Governance

Strengthening the last mile agricultural marketing architecture in India: The way forward

Governance / Agriculture Dr. Abhilaksh Likhi
March 2020

corns-farmerThe Government of Maharashtra has successfully implemented a World Bank assisted project called “The Maharashtra Agricultural Competitiveness Project” (MACP). The project objective was to increase the productivity and profitability of the farming community. Modernization of “Rural Haats” (rural periodic markets), at the last mile, was a key component of the project to improve farmer access to markets.

Basic infrastructural facilities such as platforms, pathways, toilets have been provided in these haats in addition to building of godowns, small cold storages and cleaning/sorting/grading pack houses. Training, capacity building and experience sharing has been a critical strategy to extensively involve the farming community.

An impact study conducted by the World Bank observes that due to the above initiatives, the number of buyers and sellers in these rural haats has increased by thirty three percent leading to increase in volumes of arrivals of agricultural produce. Further, due to innovative dovetailing, the impact study adds, in many haats, weekly markets are now operating on daily basis due to increased demand.

The Committee on Doubling Farmers Income (DFI), 2017 observes that the income growth of farmers is related to demand linked prices and growth in quantities transacted by farmers. The Committee, therefore recommended that existing rural periodical markets (such as the ones modernized in Maharashtra under MACP) be utilized to co-locate facilitating platforms for direct sale-purchase transactions as also aggregation of small lots of farmers’ produce.

These co-located facilities called Gramin Agricultural Markets (GrAMs) are aimed particularly to benefit small and marginal farmers as retail outlets since they are located close to their farm-gates. Besides, as feeder markets, GrAMs would serve as a robust foundation for strengthening wholesale, terminal and export markets too.

marry-gold-framerCountry wide there are more than 22,000 periodical markets that are located in villages and semi urban areas. They attract both consumers and bulk buyers for sale-purchase of various goods including agricultural produce, both non-perishable (grains) and perishable (fruits & vegetables). Located at an average distance of five to six kilometers from the farm gate, these markets assemble at a regular and fixed day interval of seven days, fifteen days and at times seasonally.

Interestingly, they are owned and managed by institutions ranging from Gram Panchayats, urban local bodies, private trusts/individuals and the regulated Agricultural Product Marketing Committees (APMCs). To plug and strengthen infrastructure bottlenecks in GrAMS, state governments have the option to borrow funds at concessional rates of interest from an agri- market infrastructure fund hosted by NABARD. Basic and support infrastructure is also being built with funding under the Mahatma Gandhi National Rural Employment Scheme (MGNRES), Rashtriya Krishi Vikas Yojana (RKVY) and Mission for Integrated Development of Horticulture (MIDH).

The density of regulated markets in different parts of the country varies from 116.57 sq.km in Punjab to 11215 sq.km in Meghalaya. Hence, to enable the co-located GrAMs in rural periodical markets to bridge the market accessibility gap, the following key issues need to be focused upon. First, farmer-consumer markets have been operated and managed by APMCs of States for direct sale such as Rythu Bandhu, Uzhavar Sandhais, Krushak Bazaar, Krishak Bazaar, Apni Mandi, Rythu Santhe. GrAMs, as last mile locations near the farm gate, could provide a less restrictive and regulatory ecology to operate such initiatives. Second, a new policy for creation of 10,000 Farmer Producer Organizations (FPOs) has been recently announced. Aggregation of small lots of marginal farmers through such FPOs operating in GrAMS, with primary and preconditioning services, could provide more collective leverage to the latter.

women-working-in-farmThird, sale of commodities through physical negotiation in GrAMs gradually has to be replaced with provision of online connectivity for better price discovery through the Government of India’s Electronic National Market (e-NAM) platform. Fourth, extension services for awareness creation is done either with the help of Government of India’s national training institutes and Krishi Vigyan Kendras (KVKs) in districts. For truly empowering farmers in catchment areas of GrAMS, audio-visual and print literature has to suit local situations and languages.

Last but not the least, there are numerous Agri startups in the country such as Crofarm, Krishi Hub and Ninjacart that are using technology to introduce automated supply chain efficiencies and ensure better prices for small and marginal farmers that they target. A distinctive feature in these Agri start-ups is the use of artificial intelligence to predict demand from the core farmer data collected enabling them thus to systematically trim waste.

Such innovative mechanisms to ensure pricing transparency, demand prediction and supply chain optimization need to be appraised too by KVKs in addition to learning from projects such as MACP in Maharashtra. This will go a long way in strengthening a hub and spoke model of agriculture marketing with GrAMs as its robust building block to evacuate surpluses and ensure remunerative prices to farmers. (The writer is an Additional Secretary in the Ministry of Agriculture & Farmers Welfare, Government of India. Views expressed are personal)

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