The government’s plan to grant farmers more economic freedom. Have you ever wondered how the food we eat reaches us? It’s a rather complicated process. The farmer begins by growing these crops and then harvesting them. The farmer then takes these crops to a center called the APMC or the agriculture produce marketing committee.
The APMC is a government-regulated market where farmers, agents, and traders meet. At these APMC centers, the farmer meets an agent, and the agent helps in setting up this product for an auction. During the auction, the trader who bids the highest amount gets the produce, and the trader eventually sells it to a retailer from where we buy our food.
Our story, however, focuses on the transaction that happens at these APMC centers. Ideally, the auctioning that occurs at these APMC centers ought to be fair. However, at many APMC centers, the auction is rigged in which traders meet beforehand and start plotting on starting the auction at really low amounts. In most cases, farmers have to let go of the produce at or below the minimum support price, leaving them no profit margin.
Now imagine you’re a farmer. Wouldn’t you want to sell your products to the buyer that gives you the best possible price? In many states in India, it is illegal for a farmer to sell their produce at any other center apart from the local APMC where auctions are rigged. So they have no other option but to sell their products without making almost any margin of profit.
It is to be noted here that farmers make only 20 to 30% of the commodity’s final price. Ideally, farmers would benefit if they have more freedom and choices to sell to the buyer that gives them the best possible price, and this is what the government is planning to do. The government wants to free up the agriculture market to boost farming income.
However, there are challenges in implementing this initiative. For example, this initiative of freeing up the agricultural market is an initiative of the central government, but the state government frames agriculture laws. So if a particular state government does not comply with this center’s industry, then farmers in that state would have no other option but to sell their produce at these local APMC centers.
This leads us to the possibility of the center bypassing the state and directly implementing this initiative and might meet even with political opposition from the state governments. While all of this helps farmers, what about other people involved in the transactions, such as buyers? For instance, corporate giants such as ITC purchase agricultural produce in bulk without APMC or traders. How would they be buying this product in bulk?
It is very unlikely for a corporate giant such as an ITC or an Adani to deal with individual farmers since individual farmers can only produce so many crops. Also, corporate giants would have the upper hand in the bargaining power and use this power to bully small-time farmers into selling their crops for a cheaper amount.
How do we solve this problem?
To solve this problem, farmers can organize themselves into self-managed groups. Through unity, they can supply the large scale required by corporate giants, and uniting, they have greater bargaining power while dealing with corporal giants. Such collectives already exist in India.
The government of India has created farmer producer organizations, or FPOS, to empower farmers. In the next five years, the government has announced that they will make as many as ten thousand FPOS in the country. If India’s government implements this policy to free up the agriculture market and encourages farmers to form themselves into self-managed collectives, agriculture would drastically improve, and India would prosper.