The problem with these commodities is that when their production rises sharply, their prices collapse, as there is not enough modern storage capacity, and the links to processing and organised retailing are very weak and small. As a result, farmers often end up receiving less than one-fourth of what consumers pay in major cities. This must change. The OG needs to set a target that farmers must receive at least 60% of what consumers pay. Remember in case of milk, farmers get more than 75% of what consumers pay. Of course, these veggies are not milk, and each one has its own characteristics. Yet, the basic principles of OF would be useful to operationalise OG. What are these key principles? First, link major consuming centres to major producing centres with minimal number of intermediaries. As Dr Kurien says in his book I too had a Dream, organising farmers and increasing production is easier job. The real challenge is to find right markets for their produce that can give them remunerative prices on sustainable basis. So, one needs to map mega-consuming centres and link their retail networks with producing centres of each commodity identified. Farmers can be organised in farmer producer organisation (FPOs). NABARD and SFAC together have about 3,000 FPOs, which could be the starting points for aggregation of commodities, assaying, sorting, grading, and even packing with bar codes reflecting their traceability.
APMC Act will have to be changed to allow direct buying from FPOs, and giving incentives to FPOs, private companies and NGOs, to build back-end infrastructure, as was done for milk. The announcement of income-tax concession to FPOs for five years is a welcome step in that direction, if it encourages building that critical infrastructure. Second is the investment in logistics, starting with modern warehouses that can minimise wastages. An example will be of cold storages for onions, where wastages are reduced to less than 10% compared to 25-30% in traditional storages on farmers’ fields. Further, such storages have to be cost effective. An example would be of potato cold storage in UP that buys power at almost Rs 10/kwh from SEBs, can generate solar power at less than Rs 4/kwh, if they go for solar tops. Large-scale investments in storage will require tweaking of Essential Commodities Act with respect to storage control order.
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