Agrarian Distress in India

In India, the farming sector is the backbone of the economy, providing a livelihood to millions of people across the country. The food we get on our plates is purely dependent on the hard work, perseverance, and dedication of farmers to the land, who are not only toiling to feed the 1.4 billion population of the country but also exporting to various parts of the world. However, the economic conditions of farmers in India remain bleak and the struggles they go through to produce food for the nation are often overlooked.

The plight of our farmers is not a new topic of discussion. Every year, we hear the same woes of low income and unfair prices for their produce. But, have any steps been taken to find out the root causes behind this?

Now, It’s not astonishing that farmers in India continue to face significant challenges in selling their produce, even after the implementation and subsequent repeal of farm laws. They are often exposed to distress selling; a situation in which farmers are compelled to sell their produce at a much lower price than its actual worth due to various reasons such as lack of storage facilities, sudden oversupply, and limited market access. In spite of being the owners of their agricultural produce, farmers have limited control over pricing and are forced to accept prices set by others, making them price takers rather than price makers. Their inability to negotiate with large buyers left them no choice but to accept the offered price. As a result, farmers are left with very little profit or even sometimes, a loss. The prevalence of distress selling highlights the need for effective measures to be taken to ensure fair prices for farmers.

Despite facing numerous risks and uncertainties inherent in farming, farmers are also burdened with significant losses of 10-15% during the selling process making agriculture unprofitable and unaffordable business. As a result, 75% of the farmers want to quit farming. In India, two-thirds of the population is dependent on agriculture for their livelihood. Therefore it's time to focus on the fundamental issues faced by farmers on a priority basis and resolve them.

Through this article, I want to shed light on how farmers are exploited in the supply chain due to informal methods of price determination.

How informal practices of price determination are leading to farmer exploitation?

The existing system of price determination often relies on arbitrary practices, which in turn leads to unfair prices and a lack of transparency in the market.

To illustrate this issue, let's consider the conventional transaction between a customer and a seller. The seller typically explains the product's quality to the customer, and the customer doesn’t take a decision to buy it until he is confident about the quality of the product, and then based on that understanding, he tries to negotiate the price.

Does this same process apply when it comes to selling agricultural commodities? NO!! Surprisingly, only the buyers (such as APMCs and processors) possess knowledge about the quality of the produce, yet they frequently follow informal practices to determine the price and that leads to the exploitation of farmers in the selling process.

During our recent visit to the APMC, we encountered a farmer, Satish Mane, who had brought in 20 quintals of red gram. He divided his red gram into two heaps for the auction. Interestingly he received two different prices for the same produce that was kept in two separate heaps - Rs. 4930 and Rs. 5250. Now the question is, what was the real price for his red gram?

Unfortunately, we don’t have a system to answer this question because we use conventional informal practices to determine the prices of the produce like chewing the produce to know the moisture content. And its result remains with traders only. That's why Satish Mane was not able to understand why he was offered two different prices for the same produce. He didn’t understand what quality parameters and its standards were considered in this process by the trader. Like Satish, millions of farmers are dealing with the same issue. That’s why the quality analysis-based scientific method is necessary for farmers to know that if their product is good then how good it is or if it’s bad then how bad it is. It's their fundamental right to know the quality of their produce.

 (Photo: Quality Control and Price Regulation for Farmers)

Photo: farmers in India continue to face significant challenges in selling their produce

From the time a farmer sows the seeds into his fields, he is uncertain about the climatic conditions that will be prevalent. However, they are also uncertain about the price they will receive for their produce when they take it to the market. The price offered to them is based on informal practices that remain opaque, and the farmers often remain unaware of the basis on which the price was determined. This situation has persisted across generations, and even with advanced technologies available, the continued use of such informal practices to determine prices is a serious concern.

Each crop has specific quality standards that are determined by the food industry based on its intended use. However, these parameters are often only known and utilized by processors, importers, and exporters. It’s the responsibility of the Indian government to regulate these quality parameters and formalize the entire system. Currently, the standards are primarily established to serve the interests of processors, who are the ones setting them. Despite being the most significant part of the supply chain, farmers are often neglected in this system. With a comprehensive understanding of the agricultural value chain, it becomes evident that these processors and traders hold a substantial level of domination and control within the system.

Farmers, who take on significant risks and uncertainties and work tirelessly to produce crops, deserve to have their products valued as more than just raw materials. It is the need of the hour to implement formal and scientific methods for quality analysis in order to offer farmers fair prices for their produce. It is impossible for the Indian Government to achieve the target of doubling the farmers' income if they are not able to address these fundamental problems of the farmers.

Need for Quality Control and Price Regulation to address the complex issues of the agriculture industry.

The concepts of price and quality are intricately linked and can be viewed as two sides of the same coin. A Price Regulation by the government would provide a much-needed framework for quality analysis and pricing. It would ensure transparency in an entire value chain and will benefit all the stakeholders. A formal system for Quality analysis using scientific methods can ensure prices offered to farmers are based on the quality of their produce.

With a standardized method of quality analysis and price regulation, farmers can’t be taken advantage of by large institutional buyers and processors who have the power to set prices and drive down the cost of the goods. Without any price regulations, farmers are vulnerable to making the decision of when to sell, how to sell, and where to sell.

It is time to recognize the importance of quality control and price regulation to ensure that the agricultural sector is given the respect and attention it deserves. By implementing a proper quality analysis system, farmers would be better equipped to understand the true quality of their produce and the corresponding price they could expect to receive. This would help them to increase their income.

GramHeet’s initiative to address the issues of informal price determination

GramHeet, a promising startup based in Yavatmal, Maharashtra, has been working tirelessly to improve the lives of farmers. Their noble efforts have been centered around educating farmers on the critical importance of quality analysis for price determination. Additionally, GramHeet has been instrumental in helping these FPOs establish quality analysis labs at their procurement centers, further enhancing the accuracy and reliability of the quality analysis. This system has benefitted 15000+ farmers by increasing their income by up to 40%. They are working in 6 districts of Maharashtra and 2 districts of Andhra Pradesh.

By implementing formal and scientific methods of quality analysis, farmers are now able to get a comprehensive quality analysis report that has details about the quality parameters upon which their produce has been graded. These reports also include information on the corresponding prices farmers can expect to receive for their produce. This method ensures farmers receive fair compensation for their hard work and dedication. GramHeet also offers a solution to the issue of farmers struggling to sell their agricultural produce by connecting them with buyers.

GrameHeet as a platform is trying to create an alternative market for farmers and ethical buyers in which price determination based on quality analysis is fundamental. This innovative system is helping farmers to reduce the cost incurred in the selling process and to obtain fair prices. This initiative started in Yavatmal and is now spreading across India. With the support of like-minded individuals and organizations, we can come together to help farmers get the prices they deserve and improve their overall economic well-being. Let's join hands and work towards a better future for farmers!



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