BY KAMLESH TRIPATHI- FORMER GENERAL MANAGER MAHINDRA & MAHINDRA LTD., HEAD OPERATIONS MAHINDRA SHUBH LABH SERVICES LTD., HEAD AGRI BUSINESS AND ENGINES. ESCORTS LTD., VICE PRESIDENT RELIANCE RETAIL (FREELANCE JOURNALIST AND AUTHOR)
STATE OF PLAY
How would you like if it was written behind the packet of wheat flour that you just bought, ‘The contents were grown in the farm of Nanak Ram near Saras town, district Sehore, Madhya Pradesh.’ This is ‘traceability’ in agri terms. Sounds like a distant dream. But then the ‘big dream’ of the big ticket ‘Indian Retail.’ Connect the farm-gate to the fork. But before we get into this let us have a flavor of how the current system operates. Indian farming traditionally has been hooked to the mechanics of Artheyas (Grain merchants) Artheyas were created to help farmers with their documents while selling their crops in the mandis. These documents included entry of grain receipts in mandi registers, raising sales invoices and also tax challans. As most of them were illiterates and did not know how to read or write. This created a lifelong bond between the Artheyas and the farmers. The Artheyas initially started as the humble ombudsman assisting the farmers but gradually transformed into strong ‘gaddis’ at the influential grain market. But at the same time the profile of farmers continued to be the same or even declined comparatively, as the number of small and marginal farm holdings only increased and profits dwindled.
Today, a farmer depends on the artheyas for crop finance and finance in case of crop failure. He also treats the artheya as an assured market for his crop. And also depends on him for certain exigency finance which he may require in terms of marriage, illness, festivals thus forging a strong bond. And as compared to banks, their documentation is simple and not cumbersome and so a big convenience. But artheyas don’t forget their pound of flesh; and finance at high rate of interest and in some cases even beyond 24% per annum, and this hits farmer profitability. Even for the grain that the farmer sells through the artheyas, he charges commissions which is the major reason for grain, vegetable and even fruit prices becoming more than double from the farm level. Government in recent times has started warehouse receipt system; a type of finance that is available by mortgaging crop but then it entails a series of documentation.
FARM TO FORK GENESIS
When the big ticket retail entered India the whole value chain from farm-gate to fork was examined by them in detail. What they found was, if the artheyas were removed from the system, and if they could buy grains, vegetables and even fruits directly from the farmers, a substantial value could be unlocked, saved and this could be shared amongst the three stakeholders; the farmer, retailer and the consumer. And, a lot of ground research has been done in this spectrum since then.
WAY FORWARD AND HOW DOES IT WORK ON THE GROUND:
Most big retailers have aggregation or stock points that store merchandise, from where it is brought to the retail floor, basis guidelines of minimum and daily stocking level. Some even have cold chains and reefer trucks for fruit and vegetable movement. Farmers who grow vegetables in the surrounding areas come with their seasonal vegetables and off load their stocks in these stock points basis number of plucking. These stocks are then sorted and graded for pricing by the company on a mutually agreed basis, after which it is taken in stock and payments are made once a week or in a fortnight to these regular suppliers. In case of onions and potatoes which have specific areas of production and limited season, such purchases may be made through one big farmer or a consortium of farmers or at times an agent who deals in these veggies. Fruits are more seasonal and the companies buy directly from orchard owners. Like apples are supplied by orchard owners from Kashmir and Himachal Pradesh, mangoes could be from Malihabad near Lucknow . Farm gate purchase for grains is more tedious and cumbersome and still continues in a big way through the mandis, because of the government policies. Even the cropping regions are quite diverse; like Basmati paddy is grown in Punjab and Haryana, as an example. Some states have also tried contract farming where farmers are first registered before the cropping season. A particular variety of seed is given to them and package of practice is explained, and when the crop is harvested the Company lifts the entire crop. Fritolay the potato chips company has done contract farming for potatoes in Ranjangaon area near Pune and Punjab Agro has taken up a huge contract farming initiative of Basmati paddy in Punjab.
ADVANTAGES VS DISADVANTAGES
Farm to fork- is model of agriculture that has come to stay and has the following advantages and disadvantages:
• Increased Profitability: It gives greater profitability and earnings to small and marginal farmers which are growing in number.
• Expert advice on crops are available such as drip irrigation, optimum use of pesticides, new cropping patterns, crop diversification and fertilizer usage, to name a few; from international crop experts associated through big retailers.
• Ready market, even before the crop is ready.
• Traceability of crop
• There is a possible danger of the buyer reneging in which case the farmer will have to look for a new buyer within a short span of time to sell his crop.
• It may not have any government support price.