Preventing predatory pricing in farming

While it’s true that a farmer can sell to those who pay better, it’s equally plausible that companies would want to buy from farmers willing to sell cheap.

Published: 15th June 2020 04:00 AM  |   Last Updated: 15th June 2020 05:51 AM   |  A+A-

farming, farmer

Image used for representational purpose only. (File photo| Vinay Madapu, EPS)

The year was 2017. Chained and handcuffed, 10 chilli farmers from Khammam in Telangana were taken to the district court. They were accused of vandalising the market yard after their demands for a remunerative price for their produce went unheard.

Chillies that sold for Rs 14,000 a quintal the previous year were selling now for a mere Rs 2,000.

The incident sparked outrage for a while, and then died down. Cut to 2020, the Centre has passed multiple ordinances to reform agriculture that, among other things, makes the Agricultural Produce Marketing Committees (APMC) redundant.

If a farmer is not happy with the price being offered at an APMC, he can sell his produce to any buyer in any part of India willing to pay more. Proponents have lauded the move as a major step towards creating ‘one nation one market’.

The APMC system was riddled with problems. Rigged by middlemen and local politicians, small and marginal farmers often got a raw deal. An upheaval of the system was in order. However, activists and experts feel that problems of the farmers have not been eliminated, but merely replaced. Instead of struggling with middlemen, now they have to trade with big corporates.

While it’s true that a farmer can sell to those who pay better, it’s equally plausible that companies would want to buy from farmers willing to sell cheap.

As a result, there is fear that small and marginal farmers will lose big time to large-scale growers. In the US, for instance, an analysis by the National Public Radio shows that retail giant Walmart sources only 11% of fresh foods locally. The rest comes from farmers in other states selling at cheaper rates. Local sourcing has now become a ‘charitable’ initiative just to support local farmers.

While Walmart has promised to source 25% of goods locally in India, not every corporate would bother doing the same. The result could be a price war. For a nation struggling to prevent predatory pricing in the telecom sector, doing the same for agriculture would be next to impossible.

As of now, the dismantling of APMCs seems to be a good initiative for agriculture, but not for farmers.


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