Now, Farmer-run Firms Make an Impact on Market Prices

Published: 03rd February 2015 06:00 AM  |   Last Updated: 03rd February 2015 06:00 AM   |  A+A-

KOCHI: Last year, cashew farmers in the state faced an alarming situation. Raw cashew prices were plunging as if there was no bottom. But, surprisingly, the fall was arrested around Rs 70-75 per kg in North Kerala even while it was ruling lower elsewhere. Reason? Fair Trade Alliance Kerala (FTAK), a society comprising over 6,500 small farmers from the hilly region of North Kerala, was buying cashew from its members at Rs 90-95 per kg, keeping the prices stable all around from further fall.

‘’We believe our buying propped up the prices in the normal market,” said Tomy Mathew, who founded FTAK in 2004 to promote organic products from small farmers  in Kozhikode, Wayanad, Kannur and Kasargod districts.

cashew-farmers.jpg“If not for the presence of Fair Trade Alliance, the market price would have fallen further. Instead of isolated cases of prosperity, what we want is to make an impact on a larger scale,” he reckoned.

In Aluva, Indian Organic Farmers Producer Company Ltd (IOFPC) with over 2,500 farmers as its members is also working on a similar concept - to support small farmers by promising higher prices for their produce.

There are also others like the Church-backed Peermade Development Society (PDS) which has been able to establish its name in the exports market for organic produce, mainly spices, and Vandanmedu Green Gold Cardamom Producer Company (VGGVP), which has 500 cardamom farmers as shareholders.

K J Thomas, managing director of IOFPC, said the company offers premium of 25-30 per cent to farmers within its fold for the produce which includes cocoa, coffee, coconut, cashew and black pepper.

IOFPC, which is into exports markets, was not able to meet the growing demand for export market that the foray into domestic markets can wait.

A farmer can join IOFPC as a shareholder with Rs 1000/share with which he can sell produce worth Rs 42,000. If the shareholder has more produce, he/she will have to subscribe to more shares.

Farmer-supported companies sell a range of organic products, including coconut oil, turmeric, black pepper, cocoa, ginger, cashew, cardamom among others. Importantly, the produce is fetching farmers 30 per cent premium over the prevailing market price.

This fact is attested by farmers. “We are happy that the prices of our organic produce are much higher than the market price,” said Celine Manuel, 44, of Wayanad, who converted her 2.5 acre plot into an organic farm six years ago. 

Mathew of Fair Trade Alliance Kerala (FTAK) said the attempt by the farmer-led alliance was not aimed at eliminating the small primary level traders but to work in close cooperation with them. “Village traders operate on thin margins. Our fight is against big corporates like Cadbury’s and Olam who pay pittance to farmers,” he said, and added the plans to bring Wayanad’s ‘Kabani’ rice to the market in the near future.

Vandanmedu Green Gold Cardamom Producer Company (VGGCP) managing director K K Saseendrababu said the entry of his company into the electronic auctioning of cardamom resulted in higher prices for cardamom and ended the stranglehold a few traders had on the commodity’s price determination.

What’s however deterring the farmer-led companies is the lack of support from bankers. “Banks don’t lend us money unless we give them collateral. Unless we get support from banks, we are unable to expand our operations,” said Thomas of IOFPC which has plans to expand into domestic retail market, mainly organic vegetables.

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