Agriculture needs marketing reforms

Farming, being a difficult profession, makes achieving economic sustainability a serious challenge for small and marginal farmers. Production and marketing of all products, industrial or agricultural, are linked issues. But this principle vis-a-vis agriculture has not been given due consideration and marketing of food grains has continued to be quite faulty and outdated.
Marketing is considered the weakest link in the agriculture development chain. Middlemen continue to flourish while producers suffer and consumers lose out. Farmers have always been fleeced by unscrupulous traders. Small and marginal farmers meet their day-to-day needs from commission agents and are compelled to sell even their subsistence produce under stress. They start buying back food grains at a higher price and pay a high rate of interest on piling debt. This commercial exploitation is the main reason for the farmers’ perpetual misery. This has renewed farmers demand for revamping the agriculture marketing system.
Farmers want to replace the existing system with one that takes care of at least five factors, which are essential parts of the agriculture cycle. These include stability of prices, which get depressed in times of glut when farmers sell due to lack of holding capacity; distress selling by small farmers, who account for 93 per cent of total farms because they have to meet their fiscal (consumption and investment) requirements; biological cycle in which production cannot be adjusted to ever-changing prices; fragmented markets that are dominated by cartels (middlemen and industrialists) and production uncertainties due to vagaries of weather.
Though any attempt to improve agriculture marketing system should be made at three levels–policy, management and farms–yet it must begin with improving the credit system, which, in its current formulation, holds over 90 per cent farmers hostage to middlemen, along with their crops. Over 90 per cent small farmers have to pledge their crops with middlemen by the time of harvest. So, it is the middleman who makes the decision about crop prices when he purchases them from farmers and when he sells it to the next buyer. The market is ruled by middlemen rather than farmers.
All official attempts to limit the role of middlemen have been bulldozed because of their financial hold on the market. The only way to reverse the trend is to take the banking sector to the union council level and stuff it with the required money. Passbooks of farmers have been a money-making source for revenue officers. They should be duty-bound to issue passbooks to all farmers falling in their area of jurisdiction and convert these books into a guarantee for loans. Unless formal credit reaches farmers, especially smaller ones, with required money, the stranglehold of middlemen cannot be broken and no meaningful marketing reforms can be undertaken.
Farmers have also long been crying hoarse about setting up farm service centres at the union council level, which should serve farmers by providing basic services like storage, credit, setting up of small processing units, inputs like fertilisers, pesticides, diesel and repair of machinery. The concept of cooperative sales could be developed through these centres and help empower farmers in decision-making about sale of their commodities. But this sale should be based on efficient marketing information system, so that the farmers could send their produce to the most profitable markets as fragmented and de-linked markets have only added to farmers’ misfortunes.
For safeguarding the interest of the farming community, the federal government has adopted the procedure of fixing the support price of food grains. The timing of the declaration of this is, however, erratic. The announcement of wheat price in March when the crop is near harvesting, hardly works as an incentive. It is, therefore, necessary that the support price be announced for all the kharif crops in the month of January and for Rabi crops in August.
The government should devise genuine ways for improving the marketing system and price policy to proactively assist and protect farmers’ interests, especially of small and marginal farmers, who face financial problems and whose land holdings are continuously fragmented, and thus are too small to be sustainable.
Such a system would not only add to the national kitty by helping farmers produce more and ensuring food and cash security, but also alleviate poverty in rural areas, where it is more threatening both in reach and wretchedness.
The writer is Islamabad-based freelance journalist. He can be reached at [email protected]