Farmer sells onions at Rs. 8, you buy at Rs. 70
The next time you shell out Rs 70 to buy a kg of onions, reflect on this: the humble bulb's journey from farm to plate started, as it has ended, with exploitation. Sandeep Pai reports. The money traildelhi Updated: Aug 22, 2013 02:52 IST
The next time you shell out Rs 70 to buy a kg of onions, reflect on this: the humble bulb's journey from farm to plate started, as it has ended, with exploitation.
You're right to feel ripped off, but spare a thought for the farmer, too. A National Bank for Agriculture and Rural Development (NABARD) report on onion production and marketing seen by HT shows that the farmer makes a profit of just Rs 3.60 for every kg he sells.
In other words, a farmer would need to sell nearly 20 kg of onion if he, hypothetically, wanted to buy a kg of his own produce in plusher parts of Delhi.According to the NABARD study, in an ideal situation - with no hoarding or unfair practices, and wastage at the "normal" 25% of the 150 million tonne crop - onions should be available at Rs 14 per kg, with the farmer getting a selling price of Rs 8 and making just under half of that as profit.
But as the number of rapacious agents and wastage along the line increases, the cost to the consumer goes up considerably, with no benefit to the farmer.
This year, heavy rains may have resulted in as much as 40% of the crop going waste in the key cultivating state of Maharashtra, where the study was carried out.
And middlemen have made plenty of money.
KG Karmakar, former managing director of NABARD told HT: "This (wastage) was used as a basis for further manipulating the price by agents and thus the cost to the consumer in Delhi and Mumbai peaked at Rs 70-80 per kg."
The report talks of unfair trade practices in auctioning and storage, and explains how prices are manipulated.
When the farmer goes to sell his produce to the local agricultural produce marketing committee (APMC) market, unscrupulous agents - whose role should actually be to help farmers find a buyer - collude to give him the impression that there is no demand.
Then one of the agents takes the onions off the farmer at a cheap price, only to bring them back in a couple of days and sell them to traders at a much higher price.
"Price manipulation takes place by the agent's men quoting an artificially low price and "self-buying". These agents are making a killing," said Karmakar.
With lack of storage facilities and scant knowledge about price trends, the farmers are at the mercy of the agents.
To make matters worse, they are being forced to pay them a commission of up to 8%, the report says, in contravention of the APMC Act that says agents should charge commissions from buyers and not sellers.