Indian households are paying the highest prices for food in a decade, but farmers producing them sell for just a fraction of the final price, agriculture minister Sharad Pawar said on Friday.
Inefficient markets, large number of middlemen and huge transaction costs on food commodities are forcing farmers to sell their produce at less profitable prices, and at times, under distress conditions, he said.
The minister's revelation, which came during an address to a parliamentary panel, flies right into the face of high food inflation, which means that commodity traders are making a kill, even though farm-end prices remain low.
Food inflation recorded a double-digit rise to 10.60% in the week ended October 8, the sharpest increase in six months, data on Thursday showed.
Pawar called for reforms in agricultural marketing to overhaul the current system, in which farmers are required to sell all produce only through regulated local committees under the Agriculture Produce Marketing Committees Act.
Such platforms, originally designed to protect farmer interests, are now being blamed for turning into hubs of hoarders. Licences for participating wholesale buyers, who are required to pay a transaction or mandi tax, are concentrated in hands of few. Farmers, who don't go through APMCs, can be booked for avoiding mandi taxes. Most APMCs harbour monopolistic practices.
"Farmers, specially small and marginal are unable to take advantage of the market system," Pawar said.