Farmers’ share from retail prices shrinks, RBI calls for reforms

Updated: Oct 5th, 2024


About a third of the retail price of tomatoes, onions and potatoes is not received by the farmers from growing them while the wholesalers and retailers are earning a large share, as stated in the working paper series prepared by the Reserve Bank of India (RBI).

Only 33% of the retail price of tomato, 36% of onion, and 37% of potato comes to farmers.

Informed sources in the agricultural produce market say that Agricultural Produce Market Committee (APMC) traders form a cartel and do not allow farmers to get prices above the fixed price of the produce.

Thus, the hardworking farmer does not get proper compensation even after six months of hard work. On the other hand, APMC traders earn a lot of money in mere hours.

The RBI mentioned that marketing reforms are necessary to improve the agricultural value chain. It is also necessary to make the system of storage of farm produce more complex and to increase the capacity of food processing.

Moreover, the paper mentions that it is necessary to increase the yield through research and development and it is equally necessary to develop varieties that are less affected by climate change. It is equally important to bring innovative techniques for farming.

Out of one rupee spent by the end user of the farm produce, the farmers need to get a larger share than what they are getting now, it stated.

The total shared weight of these three commodities — potatoes, tomatoes, and onions — in the Consumer Price Index is only 4.8%. However, they play a big role in inflation.

The supply is affected by climate change, drought, and flood.

The price depends on minimum price announced, chemical fertilisers. Fluctuations in per capita income affect he sales, fluctuating their demands.

Also, even if the monthly per capita expenditure increases, it affects the demand. The price level of its substitutes also affects its demand.

The gap between the retail price of the produce and the people who farm it continues to widen.


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