Domestic Stock And Agricultural Cooperative Corporations: Fill & Download for Free

Agriculture is the only enterprise that has the largest clients base - almost 130 crores of consumers - but still runs in losses.The technical reasons for continued low profit or loss in farming are: unorganized nature of farming and farmers; lack of crop planning as per anticipated demand; the inability to fix a remunerative price for their own produce; vagaries of weather that devastate farming; mounting price of farm inputs as against stagnant or declining price for the farm produce; poor storage infrastructure including cold storage to stock the excess production safely and to release it during periods of high demand in order to stabilize food price.Pro-consumer policies followed by successive governments and the lack of adjusting food imports or exports in relation to local production have destroyed farming in India. Growers have been losing 14% a year for nearly two decades according to the recent ICRIER-OECD report prepared jointly by experts from the Organisation of Economic Cooperation and Development (OECD) and Indian Council for Research on International Economic Research (ICRIER). Farm prices have been depressed by 14 per cent on average every year, as compared to global commodity prices, only because the government wanted to subsidize consumers, said Ashok Gulati, Infosys Chair Professor at ICRIER. In other words, India has been implicitly taxing its farmers through domestic market regulations and trade policies to subsidize its consumers. As a result, Indian consumers have been paying, on an average, 25 per cent less for all commodities, while farmers are losing out year after year.In addition, the policy-induced inefficiencies that are due to minimum support prices being set below international prices for several commodities at different periods between 2000 and 2016, to domestic regulations and to trade policy measures . Legislations such as the Essential Commodities Act and Agricultural Produce Market Committee Acts long require overhaul as the restrictions stemming from these Acts adversely hit producer prices as they influence pricing, procuring, stocking and trading of commodities, Dr. Gulati said. Moving away from all forms of export restrictions is also a key step to help Indian farmers get better prices.When you talk about MSP and waiver of farm loans to farmers, do you know how much the various industries are subsidized through infrastructure development, concessional price for land and other equipment, export subsidy or support, etc. ? In addition, the write off of bank loans given to corporate industries run into several lakhs of crores.I do not favor farm loan waivers which is politically motivated for vote banks and which benefit only large farmers and not millions of smallholder farmers. Please see my earlier post on farm loans:What do you think of the Maharashtra government's decision of freeing farmers from debt?Ref: https://www.thehindubusinessline.com/news/pro-consumer-policy-bias-has-hit-farmers/article24343207.ece?utm_source=email&utm_medium=Email&utm_campaign=Newsletter

MSP initially was started as a safety net for farmers through a guarantee that if there produce is left unsold in the market, will be bought by the government. Another purpose was to incentivize farmer to produce more crops so as to ensure food security in India.This policy took off in 1960’s and at that time Procurement prices were announced at beginning of sowing season, along with MSP. Procurement price was one under which government will buy the crop which it needs to maintain buffer stock or for PDS. Once quantity required has been purchased, farmers could only sell at MSP, which were kept lower than Procurement Prices. Procurement prices were always kept lower than Market Prices.Originally created as Agricultural Price Commission in 1960’s to recommend Minimum Selling prices for 11 crops and later it was renamed as CACP. It was a move to provide minimum floor price for these crops. It was felt that a government buying agency is prerequisite for effective implementation of MSP and Food Corporation of India was also created for procurement of foodgrains. Later for procurement of pulses and oilseeds, ‘National Agricultural Cooperative Marketing Federation of India Ltd’ (NAFED) created. So prices are recommended by CACP for all products, foodgrains are procured by FCI and pulse and oilseeds are procured by NAFED. However, horticulture, vegetables, fruits or dairy products have no such support.As of now MSP is recommended for 24 crops under 5 groups viz. Kharif Crops, Ragi crops, Sugarcane, raw jute and copra.For sugarcane instead of MSP, ‘fair and remunerative price’ is declared. It depends upon recovery percentage which varies from state to state. For other crops one MSP is declared for whole India. In beginning practice was to declare regional prices. This was so because Input costs and returns of crops vary from region to region. But later uniform MSP system was restored on ground that it alone could lead to comparatively efficient use of resources in line with their comparative advantage.Other issue is of data on which commission relies. In this case ‘Directorate of Economics and statics’ gives inputs about cost of cultivation to CACP. This data is assimilated over a long period and there is time lag of about 2 years. So MSP fixed this year will be based on data captured 2 years back. This at times has given significant variations in computation of MSP. To remedy this CACP use an adjustment factor taking into account Inflation, but this is not effective.MSP is based on economic criteria such as demand and supply situation, trends in domestic and international market prices, cost of production, inter-crop price parity, terms of trade between agriculture and non-agriculture sectors, trade policy in agriculture, effect on general price level, and so on.It should be noted that ‘cost of production’ is just one of the factors taken into account and is not a sole factor. Few years back Swaminathan Committee recommended that MSP should be cost plus 50% mark up, but this was not implemented. Other Important factors which is considered is ‘demand in the economy’ this was added to terms of reference in 2009. As discussed in the beginning non sync of MSPs with demands of economy was realized and this step was taken.However, methodology of CACP doesn’t have any specific weights attached to various given factors and MSP is influenced by Subjective discretion of members. CAG also criticized methodology on grounds of non-transparency..

Well there are two questions, which I will answer togetherWhy is Kerala not having any APMC? How do the farmers sell their farm produce in Kerala if there are no APMC mandis in the state?Kerala and Manipur were the only two states in India that never had any form of Agricultural Produce Marketing committees or any legal act in its entire history. Manipur is too small a state and mostly hilly terrain, thereby APMC makes little impact there. But Kerala, despite of being a bigger state and historically being a major agrarian state, never had any form of APMC has indeed made many do ponder upon.APMC system came in during Raj days when Britishers launched protected or regulated market (mostly cotton, jute etc) to ensure their factories in UK have access of cheaper raw materials from India without intermediaries hiking up. Over a period of time, many states did passed their own APMC laws to have a regulated market and avoid farmers being exploited by others. This process of modern day APMC started mostly by 1960s and grew into much larger base in 1970s, especially with launch of Green Revolution in 1966.Now why Kerala didn’t have so?I divide why Kerala didn’t have into two phases- The Pre and Post Independence context.British Raj EraKerala never had pure British style of Zamindari or Ryotwari system of land governance historically. Kerala’s historical revenue management were based on feudal concept of Brahmaswoms, Devaswoms and Rajaswoms. This model is very little known to outsiders. It was regressive in modern context, but the advantage was no one, including the feudal lords have any sort of absolute ownership of the land. No one in the hierarchy had absolute ownership of land as every inch of land belong either to State or Deity or Confederacy of Brahmins on behalf of the Crown. Out of entire Modern Kerala, only North Kerala- Malabar actually been subjected to British Rule (who indeed messed up the revenue system, but somehow managed to keep the traditional system here and there). 2/3rd of modern Kerala were semi autonomous Princely states of Kochi and Travancore have indeed kept the old system of Devaswom and Pandaram System intact, by which everyone in the hierarchy always had share of produce and it was more of a subsistence model as far as rice and pulses were considered. This means rice and pulses weren’t something sold in market traditionally, rather distributed by landlords to their tenants in the hierarchy as per conventions etc.Surplus rice produce or other farm produce were procured by Jew or Christian traders who might have signed agreements with the lords and brought to local markets via Rice barges (Kettuvallams which now got a new image- The famed Houseboats). These local markets could be anywhere in Malayalam speaking lands. There were historical records of rice being brought from Nanjinadu (Kanyakumari) of Travancore and shipped to markets of Thrissur or Kozhikode etc via backwaters….Purchase of rice from open markets weren’t that big in those days, rather it was mostly brought by English traders or other feudal lords etc as part of creating buffer stocks or ensuring granary limits. The purchase of rice in open markets started mostly after 1870s when middle classes started rising and city life slowly emerging when people had no access to traditional subsistence model and need to buy essentials from market.I explained the land revenue model in detailed in my answer about Mappila Riots as a prelude to the social conditions of Malabar. You can read that from there.Arun Mohan (അരുൺ മോഹൻ)'s answer to What really happened during the Mappila riots in Kerala? Was it a freedom struggle or something else?The other farm produce made historically from Kerala were spices which were traditionally a regulated market. Pepper was always seen as Royal crop (being hailed as Black Gold, that fueled the age of discovery and European colonialization of India), so even cultivation of Pepper was regulated historically by Kings and later by East India Company. But company cultivation was much similar to an APMC model in a different way. The Hon. East India Company thro’ the feudal lords allowed farmers of specific areas to cultivate Pepper, but the produce to be sold to the Thukkadis of Company (Company Agents) which were brought to the Company’s warehouses and factories at many places. So if Pepper is grown in Wayanad, the company’s Thukkadis will purchase at a price fixed by Hon.Company and brought to Thalassery Factory or Anjero Fort or Fort Kochi or Anchuthengu fort etc where the company factors grade and pack for shipment. Its this model, the finest quality of Wayanadan Pepper even got branded worldwide as celebrated Tellicherry Pepper (Tellicherry being English word for Thalassery, the fort where the Company grades the pepper). So as in case of Cardamom, Nutmeg, Cinnamon etc. Even after demise of Hon. East India Company, many famous British companies took that position doing the same job. This means, farm produce made in one area has to be brought to some other area for sale purposes and thereby the concept of sale only in the local Chanta or Mandi never worked out fully. It can be anywhere in Kerala.The other farm crops of Kerala were tea, coffee and Rubber, all introduced by Britishers. They did commercially and limited to very few British companies, thereby it was never a small scale farmer oriented, rather purely company owned plantations, which thus worked in extremely regulated fashion internally.Its for these reasons, Britishers never thought to have a APMC system in Kerala (Malabar district), though they do had similar laws in some parts of Madras Presidency then.Modern IndiaAfter Indian Independence, India states were slowly introduced APMC laws in different formats in period 1960s. But this didn’t happen in Kerala. The main reasons wereLand reforms lawThe Left’s Land reforms law changed the cultivation and farming pattern so radically in late 50s and early 60s. In gap of a decade from 1957–67, large acres of huge farms disappeared because excess lands beyond the ceiling were captured by the state and redistributed to poor landless communities. This resulted in fragmentation of land and rice farming plummeted rapidly as the yield was poor. The alarmed Govt resolved this crisis thro’ forming collective farming and this gave birth to Cooperative farming. Now cooperative farming is somewhat similar to APMC in a different format.In cooperative farming, the farmers union producers and they or their subsidiary procurement union procures what the farmers union produces. Effectively there is no one to exploit in this sort of cooperative farming.However cooperative farming slowly reduced by 1980s primarily because of Gulf migration and overall increase of social prosperity due to remittances. This made many individual farmers to pull out from collective farming and overall paddy cultivation went downward as the land has many other higher values than farming. Real estate emerged as a stronger option, so as other forms of cultivation.2. Radical change in nature of farmingIn this period (1960s-80s), there was another impact. Kerala’s farm production slowly changed from food crops to pure cash crops. By 1950s, British monopolistic companies that managed larger plantations of rubber, tea, coffee left India and many Indian companies replaced it. The lucrative rubber values of 1950s and fragmentation of land making paddy cultivation less attractive (along with collapse of Feudal social order) and pushed majority of small scale farmers to move to rubber plantations in their smaller land holdings. This means you have individual rubber farms instead of British modelled larger companies.So as in case of Coffee. Coffee being a small shrubs that easily grows in Kerala, it too became more or less less plantation mode and more of small scale farming, leaving only Tea to remain back in larger scale commercial farming. So as spices which otherwise were in small scale farming mode.These small scale farming means farmers don’t have access to markets directly, which would be perfect recipe for middle men to come and exploit. So in normal case- APMC would be required to help these cash crop farmers.But Kerala and India govt did that in a different way. Instead of a formal APMC system, these cash crops were procured by authorized Govt boards. This lead to start of various Govt of India boards like Tea Board of India, Coffee Board of India, Coir Board, Rubber Board, Spices Corporation of India, Coconut Development Board etc.Almost all these boards were in Kerala and doing Kerala specific activities (Coffee Board was started in Bangalore, but has its major regional HQ in Kerala).Untill recently, these boards do procuring goods directly from farmers or similar procurement unions with Kerala govt doing local auctions etc. This means an APMC format do exist for Cash crops of Kerala, but in a different way. Instead of committees or Mandi committee specific to one district, the entire Kerala became One Mandi and these boards do manage that, that too completely handled Central Govt with a degree of participation of Kerala Govt.And need to understand, these commercial crops are extremely high valued in nature and Govt of India in 50s-90s always saw them as a way to raise foreign exchange, unlike rice or wheat or pulses which were meant for domestic consumption. So Govt boards mandate was to buy these high value produce and focus heavily on exports.Thats the key reason why APMC didn’t matter to Kerala. Majority of grade 1 spices, tea, coffee, rubber, coir, copra were all exported outside India. And lesser grade ones to larger scale industrial houses within the country. For example, entire rubber produced by Kerala by consumed by 3 Tyre manufacturing companies in 1970s which again were sold via Rubber Board. There was movement of commercial crops from Kerala to Maharashtra or Chennai for these reasons done by Govt of India.3. Kerala Procurement modelKerala donot have APMC as recently highlighted by PM last day to rebuke those who seek for it.But what he missed is that, Kerala Govt effectively runs the biggest procurement agency directly from farmers. Kerala was the first state to procure farm produce directly from farmers and sold to public thro’ its state agency- Supplyco (Kerala State Civil Supplies Corporation).In 1974, when Kerala Govt was under UDF govt and ruled by the visionary leader- Achuta Menon (the most veteran leader of CPI who was then part of UDF), he decided launch a corporation to procure rice and all essentials from farmers at fair rates fixed by Govt and sell to public at fair rates. This lead to formation of Supplyco.Supplyco had a monopoly sort in 1970s to procure farm goods. In a way, it is akin to APMC committees as in case of paddy procurement.Post 1989, Kerala govt allowed other players to procure farm goods, still Supplyco takes the lead. Apart from Supplyco, there are two other Govt organizations that procure farm produceHorticorp Kerala - Kerala State Horticultural Products Development CorporationThis is a govt company started for procuring, processing, storage and marketing of Vegetables and fruits, after traders from Tamil Nadu were unjustifably pushing down the prices and exploiting farmers in Vattavada and Kanthallor in Idukki districts. These places in Idukki do have winter produce like carrots, beans, cabbage, potato etc which APMC middleman from TN used to exploit as Kerala don’t have a distribution structure for these kind of vegetables. So the Horticorp came into picture protect vunerable small scale vegetable farmers. And it was a great success. Today Horticorp procures and distributes more than 70% of Kerala’s vegetable requirement in state market and procures almost from 80% of Kerala farmers.Vegetable and Fruit Promotion Council Keralam (VFPCK)This organization was founded in support of European Union (particularly France) to bring European model of farm support mechanism. This is a company jointly owned by consortium of Farmers Unions across 10 districts of Kerala, Kerala Govt and few technical agencies associated with European Union with direct funding from Brussels.The company does in training, setting up distribution, logistics and grading units, financing, business networking, marketing options, developing value added products, Market information services etcFVFPCK played a key role in modernizing horticulture in Kerala, whereby it formed private networks to procure small scale vegetable/fruit farming of high yield and distribute to retail chains directly. Thus they played the role of middle man as well as encourages their networks (mostly Kudumbashree workers) to do that.Apart from three agencies, Kerala has a huge network of procurement cooperatives, notably 3 apex cooperative agencies;Kerala Marketfed (Kerala State Cooperative Marketing Federation Limited) is the apex body that works master procurer for various cooperatives who procure agro produce (farm products and edible products) as a wholesaler. Its India’s biggest Cooperative procurer as well as does marketing directly thro its own networksConsumerfed (Kerala State Consumer Retail Cooperatives Federation) does involve in similar aspects focused on direct retail of procured farm goods apart from other consumer durablesKerafed (Kerala Coconut Cooperative Federation) is the biggest procurer of coconuts in the state. They not only procure, but makes value added products which they brand and sell. Kerala’s most fast moving premium coconut oil- Kera oil as well as coconut products like Kera Coconut powder, Keshamrit etc comes from this companyAnd number of similar cooperatives at ground level which are all coordinated and controlled by Department of Cooperatives- Govt of Kerala.These three agencies and 3 apex agencies along with allied agencies like Milma (Milk Cooperative) and MPI (Meat Products of India- the official meat company of the state) gives a good mechanism in supporting farmers in holistic manner. So essentially they don’t need a Mandi.Then there are powerful independent unions who work on specific products in smaller regions. Say Pineapple cultivators, who mostly concentrated in few areas of Ernakulam district, particularly Vazhakulam region. The cultivators themselves formed an union- Pineapple Farmers Union and established Asia’s biggest Pineapple market there which farmers control. They deal with companies directly and they themselves started their own processing company- Vazhakulam Agro and Fruit Processing Company with support of Kerala Govt and now produces squash, juices and jams.Farmers who do rice farming, usually depends on authorized farmer cooperatives in the area or Supplyco to have their procurement. In some cases, rice mills companies like Double Horse, Nirapara or similar corporates directly enter a deal with farmers (mostly if the farm is run by larger collective groups or cooperatives). Vegetables are mostly procured by Horticorp or Kudumbashree on behalf of VFPCK.These procured goods are sold across Kerala as single market or exported outside Kerala.Kerala has an extraordinary high MSP culture, much bigger than Punjab and Haryana. Kerala Govt and its cooperative agencies procure goods from farmers at much higher Govt fixed MSP rates. And the only state in India even to procure fruits and vegetables at MSP.PM Modi’s jibe against Kerala (as the state was trying to making an official protest against New Farms and announced support to ongoing strike by Punjabi farmers) yesterday got a strong response from many Malayalee twitters including from State Finance Minister to highlight how Kerala has a huge MSP system much bigger than India GovtKerala farmers to get MSP for vegetables, fruitsKerala fixes MSP for vegetables; govt to pay farmers directly during price drop4. Kerala agriculture- Export orientedContrary to public belief, majority, almost 70% of Kerala agro-produce are meant to be exported outside India, not even inside the country. This is why Kerala has very small agriculture activity but high value as they are mostly cash crops. Most of Kerala’s produce today are Pepper, Tea, Coffee, Cardamom, Nutmeg, Cinnamon, Cloves, ginger, cashew nut, areca nut , rubber, cocoa, vanilla, exotic fruits like dragon fruit, mangosteen, passion fruit, strawberries, rambutan etc. This means, these products pricing are not even dependent on Indian market rates, rather International market rates. Our Rubber or Pepper or Tea or Coffee prices are fully reliant on international commodities market rate and exports always happens in dollar terms. So when the exchange rate is high, even if market rates are lower, the products fetch a handsome returns.Majority are meant for exports. So naturally these sectors become highly organized, even its small scale farmingThere was a time, when small scale rubber planters used to mint money like anything. If one visits small agrarian towns like Pala or many similar areas in Central Travancore midlands, you will see so many premium cars like Benz, Audis, BMWs etc in the roads and roadside being dotted with bungalows. They are mostly owned by farmers (though now rubber value crashed like anything). Thats because of high value export oriented farm produceKerala Farmers forms the third richest farmer community after Punjab and Haryana due to high value farming cultureMonthly rural income levels, where Kerala ranks second after Punjab2013 figures, but still gives an idea why Kerala has higher agricultural income than most of South Indian states and other Indian states.5. LiteracyKerala higher literacy also plays a key role. The higher literacy and penetration of media into every nook and corner, farmers do have access of Market Information strongly. They know the market prices of their produce clearly. Untill recently most of Malayalam news do regularly show daily prices of Rubber, tea, coffee, cashew, Pepper etc in news bulletins just like how Weather reports were shown.Now marketing information is much available online and majority of farmers have switched to Whatsapp based marketing information to know real time updates of market conditions.Kerala has so many Marketing information bodies, cooperatives and NGOs in play. So even in rural market, they are likely to know the context of marketing potential of products etc and plan accordingly. This also means, its hard for middle men to exploit like anything.Yes, Kerala don’t have a formal APMC and Mandi system. But for all pratical purposes, Kerala’s market is fully regulated and directly supported by Govt of Kerala. The entire Kerala is one single market and absolute freedom to move goods within Kerala and sell anywhere, which is mostly done by Govt agencies or cooperatives, not purely private people.Further readingArun Mohan (അരുൺ മോഹൻ)'s answer to Why did Maharashtra, Karnataka, Kerala, and Tamil Nadu farmers not participate in the farmer's protest march in Delhi?Whenever corporate presence grows, small and marginal farmers have a difficult time: Professor R Ramakumar - India News , Firstposthttps://niti.gov.in/writereaddata/files/Kerala_Report_0.pdfHow Kerala’s Cooperative Model is Making Strides Despite Odds | NewsClickPublic Finance Chapter 4 - Kerala's web of cooperatives: Advancing the solidarity economyArun Mohan (അരുൺ മോഹൻ)'s answer to Kerala has a favourable feature for agriculture, and the people of Kerala depend on other states for food product. Why?