Thriving Amidst Uncertainty

Published: Mon, 03/14/2016 - 12:33 Updated: Tue, 03/15/2016 - 13:40

Azadpur Mandi is one of the largest agricultural produce markets in Asia, where farmers, middlemen and bulk buyers interact every day. The state wants to do away with the middleman and make the farmers and the end users meet directly. Can they disrupt this system? 

Abeer Kapoor and Dhruba Basu Delhi 

When a fire destroyed the old Sabzi Mandi in 1968, the government of India took seven years to shift its location to Azadpur in 1975. The relationship between the middleman and the farmer survived that fire, and now it is surviving another onslaught: the digital revolution. With roots running deep, the middleman is miraculously surviving the digital disruption. 

In July 2015, the Indian government launched the e-kisan mandi project. The Minister of Agriculture and Farmer Welfare, Radha Mohan Singh, inaugurated the online platform, designed as a direct link between farmers and buyers. It allowed fresh perishable produce to be purchased wholesale minus several intervening layers of middlemen.

If the e-kisan mandi is successful it will have a major impact on the Azadpur Mandi. However, only a year in, it is still in its initial phase. The Azadpur Mandi, divided into 4 blocks (A-D), is recognised as Asia’s largest wholesale fruit, vegetable and spice market, boasting 438 large shops, 826 smaller shops, over 5,000 wholesalers, a daily traffic of around 10,000 trucks and a network of 10,00,000 farmers. Agricultural produce reaches the mandi from all over the country, most notably from the northern states of Rajasthan, Haryana and Uttar Pradesh, and from other countries as well. “We get vegetables from all over the country, but we also get garlic from China. If you walk around you will see it,” said a wholesaler, under a shed outside Block A, where hundreds of people bid for mountains of sacks of peas.  

These waters run deep, as any interactions with the ‘arathiyas’ (middlemen) and farmers of Azadpur will reveal. They are connected at many levels, each adding a further layer between source-producer and end-consumer

The tiny lanes of the market simmer with a kind of defiance at the mention of the digital transformation. It is almost as if its people do not want to know what is going on, which is, in fact, the case in many instances; most of the farmers are oblivious to the e-kisan initiative, responding to any questions about it with an uncomplicated, “No, we know nothing about it.” When the questions are stripped down to the fundamental matter of the viability of direct connectivity between farmers and buyers, a subdued hostility emerges, suggesting that the ostrich-like attitude may be somewhat disingenuous.  

After all, the proposed digital transformation must proceed against the weight of a history of traditional socio-economic relations that it has so far been unable to shake or change. These waters run deep, as any interactions with the ‘arathiyas’ (middlemen) and farmers of Azadpur will reveal. They are connected at many levels, each adding a further layer between source-producer and end-consumer.

The origins of this initiative lie in the delisting of fruits and vegetables from the Agricultural Produce Marketing Committee (APMC) Act by the Delhi government in accordance with the December 2013 Congress policy directive.

 

The APMC is constituted by state governments to regulate trade, services and promotional activities related to agricultural, horticultural and livestock products. The first sale of commodities listed under the APMC Act cannot be conducted without the committee’s authorisation, effectively preventing any other body from setting up wholesale markets that deal in those commodities. The delisting, undertaken by the Delhi government in September 2014, made it possible for the Small Farmers’ Agribusiness Consortium (SFAC) to conceive, under the agricultural ministry, India’s first ‘Kisan Mandi’, where farmers would be able to sell their produce directly to bulk buyers like hotels and retail chains. It was thought of as a win-win situation, with projections of a 20-25 per cent increase in gains for the former and a 15-20 per cent decrease in costs for the latter. The physical structure was to be set up over 1.6 acres in Alipur, bordering Haryana on the northern fringe of Delhi, equipped with state-of-the-art grading and storage facilities to protect against the large-scale wastage of produce (15-25 per cent, according to one estimate) that was a feature of the infrastructurally-weak and intermediary-infested APMC model.  

However, the project could not come to fruition due to issues with the transfer of land titles for the mandi. That is why the idea of an online portal takes on a resuscitative significance, by removing, in theory, the need for a physical structure at all. The State then moves towards using technology to bridge infrastructural gaps.

Anshuman Trivedi, project manager at FICCI, said that the digital transformation is inevitable, and will eventually eat away at those spaces that were not able to adapt. Indeed, while those who adopted the change would be altered, those who didn’t would be left behind. Local corner stores have shown resilience and changed, matching the big companies in speedy delivery, but their inability to match the low prices and variety that online stores offer persists. 

Details like this give the impression that the problem is one of governmental inadequacy, in that simply providing for a point of contact between farmers and prospective buyers will not address the multiplicity of issues that a farmer must deal with at every stage of the process

Jagdish Kumar, an arath, sits in a plastic chair in one corner of a busy shed. Many like him sit wearing an air of confidence that their job will not be lost to the internet. While most of them haven’t heard of the e-kisan policy, they do not appear to be bothered once the concept is explained, finding refuge in the security of the time-tested relationship between the borrower and lender. “If you want to cultivate land, more than clients, you need money to rent land; let’s face it, most farmers don’t have land to cultivate and need `30-40,000 to rent it,” says Kumar. The farmers don’t even know where to get the seeds from, and he ends up giving them the seeds. However, this perspective must be taken with a pinch of salt. He raises an important point, “If the state can’t help them rent the land, they can’t enter this space.”

“We are willing to lose our deposit because we realise that crops aren’t grown by men, but by mausam (weather/seasons). We are willing to take the risk because we have taken it for years. We also include the farmer in the auctioneering of his produce, he sits right next to us, and we decide a rate together,” said one of Kumar’s several partners. Details like this give the impression that the problem is one of governmental inadequacy, in that simply providing for a point of contact between farmers and prospective buyers will not address the multiplicity of issues that a farmer must deal with at every stage of the process. It must not be forgotten that the system Kumar is defending is steeped in a long tradition of exploitation. In most cases, the farmers don’t know what they have gotten into; Jagdish alluded to his accountants’ precise awareness of how much money is owed and the efficacy in retrieving it, and he was rather ambiguous on the means used to do so.  

To address the other side of this relationship, it  is built on familiarity and trust, and it does offer larger benefits to the farmer. The game as explained by many, is a game of borrowing, lending and delivering on promises. The farmer borrows money on the promise of getting back the vegetables, the middleman on the promise of selling his produce, making returns and ensuring the farmers’ well-being. In cases of crop fault, ‘arathiyas’ like Jagdish are willing to lose their investment in the farmland. The claim is the government will always be viewed with suspicion and distrust, and even in the garb of technological improvement, it will not be able to help the farmer out. Everyone in the market is expecting a bleak agricultural season this time because of irregular rains and associated issues. The cauliflower season has come two months in advance and the carrot harvest, according to farmers and traders, is negligible because the heat in the ground has been extremely high: “Gajar ka halwa ban gaya hai zameen mein,” said Sonu, another arathiya.

In these cases, it is the intimate relationship between the lender and the farmer that saves the latter from destitution. “Till the time the State is not willing to help the farmer get or rent the land, we are indispensable.”

In these cases, it is the intimate relationship between the lender and the farmer that saves the latter from destitution. “Till the time the State is not willing to help the farmer get or rent the land, we are indispensable

Even the growth of home delivery services such as Big Basket and Ask Me Bazaar don’t seem to pose a challenge to the middlemen. They say that these companies end up buying from other middlemen. The only model they respect is that of Safal, the fruits and vegetable subsidiary of Mother Dairy. This public sector undertaking, instead of getting the farmers to come to them, goes to them and buys a share of their crop.

While it seems the middleman is here to stay and there is no visible challenge to his power, status and the level of control he exerts over the agriculture process, the fact is disruption can take place at any point. The government and private entrepreneurs are hell-bent on removing the middleman all together, and freeing the farmer from the multiple tiers of exchange. However, in the current scenario, the existence of both parties is so intimately interlinked that it seems almost impossible that one can co-exist without the other.

The failure of crops, destitution and the patterns of borrowing and lending create an underbelly of labour, in an almost feudal structure. The main target of these middlemen is the out-of-work ‘floating farmer’ – the landless wage labourer who tills their land. There are some policies of the government that could provide relief to farmers, but only be those who own land. One such scheme is the insurance scheme in the event of the failure of crops. It is alleged that most farmers don’t even know that they’re insured, and this makes matters more complicated. 
In the foreseeable future, markets that follow similar patterns like the Azadpur Mandi will not get disrupted because of the layers of interdependence that exist within the complex and entrenched structure.

Azadpur Mandi is one of the largest agricultural produce markets in Asia, where the state wants to do away with the middleman and make the farmers and the end users meet directly. Can they disrupt this system? 
Abeer Kapoor and Dhruba Basu Delhi 

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This story is from print issue of HardNews