Thursday, December 31, 2009

Food for thought

Did you realise that the price of tomatoes is up nearly 500 % (at least in some cities in India)?

Also, did you know that India's daily turnover in vegetables and fruits is USD 59 million, which is three times that of a large firm like TCS. AND, did you know that the average wastage is USD 27 million?

Just visualise it. Rs 130 crores lying about in gutters and on the fringes of farmers markets, rotting. Every day.

And do you know that if the price of tomatoes rises by just 10 % - that is to say that, if you were paying Rs 10 for one kilo, you would now be paying Rs 11 per kilo - the increase would amount to ten times the turnover of all Reliance Fresh stores put together. Or that, Reliance Fresh makes no profit at all from its sales of fresh vegetables?

This info comes from a very interesting two-part article in a new magazine called Beyond Profit. Do check out the piece by Venkat Subramanium.

He also says that it is no point blaming the local subzi-wala for rising prices. It is really the agents and middlemen at work.

According to the article: "Each agent is networked with a few buyers in nearby areas, who are his key primary buyers. Nowadays, with the spread of mobile phones, SMS (text) messages flash back and forth in frenzy before any auction and most prices are predetermined." (emphasis mine).

Predetermined. Which means that there is a whole chain of agents who "keep close tabs on how many truckloads have been loaded up from villages and are on the way to a particular market. On a given day, if there are 20 trucks of tomatoes coming IN to the auction market, they may set price at INR10 (US$ 0.20). If they realize that only 10 truckloads are coming, then they increase it to INR20 (US$ 0.40). Often the farmers are unaware of this silent collusion between the transporters, loaders, and even local dabbha/mote wallahs and how information flows back and forth along the chain. Hence once price is set, it is unviable for farmers to even look for any other market as distances are too far and expensive. As a result, the farmer is forced to accept or dump the product in frustration."

And oh, all that bigmouthing about 'direct procurement from the farmer' and eliminating the middlemen? Turns out that all big brands that sell veggies in supermarket chains also shop at the nearest mandi. By which time, the farmer is no longer in any position to bargain.


You can read more here. The magazine also has a new piece on clean drinking water technologies that are now available at very reasonable prices. Do read.

Here's hoping the year ahead is happy, and easier on the heart, soul, wallet, etc.


Gauri Sharma said...

farmer ! farmer !! our poor, old farmer !
burried under the heap of tomatoes,
somewhere you lie, and you scream..
or at least you try.

I don't see you, they don't hear you
too busy, too busy...
how do we make money
as opportunity is ripe.

but you lie burried under the heap of tomatoes
sometimes potatoes, don't forget onions
you vanish...just like yeaterday
just like every other day !

Unknown said...

This is interesting. I've been trying to get to a piece on inflation for a month, but Bhopal and Copenhagen were too much as it was. But I'm working on one now, and I think it's more complex than just the middle men. They are and have always been a part of the problem. But there's more going on than that, and the more I read about it, the more I worry.

Mumbai Paused said...

I was travelling from Bangalore to Mumbai just before Dassara/Dushera and all long the NH4 from Kolhapur to Mumbai, I saw several farmers enterprising farmers hiring their own transport to get the flowers to the nearest towns and cities.

The smarter ones among them came all the way to Mumbai, accompanied by a son or a daughter and set up makeshift stalls on footpaths to sell flowers directly to people.

Here's a photograph of one such flower seller:

Sameer Khandelwal said...

If we are reeling under the price rise in essential commodities, what happens to those segments who earn less than Rs. 5,000 a month?

Along with vegetables, pulses, fruits, the price of milk has gone up by Re. 1 to Rs. 23 per liter. How in the world is an average householder with 2 kids, a wife and possibly live-in parents supposed to provide the recommended 2,400 calories per day?

To add insult to injury, the price of electricity has also increased for residential users.

India is truly shining! Equitable, inclusive growth for all!

Gauri Sharma said...

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