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Farmers’ share in consumer prices has seen an increase for some perishables such as onions, potatoes and green chillies since 2018. This might reflect a rise in farm-level storage structures and market level cold storage capacity and transport facilities, especially for onions and potatoes, according to the RBI’s latest bulletin.
The Department of Economic and Policy Research of RBI carried out a survey during December 2022-February 2023 to assess the agricultural market supply chain dynamics and identify factors influencing mark-ups in select production and consumption centres across the country. The survey was carried out in some 85 mandis across 16 States for 15 kharif crops. The previous survey was carried out in 2018.
Farmers’ average share
The latest survey revealed that average share of farmers in the output value varies between 33 per cent and 70 per cent across 13 crops. During the survey period, tomato prices were low. Therefore, the drop in the farmers’ share in the case of tomatoes can be partly attributed to the supply glut, it said.
In the case of rice, the farmers’ share in consumer prices has reduced marginally from 49 per cent to 45 per cent during 2022-23, while for the oilseeds it fell to 50 per cent.
The survey revealed that traders and retailers mark-ups in the latest round of survey have remained stable for non-perishables, while some fruits and vegetables have seen an increase when compared to 2018.
While the retailers mark-ups are generally higher than that of traders, empirical analysis suggests that improvement in the agriculture market density at district level, which captures spatial competition and stepping up of infrastructure potentially reduce the traders’ mark-ups and improve efficiency of the agriculture sector supply chain, it said.
About 59 per cent of the farmers were aware about the prevailing market price before selling their produce, while the rest 49 per cent were not aware. Among those who were aware of prevailing market prices, the source of price information was predominantly other farmers and traders in contact, while only a few depended on mobile apps, SMS services, websites and the media for price info.
Cash is king
The survey revealed that cash continued to be dominant mode of payment for transactions at mandis among over 86 per cent of the farmers, traders and retailers. The use of electronic payments was found to be highest among the traders and retailers. Compared to the previous survey in 2018, the use of electronic payments has registered over a three-fold increase in the case of traders and over a five fold increase among retailers.
Only a tenth of the traders and about 13 per cent of the retailers were aware of the latest export restrictions. The quality assessment facility at the mandis was reported to be the most important policy benefiting traders, followed by procurement at MSP and e-NAM. Majority of the traders felt that free international trade, commodity futures trade and easing stock limits would improve agricultural marketing.
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