Tuesday, February 12, 2008

What farmers want

What would I want the most if I were a small farmer with 6-7 acres of land?
My main problem is that what I produce needs to be sold in a market which is some distance away. Having carried the produce, I am in no position to take it back (the costs) and therefore I am forced to sell at whatever price the trading cartel is giving me at that point in time.
What I would like is that I have a warehouse within 10-15 kms of my farm. I go there, get the produce graded and certified and it is then stored. I in turn get a warehouse receipt, which clearly specifies what I delivered. This WR is then tranferable, tradable and a fully negotiable instrument. This implies that I can hold the WR, sell it to someone or pledge it for loan to a bank.
This increases my stock holding capacity. No longer am I at the mercy of a local cartel. I can wait for the prices or cash out.
To enable a farmer to reach the stage described above, the government needs to either build (or incentivize others to build) these warehouses (maybe 25-30,000 across the country), create a system of accredition of produce (grading and storing), make WR negotiable and tranferable.
Apart from targeted investments, this means that companies interested in this sort of a supply chain ought to be encouraged (cash and carry wholesalers and large scale retailers). Markets for trading WR (physically or in demat forms) need to be created and these markets should replace the current practice of markets where the producer has to carry goods.
Can the budget itself do much towards achieving this? It can in terms of allocations for such programs and tax incentives encouraging investments in these areas. However, the budget alone is not enough. A clear policy and implementation over 3-5 years will be required. Do those in power have the will to carry this through?