Increasing storage infra can help farmers get a larger share of the consumer price of onions and potatoes.

Since 2018, farmers’ share of consumer prices has increased for some perishable items such as onions, potatoes and green chilies. This may be due to the increase in capacity and transportation options of farm-level storage structures and market-level cold storage facilities, especially for onions and potatoes, according to the latest RBI release. RBI’s Economic and Policy Research Department conducted a study from December 2022 to February 2023 to assess supply chain dynamics in agricultural markets and identify factors affecting margins in selected production and consumption centers across the country. The study was conducted in about 85 mandis across 16 states in 15 kharif crops. The previous survey was conducted in 2018.

Average share of farmers

According to the last survey, the average share of farmers in the value of production varies from 33 to 70 percent of 13 crops. Tomato prices were low during the observed period. Thus, the reason for the decline in the share of farmers’ tomatoes may be partly due to oversupply, 

In the case of rice, the share of agricultural producers in consumer prices decreased slightly from 49 percent to 45 percent in 2022-2023, while in the case of oilseeds it decreased to 50 percent. The survey found that traders’ and retailers’ margins remained stable to negligible in the latest survey round, while some fruit and vegetables increased compared to 2018. Although retailer’s margins tend to be higher than those of merchants, empirical analysis shows that increasing the density of agricultural markets at the regional level, which includes regional competition and infrastructure improvements, can potentially reduce traders’ margins and improve efficiency. in the agricultural supply chain. About 59 percent of the farmers knew about the prevailing market price before selling their produce, the remaining 49 percent did not know. Among those who were aware of prevailing market prices, the source of price information was mainly other contacted farmers and traders, only a few relied on prices from mobile phone applications, SMS services, websites and mass media.

Cash is King

The survey revealed that more than 86 percent of farmers, merchants and traders still had cash as the dominant mode of payment for mandi transactions. Electronic payment was mainly used by merchants and traders. Compared to the previous survey conducted in 2018, the use of electronic payment has more than tripled among merchants and more than fivefold among merchants. Only one tenth of traders and approximately 13 percent of traders were aware of the latest export restrictions. Mandis quality assessment facility was announced as the most important policy to benefit traders, followed by MSP and e-NAM procurement. Most traders felt that free international trade, commodity futures trading and relaxation of stock limits would improve agricultural marketing..

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