Can India’s Ailing Agricultural Procurement Discover a New Mannequin?

All discussions of procurement inevitably result in a comparability between the mannequin adopted by the milk process co-operative societies, the Amul Mannequin, and the procurement of cereals and pulses by agriculture advertising societies. Why is it that Amul scores exceptionally nicely in each stakeholder belief in addition to public confidence, whereas procurement undertaken by FCI and NAFED is usually mired in controversy?

Having labored because the CEO of a multi-district milk producers co-operative society in addition to the managing director of an apex agriculture advertising co-operative NAFED, I want to share with the readers how the 2 techniques differ. However extra importantly, what will be carried out to make procurement of cereals and pulses as clear because the milk procurement operations?

Allow us to first have a look at the similarities earlier than we focus on the variations. The commonality between milk producers and farmers who develop cereals and pulses is that each are marginal and small producers. Only a few of them have bodily property or manufacturing surpluses. Neither has the infrastructure to market their produce independently and on to the market. The volumes they produce additionally make it troublesome for them so as to add worth on the farm gate. Each want the intervention of their co-operative or a state company to get a good and remunerative worth. In actual fact, on the face of it, a milk producers co-operative has a larger problem, because the product is extraordinarily perishable, whereas each cereals and grains have an extended shelf life.


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Maybe, it’s this facet of perishability that makes the milk producers extra disciplined, for except they pour the milk on the procurement heart inside the designated time, they are going to actually miss the milk van. Nevertheless, greater than that, it’s the sturdy system set in place by Verghese Kurien, referred to as the “Father of the White Revolution” in India, that ensures full transparency and absolute ease of doing enterprise, First, the member can pour any amount, from lower than a liter to multiples thereof. After it’s measured, it’s checked for high quality, and though right this moment the content material in fats and solids is measured by a machine, from the earliest instances, a lactometer and a centrifuge machine have been put in in each main procurement heart to file the standard. The worth per liter of milk was contingent on the standard of milk, and there was a constructive incentive for higher high quality. 

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Cereals and pulses: a distinct story

Nevertheless, relating to procurement of cereals and pulses, the complexity takes on a brand new dimension. The primary difficulty is that of the sheer quantity on account of the seasonality of the manufacturing cycle. The second is the absence of grading /sorting machines at a lot of the procurement facilities. Due to this fact, the choice regarding whether or not the produce adheres to FAQ (honest common high quality) norms relies on what the procurement officer on the spot decides.  There’s the everlasting threat  of a real (human) mistake. However there may be equally a threat of  establishing perverse incentives and inspiring collusion, for if the produce is under FAQ, then the inventory worth shall be considerably diminished, and if non-FAQ inventory is procured, it should obtain the Minimal Help Worth (MSP) for which it’s in any other case ineligible.

No surprise then, that whereas, over time, the enterprise of Amul and milk producers’ societies has been rising, turning into ever extra salient, the procurement operations of FCI and Nafed proceed to be  mired in controversy. Considerably,milk assortment is undertaken each single day, one year a 12 months, whereas the procurement operations for cereals and pulses happen annually and in an episodic style. Furthermore, not like Amul, which has devoted its time, power, and area experience to make sure each ahead and backward linkages, the identical can’t be stated for Nafed and the state advertising companies. One other vital issue is liquidity. 


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Though milk is actually a liquid product, the sector just isn’t beset with liquidity points. The producers obtain their cost on a day by day or weekly foundation. Alternatively, FCI and Nafed usually face a money crunch as they’re depending on a funds line, and even financial institution ensures have a sure restrict. As such, though the cost techniques have develop into fairly streamlined due to IT interventions, the fundamental downside of a scarcity of sources to make sure well timed funds stays, and this impacts the belief the system grants to the farmer. This may occasionally clarify why the stranglehold of the middleman (arthiya) over the procurement of cereals and pulses continues to stay as robust as ever.

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There’s another lesson to be realized from finding out the workings of a milk producers society. This pertains to the well-established system of strengthening the fairness base of the co-operative society, in any respect ranges. Thus, if the milk producer is receiving forty rupees per liter of milk because the procurement worth from the district milk union, it could retain a small quantity ― say 25 to 50 paise per liter of milk ― to be allotted to the fairness of the society. Over weeks and months, this quantity totals up to a couple thousand rupees, if not a lakh or extra, thereby enabling the first society to construct its fundamental infrastructure: a state-of-the-art workplace, a bike for the veterinary subject assistant, or a fridge for storing vaccines and medicines. Likewise, the district milk union additionally retains a small quantity for its fairness fund, thereby making the co-operative impartial of presidency; each by way of funds and its inner operations.

Daring to think about the longer term and making it occur

Is there a approach out? Actually. It’s excessive time the newly created ministry of co-operation led by Amit Shah brings out a compendium of finest practices in cooperation that may be replicated in sectors apart from milk and utilized in states past Gujarat and Maharashtra, the place the co-operative motion is kind of salient and robust. As a result of solely when the procurement of a whole vary of commodities ― from oranges in Tamenglong (Manipur) and apples in Uttarkashi to uncooked honey within the Sundarbans ― is placed on an excellent and clear keel will the agricultural economic system obtain the mandatory impetus. Profitable co-operative professionals in addition to elected officers could also be appointed as professors of follow within the regional and district stage cooperative coaching establishments and farmers ought to be inspired to undertake research visits throughout the nation.

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The attain of the co-operative sector is intensive, however many have develop into mere companies implementing authorities applications. We will solely hope that an publicity to a few of the profitable societies will show inspirational, in addition to significant.  Secondly, the Agri Infra fund introduced by the prime minister, in addition to the Rural Infrastructure Growth Fund (RIDF) of Nationwide Financial institution for Agriculture and Rural Growth (NABARD) have to be used to arrange a community of grading and sorting machines in all of the procurement facilities in order that the farmers can get their produce sorted and graded in opposition to the parameters on which procurement shall be made. It’s true that the preliminary prices at Rs twenty odd lakh rupees per machine could also be on the upper facet, however it should have a number of constructive fallouts, crucial being the ushering in of transparency and honest play in these operations.

On the finish of the day, we’d like interventions, each by way of processes in addition to applied sciences, to assist the first producers in sectors apart from milk reap comparable advantages and set in movement a virtuous cycle of financial transformation within the hinterland.
[The Print first published a version of this article.]

The views expressed on this article are the creator’s personal and don’t essentially mirror Honest Observer’s editorial coverage.