Food Provides Hope, Alas, Not For Food Producers

The maximum retail price (MRP) should be controlled in a manner that the agribusiness industry as well as the retail is forced to share at least 40 per cent of the end consumer price with the primary growers. Adequate provisions in law must be made to ensure no supermarket sells a product lying on its shelf unless farmers get 40 per cent of the retail price. It cannot be left to the whims of the market forces. If the base price for raw commodity goes higher, so will be the output price after processing. That is why it is so important to realise the need for making Minimum Support Price (MSP) a legally binding commitment

Whenever a video clip of a distressed farmer throwing his produce in the crop fields goes viral, and it happens quite frequently, a chorus erupts on social media blaming farmers for not making any value addition.

Often I read that the only way for farmers to enhance their income is by value addition. In fact, it is often said that the future belongs to farmers who can process, package and sell value-added products. The solution to the vexed crisis on the farm is seen through the value-addition route. The farmer must make an effort to move up the value chain and emerge as an entrepreneur. Therein is the expressway for economic diversification at the grassroots level.

In such a scenario where everyone is quick to pass the buck to farmers, blaming him for the price crash, I found it very surprising to see a recent Linkedin post on who gets the benefit from value-addition. When farmers add value to his produce aimed at increasing the economic value of primary produce it isn’t the farmer who actually ends up making a profit from value addition in agriculture. In an accompanying illustration, where a farmers is shown with his produce, followed by a depiction of the agribusiness industry, the pathway to economic empowerment of resource-poor farmers or forest dwellers, the answer provided is crystal clear: ‘No money coming back to farmers’.

As an agriculture expert and consultant, Mukti Sadhan, adds: “Despite all the talk around value addition, the money rarely flows back to the farmer. This must change.”

I completely agree. Value-addition in agriculture, despite the hype, hasn’t benefitted the farmers, at least not yet. If it was so, there is no reason why farmers in rich developed countries continue to face severe distress often leading to a high rate of farmers suicides. Even in the United States, where hardly 1.5 per cent of the population now remains involved with farming, the rate of bankruptcy on the farm, which had touched a high of $425 billion in 2020-21, is inching up again after declining for some years. And I also see no reason why protesting European farmers, with farmers in 24 countries protesting on massive scale demanding among other things, a guaranteed price for their crop produce.

In the US, the rate of suicides in the rural areas is 3.9 times the national average. In India, reports say since 1995, close to 4 lakh farmers have taken their own lives.

It is alright to say that food provides hope, but as I have often said the food producers do not see any hope. Over the decades, whether we like it or not farming has been kept deliberately impoverished. Even in the rich countries, if the suicide rate is so high, it is quite obvious that all permutation combinations to help improve farmers income have failed. Not many will like to acknowledge but even value-addition as the common prescription, has failed to transform the face of agriculture. It obviously means that besides farmers, everyone else up the value chain, makes profits at the cost of farmers.

In an article I wrote for a European publication, entitled: “No sustainable world without a living income for farmers” (Fair Food, Sept 22, 2021) I had talked of some of the popular examples in value-addition and how the farmer was left behind. This includes adding value to cocoa beans and also to coffee beans. I remember, a few years back, when invited to address the coffee growers at Bangalore, I explained how adding value to coffee didn’t leave much in the hands of farmers. The emergence of brands like Starbucks, Barista and Coffee Café Day that have sprung up almost everywhere but the benefit of value-addition bypassed the small growers. Coffee beans conversion into coffee, globally valued at $2 billion, should have elevated the economic status of farmers. But in reality, it didn’t happen.

The next time you visit a coffee kiosk and shell out Rs 300 for a cup of coffee, be sure what the farmer gets out of it just Re 1. If this is the benefit that value-addition has provided to coffee growers, it is high time we make efforts to see how does at least 40 per cent of the end consumer price is passed on to farmers. This price assurance cannot be ensured by market forces. It has to be ensured by state intervention. Similarly, for chocolate, which incidentally is a $200 billion industry. If the chocolate industry had given farmers their due share, there is no reason why bulk of the farmers income should have been less than the cost of a chocolate bar that consumers buy on an average. To make it possible, the effort must be on how to ensure at least 40 per cent of the benefit arising from vale-addition from cocoa beans goes to the producer.

My argument is that the maximum retail price (MRP) should be controlled in a manner that the agribusiness industry as well as the retail is forced to share at least 40 per cent of the end consumer price with the primary growers. Adequate provisions in law must be made to ensure no supermarket sells a product lying on its shelf unless farmers get 40 per cent of the retail price. It cannot be left to the whims of the market forces.

In reality, value addition of the primary produce will rarely benefit the producer unless of course there is a rethinking in ensuring a higher base price to growers. If the price of raw material stays put, I don’t think it will ever be possible to make farming a viable enterprise. If the base price for raw commodity goes higher, so will be the output price after processing. That is why it is so important to realise the need for making Minimum Support Price (MSP) a legally binding commitment. Farmer call a legal MSP has to be re-considered keeping economic viability of farms in focus.

(The author is a noted food policy analyst and an expert on issues related to the agriculture sector. He writes on food, agriculture and hunger)