Maximising the dividends

Punjab, paddy, cotton and maize are the major crops of the kharif season. During 2018-19, these crops covered 31.03, 2.68 and 1.09 lakh hectares, with production of 128.22, 2.08 and 3.96 lakh tonnes, respectively. Paddy is the dominant crop among these. The market arrivals of paddy have increased from 44.32 lakh tonnes in 1980-81 to about 193.68 lakh tonnes in 2018-19. These arrivals enter the markets within a short span, thanks to total mechanisation of paddy harvesting. As improved technology is necessary for assured and maximum production, efficient marketing is the yardstick for maximising the margins in the markets. 

Harvesting of any crop at the proper stage is essential for its efficient marketing. In case the crop is harvested early or it is not allowed to reach full maturity, the quality of the grains gets affected and the produce fetches a lower price in the market, besides the prospect of yield loss. 

Sometimes, the crops are threshed over a muddy/kutcha floor, due to which the grains mix with dust and dirt. So, before taking such a produce to the market, it should be cleaned properly to avoid wastage of time while doing it in the market. The produce should be dried well before taking it to the market to ensure smooth purchase.

The produce should be properly graded or sorted before bringing it to the market in order to realise higher prices in comparison with the ungraded produce. For example, the first and last pickings of cotton are usually of low quality. Therefore, the produce from these pickings should not be mixed with the rest as high-grade cotton mixed with low-grade variety fetches relatively low price in the market. Different varieties of maize and moong have different-sized grains. The grading also helps in removing the damaged and spoiled grains due to lodging of crop or infestation of pests and diseases. The damaged produce should be sold separately. By doing so, the farmers can get remunerative returns from their produce.

Farmers should have comprehensive information about the market before taking the produce there. They should know about the quantum of produce arriving in the market, the prevailing market prices and the date of entry of procurement agencies in the market. Preferably, the produce should be taken to the market in the morning so that the farmers can return home in the evening after selling their crop.

It has been seen that the market prices fluctuate depending upon the forces of demand and supply in the post-harvest period. It is, therefore, important for the farmers to be fully aware of the prices prevailing in local as well as markets of other states. If the prices in the far-off markets are higher than those in the local market, the farmers can sell their produce there also. But before taking the produce to the far-off markets, the farmers should take into consideration the additional transportation and labour costs. The prices of important crops are broadcast daily on All India Radio, Jalandhar, in Dehati Programme. The information on prices is also available in the print media (newspapers) and on Doordarshan. Educated farmers can also keep themselves abreast of the prices in different markets of the country by using the Internet. 

Grade specifications

In order to realise a remunerative price, the produce should be taken to the market as per the fixed grade specifications by the purchasing agencies. According to these specifications, in all varieties of paddy, the moisture should not be more than 17 per cent and foreign matter should not exceed 2 per cent, whereas the maximum limit for damaged, discoloured, sprouted and weevil-infested grains is 5 per cent. Immature, shrunken and shrivelled grains should not exceed 3 per cent and admixture of lower-class seeds is acceptable up to 6 per cent. In the case of maize, the maximum limit of foreign matter, other foodgrains and damaged grains is 1, 2 and 1.5 per cent, respectively. The slightly damaged, discoloured and touched grains can be 4.5 per cent, whereas shrivelled, immature and weevil-hit grains should not exceed 3 and 1 per cent, respectively. The maximum acceptable limit of moisture content in maize is 14 per cent.  In the case of cotton, the grade specifications are fixed on the basis of staple length and micronaire value. The basic staple length varies between 24.5 and 25.5 mm with micronaire value of 4.3 to 5.1 for medium-staple cotton. The respective figures vary between 29.5 and 30.5 and 3.5 and 4.3 for long-staple cotton. The acceptable limit of moisture content in cotton is 8 per cent. In the case of cotton, maize, pulses and oilseeds, the produce is generally purchased by private traders or millers. 

Price support policy

The Union Government has been implementing the price support policy for agricultural commodities since the mid-1960s. Under this policy, on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP), the minimum support price (MSP) is announced well ahead of the sowing season so that farmers can take informed decisions on cropping. To meet the objectives of the price policy to support farmers by avoiding distress sale and to procure foodgrains for public distribution, the MSP system is backed by market intervention in the form of procurement by various agencies — Food Corporation of India (FCI), Cotton Corporation of India (CCI) and National Agricultural Cooperative Marketing Federation of India Ltd (Nafed) being the leading agencies in this regard.

While recommending the price policy, the CACP keeps in view the need to provide incentive to the producer for adopting modern technology and for developing a production pattern broadly in keeping with the national requirements along with the need to ensure rational use of the production resources. In formulating the recommendations in respect of the MSP level and non-price measures, the CACP takes into account a comprehensive view of the entire structure of the economy of a particular commodity or a group of commodities. One of the most important factors for formulating the MSP is the cost of production of the crop concerned. Other key factors that are considered include changes in input prices, input-output price parity, trends in market prices, demand and supply, inter-crop price parity, effect on industrial cost structure, effect on cost of living, effect on general price level, international price situation, parity between prices paid and prices received by the farmers and implications for subsidy. Supply-related information like area, yield and production, imports, exports and domestic availability and stocks with the government/public agencies or industry etc. are also factored in. As per the decision taken by the Union Government regarding the fixation of MSP, now the CACP gives more importance to the cost of production for recommending MSP by providing a 50 per cent margin on the paid-out costs of farmers plus the imputed cost of family labour use.

As of now, the CACP recommends the MSP of 23 commodities, which comprise seven cereals (paddy, wheat, maize, sorghum, pearl millet, barley and ragi), five pulses (gram, tur/arhar, moong, urad and lentil), seven oilseeds (groundnut, rapeseed-mustard, soyabean, sesamum, sunflower, safflower and nigerseed), and four commercial crops (copra, sugarcane, cotton and raw jute). The Centre has declared the MSP for the kharif crops of 2019-20. The government has increased the MSP of paddy by Rs 65 per quintal for common as well as for ‘A’ grade variety. The MSP of the common variety and ‘A’ grade variety of paddy has been fixed at Rs 1,815 and Rs 1835 per quintal, respectively. The MSP of cotton crop (medium staple) and cotton (long staple) has been increased by Rs 105 and Rs 100 per quintal, respectively. Further details of the MSP of cotton will be notified by the Textile Commission, Government of India, in due course. The MSP of maize and bajra has been fixed at Rs 1,760 and Rs 2,000 per quintal, respectively. To promote the cultivation and consumption of nutri cereals, the MSP of jowar has been hiked from Rs 2,430 to Rs 2,550 per quintal for the hybrid variety and from Rs 2,450 to Rs 2,570 per quintal for the Maldandi variety.  

In the case of pulses, the government has hiked the MSP of tur (arhar) dal by Rs 125 per quintal and urad dal by Rs 100 per quintal to boost domestic production and reduce the country’s dependence on imports. This may also help to meet the nutritional security and protein requirements of a large section of the population. The MSP of arhar, moong and mash (urad) is fixed at Rs 5,800, Rs 7,050 and Rs 5,700 per quintal, respectively. The MSP of groundnut, sunflower seed, soyabean and sesamum has been fixed at Rs 5,090, Rs 5,650, Rs 3,710 and Rs 6,485 per quintal, respectively. 

Role of road connectivity

Besides the advancements in farm technology, agricultural development also depends upon the improvement in market infrastructure to ensure better returns to farmers. Under the Agricultural Produce Markets Act, 1961, the market charges in Punjab have been regularised and transactions are conducted by open auction in regulated markets. Under this Act, at the market level, there is a market committee represented by farmers, traders, labourers and officials of the agriculture and cooperative departments. The Weights and Measures Act provides for standardisation of weights and measures used in the markets.

To facilitate efficient marketing of farm produce in the state, the Punjab Mandi Board, the coordinating body for market committees, plays the lead role in developing village approach roads and market yards on priority. The number of regulated markets in Punjab increased from 88 in 1970-71 to 153 in 2017-18. The number of sub-yards attached with these regulated markets rose from 154 to 282 during the same period. In this period, the average area served per regulated market in Punjab decreased from 573 to 329 sq km. The average number of villages served per regulated market in the state dropped from 139 to 81. The Mandi Board also sets up around 1,800 temporary purchase centres in the peak marketing season of wheat and paddy for the convenience of farmers as well as procurement agencies (including traders/millers). Thus, the farmers do not have to cover more than 7-8 km for the sale of wheat and paddy during the peak procurement season. After the season is over, these temporary purchase centres cease to operate and farmers can sell their produce in the principal and sub-yards. Almost cent per cent villages of Punjab are linked with metalled roads that spur marketing of farm produce in the state throughout the year. In order to encourage better prices for better quality produce, grading facilities are available for the farmers in all important markets. Besides, modern laboratories have been set up in key markets in which various quality parameters of the farm output are numerically tested. This helps to get the proper price to the producer and graded quality to the purchaser. For farmers, the grading tests are free, whereas a nominal fee is charged from traders. The services of maize dryers are available in important markets of the state. The prevailing prices of various agricultural commodities are disseminated through radio, newspapers, television, Agmarknet, display boards, etc. to benefit various stakeholders.

In the market, the farmers have to pay only two types of incidental charges —unloading charges and sorting (cleaning/dressing) charges. If they bring their produce to the market after cleaning and unloading it on his own, they need not to pay even these charges. While cleaning, maximum two sievings for manual cleaning and one for power-operated cleaning are allowed. The labour charges to be paid by the farmers for the unit size of 35 kg of paddy have been fixed at Rs 5.91, including Rs 2.12 for unloading the produce and Rs 3.79 for power-operated cleaning (per sieve).  The labour charges to be paid by the farmers for the unit size of 37.5 kg of paddy are Rs 6.35 — Rs 2.30 for unloading the produce and Rs 4.05 for power- operated cleaning. The unit size for maize, moong, urad and arhar is 50 kg, while that of jowar and sesamum is 40 kg and the labour charges payable by farmers for all these crops have been fixed at Rs 5.91 per unit, including Rs 2.12 for unloading and Rs 3.79 for power- operated cleaning. For 25-kg packaging of groundnut, the unloading, cleaning (manual) and dressing charges are Rs 1.12, Rs 1.25 and Rs 0.89 per unit, respectively.  For 40-kg unit size of the cotton crop, the total charges to be paid by the farmers are Rs 5.25 per unit — Rs 2.88 for unloading and Rs 2.37 for dressing. The farmers and buyers can cross-check these charges from the office of the market committee concerned. 

Presence matters

While marketing, the farmers should remain present in the market at the time of auction and weighment of the produce. During the auction, if the farmer is of the view that the price offered by the buyer is less, he has the right not to accept that bid. But if he himself does not remain present at the time of the auction, it may not be possible for him to reject the bid. If a farmer detects a malpractice during weighment, he can exercise his right to opt for test weighment of the produce. The test weighment up to 10 per cent of the farmers’ produce is done free of cost in the presence of the officials of the market committee concerned. In case any discrepancy in weighment is found, the producers are compensated accordingly. There is also a provision of cancellation of the licence of the weighman concerned along with the imposition of penalty. 

The farmers should obtain Form-J in which all the details — the name of the produce, name of the purchaser, weight of produce, price and total deduction of charges — are mentioned. This form is needed to avail the opportunity of getting bonus etc. as announced by the government from time to time. It can also be used as documentary proof of income, whenever required. The farmers should keep all these aspects in mind so that he can reap big dividens for their produce.

The authors are on the faculty of the Department of Economics & Sociology, Punjab Agricultural University (PAU), Ludhiana