A PILOT project designed to eliminate middlemen and establish direct online links between farmers and buyers of red chilli has started functioning.

Despite some teething problems, the stakeholders believe that they will eventually end up reaping the project’s full benefits.

Registered customers dealing in spices — around 10 in number — finalised deals through an online trading system established this year at a collection centre for the crop in Kunri. Red chilli growers have also started improving their farming practices (by reducing contaminants in their crop) to get a better price for their produce.

Companies that are dealing with growers directly include some known spice producers of the country. One such company has so far procured around 200,00kg of the crop.

“Previously, we didn’t think of getting even 1kg of the crop according to our specifications, but now we have started getting better produce. We have ourselves set up a mobile laboratory and an office to guide and educate the chilli growers so that they learn how to deal with the harvested crop,” says a company’s procurement officer.

‘We realise that it is really difficult for growers to handle the small unsold stock once a certain tonne of the crop has been sold. We are addressing this issue and other matters that are coming to the fore’

He stresses the need for standardised value-addition to increase exports and observes that dundi cut red chilli is known globally.

The growers also look satisfied with the mode of payment, as the money is transferred into their accounts on time. They are, however, worried about the minimum transaction volume that is set in tonnes, as small farmers cannot become a part of this online trading despite having the required variety and standard of the crop.

A representative of the Red Chilli Growers Association, Mian Saleem, points out that growers have started understanding the difference between old and current farming practices.

“I have provided 18 tonnes of the crop to a spice-producing company so far.”

He adds that the growers will be happy if this project covers international buyers as well. The trading is currently limited to domestic buyers.

The crop’s specifications are assessed through samples that are analysed in a laboratory set up by

one of the project’s partners. The defined quality-wise grading of these samples is posted on the website of the Pakistan Mercantile Exchange for registered buyers to place their purchase orders.

Once a buyer finalises his deal, his payment is transferred to the grower’s account within two working days. Unlike conventional marketing practice, the sellers don’t have to wait for payment or unnecessary deductions.

The crop is dispatched along with one sealed laboratory-tested sample of the commodity to the collection centre, and the buyer can compare it with the result posted on the exchange’s website. Any issue related to the quality of the crop is referred to an arbitration committee.

“We realise that it is really difficult for growers to handle the small unsold stock once a certain tonne of the crop has been sold. We are addressing this issue and other matters that are coming to the fore,” says Shahjehan of the Pakistan Agriculture Coalition, which is one of the project’s partners.

He says the tonnage condition can be replaced with weight in kilogrammes so that the growers can prepare their bags accordingly. The project’s business-related matters are approved by the Security Exchange Commission of Pakistan, he adds.

Around 85pc of the country’s red chilli comes from Kunri, yet half of it is wasted due to contamination and afflatoxin. The growers are now learning about better agricultural practices under a World Bank-funded Sindh agriculture growth programme.

An officer of a warehouse provider in Kunri says 200-300 tonnes of the crop have been sold so far and the farmers have received their payments. Otherwise, such payments are delayed or reduced for one or the other reason in traditional marketing.

“We have to encourage even small growers to get involved in it and derive maximum benefits.” He adds that if small farmers are not able to meet the required tonnage of the crop, they can join hands with neighbouring landowners to meet the minimum weight requirement and sell their produce.

Published in Dawn, Business & Finance weekly, November 9th, 2015

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