Farmers buy their inputs retail and sell their produce wholesale. The retail buying of inputs is inclusive of freight and raises their cost of production. The bulk selling of their produce, minus the cost of transport and often on forced conditions, reduces their margins.
Ideally, the IT revolution should have changed this situation: by now, farmers should have been able to buy in bulk and sell directly to smaller groups of consumers. But to make that happen, provincial governments should have taken the lead and federal authorities should have facilitated them. That is nowhere in sight. Farmers continue to suffer.
Support prices are fixed for major crops to ensure fair returns to growers. But those support prices are never adhered to. Farmers have to grease the palms of corrupt officials to get sale proceeds calculated at support prices that effectively reduces their returns.
More often than not industries refuse to buy wheat and sugar cane at officially fixed minimum prices. Growers have to sell their produce at so-called market prices while governments watch their helplessness in criminal silence. When it comes to perishable agricultural produce like fruits and vegetables, the situation gets worse the produce is in abundance. Farmers have to sell them at throwaway prices.
Block-chain technology should be used to record and update the status of crops. In China, the idea took off in late 2017 and has been in use since
Sometimes, a few dejected farmers choose to burn their produce rather than sell them for nothing. What can be done to ensure fair returns to our six million farmers in a manner that does not result in abrupt or excessive price hikes for the consumer or industrial buyers?
Block-chain technology might offer a solution. How about developing a block-chain ledger to record and update the status of crops from planting to harvest, storage and delivery? Block-chain-powered agricultural trade holds promise for millions of farmers who can find niche markets for their produce. In China, it took off in late 2017 and has since been growing gradually.
Technology-driven premium produce marketing is another area where opportunities await innovative farmers. Sugar cane with higher sucrose content is sold at higher rates. Premium quality basmati rice also sells at better prices. Cotton of better staple length also fetches higher rates. And the same is the case with other crops. Online marketing platforms offering better quality crops can help growers earn more and ensure timely and hassle-free delivery to the buyers. After the launch of the 5G mobile internet facility, such online marketing will become a lot easier. Zong has already conducted 5G tests and once the 5G internet service is available to all mobile phone users (161m as of June), farmers will have no problem in finding niche markets and targeted consumers for their premium agricultural produce.
Even ordinary food grains’ marketing from farm to industries and trade centres can be planned and executed with the cooperation of provincial governments. Why is it that delays in the official procurement of wheat from farms damages large quantities in traditional storage points whereas flour mills suffer shortages in supplies? Just a legal nod from provincial authorities can allow wheat farmers to dispose of a certain percentage of freshly harvested wheat to flour mills of their choice using online trading platforms. That will save them the hassles of transporting wheat to faraway city centres and flour mills can make trading agreements with wheat growers of their choice.
The Agriculture Marketing Information Service, an online service of the Punjab government, keeps farmers posted about price trends in food commodity markets. Other provinces can follow suit as price discovery is the first step towards revolutionising farmer-friendly online marketing of crops and other agricultural produce.
Futures trading of wheat, sugar cane and Irri-6 rice at the Pakistan Mercantile Exchange also provides farmers with a window to keep track of price trends. But for the online trading of food crops using a complete supply chain — right from harvesting to delivery — they need to partner with solution providers at each stage. And finally, they will have to join hands with payment-solution providers like phone companies.
Many of our farmers need to be educated before they can enter online business on a sustainable basis. That is also an area where provincial governments and experts of marketing and payment solutions should help them. Farmers’ education and awareness programmes by Engro and Karandaaz are impressive. They should think about extending the scope of these programmes. In addition to helping farmers do better at farms, they should also educate them on how to capture specialised segments within commodity markets.
The federal government’s agricultural revolution package is wanting on many counts. Officials of Sindh and Balochistan governments complain they don’t know exact details of this programme. The revamping of commodity marketing and supply chain is part of the programme. One hopes it will start sooner than later. But on the ground, nothing has happened so far.— MA
Published in Dawn, The Business and Finance Weekly, September 16th, 2019