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India: Why some farmers are relieved to be dealing with Wal-Mart

Every day around 8 pm, a text message arrives in Lalpur village in Hapur, a district in western Uttar Pradesh, around 60-odd km from Delhi. And it goes something like this: “30 November order – Cabbage 450 kg, Beet 50 kg, Raddish 300 kg, Tomato 1000 kg, Cauliflower 1000 kg, Thanks (Walmart).” Villages such as Lalpur have a population ranging between 1500-2000. Early next morning, carts laden with vegetables fresh from the field arrive at the collection centre – where a quick quality check of the vegetables is done to separate out those that don’t fulfill Walmart’s criteria, and then weighed, loaded on to a truck, and dispatched to Delhi – all before 1 pm. From the two collection centres – there is another at Shyampur village – farmers sell vegetables worth Rs 30,000 (3 tonnes). A demand that is set to raise to 10 tonne by the end of the week. It is quite a dramatic rise in demand, given that the first truck that left Hapur on November 5, carried only 800 kg of vegetables.

Says Beena, a farmer from Lalpur village who grows cabbage on her one acre of land, “If the demand here picks up even more, we won’t have to go out of the village or to the local mandi to sell our vegetables. At the mandi a sack (60-70kgs) fetches Rs 150. (That is about Rs 3 per kg). Then I have to give two percent commission to the arthi (middlemen who facilitates the sale between the farmer and the buyer).  But at the collection centre, I get Rs 3.50 per kg in hand.” Beena is able to sell 300 kg of cabbage at the collection centre. But the volumes of farm produce are such that as much 1 tonne of her produce she sells at the mandi. “When there is no demand in the mandi, we have to go as far as Delhi and Agra to sell our vegetables.”

The women farmers spoke of instances when they were forced to simply abandon their produce in the cities for lack of buyers. Said Beena, “We have simply dumped our vegetables for cows to feed on because to bring them back means more loss for us. Unlike foodgrains, vegetables can’t be stored in homes. They rot within days. It is heartbreaking for a farmer who after working so hard in the field is not able to sell the vegetables or has to sell them at a loss.” Beena says, selling directly saves her time, transportation and labour costs.

Funded by Walmart Foundation, ‘Sunhara Walmart’ has set up Self Help Groups (SHGs) of women farmers from eight villages in Hapur who have since last month begun supplying vegetables to retail stores. The project is in collaboration with Agribusiness Systems International (ASI), a Washington-based consulting organization that runs ‘Sunhara India’ projects. Sunhara Walmart is a two-year $350,000 initiative. According to ASI, Hapur was chosen because a survey conducted by them showed that farmers there suffered most from poor rates for their produce.

Speaking to Firstpost a company official from Walmart said, “After farmers were trained in crop management and post-harvest techniques to minimize crop losses, our buyers got in touch with them. We did the quality checks and guided them on the specifications and we started procuring from them. The payment is made directly to the women’s federation account. “We have another programme running here called the Direct Farm programme, which is a completely business-driven, unlike this, which is a social initiative. At the co-op centre, we collect the farm produce. Right now, I cannot comment on where the vegetables (from Hapur) are supplied to from the co-op centre. I need to check if they go to the wholesale stores or not.” (Walmart in a joint venture partnership with Bharti Enterprise operates Bharti Walmart ‘Best Price Modern Wholesale’ stores in India. There are 14 such stores, two of which operate in Uttar Pradesh – in Meerut and Agra.)

In a matter of six months, the project has set up 60 SHGs comprising 800-odd women farmers from eight villages. About 100 of these women farmers have been identified to supply to its two collections centres. Women farmers have also registered a federation called the Mahila Kisan Vikas Sanstha. “The federation has applied to the Agricultural Produce Market Committee (APMC) for a trading licence,” said Neelima Tyagi, secretary of the local NGO partner to the project. Having an APMC license will allow the federation to directly deal with prospective buyers. Said the Walmart company official, “After NGO support is withdrawn from the project, the federation will continue to function. And if they get good prices from other buyers they will be free to sell it to them. We have only helped them build the marketing linkages.”

“The rate that Bharti tells us, we minus the transportation cost (Rs 1.50 per kg) and the collection agent’s commission (10 paisa per kg). The rate for tomato at the Mandi is Rs 3 per kg. Here we give the farmers Rs 5.50-6, almost double the mandi rate. The collection agent is employed by the federation,” said Himanshu from ASI who coordinates the Sunhara Walmart project in Hapur. Already, voices are being raised at the Hapur mandi by traders at farmers having found an alternate source to supply to. Raju is a commission agent or a middleman who operates at the Hapur Mandi. (A commission agent facilitates the transaction between farmer and buyers such as vegetable vendors, hotels, hostels, kirana stores.  He charges farmers a commission for his service.)

“I am forced to charge 5.5 per cent commission- 3 percent is my commission and 2.5 percent tax that I have to pay to the mandi samiti. Everyone has to eat. And now there are two players instead of one in the market.” According to Raju, a crate of tomatoes 25 kg fetches the farmer Rs 11o at the Mandi. That is a little over Rs 2 per kg. No comparison to what Walmart is currently offering to farmers. The Hapur Mandi has about 30-35 commission agents, says Raju. It caters to about 15-20 villages. Should the volumes procured from the collection centres, such as one set up Sunhara Walmart and subsequently by the women’s farmers federation, grows to extents where it begins to threaten the business of the Mandi, tensions are bound to grow.

When MNC retail chains begin to directly buy from farmers, a likely scenario with Walmarts and Tescos who now only operate in the wholesale space entering the retail market – the middlemen will be eliminated. But, of course, these are initial days. Already, there are expressions of disappointment being expressed by some farmers over prices having fallen from its highs. Said Dharmendra, who owns 10 bighas (about two acres) of land in Shyampur, and whose wife is part of the SHG set up under the Sunhara Walmart Project. “When it first started, we were getting very good prices at the collection centre. But now, the prices they offer are the same as those we are getting at the mandi. But we will continue to sell to them. After all, we have now formed a federation and we have to make sure it is a success.”


Source: firstpost.com

Publication date: 12/2/2011


 


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