Rythu Bazaar, a government initiative in Andhra Pradesh, to facilitate direct marketing for farmers is going strong even after 14 years of its establishment. With all its limitations, the initiative is largely benefitting both producers and consumers.
Andhra Pradesh is the second largest producer of fruits and the fourth largest producer of vegetables in the country with a combined production of 233.84 lakh tonnes. Yet, farmers’ share in the consumers’ rupee is estimated to be just 40 paise, mostly on account of the marketing system for fruits and vegetables being in the hands of middlemen.An additional estimated loss in handling of vegetables in the traditional channel of marketing is about 30 to 35 percent. By providing farmers’ an alternative channel, some of these inefficiencies existing in the system can get addressed.
Rythu Bazaar – Genesis
It is common knowledge that inefficiencies in the wholesale markets result in a long chain of intermediaries, multiple handling, loss of quality, which increase the gap between the price at which the consumer purchases his vegetables and the price that the grower gets. Large number of small retailers, each handling small quantities, create high overheads leading to high price. The state government of Andhra Pradesh, therefore decided on working towards the creation of a market where both growers and consumers get benefitted. Thus, Rythu Bazaars were established.
The Government of Andhra Pradesh started Rythu Bazaar in 1999 with the principal objective of helping farmers bring and sell their produce without the involvement of any middleman or marketing intermediary. Both farmers and consumers get benefitted with direct marketing as it helps ensure higher remuneration for the farmers and provides fresh vegetables at cheaper rates to the consumers. The usefulness of direct marketing at Rythu Bazaars is increased by the Andhra Pradesh Agricultural Marketing Department providing facilities like weighing scales for proper weighing, transportation, stalls for the farmers operating from these market yards. These market yards operate outside the purview of the Agriculture Market Committees and are managed by Estate Officers (administrative in charge of Rythu Bazaars) under the control of Revenue Department of the Andhra Pradesh State Government.
Currently there are 102 Rythu Bazaars in the State functioning from the last 14 years. To understand the strengths and weaknesses of these Rythu bazaars, an empirical study was taken up using SWOT analysis. This article focuses on the results of this study and suggests action for improvement.
Babji, a 45 year old farmer from Naimatullaguda village of Narsapur mandal under Medak district has seen his income jump by about 35 percent since the time he started operating from these markets. Heading a family of five in which Babji and his father are involved in agriculture and only Babji himself sells the produce, increased earnings has helped this illiterate farmer to send both his children to school. There are many more like Babji who have benefitted from these markets.
Rythu Bazaars are located in government plots convenient to farmers as well as consumers. Built on a minimum one acre vacant land, the infrastructure provided by the government included sheds, arrangements for supply of drinking water, toilets with sanitation facility, parking for vehicles, arrangements for removal of garbage and cleaning of market by local body, facility for storage of unsold produce, provisions of weighing scales for all farmers, telephone, fax etc.
The state government of Andhra Pradesh meets all the capital expenditure which varies according to the land prices prevailing in an area. At present, market yards are mostly set up by the State Governments. For setting up of agricultural markets, funds are sourced from NABARD. Apart from developing the market yards, free supply of weighing machines and free transport of vegetables to the farmers’ market in selected Andhra Pradesh State Road Transport Corporation run buses is also provided to the farmers. Horticultural services and seed supply at subsidized rates also benefit the farmers. Every Rythu Bazaar has an Estate Officer, Assistant Estate Officers, supervisors, night watchman, office boys, and sweepers.
When the farmers enter into a Rythu Bazaar, the vegetables brought by them are weighed correctly and then the quantity is entered in a register which is later put up on the Rythu Bazaar website. The farmers’ therefore do not lose on account of faulty weighing practices. For the consumers also, vegetables are weighed accurately and they receive the vegetables at a price which is about 15% lower than the supermarkets.
Price of vegetables is determined by the Estate Officers in consultation with a farmers’ committee with representation from each of the mandal falling under the market. The process is transparent and the prices are usually 20 to 25 percent higher than the whole sale price and lower than the local retail market prices in the area. Sale of vegetables in Rythu Bazaars is only for cash and hence there is no problem of delayed payment or bad debts.
During the week days, the quantity of vegetables that are brought to the market is in the range of 1000 – 2500 quintals. This goes up by about 500 quintals in the weekends. The total worth of transactions that happen on an average on week days ranges between 10 – 20 lakhs which even goes upto 35 – 40 lakhs during weekends for some of the markets. In a model Rythu Bazaar like the one in Erragada in Hyderabad, it has been observed that on weekdays about 300 to 400 farmers transact while the number of customers range from 16000 to 20000. These numbers go up significantly during the weekends and holidays to 500 to 600 farmers and 25000 to 30000 customers.
Supervisors at Rythu Bazaars keep track of the quantity of produce that comes into the market yards each day. This helps them divert some of the produce to some select localities through mobile vans known as Mobile Rythu Bazaars (MRB). Rythu Bazaars also encourage bulk purchases for marriage and other functions which enables higher turnover in the market.
Challenges and limitations
Although the central idea of Rythu Bazaars was to eliminate middlemen and provide a platform for the direct interaction between farmers and consumers, yet reports suggest that there exist middlemen in all Rythu Bazaars.There is some sense of dissatisfaction among the farmers on the inability on the part of the authorities to avoid the entry of middlemen into the market yards. It is widely alleged that traders enter the farmers’ market without original identity cards. The small farmers for whom these market yards have been developed are not getting a chance to sell their vegetables.
For example, in the Mehdipatnam Rythu Bazaar, some reports suggest that out of every 4 vendors, 3 are middlemen. These middlemen also charge more than the price fixed by the price fixation committee thereby delineating a set of consumers and increasing the dissatisfaction of another set of consumers.
Lack of proper infrastructure in these markets acts as a great limitation for many farmers. For example, lack of storage facilities resulted in getting lower price during evenings compared to morning hours. In a survey conducted by the author, 84 percent of the farmer respondents were dissatisfied with the provision of storage facility. Moreover, there was no provision for cold storage facility for unsold vegetables, thus reducing their price margin.
Farmers also felt that the transport arrangements made for bringing the farmers’ produce to the Rythu Bazaars are inadequate. Also, the number of stalls is found to be inadequate and farmers often have to market through makeshift stalls. The makeshift stalls adversely impact trade during rainy season. And not all farmers are aware of the method of allocating the stalls.
The farmers’ markets face stiff competition from wholesale market. The bulk buyers prefer to buy from the wholesale market as the price fixed at Rythu Bazaars is 20 percent higher than that of the wholesale market. Also, there are 20 functional wholesale market yards in Hyderabad (7) and RR District (13) as compared to only 9 Rythu Bazaars. Wholesalers are much more affluent and can adversely influence the functioning of the Rythu Bazaars.
While Rythu bazaars are fraught with challenges, building on their strengths will help in keeping these farmers markets moving. Already there are innovative ideas which have taken shape. For example, since most of the bazaars are in prime locations in the city with no scope for future expansion, Rythu Bazaars have taken the initiative to sell vegetables at colonies in the city where Rythu bazars are not present with the help of MRBs. With the population increasing significantly, more MRBs can help create opportunities for increased earnings for the farmers.
Efforts to educate and train farmers on modern methods of farming will go a long way in increasing the area under vegetable cultivation and improving the productivity. Also training farmers in dealing with customers will help in building relationships, thereby getting patronage of an increased number of consumers.
Dean and Campus Head
Globsyn Business School, National Campus, Mouza Chandi, P.S. Bishnupur, Amtala, JL No. 101, Dt. 24 Parganas South, D.H. Road, Kolkata – 743503, West Bengal.