An RBI research paper suggests increasing private mandis to improve the income of farmers and transparency in marketing Tomato, Onion, and Potato (TOP) vegetables. The study found that farmers receive only 33-37% of consumer spending for these vegetables. It also recommends leveraging e-national agricultural markets (e-NAM) and introducing futures trading in onions to reduce market inefficiencies.
A Reserve Bank of India (RBI) research paper has proposed reforms in agricultural marketing to improve the earnings of farmers, particularly by increasing the number of private mandis. The paper, which examined inflation in Tomato, Onion, and Potato (TOP) prices, highlighted that onion farmers receive only 36% of the consumer’s spending, tomato farmers 33%, and potato farmers 37%.
“As vegetables are perishable commodities, private mandis may be increased to improve transparency in marketing of TOP vegetables,” the paper recommended, suggesting that competition from private mandis could also enhance the infrastructure of local agricultural produce market committees (APMCs).
The research pointed out a “significant negative relationship” between the monthly availability/availability to usage ratio and consumer price inflation of these three vegetables. Other factors like input costs, rainfall, and wages were also considered in the analysis. The findings stressed that recent pressures on headline inflation were mainly driven by food inflation, with the volatile prices of TOP vegetables being the most challenging.
The paper, authored by researchers from the Department of Economic Research (DEPR) alongside external experts, also suggested that leveraging the e-national agricultural markets (e-NAM) could help reduce inefficiencies. This could boost the prices farmers receive while lowering the prices paid by consumers. It further advocated for promoting more farmer produce organizations (FPOs) in the TOP vegetable sector and recommended introducing futures trading for onions, especially the winter crop, to aid in price discovery and risk management.
Additionally, the study made recommendations for improving the storage, processing, and productivity of TOP vegetables. A related study on pulses inflation noted that around 75% of consumer spending on gram (chana) returns to farmers, 70% for moong, and 65% for tur. The RBI clarified that the views expressed in these papers are solely those of the authors and do not reflect the views of their respective institutions.
You must be logged in to post a comment.
Stay ahead in the dynamic world of trade and commerce with India Business & Trade's weekly newsletter.