Orange farmers caught between rock and hard place

Ratnakar Golewar, 42, a farmer from Warud in Amravati district, was quite happy with the yield in his 7-acre orange orchard this year.

“I had borrowed Rs1 lakh for overhauling the drip irrigation in the orchard, and for fertilizers and pesticides. I was hopeful of repaying the loan, especially since arrivals of the mandarin variety oranges in the international market are quite less during this period.”

But his hopes were dashed when he brought his produce to the local APMC (Agricultural Produce Market Committee) yard in Warud town last Monday. “I was shocked. Dalals (agents) offered Rs12 per kg. On top of that, they wanted to take out the smaller fruit and pay lesser,” he says. Faced with the prospect of the fruit perishing, like other orchard owners, he too, unwillingly agreed to sell. “APMCs don’t buy less than 25 tonnes. Since farmers rarely own holdings that huge, they are at the mercy of agents who operate in cahoots with the APMC.”

To add insult to injury, he knows only too well that retail shops right outside the APMC’s wholesale market sell oranges at 100% higher rates. While the smaller fruit sell for Rs24-25 per kilo, the bigger ones sell for as much as Rs28-30 a kilo. By the time the fruit reaches Nagpur, rates jump up to Rs30-32 a kilo, and 800km later, by the time they arrive in Mumbai, they sell for a good Rs 45-48 a kilo, a 300% hike,

This is not the plight of Golewar alone; in Vidarbha, nearly 1.25 lakh farmers are dependent on orange orchards for their livelihood. On the face of it, their story might seem to sit well with what finance minister Pranab Mukherjee said while pushing for FDI. “Organised retail with well integrated supply and cold chains can significantly cut down post harvest wastages, providing better returns to farmers and more competitive prices to consumers.” 

Many free market economists would second that view. Says Derek Scissors, research fellow in Asia Economic Policy at the Wasgington-based think tank, The Heritage Foundation, “FDI in retail will completely change the incentive and scale at which big retailers operate in India, making exports attractive. They will also drive the creation of commercially valuable infrastructure — roads, container terminals, and son. This is the kind of infrastructure India desperately needs, not politically motivated government projects that contribute little or nothing when the construction work is done.”

So why then, wonders social activist Vivek Monteiro, have farmers’ advocacy groups and consumer groups not asked for FDI in retail all these years? “Apart from the government and elite corporate forums like CII (Confederation of Indian Industry), nobody else seems too keen on this. Shouldn’t that tell us who will benefit?”

According to Monteiro, India should learn from the damage FDI in retail has done in other developing countries like Indonesia and Argentina. “The multinationals will undercut prices in the beginning to wipe out local retailers. Once their cartels establish monopoly, both farmers and consumers will be completely at their mercy,” he says.

Farmers like Golewar, too, are wary. “The government looked the other way when farmers were forced to switch to Bt cotton. Nobody told us then about spiralling seed, fertiliser and pesticide costs, which led to so many farmer suicides — my own my brother-in-law in Yavatmal committed suicide. How can we trust the government this time?”

His apprehensions are echoed by Kishor Tiwari, of the Vidarbha Jan Andolan Samiti. “Where is the guarantee that FDI will be restricted to linkages and creating supply chains? Our concern is that the multinational retailer will want to get into input sectors like seeds, fertilisers and pesticides. This will mean throwing the already debt-ridden cultivator to the wolves,” he says.

“Our past experience does not inspire confidence in the government. After ignoring the over 2.5 lakh farmer suicides all through the years when UPA I & II have been in power, now they are suddenly invoking farmers’ interests to push through their FDI agenda.”

Others, like agronomist R Ramakumar of TISS, are also skeptical about the claims by the advocates of FDI in retail. “The new set-up will transfer risk to the producer while transferring control to the corporate. The risk of production failure is transferred through the quality standards mechanism, the risk of fertility loss is transferred by the nature of the contracts themselves, and the risk of demand fluctuations is transferred through the delay in payments. These structures are further complemented by more straightforward abuses of power.”

He cites the example of Karnataka, where 15,000 kg of fertiliser was applied to each hectare of land in contract farming of roses. “Such increase in chemical inputs has serious ecological consequences that can easily be ignored by the contracting corporate as it is not bound to a particular patch of land.”

According to Ramakumar, the interlocking of agreements on credit, inputs and extension services present another danger. “The big corporates will supply their contracted farmers with seeds and fertiliser from allied companies on credit. Default on these loans would lead to them withdrawing from agreements to purchase their produce, leaving farmers high and dry.”

Farmers get 1/4th of what you pay
Dalals at APMC buy oranges from farmers at Rs12 per kilo, while retail shops outside the wholesale market sell them at Rs24 a kilo. By the time the oranges reach Mumbai, they are priced at Rs48 a kilo, which is 300% more than what the farmers get.