Profitability or income is one of the major parameters to decide the job in Indian society. Income from any profession not only decides your purchasing power but also decides your social status. People earning more inspire others to take up the same profession. For example in my village 30 years ago, a person called Basanta became Geologist after graduating in Geology honors. He was earning a lot and built a bungalow in the heart of the village. Now he does not stay in the village, but there is around 20~25 Geologist in the village. Young generations are aspiring to become Geologist after qualifying higher secondary. Out of 3 of my siblings, two are geologists. The whole point here is if we have to make Farming an aspirational job then we have to make it profitable and high paying profession.
The profitability of farming depends on the yield and the selling price of the produce. In this article, we will focus on the selling price of the product and analyze the factors affecting it and how can we overcome the variation in it. One of the major pain points for farmers is price fluctuation. In one season if one vegetable price is sky high then in the next season the same vegetable price falls drastically leading to a huge loss. So basically the supply-demand mismatch causes price fluctuation. Why the mismatch occurs? The mismatch occurs because a farmer of a village does not know the demand for his product in the country and he is now aware of the number of people growing the same product. He grows the vegetable which was high in price in last season unaware of the game theory which says that most of the farmers think in the same way and grow the same crop leading to overflow of the same product in the market. Ultimately the overflow cause price fall. The Indian agriculture sector is production-driven, not demand-driven. Had it been demand-driven, all varieties of crops would have been produced as per the national need leading to a reasonable price for all varieties.
How to make agriculture demand-driven? Currently, the price of a vegetable (which is not covered under Minimum support pricing) is discovered at Village mandi. Every morning, farmers of the locality get their products to the mandi. The licensed APMC (Agricultural Produce Market Committee) agents facilitate the fair open auction of their produce. The auction price determines the selling price of that vegetable. As per the rule, the task of the APMC agent is to facilitate fair auction, get the money from the buyers and give it to farmers for a 6% commission. The auction price is dependent on the quantity & quality of the product and the number of buyers. When there is a high production of the same crop in nearby villages, the buyers can go to any of the villages leading to lesser number of buyers at any particular village. Thus the price drastically falls as the farmer does not have an option of taking the product back due to its perishable nature. As a result, to enable farmers to postpone his product selling, call for cold storage installment happens. But building cold storage is like suppressing the symptoms of disease instead of curing it. Currently, all the vegetable mandis and agents work in silos. They don't have knowledge of the production of neighboring villages, area, districts & states.[Fig-1]
Fig -1
To make farming demand-driven in the country, I am suggesting an organized top-down approach. Currently, retail chains are influencing farmer's selection of crops for growing through contact farming and contract farming. Farmers are willing to accept the retail chain's advisory because they promise market for them. So how about connecting all the APMC agents to a central organization through a robust IT infra. The central organization will be using data analytics to figure out the macroeconomic demand of a certain product in the nation and influence the production of farmers through circulating advisory regarding the selection of crop through APMC agents. For example, APMC agent of village-1 will get a message from the central agency that his village should produce 100 tons of brinjals and 100 tons of tomatoes. The advisory should be in sync with the historical production of the village-1 and soil suitability. Then the job of APMC agent would be influencing the farmers in his locality to grow those vegetables before the next season. The APMC agent should also update the central agency about the current production of the village. This way we can induce demand-driven production without changing the current infrastructure much. [Fig-2]
Fig - 2
For a one-day experiment, I will analyze the historical demand and supply of different agri-produce in the city nearest to my village and find out the optimal production planning which has to be distributed across all the villages that supply vegetable to the city. Then I will try to influence the farmers' choice of the vegetable growing through the network of my friends who are educated and respected by the communities. Here I would like to test the hypothesis - farmers will accept the suggestion provided by some educated person and select the recommended crops for growing. Cost of this experiment will be my time for data analysis and the risk of ruining my friends' image in the society in case of my wrong analysis. Success will be measured by analyzing the variation in the price of all the products at the village mandis and difference with the previous years' price.
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