From farm to the fork

Agricultural produce markets have been historically exploitative due to the monopolistic role of the arhtis. The few attempts aimed to regulate their role failed due to faulty legislation and a studied neglect to achieve even its limited intent. All kinds of vested interests take advantage of the farmer’s risky and uncertain environment made worse by the poor access to credit and other services. Agriculture Produce Markets Act 1939 created public market committees. This colonial remnant reigned supreme until the 1970s when private markets were also allowed. However, the limited number of public markets deteriorated over time and private market development was undermined by unscrupulous elements. Punjab Agriculture Marketing Regulatory Authority Act 2018 was only a rehash of the colonial legislation. Sindh Wholesale Agricultural Produce Markets (Development and Regulation) Act 2010 was an improved version, but fell prey to the province’s reputation of ‘quick in progressive legislation, lax in implementation’. It’s back to drawing board.

So much for the role of the state. Commercial banks have miserably failed to reach the small land holder. Microfinance institutions improved access but protecting 100% recovery brand comes in the way. Farmer’s only ‘collateral’ is his produce. He cannot repay while in the process of producing. In this very period, he has to satisfy his consumption credit needs that formal financial institutions cannot cater for. In other words, there is no alternative to arhti’s multifarious role. Or is there?

Last month, this writer visited a rice unit sponsored by the National Rural Support Programme (NRSP) in Hafizabad. Building on its experience of a ‘back to back’ value chain and informed by the available research, small farmers are provided credit to buy inputs or are provided inputs which ensures quality. They also get technical advice to improve yields. The harvested output is taken to the unit where it can be sold at a fair price or stored in modern warehouses at a fair rate for future sale. No need for arhti and agent, and going to a dysfunctional market run by partner-in-crime market committees. Notably, the farmer can get loans for his consumption requirements against electronic wire receipts from the bank branch right next to the unit. Provision of quality seeds ensures quality paddy, enabling the unit to enter competitive market for top grade export quality raw, steamed and parboiled rice of different varieties.

An interactive session with the management, farmers, farmers’ community organisations, traders and warehouse depositors brought out some more interesting aspects. Participating farmers/families get jobs at the unit and a share in profits. There are plans to offer equity participation to the farmers. The rice unit is a for-profit public limited company registered with the SECP. It is an interesting experiment: a not-for-profit organisation is working towards a for-profit solution to perform the functions of arhti sans exploitation. With its motto ‘from farm to the fork’, the company is like a supermarket for the small and poor farmers, providing credit and advice to enable them to buy seed, fertiliser and inputs of their choice so that they can grow the best quality paddy. It then buys back the paddy from them at the best rates and makes real time cash payment. Without a middleman, it gets the best quality paddy which passes through a series of drying units to control moisture, followed by pre-cleaners, de-stoners and a set of milling machines to have the best quality raw rice.

The model is not specific to rice. Its replication to all small farms and crops is possible and profitable. An ‘Amul Pakistan’ is not far away.

Published in The Express Tribune, December 31^st, 2021.

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