Context: A recent pan-India survey by the Reserve Bank of India (RBI) has revealed that farmers' share in the consumer prices of major rabi crops ranges between 40% and 67%. Conducted between May and July 2024, the survey analyzed the price distribution within the agricultural supply chain, highlighting key differences between perishable and non-perishable crops.

Farmers' Share in Rabi Crop Prices

·         The survey found that wheat farmers receive the highest share (67%) of the consumer price. This is mainly due to government procurement policies and the Minimum Support Price (MSP) system, which ensure price stability.

·         For rice farmers, the share is around 52%, which is consistent with past trends. This reflects the stable role of government intervention in staple food crops like wheat and rice.

·         However, fruits and vegetables have a lower farmers' share (40%-63%). The unorganized supply chain for perishables involves multiple intermediaries, increasing the final price for consumers while reducing farmers' earnings.

Perishable vs. Non-Perishable Crops

The survey highlighted that:

• Non-perishable crops like wheat and rice offer farmers a higher share in consumer prices because of stable demand and government support.
• Perishable crops like fruits and vegetables have higher markups by traders and retailers due to storage, transportation costs, and market fluctuations, reducing the farmers’ share.

Pulses and Oilseeds

• Lentil farmers receive about 66% of the consumer price, while gram (chana) farmers get 60%. These higher shares incentivize pulse production, especially as India still relies on imports to meet domestic demand.
• Oilseed farmers, particularly those growing rapeseed and mustard, receive 52% of the retail price. However, this is slightly lower than the 55% recorded in 2021.

Challenges in the Fruits and Vegetables Supply Chain

The unorganized nature of India's fruits and vegetables market leads to multiple intermediaries controlling the supply chain. This creates inefficiencies that reduce the farmers' earnings. Other challenges include:

• Unstable climatic conditions affecting production.
• Supply chain delays that cause quality deterioration.
• Lack of storage facilities, making farmers dependent on middlemen.

Due to these issues, many farmers hesitate to shift from traditional cereal crops to high-value fruits and vegetables, despite their potential for higher profits.

Conclusion

The RBI survey provides key insights into how farmers benefit from consumer prices and highlights their challenges. While wheat and pulses farmers receive a better share due to government support, those growing fruits and vegetables struggle due to supply chain inefficiencies.

For a fairer and more sustainable agricultural system, India must focus on:

1. Improving supply chains to reduce middlemen.
2. Encouraging the production of pulses and oilseeds to reduce import dependence.
3. Enhancing storage and logistics infrastructure for perishable crops.

Addressing these issues will help ensure fair compensation for farmers while stabilizing food prices for consumers.