Commodity Analysis

Farmer woes @ manjal mandis

Rajalakshmi Nirmal | Updated on April 01, 2018 Published on April 01, 2018

E-tendering increases transparency at Tamil Nadu’s Erode turmeric market but cartels are preventing farmers from getting their due. A national e-platform is the way out

It is 8’0 clock in the morning and the farmers are already at the Perundurai market to sell their turmeric. Traders who gather there examine the samples collected from different bags and bid for the stock through an app on their mobile.

This is a sea change. Till a few years back, there was open outcry auctioning in these mandis and farmers spent the whole day at the market yard to sell their bags of turmeric.

However, the writer’s field visit to Perundurai and Semmam Palayam markets and the Erode Agricultural Producers Cooperative Marketing Society, all of them in the Erode district of Tamil Nadu, reveals that these markets are not yet farmer-friendly, as the pre- and post-auction process is manual.

Even in the e-tendering process, there is a difference in the way each of these mandis operates. The charges farmers cough up are different. Also, in the post-auction phase, not all three markets offer fool-proof digital weighing.

What is e-tendering?

In e-tendering, the bidding for the produce by the traders happens online. At the Perundurai market, the Unified Market Platform provided by NeML (NCDEX e Markets) is used for e-tendering.

At the Semmam Palayam market, which too is under the Erode Market Committee but practically under the control of the large turmeric traders and warehouse owners and the Erode Agricultural Producers Cooperative Marketing Society at Karungal Palayam, the application provided by San Soft, a private Coimbatore- based technology solutions provider, is used.

The objective of e-tendering is to reduce the time a farmer/trader spends at the market yard, nail traders’ cartels and bring transparency in pricing. In Perundurai market and the Cooperative Society at Karungal Palayam, as farmers enter the market yard, they are issued a lot ID for their bags (in Semmam Palayam, the godown owners act as commission agents for the farmers and they bring the sample to the market yard).

Then, a sample is collected by the weighmen from these bags and it is taken to the auction hall for traders to inspect. When the auction opens, the traders use their mobile app and bid for the turmeric. All these three markets do a closed tender, i.e., the buyer, when placing his bids, will not be able to see the price quoted by other bidders. The mobile bidding app provides information including market arrivals on the day, winners list for the lots they have participated in and also overall winners list of the market.

If the farmer is unhappy about the price received in the auction, he can reject it and the officers at the market yard inform the respective buyer. On the farmer accepting the price, the process moves to the next stage of weighment and payment settlement.

Room for cartel

Speaking with farmers and insiders in the Semmam Palayam market reveals that it is very common for buyers to ask for cancellation of the trade. Once a cancellation happens, the lot goes to the second-highest bidder. “This happens in a hush-hush manner. Even the farmer whose lot lost the best bid doesn’t come to know about it,” says a reliable source in the market yard.

PK Deivasigamani, National President, Erode Turmeric Farmers Association, insists that “Buyers should not be allowed to cancel trades. They are given time to cross-check their quote and submit, then why should they be allowed to cancel it later…? This is how they give room for cartels to grow.”

Enquiries made at the market yard show that the power for trade cancellation is vested with the Super Admin, an officer at the market yard. A source inside the market yard says, “Since everyone knows that cancellations are allowed, there are always demands for withdrawing the submitted quote. Buyers give reasons such as – they have no money or they have, by mistake, quoted a wrong price, but actually he would have connived with the second-highest bidder and would have let go of his turmeric…so the farmer loses the best price and, sadly, he doesn’t even know this to raise his voice in protest…”

The mobile bidding app provided by NeML (for UMP) as also by Nagarjuna Fertilisers (for eNAM) features a price limit set up for each commodity (based on its daily trading range) and bids above that price are automatically rejected by the system. This checks cases of a typo where, for instance, a trader types an extra zero.

Though the software application can accommodate any requirement — be it putting in a price limit or closing out the option for cancelling the bid — it is only on the requirements of the specific market yard that the app is designed. In fact, in the mobile bidding app provide by San Soft, there is an option to send the information about the highest bid for specific lots to the respective farmers by SMS as soon as the system throws up the winners list but the Semmam Palayam market yard hasn’t opted for it. The Erode Agricultural Producers Cooperative Marketing Society, which also uses the San Soft application, has availed this facility.

Deivasigamani stresses that unless the e-platform becomes national and buyers from across the country participate in the bidding, it is difficult to check cartel activity and the e-tendering process will not be of much use to farmers.

Higher charges

All the three — Perundurai, Semmam Palayam and the Erode Agricultural Producers Cooperative Marketing Society — being regulated markets, they charge the market fee (cess) of 1 per cent from the buyers on the total value of the commodity purchased. Unlike elsewhere, farmers in these three markets are forced to pay weighment charges (usually borne by the buyer in other markets). This is aside from the expenses on unloading, fumigation and the warehouse rent if the bags are stored in a godown, which the farmer anyway pays out of his pocket.

Farmers of other crops in Erode do not have the burden of weighment charges (₹19/bag). But in turmeric, it has been an unwritten rule, says Nanjappan, Tamil Nadu Secretary of Erode Turmeric Farmers Association. “The weighment charges are on the farmers in Erode. We have taken up this issue several times with the authorities, but of no use...” No bill/receipt is provided to the farmers for the money they pay towards various charges; it all goes unaccounted.

At the Semmam Palayam market, in addition to the weighment charges and cost of fumigation and warehousing, farmers also end up paying 3 per cent as commission to the godown owners who act as their agents and sell the farmers’ turmeric.

At the Erode Agricultural Producers Cooperative Marketing Society, farmers pay a service charge of 1.5 per cent but fumigation is free of cost and there are no warehousing charges for the first three months.

Cheating in weighment

Once the sale is closed, the next stage is weighing the produce. A standardised bag in turmeric is 65 kg, but an extra 1.5 kg is allowed for the gunny bag’s weight. So, when the weighmen pack the turmeric for the buyer to take away, they make it bags of 66.5 kg.

However, many a time, it so happens that the weighmen collude with the buyer and make it bags of 67/68 kg but pay the farmer only the price for 65 kg, said an insider in one of these markets.

This is so, avers Nanjappan. “This happens always, the farmer loses 3-4 kg a bag and small farmers who are unaware of this and do not speak up get cheated…”

There is a way to prevent this underhand dealing. At eNAM mandis and also in the Erode Agricultural Producers Cooperative Marketing Society, the weighing machines are connected to the trading software of the yard through Bluetooth. So, as the weighman weighs the bag, the weight is automatically updated in the trade portal against the particular lot ID, leaving no room for manipulation by manual intervention. At Semmam Palayam and in the Perundurai markets, this facility is yet to come for farmers.

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