WHY AGGREGATION IN AGRICULTURE IS STILL A CHALLENGE?

• An aggregator is an individual or business authority that collects and distributes products from many sources.
• Examples of aggregate farmer produceinclude:

1. Inputdistributor
2. Farmers’market

• Aggregation in agriculture help in the reduction of costs of transportation anddistribution.

How aggregation works in a real scenario

1. Aggregators provide basic and necessary information to thefarmers.

• For example- Information regarding the demand for particular fruits provided by aggregators to farmers helps in the cultivation of the same. During the harvesting period, better cold storage facilities provided by the aggregators help in getting better remuneration for thefarmers.

2. Aggregation helps smallholders meet the standards and requirements of the modernmarket.
3. Aggregation enhances the competitiveness of farmers by reducing transactioncosts.
4. Inaggregation,small-scalesuppliessourcedfromindividualfarmersarebulkedintoabundance.These supplies can be readily and economically transported, sorted, processed, andstored.

BENEFITS OF AGGREGATION IN AGRICULTURE

1. Economiesofscale–Itisadecreaseinthecostofproductionwhenthereisanincreaseinthescaleof productionofacompany.Collectivefarmingandprocurementreducetheoverallcostofproduction.
2. Value addition – Aggregators concentrate on adding value to the products which raise the marketability of theproduct.

• For example- Converting tomato to tomato sauce increases the shell life of the vegetable. But it is not feasible for an individual farmer. Assembling multiple farmers can ensure effective value addition for theproducts.

3. Cold storage facility – According to the demand in the market, aggregators have adequate infrastructural facilities to keep the perishables to avoid distress sales by thefarmers.
4. Reduced input cost – Aggregators provide the option to avail rented tractor facility, and better seed and fertilizer disposal at reducedcosts.

FUNCTIONING OF AGGREGATION

1. Connecting farmers andretailers-

• Thetechnologicalstart-upscanpurchasethefoodgrainsfromthefarmersandtransferthemto the retailers within a stipulated timeperiod.
• Startups can bring scientific technology like a cold storage facility, better packaging,etc.
• They can also provide information about retailers’ demands tofarmers.
• Italsohelpstoavoidharvestingtheentirecropatonegotherebyadjustingtheforcesofdemand and supply in the market.
• Technological intervention through websites and mobile apps are examples of aggregation by usingtechnology.

2. Connecting farmers directly with themarket
   • Farmers are connected to the market through the e-Nammechanism.
   • It helps the farmers to sell the products beyond geographicallimitations.

3. Connecting farmers with inputprocurement
   • It helps the farmers to avail of benefits like rented tractors, heavy machinery, better seed, and fertilizers at lowercosts.
   • It is not feasible for the individual farmer to purchase the tractors for his smalllandholding.
   • Thus, aggregators will save the farmers from the purchase of expensive farmingequipment.
   • For instance- the facility of Kisan drones where the farmers can use drones for spraying fertilizers,andpesticidesandcanalsobeusedforsurveillance.Itisnoteconomicalandpossible for individual farmers to procure drones for their use. Here, the aggregator of input comes into function.

4. Connecting farmers with marketprices
   • Technology startups help the farmers by providing information such as price volatility, market forces, weather patterns,etc.
   • It helps the farmers to plan their productionscientifically.

5. These technological startups also work well in allied sectors such as Poultry, Fish, and Meat sector. It connectstheproducersandthemarketforcesandhelpsfarmerstoproduceaccordingtotheneedsof themarket.

WHY AGGREGATION IS STILL A CHALLENGE?

1. Bad pastexperience:
   • Farmers often faced bitter experiences with governmentpolicies.
   • For instance, in 2006, Bihar repealed its APMC Act with a similar objective to attract private investment in the sector. However, this resulted in a lack of required marketing infrastructure as the existing infrastructure eroded over time due to poorupkeep.

2. Lack oftrust:
   • Farmers have no trust in private players. Farmers may feel that private parties make a profit at the cost of farmers. Thus, farmers always stand for their own individual interests rather than the collectivegoal.
   • For example: Recently the government revoked the three farm bills due to farmers’ huge protest. The farm bill had a provision for contract farming where the aggregators provide seed, fertilizers, technological assistance, etc. The farmers have to sell products after the harvest to contractors at a predeterminedprice

3. Confined to someareas
   • Existing aggregators are mostly confined to the western and southern regions of the country. The northern, eastern, and northeastern regions are lacking the facility of aggregators. Itfinally results in regional and incomedisparity.

4. Multiplefailures
   • Punjab government had their own contract farming act but failed in itsimplementation.
   • Tamil Nadu state also passed a contract farming act in 2019, but the present government revoked theact.

5. Issues with the existingmechanism
   • For example- The existing e-Nam mechanism where the electronic market connects the buyers and sellers. However, the cost associated with transportation, packaging & labeling guidelines, grading, etc., are major issues for their limited success. Neither the farmer nor buyer has the capacity to transport the products. This issue ultimately led to the e-Nam facility confining to intra-state transactions and much less inter-statetransactions.

WAY FORWARD

1. Capacity building- Workshops and seminars in regional languages for imparting sophisticated farming practices to thefarmers.
2. Better awareness- Farmers need to be educated about the benefits of contract farming, collective farming, technological interventions, andaggregators.
3. Stakeholder consultation- All the stakeholders need to be consulted while framing legislations and policies. It will help in removing all the concerns and ensures trust in the governancestructure.
4. Evidence-based policy making- Devise better policies using real-time data to suit the market conditions.
5. Infrastructural facilities- Improve the infrastructural facilities such as setting up new technological startups, scientific cold storage facilities, etc., which are necessary for increasing the value of production.
6. Infuse capital- huge capital outlays are needed for conducting research and development, infrastructure development,etc.
7. Technologicalintervention-DuetoinherentIndia-specificapprehensions,itisonlythroughtechnology interventions, maximum benefits can be driven out of the agriculture and alliedsectors.
8. Aggregation – The aggregators transmit the real-time market situations to the farmers and help farmers to enjoy the benefits of economies ofscale.

RELEVANCE OF MINIMUM SUPPORT PRICE (MSP) IN AGRICULTURE

• Unless structural changes are introduced in the agricultural field through technological intervention and aggregation, the notion of increasing the Minimum Support Price alone will not bring necessary changes in the agriculturesector.
• It is important to amicably resolve the difference of opinion between the government and farmers with respect toMSP.
• Gainingfarmers’trustisthemostinevitablefactorthatcanbringrevolutionarychangesinthissector.

CONCLUSION

The role of aggregation in agriculture is indispensable considering the highly volatile market situations. Aggregators can better forecast the market forces and communicate them to the farmers for balancing the market demand and supply. It will transform the dream of India “Doubling farmers’ income” into a reality in the near future.

PRACTICE QUESTION

Discuss the critical role of aggregators in agricultural supply chain management in India. Enumerate the associated challenges and suggest remedial measures for efficient working of it.(250 Words, 15 Marks)