Farmers have less than 50 percent share in consumer prices of perishable crops likes fruits and vegetables (except tomatoes), according to a survey published by RBI researchers in the central bank’s monthly bulletin on February 19.
The survey conducted during May-July 2024 found that farmers’ share in consumer prices ranged between 40 and 67 percent, with wheat being the item where they had the largest say in prices.
“The mark-ups of traders and retailers are observed to be lower for TOP crops during the rabi season compared to the kharif season, partially reflecting the impact of the ample availability of perishable produce during the rabi production season,” the study noted.
Tomato, Onions and Potatoes are the major constituents of India’s consumer inflation among vegetables. The high inflation in these commodities was a primary cause of vegetables inflation remaining above 20 percent for a major part of the current fiscal.
The retailer markups were also dependent on higher transaction costs like rent, transportation and labour charges, which reduced mark-up, while they were more comfortable in transferring the costs to consumers during post-harvest losses.
The study also indicated a growing use of digital transactions by farmers, even though cash still dominated the payments landscape accounting for 72 percent of transactions. Among the traders cash usage was lower at 45 percent, while it was a higher 61 percent for retailers.
The survey highlighted the need for more interventions in the form of increased investment in cold storages and supply chain efficiencies to tackle challenges and reduce losses.
There is also case for investment in technology for farmers as well.
“Weather forecast and irrigation availability appear to be the most critical factors in the farmers’ decision function regarding rabi sowing,” the study noted.
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