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Farmers get lower share of consumers’ rupee for perishables: RBI’s Supply chain dynamics and food inflation in India survey 2019

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On October 11, 2019, As per the Reserve Bank of India’s (RBI) Supply Chain Dynamics and Food Inflation in India survey 2019 carried out across 18 states, Indian farmers get average share in the consumers’ rupee in the range between 28 % and 78 % across 14 crops, with a lower share in the case of perishables (particularly, vegetables like potato and onion) and higher share in case of non-perishables (such as oilseeds and spices).

Key points:
i.High & low:  Farmers average share in retail price is highest in the case of  red chillies (78 %) & lowest in case of potatoes (28 %) .
ii. Mark-ups:The survey shows the  mark-ups (the difference between the selling price of a good or service and cost) are influenced by various factors such as commissions and mandi charges, loading/unloading charges, packing, weighing and assaying charges,among others.
iii.Variation: At the production and consumption centres, mark-ups were different i.e retailers’ margins were usually higher than the traders’ margins in consumption centres across commodities.
iv. Payments:The mode of cash payment was even higher at the level of farmers at 88% & traders at 84%. payments were made within two days of the completion of physical transactions of the commodities, so there was no significant delay in payments by counterparties.
v. Government policies: Farmers easily get minimum support prices (MSPs) for crops and readily available market information in realising better prices & reliable weather forecasts, improved storage facilities and government advisory on crops because of  the government policies.
vi. Supply management measures by the government and better availability of information on the supply-demand situation in the market help to tackle the price pressures.
vii. The study has been conducted by Binod B Bhoi, Sujata Kundu, Vimal Kishore and D Suganthi of the Department of Economic and Policy Research (DEPR), Reserve Bank of India (RBI) and is based on data collected through a survey conducted by the staff of Regional Offices of DEPR, RBI, in collaboration with an outside agency, which was coordinated by Ramesh Golait, Assistant Adviser, DEPR.

About RBI:
Headquarters: Mumbai, Maharashtra,
Formation: 1 April 1935
Governor :Shaktikanta Das
Deputy Governors :4(BP Kanungo, N S Vishwanathan, Mahesh Kumar Jain, 1 is yet to be appointed).