Early 2018, a French multinational decided to stop its dairy unit in India. It kept me wondering. Not because they left. But because of ‘why did they come to India?’ Since India by that time had a self-sufficient dairy industry. Penetrating that segment is not an easy job. So how is this related to the latest agricultural reforms in India. The Indian dairy industry is the prime example of how a farmer is benefited directly from his produce.
Here are two contradictory facts. India is not the leader in the world’s most milk producing cattle breeds. But is still the highest milk producer in the world. And it is sufficient for India’s domestic use. Till 1991 the processing of milk and its marketing was restricted to the cooperative sectors. Then it opened for private investments. And today we have symbiosis of private - cooperative sectors with satisfied cattle owners. Why? Because these cattle owners are free to decide whom to sell their produce to. So now we have an abundance of this beautiful white liquid not just for those morning coffees. With sufficient remainder for those delicious homemade yoghurt, ghee, and paneer. And even luxurious amounts for spraying on those giant size South Indian superstar posters on release day.
Now let us come to the agriculture sector. Green revolution was the beginning. This reform is the next step to take that pace forward. Agriculture is still India’s hidden gem. We have all the factors favorable for a wider farming market. We have favorable sunlight round the year. And a strong labor market that can thrive if private investments come in. The perfect recipe for experimenting new varieties of farming. If this agricultural reform can nurture a young breed of agricultural entrepreneurs, I will not be amazed if tomorrow India starts exporting Tulips to Netherlands! So, the Mantra should be, unleash the private sector! The famers will develop the competitive advantage to decide the market price. Not the middlemen or State agency or even a private firm. Economist F.A. Hayek’s Theory of Social Order says the same.
Here is a personal note. As part of my search for vegan burger expeditions in Europe, I came across a lot of meat substitutes made of Jackfruit. This was an eye opener for me. To see Jackfruit converted into a convincing form for the European palette. Jackfruit burger, schnitzel, wurst and you name it. With the, “feels like flesh” tag. But the moment I saw the price, my mind rushed to my native village. Where every Jackfruit season we are so fed up with eating them in all forms, three -four times a day. To a level that we do not even bother if few of those juicy pieces feel unused. And kilometers away they are being sold at exorbitant prices and meeting demands of the new “Vegan” trend. If these agriculture reforms of India are passed, those households in Kerala can tap this emerging market bottom up. By deciding the price and sell it directly. Rather than waiting for a middleman to decide the price, top down.
Let me end this with a question. Years down the line if your tech savvy new generation chooses farming. If they prefer selling their farm produce via an E-com platform based on a competitive price of his or her choice. Will you say Yes? Or will you tell them to sell via a middleman or mandi who will decide the price?
Author: Arun Soman
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