Friday, October 1, 2010

Twenty kilometers from the Pakistan border

Thanks to my friend Gurraj here, I had a great opportunity last weekend to visit Amritsar, Punjab and a nearby village wholesale market.  When Gurraj told me his father was previously a Market Commissioner for the wholesale market, and that he could set up a meeting with the current Market Commissioner, I thought it would be a great opportunity to get to know Punjab's system better.  

On the train ride north, Gurraj helped me understand Punjab's system of markets.  Deep breath....OK.  All food, as we know it (or as it should be), begins with the farmers.  Farmers bring their food (in this case, the first day of the rice season had begun) to the market to sell to a Commission Agent (A small percentage of farmers might sell directly to a private company.)  Each market will have a number of these privately operating agents.  The farmers then receive a price quote from the Commission Agent.  If the quality is high, the farmers get the government price, determined by the central government's Price Commission around harvest time.  If the quality is not as high, the farmer receives a lower price.  Seems fair enough.  However, one of the big flaws in this system is that many farmers are illiterate and not always aware that they are supposed to receive a J-form that informs them of their rights and the fair prices they should be garnering.  So when uneducated, illiterate farmers arrive at a dishonest Commission Agent's door, they will often not receive the price they deserve.  

Next: The Commission Agent then will have the rice processed and it may then go to a private company.  More likely, however, it will move from the processor to one of three different purchasing agencies in Punjab (Punsup, Pungrain and Markfed).  Some rice will go one of these agencies to the Food Corporation of India (FCI, controlled by the central government).  Other rice may go to the Ministry of Food Supply and then to government food supply shops in Punjab.  The rice that sold to FCI will then go either to other state governments (where it will most likely move on to government shops and private retail) or directly to private companies.  While I have not yet quite cracked the code, at any rate, this is what I understood from my hour tutorial sitting in the much more affordable Chair Class of the Indian Railways.

I arrive at the market expecting a low-key chat with the Market Commissioner.  What I got, however, was fifteen government officials crammed into a small conference room to meet with me and an curious "entourage" following me around the market!  Between my friend interpreting for me and four outspoken Punjabis, I had a little trouble following the discussion.  A few of the issues they highlighted for me: 1) There are not enough young people taking up farming 2) Farms are growing smaller and smaller (Farmland here is ridiculously expensive.  I read recently in the paper that the Punjab government has been visiting South and Latin America to establish relations with their governments to help lubricate the way for Punjabi farmers to purchase land and send product back to India.) 3) The government has not provided sufficient and adequate storage for farmers (This is the issue of the moment, with several scathing articles recently penned about government ineptitude accompanied by pictures of rotting piles of wheat (see my pic below)). 4) Prices of commodities should be set by the Price Index, not by the central government. 5) Increase extension activities.

Amanda Marg spiritual group waiting at train station in Ludhiana for their leader to arrive

Government folks from the market

The white cotton outfits are traditional Punjabi dress


  1. Fascinating Heidi! So interesting. So there's no futures commodities market?

  2. I'm not sure yet of the answer to your question. I know there are futures on the world markets...need to learn more about the economics of food trade before I can make sense of all this...