Subject– Price of Agricultural Goods and Farmers Role. Reasons of Low Price of Agricultural Goods.
The price rage of agricultural goods is very low. There are many Reasons for this situation. They have no control over price. The formula for them is as simple as it can be. Just grow the crop and sell it in market that is fixed by the marketing channel.
Reason- #1. Investment
Investment in agriculture can be divided into followings:
- Zero Budget Investment.
- Low investment.
- Average Investment.
- High Investment.
Zero Budget Investment
What is zero budget investment in agriculture?
Zero budget investment in agriculture is investing no money for the cultivation, management and the production of any crop. It is practiced by the all group of crop producers in their home or kitchen garden.
We can say it zero budget farming because all resources used in this farming is free of cost. For example-
- Seed: Seeds are obtained from other producers. Some plant growers cultivate crop to produce different crop seeds. They keep it safe for upcoming years.
- Land: Kitchen gardens are connected with house. It does not require separate piece of land e. g., purchasing land for agriculture or acquiring a piece of land in lease.
- Irrigation: Irrigation of crop is done by different methods e. g., drip irrigation, sprinkler irrigation, flood irrigation using diesel and electric pumps etc. All methods are costly. In kitchen garden, used water in house is applied for crop irrigation.
- Crop Protection: They don’t apply pesticide which is costly. Biological control methods and Indigenous technologies are applied.
How Zero Budget Investment Becomes a Reason for the question, ‘Why don’t farmers have right to fix crop price?’
Because of zero budget farming, families are able to produce fruit and vegetable in required quantity. And farmers have to sell their products in cheap rate.
Very Low Investment
Suppose a farmer lives in a river shore with one dirt road connected to it. There are thousands of farmer doing agriculture in this way. Now, what happens?………. they have to sell their products for low price or for that price which has been set by the farm visitors.
He can’t afford the charges of transportation for a small farm with very low production.
A small farmer with 4-5 acre of land has vary limited resources. He is knowledgeable and tries to manage every thing very well throughout whole season. But due to the failure of one particular section his financial state gets unbalanced.
And it is sure that will face these types of problems. This is going to happen, definitely, because the law of average works applied on every one.
Now he has to sell his products for unwanted price.
High investment is for big farmers. Farmers with land area more than 10-50 acre are big farmer. Actually it is commercial scale farming. This type of production unit includes investment in,
- Land purchasing.
- Establishment of irrigation system.
- Investment on man power.
- Investment on farm machineries.
They produce in large quantity and also they don’t go to market to sell it. There is a middleman who comes to him and purchase the raw materials at his own price.
Reason- #2. Farmers psychology and Customers Behavior
Margin of profit of agricultural goods is narrow, even very narrow. It is farmers psychology.
Take two Examples:
- Example-1: I’m a customer. I need a cloth, a boot a bag. I went to cloth shop. I asked for a cloth, a boot and a bag. He charged 100 dollars for cloth, 300 dollars for boot and 50 dollars for bag. Now, I’m not going to bargain with him. I paid him total 450 dollars happily.
- Example-2: I’m a customer. I need one kg of tomato, one kg of potato and one kg of cabbage. I went to vegetable market. I asked for one kg of tomato, one kg of potato and one kg of cabbage. He charged 1 dollar for tomato, 1/2 dollar for potato and 1 dollar for cabbage. Now, I’m going to bargain with him. I paid him total 1 dollar without happiness
Now you have to decide………..
Reason- #1. Labour Problem
If you are a small farmer then you are doing farming only to look after your farm labours. 50% or more than 50% of earnings from your farm is going to the wallet of farm labours.
They are not going to listen you. You have to pay them monthly. It doesn’t matter what happens to your farm. And you have to sell your products at low price to give them salary.
It is fact. I have discussed more than 10 big farmers before leaving this statement.
Reason- #2. Middlemen
This is the group of people who are responsible for the low earning of farmers and high rate of agricultural raw materials in local and international markets.
They force the farmer to fix the price of agricultural goods at very low. They set their own price. And farmers have to sell.
Reason- #3. Nature of The Product
Agricultural products are raw material. Almost all agriculture raw products have very short shelf life. This is the main reason why farmers sell their own products at very low price set by others.
Reason- #4. Transportation
Many times transportation is responsible for the determination of price range of agriculture goods.
Farmers have to pay huge amount of money for long distance transportation.
Agriculture is not a government property. It is the property of farmers. Governments don’t have monopoly to fix the price of agriculture raw products except some exceptions where they purchase something from the farmers at a fix rate. Middlemen have no authority to hike the price.
Farmers community across the country, if organized in legal way, can make difference. It is the farmers and their unity which can set the price of their won products.
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