Sunday, August 5, 2012

Difference between farm price and wholesale price of fruits and veggies

Here is an interesting piece about the lawlessness in Kalimati wholesale market for fruits and vegetables. Kantipur’s Lokmani Rai reports the distortions created by YCL, the Maoist party’s youth wing, and syndicated business. 

Below is a snapshot of the difference between farm price and wholesale price of fruits and veggies.

Price difference (Rs per kilo), 2012-08-03
Item

Farming site (Dharke, Dhading)

Wholesale market (Kalimati, Kathmandu)

%difference
Tomato 25 48 52.08
Pumpkin threads (per roll/mutha) 8 15 53.33
Pear 15 35 42.86
Bitter melon 16 35 45.71
Cauliflower 18 40 45.00
Cucumber 27 35 77.14

Other stuff from the article:

  • In the wholesale market spread over 42 ropanis, two to four dozen farmers are left to squeeze in a small corner to sell veggies. There are about 450 stalls, including 300 wholesale stalls, in Kalimati Fruit and Vegetable Market.
  • Since the last six years the YCL has grabbed 45 stalls without even paying rent and electricity bills. The owe about Rs 6.5 million to the management.
  • The rent for each stall ranges from Rs 5000 to Rs 7000 per month. But, middlemen charge as much as Rs 70000 per stall per month. Only a dozen stalls are owned by ‘real’ farmers and only 20 percent of the stalls are operated without middlemen being involved in rigging rents.


Earlier, a report about the same issue stated that farmers get 40-50 percent (similar is the case with the percentage of farm price in wholesale price in the table above) of retail price of veggies sold in Kathmandu.The market distortion created by middlemen is not a surprise in a developing country like Nepal where the government lacks monitoring and supervision capabilities and political parties indirectly abet middlemen, who provide them with a strong financial and support base. Here is more on market distortion created by middlemen in Nepal.

The apparent incoherence in retail prices, farm prices and output is market manipulation by middlemen or agents, who act as monopsonist and monopolist. About 1,000 metric tonnes of vegetables enter the Kalimati Fruit and Vegetable Market during the season and about 600-700 metric tonnes in the off-season from Dhading, Kavre and Nuwakot .

Furthermore, a government committee headed by the chief secretary brought out a report claiming that high rent inside the Kalimati Fruit and Vegetable Market plays a key role in vegetable price hike. Obviously, the association has refuted the claim by arguing that the price hike is due to short supply arising from drought in March-May and high veggie prices in India.

2 comments:

  1. Here is a follow-up report in Kantipur:


    कालिमाटी फलफूल तथा तरकारी बजार विकास समितिले स्टल बिचौलियालाई संरक्षण गर्दै कारबाहीको सट्टा फोटोसहितको परिचयपत्र जारी गरेको छ ।

    समितिको नियमावलीमा 'आफूले लिएको स्टल अर्कालाई भाडामा लगाए सम्झौता रद्द गरिने' उल्लेख

    छ । कालिमाटीका थोक व्यापारका ३ सय १ स्टलमध्ये ६५ जना बिचौलियाले पूर्ण रूपमा स्टल भाडामा लगाएका छन् । १ सय ८१ जनाले आधा स्टलमा आफूले व्यापार गरी आधामा अर्कालाई भाडामा लगाएका छन् । ५५ जनाले मात्र थोक स्टल भाडामा नलगाई आफैं व्यवसाय गरिरहेका छन् । त्यसबाहेक त्यहाँ भएका खुद्रा पसलका करिब २ सय स्टल समितिको तथ्यांकमा छैन ।

    आफूले लिएको स्टल अर्कालाई १० गुणासम्म बढी रुपैयाँमा भाडामा लगाएको तथ्य खुलेपछि कारबाही गर्नुपर्ने माग उठिरहे पनि समितिले बिचौलियालाई संरक्षण गर्दै आएको छ । समितिले पछिल्लो समयमा बिचौलिया मार्फत स्टल भाडामा लिने सोझा व्यापारीलाई हटाउँदै बिचौलियालाई परिचयपत्र जारी गरेर वैधानिकता दिन खोजेको हो ।

    समितिकै संरक्षणमा स्टल बिचौलियाले आइतबार झन्डै अढाई सय तरकारी व्यापारी हटाएका छन् । 'माथिको आदेश छ, १५-२० दिन नआउनू भन्दै हटाए,' आइतबार स्टल छोडेकी एक महिलाले भनिन्, 'आज मात्र म जस्ता ५० प्रतिशत भाडावाल निकालिए ।'

    यस विषयमा प्रतिक्रिया लिन पटकपटक फोन गर्दा समितिका कार्यकारी निर्देशक रुद्रबहादुर श्रेष्ठ सम्पर्कमा आएनन् । उनले ५० भन्दा बढी तरकारी बिचौलियालाई कारबाही गरको सार्वजनिक रूपमा बताए पनि स्टल बिचौलियाका विषयमा केही बोलेका छैनन् ।

    स्टल बिचौलियाले एउटा स्टल ४ जनासम्म व्यापारीलाई भाडामा दिई प्रतिव्यापारी मासिक १० हजार रुपैयाँदेखि ३० हजार रुपैयाँसम्म असुलिरहेका छन् । त्यसरी महँगो भाडा तिर्ने व्यापारीको संख्या ५ सय ५८ छ ।

    http://ekantipur.com/kantipur/news/news-detail.php?news_id=277728

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  2. I'm really interested in your work, which I see was followed up by the Economist (August 18th). But if you don't mind my asking, I'm a bit surprised at the way you've chosen to calculate the mark-ups. Wouldn't it be more usual to show the mark up i.e. as a percentage of the original price ie. have 30% for cucumbers and 133% for the tomatoes? This brings out the scale of things better, I think. But perhaps I'm missing a point here. Anyway, this is an interesting blog, thank you.

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