It is more of Auction. Farmer go to APMC which usually located at the Block Level where traders are there, they come in the group to each farmers good and start the auction whoever bets the higher get the deal, and paid after weighing, that is how farmer get the money instantly.
This is more ok, rather then the worst thing is – APMCs are located in circle of 15 to 40km of the village, so to carry good a small farmer wont be able to afford tractor so he sells in the village itself – So called “BANIYA” in our area, and you wont believe they decide the cost at what they quote, which is almost 20–25% lesser then APMC costs. So due to lake of lesser money, less lands, farmer end up loosing profit at home itself.
Now comes the intermediates – These traders pack the goods and sell to corporate, factories wherever it is required or some export directly at whatever cost they want, these guys makes real profit ranging up to 200% I have seen.
Let me give an example –
We produce Wheat in MP of priced – Rs 1500/- per quintal and you get the same wheat flour at the prices Rs3200 to Rs3800 via Ashirvad in Cities. Lets say you keep 50% of amount for preparing flour, tax, packaging etc still middle man 50%s profit, That is really huge.
Challenges why Farmer Cant sell directly to Factories/ Corporates –
- No channel between farmer to real consumer of good – This is where E-com, or so called Startups can Help. Provide the channel to sell them directly to the end user.
- Literacy to almost zero – Most of the farmers dont even read and write the mother tongue, so forget about English or Computer or Finance, So this is the area where anybody can help them, first make them aware of their goods,make them literate, show them computer, make them believe that there can be a system of trustworthy people who can help them.
Being a son of farmer, I have closely watched/experienced so this can be a great initiative if somebody wants to help farmers.