Rythu bazaars (farmers’ markets)

In Andhra Pradesh, farmers had the option to sell their produce directly to the end-consumer by means of so-called rythu bazaars (or rythus). In Telugu, the main language of the state, rythu means “farmer” while bazaar can be literally translated as market. The model of these farmers’ markets was introduced by the AP government back in 1999 to create a direct link between farmers and consumers. Through fixed retail prices that were visible on numerous announcement boards distributed throughout the rythu bazaar, farmers were assured of prices consistent with actual market price, while price transparency for both farmer and consumer was achieved (Rao, Joshi, Kumar, & Ganguly, 2008).

While the literature review prior to empirical data collection estimated rythus as an insignificant part of the retail market, our field research showed that this was a vast underestimation. According to the Agricultural Marketing Department of the state, a total of 109 rythu bazaars currently operated throughout Andhra Pradesh, including 9 rythu bazaars in the capital city of

Hyderabad. Altogether, rythus were estimated to be currently responsible for 18 per cent of the vegetables arriving in Hyderabad (Singh, 2014a). This implied that rythu bazaars constituted an additional value chain with major relevance for the fresh fruit and vegetable sector in Andhra Pradesh.

In order to maintain the integrity of a farmers’ market and to prevent intermediaries from encroaching into this channel, farmers had to obtain licenses in order be permitted to sell their produce at the rythu bazaar.

To obtain a licence, farmers had to prove that they held a land title for agricultural land. Apart from farmers, only certain self-help groups were allowed to operate market stalls in the rythu bazaars.

Farmers transported their produce from their farm to the rythu bazaar primarily via two means: hiring auto-rickshaws or hiring government-provided small trucks that were specifically dedicated to transport market-bound produce.

Despite its seemingly ideal set-up, the rythu bazaar concept suffered from several drawbacks: Firstly, rythu bazaars could only cater to farmers whose farms were relatively close to the bazaars. Most of the farmers that sold to rythus were notably smallholders, because farm parcels nearer to cities were more highly segmented. Secondly, due to the limited space at the bazaars, farmers could only sell a limited amount of produce and similarly, only a limited number of farmers could be accommodated at the farmers’ markets.

Limited space also posed garbage disposal and sanitation issues. Thirdly, the limitation in space and, respectively, limitation in licenses have resulted in cases of bribery between farmers and rythu bazaar officials. This was often to the disadvantage of other farmers who were perhaps in greater need of the services the market offered than those who already received rythu licences through bribes. Fourthly, fruit and vegetable standards were neither recognised nor implemented in the rythus. There was no sorting or grading of produce at rythu bazaars and, at the time of the survey, no cold-storage facilities were found. Therefore, consumers who bought at these markets were aware that the produce which they purchased was not entirely of high quality. A fifth drawback that was discovered – particularly from interviews with farmers who did not deliver to rythu bazaars – was that some farmers could simply not afford to leave the farm to sit all day at the bazaar to sell their produce. Farmers selling produce at rythus have therefore foregone the opportunity to work on the farm for that day. Finally, experience has shown that although one of the driving ideas behind the concept of rythu bazaars was to circumvent intermediaries, new “middlemen” had been observed to

enter the farmer’s market scene. For instance, some farmers had collected other farmers’ produce and sold it along with their own at the market while charging fees for this service (Singh, 2014a).

The “Manakuragayalu” Pilot Project

In order to resolve some of the issues linked to the original rythu bazaar concept, the Andhra Pradesh Department of Agricultural Marketing launched a pilot project called “Manakuragayalu” in January 2014. The envisaged timeframe for this pilot phase was a two-year period. The new project’s overall goal was to “increase the margins and net income for vegetable farmers and provide high quality vegetables at affordable prices to the consumers” (Singh, 2014b). The project targeted farmers who lived further away from the markets and who previously sold their produce only to wholesale mandis. In this model, farmers were expected to receive 80-90 per cent of the profits. The project aimed at bringing farmers closer to the market by introducing mobile rythu bazaars (Singh, 2014a).

The “Manakuragayalu” Pilot Project partly emulated the concept of modern retailers’ collection centres because farmers could deliver their crops to specific rythu bazaar collection centres. These crops were then sorted and put into crates. From there, they were delivered to the mandis where they were graded and put into cold storage if necessary. From the mandis, the produce was then distributed to other rythus where it was sold on behalf of the rythu bazaar administration at a marginally higher price than rythu levels.

The prices obtained at the rythu bazaars were about Rs 2.00¹⁵ higher than the wholesale price. According to the new model, rythu bazaar prices were fixed every morning. The rationale behind this price difference was that farmers would have no incentive to sell at rythus if the price were the same as at the wholesale markets. On the other hand, the prices should be lower than at local retail outlets because only this price difference would incentivise consumers to cover their daily requirements of fresh fruit and vegetables from the rythu bazaars (Singh, 2014b). Moreover, the model assured farmers a secured buyer for their produce and gave them the possibility of obtaining higher prices because of the provision of cold storage.

The envisaged organisational structure of the model-type rythu bazaars is another innovative component of the project. The structure comprised three

15 In March 2017: 1 Indian rupee = 0.014 euros.

levels at which the farmers played the main role. At the village level (on average, 30-70 km from the rythu bazaars), farmers were organised into farmers interest groups (FIGs). At the intermediate level, the FIGs formed six farmers’ producer organisations (FPOs). At the top level, the FPOs then constituted a farmers’ producer company (FPC) which was intended to run the collection centres. Since the FPOs were already constituted as societies, a general meeting was held every month. In its initial phase, the pilot project was assisted by a domestic private consulting firm (Singh, 2014a).