Intermediaries profit while farmers and consumers suffer

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Vegetable farmer Jhilke Khadka from Dhunibesi Municipality, Dhading, grows tomatoes, cauliflower and scallions which are sold in Kalimati, Nepal’s largest produce market.

Dhading district adjoins Kathmandu to the west, located just above the rim of the valley; but Khadka has never seen the Kalimati market where he has been shipping his vegetables for 16 years.

“Traders come to my farm,” he told the Post by phone.

When the weather is favorable, the 50-year-old farmer harvests 3 to 4 tons of green onion and cauliflower each per season. It also produces over a ton of tomatoes, the most sought after vegetable.

Narayan Luitel, also from Dhunibesi, has been a vegetable seller for seven years. He collects vegetables from farmers and ships them to the Kalimati market.

“I make a profit of 10 rupees per kg selling green onions. That’s a big profit margin,” Khadka said. “But the situation is not always in my favour. Sometimes we face losses.

In the farming business, the profit margin fluctuates like the weather. Drought, disaster, strike, scarcity and blockage of roads mean boon for vegetable traders. Then it’s a vendor’s market, and they can name the price, the greengrocers say.

These days, transportation and labor costs are high, according to Luitel. “I usually make a profit of not more than 5 rupees per kg. But I pay the farmers regularly even if I suffer a loss,” Luitel told the Post at the Kalimati market.

Green onions sell for 20 rupees per kg in Kalimati. The same vegetable sells in Aloknagar, Baneshwar for Rs 100 per kg.

Last week, Gita Rupakheti, who had brought cauliflowers from Khanikhola, Dhading, sold them for Rs 20 per kg in Kalimati. “Earlier today I was charging Rs25 to Rs30 per kg,” said Rupakheti, who has been in the business for a decade and a half.

“Obviously, prices vary. When we buy from farmers, we can get vegetables at a lower price. They cost more when we buy from intermediaries. Rupakheti says she pays Rs 16-17 per kg when buying directly from producers. “Farmers pay transport costs of around Rs 2.5 per kg.”

On the same day, other traders in Kalimati were retailing cauliflower for Rs30 to Rs40 per kg.

Rajkumar Khadka, 22, runs a wholesale stall at Shantinagar Tarkari Bazaar, a wholesale and retail vegetable market in Baneshwar, where he sells potatoes, onions and garlic.

“These days, it costs me Rs.20 per kilo to bring potatoes from Sarlahi to Kathmandu,” Khadka told the Post on Thursday evening. “I paid Rs14 for potatoes, Rs5 for transport and Re1 for porterage.”

Nirmala Devi Panta, 54, runs a vegetable stall in Shantinagar. She was selling Kavre cauliflower at Rs30 per kilo.

A 15 minute walk from Shantinagar in Sahayoginagar, Koteshwar, retailers were charging Rs 50 per kilo for the same cauliflower. Retailers here source their supplies from the Shantinagar and Kalimati wholesale markets.

According to official site from the Kalimati Fruits and Vegetable Market Development Board, which tracks vegetable prices daily, cauliflower prices fell in the last week of March before rising again in April.

From March 25 to 29, average local cauliflower prices were Rs 11.50 to Rs 25 per kg. On March 30, the average price rose to Rs35.

While Khadka says he usually earns Rs 10 per kg, the price doubles when the vegetable reaches wholesalers at Kalimati market and triples when it reaches retailers in different parts of the valley.

According to the Department of Commerce, Supply and Consumer Protection report, goods and services sold in Nepal normally pass through up to seven layers of intermediaries, each adding a steep markup, forcing consumers to pay unfairly high prices.

Multi-level supply chains are mainly seen in the trade of agricultural products. A product with a farm gate price of Rs 10 ends up with a price of Rs 70 by the time it reaches the customer, according to the report.

In most businesses, a product moves from manufacturer to reseller, master distributor, national distributor, local distributor, wholesaler and retailer before reaching the end user.

Since there are no regulations to control unnecessary layers of intermediaries, the ministry said it has prepared a draft to legally determine the layers of intermediaries in the distribution of essential goods under the law. of 2018 on consumer protection. But this was never implemented.

Inconsistency in vegetable prices is a serious problem, say consumers.

“There is a monopoly in the vegetable market due to serious loopholes in oversight,” said Yam Bahadur Karmacharya, an 82-year-old buyer the Post met in Kalimati.

Karmacharya said he only trusts a few traders he has known for years and buys his vegetables from them. “Relevant authorities should keep an eye on prices. They should carry out regular market inspections,” Karmacarya said.

“It seems that the market management committee is only busy collecting fees and taxes. It ignores how it burdens consumers who suffer from high inflation.

According to Nepal Rastra BankYear-on-year consumer price inflation stood at 5.97% in the first seven months of FY2021-22, down from 2.70% a year ago.

The prices of ghee and oil, vegetables, pulses and pulses increased by 20.68%, 14.07% and 9.36% respectively year-on-year.

Experts fear that high inflation could push Nepalese consumers to cut spending, which would be disastrous for the recovery of the economy hit by the Covid-19 pandemic and then the Russia–Ukraine War that have disrupted supply chains, with fuel prices reaching record highs in global and domestic markets.

Consumer spending is the main driver of the Nepalese economy. The Central Bureau of Statistics revealed that in the last fiscal year 2020-21 ended mid-July, Nepal’s final consumption expenditure at current prices stood at 3.98 trillion rupees, or 93.38 percent of gross domestic product.

Some consumers say that vegetable prices vary wildly from place to place, but not everyone has time to go to wholesale markets to buy vegetables.

Khadka said traders get better prices when there is a shortage in the market. “But traders also suffer losses. Once, cauliflower prices fell to Rs7 per kg when we bought them at Rs15 per kg.

In the Kathmandu Valley, vegetable prices fluctuate widely due to multiple layers of intermediaries, especially between wholesalers and consumers, Khadka said.

Madhav Timalsina, chairman of the Consumer Rights Investigation Forum, says there are many levels of intermediaries between farmers and customers, which results in farmers getting less value for their produce. In the long run, this deters farmers from continuing to farm.

In August 2018, the government formed a committee after prices for seasonal vegetables shot up 30% month on month, while out-of-season vegetables became more expensive by up to 50% due to the involvement of intermediaries.

The commission’s report recommended making a purchase invoice mandatory to ensure transparency of the purchase rate (the price paid to farmers) and reduce the involvement of middlemen in the supply chain.

“The government has not implemented the recommendations, giving middlemen more leeway to raise prices,” Timalsina said. “The Consumer Protection Act 2018 contains provisions to determine the level of market prices. But nothing has been done so far. »

Middlemen bring home a large sum of money, in some cases more than farmers’ earnings, traders say.

(Krishana Prasain contributed reporting.)

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