Why do Indian farmers sell their produce to middlemen and not directly to consumers?
I will explain this with two of the crops that are grown in our village.
First one is sugarcane
After the crop is ready for harvesting, the farmer hires a batch of workers and trucks for cutting and loading the sugarcane.
The trucks take the crop to the sugar factory located 20 km away. The famous K.C.P. Sugar and Industries Corporation Limited is less than an hour drive from my village.
They take the weight there and pay the farmer accordingly.
No middlemen involved. Instant money.
Second is black dal.
Once the harvesting is done, the farmer packs it in gunny bags and stores it in his house. Most of the houses have a separate room to store the 30 to 40 gunny bags.
As the prices keep fluctuating, he waits for the good price. This could take quite a few months.
Once the price is good, he informs the middleman. He comes with a bunch of workers and a bag of weights. They filter out all the chaff and soil crumbs, repack and take the actual weight of the produce. The middleman pays the money to the farmer and takes the produce in the truck arranged by him.
The farmer then uses this money for the next crop, which is usually rice.
The middleman owns or rents the godowns in different towns around the village. He maintains the network of traders. The black dal procured from all the villagers would thus be sold to the traders either in bulk or in batches depending on the season, demand and price.
Now if you were to eliminate the middleman here, the farmer has to arrange the workers for the filtration, repacking and transport. He has to maintain godowns and network with the traders. He has to keep monitoring the prices and demand. All these consume a lot of time and energy, in addition to the additional investment apart from the money spent on agriculture. Added to this, the returns are not going to come to him in one package. It is going to come gradually all through the year.
When a farmer is busy doing all this, how and when is he going to cultivate his next crop.
If the crop is rice, this process becomes even more worse as the amount of produce is so much that it is cleared by the middlemen from the fields itself. The farmer can’t even store the rice in his house. And procuring and selling rice has additional step of deshusking as well.
So the bottom line is
Unlike these ‘organic farming’ films show, middlemen are not villains.
In reality, it is a job—procurement, transportation, storage, market research, networking, and selling—that involves quite a skill and investment.
Especially for vegetables or fruits, the farmers get an advantage of getting money for all the produce right after harvesting. The middleman and traders have to bear the risk of items spoiling or pest attacks should there be low sales. If the farmer takes up that role, the risk involved is so huge that he might not be able to cultivate his next crop.