Wednesday, February 5, 2014

Notes on the agricultural supply chain

Credit Linkages between commission agents and wholesale traders

Traders at the Azadpur Mandi went on strike after the Delhi Government issued orders that traders at mandis have to collect 6% commission from buyers rather than farmers (See this report)Interestingly, one of the traders at the mandi is quoted in the report as saying:

We deal in huge volumes and often sell the produce to the buyers at a credit. Sometimes they pay us off as late as four months. If we don’t take any commission from the sellers at the time of the sale, we will have no money left. Sometimes, the buyer defaults on the payment. What will happen to our earning in that case?”

The credit linkages between commission agents and buyers (wholesale traders, sub wholesalers) is another aspect of the agricultural marketing chain that leads to high markups on vegetable and fruit prices.

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