E-commerce can help reduce exploitation of farmers by middleman

ISLAMABAD-Eliminating the middleman’s role through the promotion of e-commerce can not only make farmers prosperous but also bring about a revolution in the agriculture sector, said Rafia Jalil, Senior Researcher at the Islamabad-based Policy Research Institute of Market Economy (PRIME), while talking to WealthPK. ‘’The practice of relying on the middleman is common in our rural areas, especially in Punjab and Sindh. For many reasons, the farmers have no access to the markets and industrial units where the agricultural raw material is value-added. The middleman gives low price to the farmer for the produce and sells it at a higher price in the open market,” Rafia said.
“One of the factors responsible for this exploitation is the farmers’ lack of access to immediate credit. At times, they cannot wait for the crop to grow up to the harvesting stage. The middleman tends to grab this opportunity and provides them with cash against the expected crop at a price far below the market rate,” Rafia added. She said promotion of e-commerce in the agriculture sector will give farmers direct access to the markets without involvement of the middleman. Farmers can have the marketplaces on their doorstep with the help of a digital tool. The middleman is additionally responsible for creating artificial inflation in the food market. The PRIME senior researcher highlighted the inefficacy of government departments, which acts as an enabling factor for the middlemen to exploit farmers.
“The government allows the selling of farm produce through the ‘minimum support price’ mechanism. Owing to delays in disbursing the payments, farmers prefer to sell their farm output to local buyers,” she said. She said the developed world was creating a direct link between farmers and consumers through agro-marts. In Pakistan, trading through digital means is not a common practice, she added. According to a report by the Pakistan Institute of Development Economics (PIDE), eliminating the role of middleman will result in 40% increase in returns to farmers. “E-commerce has a leading role to play in the manufacturing units of processed food. Through this mode, the prices of agricultural products in raw form would go down with the elimination of the middleman’s role. A low price of raw material always translates into a low cost of finished products,” Rafia said. It is beyond doubt that the middleman’s involvement in the supply chain of agricultural products has its disruptive impacts on the economy. Introducing e-commerce in the agriculture sector is a promising feature to build a sound economy.

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