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Wednesday, October 28, 1998

Middleman, wholesaler, retailer cream off Rs 46 en route to kitchen

Anindita Ramaswamy  
NEW DELHI, October 27: Sold! To the man in black near the cages on the left.'' Hardly Sotheby's, but it's the cathartic climax to the bidding process, that reaches a frenetic pitch just before the gavel comes down on another sealed deal. This is business as usual at the Ghazipur poultry market where after much haggling and under-the-coop exchanges, vans full of chicken find their way to shops and eventually our homes.

But the route the price takes increases in geometric proportions. Chicken that is sold for between Rs 24-30 per kg -- depending on the size -- by the farmer ends up in our kitchens for a minimum of Rs 70 per kg.

Money and muscle power determine prices at the mandi. Express Newsline tracked the `average' route of a bird weighing 1 kg from farm to kitchen. The farmer sold the one-kg bird for Rs 24 to a commission agent. The commission agent sold it for Rs 39 to a wholesaler, a mark-up of Rs 15. The wholesaler sold it to the retailer for Rs 59, a mark-up of Rs 20. The retailer sold it to the consumer for Rs 70, a mark-up of Rs 11.

So the commission agent, whose value-addition to the product is nil, creams off Rs 15 on product that costs Rs 24, or a margin of more than 60 per cent. The wholesaler creams off Rs 20, thereby adding more than 80 per cent to the cost of the product. The retailer's margin adds another 46 per cent and, hey presto, the 1 kg of chicken ends up costing the consumer Rs 70.

All roads lead to Ghazipur at 4 a.m. every day for four hours of action-packed wheeling and dealing. Nearly 80 per cent of the farmers are from Haryana. They say this is the only mandi of its kind in the region. Sometimes farmers even come here all the way from Rajasthan.

The price, of course, is the ultimate determinant. In fact, the money game starts well before the crack of dawn, when the bigger farmers make urgent phone calls across the region to find out the price of the day.

There is often no need to come to the Ghazipur mandi at all. For, if the farmer hears of a better deal elsewhere, he will naturally gravitate to that area. On other occasions, buyers approach the farmers directly. While these cases are rare and resorted to only by the wealthier farmers -- who have a lot more money at stake -- it helps them save on additional costs like transport, labour, commission agents and mandi fees. Costs, which only serve to hike the price by the time it reaches the consumer.

There is a risk factor for those who don't go to Ghazipur. The Jama Masjid Poultry Association that runs the mandi challans all those who sell their products elsewhere. That is, if they find out.

Everything is arbitrary in the poultry market, where around 200 trucks come every morning loaded with approximately 90-100 crates, each of which in turn have 8-15 birds, depending on their size. The initial cost is determined by an auction. Bidding currently starts at a low of Rs 25. For tandoori chicken -- the smaller variety and hence more expensive -- the bidding starts at around Rs 35. This is where the price first starts rising.

Both farmers and suppliers say that the auctioneers have their own agenda and the price solely depends on the equation one has with them. ``There is such a monopoly here. The big farmers even have their own symbols to indicate to the auctioneer when to stop, when to wait, when to stagger bidding. Everything depends on the auctioneer's whim, which in turn is determined by the cut he has been promised,'' says one disgruntled farmer.

The chicken is ultimately sold to the supplier for between Rs 36-45. The 72 commission agents take Rs 3 and 12.5 paise for every Rs 100 from the farmer. But the buyer also pays a price: One per cent is the market fee taken by the association from the supplier. This is the second instance where the price rises.

The commission agent is king at Ghazipur, and no matter how bad the situation in the market, they always make the maximum profit. Farmers say that even though the commission is supposed to be fixed, it never really is. The larger farmers work out their own deals with the agents. And it is at this stage that the price increases by astronomical proportions. One farmer says, ``We try and pit the auctioneer against the agents, as we have to make our profit. But even when we try and control the auction, the agents manage to extract most of the money from us. We are at their mercy''.

As one commission agent, Raees Ahmed, says, ``We have our own rates, so we never suffer. It's that small farmers and suppliers who are always complaining. It is they who lose most money. And of course, people like you''.

Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.


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