Middle Men, not a dirty word!
I was ready and
raring to go on the chilly November morning when the lean and wire-framed
Horticultural Field Assistant Dhanpal Singh at Roing, Arunachal Pradesh knocked
on my doors .
My Samsung Galaxy
Note displayed
“Roing… 7 degrees Celsius”.
I need to meet as
many orange/ pineapple growers to understand their sales and marketing strategy
within 48 hours and Dhanpalji
– as I begun to address him right from the moment alighted the previous day
from Tezu – has already lined up a few meetings for the day.
“Sir, car ready.
Shall we go?” he asked.
We climbed down
quickly and got into the Maruti Gypsy – the most cumbersome vehicle given my
tall frame and less legroom in the conductor’s seat (next to the driver).
Sensing my discomfort, Dhanpalji
smiled and said: “It is a very short distance!”
Before I could
settle down on the rickety and bumpy ride, we were inside a compound and saw a
short, portly young man rushing out to greet us with two kids in tow.
Chiliko Meto, I
must tell you, is a gregarious man. Good English and equally excellent command
over Hindi. Thankfully, no linguistic challenges unlike in Assam where I have
to encounter Bengali and Assamese – both languages I am unfamiliar with.
Some people quickly
put you at ease. Their personality is
total friendly. Of course, there are others at whose sight, you freeze. They
are guarded and every single word is measured before it slips out. Too cautious
and therefore lacks warmth. Even their handshake is firm, not warm. You would
have preferred shaking hands with an iron pillar.
Luckily Meto is a
warm personality. We exchange greetings and begin to talk business.
“Have you sold your
bagan (orchard)?”
Dhanpalji asked Meto.
A beaming Meto nods
and blurts out, “at 70 paise per fruit”. A Congress man and Zilla Parishad
Chairman, he owns 3,000 orange trees spread across 10 hectare at Balali village
– say almost an hour long drive on the Trans Arunachal Highway coming up
linking Tezu with Roing. In fact this prestigious Highway passes along his bagan.
This was his maiden
year of harvest and he was proud of having sold his produce at 70 paise per
fruit.
“What?” Dhanpalji exclaimed almost jumping out of his seat.
… “70 paise?”
“Yes…. Something
wrong, Dhanpal?” demanded Meto.
Meanwhile, the two
little kids walked in with a tray of piping hot tea and some cookies and begun
to serve. Cute little ones and they were serving us in the most dignified way.
The girl Anina Meto – handing over cups and saucer to her elder brother Atindo
– not more than five years – to be handed over to us seating in the
aesthetically decorated drawing room of their sweet papa.
“Why did you sell
at such a low price? I got it done at Rs.1.60 per fruit for the government
nursery,” says the 18-year experienced Horticultural Field Assistant, hailing
from Uttar Pradesh.
If you expect Meto
to drop his jaws down in horror, you’re mistaken.
“It’s okay,”
responds the 3,000 tree owner, having finished his maiden harvest. Assuming
each tree gives 100 oranges in its maiden year of harvest, the volume would be
300,000. His actual – not notional – loss of income is mind boggling: Rs.2.7
lakhs! Instead of pocketing Rs.4.8 lakhs, he settled down for Rs.2.1 lakhs.
Is he regretting
his poor decision? I ask.
No. Not at all.
“You learn from your own mistake. Next year, I will be more careful,” he says.
He was so full of
vigour and happy state of mind over his first year harvesting, he decides to
drive us down to the bagan. He hops into our
Maruti Gypsy – pushing our Nepali driver to the back seat – and takes control
to steer us through the under construction Trans Arunachal Highway to his
Balali farm.
Meto is not the
only one to sell at such low price to the buyers from Karimganj, Assam. These
middle men – mostly Muslims – buy either the entire output for a lumpsum or per
fruit basis and transport them to Karimganj – 700 km away – and from there push
oranges into Bangladesh for some value addition and exported to Europe and the
Persian Gulf under the label, “Produce of Bangladesh”!
Smart Bangladeshis!
Minonge Linggi,
another orange grower from Roing again with 4,000 trees, also does the same. He
also sells to the same Karimganj gang at rock bottom prices.
The previous
evening, when I visited the local market with Dhanpalji, we found the same oranges sell at Rs.7
per unit. Pine apples sold at Rs.5 at farmgates, selling at Rs.25 a piece. Farm
fresh ginger at Rs.2/kg at farmgates! (Rs.15/kg at the Pasighat mandi in
Arunachal Pradesh, hardly 100 km away from Roing…. Hang on, Rs.10 per 100 gm in
Karol Bagh, New Delhi!).
Why this
discrepancy? Obviously the role of middlemen crops up. What is that they do and
reap such huge windfall profit? Is it okay? Is it ethical? I thought to raise
these questions to my favourite supply chain friend.
“Do you know a box
of bananas bought at US$4 at the farmgate is sold at US$30 in supermarkets? Are
you aware the price of Moldovian apples have a 2:17 price from farm to when
they are sold in next door Europe!! This value change is not the only change
that so called middle men bring, they also allow the supply chain to function
as a conduit. Please don’t undermine the importance of middlemen, please do not
make them out to be wasteful,” thundered Capt. Pawanexh Kohli, Principal
Advisor CrossTree who also doubles as the Chief Advisor to National Centre for
Cold-chain Development, a government body under the Ministry of Agriculture
that is mandated to usher in the change to our cold chain. It was on the behest
of this nodal body that I was visiting the North East on a study tour.
“It is a process that
can be wasteful but if it exists then those who fulfill it cannot be tainted
the same. Someone has to hail the transport, someone has to aggregate the load,
produce has to be graded and accounted for, then possibly packed branded and
marketed too. A chain of activities which the producer or cultivator cannot do
or is not capable to undertake. The maligned middle man exists because he is doing
or facilitating this work and in this course may even take a business risk. Look
at ordinary logistics, the middle men there are the freight forwarders, the
ship brokers and the customs agent! Some fulfill a physical activity, some
facilitate the trade, but each exists because there is a need for that function.”
This was the longest I had heard Capt Pawanexh Kohli speak on what we
disparagingly call a ‘middle man’.
”What we need is to
change the process, the route, increase competition, enable reach into other
markets. Soon you will find that these market forces will perforce lead all
these middle functions to get consolidated. Such consolidation will bring
greater ownership and reduce the chain of custody. Which will mean better
handling, lesser wastage, more value, improved quality. You will then just call
the middle-man by another name, usually the function name”.
He continued to say
that true, more the number of independent functionaries, more the profit
skimming which is the very reason shipping companies have begun to reach out to
their customers in an attempt to take on the responsibility of freight
forwarding and thus trapping some of that profit component for themselves. “Are
the producers ready to take on the middle man’s role? And if not, then why?
Understanding this and then enabling them to do so or to partner with these
arrangers-of-supply-chain is how we will create value for them”, said Kohli.
He got me thinking,
what if the entire lot of orange ends up as surplus stock because another
region had a bumper yield too, what if it turns out diseased? Nobody will touch
it. What if the truck carrying farm fresh items gets delayed or meets an
accident en route? Yes, there were a lot of imponderables to contend with. For
taking that risk, these off-farmgate associates obviously add their margins.
So, when someone argues that these middlemen milk farmers it has to be taken
with a pinch of salt.
You can eliminate the
so called middle man, but not their middle function. Someone has to play that facilitating
role. In the publishing world, for example, with which am familiar, proof
readers no longer exist. Editorial page makeup artists are extinct.
Multi-tasking has become the norm. Sub-editors and news desk manage pages. Put
it differently, pages are made as in the past and proofing is done as in the
past. Those functions exist, but not those who executed in the past. Others
have taken charge of that vital role. Competition made that happen, brought
about role optimization but those functions do remain!
As I trawl through
Arunachal Pradesh trying to figure out how to help growers of fruits and
vegetables to market their produce and sense the role of ‘Karimganj gang’ – as
I have to come call them derisively – the role of middle men is on top of my
mind. Farmgate interactions do provide insight that growers’ disenchantment
with these Karimganj gang and their inability to do marketing on their own.
Will someone replace these sharks? is a constant refrain.
“One request. Don’t
throw these middlemen. They are playing a very important role of helping us
push our fruit out of our farmgates,” tells Pabu Tayang, 75-year old ex-Fauji
who had seen action in 1962 India-China war and an owner of 1,000 orange trees
spread over 4 hectares. He verily echoed what I heard earlier from Pawanexh
Kohli. “Yes, they are necessary evil,” adds his 50 plus nephew Tanyo Jerang at Tekong village near Pasighat on a
November evening.
“We’ve arrived,”
says someone. I come out of my reverie and notice Meto stepping out of Maruti
Gypsy and walking towards the bunch of Karimganj gang in action at his Balali
bagan, plucking oranges from trees.
“Would you like to
try?” asks Meto, the man who has lost out a huge sum a few hours ago to the
Karimganj gang.
I nod and would
like to climb the wooden ladder and try my hands at plucking oranges. Lifetime
opportunity, yes. I begin to walk behind him.
