In India, cereals and pulses are primarily procured by agriculture marketing societies like FCI and NAFED, whereas milk procurement is done through cooperative societies like AMUL. Procurement by cooperative societies gains both stakeholders’ trust as well as public confidence, while procurement undertaken by agriculture marketing societies is often mired in controversy due to various problems.

Issues in the procurement and marketing of cereals and pulses in India:

• Quality grading: The absence of grading or sorting machines in most of the procurement centers leads to the absence of positive incentives for better quality.
• Malpractices in awarding MSP: Due to the absence of grading and encouraging collusion, commodities not qualified for FAQ (fair average quality) are also getting minimum support price (MSP) for which it is otherwise ineligible.
• Episodic procurement: Cereals and pulses procurement happens only once in the Rabi and Kharif seasons, which leaves out farmers who harvest off-season.
• Absence of forward and backward linkages: It impacts the marketing capacity of farmers. They have to sell to local buyers, who don’t guarantee the minimum price.
• Delay in payments: FCI and the National Agricultural Cooperative Marketing Federation of India (NAFED) often face a cash crunch as they are dependent on budget allocations.

Model of the milk sector in dealing with issues related to cereals and pulses procurement and marketing in India:

• Transparency: Quality checking through machinery like a lactometer and a centrifuge machine in the milk sector helps farmers to be immune from fraud related to the grading of stock.
• Ease of doing business: Minimal or no restrictions on quantity to sell. It helps small and marginal farmers to sell their products along with the large farmers who generally have greater bargaining power.
• Round-the-year procurement: Like milk collection undertaken every day, allowing agriculture marketing societies to procure cereals and pulses 365 days a year can help those farmers who want to sell according to the market dynamics.
• Dedicated service: Like milk sector co-operatives, agriculture marketing societies need to devote time, energy, and domain expertise to ensure both forward and backward linkages for a smooth marketing mechanism.
• Regular payments: The milk sector is known for daily or weekly payments, which ensure income security for dairy farmers. Such liquidity flow can be adopted by financially empowering agriculture marketing societies as it will build trust among farmers and encourage them to sell produce to the agriculture marketing societies.
• Creating equity fund: The district milk union retains 25 to 50 paise per liter from the payments to dairy farmers to consolidate funds for building their own infrastructure and for other expenses. Such an independent source of income would make agriculture marketing societies less dependent on governments.

The newly established Ministry of Cooperation in coordination with the Ministry of Agriculture & Farmers Welfare can adopt the best practices of the milk sector from the states of Gujarat and Maharashtra into the agriculture procurement and marketing societies. Agri Infra Fund as well as the Rural Infrastructure Development Fund (RIDF) of NABARD can be used to strengthen the cereals and pulses procurement and marketing mechanism in India.