This activity is the actual procurement of crops from farmers and their sales directly to larger wholesale traders or formal sector institutional buyers. The idea is to short circuit the food supply chain and thereby, get better prices for the produce.
However, this is also a risky business as one is always open to market price fluctuations. Market fluctuations also have a bearing on the holding costs. Hence, Marutham is proceeding cautiously on this activity. Two years back, they had started this activity. But last year’s excessive rainfall had reduced the quality of grains. Thus, they decided not to procure last year.
This year, they have planned to procure the Seeraga Samba and few other indigenous varieties in particular. This is in line with the principle to promote indigenous paddy varieties and sustainable agriculture. Native varieties of paddy have higher prices than normal ones, and the formal markets is more open to such varieties, thus market side risks are also lower.
Spaces for effective storage are one of the lacunae of the agri supply chain in India. As a preparation for expanding this activity, one of the board members – Mr. T. Elumalai of Kdambai Village has donated a patch of land for the company to have its own godown. This is a major breakthrough, as godown rentals would be saved. It also means that the company can apply for loan for the construction of a godown.