India’s agricultural landscape reveals a sharp divide between the incomes of dairy farmers and those growing crops like tomatoes and onions. At one end is Amul (and other coops which collect milk), the cooperative giant, which returns 80-85% of the consumer price to farmers. On the other hand, vegetable farmers often receive a meager 30-40% of the final retail value, leaving them vulnerable to debt and financial stress. This disparity sheds light on the efficiency of cooperative models like Amul and the inefficiencies plaguing the vegetable supply chain.
Amul’s success lies in its cooperative structure, where farmers are not just suppliers but also stakeholders. With more than 3.6 million members, Amul ensures that dairy farmers receive transparent payments based on milk quality, with minimal delays. The cooperative’s streamlined operations keep distribution costs low, allowing them to pass savings on to farmers. For example, when a liter of milk retails at ₹60, the farmer typically receives ₹50-51, making Amul’s system a model of inclusive growth. This stability has encouraged many rural households to remain in or shift to dairy production as a reliable source of income.
In stark contrast, vegetable farmers, particularly those growing tomatoes and onions, struggle with volatile prices and fragmented markets. During peak seasons, these crops experience steep price fluctuations due to perishability, poor storage infrastructure, and the involvement of multiple middlemen. As a result, even when urban consumers pay ₹60-80 per kg for tomatoes or onions, farmers may receive only ₹15-25 per kg, or even less.
The root of this disparity lies in the structural differences between dairy and vegetable markets. Amul’s cooperative model ensures direct farmer participation, minimal intermediaries, and better price realization. In contrast, vegetables pass through a web of intermediaries, each taking a cut, leaving the farmer with just a fraction of the consumer price. Post-harvest losses due to inadequate cold storage further erode farmers’ earnings. Additionally, most vegetable farmers rely on local mandis dominated by middlemen, limiting their bargaining power.
This imbalance in farmer returns could have significant long-term impacts. If current trends persist, more farmers may abandon vegetable cultivation in favor of dairy. Such a shift would not only disrupt agricultural diversity but also threaten India’s food security.
Addressing this disparity requires a multi-pronged approach. Strengthening Farmer Producer Organizations (FPOs) could replicate Amul’s cooperative success in vegetable markets. Better cold storage facilities and direct-to-consumer platforms can reduce post-harvest losses and increase farmer margins. Additionally, offering MSP-like protections for key vegetables could safeguard farmers from price crashes.