Economy

High cost of compliance is lowering farmers’ income – Is national turmeric board an option?

While the target of “Doubling Farmer’s Income by 2022” has been missed despite many measures and incentives by the Centre and States, farmers in key export products such as turmeric are facing rising costs and lower income. Turmeric now has good global demand and even smaller countries such as Fiji produce and export it. Yet, farmers in the top exporting country struggle to meet their daily needs and some are withdrawing from turmeric production.

An ongoing survey by the authors covering 262 turmeric farmers and 43 Farmer Producer Organisations (FPOs) found that compliance costs have increased manifold. Multiple agencies such as the Spices Board, APEDA, FSSAI and BIS are setting standards for agricultural produce. Yet, none of them regulates the entire turmeric value chain. For example, Spices Board looks at processed turmeric, while APEDA covers fresh turmeric. These agencies have onboarded different laboratories and are asking for different compliance requirements, significantly driving up export costs, particularly for small farmers and producers. Testing fees can range from ₹100 in government laboratories to ₹4,200/- in private laboratories for comprehensive testing. The testing process is also more rigid in some private laboratories. Moreover, most laboratories are in urban areas, posing logistical challenges for farmers, as there are only a few decentralised testing options.

Too many controls, little benefit

Even after incurring costs and going through all the regulatory requirements set by the export agencies, the product can be rejected in the export market. Data from the Rapid Alert System for Food and Feed (RASFF) of the European Union (EU) food and feed safety department shows that between 2019-2024, Indian turmeric faced 16 rejections due to contaminants (like pesticide residue “ethylene oxide” and “Chlorpyrifos”). The United States Department of Agriculture (USDA) recorded 42 rejections of Indian turmeric exports between 2017-2024.

The survey found that multiple regulatory bodies with different standards/compliance requirements discourage small and marginal farmers from being a part of the global value chain (GVC). Many want to forgo the testing and certification process, and are opting to sell domestically to traders instead of FPOs/cooperatives societies/contract manufacturers at lower prices.

Another interesting finding is that government agencies can reject each other’s compliance process. The APEDA recently suspended the Sikkim State Organic Certification Agency (SSOCA), which farmers thought was fairly secure as it is State-run.

While establishing a single agency like the National Turmeric Board, as proposed by Prime Minister Narendra Modi could have potentially addressed these regulatory complexities, unified standards, streamlined testing and certification procedures, and offered farmers the necessary support to meet global benchmarks, it has not seen the light of the day. Such a board could have also facilitated R&D, capacity building, exports, and knowledge sharing.

Streamline compliance processes, increase capacity building will help

Reducing fragmentation in value chains and connecting farmers to the global market can increase their income. To do so, compliance costs should be reduced, and farmers should be made “market-ready” through capacity building/training. In the survey, 56 per cent of the farmers adhere to organic practices, with a combination of third-party and self-certified participatory guarantee system models, yet many lack the knowledge of the requirements of different export markets and buyers with respect to quality, curcumin content, etc.

Without a clear understanding of how quality assurance and high-curcumin varieties impact the price and, therefore, their income, farmers are less likely to invest in testing and certification process. Thus, knowledge gap prevents them from accessing premium export markets. At present, multiple agencies are training on what they want and within their jurisdiction, but a more holistic approach to capacity building/training can equip farmers with insights into different market standards and testing protocols leading to higher returns. Some other ways to reduce the cost for farmers include:

1. Strengthen and standardised laboratory testing: Uniform spread of laboratories, with in-field sample collection, can reduce cost and time. Establishing uniform testing methods across all laboratories would ensure consistent, transparent, and reliable results, increasing trust among international buyers. It will also reduce quality assessment discrepancies, leading to fewer rejections in export markets.

2. Subsidise third-party certification costs: Third party certification cost for organic products may be subsidised for small and marginal farmers. Adopting a subsidy model adjusted by farm size or production volume could help farmers financially and encourage them to go for certification, which will, in turn, enhance their global reach.

3. Implement uniform capacity building/training modules: At present, multiple training modules by multiple agencies are confusing the farmers. Sometimes they just attend the training as they get some financial remuneration to do so. There is also a need for training of the trainers. A holistic training module, which can be customised to the local needs, soil quality, etc., will help. Agricultural extension officers/FPOs/cooperative societies need to be trained first, and then they could lead training initiatives.

4. Support to implement product traceability: Traceability should be implemented to the farms, by bringing in technology partnerships and innovative schemes linked to product traceability. Traceability is now the key requirement of export markets, and this area requires an urgent focus in Indian policymaking.

Single regulator, an option

To summarise, a coordinated and holistic approach towards ensuring uniform, high-quality produce, which can help to reduce compliance costs, will increase farmers’ income and help in their value chain integration.

The National Turmeric Board could have been an option only if it could have unified the activities across regulatory bodies, providing cohesive support to farmers. A single food regulator for exports, imports, and domestic markets can also be an option, and the third option may be to integrate the export agencies.

Mukherjee is Professor and Khanna is Research Assistant at Indian Council for Research on International Economic Relations (ICRIER). Views are personal.



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