Agents: a changing role
Agents play a crucial role in servicing small-scale farmers. They often distribute inputs such as PL and feed and additionally provide farmers with credit or loans. In exchange, agents require farmers to sell back their raw materials, often at prices below the actual market level. Agents used to support farmers during harvest and facilitate transport from the farms to the processing establishments. Depending on the location and the size of farmers, multiple agents may have a role between the farmer and the factory.
Since farmers have increased their productivity, the role of agents has started to change. Although earlier they would actually purchase and sell the raw materials, nowadays more processors use the agents as a service provider. The main task of the agent is to coordinate harvesting between the many small-scale farmers and the processing establishments. Factories provide farmers with high quality inputs and in many cases send their own trucks with ice to the farmers at harvest time. The new system provides processors with more control over the supply chain and enables them to guarantee supply to their factories.
Spot market selling often takes place when processors from a certain state are locally confronted with a shortage of raw material supply due to crop failure. As a consequence they are forced to purchase from elsewhere in order to be able to fulfil their contracts with overseas buyers. In these cases, the processors offer higher prices to farmers to convince them to sell at the spot market. Even though there is a lot of competition for raw materials between processors and between processors and agents, spot market selling is declining.