Agricultural Marketing in India

Indian agriculture is fast getting commercialized. Consequently, farmers have become aware of the importance of post-production work such as storage, packaging, and transportation. This is where agricultural marketing in India becomes significant. The agricultural marketing system consists of activities ranging from harvesting to the final sale of the produce. The following are the activities involved in agriculture marketing.

In other words, agricultural marketing does not simply refer to farmers’ act of bringing their produce to the market for the purpose of sale. Rather, it also includes all those activities that help farmers fetch the maximum price for their produce.

Importance of Agricultural Marketing

The existence of a proper agricultural marketing system has the following advantages.

Measures Adopted By the Government

Realizing the importance of agricultural marketing, the Indian government has adopted various measures to improve the same. Here are some of those measures.

Organization of regulated markets: In regulated markets, the sale and the purchase of farm produce are monitored by a market committee that comprises farmers, government agents, brokers, and traders. These markets operate with the basic rationale of protecting farmers from fraudulent practices of intermediaries.

Often, on account of their illiteracy and lack of awareness, farmers are cheated by middlemen through the use of wrong weights and measures, underhand dealings, etc. The market committee aims at protecting farmers from such practices. Some of the important functions of the market committee are summarised below.

Infrastructure development: Lack of proper infrastructure forces farmers to sell their produce right after harvesting, even at unfavorable prices. This impedes agricultural productivity and growth prospects. To counter this, the Indian government has set up cold storage and warehouses all across the country. The central and state warehousing corporations offer storage and warehousing facilities to farmers. This has given farmers the option of selling their produce at the right time and at the right price. The availability of these facilities has also motivated farmers to generate a greater marketable surplus.

Further, the advancement of the Indian railways and roadways (which offer subsidised transport facilities) has helped farmers to extend their market to urban areas where they are able to earn even higher profits.

Propagation of market information: Prior to the introduction of the agricultural marketing system, Indian farmers would fall prey to intermediaries and traders. To safeguard the interests of farmers, they had to be made aware of the prevailing market conditions such as current prices, sales, and stock updates of farm products. So, these market updates and market forecasts began to be disseminated via the radio, television, newspapers, etc. Special agriculture-based programs such as Krishi Darshan began to be broadcast on Doordarshan and the All India Radio. In 2004, the government initiated the Kisan Call Centres to speed up the dissemination of information and to provide round-the-clock solutions to various grievances of farmers. All these facilities have helped farmers sell their produce at a favorable time, so as to get the maximum returns.

MSP policy: Minimum Support Price (MSP) is the minimum legislated price that farmers can charge in return for selling their produce. This policy enables farmers to sell their produce in the open market at a higher price. MSP insulates farmers in case of price fall as they are assured of selling their produce at the minimum price. Government agencies (such as the Food Corporation of India) purchase the produce from farmers at MSP and keep it as buffer stock. The purchases are then distributed to the public through the public distribution system and fair price shops at subsidized prices. The buffer stock is also used during emergencies such as low produce and scarcity.

Setting up of warehousing facilities: The availability of warehousing facilities encourages farmers to invest in crops, store their excess produce and sell it later at an attractive price. The central and state warehousing corporations have provided farmers with storage space for storing their excess produce.

Improvement of transportation facilities: With better transportation facilities at their disposal, farmers can sell their produce in urban areas at higher prices. In this way, they are able to enhance their earnings.

Alternative Channels For Agricultural Marketing

To further improve the system of agricultural marketing, the government has developed various alternative channels. It was found that small and marginal farmers, who sold their produce through middlemen were often exploited because of price differences. The middlemen would buy the farmers’ produce at a very low price and sell the same at a higher price in the market.

Alternative marketing channels have, thus, been developed to protect the economic interest of such farmers. Using these channels, small and marginal farmers can sell their produce directly to consumers at a higher price and, thereby, make profits. Some examples of alternative agricultural marketing are Apni Mandi in Punjab, Haryana, and Rajasthan, Hadapsar Mandi in Pune, Rythu Bazar in Andhra Pradesh, and Uzhavar Mandi in Tamil Nadu.

Nowadays, various national and international companies enter into contracts of direct sale with farmers. These companies make advance payments to farmers for supplying their produce at pre-determined rates. These alternative agricultural channels raise a farmer’s income and, simultaneously, reduce the price risk for small and marginal farmers.

Problems of Agricultural Marketing in India

Despite various attempts by the government, the system of agricultural marketing in India has only been partly successful. Private traders and middlemen still remain the dominant players in the marketing system. They account for 90% of the marketing activities, while government agencies handle a mere 10%. The following are some of the obstacles in the way of a successful agricultural marketing system.

Defective weighing techniques and misappropriation of accounts: Being illiterate and ignorant, farmers fall prey to defective weighing techniques and misappropriation of accounts.

Ignorance: Lack of knowledge of market prices and market conditions forces farmers to sell their produce at a lower price.

Lack of proper storage facilities: Lack of access to proper storage facilities forces farmers to sell their produce at a lower price right after harvesting. Also, improper storage makes the agricultural produce vulnerable to damage due to pests and bad weather. Huge amounts of food grains and other products are wasted every year due to improper storage.

Difficulty in obtaining agricultural credit: Lack of institutional sources of finance forces farmers to fall back on local moneylenders for obtaining credit. Such credit is subject to various conditions. For example, credit might be advanced to farmers on the condition that they would sell their produce only to the moneylender at whatever price he sets. This results in the exploitation of small and marginal farmers.

Lack of transportation facilities: Farmers are unable to sell their produce in far-off places because of a lack of proper roads and transportation facilities. They are forced to sell in local markets at a lower price.

The large number of intermediaries: Farmers are separated from the actual consumers of their produce by a large number of intermediaries. These intermediaries purchase the produce from farmers at a low price and sell the same at a much higher price. This implies that farmers receive a very small share of the actual return on their produce. Studies indicate that Indian farmers on average receive less than 60% of the actual price paid by the final consumers for their produce.

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