Opportunities & Challenges For “Agricultural Marketing” By: Ms. Subina Syal Preface The term agricultural marketing is composed of two words -agriculture and marketing. Agriculture, in the broadest sense means activities aimed at the use of natural resources for human welfare, and marketing connotes a series of activities involved in moving the goods from the point of production to the point of consumption. Specification, the subject of agricultural marketing includes marketing functions, agencies, channels, efficiency and cost, price spread and market integration, producers surplus etc.
The agricultural marketing system is a link between the farm and the non-farm sectors. In India Agriculture was practiced formerly on a subsistence basis; the villages were self-sufficient, people exchanged their goods, and services within the village on a barter basis. With the development of means of transport and storage facilities, agriculture has become commercial in character; the farmer grows those crops that fetch a better price. Marketing of agricultural produce is considered as an integral part of agriculture, since an agriculturist is encouraged to make more investment and to increase production.
Thus there is an increasing awareness that it is not enough to produce a crop or animal product; it must be marketed as well. Agricultural marketing involves in its simplest form the buying and selling of agricultural produce. This definition of agricultural marketing may be accepted in olden days, when the village economy was more or less self-sufficient, when the marketing of agricultural produce presented no difficulty, as the farmer sold his produce directly to the consumer on a cash or barter basis. But, in modem times, marketing of agricultural produce s different from that of olden days. In modem marketing, agricultural produce has to undergo a series of transfers or exchanges from one hand to another before it finally reaches the consumer. The National Commission on Agriculture, defined agricultural marketing as a process which starts with a decision to produce a saleable farm commodity and it involves all aspects of market structure of system, both functional and institutional, based on technical and economic considerations and includes pre and post- harvest operations, assembling, grading, storage, transportation and distribution.
The Indian council of Agricultural Research defined involvement of three important functions, namely (a) assembling (concentration) (b) preparation for consumption (processing) and (c) distribution. Definition Marketing can be defined as the commercial functions involved in transferring goods from producer to consumer. Marketing is not just the final transaction of receiving a check. The acts of buying supplies, renting equipment, paying labor, advertising, processing and selling are all part of a marketing plan. Marketing should begin as the first ideas for an enterprise start to bubble.
Some say marketing is everything a business does, that it is the most important aspect of any business, and the only action that results in revenue. Agricultural marketing is the where the producer, the processor, the distributor and the consumer meet. Introduction The importance of marketing in agriculture is very well illustrated by saying, “that a good farmer has one eye on the plough and the other on the market”. This is true when agriculture is mainly for subsistence; and now, even Indian agriculture is becoming commercialized. In these days of commercial agriculture, it will be more fit to say, “a good farmer has only is hands on the plough but the eyes on the market Since agriculture constitutes a major part of the economy, marketing of agricultural products also assumes considerable importance in our context. Marketed surplus is the amount of agricultural produce that is brought to the market for sale after what is retained by the producers for their own consumption. Hence it will be less than total production. It is difficult to give a correct estimation of marketed surplus, since it differs according to crop, place, season and general state of the economy.
Marketing finance is also important since the small producer will experience difficulty in waiting for payment from the wholesale buyer, if the time lag is too long. Proper storage and handling facilities are important because otherwise, the produce will perish and become unmarketable and unusable. Challenges for Agricultural Marketing The present system of agricultural marketing is not well organized and the farmers have to depend largely on the middlemen for the disposal of the farm’s yield who have no hesitation in taking advantage of the farmer’s dependence upon them.
The real evil is the tendency of these intermediaries who exploit the ignorance and helplessness of the farmers to increase their own profit. The malpractices in the present system of agricultural marketing are very well known. The Rural Credit Survey Committee described the position as follows: “while standards of marketing have improved, in most of the relatively few regulated markets which have been established, a number of malpractices still exist even in them since personnel and enforcement are two great problems, not always sufficiently attended to, much less solved.
Sometimes, the malpractices take fresh lease of unauthorized life just outside the market, for the private interests are strong, the advantages of evading strict regulation are many and the producer is in no position to seek eventual advantage and protection from law at the cost of the immediate disadvantage involved in the loss of powerful customers, which are also sources of credit and finance. Moreover, there is a very great lacuna that no control at all is exercised over village sales, in which the primary producer is literally, legally and in practice at the mercy of the village trader”.
Frequently large samples are also taken by the buyers with payment. The cultivators are not paid for them even when no sale is affected. Generally the transactions take place on a sample basis. Consequently, the producer does not get the full worth of his produce. The reputation of Indian agricultural producers in the world market is low. The villagers have practically no contact with the outside world not are they in touch with the trend of market process and they mostly depend on hearsay reports received form the village bania who is always busy in earning profits from buyers by making them fools to the ignorant villagers.
In India, the following are some of the common defects agricultural marketing: 1. Lack of organization, 2. Forced sales, 3. Presence of middlemen, 4. Numerous market charges, 5. Market malpractices, 6. Lack of standard weights and measures, 7. Inadequate storage, 8. No standardization of price and quality, 9. Lack of marketing finance, and 10. Want of proper market information. Requisites of good marketing ? In the first place the quality of produce should be good.
Good quality can fetch better price and confidence which can be assumed by using best seeds, by adopting correct methods of harvesting by grading the product by storing it well and avoiding malpractices like adulteration and misrepresentation etc. ? The second essential of good marketing is the staying power of the seller. Therefore, the agriculturists may have the staying power to sell so that they may get better prices after the harvest. The peasant should, therefore, have enough reserve to pay land revenue and meeting other needs. ? The third essential of a good marketing is the good means of communication and transport facilities. Fourthly, there should be conducted markets at convenient distance, and lastly, good marketing eliminates exploitation of the seller and reduce the number of intermediaries. Facilities Needed for Agricultural Marketing In order to have best advantage in marketing of his agricultural produce the farmer should enjoy certain basic facilities. 1. He should have proper facilities for storing his goods. 2. He should have holding capacity, in the sense, that he should be able to wait for times when he could get better prices for his produce and not dispose of his stocks immediately after the harvest when the prices are very low. . He should have adequate and cheap transport facilities, which could enable him to take his surplus produce to the mandi rather than dispose it of in the village itself to the village money-lender-cum-merchant at low prices. 4. He should have clear information regarding the market conditions as well as about the ruling prices, otherwise may be cheated. There should be organized and regulated markets where the farmer will not be cheated by the dalals and arhatiyas. 5. The number of intermediaries should be as small as possible, so that the middleman’s profits are reduced.
This increases the returns to the farmers. PROBLEMS AND PROSPECTS: There are several challenges involved in marketing of agricultural produce. There is limited access to the market information, literacy level among the farmers is low, multiple channels of distribution that eats away the pockets of both farmers and consumers. The government funding of farmers is still at nascent stage and most of the small farmers still depend on the local moneylenders who are leeches and charge high rate of interest. There are too many vultures that eat away the benefits that the farmers are supposed to get.
Although we say that technology have improved but it has not gone to the rural levels as it is confined to urban areas alone. There are several loopholes in the present legislation and there is no organized and regulated marketing system for marketing the agricultural produce. The farmers have to face so many hardships and have to overcome several hurdles to get fair and just price for their sweat. GLOBALISATION: The globalization has brought drastic changes in India across all sectors and it is more so on agriculture, farmers and made a deep impact on agricultural marketing.
It is basically because of majority of Indians are farmers. It has brought several challenges and threats like uncertainty, turbulence, competitiveness, apart from compelling them to adapt to changes arising out of technologies. If it is the dark cloud there is silver lining like having excellent export opportunities for our agricultural products to the outside world. AGRICULTURAL MARKET REFORMS: Below are the certain measures that can be affected to bring out the reforms in agricultural marketing so as to ensure just and fair price for the farming community. Provide loans to the farmer at low rate of interest so that they will be freed from the clutches of local moneylenders who squeeze them. It is said that farmer in born into debt, lives in debt and dies in debt. Right from the beginning of the life, the poor farmers approach money lenders for investing into cultivation who levies very high rate of interest and who takes away the maximum amount of the share from the produce. In case if the crop fails due to natural calamities then the situation would be worse as the farmer is not in a position to pay his loans.
And ultimately he is forced to sell the land at throw away price to the money lender. • It is essential to provide subsidized power supply and loans to the farmers as the expenses towards power consumption takes considerable amount of investments. • Generate a new distribution network that connects the farmers directly to the consumers to get maximum returns as the present channel of distribution involves multiple mediatory who take away the major portion of profits which otherwise the farmers is supposed to get. Elimination of the existing loopholes in the present legislations is warranted. • There should be stringent action against black marketers and hoarders who buy the stocks from farmers at cheap prices and create artificial demand and then sell the stocks at higher prices. • Creating local outlets at each village where the farmers sell their stocks directly to the consumers or the authorized buyers at fixed prices would help to a great extent. Intervention of government in this network is essential to bring the fruits to the farmers. At the village level there should be counseling centers for farmers about the worth of their stocks so that they can get fair price. The crucial role of Non-Governmental Organizations (NGOs) is needed in this context. • The existing legislations are outdated and are not in tune with the changing trends and technological inventions and the same need to be updated forthwith. • The retail revolution has brought several changes in the retail sector where the retail giants buy in bulk directly from the suppliers and sell to the consumers directly and in this process they pass the benefits to the consumers as well.
In the past the consumers were paying more for less as there were many channels of distribution system and now the consumers pay less for more. • The government is already fulfilling the objective of providing reasonable prices for the basic food commodities through Public Distribution System with a network of 350,000 fair-price shops that are monitored by state governments. It is more effective in states like Punjab, Haryana and some parts of Uttar Pradesh. And the same needs to be strengthened across the country. Government should levy single entry tax in stead of levying multiple entry taxes either directly or indirectly for the transactions and activities that are involved in agricultural marketing such as transportation, processing, grading etc. , as it would benefit both farmers and consumers directly. HOW TO GET FAIR AND JUST PRICES FOR FARMERS? Direct marketing of the agricultural produce is the need of the hour. Efforts may be made to provide facilities for lifting the entire stock that farmers are willing to sell with incentive price. There should be provision for storing the stocks such as godowns and warehouses.
It helps the farmers to hold the stocks till the prices are stabilized. Usually immediately just after the harvest the prices would be low and if the farmers are patient in holding the same for some time it would fetch better prices. The brokers play the games during the trading of the agricultural stocks which the farmers do not know and realize because of improper information about the market prices. The brokers without any investment and with their negotiation skills transfer stocks by buying at low prices and selling at higher prices to the other end.
The farmers need to be educated in this regard. There should be all-round rationalization and standardization of the prices through legislative means. Presently there is vast gap between the marketing strategies of agricultural produce in India and abroad and the same needs to be bridge. Remove the various malpractices prevalent in the present system. There is need to set up marketing committees which has the representation of growers, merchants, local bodies, traders and nominees from the govt.
There should be collective and integrative efforts and energies from all quarters for ensuring just and price for farmers. Conclusion Agricultural Marketing, rather than production, is going to be the key driver of the agriculture sector today, thanks to the new market realities posed by the increasing accent on globalization, liberalization and privatization of the economy. Market-driven production is an idea whose time has come. With the gradual shifting of agricultural system from subsistence to commercial one, there is increasing focus on Agripreneurship and Agri-marketing.
It is the need of the time to tune up the Agricultural Marketing System of the country to enable the farmers to face the new challenges and reap the opportunities as well. This summons us to revisit our traditional statistic policies and laws and bring about the requisite reforms in the sector. The imperatives of the integration of the Agricultural Marketing System of the country are increasingly posing new challenges in respect of each of the components of the system such as- cleaning, grading, quality certification, packaging, storage, transportation, financing, wholesaling and retailing etc of agriculture produce.
The subtlety of the management of Agricultural Marketing issues today calls for high degree of professionalism to measure up to the expectations of different stakeholders. Internal reforms in traditional agricultural marketing system of the country have become indispensable to enable our farmers to tap into the external market of the post-WTO regime. Now that many states have introduced some reforms in agricultural marketing, the need of the hour is to consolidate the gain of reforms through appropriate policies and plans. The existing trade barriers have to be removed for evolving a common market in India.
There is a need to give a push to processing and value addition. Cost effectiveness through integrated supply chain management has become sine qua non in the present world trade environment. This demands doing away with the dysfunctional aspects of the present regulated marketing system by putting in place a responsive market information system, need-based price discovery mechanism, measures to solve the problem of economies of scale at the grass root level by promoting contract farming, direct marketing and private investment in agricultural marketing infrastructure.
Congenial investor-friendly economic environment has got to be evolved to attract the private investors to invest in agricultural marketing sector for bridging the existing gap in the agricultural marketing infrastructure of the country. Farmers should get freedom of choice to use a physical market giving them services for the fees paid by them. This could be possible through dismantling of the monopoly of the Government-owned markets and permitting setting up markets in the private sector, thereby bringing healthy competition in the sector.
This also calls for the traditional Government mandies to be spruced up in terms of their management, infrastructure, service delivery, customer-friendliness through fine-tuning of their internal processes. The other areas of reforms such as promotion of grading and standardization, market-led extension, rationalization of market fees, public- private partnership in owning and management of markets etc will go a long way towards pushing the system to the next level of excellence.
The focus on reforms calls for a paradigm shift in our approach. There is no doubt that in any marketing there is a motive towards profit involved and at the same time the marketing is to be based on certain values, principles and philosophies such as offering just and fair prices to the farmers who toil hard to till. Bringing necessary reforms coupled with proper price discovery mechanism through regulated market system will help streamline and strengthen the agricultural marketing.
In order to avoid isolation of small-scale farmers from the benefits of agricultural produce they need to be integrated and informed with the market knowledge like fluctuations, demand and supply concepts which are the core of economy. Marketing of agriculture can be made effective if it is looked from the collective and integrative efforts from various quarters by addressing to farmers, middlemen, researchers and administrators. It is high time we bring out significant strategies in agricultural marketing with innovative and creative approaches to bring fruits of labor to the farmers.
References Websites: http://agmarketing. extension. psu. edu/ http://www. world-agriculture. com/agricultural_marketing/agricultural-marketing. php http://www. ccsniam. gov. in/agricultural-marketing. html http://www. delagrimarket. org/agriculturalmarketing. htm http://www. coolavenues. com/know/mktg/ http://www. ces. purdue. edu/sa/famfarm/market. html Books: | |Encyclopedia Of Agricultural Marketing- Concepts Issues Problems & Prospects (Vol. 1) Rural & Agriculture Marketing: Opportunities, Challenges & Business Strategies