Agricultural Marketing In India

Agricultural marketing in India is the process of buying and selling agricultural products, from the farmer to the consumer. It involves a series of exchanges and transfers before reaching the consumer.

It is a very important part of the Indian economy, as it contributes to rural development, food security, and income generation. Here are some aspects of agricultural marketing in India.

Introduction

The agriculture sector in India has directly or indirectly continued to be one of the main source of livelihood for majority of the population. Several efforts have been made to increase and maintain the growth rate of agricultural sector to 4% per annum. Despite of these efforts the average rate has increased to 2-3% in the last decade. One of the primary reason for this growth behind this is “Poor Agricultural Marketing”. The reforms in agricultural marketing envisaged by the recent legislations further verify the importance of the sector.

Agricultural Marketing and the Major Marketing System in India

• The agricultural marketing can be defined as the commercial functions involved in transferring agricultural products consisting of far agriculture and other allied products from producer to the consumer.
• It includes all activities involved in moving agricultural produce in time (storage), space (transport), form (processing), and transferring ownership at various levels of marketing channels.
• Under its present form, agricultural marketing in India is not uniform.
• There is considerable regional variation in methods of marketing.
• These processes can be broadly divided into three categories:
  • Traditional Marketing Method:
    • Traditional marketing methods are important in agricultural marketing because they are effective for local promotion. Some examples of traditional marketing methods in agriculture include: 
      • Brochures, flyers, and identity cards: 
        • These are distributed in markets and places of sale. 
      • Local mandis: 
        • Farmers bring their produce to these traditional markets for auction or direct sale.
      • Farmers’ markets: 
        • These markets eliminate middlemen and allow farmers to sell their produce directly to consumers at reasonable prices
  • Cooperative Based Marketing:
    • Cooperative marketing is a voluntary association of farmers who pool their resources to market and distribute their farm products. The goal of cooperative marketing is to give producers more control over their products and to create economic development in rural areas. 
  • Emerging Models of Agricultural Marketing:
    • Some emerging models of agricultural marketing include:
    • Contract farming:
      • A new marketing method that involves farmers and buyers of agricultural produce 
    • Farmers’ markets:
      • A channel that allows farmers to sell their produce directly to consumers at reasonable rates 
    • Farmer producer organizations (FPOs):
      • A collective marketing method that helps farmers improve their marketing opportunities and market linkages 
    • Digital marketing:
      • A new marketing method that can help farmers access market information and market their produce 
    • Direct procurement by organized retail chains:
      • A new marketing method that involves integrating farm production with national and international markets 
    • Electronic- National Agriculture Market (e-NAM):
      • A web-based portal that helps farmers sell their produce to buyers of their choice at their convenience 
    • Other initiatives in agricultural marketing include: 
      • The Agriculture Produce and Livestock Marketing Act, 2017
      • The Model Contract Farming Act, 2018

Rural Primary Market Produce moves from farmer to trader via commission agents. Examples includes: Haats, Shandies, Mandis, Fairs..etc.

Wholesale and Terminal Markets The produce moves from trader to consumer going through wholesale markets like Mandis administ-ered by APMCs and other terminal markets.

Government Initiatives for Agricultural Marketing

1. Integrated Scheme for Agricultural Marketing (ISAM):

• Provides capital for the creation of agriculture infrastructure under the sub-scheme “Agricultural Marketing Infrastructure (AMI)”.

2. Model Contract Farming Act,2018:

• It takes contract farming out of the ambit of Agricultural Produce Marketing Committees (APMCs).
• It instead sets ups a Registering and Agreement Recording Committee, under which all the contracts have to be registered.
• The Model Act contains provisions for dispute resolution, such as : negotiation and reconciliation for a mutually acceptable solution, referral of the matter to a nominated dispute settlement officer.

3. Model Agricultural Produce and Livestock Marketing (Promotion and Facilitating) Act (APLM), 2017:

• The Act is meant to replace the APMC Act, 2003.
• The purpose is to create a single agricultural market with a single license. Both the  agriculture produce and livestock could be traded.
• The new model law has mandated establishment of a regulated wholesale agri-market at a distance of every 80 km.
• It has allowed the private market yards, warehouses and cold storages to be used as a regulated agri-market.

4. Grameen Agricultural Markets(GrAMs) :

• GrAM programme, under the Ministry of Agriculture and Farmers Welfare aims at modernizing and developing the infrastructure of  the rural markets.
• The GrAMs would be outside the ambit of APMC regulation.

5. SAMPADA(Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters) :

• SAMPADA  scheme aims to modernise the food processing sector.
• It will provide the linkage between the farmers and the food processing industries.

6. Operation Greens:

• It aims to stabilize the supply of Tomato, Onion and Potato (TOP) crops and reduce price volatility of these crops.

7. Electronic-National Agricultural Market (e-NAM):

• It aims to unify mandis across the nation into a single national market through electronic trading.
• In e-NAM,  a buyer located anywhere in India would be able to place an order in any mandi in India.

8. Agri-Market Infrastructure Fund (AMIF):

• It was created with NABARD for development and up-gradation of agricultural marketing infrastructure in Gramin Agricultural Markets and Regulated Wholesale Markets.
• AMIF  is a corpus of Rs. 2000 crores.

9. Agri-Udaan:

• The scheme will mentor the  selected agricultural startups to scale up their operations in agri value chain for effective improvement in agriculture.

India’s Current Agricultural Marketing System

• Currently, India has four primary agricultural marketing systems.
• These include:
  • Direct sale to moneylenders and traders
  • Village Haats
  • Mandi
  • Co-operative marketing

Direct Sale to Moneylenders and Traders

• Farmers sell the majority of their crops to local traders and money lenders.
• The moneylenders then act as the wholesalers’ agents.

Village Haats

• This market is limited to a single village, where producers, intermediaries, or consumers meet to buy and sell farm products.
• They are conducted weekly, and the agents of wholesalers and various brokers come to buy the produce.
• The Haats are ill-equipped, with no storage, drainage, or other utilities.
• In these markets, the products made in that village are sold.
• The local market, also known as the growers’ market, is available in rural areas.
• They are usually located in small towns or in convenient locations where rural producers can bring their produce and sell it to buyers.

Mandi

• These markets can be found in district headquarters as well as other towns.
• These are regular wholesale markets that provide a consistent location for daily transactions.
• The quantity of commodities exchanged is in bulk. Commodities in large quantities arrive in these markets from other markets.
• As a result, the marketing system includes middlemen, market agents, weighmen, and commission agents.
• Grading, packing, warehousing, loading, transportation, telephone, and banking services are also available in these markets.
• The Mandis are governed by several state APMC legislation.

Co-operative Marketing

• Farmers create cooperative marketing groups to take advantage of collective bargaining.
• A marketing organisation collects excess from its members and sells it collectively in the Mandi.
• This increases the members’ negotiating power, allowing them to negotiate a higher price for the produce.
• In addition to selling food, these organisations provide a variety of other services to its members.

Agricultural Marketing Infrastructure in India

Markets may be divided into various categories, such as:

• Rural Primary Markets
• Secondary/Assembly Markets
• Wholesale Markets
• Terminal Markets
• Retail Markets
• Live Stock Markets

Rural Primary Markets

• Rural primary market places mostly consist of the seasonal markets known as haats, shandies, painths, and fairs.
• Despite the growth of permanent stores, they continue to play an essential part in the rural economy. They are the existing conventional trade institutions.
• These marketplaces allow you to not only buy consumer products but also sell excess agricultural and allied commodities.
• Producers sell their produce to consumers directly or to tiny rural merchants. The products exchanged are often of poor quality, and the amounts traded are small.
• These marketplaces are mostly uncontrolled and take place once a week.
• Rural primary markets serve an important role in the selling of agricultural products, particularly those produced by small and marginal farmers, including landless labourers.

Secondary/Assembly Markets

• Although it is widely acknowledged that primary markets meet local needs, secondary markets also play an essential role since they meet distant demand.
• These markets draw potential buyers/traders who assemble and combine a truck load for sale in the city wholesale market.
• These operations are typically carried out informally as well.
• In this method, certain traders/transporters set up collecting points in production areas where farmers deliver their food to be trucked to a city market.
• These marketplaces’ infrastructure is often weak, and they face the same challenges as primary markets.

Wholesale Markets

• These markets provide a handy way to acquire large volumes of food from various sources and divide it into tiny assortments to fulfil the demands of the country’s retailers.
• These marketplaces are also used by various government entities to purchase agricultural products.
• These marketplaces deal with substantially bigger quantities.
• These marketplaces need not only a complex physical infrastructure, but also some form of regulation to safeguard both the producer and the consumer’s interests.
• Most wholesale markets, also known as regulated markets, are covered by the Agriculture Produce Marketing Committee Acts.

Terminal Markets

• Terminal markets are typically seen in wealthy nations, but are predicted to gain traction in India.
• In these market places, unlike the primary and secondary markets, the sellers are often merchants rather than farmers.
• The terminal market concept developed in India is anticipated to connect farmers directly to these marketplaces via collecting centres.
• During 2006-07, the Government of India announced the establishment of eight terminal market complexes for perishables in Nagpur, Nashik, Bhopal, Kolkata, Patna, Chandigarh, and Mumbai.
• Farmers have a variety of choices for disposing of their products at terminal markets.
• Such marketplaces are projected to minimise post-harvest losses and boost farmer profitability.

Retail Markets

• Retail markets are gatherings of retail stores that are concentrated and located in a certain location or in a structure built for the purpose.
• Retail markets that sell food are the most active parts in the food distribution chain, especially for low and middle-income customers.
• They cater to the demands of a certain population. They are the final links in the marketing chain, directly serving the ordinary man.
• The majority of merchants are involved in the task of delivering food goods to consumers in the country through retail marketplaces.

Live Stock Markets

• India is the world’s largest producer of milk and the sixth greatest producer of eggs.
• In the future, the cattle industry may become the most important component of the agricultural economy.
• Livestock products are produced through an extensive, multi-location system that employs millions of agriculturalists while limiting productivity to meet only domestic demand and enable sale of surplus to the nearest market as soon as possible because they are perishable and cannot be kept for long without cooling facilities.
• Cattle marketing is a lucrative industry for farmers and animal merchants.

Agricultural Produce Market Committee (APMC)

• Since agricultural marketing is a State matter, the Agricultural Produce Market Committee (APMC) is a mechanism that operates under the State Government.
• In the market region, the APMC maintains Yards/Mandis that control registered agricultural commodities and livestock.
• The purpose of instituting APMC was to reduce the occurrence of Distress Sales by farmers who were subjected to the pressure and exploitation of creditors and other middlemen.
• APMC guarantees that farmers are paid fairly and on schedule for their goods.
• The APMC is also in charge of agricultural trade practises regulation. This has a variety of advantages, including:
• Unnecessary intermediaries are removed.
• Increased market efficiency through lowering market charges
• The interests of the manufacturer and seller are carefully safeguarded.
• These committees were also intended to guarantee that the farm-to-retail price did not rise excessively and that farmers were paid on schedule through the APMC auctions.
• Farmers were also given the option of using APMCs for storage, such as go-downs.
• APMCs were also supposed to organise farmer markets so that farmers could sell their goods directly to customers.
• APMCs also aided in the regulation of price volatility.

Agricultural Marketing in India – Challenges

• Agricultural marketing has a number of challenges since it relies on the type of commodity and includes a risk factor like perishability.
• A hazard arises if the agricultural output is a seasonal one. Similar to this, agricultural marketing involves a number of risk factors.
• Product pricing is influenced by seasonality, perishability, demand, and availability, as well as other variables.
• Agriculture marketing in India is not quite marketing in the traditional sense. Given the amount of middlemen participating in the selling of the agricultural products, it might be considered a sort of “distributive handling” of agricultural products.
• The information on the market is only partially accessible. Low literacy rates and a variety of distribution routes that drain both farmers’ and customers’ wallets are problems among agriculturalists.
• The government’s support for agriculture is still in its infancy, and the majority of small farmers still rely on predatory local moneylenders who demand exorbitant interest rates.
• Even though we are in a technologically sophisticated era, this has not yet reached rural regions because it is only present in metropolitan areas.
• To receive a fair and equitable price for their tremendous efforts to generate food, farmers must endure a great deal of suffering and overcome numerous obstacles.
• Villages lack adequate storage facilities Farmers are required to keep their harvest in mud-vessels called katcha storage facilities.
  • This leads to improper storage, waste, or hurriedly throwing away the produce. Establishing rural godowns and warehouses is encouraged.
  • The situation has improved to some extent as a result of the establishment of the Central Warehousing Corporation and State Warehousing Corporation.
• Lack of grading and standards: 
  • The lack of appropriate grading and standardisation processes is a major issue in the sale of agricultural goods. This results in Dhara (heap) sales, when all crop varieties are sold together in a single lot.
• Poor transportation options: 
  • Due to the limited number of villages that are connected by railways and pucca roads to Mandies, there are few transportation options.
    • Farmers use bullock carts or other similar vehicles to transport their produce to Mandi as a consequence.
    • The perishable product must be dumped at incredibly cheap market prices at a neighbouring market.
• Lack of sufficient market knowledge: 
  • Farmers lack the knowledge necessary to sell their products. Farmers accept whatever price the traders offer them if they lack access to accurate market information.
• Lack of a Common Trade Language: 
  • Distinct organisations around the nation adhere to different sets of standards and requirements for agricultural goods.

Need of Reforms in Agricultural Marketing in India

• For the agriculture industry to increase growth, employment, and economic prosperity in India’s rural areas, an organised system and efficiently running marketplaces are essential.
• Large investments are required for the construction of post-harvest and cold-chain infrastructure closer to the farmers’ fields in order to give the marketing system life and efficiency.
• This kind of investment requires private sector participation, which calls for the right regulatory and legislative framework.
• Additionally, enabling laws must be implemented to promote the purchase of agricultural products straight from farmers’ fields and to create a strong connection between farm production, the retail chain, and the food processing businesses.
• A model legislation on agricultural marketing was also created by the Department of Agriculture and Cooperation for use as a guide and adoption by state governments.
• In order to manage and grow India’s agricultural markets, the model law encourages Public Private Partnerships (PPP) as well as the formation of private markets and yards, direct buying facilities, consumer and farmer marketplaces for direct sales.

Agricultural Marketing in India – Reforms

eNAM

• The National Agriculture Market (NAM) is a pan-India electronic trading portal that connects the existing APMC mandis to create a unified national agricultural market.
• It was launched in April 2016.
• The Small Farmers’ Agribusiness Consortium (SFAC) manages it under the Department of Agriculture, Cooperation, and Farmers’ Welfare.
• The NAM Portal serves as a one-stop shop for all Agricultural Produce Market Committee (APMC)-related information and services.
• It currently connects 1260 markets from 22 states and 3 UTs, and various commodities such as staple food grains, vegetables, and fruits are on its list of commodities available for trade.
• To use the portal’s services, traders and exporters must first register with it.
• This includes, among other things, commodity arrivals and prices, buy and sell trade offers, and the ability to respond to trade offers.

Model APMC act 2017

• This act eliminates market fragmentation within the State/Union Territory (UT) by removing the concept of ‘notified market area’ from the Agricultural Produce and Livestock Market Committee’s regulation (APLM).
• Aside from cereals, pulses, and oilseeds, the Act allows for geographically unrestricted trade in agricultural products such as cotton, horticulture crops, livestock, fisheries, and poultry.
• This act creates a favourable environment for the establishment of operational private wholesale market yards and farmer-consumer market yards in order to increase competition among different markets.
• It promotes direct contact between farmers and processors/ bulk buyers/ exporters/ end users in order to reduce price spreads and benefit both producers and consumers.
• Allows for the designation of warehouses/ silos/ cold storages, as well as other structures/space, as market sub-yards in order to improve farmers’ market access/linkages.

Essential Commodities Act (ECA), 1955

• The ECA Act of 1955 was enacted at a time when the country was facing a food shortage due to persistently low levels of foodgrain production.
• To feed the population, the country was reliant on imports and assistance (such as wheat imports from the United States under PL-480).
• The Essential Commodities Act was passed in 1955 to prevent food hoarding and black marketing.
• The Essential Commodities Act of 1955 contains no specific definition of essential commodities.
• According to Section 2(A) of the Act, a “essential commodity” is defined as a commodity listed in the Act’s Schedule.
• The Act gives the central government the authority to add or remove commodities from the Schedule.
• In consultation with state governments, the Centre can notify an item as essential if it believes it is necessary in the public interest.
• The Act prohibits the importation of drugs, fertilisers, pulses, and edible oils, as well as petroleum and petroleum products.

Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act

• Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 permits intra-state and inter-state trade of farmers’ produce outside of the physical premises of APMC markets.
• State governments are prohibited from imposing any market fee, cess, or levy outside of APMC areas.
• The Farmers Agreement Ordinance creates a framework for contract farming by requiring a farmer and a buyer to enter into an agreement prior to the production or rearing of any farm produce.
• It establishes a three-tiered dispute resolution system, with the Conciliation Board, the Sub-Divisional Magistrate, and the Appellate Authority serving as the first two levels.
• The Essential Commodities (Amendment) Ordinance, 2020 grants the central government the authority to regulate the supply of specific food items only in exceptional circumstances (such as war and famine).
• Only if prices rise dramatically can stock limits on agricultural products be imposed.

Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act

• The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 was an Indian Government act that established a national framework for contract farming through an agreement between a farmer and a buyer prior to the production or rearing of any farm produce.
• The act was passed as part of the 2020 Farm Bills.
• It aims to provide a national framework for farm agreements that protects and empowers farmers to engage in farm services with agri-business firms, processors, wholesalers, exporters, or large retailers.

Conclusion

The marketing of agricultural goods is very important in India. Agricultural marketing is one of the numerous issues that have a direct impact on the farmer’s prosperity. In its broadest sense, agricultural marketing encompasses all operations involved in the movement of goods and raw materials from the field to the final consumer. The sale of an agricultural product in agriculture marketing is determined by a variety of factors such as current product demand, storage availability, and so on. India is an agricultural country, with agriculture directly or indirectly employing one-third of the population. Increased marketing mechanism efficiency would result in consumers receiving products at lower prices, which would have a direct impact on national income.