AGRICULTURE MARKETING

AGRICULTURE MARKETING

Agriculture marketing is the process of getting agricultural products from farmers to consumers. It plays a crucial role in the food chain, ensuring the smooth flow of produce from farm to table and influencing both farmer incomes and consumer prices. India, with its vast agricultural sector, faces unique challenges and opportunities in this domain.

The marketing of the agricultural produce in India is governed by the Agricultural Produce Market Committee [APMC] Act enacted by the respective state governments.

IMPORTANCE OF AGRICULTURAL MARKETING:

Agricultural Marketing is a vital feature that connects farm production with potential consumers. This is not just trying to get products from farm to table, it's a multi-faceted system with myriad interconnections. Here's why it's important:

For Farmers:

Increased Income: Effective marketing helps farmers get better prices for their products, leading to improved income and profitability.

Market accessibility: Marketing facilitates the flow of goods between producers and consumers enabling new markets to emerge with higher opportunities for sales.

Less Waste: Efficient marketing system reduces wastage and losses of agriculture products.

For Consumers:

Food Security: An effective marketing mechanism on agricultural products provides an assurance to the consumers of a continued supply over time together with profitable market prices thus attains food security and affordability.

Product variety and Choice: Marketing facilitates the distribution of diverse agricultural products, providing consumers with a wider range of choices.

Quality, insurance and safety: Marketing principles make it compulsory to guarantee the nature of agricultural items under directed determinations ensuring buyers' wellbeing.

Base Prices: Fair trade certification seeks to maintain prices that are not too low since this can lead to poor conditions of growth or others, Farmers cannot cover their costs and families suffer for example paying food.

For the Economy:

Contribution to Economic Growth: The agricultural sector is a prominent one in terms of its contribution to the GDP and efficient marketing routes increase earnings from it leading towards economic growth.

Employment: Agro-marketing creates job complexity in all modes of transportation, processing & packing storage and retailings.

Earn foreign exchange: Exporting agricultural products with proper marketing ensures making foreign money which ultimately beneficial for the national economy.

Rural Development: A robust marketing structure provides opportunities to farmers and sends benefits down through communities.

ISSUES WITH AGRICULTURE MARKETING:

Here are the issues regarding agriculture marketing in India, with specific examples:

1. Lack of Infrastructure:

• Limited Cold Storage: Only 12% of fruits and vegetables are stored in cold storage facilities. This leads to huge post-harvest losses, like in 2021 when over 40% of India's potato crop went to waste due to lack of storage.
  
• Poor Transportation: Many rural areas lack good roads, forcing farmers to transport produce in trucks that can damage crops and increase transportation costs. This is especially problematic for perishable items like mangoes, where even a few hours of delay can significantly impact quality.
  
• Limited Processing Facilities: Lack of processing facilities restricts the ability to convert raw produce into value-added products, reducing profitability for farmers. For example, India's milk processing industry is mostly limited to large corporations, leaving smaller dairy farmers with lower prices for their milk.
  
  

2. Inefficient Market Structure:

• Fragmented Market: India has countless small, informal markets, making it difficult for farmers to find buyers and negotiate fair prices. For instance, a farmer selling onions might have to visit multiple markets to get the best price, wasting time and money.
  
• Lack of Transparency: Farmers often don't know how much their crops are selling for in other markets, making it hard to negotiate effectively. For example, a farmer might accept a low price for tomatoes without knowing that they are fetching higher prices in a nearby city.
  
• Domination of Large Traders: Powerful middlemen often control prices and exploit farmers. A 2020 study found that in the Indian potato market, large traders made an average profit of 25%, while farmers only earned 10% of the sale price.
  

3. Poor Information Flow:

• Limited Access to Market Information: Farmers lack access to real-time market prices, leading to uninformed decisions. For instance, a farmer might sell their wheat at a low price without knowing that prices are rising in a nearby market.
• Lack of Market Research: Farmers often don't understand consumer preferences and demand trends. This can lead to growing crops that are not in demand, resulting in low prices and financial losses.

4. Financial Constraints:

• Limited Access to Credit: Farmers often lack access to affordable credit to buy seeds, fertilizer, and other inputs. This can force them to take loans from informal sources with high interest rates.
• High Interest Rates: High interest rates on loans burden farmers, making it difficult for them to invest in their farms and improve their yields.
  
  

5. Lack of Government Support:

• Inadequate Policies: Government policies often fail to adequately address the needs of farmers. For example, the MSP (Minimum Support Price) for some crops is insufficient to provide a profitable return for farmers.
  
• Weak Regulatory Framework: A weak regulatory framework allows for exploitation and unfair practices in the market. For example, the lack of enforcement of standardized weights and measures allows for manipulation of prices.
  

6. Technological Gaps:

• Limited Adoption of Technology: Many farmers lack the knowledge and resources to adopt modern agricultural technologies like precision farming, which can improve yields and reduce costs.
  
• Digital Divide: The digital divide between urban and rural areas limits access to information and technology, leaving many farmers behind.
  
  

7. Lack of Farmer Empowerment:

• Limited Market Knowledge: Farmers lack the necessary skills to understand market trends and negotiate favorable prices. This puts them at a disadvantage when dealing with traders.
  
• Poor Organization and Collective Action: The lack of strong farmer organizations and cooperatives hinders their collective bargaining power.
  
  

8. Climate Change Impacts:

• Extreme Weather Events: Climate change has increased the frequency and severity of droughts and floods, leading to crop losses and unpredictable yields. This makes it harder for farmers to plan their production and secure their livelihoods.
  
  
• Water Scarcity: Water scarcity is a growing concern, impacting crop yields and agricultural productivity, especially in regions like Rajasthan and Gujarat.
  

Reforms required:

• Uniform mandi fees: It is proposed that a uniform mandi fee of 0.25% or 0.50% be levied nationwide for foodgrains, oilseeds and fruits & vegetables.
  

The consequent losses to APMCs may be compensated by the Centre and state governments, as in the case of the Goods and Services Tax.

• Eliminate middle man: All trade in APMCs should be through open auctioning, involving multiple bidders for each lot. Such trades should be directly between buyers and sellers, with no middlemen charging commission. Government’s announcement of GRAMs(Gramin rural agricultural market) is a step in the right direction.
  
  
• Modern Mandis: Augmenting Agricultural Produce Market Committees (APMCs) with improved infrastructure and logistics to provide a competitive trading platform for traders.
  
  
• E-Platforms: Expanding the reach and functionality of e-platforms like with features such demo-buyer linking services to farmers across 22, states, providing real-time information about market price.
  
  
  
• Cold Chain Investment: Increased investment in cold storage facilities, refrigerated transport and other elements of the cold chain to decrease post -harvest losses (especially for high-value perishable produce).
  
  
  
• Farmer Producer Organizations (FPOs): FPC has been instrumental in the formation and strengthening of Farmer Producer Organisations that act as an aggregation point for produce from small farmers, providing them with better negotiating power over prices and linking them to large markets.
  
  
• Alternative Marketing Channels: Direct-to-consumer marketing, such as farmer-market sales (FPOs), and subscription agriculture schemes offer alternatives to breaking the downward spiral of system.
  
  
  
• Market Information: Providing farmers with access to real-time market information about prices, demand, and supply through online platforms, mobile apps, and farmer training programs.
  
  
  
• APMC Reform: Making the APMC Regulations Simple and to Attract Private Parties for a greater competition leading to improved efficiency & Pricing.
  
  
• Regulatory Harmonization: Moving state agricultural marketing laws towards uniformity and away from intrastate trade barriers.
  
  
• Fair Trade: The imposition and enforcement of regulation to protect against economically unfair trading manipulations (such as pricing manipulation, farmer exploitative intermediaries).
  
  
• Infrastructure: Road, rail connection for better connectivity and warehousing to store the produce in order to avoid transportation costs and time required.
  
  
  
• Enhanced Cold Chain Logistics: Enhanced availability of refrigerated trucks and cold chain infrastructure to carry perishables with out spoilages.
  
  
  
• Inter-State Trade: Promoting a simplified interstate transport infrastructure to curtail wastages, delay & less movement in produce across the markets.
  
  
  
• Improve Processing Units: Set up food processing units and value-added facilities to improve the shelf-life of produce, enhance its market cost and introduce new product line.
  
  
  
• Ashok Dalwai committee recommendations: For participation of private sector, development of post production logistics and cold chain, and placing agriculture marketing under CONCURRENT LIST ,which would facilitate One-India market concept.
  
  

Agricultural Marketing: Government Initiatives

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).

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.

The purpose is to create a single agricultural market with a single license. Both the agriculture produce and livestock could be traded.

It has allowed the private market yards, warehouses and cold storages to be used as a regulated agri-market.

3.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.

4. 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.

5. Operation Greens:

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

6. 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.

7. 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.