What is Agricultural Marketing? Definition Significance, Issue, Marketing System

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The agricultural marketing system is an efficient method of distributing farmer’s surplus produce at a fair and reasonable price. The term ‘market’ refers to a place where there is exchange of goods between the producer and the consumer but agricultural marketing involves operations such as procurement, grading, collecting, preserving, transportation and financing. An efficient and stable marketing system is essential for the development of agriculture sector. It provides the farmer an opportunity to increase production, commercialise operations and incentivise farmers to produce diverse varieties of crops. Though reforming the agricultural marketing system is usually separated from agricultural farm and farmers but, it is directly related to improvements in the living standard of farmers, which aims to make India free from hunger and turn poverty into prosperity

Significance of Agricultural Marketing

Agriculture marketing plays a significant role in improving production, productivity and consumption. It also helps in accelerating the pace of economic development It has direct bearing on the life of the farmers as India is primarily an agricultural country and more than 60% of the population depends upon agriculture. Indian farmers also produce a significant quantity of cash crops that require transportation, storage and distribution to urban markets. Marketing infrastructure is necessary to transport such cash crops.

Agriculture sector supplies raw materials to industries and therefore marketing of crops such as cotton, sugarcane, oilseeds, etc are important. It is also required for shifting from subsistence agriculture to commercial agriculture in India. Also, any increase in the efficiency of marketing results in lower costs of distribution to the consumers that also raises the national income.

Marketing also aids in bringing new varieties, qualities and beneficial goods to the consumers. It can also boost the growth of a number of agro-based processing industries. If agricultural marketing is managed scientifically, &t stabilises price levels and plays an important role in economic development and stability of a country.

Marketing System in India

The existing system of agricultural marketing in India is in the form of following types of markets

Direct Sale to Traders and Moneylenders in Villages

A considerable part of total produce of farmer is sold by him to village traders and moneylenders at very low prices. The moneylenders or traders are either independent or may act as an agent of a bigger merchant in the nearby mandi. In India, more than 50% of the agricultural produce is sold in the local village markets in the absence of organised market systems.

Weekly Haats and Shed

Weekly haats and sheds are organised once or twice in a week or on special occasions or longer intervals. The agents of wholesale merchants operating in different mandies visit these markets. These type of markets are poorly equipped, are uncovered and lack storage, drainage and other facilities. Only small and marginal farmers who have no access to the bigger markets sell their produce in such markets.

Mandies or Wholesale Markets

One single mandi serves a large number of villages. Mandies are generally located in cities. In such mandies, business is carried out by Ahartiyas (commission agents). The farmers sell their produce to these Ahartiyas with the help of middlemen. The middlemen are often involved in malpractices. The Ahartiyas of these mandies sell the produce to the retail merchants. These mandies are regulated by the Agricultural Produce Marketing Committees (APMC). Under APMC Act, farmers are required to sell a large number of commodities in these mandies where prices are often manipulated. These mandies also lack storage, warehousing etc.

Cooperative Markets

A cooperative society collects surplus from its members and sell it at the mandies collectively. This is the cooperative system of marketing. It increases the collective bargaining power of the members and they are able to obtain better price of their produce. In addition to the sale of produce, these societies also serve the farmers in a number of ways. They also provide finances to the members and incentivises them to grow better quality crops.

Contract Farming

Contract farming has emerged as an important mode of procurement of agricultural goods by several agribusiness firms which are private, public or cooperatives. There is an advance agreement of the farmer with the large firms that procure the produce of a pre-determined quality at fixed prices. This type of marketing is quite beneficial to the farmer, but the outreach of this type of farming is very low in India.

Issues of Agri-Marketing Systems in India

Farmers in India are not able to get a fair and remunerative price as a consequence of the defects in Indian agriculture marketing system. Various committees and groups have been setup to bring out the inadequacies in the agricultural marketing systems across India. The weaknesses of India’s agricultural marketing are :

Irregular Warehousing

There are absence of proper warehousing facilities in the villages. Farmers are compelled to store their products in pits, mud-vessels, kutcha storehouses. This leads to a considerable wastage of agricultural products and valuable production gets rotten due to improper storage facilities.

Lack of Standardisation

The quality of agricultural produce is properly due to lack of standardisation. Better quality produce and poor quality produce are considered as one and sold in a common lot at same prices. The farmer who has invested more for producing higher quality crops do not get a Fair price.

Poor Transport Facility

Only a small number of villages are railways and pucca roads to the agricultural markets. Various small farmers carry their produce on slow and old means of transport such as bullocks. Such means of transport are inadequate to carry production to far off places. Due to these reasons, the farmers have to dump their produce in nearby markets even if the sale is at very low prices. This is true even with the perishable commodities that require quick transport facilities.

Presence of Middlemen

The middlemen in agricultural marketing system through the farmer’s revenue by as much as 50%. The chain of intermediaries in the marketing very large. The farmers have to sell their produce to these intermediaries as a result of which their share of profit is reduced.

Inadequate Market Information

It is not possible for small as well as marginal farmers to obtain information on exact market prices in different markets. The middlemen take advantage of the illiteracy and ignorance of the farmers. Often, unfair means are used to cheat the farmers. There are various unspecified and hidden charges levied by the middlemen upon these illiterate farmers.

Lack of Organisation

There is lack of collective organisation on the part of Indian farmers. This reduces their collective bargaining power and reduces profits. They have to bow down to wishes of the functionaries in the markets. If the farmer himself does not learn the system of marketing, he will not be able to bargain with the buyers who are well informed. There are delays in making payments to these farmers. Many times high interest is also charged by local traders because of no bargaining power of the farmer.

Malpractices in Markets

Several types of malpractices are prevalent in the agricultural markets. False weights and other unfair means are used by the functionaries in the market. Various unspecified charges are taken from the farmers. Small, illiterate and unorganised farmers are often cheated by employing fraudulent methods.

The government has been trying to reform the agricultural marketing system. The APMC acts have been amended several times to facilitate better price for farmers. Cooperatives and contract farming have been explored to give farmers professionalised services so that they are compensated for their crops fairly and at good profits. But these reforms have been inadequate and farmers continue to be exploited.

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