Market led extension


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Market led extension

  1. 1. I SEMINAR ON Presented By: Preety PGS12RHS390 Jr. MHSc.2
  2. 2. With globalization of the market, farmers need to transform themselves from mere producers- sellers in the domestic market to producers cum sellers in a wider market. Producers Sellers Produc- ers Sellers 3 Introduction
  3. 3. Keeping this in view, MANAGE started working on the concept of „Market-Led Extension‟ and a beginning was made through a three day national workshop on Market-Led Extension at MANAGE during 18th-20th December, 2001. • Market led means identification of customer needs and wants before offering service. 4
  4. 4. • Market led extension is market ward orientation of agriculture through extension includes agriculture and economics • The perfect blend for reaching at the door steps of farming community with the help of appropriate technology. 5
  5. 5. Why MLE? • Even after 65 years of independence, the quality, timely and cost effective delivery of adequate inputs remains a dream • Farmers are not able to sell their surplus produce remuneratively • Plenty of distress sales among farmers 6
  6. 6. Knowledge-skill input crisis Efficacy crisis Credibility crisis Reorganization structure crisis With the changing scenario of Indian agriculture, with newly added face of marketing, the extension system is likely to undergo series of crises: 7
  7. 7. NEED 8
  8. 8. Paradigm Shift from Production-led Extension to Market Led Extension Aspects Production led extension Market led extension Purpose/Objective Transfer of production technologies Enabling farmers to get optimum returns out of the enterprise Expected end results Delivery of messages, Adoption of package of practices by most of the farmers High returns Farmers seen as Progressive farmer/High producer Farmer as an entrepreneur “Agripreneur” Focus Production/Yields. “seed to seed” Whole process as an enterprise/ High returns. “rupee to rupee”. 9
  9. 9. Aspects Production led extension Market led extension Technology Fixed package recommended for an agro climatic zone covering very huge area irrespective of different farming situations Diverse baskets of package of practices suitable to local situations /farming systems Extensionists interaction Messages/ Training/ Motivating/ Recommendations Joint analysis of the issues, varied choices for adoption Linkages/ Liaisons Research-Extension- Farmer Research-Extension – Farmer- Market Extensionists’ role Limited to delivery mode and feedback to research system Enriched with market intelligence besides the TOT function. 10
  10. 10. Aspects Production led extension Market led extension Contact with farmers Individual Farmer’s intrest group/ Commodity Intrest Groups/ SHGs Maintenance of records Not much importance as the focus was on production Very important as agriculture, viewed as an enterprise to understand the cost benefit ratio and the profits generated Information and technology support Emphasis on production technologies Market intelligence including likely price trends, demand position, current prices, market practices, communication network etc. besides production technologies. 11
  11. 11. Flow Chart of Agriculture as an Enterprise:- Rupees (Credit/Investment) What to produce Analysis of land holding for suitability of crops Decision on how much to produce How to produce Post harvest technology Value addition Storage/ Transport When to sell Where to sell At what price to sell Selling Rupees 12
  12. 12. • With the emergence of agriculture as industry, farmers no longer function in isolation and most of the production decisions are governed by marketing firms and consumer preferences. • Farming sector would be successful only when farmers produce what market wants, rather than what they are good at producing. • Farmers, agricultural input suppliers and marketing firms need to work in cohesion, so that, enterprises are mutually benefitted. 13
  13. 13. OBJECTIVES 1. • Conversion of Agriculture sector into profit oriented business. 2. • Strengthening R-E-F linkages – between various department at various levels. 3. • Strengthening market linkages to farmers – IT application in Agricultural marketing. 4. • Wider use of electronic mass media for Agricultural Extension. 14
  14. 14. Required information to extension system and farmers for MLE Present agricultural scenario and land use pattern Suitability of land holding to various crops/enterprises Crops in demand in near future Market prices of crops Availability of inputs Usage of inputs Credit facilities 15
  15. 15. Desired qualities of the products by consumers Transport facilities Market network of the local area and the price differences in various markets Network of storage and warehouse facilities available Regular updating of market intelligence Production technologies like improved varieties, organic farming, usage of bio- fertilizers and bio-pesticides, IPM, INM, and right methods of harvesting etc. 16
  16. 16. Post-harvest management like processing, grading, standardization of produce, value addition, packaging, storage, certification, etc. with reference to food grains, fruits and vegetables, eggs, poultry, fish, etc. Contract farming Private modern terminal markets Food retail chains Food safety and quality standard Certification WTO regulations 17
  17. 17. 18 So how should the market be for MLE???
  18. 18. Markets • Markets must be available and profitable • Potential risks include: rapid price fluctuations; highly competitive markets; limited number of buyers. 19
  19. 19. Agri-Markets in India as on 31.03.2007 6261 Wholesale Markets in India (majority are regulated markets) 20870 Rural Primary Markets (about 15% are regulated markets) Total – 27131 2459 Principal Regulated Markets 5006 Regulated Market Sub-yards Total – 7465 (Only 286 regulated markets in 1950) 20
  20. 20. Roles of Extension System in Light of Market Led Extension • SWOT analysis of the market • Organization of Farmers‟ Interest Groups (FIGs) • Supporting and enhancing the capacities of locally established groups under various schemes /programmes • Enhancing the interactive and communication skills of the farmers • Establishing marketing and agro-processing linkages between farmers‟ groups, markets and private processors. 21
  21. 21. • Advice on product planning • Educating the farming community • Direct marketing: farmers need to be informed about the benefits of direct marketing. • Capacity building of FIGs in terms of improved production, post harvest operations, storage, transport and marketing. • Regular usage of internet facility and production of video films of success stories of commodity specific farmers. 22
  22. 22. Market Related Extension Related Production Related Problems in MLE 23
  23. 23. Production related • Seasonality of production: Supply not uniform throughout the year. • Perish ability of produce: Problem of storage • Bulkiness of production: Transportation problem Market related • Non – availability of MI • Existence of many middleman • Inferior quality of produce • Export promotion • Supply chain management • Retail market Extension related • Lack of communication skills. • Lack of credibility • Insufficient information related with market and many more 24
  24. 24. MLE – ITS CHALLENGES Market size is large and continuously expanding, but marketing system has not kept pace. Direct marketing “farmer-consumer” is negligible. 85% of the 27,294 rural periodic markets, facilities for efficient trade is still almost absent. 7200 market yards/sub yards are inadequate, ill equipped and mismanaged. Due to lack of proper handling at farm gate lead to 30% fruits and vegetables, 7% grains, 10% spices loss before reaching market. Rs 50000 crores/year lost due to poor marketing chain. Risk bearing Storage of farm produce and grading 25
  25. 25. Different models of MLE in India 26
  26. 26. Self-help Groups (SHGs) are a unique method to implement developmental schemes at the grass root level by combining self management with access to low cost finances. SHGs or thrift and credit groups are mostly informal groups whose members pool savings and re-lend within the group on rotational or need basis. Many of these groups are formed around specific production activity. 27 Self Help Groups???
  27. 27. • Brain child of Grameen Bank of Bangladesh • Founded by Prof. Mohammad Yunus in 1975 • The concept of self help groups gained significance especially after 1976 when Prof. Mohd. Yunus of Bangladesh began the experiment with micro credits and self help groups. • In India NABARD initiated SHGs in 1986-87 • In 1991-92, linkage of SHGs to bank 28
  28. 28. 2 Models of SHGs 29
  29. 29. Research based evidences 30
  30. 30. Impact Assessment of Reuters Market Light in Agricultural Information Dissemination in Punjab Objective: To examine the awareness about utilization of information by the farmers and extent of satisfaction of the subscribers to the RML scheme Chahal et al., 2012 31
  31. 31. Frequency of Market Information Supply (N=116) Particulars Number of respondents/ Subscribers Percentage to total Daily - - Once in week 11 9.48 Twice in week 10 8.62 Thrice in week 45 38.79 Four times in a week 48 41.39 Five times in a week 2 1.72 32
  32. 32. Views of respondent-subscribers on subscription of RML scheme Particulars No. of respondents /Subscribers Percentage to total Subscription charges not commensurate with the services provided 11 11.11 Services provided not satisfactory 42 42.42 Information not timely 17 17.18 Information not accurate 16 16.16 Information not relevant 11 11.11 Other (ambiguous SMS) 2 2.02 33
  33. 33. Advantages of RML Scheme Particulars Response (no.) Percentages to total Could receive higher prices 25 21.55 Spend less time in disposal of produce 14 12.07 Utilized warning about outbreak of disease/insect- pest attack 20 17.24 Availability of inputs 5 4.31 Demand and supply situation of a particular commodity 4 3.45 Weather conditions 63 54.31 Latest market situation of a commodity 59 50.86 Others 8 6.90 34
  34. 34. Benefits in terms of price derived based on information from RML Scheme Particulars Basmati Potato Farmers (No.) Quantity (Q) Price (Rs/Q) Farmers (No.) Quantity (Q) Price (Rs/Q) Nearby market in the same district 10 962 2266 12 1300 216 Market in other districts of Punjab - - - 20 11010 350 Distant Markets 8 607 2333 7 1000 700 35
  35. 35. • Most of the respondents rated the RML scheme as advantageous as they could get a higher price for their produce, disposed off their produce according to market conditions, got imminent warning on the outbreak of disease, etc. • It shows that if farmers are provided with the latest information on different crops, it will go a long way in making farming a more remunerative venture. 36
  36. 36. Rythu bazaars – A study of the benefits received by farmers 37 Dey, 2012 N=250
  37. 37. Increase in Monthly earnings Response Frequency Percentage No 8 3.2 Yes 242 96.8 Total 250 100 38
  38. 38. Binomial test for significance of association of Rythu bazar and Increase in Income Category N Obs. Proportion Test Proportion Asymptote Sig.(2- Tailed) Group 1 8 0.03 0.5 .oooaGroup 2 242 0.97 Total 250 1 39
  39. 39. Farmers income increment 40 1.2 0.4 0.8 16.1 3.7 28.1 26.9 12.8 7.9 0 0.8 0.8 0.4 0 0 percent of respondents
  40. 40. Test for significance for association of Rythu Bazar and farmers‟ income increment Value DF Asymptote sig.(2-sided) Pearson chi square 250.000a 13 .000 41
  41. 41. Benefit on assurance of fixed income Category N Obs. Proportion Test Proportion Asymptot e Sig.(2- Tailed) Group 1 1 224 0.9 0.5 .oooaGroup 2 0 26 0.1 Total - 250 1 42
  42. 42. Benefit on account of Immediate Cash Realization Category N Obs. Proportion Test Proportion Asymptot e Sig.(2- Tailed) Group 1 1 224 0.9 0.5 .oooaGroup 2 0 26 0.1 Total - 250 1 43
  43. 43. Benefit on account of Receiving Higher Rates Category N Obs. Proportion Test Proportion Asymptot e Sig.(2- Tailed) Group 1 1 229 0.92 0.5 .oooaGroup 2 0 21 0.08 Total - 250 1 44
  44. 44. Benefit on account of Location Category N Obs. Proportion Test Proportion Asymptot e Sig.(2- Tailed) Group 1 1 249 1 0.5 .oooaGroup 2 0 1 0 Total - 250 1 45
  45. 45. It is evident that the farmers have got benefitted on the account of  increase in their earnings,  assurance of fixed income, immediate cash realization,  higher rates for their vegetables and location of the market yards. 46
  46. 46. Case study of citrus fruits: Improving post harvest handling and market linkage in Philippines 47 Rapusus 2008
  47. 47. Developed local citrus industry through farmers‟ cooperative Post harvest handling and market linkages Application of Immediate interventions 48 Strengthening institutional linkages and support
  48. 48. Major constraints in handling and marketing of citrus fruits 1. Problems in manual handling operations like washing, waxing, sorting and packing. 2. Limited trading capital and inadequate market facilities. 3. Presence of several kinds of middlemen. 49
  49. 49. Intervention Adaptation of sorter/ grader Use of stackable plastic crates 50 Manual to Mechanical Wooden to plastic
  50. 50. Linkage with institutions Farmers’ Cooperative LGU Markets PHTRC DTI 51 LGU-Local Government Unit DTI-Dept. of Trade and Industry PHTRC-Post Harvest Horticulture Training and Research Centre
  51. 51. The project strengthened the farmers‟ cooperative and improved its capacity to provide support services, in an integrated approach, on production, postharvest handling and marketing of citrus produced . In the area of marketing, the increase in trading capital and the establishment of a packing house equipped with a mechanical sorter, together with the use of plastic crates in citrus handling has increased the volume handled by the cooperative from 20% to 75% of total production of members(14 MT/day). Gradually the cooperative has pulled the citrus growers away from depending too much on the traders, who usually dictate the price and terms of payment of the citrus fruits. 52
  52. 52. 53 The dynamics of Farmers’ Market: A Case Analysis of Uzhavar Sandhai of Tamil Nadu Kallummal & Srinivasan 2007 N=330
  53. 53. Profit Margins of the Farmers Profit Margin Frequency Percentage Less than 10% 42 12.7 10%–20% 135 40.9 More than 20% 153 46.4 Total 330 100 54
  54. 54. Views of farmers regarding Uzhavar Sandhai Situation Frequency Percentage Best 38 11.5 Good 136 41.2 Bad 16 4.8 Worst 5 1.5 Satisfactory 135 40.9 Total 330 100 55
  55. 55. Uzhavar Sandhai has created better market for the products of poor, small and margial farmers with fixed prices. It has enabled the farmers to sell their produce at a competitive price by elimination of middlemen. 56
  56. 56. • Indira Kranthi Pathakam, a self help group of Andhra Pradesh conducted marketing interventions during 2001 Objective: To enable the poor farmer producers to obtain the best price for their agricultural Commodities and NTFPs. To create marketing facility at their door steps. 57
  57. 57. 58
  58. 58. Marketing intervention included: • Potential survey of Agricultural Commodities and NTFPs • Monthly Action Plan • Micro credit plans • Sourcing of finance • Constitution of Procurement Committee and Advisory Committee • Training to Committee members and Book Keepers • Supply of required Physical Infrastructure to the VO • Farmers education (on Price, Quality and Markets) • Marketing tie ups with trade, government agencies (MSP and Direct Marketing) 59
  59. 59. Key Commodities under the programme Paddy Maize Red gram Soya Neem Medicinal Plants 60
  60. 60. Achievement of the marketing intervention 2005-06 2006-07 2007-08 2008-09 1.42 1.26 3.1 6.5 Rupees in Billion 61 Projection
  61. 61. Direct Benefit for Paddy (For 50 quintals) Particulars @ rate of Rs/Q Total Quantity (Q) Total Amount (Rs) Price difference 120 50 6000 Transportation 13 50 650 Bus fare - - 30 Total - 50 6680 62
  62. 62. Direct Benefit for Maize (For 128 quintals) Particulars @ rate of Rs/Q Total Quantity (Q) Total Amount (Rs) Overall difference 60 128 7680 Difference in expenditure 20 128 2560 Total difference - 128 10,240 63
  63. 63. Direct benefit for chillies (For 50 quintals) Particulars @ rate of Rs/Q Total Quantity (Q) Total Amount (Rs) Price difference 280 50 14000 Transportation 10 50 500 Bus fare - - 14 Cash discount 3 % - - 8070 Adithi dhadwai 2 % - - 5380 Total 559 50 27964 64
  64. 64. Benefits to Farmer Direct • Remunerative prices • Procurement at door step • No exploitation in weighment and price • Reduction in costs under various components (Rs. 50 to Rs.100 per quintal) • No wage loss • No hassles like in Market yards Indirect • Better terms from trade • More transparency 65
  65. 65. A final thought... • The focus of the extension functionaries need to be extended beyond production. Farmers should be sensitized on various aspects on quality, consumer‟s preference, market intelligence, processing and value addition and other marketing information. This will help the farming community to realize high returns for the produce, minimize the production costs, and improve the product value and marketability. • Market led extension system establishes its position by helping the farmers realize high returns for the produce and minimize the production costs and improve the product value and marketability 66
  66. 66. • Information technology, electronic and print media need to be harnessed to disseminate the production and market information. • Indian farmers have moved from subsistence to self sufficiency due to advent of production technologies. In order to be successful in the liberalized market scenario they have to shift their focus from „supply driven‟ to „market driven‟ and produce according to the market needs and earn high returns. 67
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