The document discusses various problems faced in agricultural marketing in India, including a large number of middlemen reducing farmers' profits, small landholdings, forced sales, lack of transportation and storage facilities, and issues with the APMC Acts. It provides suggestions to improve the situation such as establishing regulated markets, improving marketing channels through direct sales, contract farming, improving grading/standardization, handling/packing, transportation, and providing market information, training and credit access to farmers. Amending the APMC Acts and increasing government investment in agricultural infrastructure are also recommended.

1. ASSIGNMENT ON
PROBLEMS OF AGRICULTURAL
MARKETING IN INDIA
Submitted to : Submitted by :
Dr. S. K. Srivastava Priyanka Upreti
Scientist roll no. 20499
NCAP m.sc. Ag. Economics

2. WHY TO STUDY PROBLEMS OF AGRICULTURAL
MARKETING :
 To understand the nature of problems.
 To know why markets are not developing.
 To suggest some measures required to develop the
market.
 To improving marketing system and various
marketing functions like grading, standardization,
storage, processing, packaging etc.

3. 1. LARGE NUMBER OF MIDDLEMEN :
 Varies with the commodities and the marketing channels
of the products.
 The producer’s share in consumer’s rupees is reduced.
 For instance, a study of D.D. Sidhan revealed, that
farmers obtain only about 53% of the price of rice, 31%
being the share of middle men (the remaining 16%
being the marketing cost). In the case of vegetables and
fruits the share of farmers was even less, 39% in the
former case and 34% in the latter. The share of middle-
men in the case of vegetables was 29.5% and in the
case of fruits was 46.5%. ( challenges in rural
and agriculture market – by Hardeep singh , Manoj
kr. Goel, Amit kr. Singhal in VSRD international
journal of business and management research)

4. 2. SMALL AND SCATTERED HOLDING :
 Marketed surplus is very small.
3. FORCED SALES :
o farmer, in general, sells his produce at an
unfavourable place and at an unfavourable time
and usually he gets unfavourable terms.
4. TECHONOLOGICAL DEVELOPMENT
PROBLEMS IN FARM PRODUCTION :
o paddy harvesters are identified to increase the
moisture content problem in paddy.
o ; mechanical picking of cotton associated with the
problem of mixing trash with cotton.
o potato diggers are found to cause cuts on the
potato.
o sugarcane harvesters effects the problem of trash
mix with the cane, etc

5. 5. LACK OF TRANSPORT FACILITIES :
 Absence of the transport service in reasonable
agricultural marketing areas.
 Unsuitability of the present transport facilities for
transportation of some products like fruits,
vegetables, eggs, etc.
 Insufficient vehicles to carry goods from the farms
to the rural markets and from the rural markets to
the towns.
 High transportation cost.

6. 6. POOR HANDLING, PACKING, PACKAGING, AND
PROCESSING FACILITIES :
 Extent of food processing of agro products of production in
India ( journal of Indian statistics – 2009-2010) :
 Cereals 4.4% pulses 19.6%
 Fruits 1.7% spices 10.2%
 Vegetables 2.4% milk18%
 Egg 1.2 % meats 4.9% Fish 1%
 While the extent of food processing in fruits and vegetables in
brazil accounts for 70%, in Malaysia it is 83% and in Philippines it
is 78%.
 Processing of dairy products is >90% in Australia and USA and
only 18% in India, indicating backwardness of Indian dairy sector.
The farmers share in consumers basket is increasing in Australia
while it is stable in informal sector dominated market India. This
study is done by A.V.Manjunatha , M.K. Gana Shruthy and V.A.
Ramachandra published in Indian journal of marketing,
October 2013 under the topic Global marketing systems in
the dairy sector : a comparison of selected countries.

7. 7. GREAT EXTENT OF POST HARVEST LOSSES
(JOURNAL OF INDIAN STATISTICS: 2009-10)
COMMODITIES LOSS(%) LOSS(QTY) IN
MT
LOSS(MONETARY
VALUE) IN CRORES
Durables 10 23 23000
Semi durables 15 6 1800
Perishable 20 42 63000
average 14.8 71 87800
Buffer stock of rice was 17.4mt in jan 1995 as
compared to actual minimum stock requirements of 7.7mt.
So this is indicating great export potential but India is not
meeting the quality specification required by global
market.

8. 8. LACK OF UNIFORM STANDARDIZATION AND GRADING :
 To facilitate grading, grading centres have been
established only in 1321 markets so far But the
quantity graded at producer’s level is still almost
negligible.
 to enhance the quality of agricultural produce, 956
laboratories have been established.
 On an average not even one laboratory is available
for serving an area of one thousand Sq. Km.
 Such facilities are completely absent in all the NE
states, Sikkim and Goa. (
Agricultural marketing infrastructural facilities
in India – state wise analysis by M.S. Jairath )

9. 9. INADEQUATE STORAGE CAPACITY AND
WAREHOUSING FACILITIES :
 . About 40% of government’s foodgrains is stored in
an unprofessional way due to acute shortage of
storage capacity to the tune of 35 mt .
 Currently 70% of the total warehousing capacity of
112mt is owned by the government.
 Additional 35mt of storage capacity is required in
the 12th five year plan (2012-2017) period.
 only 12% of the total warehouse capacity accounts
for agricultural commodities, while the maximum is
industrial warehousing. ( agriculture
today – august 2014 edition)
o Due to the lack of these facilities often account for
increasing cost of marketing and, hence, retail
prices.

10. 10. LACK OF COLD STORAGE FACILITIES :
 Currently, India has 6300 cold storage facilities unevenly
spread across the country, with an installed capacity of
30.11 million metric tonnes.
 Studies have shown this is half the amount of cold
storage facilities that India actually needs.
 The 3 biggest challenges that India is facing in
spreading cold storages are:
1. High lifecycle costs for a cold storage facility that
typically needs land and buildings to hold 6000 metric
tonnes of food.
2. Uneven distribution of cold storage facilities with 60% of
existing facilities located near the point of production in
just 4 states and too few closer to distribution points in
the other 24 states.
3. Low awareness of best storage practices amongst
industry players.
( agriculture today – august 2014 edition )

11. 11.FAILURE OF STATE APMC ACTS:
 . Apart from Kerala, Jammu and Kashmir and Manipur
all other states have enacted marketing legislations
known as APMC Acts.
 these markets have become restrictive and monopolistic
markets, providing no help in direct and free marketing,
organised retailing and smooth raw material supplies to
agro-industries.
 Exporters, processors and retail chain operators cannot
procure directly from the farmers as the produce is
required to be channelized through regulated markets
and licensed traders.
 So resulted in increased cost of marketing and farmers
are getting low price.
 Monopolistic practices and modalities of the state
controlled markets have prevented private investment in
the sector.

12. 12. ADULTERATION OF PRODUCE AND
MALPRACTICES IN MARKET :
 The manipulation of weights and measures.
 Sale under cover method of sale.
 inferior commodities are mixed with superior ones
and are sold as superior commodities.
 The no. Of regulated markets are 7157 in march
2010.
 On an average, each regulated market in the
country serves an area of 459 square kilometre.
 The National Commission on Agriculture (1976) has
recommended that the facility of a regulated market
should be available in general, within a radius of 5
km.
 Accordingly the country needs 41838 markets.

13. 13. COMMUNICATION PROBLEM :
 Rural areas are inadequately placed with reference
to posts, telegraphs and telephone.
 Low literacy rates among farmers.
14. LACK OF INFORMATION ABOUT PRODUCTION
AND MARKETING :
 Awareness of farmers on different components of
market information and its utility was very poor (11-
37%) as compared to that of traders (75%). This
study is done by A .Vedivelu and B. R. Kiran
2013 published in journal international journal
of agriculture and food science under the topic
problems and prospects of agricultural
marketing in India : an overview.

14. 15. LACK OF FARMERS ORGANISATION :
 The marketing system constitutes unorganized
farming community on one side and organized and
powerful traders on the other side.
 farmers will be generally exploited and do not get
remunerative prices for their produce.
16. INADEQUATE RESEARCH ON MARKETING
o Need to know about new technologies in food
storage and preservation.
o Need for research on consumer demands and
preferences, handling and packaging.

15. 17. INADEQUATE CREDIT FACILITIES :
 though the overall flow of institutional credit has
increased over the years, there are several gaps in
the system like inadequate provision of credit to
small and marginal farmers.
 Though KCC are introduced in the recent years but
the share of small farmers in total credit appears to
be falling to a certain extent. This study is done by
Rakesh Mohan published in Reserve bank of
India bulletin under the topic agricultural credit
in India : status, issues and future agenda.

16. 18. RISING COST OF PRODUCTION AND
TRANSPORTATION :
 Due to hike in power tariffs and the price of
fertilizers , seeds and fuel .
 On an average, India’s international transportation
costs are 20-30 per cent higher than those faced by
other countries.
 Indian products are 5 to 15 per cent more
expensive than their foreign counterparts simply on
account of high international transportation costs. (
Case study on horticultural and agricultural
export from India by public private
infrastructure advisory facility)
 High transportation cost is causing barrier to export
of perishable agricultural products from India.

17. 19. MARKETING UTILITIES CAUSING FOOD SAFETY
PROBLEMS :
 In case of place utility,the further a food product travels
between producers and consumer, the wider the
information gap that exists between economic agents
and the increased hazard of food contamination.
 In case of time utility perishable livestock products such
a fresh milk and unprocessed meats as well as some
horticultural products present opportunities for
adulteration in order to extend the life of the product.
 In case of form utility often there are various , less than
transparent, ways of transforming the goods and
producers may pursue least cost ways inconsistent with
the provision of safe foods. (agricultural marketing
and food safety in china: a utility perspective – by
David L. Ortega, Colin G. Brown and Scott A.
Waldren, H. Holly Wang in journal of agribusiness in
developing and emerging economics )

18. 20. POOR PERFORMANCE OF COOPERATIVES :
 Due to poor relationship among the members of
cooperatives there is poor performance of
cooperatives.
 A cooperatives uncertainty about its farmers
behaviour has a direct and negative impact on its
performance.
 The higher the environmental uncertainty , the
lower the cooperatives performance.
 This study is done by Gustavo Marcos-Matas,
Miguel Hernandez- Espallardo and Narcisco
Arcas- Lario published in journal- outlook on
agriculture , vol 42, June 2013 under the topic
Transaction costs in agricultural marketing
cooperatives : effects on market performance.

19. REPORT OF THE WORKING GROUP ON AGRICULTURAL MARKETING
INFRASTRUCTURE, SECONDARY AGRICULTURE AND POLICY REQUIRED
FOR INTERNAL AND EXTERNAL TRADE FOR 12TH FIVE YEAR PLAN
(2012-2017) BY AGRICULTURE DIVISION ,PLANNING COMMISSION ,
GOVERNMENT OF INDIA
 Private sector unwilling to invest in logistics or
infrastructure under prevailing conditions.
 Price setting mechanism not transparent.
 Mandi staff ill-equipped and untrained.
 Primary or Periodic Markets (haat / bazaars) are most
neglected – basic amenities not available.
 Low density of regulated markets in some States-
farmers have to travel long distances.
 Multi-Point Levy of Market Fee (Varies from 0.5 to 2%)
and Multiple Licensing System.
 Restrictions on movement of goods inter-state and even
intra-state.

20. SUGGESTIONS TO IMPROVE AGRICULTURAL
MARKETING :
 1. ESTABLISHMENT OF REGULATED MARKETS : benefits:
 Farmers are encouraged to bring their produce directly to the markets
 Farmers are protected from the exploitation of market functionaries
 Farmers are ensured better prices for their produce
 Farmers have access to up-to-date market information
 The marketable surplus of the farmers will be increased
 Marketing costs are lowered and producers share will be increased.
 2. IMPROVED MARKETING CHANNEL / DIRECT MARKETING: Apni
mandi/ kisan mandi in Punjab
 Hadaspar vegetable market in pune
 Rythu bazaar in Andhra Pradesh
 Uzhavar sandies in tamilnadu
 Shetkari bazaar in Maharashtra
 Krushak bazaar in Orissa
 Mother dairy booths in delhi

21. 3. CONTRACT FARMING / CONTRACT
MARKETING :
To the farmer, contract farming-
 Reduces the risk of price/ production
 Ensures the price as market is assured
 Increases the quality consciousness
 Ensures higher production because of better quality seeds and pesticides
 Reduces marketing costs
 Provides financial support in cash or kind
 Ensures efficient/ timely technical guidance almost free of cost
To the processing company, contract farming-
 Ensures supply of quality agricultural produce at right time and at lesser cost
to the company.
 Canalizes direct private investment in agricultural activities.
 Ensures that the toxicity level is reduced as per requirement for export.
 The ministry of food processing industries of government of India has
launched a scheme entitled ‘grant under backward linkages’ to promote
contract farming. Under this scheme, a grant of 10% of value of raw material
purchased from the contract farmers (subject to a maximum of rs. 10 lakh
per annum) is provided to food processing units up to 3 years. (Condition is
that number of contract farmers is at least 25)

22. 4. STANDARDIZATION AND GRADING :
 Simple, clear and uniform standardization and
grading.
 Standardization and grading should be such that it
will meet the global standards.
5. IMPROVEMENT IN HANDLING AND PACKING :
6.PROVISION OF STORAGE FACILITIES :
A licenced warehouse has the following benefits:
 Reduces the wastage in storage of various commodities by
providing scientific storage facilities
 Assists the government in orderly marketing of agricultural
commodities by introducing standard grade and specifications
 Issues warehouse receipts, a negotiable instrument in which
commercial banks advance finance to the producers and
dealers
 Assists government in the scheme of price support operations.

23. 7. IMPROVING TRANSPORT FACILITIES :
8. MARKET INFORMATION :
9. MARKET RESEARCH : it is the study of consumer
demand by a firm so that it may expand its output
and market its product.
10. MARKET EXTENSION : This involves the dissemination of
needed information on marketing to producers. The farmers
will be advised on consumer preferences, grading, packaging,
transport, etc., in order to help them to secure better returns.
11. PROVISION OF AGRICULTURAL MARKETING TRAINING
TO FARMERS :
The farmer needs to be trained in product planning i.e. crops
and varieties to be grown, preparation of produce for
marketing, malpractices and rules and regulations, market
information, promotion of group marketing, etc.

24. 12. COOPERATIVE MARKETING :
 A cooperative setup may eliminate the middlemen dominated
market.
o In a cooperative model farmers get at least 70% of market
price of their produce ( said R. B. Singh , former president of
national academy of agricultural sciences ).
o In fertilizer production and distribution the Indian fertilizer
cooperative commands over 35% of the market.
o In the production of sugar the cooperative share of market is
over 58% and in cotton they have share of 60%.
o But the cooperative should be a viable one having successful
and good relationship among its members.
13. AMENDMENT OF APMC ACT :
In amendment there must be provision for establishment of
private market yards, direct purchase centres, market for
direct sales and promotion of PPP in the management and
development of agricultural markets.
Till now only 16 states have amended their acts.

25. 14. GOVERNMENT PLANS IN UNION BUDGET 2014-15 :
 An amount of rs. 100 crores set aside for “agri- tech infrastructure fund”.
 To meet the vagaries of climate change a “national adaptation fund” with
an initial amount of rs. 100 crore will be set up.
 To mitigate the risk of price volatility in the agriculture produce, a sum of
rs. 500 crore is provided for establishing a “price stabilization fund”.
 Central government to work closely with the state governments to re-
orient their respective APMC acts.
 A target to rs. 8 lakh crores has been set up for agriculture credit during
2014-15.
 Allocation of rs. 5000 crores provided for the warehouse infrastructure
fund.
 Restructuring FCI, reducing transportation ans distribution losses and
efficacy of PDS to be taken up on priority.
 Government when required will undertake open market sales to keep
prices under control.
 Rs. 100 crore is provided for kisan TV, to disseminate real time
information to the farmers on issues such as new farming techniques,
water conservation, organic farming etc.
 To incentivize expansion of processing capacity, reduction in excise duty
on specified food processing and packaging machinery from 10% to 6%.

26. REFERENCES :
1) Agriculture today magazine – august 2014 edition
2) Challenges in rural and agriculture market – by Hardeep singh , Manoj kr.
Goel, Amit kr. Singhal in VSRD international journal of business and
management research
3) Global marketing systems in the dairy sector : a comparison of selected
countries by A.V.Manjunatha , M.K. Gana Shruthy and V.A. Ramachandra
published in indian journal of marketing, October 2013.
4) Journal of Indian statistics 2009-10
5) Agricultural marketing infrastructural facilities in India – state wise analysis
by M.S. Jairath
6) Problems and prospects of agricultural marketing in India : an overview by A
.Vedivelu and B. R. Kiran 2013 published in journal international journal of
agriculture and food science .
7) Agricultural credit in India : status, issues and future agenda by Rakesh
Mohan published in Reserve bank of india bulletin.
8) Case study on horticultural and agricultural export from India by public
private infrastructure advisory facility
9) agricultural marketing and food safety in china: a utility perspective – by
David L. Ortega, Colin G. Brown and Scott A. Waldren, H. Holly Wang in
journal of agribusiness in developing and emerging economics

27. CONTD…
10. Transaction costs in agricultural marketing cooperatives : effects on
market performance by Gustavo Marcos-Matas, Miguel Hernandez-
Espallardo and Narcisco Arcas- Lario published in journal- outlook
on agriculture , vol 42, june 2013
11. Report of the working group on agricultural marketing infrastructure,
secondary agriculture and policy required for internal and external
trade for 12th five year plan (2012-2017) by agriculture division
planning commission government of India.
12. Status of agricultural marketing reforms by Gokul Patnaik under the
workshop on policy options and investment priorities for accelerating
agricultural productivity and development in India.
13. How transportation costs affect fresh fruits and vegetables prices by
Richard Volpe, Edward Roeger, Ephraim Leibtag – a report summary
from the economic research service
14. The major problems confronting agricultural marketing in Nigeria by
the Federal university of technology Akure ( department of
agricultural economics and extension ).
15. Can producer associations improve rural livelihoods? Evidence from
farmer centres in India by Raj M. Desai and Shareen Joshi – the
journal of development studies
16. Agricultural marketing in India by S. S. Acharya and N. L. Agarwal