Objectives 1.To examine the bargaining power of the farmers in India. 2. To assess the effect of Farmers collectives and market intervention.

2. Dr Panjabrao Deshmukh Krishi Vidtapeeth, Akola
2
Department of Agricultural Economics and Statistics
Post Graduate Institute, Akola.
AG.ECON-591
MASTER SEMINAR
ON
Enhancing Bargaining Power of Farmers in India
Seminar Incharge
Dr. V. K. Khobarkar
(Assistant Professor, Dept.
Agril. Econ. & Stat.)
Research Guide
Dr. S. N. Suryawanshi
(Assistant Professor, Agril. Econ. &
Stat. Section.)
Presented By
Athawale Snehal Shivlal
M.Sc. (Second Year)
Department of Agricultural
Economics And Statistics

3. 3
• To examine the bargaining power of the
farmers in India.
Objective 1
• To assess the effect of Farmers
collectives and market intervention.
Objective 2

4. Points to be discussed…. 4
Introduction
What is bargaining power and
why it is necessary.
Land Holdings
Who are India’s Farmers ?
Need for Reforms
What is to be Done for Strengthening
the Bargaining Position of Farmers in
the Market?
Distribution of average monthly income
per agricultural households by sources
Indebtedness of agricultural
households
Farmers’ Average share in
retail prices
Average Monthly Income
Factors Influences the mark ups on
Farm Gate Prices
Price Formation mark-ups
Importance of Agricultural marketing
The Culmination of Previous
Reform Attempts Successful Farmer Collectives and
Market intervention by the state
governments
• ITC e-Choupal
• e-NAM
• Maha Mango/Maha Grapes/ Maha
Mandarin/Maha Anar of Maharashtra
• Unified Market Platform (UMP) of
Rashtriya e-Market Services (ReMS).
References

5. Introduction
What is Bargaining Power and why it is necessary
Bargaining Power: ‘The power to obtain a concession from another party by threatening to impose a cost, or
withdraw a benefit, if the party does not grant the concession.’ - The emphasis of the definition is on a specific
negotiation among certain parties.
•The condition of the farmers who are facing difficulties due to farmers' bargaining position is still weak when
compared with the sellers.
•Farmers often negotiate prices for their produce from a weaker bargaining position, which stems from a lack of
outside options (in terms of buyers), risk aversion, lack of patience, high transportation costs, and the perishable
nature of the crops.
• Some other examples of risks that weaken farmers’ bargaining power include the risk of middlemen abandoning the
region in favor of more profitable areas, the risk of future prolonged droughts, and the risk of oversupply of farm
produce. In addition to these risks, farmers face significant institutional and infrastructure-related hurdles in their
pursuit of attractive prices for perishable farm produce. Transportation and storage infrastructures are often lacking or
costly in poorer regions, preventing farmers from taking their produce to distant markets that may offer better prices.
• Even if a farmer does manage to get produce directly to the central markets (locally known as “mandi” in India),
there is no guarantee of receiving a better price because these markets are dominated by large traders and auction-
based sales of agricultural commodities.
• The weak bargaining position of farmers led to farmers underestimated the market mechanism system. Therefore,
we need a study to determine the cause of the weak bargaining position of farmers and how to improve the
bargaining position of farmers to achieve prosperity.
5

6. Land holdings
Who are India’s Farmers ?
Marginal and
small Farms
86.2%
Semi-Medium
and medium
farms
13.2%
Large sized
farms
0.6%
The average size of operational
holding in India is 1.15 ha.
86.2% Marginal and small
farmers (0-2 hectares).
13.2 % Semi- medium and
medium farms . (2-10 hectares).
0.6 % Large farms (10 hectares
and above).
Source : Agricultural Census 2015-16
6

7. 7
There is a disconnect between
agricultural growth and
improvement in farmers’ incomes
The value of agricultural produce at
retail prices is substantially higher than
the prices received by the farmers.
The margins that accrue to
middlemen between direct producer
and consumer are very high.
The increasing capital and credit
intensity of agricultural marketing
technology restricts market access to
small and marginal farmers.

8. The Need for Reform 8
Fragmented Markets
Each market functioned
as a separate entity,
hampering intra and
interstate trade.
Market Fees & Charges
Taxes, various
commissions raised the
cost of the final product,
while reducing the returns
to farmers
Inadequate Infrastructure
Infrastructure in markets
remained underdeveloped
and not in tune with
modern supply chains.
Licensing Barriers
Entry as a licensed agent
was restricted, discouraging
competition and
encouraging cartelisation
Inadequate Credit
Facilities
Informal credit
channels still
dominated formal
credit channels.
02
01
03
04
05
Post Harvest Losses
Inadequate
infrastructure, like Cold
storage led to high post
harvest losses
06
07
High Intermediation Costs
The fragmented system led to high
intermediation costs, raising costs
for consumers, while depressing
prices received by farmers
08
Monopoly by APMC’s
Treated Agri. Marketing as
localised subject, ensuring that
the produce grown in notified
area was only allowed to be sold
within itself
09
Long Marketing Channels
Channels distributing
produce to the consumer
are unnecessarily long
10
Information Asymmetry
Farmers often lacked market
information, which traders &
commission agents withheld
from farmers

9. The Culmination of Previous Reform Attempts 9

10. Average Monthly Income 10
Average monthly income and consumption
expenditure: Average monthly income of the
agricultural households included net receipts from
cultivation, farming of animals, nonfarm business and
income from wages/ salaries. At all-India level,
average monthly income per agricultural household
during the agricultural year July 2012- June 2013 was
estimated as Rs.6426/-. During the reference period,
net receipt from farm business (cultivation and
farming of animals) accounted for 60 percent of the
average monthly income per agricultural household in
the country. Nearly 32 percent of the average monthly
income was contributed by income from wages/
salary. During the same period, the average monthly
consumption expenditure per agricultural household
was Rs.6223/-. There is wide disparity across states,
ranging from Rs. 18,059/- in Punjab to Rs. 3,558 in
Bihar.
Wage
32%
Cultivation
48%
livestock
12%
Non-Farm
8%
Distribution of average monthly income per
agricultural households by sources
wage
cultivation
livestock
non-farm
Source: Assessment survey of Agri. Households, NSSO 2014

11. Average monthly income (Rs.) and consumption expenditure (Rs) per agricultural household for
the agricultural year July 2012-June 2013 for different States/ Group of UTs 11

12. Indebtedness of agricultural households
• The information included all kinds of
outstanding loans irrespective of the
purpose for which loans were taken.
Statement shows the average amount of
outstanding loan per agricultural
household by size class of land possessed
for major States.
• The Statement reveals that about 52 %
of the agricultural households in the
country were estimated to be indebted.
The average amount of outstanding loan
per agricultural household was
Rs.47000/- (approx.).
•Andhra Pradesh had the highest share
of indebted agricultural households in
the country (92.9 percent) followed by
Telangana (89.1 percent) and Tamil Nadu
(82.5 percent).
•The average amount of outstanding loan
was highest for Kerala (Rs.213600/-)
followed by Andhra Pradesh (Rs.123400).
12

13. Farmers’ Average share in retail prices
28
33 33
49
55
60 61 63 65 68
74 75 76
0
10
20
30
40
50
60
70
80
To assess what price the farmers get
as a proportion of the final price paid by
the consumers, i.e., the relative
bargaining power of the farmers in the
price formation process for each
commodity vis-a-vis the traders and the
retailers. The survey findings revealed
that farmers’ average share in retail
prices vary between 28-78 per cent
across the 14 crops covered in the
survey - with a lower share in the case of
perishables (particularly, vegetables like
potato and onion) and higher share in
case of non-perishables (e.g., oilseeds
and spices)
Reserve Bank of India Annual Report 2018-19 :
• The survey covered a total of 9,403 respondents comprising farmers,
traders and retailers spread across the consumption and production
centre.
•The survey was conducted in 85 mandis spread across 16 states to
gather detailed information on price formation in 14 major food crops.
13

14. Factors Influences the mark ups on Farm Gate Prices 14
Farmer
Mandi charges: 0.8 per cent.
Commissions: 1.3 per cent
Loading/Unloading charges: ₹0.4/kg
Packing: ₹0.5/kg
Weighing: ₹0.3/kg
Assaying: ₹0.3/kg
Trader
Membership fee: ₹2412/year
Shop rentals: ₹5106/month
Cess/taxes: ₹0.7/kg
Labour charges: ₹0.4/kg
Transport cost: ₹1.0/kg
Storage cost: ₹1.0/kg
Retailer
Shop rentals: ₹4206/month
Local taxes: 1.2 per cent
Labour charges: ₹1.4/kg
Transport cost: range and per cent of
retailers
0-5 per cent: 75 per cent
6-10 per cent: 21 per cent.
Source : RBI bulletin 2019

15. Price Formation mark-ups
It was found that the mark-ups at the production and consumption centres for the traders and the retailers were
different - retailers’ margins were generally higher than the traders’ margins in consumption centres across
commodities, possibly due to significant product loss at the retail stage, particularly for perishables.Empirical
results suggest that factors contributing to greater efficiency in the supply chain such as better road network,
mandi infrastructure, tele-density to improve flow of information, irrigation facilities to reduce supply
uncertainties, and increase in overall literacy levels in the country enabling greater consumer awareness can
help reduce mark-ups.
Oct 2019
15

16. Importance of Agricultural marketing 16
Advanced agricultural
practices resulted in the
surplus production which
changed the subsistence
face of Indian
agriculture.
01
Approximately 33% of the
output of food grains,
pulses and nearly all of
the productions of cash
crops like cotton,
sugarcane, oilseeds etc.
are marketed as they
remain surplus after
meeting the consumption
needs of the farmers.
02
As agriculture sector
produces raw materials
for many of the other
industries, marketing of
such commercial
products assumes
significance.
03
Increased efficiency of
the marketing
mechanisms would result
in the distribution of
products at lower prices
to consumers having a
direct bearing on
national income.
04

17. What is to be Done for Strengthening the
Bargaining Position of Farmers in the Market?
17
Capacity building
Collectives capacity building
should be the core element for
strengthening the bargaining
position of farmers
Farmers ‘ Awareness
It should be built through
consolidation of their
collective strength
Government Interventions
Consist of framing rules and
regulations, promote
infrastructure development,
administration of prices etc.
Agri-food supply chain
Consolidation of
supply chain can lead
to efficiency gain.
Direct Linkages
Linkages with farm and
alternative markets needs to be
promoted to ensure cultivator
consumer connectivity.
Augmenting Credit Flow
Credit planning, adoption of
region specific strategies,
rationalization of lending policies
bringing down the rate of interest
on farm loan.

18. Successful Farmer Collectives and Market intervention
by the state governments
ITC e-Choupals
e-NAM
Maha Mango/Maha Grapes/Maha Anar of Maharashtra
Unified Market Platform (UMP) in Karnataka
18

19. ITC e-Choupal
International Business
Division of Indian Tobacco
Company (ITC) started
about 6500 e-choupals in
40,000 villages of 10 states
to network villages and
procures agricultural
products for domestic and
export purposes (ITC,
echoupal portal)
ITC e-Choupal, has
empowered 4 million
farmers in India. farmers
increased their sales
realisation by 10 to 15 per
cent and it succeeded in
saving procurement cost
to the tune of 3 to 4 per
cent.
Crop Advisory
Personalized crop
advisory services to
help improve crop
productivity, quality
and farmer incomes
Crop Monitoring
Capturing information of
stage-wise crop
production practices &
crop health. Analysing
the data for improved
efficiency of processes,
customized advisory to
farmers
Farmer Forums
Information sharing
network that
facilitates farmer-
farmer and farmer
expert interactions on
crop production
practices and
marketing
Marketplace for Agri
Inputs Customized
high quality agri-input
recommendations
based on farm data,
weather information,
package of practices
and alignment to
market quality
requirements
19

20. ITC has set up small internet kiosks at the village
level to provide real-time market information related
to prices, availability of inputs, weather data and other
aspects relevant to farmers. Locally identified farmers,
called sanchalaks, manage these kiosks. Farmers can
sell their produce directly to ITC and get cash in ITC
collection centers. It benefits farmers in getting higher
farm gate prices, as ITC could directly procure from the
farmers by removing the intermediaries. It also
benefits the company by reducing its sourcing cost and
gaining wider reach and networks. ITC’s intervention in
supply chain benefits the farmers by increasing their
sales. , ITC has also launched a pilot project, Baareh
Mahine Hariyali, that adds a new dimension to the
complex task of multiplying farmer incomes. The
programme has demonstrated encouraging results
within a short span of time.
20

21. e-NAM
In Chhattisgarh and Andhra Pradesh, for traders participating
in e-NAM, Rs. 0.25 rebate is given in the market fee to be
paid on every purchase of notified agricultural commodities.
In Sandspur Market of Gujarat, 30 per cent exemption in the
total market fee is given to the traders operating through e-
NAM.
In Madhya Pradesh and Uttarakhand, 0.5 per cent to 10 per
cent market fee is waived on e-NAM proceedings
respectively.
These incentives will have their impact on the ultimate
consumer prices in a big way. That the farmers get benefitted
from e-auction is evident from the fact that the arrivals in the
market after introduction of e-NAM have been increasing
steadily.
The value of commodities traded through the unified
platform (e-NAM) has almost doubled from Rs. 6,509 crore in
2014-15 to Rs. 12,597 crore in 2015-16.
Around 1.68 crore farmers registered and Rs. 1.14 lakh crore
of trade value carried out through e-NAMs.
21

22. According to Union Budget 2021-22, 1000 more mandis to be integrated with e-NAM to bring transparency and competitiveness.

23. Fruit Crop Total export
from India in
MTs
Value in INR
Lakhs
Area under crop
in Maharashtra
(ha)
Maharashtra’s
Production (MTs)
Major export to Varieties in Demand
Internationally
Mango 36329 31710 4,48,000 6,46,000 Middle East, UK,
Netherlands
Kent, Tomy Atkin,
Alphonso, Kesar
Grapes 156218 155132 35236 9,88,722 Middle East, UK,
Holland, Germany
Thompson seedless,
Emperor, Ruby seedless,
Red globe, Exotic
Mandarin 2527 1015 150786 8,81,478 Middle East Kinnow, Nagpur
Mandarins, Clemetine,
Tangerines
Anar 93673 35613 81376 50,948 Middle East, UK Ganesh, Aarakta
Maha Mango/Maha Grapes/ Maha Mandarin/Maha Anar of Maharashtra
MSAMB is a state level Organization working in the field of export of various fresh fruits, vegetable and
processed food product since last thirty four years. Export can provide better option for the marketing of agro
commodities and provide alternative way of utilization of surplus production. Some of the major Fruit crops
given as below.
23

24. The Board has established post-
harvest training centre in
Talegaon near Pune to train the
farmers of different fruit co-
operatives.
The State Marketing Board of
Maharashtra provides handholding to
the entrepreneurial farmers to market
the fruits largely grown in the state
under its brand name, prefixing
“Maha” (short for Maharashtra) to
variety of fruits.
The farmers are organised into co-
operatives and the Board provides the
necessary technical support to them to
grow and market their produce both in
India and abroad.
Cargo hub is established at
Pune, where the farmers bring
their produce for upcountry
sale/export. At the cargo hub,
the produce is graded, packed
and air lifted to different
destinations.
24

25. Unified Market Platform (UMP) of Rashtriya e-Market Services (ReMS).
Government of Karnataka had constituted a committee under the chairmanship of the Additional Secretary
to Government, Cooperation Department to explore means to improve the agricultural marketing system,
identify the interventions required in the sector and suggest necessary reforms.
ReMS was set up to implement the Agricultural Marketing Policy as a joint venture company, with Government
of Karnataka and the NeML having shareholding of 50 per cent each.
UMP was established in 2014 by the state government of Karnataka to unify all transactions occurring in the
state’s regulated agricultural wholesale markets to be carried out within a single online platform forming “One
State – Single Market”. By November 2019, 162 of the 164 regulated markets across 30 districts in the state
have been integrated to UMP.
Recently (2021), Around 66 Farmer Producer Organizations (FPOs) supported by Karnataka government and
NABARD were on boarded on the Unified Market Platform (UMP). These FPOs will now be accessible by 44,000
traders registered across 162 markets and will facilitate the trading of more than 60 agricultural commodities.
25

26. References
http://enam.gov.in
http://www.echoupal.com
https://www.msamb.com/Export/ExportSpecifications
http://www.remsl.in/
Agricultural Census 2015-16
Levia, R., Manoj Rajanb, Somya Singhvic, Yanchong Zhenga , (2019) The impact of unifying agricultural wholesale markets
on prices and farmers’ profitability. PNAS vol. 117,no. 5
National Sample Survey Office (2014): Key Indicators of Debt and Investment in India, NSS 70th Round, (January–
December 2013) Report No. NSS KI (70/18.2), Ministry of Statistics and Programme Implementation, National Sample
Survey Office, New Delhi.
Puspitasari, A., (2015), Farmer’s Prosperity: How to Increase Farmer’s Bargain Power (In Islamic Perspective). Procedia -
Social and Behavioral Sciences 211 ( 2015 ) 455 – 460.
Radhakrishna, R., (2020), Presidential Address Towards Inclusive Agricultural Development: Growth Performance,
Welfare Challenges and Policy Innovations. Indian Journal of Agricultural Economics Vol.75, No.1.
26

27. References
Ranjan, R., (2017), Challenges to Farm Produce Marketing: A Model of Bargaining between Farmers and Middlemen under
Risk. Journal of Agricultural and Resource Economics 42(3):386–405.
RBI (2019) : Supply Chain Dynamics and Food Inflation in India. RBI Bulletin October 2019.
Reddy, A., S. S. Raju , Arnab Bose (2020), Farmers’ Income, Indebtedness and Agrarian Distress in India. The Microfinance
Review ,Volume XII(1)
Sorrentino A., Russo C., Cacchiarelli, L. (2017), Strengthening Farmers’ Bargaining Power in the New CAP. International
Journal on Food System Dynamics, Proceedings in System Dynamics and Innovation in Food Networks 2017, 123-127.
Union Budget 2021-22: Press Information Bureau Government of India.
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