Problem of Agricultural Marketing in India

1. Krishi Manthan
-----A Case Study Competition
Problem of Agricultural Marketing in
India
Team Name
Germinating Agriculturist
Name: Subham Kumar Singh
Contact Number: 7998257384
Mail address: singhsubhamkumar98@gmail.com
College Name: The Neotia University
Name: Souvik Roy
Contact Number: 9593889191
Mail address: roys.viks@gmail.com
College Name: The Neotia University
Name: Ishita Chattopadhyay
Contact Number: 9088255104
Mail address: ishitachat99@gmail.com
College Name: The Neotia University

2. 1. “Absence of Market information is the main reason for the Farmer's loss.” To what
extent does this statement relate to the modern scenario? Explain in relation with
middlemen or intermediaries.
ANS:-Information is crucial to increase marketing success and aids in problem-solving and decision making.
Concerning the question, I would like to shed some light on the Marketing Information System (MIS), which
is a system designed for gathering, processing, storage, and improving marketing exchange with an upcoming
active role of computerization in MIS.
Agricultural marketing continues to be in a bad shape in rural India. In the absence of sound marketing
facilities, the farmers have to depend upon local traders and middlemen for the disposal of their farm produce
which is sold at a throw-away price.
In most cases, these farmers are forced, under socioeconomic conditions, to carry on distress sale of their
produce. In most small villages, the farmers sell their produce to the moneylender from whom they usually
borrow money.
“According to an estimate, 85 percent of wheat and 75 percent of oilseeds in Uttar Pradesh, 90 percent of Jute
in West Bengal, 70 percent of oilseeds, and 35 percent of cotton in Punjab is sold by farmers in the village
itself.” Such a situation arises due to the inability of the poor farmers to wait for long post-harvest operations.
To meet his commitments and pay his debt, the poor farmer is forced to sell the produce at whatever price is
offered to him. “The Rural Credit Survey Report rightly remarked that the producers, in general, sell their
produce at an unfavorable place and at an unfavorable time and usually they get unfavorable terms.”
In the absence of an organized marketing structure, private traders and middlemen dominate the marketing
and trading of agricultural produce. The remuneration of the services provided by the middlemen increases
the load on the consumer, although the producer does not derive similar benefit.
Many market surveys have revealed that middlemen take away about 48 percent of the price of rice, 52 percent
of the price of groundnuts, and 60 percent of the price of potatoes offered by consumers.
To save the farmer from the clutches of the money-lenders and the middlemen, the government has come out
with regulated markets. These markets generally introduce a system of competitive buying, help in eradicating
malpractices, ensure the use of standardized weights and measures, and evolve suitable machinery for
settlement of disputes thereby ensuring that the producers are not subjected to exploitation and receive
remunerative prices. Enhancement of Indian agricultural market information services are essential for
marketing efficiency and to assimilate the national agricultural market with the regional and international
market for sustainable growth of the agricultural sector.
For the betterment of the economy, there should be transparency among the farmers, all the firms, and
government-regulated agriculture bodies.
If we take into consideration the fact that after two dry spells in 2017 and 2018, there was a record production
in 2019 due to good monsoons although the needs of the farmers were not fulfilled because of the
overproduction the results were steep fall in prices of the agricultural produce and the farmers struggled to
recover their inputs cause of less marketing information and also due to the less availability of intermediaries
which could have possibly provided the basic support to the farmers. The lack of storage facilities also
accounts for this problem and the farmers are forces to sell all their produce before they perish and are of no
more use. “According to the Economic Survey of India, 2018 the farmer's income was stagnant for the last
three consecutive years.”
Even after seven decades of independence remunerative prices for crops and other farm produce are elusive
for Indian farmers. Modern technology, high-yielding seeds, and fertilizers have helped in rising the farm
output but not farmers' prosperity. In the agriculture sector, post-harvest management is the weakest link and

3. the government has not been able to address this sore point. For this very reason, the middlemen and
intermediaries take advantage of the unfavorable circumstances incurred by the farmers. The possible ways to
cope up with this problem can be the alterations in the current supply chain in agriculture which has a series
of intermediaries and middlemen exploiting the farmers and better storage and warehouse facilities.
2. Suggest some strategies to tackle the problems of current agricultural marketing in
India.
ANS:-The current agricultural marketing in India suffers from some pressing issues like-
Lack of Output Quality and absence of proper grading:
Prima facie, the quality of products is low due to several factors which are Poor quality of seeds, Primitive
methods of cultivation, Lack of pest and disease control measures, Dependence on erratic monsoon (drought
or flood), and more like it. As a general rule, there is hardly any grading of the commodities to be marketed.
Therefore, the purchaser has little, if any, confidence in the quality of the product. As per the Act, licenses are
issued on a selective basis to reliable merchants, under the supervision and control of the Government staff.
The graded commodities are subsequently passed on to the market under the label of “AGMARK”.
Strategy: -There are lots of approaches these days being followed, where there is the minimum role of
chemicals, though the world is divided, which one is the best since food demand is on the continuous
increasing side. some of the approaches like organic farming, bio-dynamic farming, natural farming,
conservation agriculture (allows limited use of chemicals), integrated crop management, however,
combination organic farming and conservation agriculture has produced much better dividends. Irrigation
Facilities, Institutional Credit, Proper Marketing Facilities, Supply of Quality Inputs, Consolidation of
Holdings Agricultural Education, Reduction of Population on Land, Provision of Better Manure Seeds. These
factors can be beneficial to improvise the quality of output.
Standardization and grading should be done on a serious note by government-regulated bodies to ensure
quality to consumers and better prices to producers.
Debt Obligation and Distress Sales:
Finally, the average farmer is almost always in debt. So, he cannot wait after the harvest to obtain better prices
in the future. He has to make distress sales to the moneylender or the trader immediately after the harvest, for
clearing his debt. This weakens the position of the farmer. His condition deteriorates further when, at a later
date, he has to make a distress purchase from the open market by obtaining consumption a loan.
Strategy-
Credit:
Steps may be taken to provide cheap credit to farmers, especially from institutiontonal sources like commercial
banks and co-operatives. Co-operative societies are providing credit facilities to farmers with a view to
improvisesing their economic conditions, protecting them from the exploitative practices of village money-
lenders and for helping them to get reasonable prices for their produce.
Lack of Adequate Transport Facilities and Lack of Information:
The road conditions in rural areas are very bad. Even the rich cultivators, having a surplus to dispose of, are
often not interested in going to the mandis. Most rural roads are un-metaled and cannot be used during the
monsoon season. Since most farmers are illiterate and ignorant, they take at face value whatever price rules in
all parts of the market. Instead, lack of market information causes variations in market prices. Daily prices of
some essential commodities are no doubt made public by the A.I.R. and T.V., but the number of radio sets
and T.V. in rural areas is very small.
Strategy: -
Expansion of transport facilities between the villages and mandis seems to be the need of the hour. Rural
transport has been emphasized in the five-year plans and quite some progress has been made in this direction.

4. Various other measures taken include Prompt supply of market information through published documents and
T.V. programmed also circulated among the rural regions as the prime focus as major agriculture sector resides
there.
Inadequate Storage and Warehousing Facilities & Lack of Proper Marketing Facilities:
The average Indian fanner does not have. adequate storage facilities. Moreover, there are no satisfactory
warehousing facilities in the market. For these two reasons, the farmer has to sell his produce immediately
after the harvest. In very recent times, the quantum of marketed surplus has increased significantly in certain
areas due |td] the spread Of Green the Revolution. But this has not been supported by a. corresponding increase
in yards and other ancillary facilities. Consequently, the farmer has been the lone sufferer.
Strategy: -
An extension of storage facilities at the farmland and Storage and Warehousing Corporation, to construct and
managing a. whole network of warehouses in all towns and mandis. The co-operative societies get necessary
financial and. technical assistance from the Government for promoting warehouses in villages.
Moreover, the National Co-operative Development Corporation has been set up for planning, promoting and
financing the programmed of augmenting storage capacity augmenting The storage capacity of 150 lakh tones
had already been constructed in the co-operative sector by the end of March 2000 as against a capacity of 8
lakh tones in 1960-61.
Expansion of Market Yards:
This is a vital necessity. This must be supported by a corresponding expansion of ancillary facilities in the
various existing markets and setting up new markets and market yards for handling the phenomenal increase
in market arrivals, particularly in those areas where the Green Revolution has occurred (viz., Punjab, Haryana
and western U.P.).
Unethical Practices & Multiplicity of Charges:
The entire method of transaction is against the interest of the farmer. In the mandis, the farmer has to approach
a broker (a deal) to be able to dispose of his produce to the arrhinia. These two intermediaries often use code
words to settle the price undercover and not in open. Moreover, false weights and measures are used and
unnecessary deduction is made from the quoted price on the pretention that his produce is of inferior quality.
There is a multiplicity of charges on the seller. Some of these are legitimate such as commission, carriage, and
weighment, while others are not (such as charges for the arrhinia buyers’ servants and apprentices, charity,
religious festival and so on). In each case, the seller has to pay more than the buyer.
Strategy: -
Regulated Markets:
Regulated markets may be established to eliminate unhealthy and unethical trade practices and reducing
various marketing charges benefit the poor cultivator. Quite recently, numerous regulated markets have been
set up in various States to the various interest of the farmers.
Cooperative Marketing Societies:
I here need to set up such societies. Some progress has been achieved in this direction. In India, the cooperative
marketing structure consisted of more than 7,000 co-operative marketing societies during 1999-00, covering
all important agricultural markets in the country. The total value of agricultural produce marketed by co-
operatives amounted to Rs. 22,500 crores in 1999-00, as against Rs. 169 crores in 1960-61.
A Long Chain of Intermediaries:
The number of middlemen and intermediaries between the farmer and the final consumer of most agricultural
commodities is very large. Therefore, the total margin going to the traders is quite a large part of the market
price. Some of them, such as the Dallas, hardly perform any economic function. So, the farmer hardly gets
anything compared to the effort put and expenses incurred.

5. Strategy: -
Transparency should be there among the firm and farmers.
Contract farming can meet the purchaser's quality requirements and be shipped on schedule. In exchange,
the customer agrees to buy the commodity and, in certain situations, to assist with processing by providing
agricultural inputs, land planning, and technical guidance, among other things.
3. Discuss the supply chain of Agriculture and the problems associated with it. Support
your answers by using relevant data.
Supply Chain is a sequence of actions that help in meeting the final customer requirements, which take place
in and between various stages along a continuum, from production to final consumption.
The Supply Chain includes producers, suppliers, transporters, warehouses, retailers, and consumers. It also
includes new product development, marketing, operations distribution, finance, and customer service.
An agriculture supply chain system comprises organizations/cooperatives that are responsible for the
production and distribution of vegetables/Fruits/Cereals/Pulses or animal-based products. In general, we
distinguish two main types:
‘Agriculture food supply chains for fresh agricultural products’ (such as fresh vegetables, flowers, fruit). In
general, these chains may comprise growers, auctions, wholesalers, importers and exporters, retailers and
specialty shops, and their input and service suppliers. All of these stages leave the intrinsic characteristics of
the product grown or produced untouched. The main processes are the handling, conditioned storing, packing,
transportation, and especially the trading of these goods.
‘Agriculture food supply chains for processed food products (such as portioned meals, snacks, juices, desserts,
canned food products). In these chains, agricultural products are used as raw materials for producing consumer
products with higher added value. In most cases, conservation and conditioning processes extend the shelf-
life of the products.
Issues Related to Agriculture Supply Chains
Participants in Agriculture supply chains, e.g., farmers, traders, processors, retailers, etc., understand that
original good quality products can be subject to quality decay because of an inadequate action of another
participant.
For example, when a farm leaves a can of milk for pick-up on a roadside, under the sun, without any cover,
there will be a loss of quality that may even render the raw material unfit for processing.
Similarly, if processors, on the other hand, use packaging items and/or technologies that do not maintain the
freshness and nutritional characteristics of their products as much as possible, retailers will be likely to face
customer complaints.

6. Characteristics of Agriculture Supply Chains and its impact: -
Supply Chain
Stage
Issues with Product & Process Characteristics Impact on Logistic/Flow of
goods.
Overall Shelf-life constraints for raw materials,
intermediates, and finished products and changes in
product quality level while progressing the supply
chain (decay).
Recycling of Materials Required.
• Timing constraints (goods have
to be supplied quickly to avoid
decay).
• Information requirements
(correct information of goods is
essential).
Growers /
Producers
• Long production times (producing new or
additional agro-products takes a lot of time)
• Seasonality in production • Variability of quality
and quantity of supply
• Responsiveness
• Flexibility in process and
planning
Food processing
industry
• High volume, low variety (although the variety is
increasing) production systems
• Highly sophisticated capital-intensive machinery
leading to the need to maintain capacity utilization
• Variable process yields in quantity and quality due
to biological variations, seasonality, random factors
connected with the weather, pests, other biological
hazards
• A possible necessity to wait for the results of
quality tests
• Alternative installations, alternative recipes,
product-dependent cleaning and processing times,
carryover of raw materials between successive
product lots, etc.
• Storage buffer capacity is restricted, when
material, intermediates, or finished products can
only be kept in special tanks or containers
• Necessity to value all parts because of the
complementary nature of agricultural inputs (for
example, beef cannot be produced without the co-
product hides)
• Necessity for lot traceability of work in the
process due to quality and environmental
requirements and product responsibility
• Importance of production
planning and scheduling
focusing on high-capacity
utilization
• Flexibility of recipes
• Timing constraints, ICT
possibility to confine products
• Flexible production planning
that can handle this complexity
• Need for configurations that
facilitate tracking and tracing
Auctions /
Wholesalers/
Retailers
• Variability of quality and quantity of supply of
farm-based inputs
• Seasonal supply of products requires global (year-
round) sourcing
• Requirements for conditioned transportation and
storage means
• Pricing issues
• Timing constraints
• Need for conditioning
• Pre-information on quality
status of products

7. Issues Related to Supply Chain Management in India
4. “How modern farm laws are effective in reducing the pressure on Farmers?” Explain
in the context of the given passage.
The governments of different states enacted the Agricultural Produce Market Regulation Acts (APMC Acts)
for authorizing the farmers to set up and regulate marketing practices in wholesale markets to get a fair price
of their produce. But with each passing year, the APMCs turned out to be inefficient with increased
interference of middlemen, a ban on private players to enter the trade, increasing corruption, etc. After
realizing the inadequacies in the existing APMC acts of various states the Modi government has now
introduced three more bills to promote much easier trade for the farm produce and to provide a competitive
market for the producers outside the existing APMC system.
According to the Farming Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, farmers can
sell their products anywhere outside the state-regulated mandis without the burden of taxes and fees. Following
this farmer gets a great exposure by accessing outside the APMC markets to sell their produce.

8. Far ago agriculture policies only focused on increasing yields and ignored competitive pricing of farmer’s
produce. One of the biggest factors plaguing the growth of the agriculture sector in the country is the inability
of the farmer to find a market and to get a fair price for his produce. But this new Farm Bill shifts the focus
towards marketing which is a great move for our farmers. The law intends to end the monopoly of Agriculture
Produce Market Committees (APMCs) in carrying out the trade of farm produce in the country. It will help
the farmers by :
 Allowing intra-state and inter-state trade of farmers’ produce beyond the physical premises of
APMC markets thus giving freedom for the farmers and traders to sell or purchase farm products
anywhere.
 The Bill prohibits state governments from imposing any market fee or tax on farmers, traders for
the trade conducted on farmers’ produce conducted in an ‘outside trade area’.
 Under the proposed law, electronic trading in the transaction platform has been proposed for
ensuring a seamless trade electronically. The proposed law also allows private individuals, FPOs,
and co-ops to set up electronic trading platforms in these areas.
The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020
creates a framework for contract farming through an agreement between a farmer and a buyer before the
production or rearing of any farm produces. It will help the farmers because:
 Under this legislation, farmers are empowered to directly engage with processors, wholesalers,
aggregators, retailers’ exporters, etc, thus eliminating intermediaries resulting in full realization of
the price for the farm produce.
 The proposed law also states that the price of farming produce negotiated between the trader and
the farmer should be mentioned in the agreement.
 The buyer (corporate companies) will be responsible for providing the necessary means or inputs
for good crop yield. Under the bill, it is the responsibility of the buyer to provide agricultural
equipment to the farmer.
The Essential Commodities (Amendment) Bill, 2020 will boost investment in the agriculture sector and will
also create more storage capacities to reduce the post-harvest loss of crops. Thus, in the case of horticultural
produce, a 100% increase in the retail price of a commodity over the immediately preceding 12 months or
over the average retail price of the last five years, whichever is lower, will be the trigger for invoking the stock
limit.
The laws will provide more choices for the farmer and lessen the marketing costs for the farmers thus helping
them to get better prices. It will also help farmers of regions with surplus produce to get better prices and
consumers of regions with shortages, lower prices. The laws will enable the farmer to make use of modern
technology and better inputs to enhance their farm produce and its trade. It will reduce the cost of marketing
and improve the income of farmers. These new laws will encourage large companies, food processing firms,
exporters, etc, to invest in the farm sector and source good-quality farm produce. The announced amendment
to the Essential Commodities Act is expected to help both farmers and consumers while bringing in price
stability. The proposed changes will also create a competitive market environment and prevent wastage of
agri-produce that happens due to lack of storage facilities.

9. 5. SWOT analysis is a strategic planning technique used to help a person or organization
identify strengths, weaknesses, opportunities, and threats related to business
competition or project planning. You can learn more about this on the following
website
https://www.mindtools.com/pages/article/newTMC_05.htm
Perform a SWOT analysis on any two government policies implemented to reduce
the exploitation of farmers from middlemen.
1. Bill on agri market
SWOT
Strengths Weaknesses
1. The bills will empower farmers through
greater market access.
2. Expansion of the opportunities for
commercial outcomes.
3. The bills lead to an open market.
4. Enabling improved price discovery
5. Dynamic market linkages.
1. The lack of policy-level support for
transporting farmer produces (At least 85
percent of the Indian farming community
comprises marginal farmers who do not have
access to markets or transportation facilities.).
Opportunities Threats
1. The farmer can make them more
improve by observing the different
market.
2. Speeding the local technology of
farming.
1 . Difficult to move from their
comfort zone.
2. Sometimes the previous people don’t
allow the new people to sell their
product in their place.
2. Bill on contract farming
SWOT
Strengths Weaknesses
1. The Union government has intended to
liberalize farming with the short-term goal
of doubling their current average monthly
income.
2. Eliminating the APMC monopoly following
eliminating the middleman.
3. Supply chain efficiencies.
Dynamic market linkages.
1. The lack of policy-level support for
transporting farmer produces (At least 85
percent of the Indian farming community
comprises marginal farmers who do not
have access to markets or transportation
facilities.).
2. It will create a sudden power vacuum in the
market, thereby creating uncertainty in the
production market. In case of gradual
collapse in APMC systems, the government
has not currently envisioned an alternate
price-setting mechanism.
Opportunities Threats
1. It will introduce corporate and private
investments in the industry.
2. The investments can strengthen
infrastructure, improve tools and modernize
the sector.
3. The open-market structure allows the
farmers to sell their produce online,
1. It is also difficult to ensure that the big
corporates do not enslave the already
marginalized farmers. By allowing both
verbal and written contracts, the Centre
places the farmers at the vulnerable end of
the bargain with no redress.

10. following in an increasingly digital
universe.
4. The increase in competition can potentially
work to increase prices for farmers who are
currently at the mercy of middlemen.
5. The availability of contract farming
provides farmers with price assurance
instead of subjecting them to market
uncertainty.
6. In most cases the firms will provide the
farmers with input material as a part of
contracts, thereby reducing input costs.
It enables stabilize prices by driving supply chain
efficiencies through access to stock (as per the
Essential Commodities Act, 1995)
Farmers and consumers run the risk of exploitation
by placing the market in the hands of big
businesses.