AGRICULTURAL MARKET SYSTEM

Agricultural Market System

Meaning of Agricultural

Definition: Marketing Agricultural marketing is a process that involves assembling, storage, processing, transportation, packaging, grading and distributing different agricultural commodities across the country.

Agricultural marketing system is an efficient way by which the farmers can dispose of their surplus produce at a fair and reasonable price. It involves different activities for the movement of farm produce from the producer to the ultimate consumer.

Problems faced by Farmers

• Manipulations by Big Traders: Prior to independence, farmers suffered from faulty weighing and manipulation of accounts while selling their produce to traders.
• Lack of Market Information: Farmers were often forced to sell at low prices due to a lack of required information on prices prevailing in markets
• Lack of Storage Facilities: They also did not have proper storage facilities to keep back their produce for selling later at a better price. Even today, more than 10% of goods produced on farms are wasted due to a lack of storage.

Therefore, government intervention became necessary to regulate the activities of private traders.

Measures to Improve Agricultural Marketing:

1. Regulated Markets: The first measure was the regulation of markets, to create orderly and transparent marketing conditions. Regulated markets have been organized with a view to protecting the farmers from the malpractices of sellers and brokers. This policy benefitted farmers as well as consumers.
2. Infrastructural Facilities: The Government aims to provide physical infrastructure facilities like roads, railways, warehouses, godowns, cold storage and processing units. The current infrastructure facilities are quite inadequate to meet the growing demand and need to be improved
3. Cooperative Marketing: The aim of cooperative marketing is to realize fair prices for farmer’s products. Under this, marketing societies are formed by farmers to sell the output collectively and to take advantage of collective bargaining, in order to obtain a better price. Milk Cooperatives Gujarat has been very successful in transforming the social and economic conditions in Gujarat and some other parts of the country. However, cooperatives have received a setback in the recent past because of:
   1. Inadequate coverage of farmer members;
   2. Lack of appropriate link between marketing and processing cooperatives;
   3. Inefficient financial management
4. Different Policy Instruments: In order to protect the farmers, the government has initiated the following policies:

1. Minimum Support Prices (MSP): To safeguard the interest of farmers, government the minimum support prices of agricultural products, like wheat, rice, maize, cotton, sugarcane, pulses, etc. Such a price may be regarded as an offer price, at which Government is willing to buy any amount of grains from the farmers.
2. Maintenance of Buffer Stocks: The Food Corporation of India (FCI) purchases wheat and rice at the procurement prices, to maintain buffer stock. Buffer stock is created CS years of surplus production and is used during shortages. It helps to ensure regularity in supply and stability in prices.
3. Public Distribution System (PDS): The public distribution system in our country operates through a network of ration shops and fair price shops. Fair price shops offer essential commodities like wheat, rice, kerosene, etc. at a price below the market price, to the weaker sections of the society.

Conclusion

• Agricultural markets are still dominated by private traders like moneylenders, rural political leaders, big merchants and rich farmers.
• The quantity of agricultural products, handled by the government agencies and consumer cooperatives, constitutes only 10%, while the rest is handled by the private sector.
• It is often argued by some scholars that the commercialization of agriculture offers tremendous scope for farmers to earn higher incomes provided the government intervention is restricted.

Emerging Alternate Marketing Channels

1. Origin of Farmers Market: Farmers can increase their incomes if they directly sell their products to consumers. As a result, the concept of "Farmers Market" was started, to give a boost to the small farmers by providing them direct access to the consumers and eliminating the middlemen Some examples of these channels are:
   • Apni Mandi in Punjab, Haryana and Rajasthan;
   • Hadapsar Mandi in Pune; "Apni Mandi" is an initiative to encourage farmers to directly
   • Rythu Bazars in Andhra Pradesh; and market their products without being exploited by middlemen or traders
   • Uzhavar Sandies (farmers market in Tamil Nadu).
2. Alliance with National and Multinational Companies: Several national and multinational fast-food chains are increasingly entering into contracts/alliances with farmers.
   • They encourage the farmers to cultivate farm products (vegetables, fruits, etc.) of the desired quality.
   • They provide them with not only seeds and other inputs but also assure procurement of the produce at pre-decided prices.
   • It is argued that such arrangements will help in reducing the price risk of farmers and expand the market for farm products.