A shirt that is available for sale in the market has a long ‘journey’- right from the production of cotton to the buyer in the supermarket. There is a chain of markets involved in this ‘journey’ with buying and selling taking place at every step.
 

A cotton farmer’s life
    Majority of farmers have small holdings of land. They need to do backbreaking work to get a good harvest of cotton. Picking cotton from cotton farm is a tough task. It takes many days to harvest cotton because all the cotton bolls do not burst at one go.

    Cotton farming requires high levels of inputs; such as fertilisers and pesticides. Farmers often have to borrow money from the local traders for meeting these expenses.

    The traders charge a high rate of interest. They also put a condition that the farmer would sell cotton only to that trader and not anywhere else. This forces a farmer to sell cotton at a price which is lower than the market rate.

    Traders are powerful men in the villages. A farmer depends on such traders for money in exigencies; like illness, education, marriage, etc. Moreover, farmers also need to borrow money in order to survive during lean season.

APMC
    An agricultural produce market committee (APMC) is a marketing board established by state governments of India. APMC acts run on two principles:

    Ensure that intermediaries (and money lenders) do not compel farmers to sell their produce at the farm gate at extremely low price. This ensures that farmers are not exploited.
    All food produce should first be brought to the market yard and then be sold through auction.

   Under APMC Acts, a state is geographically divided and Market (Mandis) are established at different places within the states. Farmers have to sell their produce through the auction in mandi. To operate in Mandi, a trader has to get license. Wholesale,             retail traders (e.g. shopping mall owner) or food processing company etc cannot buy farm output directly from farmer. They’ve to get it through the Mandi.

The Cloth Market of Erode
    Erode; a city in Tamil Nadu has a bi-weekly cloth market. It is one of the largest cloth markets in the world. It boasts of a large variety of clothes. The people involved in this market either directly or indirectly are;

   The Weavers: Cloth that is made by weavers from the villages around is bought here for sale. The weavers make cloths as per the requirements of merchants.

   Cloth Merchants: They have their offices around this cloth market. They buy from weavers and sell to garment manufacturers and exporters around the country. They purchase the yarn and give instructions to the weavers regarding what type of cloth is to       be made from the yarn.

    Other Traders: Other traders from other south Indian towns also come here for purchases.

‘Putting out’ system
    It is a system whereby the merchant supplies raw material and receives the finished product. The merchant books orders from his customers. He distributes work among the weavers and instructs them to make a cloth as per an order’s specification.

Advantages for the weavers
    Cost Saving: They do not have to spend money on purchase of yarn. They also save on the money spent on selling (money spent on finding customers and other sales related costs) of the finished cloth.
    Clarity of Work: The weavers have clarity regarding what cloth they should make and how much is to be woven.

    Therefore, the weavers depend on the merchants for raw materials and markets. This high level of dependence proves that the merchants have a lot of power.

Disadvantages for the weavers
    Low Wages: The merchants pay a very low amount to the weavers for making the cloth.
    Lack of vital information: The weavers have no way of knowing who they are making the cloth for and at what price it will be sold.

    It is a merchants’ market in the sense that it works more in the favour of the merchants. They sell the cloth to the garment factories.

Input cost for weavers
    The main cost of inputs is the looms. The weavers invest all their savings or borrow money at exorbitant interest rates for buying the looms. A loom costs Rs 20000/-. A weaver who has two looms has to shell out Rs 40000/-. Since the work on these looms      cannot be done alone, another adult family member works with him. They work upto 12 hours a day. They earn a meagre amount of Rs 3500/- per month in spite of working so hard.

    The weaver exists at the core of the process of shirt manufacture. He is the foundation of the textile industry. The cotton cloth supplied by the weavers is sold by the Erode merchant to a garment exporting factory in Delhi. The garment exporter makes            shirts with this cloth and exports it to foreign buyers who are mainly the businessmen in the US and Europe. These businessmen run a chain of shops.

Scenario at garment factories
    The workers in a factory are employed on a temporary basis. They may be asked to leave anytime at the whims and fancies of the employer. The wages paid to them is fixed based on their skills. The highest amount paid monthly is Rs 3000/- which is            paid to the tailors. Women do ancillary jobs like cutting, buttoning, ironing, etc. They get meagre amount in lieu of their work.

A Shirt in The United States
    In a large shop in the Unites States, a number of shirts are on display each costing $26, which is equivalent to Rs 1200. It purchase a shirt for note more than Rs. 200 and thus earns huge profit. The garment exporter earns moderate profit after deducting     the cost of input and wages.

    As mentioned earlier a chain of markets is involved right from the production of cotton to the sale of a shirt, with buying and selling taking place at every stage. However, all the parties in this ‘chain’ do not gain or lose, nor do they gain or lose to the same       extent.

Market and Equality
    Equality is a basic principle in a democracy. It also involves getting a fair wage in the market. In descending order of the gains/earnings, the parties involved in the chain of markets are as under:
    Foreign businessmen
    Garment exporter
    Workers at the garment export factory

    The foreign businessman makes huge profits whereas the garment exporter’s profits are moderate. Unfortunately, the earnings of the workers at the garment factory is barely enough for their survival. Similarly, the cotton farmers and the weavers who              have worked so hard hardly earned anything to fulfill their day-to-day needs. The merchants/traders earned much less than the exporter but more than the weavers/farmers.

    Benefits of Market: It is because of the market that people get an opportunity to work and earn. They are able to sell their produce/finished product. Whether it is the small farmer, weaver or the merchant and exporter; a market exists for all of them.

    Drawbacks of Market: Market are always one-sided. In other words, it is always the rich and the influential that gain maximum from the market. They own large factories, set up big shops, etc. They exploit the poor workers by overburdening them and              paying them very low wages. The poor people are dependent on them for:

    Loans for inputs in farms and/or survival
    Raw material and market for goods as in the case of weavers
    Employment as in the case of workers in a factory, shop etc.

Weaver’s cooperative
    These help the weavers to earn a higher income and reduce their dependence on the merchant. In a weaver’s cooperative, the weavers form a group and collectively initiate some activities. These activities include;
    Procurement of yarn from the yarn dealer
    Distribution of yarn among the weavers
    Marketing

   The government also intervenes at times to help the weavers. For example in Tamil Nadu the government runs a Free School Uniform programme for which it procures the cloth from the powerloom weaver’s cooperatives. The Co-optex stores are also an       example of government intervention for the interest of the weavers. The government buys cloth from the handloom weaver’s cooperatives and sells it through Co-optex stores.

Keywords:
    Cooperative: In a co-operative, people with common interests come together and work for mutual benefit.
    Ginning Mill: It is a factory where seeds are removed from cotton bolls. The cotton is sent for spinning after pressing it into bales.

    Exporter: A person who sells goods to other countries.
    Profit: It is also called gain. It is the amount left after deducting all the costs.
    Loss: It is the opposite of profit. If the costs are higher than the earnings, it would lead to a loss.

 

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