THE AGRICULTURAL MARKETING SYSTEM

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1 Chapter No. 10 Page No. 120 THE AGRICULTURAL MARKETING SYSTEM MAJOR DEFICIENCIES: LACK OF ORGANIZATION AMONG PRODUCERS. FORCED SALE. SUPERFLUOUS MIDDLEMEN. MULTIPLICITY OF MARKET CHARGES. MALPRACTICES IN UNREGULATED MARKETS. LACK OF GRADING AND STANDARDIZATION. CONT..

2 Chapter No. 10 Page No. 120 THE AGRICULTURAL MARKETING SYSTEM MAJOR DEFICIENCIES: INADEQUATE STORAGE FACILITUIES. UNDER DEVELOPED TRANSPORT SYSTEM. HIGH COST OF BORROWING. LACK OF STANDARD WEIGHTS AND MEASURES. ADULTERATION. LACK OF MARKETING INFORMATION.

3 Chapter No. 10 Page No. 120 LACK OF ORGANIZATION AMONG PRODUCERS THE FARMERS ARE NOT UNITED AT VILLAGE LEVEL. THEY ARE NOT ABLE TO BARGAIN PRICE. ORGANIZATIONAL ATTEMPT AT THE GRASS ROOT LEVEL USUALLY FAILS. THE PROGRESS OF CO-OPERATIVE MOVEMENT IN INDIA IS VERY SLOW. SMALL FARMERS LACK ORGANIZATION.

4 Chapter No. 10 Page No. 120 FORCED SALES A HIGH PERCENTAGE OF PRODUCE IS SOLD IN THE VILLAGE ITSELF, DUE TO THE INDEBTEDNESS OF THE FARMER. FARMER HAS NO ACCESS TO THE MARKET INFORMATION DUE TO POOR COMMUNICATION FACILITIES. INADEQUATE TRANSPORT FACILITIES. MOST OF THE CULTIVATORS ARE HARD PRESSED FOR CASH TO MEET THE CLAIMS OF THEIR CREDITORS AND TO PAY OFF RENT AND OTHER CHARGES.

5 Chapter No. 10 Page No. 121 SUPERFLUOUS MIDDLEMEN THERE ARE TOO MANY INTERMEDIARIES BETWEEN THE PRODUCER AND THE ULTIMATE CONSUMER. THEY FUNCTION AT VARIOUS STAGES IN THE PROCESS OF ASSEMBLING AND DISTRIBUTION OF THE PRODUCE. THE EXISTENCE OF THE LONG CHAIN OF MIDDLEMEN REDUCES THE SHARE OF THE CONSUMER S PRICE RECEIVED BY THE ACTUAL CULTIVATOR.

6 Chapter No. 10 Page No. 122 MULTIPLICITY OF MARKET CHAREGS IN THE ABSENCE OF STATUTORY REGULATIONS THESE CHARGES ARE NEITHER DEFINED, NOR ARE BASED ON ANY SERVICE CONSIDERATION AND ARE RECOVERED EITHER IN CASH OR IN KIND AND OFTEN BOTH. THEY ARE ALWAYS INTRODUCED IN FAVOUR OF THE TRADERS AND THE FUNCTIONARIES. 21.5% OF THE INCOME OF THE PRODUCER GOES TO MEET THE VARIOUS EXPENSES. THE CHARGES VARY FROM MARKET TO MARKET AND THERE IS ALSO NO UNIFORM PRACTICE AS TO CHARGES THAT ARE BORNE BY THE SELLER AND THE BUYER.

7 Chapter No. 10 Page No. 123 MALPRACTICES IN UNREGULATED MARKETS SCALES AND WEIGHTS ARE MANIPULATED AGAINST THE SELLER. ARBITRARY DEDUCTIONS FOR THE RELIGIOUS AND CHARITABLE PURPOSES AND OTHER OBJECTS. LARGE QUANTITIES ARE TAKEN AWAY FROM THE PRODUCE OF THE CULTIVATOR AS BANGI OR SAMPLE. THE BROKER IS MORE LIKELY TO FAVOUR THE PURCHASER WITH WHOM HE HAS DAILY CONTACT. WHEN DISPUTE ARISE THE CULTIVATOR HAS NO MEANS TO SAFEGUARDING HIS INTEREST. DIFFERENTETIAL PRICES FOR THE SAME GRADE AND LEVYING UNFAIR CHARGES.

8 Chapter No. 10 Page No. 124 LACK OF GRADING AND STANDARDIZATION THE AGRICULTURAL PRODUCE (GRADING AND MARKETING) ACT EXISTS SINCE IT IS NOT EVEN HEARD TODAY IN UNREGULATED MARKETS. THERE ARE NO STANDARD GRADES COMMONLY ACCEPTED THROUGHOUT INDIA. NUMBER OF FARMERS HAVE LITTLE KNOWLEDGE ABOUT GRADING THEIR PRODUCE. THEY MIX UP GOOD AND BAD QUALITY PRODUCE INTO ONE LOT WHICH SECURE THEM A LOWER PRICE.

9 Chapter No. 10 Page No. 124 INADEQUATE STORAGE FACILITIES THERE IS A GENERAL INADEQUACY OF GOOD STORAGE FACILITIES BOTH IN RURAL AND URBAN AREAS. THE INDIGENOUS METHODS DO NOT ADEQUATELY PROTECT THE PRODUCE FROM DAMPNESS. LOSSES ARE DUE TO MOISTURE ABSORPTION, EXCESSIVE HEAT, INSECTS, RODENTS AND BIRDS. THE DAMAGE IS GREATER WHEN THE GRIAN IS STORED IN KACHCHA UNDERGROUND PITS WHERE THE SUB-SOIL WATER LEVEL DAMEGES SUBSTANTAILLY. LOSSES DUE TO RODENTS ARE ALSO VERY HIGH.

10 Chapter No. 10 Page No. 125 UNDERDEVELOPED TRANSPORT SYSTEM COMMUNICATIONS FROM THE FILED TO THE VILLAGE AND FROM VILLAGE TO THE MANDI ARE OFTEN EXTREMELY POOR AN DEFECTIVE. BAD ROADS, LANES, AND TRACTS CONNECTING VILLAGES WITH THE MARKETS ADD TO THE PROBLEMS OF TRANSPORTATION AND ALSO MULTIPLY THE INTERMEDIARIES. RAILWAYS HAVE NOT BEEN DEVELOPED FURTHER AND HENCE ARE INADEQUATE BY TODAY'S STANDARDS. BAD ROADS LEAD TO DELAY. SOME OF THE AGRICULTURAL PRODUCE NEEDS SPECIAL STORAGE SYSTEMS EVEN WHILE BEING TRANSPORTED.

11 Chapter No. 10 Page No. 125 HIGH COST OF BORROWING THE CULTIVATOR IS FINANCED BY THE VILLAGE SAHUKAR-CUM-TRADER WHO IN TURN IS FINANCED BY ARHATIA AND THE INDIGENOUS BANKER. IN THE ABSENCE OF WAREHOUSES AND THE LACK OF FACILITIES FOR TAKING ADVANCES AGAINST THE SECURITY OF WAREHOUSE RECEIPTS THERE CANNOT BE ANY SYSTEM OF CHEAP FINANCE AGAINST SECURITY OF GOODS. THE VARIOUS MARKETING AGENTS BORROW FUNDS AT A HIGH RATE OF INTEREST. THE CASE FOR BORROWING PRIVATE FINANCE AND THE FLEXIBILITY IN THE REPAYMENT MAKE IT ATTRACTIVE DESPITE MANY MALPRACTICES.

12 Chapter No. 10 Page No. 126 LACK OF STANDARD WEIGHTS AND MEASUR THE GOVT. OF INDIA IMPLEMENTED STANDARD WEIGHTS AND MEASURES ACT 1958, BUT PRIMITIVE MEASURES ARE STILL USED IN MANY RURAL AREAS. THERE ARE GREATER OPPORTUNITIES FOR CHEATING THE IGNORANT CULTIVATOR AND UNSCRUPULOUS DEALERS READILY AVAIL THE OPPORTUNITIES. MULTIPLICITY OF WEIGHTS AND MEASURES MAKE SUPERVISION DIFFICULT AND AFFORD GREATER OPPORTUNITIES FOR CHEATING THE PRODUCER. DELIBERATE MALPRACTICES, IGNORANCE AND CARELESSNESS HAVE ALL COMBINED TO MAKE THE CONSUMER IN INDIA PAY AN UNNECESSARILY HIGH PRICE FOR MANY GOODS.

13 Chapter No. 10 Page No. 126 ADULTERATION MOST IMPORTANT REASON FOR DELIBERATE ADULTERATION OF AGRICULTURAL PRODUCE IS THE HIGH AMOUNT OF REFRACTION (KHAD) ALLOWED IN MOST MARKETS AND THE NON-MUTUAL TERMS. A DEDUCTION OF 2% IS MADE FOR IMPURITIES AND THE TERMS ARE NON-MUTUAL. i.e. A PRODUCER OFFERING CLEANER PRODUCE RECEIVES THE SAME PRICE AS THE PRODUCER OFFERING PRODUCE CONTAINING LOT OF IMPURITIES.

14 Chapter No. 10 Page No. 128 LACK OF MARKETING INFORMATION LINES OF IMPROVEMENT: ESTABLISHMENT OF REGULATE MARKETS. STANDARDIZATION OF WEIGHTS AND MEASURES. STANDARDIZATION OF CONTRACTS. TRANSPORTATION FACILITIES. WAREHOUSING. PROVISION OF GRADING AND STANDARDIZATION OF PRODUCE PROVISION OF MARKETING NEWS.

15 Chapter No. 10 Page No. 128 REGULATED MARKETS OBJECTIVES: ENSURE A FAIR PRICE TO THE FARMERS. PROVIDE CONGENIAL ENVIRONMENT FOR BUSINESS TRANSACTIONS BY PROHIBITING MALPRACTICES. TO STABILIZE THE PRICES OF AGRICULTURAL PRODUCE. PROVIDE A COMMON PLACE FOR BUYER AND SELLER TO MEET AND UNDERTAKE BUYING AND SELLING.

16 Chapter No. 10 Page No. 129 ADVANTAGES: REGULATED MARKETS ETHICAL PRACTICES IN SELLING THE PRODUCE THROUGH OPEN AUCTIONS AND OPEN AGREEMENT. UNNECESSARY MARKET CHARGES HAVE BEEN REMOVED. IT HAS REMOVED MALPRACTICES IN WEIGHING THE PRODUCE. USE OF CERTIFIED WEIGHTS AND MEASURE. IT HAS OVERCOME ADULTERATION. MACHINERY FOR SETTLEMENT OF DISPUTES.

17 Chapter No. 10 Page No. 130 PROBLEMS OF REGULATED MARKETS LOCATION: THE REGULATED MARKETS ARE SITUATED IN DISTRICT / TALUKA HEADQUARTERS AND THEREFORE THEY ARE NOT EASILY ACCESSIBLE TO THE FARMERS. PAYMENT: THERE ARE DELAYS IN RECEIVING THE PAYMENT AFTER DISPOSAL OF THE PRODUCE. PRESENCE OF MIDDLEMEN: THE MIDDLEMEN CONTINUE TO OPERATE IN REGULATED MARKETS AND CHARGE HIGHER COMMISSION. CONT..

18 Chapter No. 10 Page No. 130 PROBLEMS OF REGULATED MARKETS WORKING HOURS: THE BUSINESS IS DONE FOR A FEW HOURS AND THE FARMERS COMING FROM FAR OFF PLACES ARE NOT ABLE TO REACH THE MARKETS ON TIME. LACK OF INFORMATION: MANY SMALL AND MARGINAL FARMERS ARE NOT AWARE OF THE EXISTENCE OF REGULATED MARKETS. INCENTIVES: MANY FARMERS ARE NOT AWARE OF THE INCENTIVES, CONCESSIONS, SUBSIDY PROVIDED TO THEM BY GOVT.

19 Chapter No. 10 Page No. 130 MEASURES TO REMOVE THE DEFICIENCIES IN REGULATED MARKETS PUBLICITY: THE FARMERS SHOULD BE AWARE OF THE EXISTENCE OF REGULATED MARKETS AND THE BENEFITS IT OFFERS. COMMISSION AGENTS: ABOLISH THE PRESENCE OF AGENTS. PAYMENTS:FARMERS SHOULD GET MMEDIATE PAYMENT EFFECTIVE SUPERVISION: THE OFFICIALS SHOULD INCREASE THEIR INVOLVEMENT TO ENSURE EFFECTIVE SUPERVISION. INFORMATION: REGULATED MARKETS SHOULD SEND OUT THE DETAILS OF THE PRICES OF COMMODITIES TO ALL THE VILLAGES.

20 Chapter No. 10 Page No. 131 STANDARDIZATION OF WEIGHTS AND MEASURES AND IMPROVEMENT IN WEIGHING PRACTICES VARIOUS NATIONAL LEVEL COMMITTEES HAVE GIVEN MANY SUGGESTIONS TO THE IMPROVEMENT IN THE SCENARIO. IT IS SUGGESTED THAT THE MARKET COMMITTEES SHOULD EXPEDITE THE PROCESS OF ISSUING LICENSE TO WEIGH MEN IN THE INTEREST OF PRODUCER-SELLER. MARKET COMMITTEES SHOULD THEMSELVES PROVIDE WEIGHING AND MEASURING EQUIPMENTS AS AGAINST PRESENT PRACTICE OF TRADERS USING THEIR OWN EQUIPMENTS. CONT.

21 Chapter No. 10 Page No. 131 STANDARDIZATION OF WEIGHTS AND MEASURES AND IMPROVEMENT IN WEIGHING PRACTICES VARIOUS NATIONAL LEVEL COMMITTEES HAVE GIVEN MANY SUGGESTIONS TO THE IMPROVEMENT IN THE SCENARIO. IT IS SUGGESTED THAT THE MARKET COMMITTEES SHOULD EXPEDITE THE PROCESS OF ISSUING LICENSE TO WEIGH MEN IN THE INTEREST OF PRODUCER-SELLER. MARKET COMMITTEES SHOULD THEMSELVES PROVIDE WEIGHING AND MEASURING EQUIPMENTS AS AGAINST PRESENT PRACTICE OF TRADERS USING THEIR OWN EQUIPMENTS. CONT.

22 Chapter No. 10 Page No. 132 STANDARDIZATION OF WEIGHTS AND MEASURES AND IMPROVEMENT IN WEIGHING PRACTICES IT IS SUGGESTED THAT THE MARKETING COMMITTEES TAKE THE PUNITIVE ACTIONS AGAINST OFFENDERS AND CHECK THESE MALPRACTICES. WEIGHING WORK AMONG THE LICENSED WEIGH MEN SHOULD BE GIVEN ON ROTATION BASIS. GROWER SHOULD BE DILIGENT AND METICULOUS WITH RESPECT TO THE PRODUCE OF WEIGHING LAID DOWN BY THE AUTHORITIES. THE GROWER SHOULD WEIGH THE PRODUCE AT THEIR OWN END BEFORE BRINGING IT TO THE MARKETS.

23 Chapter No. 10 Page No. 132 STANDARDIZATION OF CONTRACT THE MODE OF ACTUAL PAYMENT OF SALES PROCEED DIFFER FROM REGION TO REGION, MARKET TO MARKET AND WITHIN THE SAME MARKET FROM TRANSACTION TO TRANSACTION. THESE MODES ARE EXPLOITATIVE. WITH THE SETTING UP OF REGULATED MARKETS ALL SUCH IRREGULARITIES CAN BE ELIMINATED TO A LARGE EXTEND. THE MARKET LEGILATIONS HAVE CLEARLY PROVIDED FOR INSURING PROMPT PAYMENTS. IT IS RECOMMENDED THAT THE MARKET COMMITTEES PLAY AN ACTIVE ROLE IN IMPLEMENTING SUCH LEGISLATIONS. CONT..

24 CO-ORDINATION BETWEEN THE COMMISSSION AGENTS, BROKERS AND THE MARKETING COMMITTES AND ADMINISTRATION OF THE MONEYLENDERS ACT SHOULD BE ATTEMPTED. Chapter No. 10 Page No. 134 STANDARDIZATION OF CONTRACT DUE TO CASH CRUNCH IN INDIAN MARKETS DEFERRED PAYMENTS CANNOT BE AVOIDED. THE FORWARD CONTRACT REGULATION ACT 1952 AIMS TO STOP UNHEALTHY SPECULATION AND ENFORCING THE ACT. MONEYLENDERS ARE GOVERNED BY THE BOMBAY AGRICULTURAL PRODUCE MARKET RULES OF COMMITTEES HAVE PRACTICALLY NO DIRECT CONTROL OVER THE CREDIT ACTIVITIES OF THE TRADERS.

25 Chapter No. 10 Page No. 134 IMPROVEMENT OF TRANSPORT FACILITIES THE MARKET COMMITTEE SHOULD ORGANIZE TRUCKS OR LORRIES FOR THE TRANSPORT OF PRODUCE OF SMALL FARMERS FROM THE VILLAGE ASSEMBLY CENTERS TO URBAN SECONDARY MARKETS. THE INDIVIDUAL GROWER-SELLER MAY RECORD THEIR REQUIREMENT S WITH THE MARKET COMMITTEE. THE COMMITTEE AFTER RECEIVING REQUISITION POOLS THEM AND CONTRACT LORRY SUPPLY OFFICES FOR ARRANGEMENTS. THE COST OF SUCH FACILITIES COULD BE RECOVERED FROM THE SALE. THIS WOULD REDUCE SUBSTANTIALLY THE TRANSPORT BOTTLENECKS THUS BENEFITING BOTH THE FARMERS AND THE TRADERS.

26 Chapter No. 10 Page No. 135 WAREHOUSING WAREHOUSING CONSISTS OF A GROUP OF ACTIVITIES CONCERNED WITH THE STORING AND PRESERVING OF GOODS FROM THE TIME OF PRODUCTION TILL THE TIME OF CONSUMPTION. INADEQUATE FACILITIES RESULTS IN IMMEDIATE SALE TO AVOID DAMAGE DUE TO INSECTS, DISEASES AND RATS EVEN AT NON REMUNERATIVE PRICES. THE FINANCE COMMITTEE (1945) RECOMMENDED A THREE-TIER SYSTEM FOR SCIENTIFIC STORAGE OF AGRICULTURAL PRODUCE i.e. NATIONAL, STATE LEVEL, DISTRICT LEVEL AND VILLAGE LEVEL.

27 CONTAINER FREIGHT STATIONS AND INLAND CLEARANCE DEPOT: CWC HAS CFs / ICDs WHERE COMPOSITE SERVICES FOR MOVEMENT OF IMPORT / EXPORT CARGO ARE PROVIDED. Chapter No. 10 Page No. 136 SERVICES PROVIDED BY CWC CWC OPERATE CUSTOM BONDED WAREHOUSES TO FACILITATE DEFERRED PAYMENT OF CUSTOM DUTY TO ENCOURAGE TRADERS TO CARRY OUT THEIR BUSINESS WITH MINIMUM INVESTMENT. PEST CONTROL SERVICES: SUCH AS ANTI TERMITE TREATMENT, SHIP AND CONTAINER FUMIGATION, DISINFESTATIONS OF WAREHOUSES. SCIENTIFIC STORAGE FACILITIES FOR COMMODITIES AND PERISHABLE ITEMS THROUGH A NETWORK OF WAREHOUSES AND TRAINED PERSONNEL

28 Chapter No. 10 Page No. 136 STANDARDIZATION AND GRADING STANDARDS ARE MODEL PRODUCTS, WHICH FORM THE BASIS FOR COMPARISON. BUREAU OF INDIAN STANDARDS-BIS (PREVIOUSLY KNOWN AS INDIAN STANDARD INSTITUTION-ISI): THE ACTIVITIES OF BIS ARE o o FORMULATION OF INDIAN STANDARDS. THEIR IMPLEMENTATION BY PROMOTION AND THROUGH VOLUNTARY AND THIRD PARTY CERTIFICATION SYSTEM. MANUFACTURERS COMPLYING WITH THE STANDARDS LAID DOWN BY BIS CAN OBTAIN AS ISI MARK WHICH CAN BE EXHIBITED ON THEIR PRODUCT PACKAGES.

29 Chapter No. 10 Page No. 137 AGMARK GRADING UNDER AGRICULTURAL PRODUCE ACT IS KNOWN AS AGMARK. AS PER THE SCHEME, THE AGRICULTURAL MARKETING ADVISER GRANTS CERTIFICATES OF AUTHORIZATION TO ORGANIZATIONS OR INDIVIDUALS TO GRADE AND MARKET THE AGRICULTURAL PRODUCE. ABOUT 150 COMMODITIES HAVE BEEN COVERED AND INCLUDES GHEE, POTATO, WHEAT ATTA, EGGS, COTTON, BUTTER, TOBACCO AND VEGETABLE OILS ETC.

30 Chapter No. 10 Page No. 137 PROVISION OF MARKETING NEWS AT PRESENT,THE INFORMATION IS DISSEMINATED THROUGH VARIOUS MEDIA LIKE RADIO, NEWSPAPERS, BLACK BOARD DISPLAY AND PUBLIC ADDRESS SYSTEM AT MARKET YARDS. BY AND LARGE THE STATE AND UNION TERRITORIES ARE PROVIDING SOME MARKET INFORMATION. IMPROVEMENT IN THE PRESENT SYSTEM BY LINKING ALL IMPORTANT AGRICULTURAL PRODUCE MARKETS, AGRICULTURE MARKETING BOARDS AND DEPARTMENTS IN THE STATE AND UNION TERRITORIES IS ENVISAGED BY DMI UNDER AGMARNET BY INSTALLING COMPUTER FACILITIES AND CONNECTING WITH NICNET FOR INTERNET / SERVICES.

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