CHAPTER VI MARKET CHANNELS, MARKETING COST, PRICE SPREAD AND MARKETING EFFICIENCY

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1 CHAPTER VI MARKET CHANNELS, MARKETING COST, PRICE SPREAD AND MARKETING EFFICIENCY Agricultural marketing plays a vital role in agricultural development which is a pre-requisite for development in other sectors and for the overall development of the economy. The agricultural marketing is defined as the operations involved in the movement of food and raw materials from the farmers to the final consumer and the effect of such operations on producers and middlemen. 1 In India, there exists an elaborate and inter-connected system of agricultural produce markets through which the produce flows from the producer to the consumer. The market system in India comprises 30,000 rural primary markets, 7,000 wholesale assembling markets at the secondary stage and terminal distribution markets in every urban city or town. 2 An efficient marketing is a sine qua non in the economy of all countries, in general and of agricultural countries, in particular. It definitely exerts a powerful influence on a country s production and consumption pattern; it plays a prominent 1 Lallan Singh, Relationship between Apex and Primary Co-operative Marketing in Bihar, The Co-operator, Vol.XXII(9), 1984, p Harish Nayyar and P. Ramasamy (Ed.), Globalization and Agricultural Marketing, Rawat Publications, New Delhi, 1995, p.28.

2 193 role in regulating supply and demand; and it helps in the elimination of duplication of services and wastages of valuable resources. 3 Marketing perhaps has its greatest and most enduring role to play in the economic changes in developing countries. An efficient internal marketing system for agricultural commodities holds the key for rural development and for meeting the challenges thrown up by explosive growth of population in developing countries. Marketing holds the key for agricultural development which could determine the quality of urban life. 4 The present study is confined to the study of marketing system of banana in Tirunelveli district. Hence, the present chapter makes an attempt to study the marketing system in terms of marketable surplus, marketing channels and the like. Further, an attempt has been made to anlayse marketing cost, marketing margin, price-spread and marketing efficiency. 3 A.P. Gupta, Marketing of Agricultural Produce in India, Vora & Company Publications Pvt. Ltd., 1975, p.1. 4 Food and Agricultural Organisation, Report on FAO/RED Workshop on the Effective Use of Marketing for the Development of Small in Asia, held in Thailand, 1976, p.5.

3 194 headings: For better exposition, the present chapter is organised under the following i. Marketable surplus of banana; ii. iii. iv. Market Structure; Marketing cost, Marketing margin and Price-spread; Marketing Efficiency and v. Marketing problems MARKETABLE SURPLUS OF BANANA Marketable Surplus is the estimated quantity to be marketed by producer and is arrived at after providing some percentage for various items of retention. These items include provision for seed purpose, payment of wages in kind, domestic consumption and the like. Hence, this section makes an attempt to analyse the retention and marketable surplus of the selected farmers producing banana. Further the functional analysis was made to identify the determinants of marketable surplus of banana. Marketable Surplus and Retention The marketable surplus and percentage of retention of the selected farmers producing banana are furnished in Table 6.1.

4 195 Sl. No. TABLE 6.1 MARKETABLE SURPLUS OF BANANA (Quintals per acre Size of Farmers Total Total Production Retention 1. Small (100) 1.91 (7.74) Total Marketable Surplus (92.26) Percentage to Total Production Large (100) (12.39) (87.61) 3. Overall (100) (9.99) (90.01) Source: Primary data. Note : Figures in brackets represent percentages to total. The total production in sample farms was quintals with retention of 4.78 quintals per acre. The variation in the percentage of marketable surplus to production among the group was found to be minimum. The maximum was per cent in small farms and the minimum was per cent in large farms. Purpose-wise Retention The farmers retain a certain portion of banana harvested for the domestic use, seeds and other purposes like giving to relatives, friends and labourers. The analysis of retention would provide an idea of marketable surplus of banana. The purpose-wise retention of banana in the selected farms is presented in Table 6.2.

5 196 TABLE 6.2 PURPOSE-WISE RETENTION OF BANANA IN SAMPLE FARMS (Quintals per acre) Sl. Small Large Purpose No. Farmers Farmers Total 1. Domestic use (81.68) (79.44) (80.34) 2. Others ( (20.56) (16.66) Total Retention (100) (100) (100) Source: Survey data. Note : Figures in parentheses are percentages of the total. It is observed from table 6.2 that farmers have retained 1.91 quintals to 2.87 quintals of banana per acre. The quantity of banana retained for several purposes by small and large farmers constitutes 7.74 and per cent respectively of the total production of banana (Vide in Table 6.1). Out of total retention, per cent is for domestic use and per cent is for other purposes. The marketable surplus is the difference between the total production and total retention per acre. The marketable surplus creates its own effect on the marketable decisions of the farmers. Determinants of Marketable Surplus In order to identify the determinants of marketable surplus of banana in the study area, a Multiple Linear Regression Model of the following type was used for the present study:

6 197 Y = β 0 + β 1 X 1 + β 2 X 2 + β 3 X 3 + U... (6.1) where, Y = Marketable surplus per farm in quintals X 1 = Area under banana in acres X 2 = Family size X 3 = Price received in rupees per quintal U = Error term β 0, β 1... β 3 are the parameters to be estimated. The above 6.1 model was estimated by the Method of Least Squares and the results are furnished in Table 6.3. TABLE 6.3 DETERMINANTS OF MARKETABLE SURPLUS OF BANANA Number of Observations Regression Coefficients β 0 β 1 β 2 β 3 R 2 F * (5.033) (-0.893) 0.81* (2.903) ** Source: Computed. Note : Figures in parentheses are the t-values. * Indicates that the coefficients are statistically significant at the 5 per cent level. **F-value is statistically significant at the 1 per cent level. According to Table 6.3, R 2 value is indicates that all the three explanatory are jointly responsible for 81 per cent variation in the marketable surplus of

7 198 banana expressed in quintals per farm. Further, R 2 value indicates that the function was considered to be a good fit and the interpretation was made for the significant variables only. The F value shows that the fitted regression is statistically significant at one per cent level. Out of three variables included in the regression model, the area under banana and price of banana were statistically significant at the 5 per cent level which was also found to be positively related to the marketable surplus. It indicates that an acre increase in area under banana cultivation, other things being equal would increase the marketable surplus by quintals. Similarly, one rupee increase in price of banana per quintal would result in an increase of 0.79 quintals of marketable surplus per farm. Thus, it may be concluded from the analysis that the area under banana was found to be highly significant and it had greater influence on marketable surplus compared to the variable, price per quintal MARKETING CHANNELS The marketing channel is the route taken by the title to the goods as they move from producer to ultimate consumer. 5 Marketing channels are combinations of agencies through which the seller who is often, though not necessarily 5 William J. Stanton, Fundamentals of Marketing, McGraw-Hill, Kogakusha Ltd., 1975, p.254.

8 199 manufacturers, markets his product to the ultimate consumer. 6 Parashwar has defined market channel as the vehicle of marketing system, the unit within which all marketing activity takes place. 7 Bilgrani has defined market channel as a distributory that is involved in direct and indirect transfer of title to a product as it moved from producers to consumers or industrial users. 8 In the present study, marketing channel refers to the collection of agencies and movements associated with the exchange of banana from the primary producer to the ultimate consumer. The banana in Tirunelveli district is sold through middlemen namely commission agents, village traders, wholesalers cum retailers and commission agents. The marketing channels identified are, Channel I = Producer Village Traders Consumer Channel II = Producer Wholesaler cum Retailers Consumer Channel III = Producer- Commission Agent Retailer - Consumer. The farmers in the study area have chosen only the commission agents in most cases as the main intermediary. Eighty per cent of the total produce is passed through the commission agents and wholesalers cum retailers. 6 A. Howard John, Fundamentals of Marketing, p P.K. Parashwar, Marketing Channels in Developing Countries, Agricultural Situation in India, 23(7), 1991, p S.M. Bilgrani, The Role of Distribution in Marketing, Indian Journal of Marketing, 4(5), 1974, pp

9 200 Choice of the Middlemen It is not only the number of days stored but also the agent or the merchant middlemen through or to whom the produce sold influences the net price realised by the farmers. Table 6.4 shows the different types of middlemen through whom the sample farmers are selling their banana. TABLE 6.4 MIDDLEMEN CHOSEN BY THE SAMPLE FARMERS Sl. No. Middlemen 1. Village Traders 2. Wholesaler cum Retailers 3. Commission Agents Total Small Farmers 14 (7.37) 30 (15.79) 146 (76.84) 190 (100) Large Farmers 14 (12.73) 28 (25.45) 68 (61.82) 110 (100) Source: Primary data. Note : Figures in parentheses are the percentages of the total Total 28 (9.33) 58 (19.33) 214 (71.34) 300 (100) It is observed from Table 6.4 that per cent of farmers sold their produce through the commission agents in the study area. The remaining and 9.33 per cent sold their produce through wholesaler cum retailers and village traders respectively. The commission agents are the most preferred middlemen by the small farmers than the large farmers because of the facilities offered by them. The large farmers are more or less equally distributed in all the three channels.

10 201 Sale to Village Traders The number of farmers selling and the quantity of banana sold through village traders are analysed and presented in Table 6.5. Sl. No. TABLE 6.5 NUMBER OF FARMERS AND QUANTITY OF BANANA SOLD THROUGH VILLAGE TRADERS Size of Farmers Number of Farmers Percentage to Group Concerned 1. Small Average Quantity of Banana sold (in quintals per acre) 3.81 (8.85) (Tonnes per acre) Percentage of marketed surplus of the group concerned Large Overall (2.81) 5.02 (11.66) Source: Primary data. Note : Figures in parentheses are the percentages of the total It is seen from Table 6.5 that in total, 28 farmers are selling their banana through the village traders. Out of 28 farmers, 16 are small farmers and the remaining 12 are large farmers. The percentages of quantity sold to the marketed

11 202 surplus to the group concerned are and 5.96 per cent of their respective totals. In order to rank the reasons for selling banana through various middlemen like village traders, commission agents and wholesalers and retailers, the Garrett s Ranking Technique 9 was adopted. The respondents were given the reasons and asked to rank them according to their choice. The order of merit given by the respondents was converted into ranks by using the formula: Where, 100 (R ij 0.50) Per cent Position = (6.3) N i R ij = Rank given for (i th factor by j th farmer) N i = Number of constraints ranked by j th households. The per cent position of each rank thus obtained was converted into scores using the table given by Garrett. The scores of individuals representing each reason were added together and divided by the total number of farmers for whom the scores were added. The mean scores for all the reasons were analysed in the ascending order, ranks assigned and the important factors identified. 9 Garrett E. Henry, Statistics in Psychology and Education, Vakils and Simons Pvt. Ltd., Bombay, 1969, pp

12 203 The reasons for selling the banana through village traders are analysed and presented in Table 6.6. TABLE 6.6 REASONS FOR SELLING BANANA THROUGH VILLAGE TRADERS Sl.No. Reasons Score Rank 1. Easy method of sale V 2. No price difference II 3. Long-term practice IV 4. No transport cost I 5. No commission charges III 6. Immediate payment VI Source: Primary data. Table 6.6 shows that among the reasons to sell the banana through village traders, no transport cost ranks first followed by no price difference, no commission charges, no storage cost, easy method of sale, long term practice and immediate payment. Wholesaler cum Retailers The number of farmers and quantity of banana sold to the wholesalers cum retailers are analysed and presented in Table 6.7.

13 204 Sl. No. TABLE 6.7 NUMBER OF FARMERS AND QUANTITY OF BANANA SOLD THROUGH WHOLESALER CUM RETAILERS Size of Farmers Number of Farmers Percentage to Group Concerned 1. Small Average Quantity of Banana sold (in quintals per acre) 4.30 (9.98) (Tonnes per acre) Percentage of marketed surplus of the group concerned Large Overall (14.00) (23.98) Source: Primary data. Note : Figures in parentheses are the percentages of the total It is observed from Table 6.7 that and 9.23 per cent of large and small farmers sold their produce through wholesaler cum retailers respectively. The average quantity of banana sold per acre by small and large farmers is 4.30 and 6.03 quintals respectively. The percentage to the marketed surplus of the group concerned namely small and large farmers is and per cent respectively. The reasons for selling banana through wholesaler cum retailer are ranked and presented in Table 6.8.

14 205 TABLE 6.8 REASONS FOR SELLING BANANA THROUGH WHOLESALER CUM RETAILERS Sl.No. Reasons Score Rank 1. Easy method of sale II 2. Long term practice III 3. No commission charge I 4. Credit facilities VI 5. Better price V 6. More off-take IV Source: Primary data. Table 6.8 shows that among the reasons, no commission charge ranks first followed by the reasons namely, easy method of sale, long term practice and more off-take are ranked II, III and IV whereas the V th and VI th ranks are assigned to reasons namely better price and credit facilities. Sale to Commission Agent The most popular and dominant channel in the district is the commission agent. The commission agent advances loans with or without interest to the farmers whenever they need it. The commission agent recovers the entire amount

15 206 from the farmers at the time of sale. The number of farmers and quantity of banana sold through commission agent are discussed and presented in Table 6.9. Sl. No. TABLE 6.9 NUMBER OF FARMERS AND QUANTITY OF BANANA SOLD THROUGH COMMISSION AGENT Size of Farmers Number of Farmers Percentage to Group Concerned 1. Small Large Overall Average Quantity of Banana sold (in quintals per acre) 6.81 (15.81) 9.52 (22.11) (37.92) (Tonnes per acre) Percentage of marketed surplus of the group concerned Source: Primary data. Note : Figures in parentheses are the percentages of the total It is observed from Table 6.9 that per cent of the farmers selected commission agent to sell their produce. Out of the small farmers per cent sold through the commission agents. In the case of large farmers, per cent have selected the commission agents. The average quantity sold per acre varied from tonnes to tonnes with respect to small and large farmers. The percentages of quantity sold to marketed surplus are and per cent of their respective total in the case of small and large farmers.

16 207 Table The reasons for the choice of commission agents are presented in TABLE 6.10 REASONS FOR SELLING BANANA THROUGH COMMISSION AGENT Sl.No. Reasons Score Rank 1. Availability of credit facilities I 2. Better price III 3. Immediate cash after sale II 4. Long term practice V 5. Higher off-take IV Source: Primary data. Most of the farmers prefer the commission agents as their intermediary because the commission agents provide credit facilities to the farmers whenever they need. Therefore it is ranked first. Other reasons namely immediate cash after sale, better price, high off-take and long term practice are ranked II, III, IV and V MARKETING COST, MARKETING MARGIN AND PRICE-SPREAD Price-spread would explain in detail the actual price received by the producers, the price paid by the consumers, costs incurred and margins earned by the various market intermediaries in the process of marketing banana. The net price received by the producers, total marketing costs and margins will be

17 208 analysed in the present study, to evaluate the functional efficiency of different marketing channels. With this end in view, an attempt has been made in this section, to analyse the marketing cost, marketing margin and price-spread of multiplier banana in different channels of marketing in the study area. Marketing Cost and Marketing Margin The marketing expenses incurred by the banana cultivators are the expenses which are incurred after the harvest and prior to the sale of banana. The expenses are incurred for several purposes like transport, unloading, weighing and stitching, charity, sample, commission and other purposes. The marketing expenses very as the farmers sell their produce through different channels. The cost per quintal incurred by the producer was analysed for large and small farmers separately in all the three channels and the results are presented in Table 6.11.

18 209

19 210 It is observed from Table 6.11 that the average marketing costs incurred by the farmers per tonnes of banana was Rs , Rs and Rs in the case of small farmers and Rs , Rs and Rs in the case of large farmers through channels I, II and III respectively. The cost of marketing through Channel I was found to be 80 per cent higher as compared to other two channels in both small and large farms. This is due to the payment of commission charges to the commission agent. The contribution of commission charges are and per cent to the respective total marketing cost in small and large farms respectively. In both farms, the commission charges, storage cost and transportation cost ranked first, second and third in the marketing cost. In Channel II, both small and large farmers have incurred Rs and Rs per tonnes respectively on the storage facilities. The cost of marketing through Channel II was found to be higher as compared to other two Channels I and III.

20 211 Marketing Cost Incurred by the Intermediaries Certain expenses relating to marketing were incurred by intermediaries namely, village traders, regulated markets and commission agents too. These expenses are borne by the intermediaries from the purchase of banana to the sale of banana. Generally, the marketing cost of intermediaries includes labour charges, transport cost, packaging cost, loading and unloading charges, weighment charges, shop rent, tax, cost towards wastage and the like. In the study area, the wholesalers themselves do the retailing business also. No exclusive wholesaler was found in the market that purchased for the purpose of selling banana to the retailers. All the intermediaries sold banana only with a profit motive. Their profit was highly determined by the marketing cost incurred by them. Hence, separate analysis of marketing cost by village traders, commission agents and wholesalers/ retailers are attempted. Price Spread Price-spread is the difference between the actual price received by the producers, the price paid by the consumers, costs incurred and margins earned by the various market intermediaries in the process of marketing of banana. The net price received by the producers, total marketing costs and margins were analysed separately for small and large farmers in order to evaluate the marketing efficiency of different marketing channels.

21 212 The results of price spread are presented in Table TABLE 6.12 MARKETING COST AND MARKETING MARGIN IN SMALL FARMS Particulars Amount (Rupees per tonnes) Channels I II III Percentagtage Percen- Amount Amount Percentage PRODUCER Net Price Received Marketing cost Gross Price received or paid by Village Trader/Commission Agent / Wholesaler / Retailer VILLAGE TRADER Marketing cost Marketing Margin Price received or paid by Commission Agent/ Wholesaler / Retailer COMMISSION AGENT Marketing cost Marketing Margin Price received or paid by Commission Agent /Miller / Retailer REGULATED MARKETS Marketing Cost Marketing Margin Price received or by the consumer Source Primary data

22 213 It is observed from Table 6.12 that the net price received by the farmer was maximum in channel III which is Rs per tonne compared to Rs and Rs per tonne channel II and Channel I respectively. But the gross price received is higher in Channel II which is Rs per tonne than in Channel I (Rs ) and in Channel III (Rs ). The net price received is less, due to the higher marketing cost incurred by the farmers in Channel I towards the payment of commission charges. The net price received by the farmers in the consumer s price is per cent, per cent and per cent in Channels I, II and III respectively. The marketing costs incurred by the farmers, village traders and wholesaler cum Retailer constitute 7.32, 3.25 and 2.95 per cent respectively of the consumers price in Channel I. The marketing margins of village trader and wholesaler cum retailers constitute 2.17 and 0.93 per cent of the consumer s price respectively. The percentages of marketing cost to consumers price in Channel II are 7.60 and 4.13 for farmers, and wholesaler cum retailers respectively. The marketing margins to consumer price are 7.60 in Channel II. In Channel III, the percentages of marketing cost to consumer s price for farmers, commission agents and retailers are 6.15, 3.54 and 1.29 per cent

23 214 respectively while the percentage of marketing margin to the commission agent and retailers is 2.25 and 1.36 per cent respectively. Nature of Price-Spread in Large There is no major difference in the nature of price-spread between small and larger farmers. The net price received by the large farmers are a little higher than that by the small farmer in all the three channels due to the fixed overheads in the marketing channels. The large farmers are benefited by price-spread than the small farmers due to the advantage of lesser marketing cost. The analysis of price-spread in large farms is presented in Table 6.13.

24 215 TABLE 6.13 MARKETING COST AND MARKETING MARGIN IN LARGE FARMS Particulars Amount (Rupees per tonne) Channels I II III Percentagtage Percen- Amount Amount Percentage PRODUCER Net Price Received Marketing cost Gross Price received or paid by Village Trader/Commission Agent / Wholesaler / Retailer VILLAGE TRADER Marketing cost Marketing Margin Price received or paid by Commission Agent/ Wholesaler / Retailer COMMISSION AGENT Marketing cost Marketing Margin Price received or paid by Wholesaler / Retailer REGULATED MARKET/MILLER Marketing Cost Marketing Margin Price received or by the consumer Source Primary data.

25 216 It is observed from table 6.13 that the large farmers are highly benefited in Channel III (commission agent) since the net price received is higher at Rs per tonne while it is Rs and in Channel II and Channel I respectively. This is due to the lesser marketing cost and margin incurred by farmers and wholesalers/retailers. Price- Spread in Small Price-spread analysis shows the producer s prices, marketing margin, marketing cost and consumer price in the three marketing channels. The higher price- spread means higher marketing cost and margin obtained by the intermediaries and vice-versa. The analysis of price-spread in the three marketing channels for small farmers is presented in Table TABLE 6.14 PRICE-SPREAD IN SMALL FARMS UNDER DIFFERENT CHANNELS (Rupees per tonne) Sl.No. Particulars Channels I II III 1. Producers Price Marketing Margin Marketing Cost Consumer s Price Price-Spread Source: Primary data.

26 217 It is found from Table 6.14 that the price-spread in the small farms is higher in Channel I at Rs per tonne than in other channels due to higher marketing cost. The village trader incurs higher marketing cost since he has to bear the commission charges paid by the commission agents also. Channel III is economical to the farmer since its price-spread is lesser at Rs per tonne, but the constraint is lesser off-take. Price-Spread in Large In both small and large farms, the same type of analysis of price-spread is carried out. The results are presented in Table TABLE 6.15 PRICE-SPREAD IN LARGE FARMS UNDER DIFFERENT CHANNELS (Rupees per tonne) Sl.No. Particulars Channels I II III 1. Producers Price Marketing Margin Marketing Cost Consumer s Price Price-Spread Source: Primary data.

27 218 It is seen from Table 6.15 that the price-spread is a minimum of Rs per tonne in Channel III and a maximum of Rs in Channel I. The results of price-spread analysis shows are similar in small as well as large farms. But the large farms have a lesser price-spread than the small farms in all the three marketing channels because of their financial strength, large-scale production and lesser average fixed overheads MARKETING EFFICIENCY Marketing is said to be efficient, if the total marketing margin is reduced for a given marketing cost. In other words, among the marketing margins of the different channels, that with the lowest value would reveal a channel to be efficient. In the present study, marketing efficiency was examined for the three different channels for small and large farms. The marketing costs, marketing margins and efficiency indices for the three different channels for both small and large farms were estimated separately and they are presented in Table 6.16.

28 219 Sl.No. TABLE 6.16 MARKETING EFFICIENCY INDEX IN SMALL FARMS Marketing Channel Marketing Cost (M.C.) Marketing Margin (M.M.) (Rupees per tonne) Efficiency Index = 1 + M.M/M.C. 1. Channel I Channel II Channel III Source: Primary data. It is observed from Table 6.16 that the marketing efficiency in channel III is better than in Channels II and I due to the lesser marketing cost and higher marketing margin. Sl.No. TABLE 6.17 MARKETING EFFICIENCY INDEX IN LARGE FARMS Marketing Channel Marketing Cost (M.C.) Marketing Margin (M.M.) (Rupees per tonne) Efficiency Index = 1 + M.M/M.C. 1. Channel I Channel II Channel III Source: Primary data.

29 220 It is seen from Table 6.17 that Channel III is operating more efficiency than Channels II and I. The efficiency index of channels I and II are 1.28 and 1.28 respectively. Channel III is efficient because of its lesser marketing cost and higher marketing margin compared to the other channels. There is no difference in marketing efficiency in different channels between small and large farms. The marketing efficiency of the three channels is measured by Shepherd s Method, Acharya and Agarwal s Method and Composite Index Method. Marketing Efficiency by Shepherd s Method The marketing efficiency is measured with the help of the following formula given by Shepherd: Where, V ME = (6.2) I ME = Index of Marketing Efficiency, V = Value of goods sold or consumer price and I = Total marketing cost or marketing cost per unit. In the present study, only the consumer price and marketing cost per quintal of banana are taken into account to find out the marketing efficiency of the various channels. The results are given in Table 6.18.

30 221 TABLE 6.18 MARKETING EFFICIENCY ANALYSIS USING SHEPHERD S METHOD (Rupees per tonne) Channels Particulars Small I II III Large Small Large Small Large Consumer Price (V) Total Marketing Cost (I) Shepherd s Marketing Efficiency: ME=(V/I) Source: Computed data. It is observed from Table 6.18 that the marketing efficiency in Channel III for small and large farms (8.12 and 7.22) is greater than in Channel II (7.52 and 5.06) and in Channel I (6.39 and 7.88). The marketing efficiency of Channel I is very poor because of its higher marketing cost at Rs and Rs per tonne for small and large farms respectively which is two times greater than that of Channel III.

31 222 Acharya and Agarwal s Method The marketing efficiency is measured by using the following formula given by Acharya and Agarwal: Where, O E = x (6.3) I E = Marketing Efficiency, O = Output of the marketing system (value added, that is, difference between consumer s price and producer s price) and I = Inputs used in the marketing process (marketing cost). TABLE 6.19 MARKETING EFFICIENCY ANALYSIS USING ACHARYA AND AGARWAL METHOD (Rupees per tonne) Channels Particulars Small I II III Large Small Large Small Large Total Marketing Cost (I) Value Added (O) (Consumer s Price Producer s Price) Marketing Efficiency: ME = (O/I) Marketing Efficiency Index: (ME x 100) Source: Computed data

32 223 It is observed from Table 6.19 that the marketing efficiency index of Channel I is greater than that of Channel II and Channel III. The marketing efficiency of Channel I is greater than that of Channel III. The marketing efficiency index of large farms (158) is greater than that of small farms (123) in Channel I. The Value Added of the large farms is also greater than the small farms under Channel I. Composite Index Method The marketing efficiency was also analysed by using composite index method. The percentages of producer s price, marketing cost and marketing margin to consumer s price per quintal were calculated and these were assigned ranks. Total scores were found by adding the respective ranks in each Channel. The mean scores were calculated for each channel. Where the mean score is less, it showed the real marketing efficiency of the Channel. The results are presented in Table 6.20.

33 224 TABLE 6.20 MARKETING EFFICIENCY ANALYSIS USING COMPOSITE INDEX METHOD (Rupees per tonne) Channels Particulars Small I II III Large Small Large Small Large Producer s Share Rank Marketing Cost Rank Marketing Margin Rank Total Score Mean Score Source: Computed data. It is observed from Table 6.20 that, of the three Channels, since the producer share was found high in Channel III and marketing cost was also less compared to Channels I and II, hence, Channel III has more marketing efficiency than Channels II and I. The marketing efficiency of Channel II is greater than that of Channel I for small farmers. Whereas, Channel I is greater than that of Channel II for large farmers

34 PROBLEMS IN THE MARKETING OF BANANA The banana cultivators have various problems like heavy commission charges, the lack of finance, unremunerative prices, non-availability of manures, pesticides, water scarcity, the lack of storage facilities, irregular power supply, want of market for the produce, high transport cost, the lack of regular payment and the like. For the present study, six of the above problems were selected. They are analysed with the help of Garrett s Ranking Technique. The results are presented in Table TABLE 6.21 PROBLEMS FACED BY THE BANANA CULTIVATORS IN MARKETING Sl.No. Problems Mean Score Rank 1. Heavy commission charges II 2. Lack of finance III 3. Fluctuations in prices I 4. High cost of transport IV 5. Want of regular payment V Source: Computed data. It is observed from Table 6.21 that huge fluctuations in the prices of banana and heavy commission charges as reported by farmers, happened to be the major problems with a mean score of and respectively. The lack of finance and high transport cost were also important. Hence the price fluctuations and heavy commission charges were identified to be the major problems which need the immediate attention of the policy-makers.