Agricultural Marketing in India: Defects and their Remedial Measures!
Main Defects of Agricultural Marketing in India:
The position of agricultural marketing system in India seems to be far from perfect.
The major defects of the system are the following:
1. Lack of Output Quality:
Prima facie, the quality of produce is low due to a number of factors:
(i) Poor quality of seeds,
(ii) Primitive methods of cultivation,
(iii) Lack of pest and disease control measures,
(iv) Dependence on erratic monsoon (drought or flood),
(v) Lack of adequate storage facilities to protect the crop from rains and rats,
(vi) Deliberate adulteration and dumping and so on.
Of course, things have changed of late due to the setting up of regulated and organised markets by different State Governments.
2. Absence of Grading:
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(s). Of course, the British Government passed the Agricultural Produce (Grading and Marketing) Act in 1937 to solve this problem. But nothing really has happened. 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”.
3. Inadequate Storage and Warehousing Facilities:
The average Indian fanner does not have .adequate storage facilities. Moreover, there is no satisfactory warehousing facilities in the market. For these two reasons the farmer has to sell his produce immediately after the harvest. He cannot wait to obtain better prices in the future. Moreover, due to lack of storage facilities, farmers are unable to obtain loans from co-operative marketing societies or even commercial banks against the security of the stored output.
4. Lack of Adequate Transport Facilities:
India’s railroad network is grossly inadequate compared to its needs. There are hardly 2.8 km of rail tract per 100 square km area in India. The condition in rural areas is even worse. The road conditions in rural areas are really very bad. Even the rich cultivators, having surplus to dispose off, are often not interested in going to the mandis. Most rural roads are un-metalled and cannot be used during the monsoon season.
5. Lack of Information:
The market for agricultural products in India is not perfectly competitive in the sense that the farmers do not usually get adequate information about the price that prevail in big and organised markets. Due to lack of communication facilities, the information about market prices rarely reaches the farmers.
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.
6. 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 dalals, hardly perform any economic function. So the farmer hardly gets anything compared to the effort put and expenses incurred.
7. Unethical Practices:
Many fraudulent practices are observed in rural markets. The entire method of transaction is against the interest of the farmer. In the mandis, the farmer has to approach a broker (a dalal) to be able to dispose of his produce to the arhitiya. These two intermediaries often use code words to settle the price under cover and not in open. Although they act for both the buyer and the seller, they serve the interest of the buyer than that of the seller by forming collusion with the arhitiya.
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. Thus, the farmer is exploited in various ways and, the whole method of transaction is against the interest of the farmer. In short, most transactions are unfair and unethical.
8. Multiplicity of Charges:
A related point may be noted in this context. There are multiplicity of charges on the seller. Some of these are legitimate such as commission, carriage and weightment, while others are not (such as charges for the arhitiya buyers’ servants and apprentices, charity, religious festival and so on). In each case the seller has to pay more than the buyer.
Peasants are also to pay various indirect taxes such as octroi (a tax on the inter-State movement of goods), terminal taxes and municipal tolls. In theory, these are normally paid by the consumers because the demand for agricultural commodities is elastic. But in practice these are paid by the seller—the poor and helpless cultivator.
9. Lack of Proper Marketing Facilities:
In very-recent times, the quantum of marketed surplus has increased significantly in certain areas due |td] the spread Of Green Revolution. But this has not been supported by a. corresponding increase in market yards and other ancillary facilities. Consequently, the farmer has been the lone sufferer.
10. Debt Obligation and Distress Sales:
Finally, the average farmer is almost always in debt. So he cannot wait after the harvest so as to obtain better prices in 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 distress purchase from the open market by obtaining consumption loan.
So the main point is that the farmer has to sell his produce at the wrong time, at a wrong place and at an unfavourable price. As a result his revenue falls.
Remedial Measures of Agricultural Marketing in India:
For all the above defects of India’s agricultural marketing system the farmer does not get a fair deal from the market. However, his condition can be improved by removing the defects.
The following measures may be taken to improve the present system of agricultural marketing in India:
(a) Regulated Markets:
Regulated markets may be established with a view to eliminating unhealthy and unethical trade practices and reducing various marketing charges with a view to benefitting the poor cultivator. Quite recently, numerous regulated markets have been set up in various States to safeguard the interest of the farmers.
(b) 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.).
(c) Cooperative Marketing Societies:
I here is 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.
(d) Storage Facilities:
An extension of storage facilities at the farm land and Storage and Warehousing Corporation, with a view to constructing 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 programme of augmenting storage capacity of co-operatives at various levels. 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.
Steps may be taken to provide cheap credit to farmers, especially from institutional sources like commercial banks and co-operatives. Co-operative societies are providing credit facilities to farmers with a view to improving their economic conditions, protecting them from the exploitative practices of village moneylenders and for helping them to get reasonable prices for their produce.
(f) Transport Facilities:
Expansion of transport facilities between the villages and mandis seems to be the need of the hour. Rural transport has been given emphasis in the five year plans and quite some progress has been made in this direction.
(g) Other Measures:
Various other measures taken include Prompt supply of market information through published documents and T.V. programmes, standardisation and grading to ensure quality to consumers and better prices to producers.