Agricultural Marketing: Meaning, Measures, Defects and Alternate Marketing Channels

What is Agricultural Marketing?

The agricultural sector is the backbone of the Indian economy and contributes significantly to the country’s Gross Domestic Product (GDP). The agricultural sector is also the primary source of livelihood for a significant portion of the population. In recent years, the Indian government has taken several measures to improve the agricultural sector and increase its competitiveness in the global market. The agricultural marketing system is one of the critical aspects of the agricultural sector’s growth and development. Agricultural Marketing refers to the process of assembling, storing, processing, transporting, packaging, grading, and distributing different agricultural commodities across the country.

The agricultural marketing system plays a crucial role in farmers’ lives as it allows them to dispose of their surplus produce at a fair and reasonable price. Besides, agricultural marketing also includes different activities that help in the movement of fair produce from the producer to the ultimate consumer.

Problems faced by Farmers

The farmers used to face a number of problems. Some of them are as follows:

• Manipulations by Big Traders: Before independence, the big traders used to manipulate farmers by making them suffer from the faulty weighing of goods and manipulation of accounts while buying produce from them.
• Lack of Storage Facilities: To keep their produce in storage to sell them later at a better price, the farmers didn’t also have proper storage facilities. This problem is still present, as 10% of the goods produced by farmers in the farms get wasted due to lack of storage.
• Lack of Market Information: As the farmers didn’t have proper information on the prevailing prices for their goods, they were forced to sell at low prices.

Because of these problems faced by the farmers, it became essential to regulate the activities of private traders.

Measures to Improve the Agricultural Marketing System

The Indian government has taken several measures to improve the agricultural marketing system. Some of the measures are:

1. Regulated Markets:

Regulated markets or Agricultural Produce Market Committees (APMCs) were established to ensure fair prices for the farmers and prevent exploitation by middlemen. The APMCs are responsible for regulating the buying and selling of agricultural products and ensuring that the farmers receive a fair price for their produce and to benefit the consumers too.

2. Infrastructural Facilities:

The government has also focused on developing infrastructural facilities such as storage, transportation, and marketing. Storage facilities such as warehouses and cold storage help in reducing wastage and preserving the quality of the produce. Transportation facilities such as roads, railways, and airports facilitate the movement of agricultural products from one place to another. Marketing facilities such as mandis and haats provide a platform for farmers to sell their produce directly to consumers.

3. Cooperative Marketing:

Cooperative marketing is a system where farmers come together to form a cooperative society and sell their produce collectively. This helps in reducing the dependence on middlemen and ensures a fair price for the farmers. The cooperative societies also provide access to credit and other support services to the farmers.

Benefits gained by farmers from Cooperative Marketing:

• As the farmers sell their produce together through one agency, Cooperative Marketing improved the bargaining power of farmers.
• Cooperative Marketing Societies also provide farmers with credit whenever they have immediate cash requirements.
• The Cooperative Societies often have storage facilities through which instead of selling their produce in a hurry, the farmers can wait for better prices and then sell their produce.
• Cooperative Marketing System also provides the facility of bulk transportation at a cheaper price.

Besides these benefits, the Cooperatives received a setback during the recent past times because of the following reasons:

• Inefficient Financial Management
• Inadequate coverage of farmer members
• Lack of proper link between marketing and processing cooperatives

4. Different Policy Instruments:

The government has also implemented different policy instruments to improve agricultural marketing. These include price support policies, minimum support prices, and direct procurement from farmers. Price support policies ensure that farmers receive a fair price for their produce, while minimum support prices guarantee a minimum price for crops. Direct procurement from farmers ensures that the farmers receive a fair price for their produce and reduces their dependence on middlemen.

• Minimum Support Prices (MSP): The Minimum Support Price is the price at which the government purchases crops from the farmers to ensure that they receive a fair price for their produce. The MSP is fixed by the government based on the recommendations of the Commission for Agricultural Costs and Prices (CACP) and is announced before the sowing season.
• Maintenance of Buffer Stocks: The government maintains a buffer stock of essential food items such as wheat, rice, and sugar to ensure that they are available during times of scarcity and to stabilize the prices in the market.
• Public Distribution System (PDS): The Public Distribution System is a government initiative that provides essential commodities to the poor and needy at subsidised prices. It includes items like rice, wheat, sugar, and kerosene oil, which are made available through a network of Fair Price Shops across the country.

Defects of Agricultural Marketing in India

Agricultural marketing in India faces several challenges and defects, which hamper the growth of the agricultural sector and the well-being of farmers. Some of the significant defects of agricultural marketing in India are as follows:

1. Lack of Infrastructure: Inadequate storage facilities, transportation, and communication networks are some of the major issues that plague the agricultural marketing system in India. Due to the lack of proper storage facilities, farmers are often forced to sell their produce immediately after harvest, which results in lower prices. Poor transportation infrastructure also leads to the wastage of agricultural produce, as perishable commodities like fruits and vegetables cannot be transported to distant markets in time.

2. Fragmented Market: The agricultural market in India is highly fragmented, with multiple intermediaries involved in the value chain. As a result, farmers are not able to get a fair price for their produce, as middlemen take a significant share of the profit margin. Moreover, due to the lack of a transparent pricing mechanism, farmers are often unaware of the prevailing market prices.

3. Lack of Market Intelligence: The lack of accurate and timely market information is a significant hurdle for farmers in India. Farmers are not aware of the demand and supply situation, prevailing market prices, and quality standards required by buyers. This lack of information leads to inefficiencies in the market and results in price volatility.

4. Inadequate Institutional Support: The absence of institutional support, such as credit facilities, market linkages, and extension services, is another significant defect of the agricultural marketing system in India. Small and marginal farmers often do not have access to credit facilities, which makes it difficult for them to invest in their farms and improve their production.

5. Lack of Grading: The farmers in India do not give much importance to grading their produce. They hesitate while separating good quality crops from bad crops because of which they fail to fetch a good price of their quality crop.

Alternate Marketing Channels

In recent years, alternative marketing channels such as farmers’ markets and alliances with national and multinational companies have emerged as viable options for farmers. These alternative channels provide farmers with a direct link to consumers, eliminating middlemen and ensuring a fair price for their produce.

Emerging alternatives such as contract farming, farmers’ markets, and direct marketing have also been promoted as a means of improving agricultural marketing in India. These alternatives have the potential to eliminate the middlemen and provide farmers with direct access to the market. Moreover, they can help in the development of the rural economy by creating additional job opportunities and generating income for farmers.

1. Origin of Farmers Market:

Farmers’ markets are community markets where farmers sell their produce directly to consumers. These markets have been in existence for centuries and were the primary mode of marketing agricultural products before the advent of middlemen. Farmers’ markets provide consumers with fresh and high-quality products and farmers with a fair price for their products. Some examples of Farmers’ Markets are Hadaspar Mandi in Pune, Apni Mandi in Punjab, Rajasthan, and Haryana, 

2. Alliance with National and Multinational Companies:

Alliances with national and multinational companies are another alternative marketing channel for farmers. Under these alliances, companies partner with farmers to source their agricultural products directly, eliminating middlemen and ensuring a fair price for the farmers. These alliances also provide farmers with access to technology, credit, and other support services.

In the year 2020, the Indian Parliament passed three Agriculture Acts to reform the agriculture marketing system. However, a section of farmers opposed the Act because of which it was taken back in 2021.

With the above-mentioned problems faced by farmers, defects in the agricultural market system, and alternative marketing channels, it can be concluded that even though agricultural marketing has come a long way with the government’s intervention, it is still dominated by the private traders like rural political lenders moneylenders, rich farmers, and big merchants. Also, only 10% of the total agricultural product is handled by government agencies and consumer cooperatives, and the rest of the portion is handled by the private sector.