Agricultural Marketing System
The agricultural products that we consume daily reach us through a long journey through the market system from their origin. The efficiency of the system has a direct impact on our day to day lives. The agricultural market system defines the method through which agricultural products reach us from their source and spread all over parts of the country. Agricultural marketing is a mechanism through which the goods reach different places depending upon the market. It is a process that involves assembling, processing, storage, packaging, transportation, grading, and distribution of various agricultural products across the country. The term encompasses the entire range of the supply chain operations of the farming products.
Measurement for Improvement
The agricultural system began to reform as the government started taking steps in making it efficient. The markets were regulated and improvements were done in transport infrastructure which bought new channels of connectivity.
Infrastructure was uplifted to reach better heights about the storage, processing units, warehouses, etc. The cooperatives also helped in bringing various farmers together. It provides them with a common voice, helping them to get fair prices for their produce.
The cooperatives in Gujarat are a perfect illustration of the point mentioned above. Lastly, measures are taken by the government, such as the assurance of minimum support price (MSP), maintenance of buffer stocks, and distribution through PDS, were a step in the right direction.
Preventive Measures
The following measures should be taken to protect the farmers:
Misinformed farmers often fall prey to producing produce at rates lower than the prevailing market rates.
Lack of access to proper and good storage facilities forces them to sell produce at whatever rate being asked. Hence, they cannot store the output to sell it in the future when prices are high. It prevents them from earning good returns.
Lack of easy formal credit makes farmers knock on informal sources, which eventually push them into debt traps.
Emerging Markets
Among all the positives and negatives, various marketing channels with innovative and helpful ideas have emerged. They are successfully linking producers to consumers eliminating the need for a middleman. Hence the money lost in commission now becomes a part of the profit for the farmers. Some examples of such markets are Apni Mandi (Punjab, Rajasthan, Haryana), Hadapsar Mandi (Pune), and many more. Other channels involve various national and multinational food chains reaching out to farmers directly. These companies enter into deals with farmers, which require them to produce certain quality.
Companies also provide good quality seeds to farmers to encourage this culture. It also maintains a stable income for farmers, as they are paid according to a pre-decided price for their output.
Essential Requirements of Farmers
Storage:
Farmers should have adequate storage facilities. Development of warehousing is essential.
Finance:
Farmers should have sufficient holding power; i.e., he should wait for favorable prices. He should not be forced to sell their stocks immediately in the village to the trader-cum-money lender, even at low prices. Cooperative credit can solve this problem.
Information:
Farmers should have up to date market information regarding supply, demand, and prices. Only regulated markets and cooperative marketing society can supply market intelligence services.
Cooperatives:
There should be a reasonable number of middlemen between the farmers and the consumers. Here again, marketing cooperatives can reduce the number of middlemen and assure better prices for agricultural goods.
Transport:
Marketing depends on transport. We must have an efficient and economic network of road-rail transport for home trade. The agricultural market can be wide if the transport facility is cheaper.
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Solved Example on the solution of Agricultural Marketing
Q1. What are the Obstacles that the Agricultural System Face?
Ans: Some of the problems that the agricultural market system face are as follows:
Lack of efficient warehouse facilities.
Unregulated Markets.
Poor credit facility and lack of affordable finance.
Malpractice in weighing and grading of the products.
Q2. Give Some Examples of Farmer Markets.
Ans: Some examples of farmer market are:
Apni Mandi in Punjab, Rajasthan, and Haryana.
Rythu Bazars in Andhra Pradesh.
Uzhavar Sandies (farmers market) in Tamil Nadu.
Hadaspur Mandi in Pune.
FAQs on Overview of Agricultural Market Systems
1. What is an agricultural market system?
An agricultural market system refers to the entire process and infrastructure involved in moving agricultural produce from the farm to the final consumer. It includes a series of interconnected activities such as assembling, storing, processing, grading, transporting, and distributing farm commodities. This system determines how products are priced, how farmers get paid, and how consumers access food and raw materials.
2. What are the main types of agricultural markets in India?
Agricultural markets in India can be broadly classified based on their operational area and regulation. The main types include:
Primary Markets (Haats/Shandies): These are local, often weekly, markets in villages where farmers sell their produce directly to consumers or small traders.
Secondary Wholesale Markets (Mandis): These are larger, permanent markets located in towns or district headquarters. Transactions mainly occur between farmers, village merchants, and wholesalers.
Terminal Markets: These are centralised markets located in major cities or ports where produce is sold to large-scale wholesalers, retailers, or processors for final distribution.
Regulated Markets: These are organised markets established by state governments to protect farmers from exploitation by intermediaries. They operate under the rules of an Agricultural Produce Market Committee (APMC).
3. What are the key functions performed in agricultural marketing?
Agricultural marketing involves several critical functions that add value to the produce. These can be grouped into three categories:
Assembling Functions: This includes collecting produce from numerous small farms and concentrating it for further handling. It involves activities like collection, grading, and standardisation.
Processing Functions: These activities transform the raw produce into a more usable or valuable form, such as milling wheat into flour or processing fruits into jams.
Distribution Functions: This includes all activities that move the product from the farm or processing centre to the consumer, such as packaging, transportation, storage, and selling.
4. Why is an efficient agricultural marketing system important for a country's economy?
An efficient agricultural marketing system is crucial for economic development for several reasons. It ensures that farmers receive a fair price for their produce, which incentivises them to increase production. For consumers, it guarantees a steady supply of goods at reasonable prices. Furthermore, it stimulates overall economic growth by creating employment in related sectors like logistics, processing, and retail, and helps in managing food security by reducing post-harvest losses and ensuring equitable distribution.
5. What are the major challenges facing the agricultural marketing system in India?
Despite improvements, the agricultural marketing system in India faces several significant challenges:
Distress Sales: Small and marginal farmers are often forced to sell their produce at low prices immediately after harvest due to a lack of storage facilities and urgent cash needs.
Dominance of Intermediaries: A long chain of middlemen often results in farmers receiving only a small fraction of the price paid by the final consumer.
Inadequate Infrastructure: There is a severe shortage of proper warehousing, cold storage, and all-weather rural roads, leading to high post-harvest losses.
Lack of Market Information: Farmers often lack access to real-time information on prevailing market prices, leading to poor bargaining power.
6. What key measures has the government implemented to improve agricultural marketing in India?
The Indian government has implemented several measures to address the challenges in agricultural marketing. Key initiatives include the establishment of regulated markets (mandis) to ensure transparent transactions, the provision of Minimum Support Price (MSP) for major crops to safeguard farmers against price falls, and the promotion of cooperative marketing societies to enhance farmers' collective bargaining power. More recently, platforms like the Electronic National Agriculture Market (e-NAM) have been introduced to create a unified national market for agricultural commodities.
7. How do regulated markets (mandis) differ from traditional local markets (haats)?
Regulated markets and traditional haats are fundamentally different in their structure and operation. A haat is an informal, periodic market where farmers and local consumers interact directly, with minimal regulation. In contrast, a regulated market or mandi is a formally structured marketplace managed by an APMC. It has licensed traders, standardised weights and measures, and a more transparent auctioning process designed to protect farmers from exploitation and ensure they get a competitive price for their produce.
8. What is the specific role of infrastructure like warehousing and transportation in agricultural marketing?
Infrastructure plays a critical role in making the agricultural marketing system efficient. Warehousing and cold storage facilities allow farmers to store their produce safely, preventing post-harvest losses and avoiding distress sales. This enables them to sell when market prices are more favourable. Efficient transportation networks, including all-weather roads and railways, are essential to connect farms to markets quickly, reduce transit losses, and allow produce from surplus regions to reach deficit regions, thus creating a wider, more integrated market.
