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Marketing of Agricultural Produce

Agricultural marketing comprises all the activities involved in the supply of farm inputs and output including all those operations which are related to the procurement, collecting, grading, storing, food and agro-processing, transportation, financing and selling of the agricultural produce.  In effect, marketing includes all overarching aspects of agribusiness, while it excludes the core activity of cultivation.

The agricultural marketing system also relates to economic growth of the agriculture sector and ensuring safe and affordable food to consumers, both of which are directly linked to the food security of the country.

Objectives of Efficient Agri-Marketing

As per the report of the National Commission of Agriculture (1976), the objectives of an efficient agri-marketing system, are :

  • To enable the farmers as primary producers to reap the best possible benefits;
  • To provide facilities for lifting all the produce the farmers are willing to sell, at a price incentive;
  • To reduce the price spread between the primary producer and ultimate consumer; and
  • To make available all products of farm origin to consumers at reasonable price without impairing the quality of the produce.

A new addition to the objectives of agricultural marketing, is to contribute to the doubling the farmers’ income by 2022-23.

Advantages of good Marketing System

A good marketing system helps in the following ways:

  • Monetising the Produce: It helps the farmers to get the due value of their produce.
  • Demand Signal Platform: Marketing systems balances the demand with supply. The bridge in the form of agri-logistics, function to execute this purpose.
  • Market growth: India’s agriculture is transitioning from a state of deficit towards a status of surpluses. Agri-logistics technologies have also modernised to allow farm produce to connect with demand further afield. An aware and competitive marketing system, will adjust itself to suit this transformation of Agriculture in India. Further this can open up new market avenues. The opening up of the markets to promote competition and long term growth as a desired outcome.
  • Capital formation and investment in technology: Marketing leads to investment in Modern Supply Chain infrastructure and Information and Technology applications to increase the Produce or enhance the value of Produce.

Effective Marketing System and Its advantages

Marketing effectiveness in a measure of expanding the market system  to  generate larger revenue  streams and  competitiveness.  Market channel efficiency depends on reduction of marketing cost, adoption of technology in grading, packaging, transportation, storage, value addition, wholesaling, retailing and exploring economies of scale through aggregation. An effective Marketing system provides farmers their due share in the Production process and ensures timely delivery of goods and services.

The effectiveness of an agricultural marketing system varies depending on the situation of the target regions, consumer, product and technologies in hand.

Various Platforms for Marketing of Agricultural Produce

Agriculture is a state subject and various states have enacted their laws based on Model APMC Act 2003 and Model Rules 2007. These make Mandis or APMCs as main platform for farmers to sell their produce. Apart from that, there are some alternative marketing platforms also that can be utilised by farmers to sell their produce. These are as follows:

Direct Marketing

In direct marketing, the farmers directly sell with the produce consumers. These operate in two basic formats:

  • Farmers’ Markets, and
  • Direct sourcing from farmer’s field by processors (primary consumers).

These markets have helped in mitigating the problems of fragmented supply chain.  Along with it, the quick movement of produce from farmer to consumer saves losses considerably. In these markets no market fee is charged but service charges are collected from sellers. About 488 such farmers’ markets are operating across different States in the name of Apnamandis in Punjab, Haryana,  Rythu bazaars in Andhra Pradesh and Telangana, Uzhavar Sandhai in Tamil Nadu, Shetkari Bazaars in Maharashtra and Raitha Santhe in Karnataka.

Direct marketing allows farmers to  skip  multiple  layers  in  their  transactions  and  benefits  by  skipping  of intermediary margins. Though recommended in the Model APMC  Act & Rules, very  few of States have issued such licenses for direct sourcing.

Contract farming

Contract farming can address lack of market connectivity, long chain of market intermediaries,  ignorance about the buyer demands, etc. Contract farming has  a constraint from  farmers’ perspective, in  that they are limited  in their production to the direct demand and their growth is linked to the contractor’s capacity to grow the market share.  Though  contract farming is not an entire solution for problems  in agricultural marketing, it can  very well be leveraged in certain  regions and for specific crops for increasing farmers’ income. {We have discussed this in current module}

Private wholesale markets

These have not yet developed in India and states need to liberalise the marketing regulations to promote development of private markets.

Organised retailing

Organised retailing on the lines of SAFAL (the fruit & vegetable marketing  subsidiary   of  Mother   Dairy) which   is   an   example  of indigenously organised retailing network. SAFAL operates in Delhi out of approximately 400 retail outlets, and sells about 350 tonnes of fresh produce daily in Delhi-NCR markets.

Farmer Producer Organisations (FPOs)

Organising producers into formal management practices help to take collective decisions on cultivation to make the best use of market intelligence, as well creates opportunities for producers to get involved in value adding decisions and activities such as input supply, credit, pre-conditioning,  processing, marketing  and  distribution. The aggregation of farmer into FPOs (cooperatives/SHGs/FIGs/Producer company), helps their integration into the supply chain.

Cooperatives in agricultural marketing

Cooperatives are organised to aggregate farmers for establishing scale in their production and marketing activities, besides easing access to credit and other services. Notable example is in the dairy sector – AMUL.

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