Marketing & Pricing Woes
India being a predominantly agrarian economy, Agriculture is the primary source of livelihood in the country and a key driver to the economy. The country has made tremendous progress in Agriculture with increasing production levels during the post-independence period, but farmer income has not improved simultaneously owing to some serious flaws in India’s Agricultural Marketing.
Agricultural marketing refers to the buying and selling of agricultural products. Modern day agricultural marketing involves a series of exchanges or transfers from one person to another before it finally reaches the end-user or consumer. There are mainly three marketing functions involved in this, i.e., assembling, preparation for consumption and distribution.
In India, most of the agricultural products are sold by farmers to moneylenders or to village traders. These private traders and middlemen dominate the marketing and trading of agricultural produce thus exploiting the poor farmers due to lack of adequate marketing infrastructure in the organised sector.
- Presence of Too Many Intermediates/Middlemen results in the exploitation of both farmers and consumers with the middlemen offering lower prices to farmers and charging higher prices from the consumers.
- Highly Fragmented Nature of Markets across the States denies adequate market access to the farmers on one side and hinders the development of infrastructure required for handling of the growing volume of agricultural produce on the other.
- Huge Variation in the Density of Regulated Markets in different parts of the country acts as a barrier in the efficient handling of ever increasing marketed surplus and easy market access to farmers.
- Inadequate Marketing Infrastructure restricts the various benefits farmers are entitled ina regulated market environment. These benefits include covered and open auction platforms, common drying yards, cold storage, grading facilities, electronic weigh-bridges.
- High Incidence of Market Fee/Charges including commission charges by the licensed agents, development cess, entry tax, purchase tax, weighment charges etc. results in a higher transaction cost and low price realization by the farmers in a regulated market.
- Less Remuneration to the Farmers & High Intermediation Cost in a long supply chain deny the remunerative prices to the farmers.
- Asymmetry in Market Informationamongest the farmers living in distant areas in rural India compels the farmers accepting whatever price the traders offer to them.
- Inadequate Rural Farm Credit Facilities compels poor Indian farmers to resort to ‘distress sales’ immediately after the harvest even if the prices are low at that point of time.
- Lack of All-Weather Transport Facilitiesin many rural areas of the country obstructs the smooth movement of the agri produce to the marketplace, thus denying fair price to the farmers.
- Insufficient Storage Facility causes wastage of agri produce and farmers are left with no choice but to either sell their produce at a low price or to bear huge post-harvest losses.
- Unfavourable Conditions and Malpractices in Mandis e.g. deducting money for donations, chanda etc., taking out large amount of grains for sampling, offering lower prices by terming a product sub-standard, adulteration, black-marketing, hoarding of stocks etc. take a toll on farmer income.
- Agricultural Marketing in India: Issues and Challenges, Asia Specific Journal of Research, April 2017
- History of Marketing Regulation: Brief, Directorate of Marking & Inspection, Ministry of Agriculture and Family Welfare, GoI (https://dmi.gov.in)