Agricultural Marketing

Example: e-Chilli Project

  • Started by Spices Board in Guntur
  • Database of Chilli farmers
  • Better prices for farmers
Write a note on the recent initiatives taken by the government to reform agricultural marketing in India. (200 Words)
Agricultural marketing has an important role to play in the overall agricultural development. It provides economic security to farmers by way of fair and remunerative compensation for agricultural produce. At the same time, it ensures affordable and accessible food products to consumers thereby reducing the inflation. Keeping in view the role of agricultural marketing in Indian agriculture, the government has taken various steps for its harmonious development:
  1. The Dept of agriculture has advised the states to create a single market throughout state territory with a single licence so that agriculture product can be moved without any restriction.
  2. Govt has worked towards developing the national market and for this purpose an e-platform will be designed from the agriculture tech infrastructure fund(ATIF) so that marketing of agriculture produce will be done through all states without any restriction.
  3. Central govt requested the state govt to exempt fruits and vegetables from the purview of APMC act and many state govt has responded positively to this move of central govt. Kisan mandi are also being developed in some regions.
  4. Besides this, government has also decided to improve the warehousing and transportation of agricultural items, opening new cold chain and logistical improvement. Recently, the approval has been granted for setting up of 17 new mega food parks for processing and export of agricultural commodities.
Amendment Consumer Protection Act,1986 to make hoarding a non-bail able offence and improve 3-tier grievance redressal system.
Recently the union cabinet gave its nod to set up the National Agriculture Market. Critically discuss the need for such a market and its impact on APMCs and farmers. (200 Words)
A Common national agriculture market is essential for fair prices to agricultural commodities, control food inflation and promoting investment in agriculture and food processing sector.
It would have following impact on farmers and APMCs:
  1. Increase options for farmers and increase their price realization by ensuring unrestricted movement of agricultural goods.
  2. It would promote value addition and integration of supply chain which would be beneficial for farmers and economy
  3. APMCs which have operated under the monopolistic market would face pressure to upgrade their infrastructure, decrease commission and provide more facilities at Mandis to remain relevant.
  4. APMCs would be motivated to expand grading, packing and marketing and move up the value chain to leverage the liberalization.
  5. Would help in their checking inflation and shortages in some regions by reducing inter-state disparities in terms of availability of these products in markets in the respective regions of states.
  6. Would lead to transparent e-auctioning of the process of purchasing agricultural commodities by traders/retailers in the mandis from farmers which would in turn reduce the exploitation, price manipulation and delayed payments to farmers and also the role of middle men. All these would mean farm growers would be able to fetch better price for their produce.
  1. Might be considered by some as infringement on the rights and domain of states as agriculture is a state matter(although listed in Concurrent List ) and they are best suited to regulate it as local knowledge is necessary in this field .
  2. Increased inter-state trade on agricultural commodities might create shortages of commodities locally as farmers would likely to sell their products where they would get high and better prices.
  3. Likewise, traders would refrain buying locally and use ‘single license’ to purchase from other regions.
However, it would largely have a positive impact on the market of agricultural commodities as the recent scenario is not good for farmers .They are often manipulated on prices and delayed payments by traders and the fee charged on traders operating in mandis ultimately fall on farmers. The APMCs have failed to check all these.
Recently the union government proposed to reform 50 regulated  wholesale markets (mandis) across 10 states in order to help create a national common market for agricultural marketing. Write a note on the role of mandis and examine how this proposal would help agricultural marketing in India. (200 Words)
Important points:
  1. The survey said an un-integrated and distortion-ridden agriculture market was one of the most striking problems in agricultural growth.
  2. National Common Market: The state governments would have to switch to modern practices such as
    1. A single trading license for the entire region,
    2. Single-point levy of market fee (mandi tax) and
    3. Electronic auction for price discovery in the identified mandis.
  3. For instance, in Punjab, food grain is taxed at 14 per cent but Madhya Pradesh levies a little less than five per cent. At present, most wholesale markets in different states are governed by the respective (APMC) laws.
  4. The APMCs charge multiple fees, of substantial magnitude and often nontransparent –  market fee on buyers, licensing fee from commission agents and fees from a whole range of functionaries. Commission agents also charge a fee on transactions between buyers and farmers
  5. Absence of a uniform national market has been several times blamed for the wide disparity between farm gate and retail prices, sometimes as much as 100 per cent.
  6. It also said that all states should drop fruit and vegetables from the APMC schedule of regulated commodities.
Critically analyse the characteristics of India‘s agriculture markets and examine if India setting up a national market for agricultural commodities would address problems faced in agricultural marketing. (200 Words)
India’s agriculture markets are regulated be archaic Agricultural Produce Market Committees. These committees were set up to provide platform to farmers to sell their produce directly at market prices and to decrease the role of intermediaries. Many changes has taken place in the economy of India since Independence. These committees instead of benefiting producer and consumer worked in opposite direction. The characteristics of Indian agricultural markets emerged due to APMCs are:
  1. Market got fragmented and this fragmentation resulted in different price level of commodities.
  2. We are frequently facing problem of plenty at one market and scarcity at another market. It resulted in either price-depression and loss to producer and inflation and loss to consumer.
  3. It created new kinds of intermediaries who cartel and depress price for producer and increase for consumer under the nose of APMCs.
  4. Contract farming and cooperative farming which are the needs of modern time got disincentivised due to number of rules and regulations.
  5. Many non-transparent levies by states and commission agents are levied which are not audited or scrutinized.
  6. No major investment is done in modern infrastructure in the form of cold storage, modern warehouses etc. Plenty of food is wasted due to these reasons.
  7. Inclusion of fruits and vegetables under the purview of APMCs has resulted in large wastage.
As a remedy to these problems national market for agricultural commodities is proposed this will integrate all the markets and provide transfer of commodities in various parts of country. Though national market is the major reform in agricultural marketing but it also has to assist with other solutions. Creation and maintenance of infrastructure in the form of storage, transportation is a big requirement. Use of online commodity market needs dissemination of information among farmers for this they have to be provided with internet connectivity. To engage private sector many incentives and easing of foreign investment is required. Time has come to free agriculture marketing from clutches of APMCs and a national market with private participation and huge infrastructure is needed.



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