Agricultural Marketing in India
Agricultural Marketing in India
Agricultural Marketing in India
16.10 Warehousing
16.10.1 Functions of Warehousing 16.10.2 Use of Warehousing Facilities 16.10.3 License for Running a Warehouse
16.12 Let Us Sum Up 16.13 Key Words 16.14 Some Useful Books 16.15 Answer/ Hints to Check Your Progress Exercises
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16.0
OBJECTIVES
After going through this unit, you will be in a position to: identify various types of marketing institutions prevalent in India; explain the cooperative marketing structure and its problems; and identify the role and efforts of the central and state governments in regulating marketing of farm produce.
16.1
INTRODUCTION
The term marketing is derived from the term market, which in turn is derived from the Latin word marcatus meaning merchandise, wares, traffic or place where business is conducted. The word market has been widely and variably used to mean: (a) a place or a building where commodities are bought and sold, e.g., super market; (b) potential buyers and sellers of a product, e.g., wheat market and cotton market; (c) potential buyers and sellers of a country or region, e.g., Indian market and Asian market; (d) an organization which provides facilities for exchange of commodities, e.g., Bombay stock exchange; and (e) a phase or a course of commercial activity, e.g., a dull market or bright market. Marketing occupies an important place in agriculture. It motivates the farmers to produce more and earn higher income. Traditionally, marketing consisted of those efforts which affect transfers in ownership of goods and care for their physical distribution. But in the modern concept marketing is a comprehensive term covering a large number of functions such as (i) collection of surpluses from the individual farmers; (ii) transportation to nearest assembling centre; (iii) grading and standardisation; (iv) pooling; (v) processing; (vi) warehousing; (vii) packing; (viii) transportation to the consuming centres; (ix) bringing the buyers and sellers together; and (x) sale to the ultimate consumers. All these functions require capital and also involve risk due to fluctuation in prices, losses, deterioration in quality, etc. The arrangements made for raising the requisite finance for the above activities bearing market risks at various levels, also, therefore, form part of marketing.
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e) The production of certain crops like fruits and plantation crops is highly localised but consumption is widespread, their marketing becomes more difficult. f) In India most of the farmers are small and medium scale producers with weak financial position. They are unable to undertake the above functions individually, whereas these functions are usually in the hands of intermediaries or middlemen, who exploit them.
16.3
b)
c)
d)
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e)
Tolas (weighmen): Weighing in wholesale market is done by a functionary called Tolas who generally works as a separate entity. Hammals and Palledars (Market laborers): They attend to the collection and handling of produce in the market. They are generally independent workers. Other Functionaries: There are a number of other minor functionaries such as sweepers, water carriers and other servants of arhatia who attend to the affairs of arhatias clients.
f)
g)
16.3.3
Notwithstanding the direct intervention by the government, the markets for agricultural products in India have remained dominated by the private sector. According to one estimate, the quantity of agricultural produce handled by the government agencies has been not more than 10 per cent of the total value of marketed surplus. Further, around 10 per cent of the surplus is handled by the cooperatives. Thus 80 per cent of the marketed surplus of agricultural products in India is handled by the private trade. Even in the case of cereals, the share of private trade is quite large and increasing. Of the estimated marketed surplus of cereals, the share of private trade which was 72.5 per cent during triennium ending (TE) 1982-83 went upto 74.0 per cent during TE 1996-97. Out of the incremental output of 57.4 million tonnes between TE 1982-83 and TE 19967-97, the quantity handled by the public agencies was around 8 million tonnes. With larger quantities required to be handled by the private trade, the size and structure of the market for cereals have considerably expanded. Trade in foodgrains in India is handled by around two million wholesalers and five million retailers. In the area of retailing, there are more than 4.10 lakh fair price shops, of which nearly three-fourths are in the private sector, operating under the public distribution system (PDS). On average, there is one retail shop of foodgrains for a population of 200. Apart from traders, processors play an important role as they also enter the market as bulk buyers and sellers. In the case of paddy/rice, there are 91,801 hullers, 4,538 shellers, 8,365 huller-cum-shellers and 34,688 rice mills, which process the entire output of around 120 million tonnes of paddy. In the wheat market, the roller flour mills command considerable share of total quantity handled. There are now 812 roller flour millers who buy, process and sell 10.5 million tonnes of wheat and wheat products. Out of the total output of pulses, nearly 75 per cent is processed in the organised as well as unorganised sector. The number of organised pulse (dal) mills is now more than 10,000. Nearly 98 per cent of the fruits and vegetables produced in India are traded as fresh products. The commercial processing segment accounts for only 1.8 percent of the total output. Though the processing capacity has gone up to 19.1 lakh tonnes, due to the seasonality in production and lack of farmer-processor linkages, only half of the capacity is being utilised. The food-processing sector is assuming increasing importance owing to the increased urbanisation and rise in the income levels. Of the total Indian food market the processed segment is only 10 per cent, semi-processed 15 per cent and remaining 75 per cent is fresh food segment. The food processing in India is presently dominated by the unorgainsed sector. The organised processing sector comprises 18,000 units producing Rs.9000 crore worth of processed foods. The processing segment of the food market is growing rapidly and projected to increase by 200 per cent by the year 2005 with high investment potential. This segment is attracting massive investment and since July 1991 several ventures in the private, joint and cooperative sectors, some with foreign collaboration and 100 per cent export oriented units, have been approved, sanctioned or commissioned.
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The market structure for meat includes 3,600 slaughter-houses, six modern abattoirs and 25 meat processing plants, besides several poultry dressing units. There are 104 licencees functioning under the Meat Food Products Order, 1973. The structure of the processing capacity needs to be examined in relation to the total meat output in the country which is estimated at 3.9 million tonnes per year. Oilseeds and vegetable oils constitute another important segment of the Indian agricultural markets. The oilseed processing industry consists of mechanical crushing and solvent extraction units. The mechanical crushing units include 20,000 expellers and 1,31,600 cottage level crushers (ghanies). The number of solvent extraction units is 761. In addition, there are 130 oil refining and 145 hydrogenation units. The capacity utilisation of the industry is less than half. One important structural change observed in oilseeds processing sector is that the share of cottage units in the total volume of crushing is going down. The capacity utilization in cottage units is reported to be around 10 per cent whereas it is 30 per cent for expellers, 34 per cent for solvent extraction units, 50 per cent for oil refining and 37 per cent for hydrogenation units. Some preliminary information presented here indicates some general features of the agricultural produce markets, viz., (a) the market size is already large and expanding; (b) it is dominated by the private sector; (c) by and large, unorganised segment is much larger than the organised sector and the share of organized sector is increasing; and (d) despite the market being large, due to infrastructure bottlenecks coupled with geographically dispersed market places, the possibilities of localised monopolies or oligopolies cannot be ruled out.
16.4.2
Marketing channels for various cereals in India are more or less similar, except the channel for paddy (or rice) where rice millers come into the picture. Some common channels for wheat have been identified as follows: i) Farmer to consumer
ii) Farmer to retailer or village trader to consumer iii) Farmer to wholesaler to retailer to consumer iv) Farmer to village trader to wholesaler to retailer to consumer v) Farmer to co-operative marketing society to retailer to consumer vi) Farmer to a government agency (FCI etc) to a fair price shop-owner to consumer vii) Farmer to wholesaler to flour miller to retailer to consumer The channels for paddy and pulse are broadly the same, except that the rice millers or dal millers come into the picture before the produce reaches retailers or consumers.
16.4.3
Marketing channels for oilseeds are different from those for foodgrains, mainly because the extraction of oil from oilseeds is an important marketing function for oilseeds. The most common marketing channels for oilseeds in India are: i) Producer to consumer (who either directly consumes oilseeds or gets it processed on custom basis)
ii) Producer to village trader to retailer to consumer iii) Producer to oilseed wholesaler to processor to oil wholesaler to oil retailer to oil consumer iv) Producer to village trader to processor to oil consumer v) Producer to government agency to processor to oil wholesaler to oil retailer to oil consumer
16.4.4
Marketing channels for fruits and vegetables vary from commodity to commodity and from producer to producer. In rural areas and small towns, many producers perform the functions of retail sellers. Large producers directly sell their produce to the processing firms. Some of the common marketing channels for fruits and vegetables are: i) Producer to consumer
ii) Producer to primary wholesaler to retailer or hawker to consumer iii) Producer to processor (for conversion into juices, preserves, etc.) iv) Producer to primary wholesaler to processor v) Producer to primary wholesaler to secondary wholesaler to retailer or hawker to consumer vi) Producer to local assembler to primary wholesaler to retailer or hawker to consumer
i)
Producer to consumer
ii) Producer to retailer to consumer iii) Producer to wholesaler to retailer to consumer iv) Producer to co-operative marketing society to wholesaler to retailers to consumer v) Producer to egg powder factory Sometimes, the wholesaling and retailing functions are performed by a single firm. Check Your Progress 1 1) Justify the statement that marketing of agricultural commodities differs from that of industrial goods. ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... 2) What are the essential components of market structure? ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... 3) What are the types of markets for agricultural produce in India? ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... 4) What are the marketing channels for fruits and vegetables? ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... .......................................................................................................................
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16.5
MARKETING COSTS
The difference between the price received by the farmer and price paid by the consumer is called marketing cost. This includes middlemens charges for the services rendered in performing marketing functions. Studies have shown that a large proportion of consumers income is taken away by the middlemen. The reasons for the prevalence of high marketing costs are scattered farms, small size of individual lots of produce, their variability in quality, poor transport facilities, inadequate development of market information services, lack of capital for storage and processing, etc. The following are some of the marketing disabilities, which cause high marketing costs. a) Multiplicity of Market Charges: The producer is required to pay a large number of market charges without any justification and often for no services rendered. charity or dharmada charges, storage charges without the produce having been stored are some of the examples of unwanted charges. b) Trade Allowance: Traders in most of the unregulated markets make deductions which are unwanted and heavy. For example, allowances for drayage, moisture, dirt, etc. even when the produce is displayed in a heap and inspected by the buyers before purchases are made. These are unjustified trade allowances. c) Adulteration and lack of grading: The producers of agricultural commodities and traders by and large, have not yet realized the importance and advantages of grading the produce, with the result that the transaction takes place on a sample basis and the producer does not get full worth of his produce. d) Method of Sale: The under-over (or hatha) system of sale is widely prevalent in many of the unregulated markets. This system is open to various malpractice, because only the negotiators know the price being negotiated. It generally operates to the detriment of the producer and to the benefit of the trader, particularity the commission agent. e) Weighment: In many markets the weights used are not correct. Besides, there is no supervision over the persons engaged in weighing, who are mostly employees of the trader and often manipulate the scale. f) Large Samples: Large samples are taken by the buyers without payment. g) Delayed payment of sale proceeds: The producer in most cases is not paid immediately the full value of his produce sold. Advances are made and final settlement is made after some delay. If advances are made before harvest, heavy interests are also charged. h) Superfluous Middlemen: There are large number of middlemen between the producer and the consumer resulting in high cost to the consumer and low returns to the producer. i) Inadequate Storage Facilities: In most of the villages, there is hardly any institutional storage facility is available as a result the farmers dispose of their produce as soon as it is harvested at any cost. It is estimated that the storage losses at the farmers level are about 5% of the total produce. Defective Transport: The transport system in rural areas is also in the bad state of affairs and is practically non-existent during rainy season. It is a well known fact that good transport and communication systems are pre-requisite for efficient marketing.
j)
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k) Lack of Market Information: There is hardly any agency providing reliable information about prices in rural areas. The villagers have no contact with the outside world and act on the hearsay reports. l) Absence of Regulated Markets: As many as 2,000 out of the 3,400 important markets have not been regulated so far. Even in the regulated markets the rules and regulations are not properly enforced by the officials, with the result that the malpractices continue in one form or other.
Organised marketing is of considerable significance to the economy of the country. It would be useless to increase the output of food and equally futile to set up optimum standards of nutrition, unless food moves to the consumers from producers at a price which provides fair remuneration to the producers and is within the consumers ability to pay.
16.6
COOPERATIVE MARKETING
The need for cooperative marketing is keenly felt in India against the background of defects and malpractices that exist in agricultural marketing system. Although, certain statutory measures have been adopted by the central as well as state governments, yet many malpractices still continue in one form or other. This is because even today a large number of farmers continue to be indebted to the trader-cum-money lenders, as they control credit, marketing, transport and storage. Cooperative marketing is a process of marketing through a cooperative association formed to perform one or more of the marketing functions in respect of the produce of its members. It is a voluntary business organisation established by its members to market farm produce collectively for their direct benefits.
16.6.1
The broad aim of cooperative marketing society is to rationalise the whole marketing system so as to make it beneficial to the producer. Its immediate objectives are to: a) strengthen the bargaining capacity of the cultivator, b) secure the members a better price for their produce, c) eliminate superfluous middlemen, d) provide the members with needed finance, e) persuade the farmer to grow better quality goods, f) stabilise prices, g) develop fair trading practices, h) provide facility of grading, storage and transportation, i) j) act as an agent of the government for the procurement and implementation of price support and market intervention schemes, promote the economic interest of its members by encouraging self-help, thrift and better farming among members,
k) act as a distributive centre for agricultural inputs such as seeds, fertilisers, chemicals, implements, etc., and l)
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help in the expansion of agricultural credit programme by linking marketing with credit.
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3)
What are the important objectives of cooperative marketing? ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... .......................................................................................................................
16.7
The structure of cooperative marketing societies consists of the National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED) at the national level, the state cooperative marketing federations at the state level and primary marketing cooperative societies at the agricultural market (Mandi) level. The organisational structure of cooperative marketing in the country is federal type but the pattern of organisation is not uniform in all the states. It is two-tier, consisting of primary marketing cooperatives at the mandi level and state marketing federation, at the state level , in the states of Assam, Bihar, Kerala, Karnataka, M.P., Orissa, Rajasthan, West Bengal, and North-eastern states. On the other hand, it is three tier consisting of primary marketing cooperatives at the base, central marketing societies at the district and state marketing federations at the state levels in the rest of the states. NAFED
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The structure of Cooperative Marketing Societies in India is given in Fig. 16.1 As of March 1998 there were 29 state marketing federations, 22 state level special marketing federations, 397 district/central marketing societies and 8,422 primary cooperative marketing societies in the country. The business turnover of primary societies was Rs.5803 crore and that of state and district societies/federations to the tune of Rs.1,05,845 crore. The National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED) which is the national body of marketing cooperatives handled agricultural commodities worth Rs.546 crore during 1997-98. Of this amount, Rs.208 crore was through internal trade and Rs.339 crore through exports. It has also implemented price support scheme and market intervention scheme of Government of India. It had earned a net profit of Rs.11 crore in that year. TRIFED
LAMPS (3352)
In ten states having a higher concentration of tribal population, minor forest produce is marketed by Large-sized Agricultural Multi-purpose cooperative societies (LAMPS) at the primary level and Tribal Development Cooperative Corporations / Federations at the state level. The Tribal Cooperative Societies Marketing Development Federation of India Ltd. (TRIFED) is a national level body which provides support to the tribal cooperatives in marketing of minor forest produce. In 1996-97 TRIFED conducted business of Rs.132 crore of which export component was Rs.22 crore. The structure of Tribal Cooperatives is given in Fig. 16.2
b) c) d) e) f)
give loans to the members on pledging their produce procure agricultural commodities, implement price support and market intervention schemes and act as an agent of the government undertake processing of agricultural commodities act as an agent of PACs for recovery of production loans from the members distribution of fertilisers and other agricultural inputs.
16.7.3
The state cooperative marketing societies have crucial role to play in the development of PMSs. These federations are organised for undertaking operations on behalf of their affiliated societies particularly in the field of inter-state trade and export of agricultural commodities, They also undertake procurement of agricultural inputs and consumer goods required by the farmers. The following functions in particular are performed by the state federations: a) marketing and processing of agricultural produce b) supply of improved implements, fertilisers and other agricultural inputs c) coordinate member societies in marketing d) implement price support scheme and market intervention scheme as an agency of NAFED e) provide remunerative prices to farmers for their produce.
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16.7.5
Although steady growth in the marketing of agricultural produce by cooperatives has been recorded year after year, yet the structure suffers from many ills, which are as under: a) absence of forward and backward linkages in the structure. b) most of the marketing cooperatives are mainly engaged in supply activities rather than marketing activities. c) only few societies are making outright purchases and selling farmers' produce through pooling. d) cooperative marketing societies are undertaking marketing of agricultural produce by handling the produce of farmers on commission basis. e) very few societies are providing finance against the pledge of farm produce. f) marketing cooperatives are financially weak and are unable to mobilise adequate working capital for business activities. g) marketing cooperatives engage themselves in the business activities involving lesser risk with the result that no long term perspective planning is resorted to. h) most of the marketing cooperatives have failed to create their own employees as manager, instead departmental officers work as managers in these cooperatives who do not take the marketing business seriously.
3) Discuss the functions of primary marketing societies. ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... 4) Explain the structure of cooperative marketing in India. ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... .......................................................................................................................
16.9
REGULATED MARKETS
Under the traditional system of marketing of agricultural produce, producer is the seller. He incurs a high marketing cost and suffers from unauthorized deductions of marketing charges and the prevalence of various malpractices. Improvement in marketing conditions with a view to creating fair competitive conditions and increase the bargaining power of producer-sellers was considered to be the most important pre-requisite of orderly marketing. Most of the defects of, and malpractices under, the traditional marketing system of agricultural produce have been more or less removed by the exercise of public control over markets, i.e., by the establishment of regulated markets in the country.
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The establishment of regulated markets is not intended at creating an alternative marketing system. The basic objective is to create conditions for efficient performance of the private trade, through facilitating free and informal competition. In regulated markets, the farmer is able to sell his marketed surplus in the presence of several buyers through open and competitive bidding. The legislation for the establishment of regulated markets does not make it compulsory for the farmer to sell his produce in the regulated market yard. Instead, voluntary action on the part of the farmers to take advantage of such a market is assumed. The basic philosophy of the establishment of regulated markets is elimination of malpractices in the system and assignment of dominating power to the farmers or their representatives in the functioning of markets.
ii) To make the marketing system most effective and efficient so that farmers may get better prices for their produce, and the goods are made available to consumers at reasonable prices; iii) To provide incentive prices to farmers for inducing them to increase the production both in quantitative and qualitative terms; and iv) To promote an orderly marketing of agricultural produce by improving the infrastructure facilities.
16.9.2
Though the establishment of regulated markets was started during the 1930s, the programme got momentum only after the independence. The number of regulated markets before the commencement of First Five Year Plan (April 1951) was 236 However, this number increased to 715 in March 1961, 5776 in April 1986, and further to 6968 in March 1996. At present, 98.5 per cent of wholesale markets are functioning under the regulation programme (Table 16.1). The number of commodities under regulation also varies from state to state; but they include almost all the important agricultural commodities such as foodgrains, oilseeds, fibre crops, commercial crops, fruits and vegetables, forest produce and livestock products. There is also wide variation across states in infrastructure facilities in the regulated markets. The facilities in many markets are less than what they should have been.
Table 16.1 : Progress of Market Regulation in India Year Ending Number of Regulated Markets Regulated Markets as Percent of Total Wholesale Assembling Markets (7077) 3.33 6.64 10.10 14.30 49.85 62.82 81.48 93.83 98.46
March, 1951 March, 1956 March, 1961 March, 1966 March, 1976 March, 1980 March, 1986 March, 1991 March, 1996
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16.9.3
Under the provisions of Agricultural Produce Market Act, the state government gives notice of its intention to bring a particular area under regulation by notifying the market area, market yard, main assembling market and submarket yard, if any, under the principal regulated market. The meaning of these terms is explained below. i) Market Area: The area from which the produce naturally and abundantly flows to a commercial centre, i.e., the market, and which assures adequate business and income to the market committee.
ii) Principal Assembling Market: It is the main market which is declared as a principal yard on the basis of transactions and income generated for the market committee. iii) Market Yard: This is a specified portion of the market area where the sale and purchase of any of the specified agricultural commodites are carried out. iv) Sub-Market Yard: It is the sub-yard of the principal assembling market. This is a small market and does not generate sufficient income to be declared as a principal assembling market. In the regulated markets, (a) the sale of produce is undertaken generally by open auction or by close tender method; (b) weighment of the produce is done by licensed weighment; (c) the produce is put to auction generally after cleaning and/ or grading; (d) market information is appropriately disseminated; (e) market charges are specified; (f) the payment to the seller is made by the buyer within the stipulated time; and (g) all the functionaries are required to obtain a license. The day-to-day functioning of regulated markets is supervised by the officials of market committee, viz., the secretary, auction clerks, and other staff. The administrative decisions are taken by the nominated/ elected market committee. The market committee consists of representatives of all sections, viz., farmers, traders, co-operative marketing societies, co-operative or commercial banks, autonomous bodies (panchyat samiti and municipal board of the area) and government officials. Prior to the establishment of regulated markets, the rules for the conduct of the business in the market were framed by traders without any consideration for the interests of other groups of persons, (farmers and consumers). Disputes arising between producer-seller and traders on the ground of quality of the produce, accounts and deductions of unauthorized charges are solved by the subcommittee of the market committee. This avoids the legal complications and unnecessary expenditure. Prior to regulation, no such facility existed. If a farmer was not satisfied, he had to go to the court of law to get his due share, which involved a lot of expenditure and wastage of time. Regulated markets have brought about a general awakening among producer-sellers. This awakening enables them to protect themselves against a number of malpractices which were formerly prevalent in the unregulated markets. Now the sale slips of the produce sold are given to farmers, showing the details of the quantity sold, the rate of sale and deductions, if any. A copy of the sales slip is supplied to the market committee for the purpose of checking. The malpractices like taking away of samples by the bidders have also been stopped. The market committee provides the amenities required for a smooth and efficient marketing of the produce of farmer-sellers. These amenities encourage the farmers to bring their produce for sale in the regulated market, and check the tendency on their part to sell locally. There is also a check on the tendency to aversion of city markets for one reason or the other.
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Various amenities provided by the market committee in the market area are: i) Link roads and culverts in the area ii) A spacious market yard and/ or subyards iii) Rest houses, cattlesheds and water trough iv) Light, watchmen, drinking water and parking space for carts in the market yard v) Infrastructure facilities, such as banks, canteens and post offices in the market yard. The amenities vary from state to state and from market to market, depending upon the financial status of the market committee.
Agriculture Produce (Grading and Marking) Act, 1937, 1986. Prevention of Food Adulteration (PFA) Act, 1954, 1964, 1976, 1986. Essential Commodities Act, 1955. Solvent Extracted Oil, Deoiled Meal and Edible Oil (Control) Order, 1967. Meat Food Products Order, 1973. Standards of Weights and Measures Act, 1976. Pulses, Edible Oilseeds and Edible Oils (Storage Control) Order 1977. Vegetable Oil Products (Control) Order, 1977. Prevention of Black Marketing and Maintenance of Supply of Essential Commodities Act, 1980. The Cold Storage Order 1964, 1980 (rescinded in 1997). Consumer Protection Act, 1986. Bureau of Indian Standards Act, 1986. Milk and Milk Products Order, 1992. Fruit Products Order (FPO) 1955, 1997.
The provisions under the legal instruments are used to regulate the activities of traders and processors pertaining to trading, stocking, maintenance of quality, grading, packing, processing, blending and movements. These instruments are administrated by different Ministries and Departments.
16.10
WAREHOUSING
Storage is an important marketing function which involves holding and preserving goods from the time they are produced until they are needed for consumption. The storage function is as old as human civilization and is performed at all the stages of marketing. However, in traditional storage methods there is a considerable loss of the produce. The storage losses could be 3 to 5 per cent depending on the type of storage structures used. The losses to the produce during storage is caused by rodents, insects and pests and also by dampness in the grain as well as the storage structure. With a view to reducing these avoidable losses, there is a need for scientific storage to prevent national loss.
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Delivery of Produce: The warehouse receipt has to be surrendered to the warehouse owner before the withdrawal of the goods. The holder may take delivery of a part of the total produce stored after paying the storage charges.
ii) The government grants the license after examining the warehouse building and the financial soundness of the party, and after the realization of the prescribed fees. iii) The license has to be renewed periodically on payment of prescribed fees. iv) The warehouse owner is authorised to receive only notified commodities for storage in his warehouse and issue receipts in prescribed form. v) It is the responsibility of the warehouse owner to keep the premises clean, keep different lots of goods separately in the warehouse, and carry on such operations as are necessary to protect the goods against losses form the damage and pilferage. At the end of March 1996, there were 1829 warehouses in the country with a storage capacity of 18.4 million tonnes. Apart from the warehouses owned by CWC and SWCs, the Food Corporation of India has also established storage capacity of 16.8 million tonnes. The cooperative societies have also built a storage capacity of 13.36 million tonnes. The warehouses can also be constructed in the private sector which are licensed under the provisions of the prevailing Act in that regard. Depending on the commodities stored, warehouses are classified into general warehouse, special commodity warehouse or refrigerated warehouse.
16.11
FORWARD TRADING
In order to control unhealthy practices in forward trading in agricultural commodities, which ultimately reflect on prices in primary and secondary markets, Forward Contracts (Regulation) Act was passed by the Central Government in 1952. Under this Act, a Forward Markets Commission has been set up whose functions are both quasi-judicial and executive. The functions include: a) study of the forward market in a particular commodity with a view to deciding if the market should be brought under the regulatory provisions of the Act. b) enquiry into claims of associations for recognition to conduct forward trading. c) supervision and inspection of recognised association. d) collection of factual data, and e) keeping the different forward markets under observation.
16.11.1
In order to protect the farmers from the distress sale of agricultural commodities, Government of India set up Agricultural Costs and Prices Commission. The commission fixes minimum support prices of foodgrains, oilseeds and pulses, taking the cost of production and other costs into account. In the event of a fall in market rates of the above commodities below the minimum support price fixed by the Central Government,
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Food Corporation of India (FCI) in the case of foodgrains and pulses makes purchases from the markets. In the case of oil seeds as well as the commodities which are not procured by the FCI, the NAFED is asked to procure these commodities. Government of India meets the losses, if any, suffered by the NAFED.
16.11.2
In the case of perishable agricultural and horticultural commodities such as fruits and vegetables, the producers usually suffer heavy losses in the event of bumper crop. With a view to protect them from fall of prices and distress sale, Market Intervention Scheme has been introduced. The scheme is implemented on request from the state Government concerned. The procurement is made on the pre-determined price during the specified period jointly by the NAFED, as an agent of Government of India and state designated agency as their agent on 50:50 basis. At the end of the operation the loss (or profit) is shared by the State and Central Governments on 50:50 basis. The scheme in the past has been implemented in commodities like apples, pine apples, ginger, potatoes, chilies, coriander, grapes, oranges, etc. in the states of Himachal Pradesh, Jammu & Kashmir, Uttar Pradesh, North Eastern States, Andhra Pradesh, Rajashtan and Karnataka. Check Your Progress 4 1) What is the role of market committee in a regulated market? ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... 2) What are the facilities provided by warehouse owners to farmers and traders? ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... 3) What are the various efforts initiated by the Central and State Governments for improving agricultural marketing? ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... .......................................................................................................................
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4) Discuss the Market Intervention Schemes initiated by Government of India. ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... .......................................................................................................................
16.12
LET US SUM UP
Marketing comprises collection, transportation, grading, standadisation, pooling, processing and finally distribution to the ultimate consumers. There are a number of functionaries involved in the above process. As a result, the costs of goods and services increase considerably. Cooperative marketing as well as regulated markets have been introduced in order to reduce the costs of marketing with a view to benefit both producers and consumers. The cooperative marketing structure in India is generally federal type having three tiers: primary marketing societies at the taluka/tahsil level, central marketing societies at the district level and state marketing federations/ societies at the state level.
16.13
FAO NAFED TRIFED LAMPS
KEY WORDS
: : : : Food and Agricultural Organisation of United Nations National Agricultural Cooperative Marketing Federation of India Ltd. Tribal Cooperative Marketing Federation Ltd. Large-sized Agricultural Multi-Purpose Cooperative Societies
16.14
Abott, J., 1993, Agricultural and Food Marketing in Developing Countries: Selected Readings, Technical Centre for Agricultural and Rural Cooperation, UK. Ellis, F., 1992, Agricultural Policies in Developing Countries, Cambridge University Press, UK. Jat, D.R., 1991, Marketing of Agricultural Produce, Radha Publications; New Delhi. Vyas, V. S. and P. Bhargava, 1997, Policies for Agricultural Development, Rawat Publications, New Delhi.
3) There are three types of markets: Primary, secondary and territory. 4) Read Sub-section 16.4.4 and answer the question. Check Your Progress 2 1) The disabilities of Indian agricultural markets are given in Section 16.5. Discuss these problems. 2) Read Sub-section 16.6.2 and answer. 3) Bring out the important objectives given in Sub-section 16.6.1 and answer the question. Check Your Progress 3 1) Bring out the important functions given in Sub-section 16.7.4 and answer the question. 2) Read Sub-section 16.7.5 and answer. 3) Read Sub-section 16.7.1 and answer. 4) You can explain the cooperative marketing structure on the basis of Fig.16.1. Discuss about the hierarchy of national, state and village levels cooperative institutions. Check Your Progress 4 1) Read Sub-section 16.9.3 and answer. 2) Read Section 16.10 and answer. 3) The government has introduced price support scheme and market intervention scheme, Moreover, the government has encouraged regulated markets and cooperative marketing. 4) Read Sub-section 16.11.2 and answer.
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