AGRICULTURAL MARKETING: Importance, Growth and Problems in India

Agricultural Marketing

• Agricultural marketing covers the services involved in moving an agriculture product from the farm to the consumer.
• These services involve the planning, organizing, directing and handling of agricultural produce in such a way as to satisfy farmers, intermediaries and consumers.

Agricultural Marketing

• Numerous interconnected activities are involved such as planning production, growing and harvesting, grading, packing, transport, storage, agro- and food processing, provision of market information, distribution, advertising and sale.

Marketing Agricultural

• Agricultural Marketing is the entire range of supply chain operations for agricultural products. The term agricultural marketing is composed of two words- agriculture and marketing. Agriculture, generally means growing and/or raising of crops and livestock while, marketing encompasses a series of activities involved in moving the goods from the point of production to point of consumption.

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Marketing Agricultural

• Agricultural marketing is mainly the buying and selling of agricultural products.

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Definition of Agriculture Marketing

• According to Phillip Kotler , “Human activity directed at satisfying the needs and wants through exchange process”.
• According to American Marketing Association , “Performance of business activities that directs the flow of goods and services from producers to users “.

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Importance of Agricultural Marketing

Optimization of Resource use and Output Management

A well-designed system of marketing can effectively distribute the available stock of modern inputs, and thereby sustain a faster rate of growth in the agricultural sector.

Importance of Agricultural Marketing

• Increase in Farm Income

An efficient marketing system ensures higher levels of income for the farmers reducing the number of middlemen or by restricting the cost of marketing services and the malpractices, in the marketing of farm products.

Importance of Agricultural Marketing

• Widening of Markets

An efficient and good network of marketing system widens the market for the both within and outside the country. The widening of the market helps in increasing the and thereby guarantees a higher income to the producer.

Importance of Agricultural Marketing

• Growth of Agro-based Industries

An improved and efficient system of agricultural marketing helps many industries like cotton, sugar, edible oils, food processing and jute depend on agriculture for the supply of raw materials.

Importance of Agricultural Marketing

• Adoption and Spread of New Technology

The marketing system helps the farmers in the adoption of new scientific and technical knowledge.

Importance of Agricultural Marketing

Employment generation

The marketing system provides employment to millions of persons engaged in various activities, such as packaging, transportation, storage and processing. Persons like commission agents, brokers, traders, retailers, weighmen, hamals, packagers and regulating staff are directly employed in the marketing system.

Importance of Agricultural Marketing

• Addition to National Income

Marketing activities add value to the product thereby increasing the nation's gross national product and net national product.

Importance of Agricultural Marketing

Better Living

The marketing system aims at diminishing the poverty of the agricultural population, reducing consumer food prices, earning more foreign exchange or eliminating economic waste , thus improving standard of living of masses.

Importance of Agricultural Marketing

• Creation of Utility Marketing. Marketing adds cost to the product, but, at the same time, it adds utilities to the product. The following four types of utilities of the product are created by marketing: Form utility, Place Utility, Time Utility and Possession Utility

Growth of Agricultural Marketing in India

Earlier farmers used to consume themselves of what they produced; but, now farmers exchanged their produce. This tendency has increased their dependence on marketing, which has resulted in the overall development of the market mechanism.

Growth of Agricultural Marketing in India

The importance of an efficient marketing system as a vital link between the farmer and consumer was recognised way back in 1928 by the Royal Commission on Agriculture.

Growth of Agricultural Marketing in India

The establishment of Directorate of Marketing and Inspection in 1935, the enactment of the act for the grading and standardization of agricultural commodities in 1937, the conduct of market surveys, and the establishment of regulated markets in the country are some of the measures to improve the marketing situation and make agricultural marketing as efficient as possible.

Growth of Agricultural Marketing in India

During the first and second five year plans, agricultural marketing did not receive importance. National Commission on Agriculture (the first commission which suggested measures for the development of agriculture in the post-independence period)

Growth of Agricultural Marketing in India

During the 10th Five year plan, the union Ministry of Agriculture formulated another modified Model Law on agriculture marketing, which provides for establishment of private markets/yards, direct purchase centers, consumers or farmers’ market for direct sale, and promotion of public private partnership in the management and development of agricultural markets in the country.

Determinants of growth of Agricultural Marketing in India

• Technological change in Agriculture: Technological developments in agriculture, use of high yielding varieties of seeds, increased use of modern inputs and cultivation practices in the agricultural sector, have increase the marketed surplus of agricultural produce.

Determinants of growth of Agricultural Marketing in India

• Specialization:

Increasing specialization by farmers and regions in certain crops or livestock has resulted in an increased production, which has also resulted in improved use efficiency of natural resources like land and water.

Determinants of growth of Agricultural Marketing in India

• Urbanization:

Urban people are the main buyers of agricultural surpluses. The rate of growth of urban population is much higher than rural population (due to rural-urban migration) which has further increased the importance of marketing system for farm products.

Determinants of growth of Agricultural Marketing in India

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• Transportation and communication

The increase in transportation and communication facilities has widened the market for farm products.

Problems in Agricultural Marketing in India

Improper Warehouses:

• There is an absence of proper ware housing facilities in the villages. Therefore, the farmer is compelled to store his products in pits, mud-vessels, "Kutcha" storehouses, etc.
• Approximately 1.5% of the produce gets rotten and becomes unfit for human consumption.
• The setting up of Central Warehousing Corporation and State Warehousing Corporation has improved the situation to some extent

Problems in Agricultural Marketing in India

Lack of Grading and Standardization:

Different varieties of agricultural produce are not graded properly. The farmer producing better qualities is not assured of a better price. Hence there is no incentive to use better seeds and produce better varieties.

Problems in Agricultural Marketing in India

• Inadequate Transport Facilities:

Transport facilities are highly inadequate in India. Only a small number of villages are joined by railways and pucca roads to mandies.

Problems in Agricultural Marketing in India

Presence of a Large Number of Middlemen:

• The chain of middlemen in the agricultural marketing is so large that the share of farmers is reduced
• A study of D.D. Sidhan revealed, that farmers obtain only about 53% of the price of rice, 31% being the share of middle men (the remaining 16% being the marketing cost).
• In the case of vegetables and fruits the share was even less, 39% in the former case and 34% in the latter. The share of middle- men in the case of vegetables was 29.5% and in the case of fruits was 46.5%.
• Some of the intermediaries in the agricultural marketing system are -village traders, Kutchaarhatiyas, puccaarhatiyas, brokers, wholesalers, retailers, money lenders, etc.

Problems in Agricultural Marketing in India

• Malpractices in Unregulated Markets: Even now the number of unregulated markets in the country is substantially large.
• Inadequate Market Information:

farmers fails to get proper information about market price.

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Problems in Agricultural Marketing in India

• Inadequate Credit Facilities: Credit facilities are not available so Indian farmer, being poor, tries to sell off the produce immediately after the crop is harvested though prices at that time are very low.