DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

VISAKHAPATNAM, A.P., INDIA

PROJECT TITLE
ECONOMIC AND LEGAL ISSUES RELATED TO
AGRICULTURE MARKET ACCESS

SUBJECT

ECONOMICS

NAME OF THE FACULTY

Mr. ABHISHEK SINHA

Name of the candidate

P.KAMALAKAR REDDY

ROLL NO & SEMESTER

2015045 & Semester-III

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Acknowledgement

I would sincerely like to put forward my heartfelt appreciation to our respected Economics
Faculty Mr. Abhishek Sinha sir for giving me a golden opportunity to take up this project
regarding - ECONOMIC AND LEGAL ISSUES RELATED TO AGRICULTURE
MARKET ACCESS. I have tried my best to collect information about the project in various
possible ways to depict clear picture about the given project topic.

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CONTENTS:

1. Introduction…………………………………………………………………5

2. Role of Agribusiness in India……………………………………………….6

3. Market Size…………………………………………………………………8

4. Investments…………………………………………………………………9

5. Legal Issues………………………………………………………………..15

6. Economic Issues…………………………………………………………...19

7. Conclusion …………………………………………………………………20

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Objectives/ Aims of the study
The objective of the study is to characterize the ECONOMIC AND LEGAL ISSUES
RELATED TO AGRICULTURE MARKET ACCESS from time to time

Significance/benefit of the study

The significance of the study is to give a brief explanation ECONOMIC AND LEGAL
ISSUES RELATED TO AGRICULTURE MARKET ACCESS

Scope of study
The scope of the study is limited to the topic ECONOMIC AND LEGAL ISSUES
RELATED TO AGRICULTURE MARKET ACCESS

Research Methodology
This project is purely Doctrinal and based on Primary and secondary sources such as
websites, books, articles and internet sources. The referencing style followed in this project is
HARWARD format of citation. This research process deals with theoretical and analyzing
information that is collected. The research is purely descriptive in its boundaries of the topic.

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Introduction

India is an agricultural country and one third population depends on the agricultural sector
directly or indirectly. Agriculture remains as the main stray of the Indian economy since
times immemorial. Indian agriculture contribution to the national gross domestic product
(GDP) is about 25 per cent. With food being the crowning need of mankind, much emphasis
has been on commercialising agricultural production. For this reason, adequate production
and even distribution of food has of late become a high priority global concern. Agricultural
marketing is mainly the buying and selling of agricultural products. In earlier days when the
village economy was more or less self-sufficient the marketing of agricultural products
99presented no difficulty as the farmer sold his produce to the consumer on a cash or barter
basis.

Today's agricultural marketing has to undergo a series of exchanges or transfers from one
person to another before it reaches the consumer. There are three marketing functions
involved in this, i.e., assembling, preparation for consumption and distribution. Selling on
any agricultural produce depends on some couple of factors like the demand of the product at
that time, availability of storage etc. The products may be sold directly in the market or it
may be stored locally for the time being. Moreover, it may be sold as it is gathered from the
field or it may be cleaned, graded and processed by the farmer or the merchant of the village.
Sometime processing is done because consumers want it, or sometimes to conserve the
quality of that product. The task of distribution system is to match the supply with the
existing demand by whole selling and retailing in various points of different markets like
primary, (to whom the farmer may be indebted) or to village traders. Products are sold in
various ways. For example, it might be sold at a weekly village market in the farmer's village
or in a neighboring village. If these outlets are not available, then produce might be sold at
irregularly held markets in a nearby village or town, or in the mandi.

In India, there are several central government organisations, who are involved in agricultural
marketing like, Commission of Agricultural Costs and Prices, Food Corporation of India,
Cotton Corporation of India, Jute Corporation of India, etc. There are also specialised
marketing bodies for rubber, tea, coffee, tobacco, spices and vegetables.
Under the Agricultural Produce (grading and marketing) Act of 1937, more than forty

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primary commodities are compulsorily graded for export and voluntarily graded for internal
consumption. Although the regulation of commodity markets is a function of state
government, the directorate of marketing and inspection provides marketing and inspection
services and financial aid down to the village level to help set up commodity grading centers
in selected markets.

As we have a tradition of agricultural production, marketing and allied commercial activities,

now it is the time for us to brainstorm and come out with new ideas of value added services.
These value added services will give the existing agricultural engine a new dimension. The
next logical step could be food-processing which not only could be another revenue
generating area but also can provide lots of full-time employment to our youths. With the
changing agricultural scenario and global competition, there is a need of exploiting the
available resources at maximum level.

The Department of Agriculture and Cooperation under the Ministry of Agriculture is

responsible for the development of the agriculture sector in India. It manages several other
bodies, such as the National Dairy Development Board (NDDB), to develop other allied
agricultural sectors.

ROLE OF AGRIBUSINESS IN INDIA

It would seem self-evident that independent India’s number one priority would have been
agriculture. But India did not do the self-evident. By the mid-’60s, the relative neglect of
agriculture blew into a crisis unleashing the Green Revolution. However, the post 1990s
progress of Indian agriculture too has been patchy. Public investment in agriculture has
declined from 1.6 per cent of GDP in the early ‘90s to 1.3 per cent of GDP in 1998-2002. The
agricultural production index has stagnated and the productivity of agriculture has made no
progress. The dismal situation in agriculture was exacerbated by a four-year spell of bad
monsoons in recent years. Deceleration in agriculture is one of the major concerns of the
UPA government. According to the Planning Commission, agricultural growth has
decelerated sharply from 3.2 per cent between 1980-81 and 1995- 96 to an average of 1.9 per
cent subsequently.

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The mid-term appraisal of the Tenth Plan has cited loss of dynamism in the agriculture sector
as the major cause of rural distress. While bringing agriculture centre stage, we also need to
shift policy emphasis to marketing from production. Today, the agricultural marketing system
and infrastructure are incapable of profitably absorbing even the current output. It has been
realised that Indian farming has to undergo major changes, for rural incomes to go up
appreciably.

Dependency on subsidy has to give place to income generation from market integration. This
calls for many changes such as raising productivity in diverse activities rather than pure crop
husbandry, market reforms, creation of new capacity in agro services (like storage, sorting,
handling and processing of food), enabling farmers to benefit from the enhanced value
addition. There are certain things that must figure in this new farm package: accentuating
infrastructure accessibility, security framework of insurance, sound agro-climatic studies
(coupled with viable methods of disaster management) and dissemination of information, and
above all a strong political will to stamp out weeds in the way of agricultural development.

The Government of India is already planning to formulate a new farm package, well
appreciating the on-going economic reforms. These realities require a shift in public policy
on agriculture to markets and competition from the traditional ones of regulation and support,
and a view of agriculture as an agribusiness. It is time for greater boldness in Indian
agricultural reform (Gopalakrishnan, 2004). The economic liberalisation and the associated
opening up of the Indian economy have significantly reduced the structural rigidities in the
system. This positive trend should be the premise for India’s future agricultural reforms.
Agribusiness has come under the strong and direct influence of international markets. Indian
farmers have to produce quality goods to meet the international standards (Godara, 2006).
India is a huge country with a large agricultural base. It should not be impossible for India to
emerge as a major presence in the agro industry sector.

Out of the 320 million work force of India, 170 million (53 per cent) are employed in
agriculture. India ranks 2nd in the world in terms of arable land and also in terms of irrigated
area. It ranks 1st in the world in production of milk and milk products, 2nd in terms of rice,
wheat, groundnut and tobacco and 3rd in coffee. However, there is the problem of low
productivity. The yield for each crop is only 30 per cent of the world standard. Low

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agricultural productivity today is not due to absence of technology but because the full
advantage of technology has not reached this sector. An agro industry focussed strategy as
the core of the next stage of reform process will be politically correct and at the same time,
yield rich economic and political dividends.

Market Size
Over the recent past, multiple factors have worked together to facilitate growth in the
agriculture sector in India. These include growth in household income and consumption,
expansion in the food processing sector and increase in agricultural exports. Rising private
participation in Indian agriculture, growing organic farming and use of information
technology are some of the key trends in the agriculture industry.

As per the 3rd Advance Estimates, India's foodgrain production has increased marginally to
252.23 million tonnes (MT) in the 2015-16 crop year. Production of pulses is estimated at
17.06 million tonnes. With an annual output of 146.31 MT, India is the largest producer of
milk, accounting for 18.5 per cent of the total world production. It also has the largest bovine
population. India, the second-largest producer of sugar, accounts for 14 per cent of the global
output. It is the sixth-largest exporter of sugar, accounting for 2.76 per cent of the global
exports. India is a leading country in coconut production and productivity in the world, with
annual production of 2,044 crore coconuts and the productivity of 10,345 coconuts per
hectare as on 2015-16. Spice exports from India are expected to reach US$ 3 billion by 2016–
17 due to creative marketing strategies, innovative packaging, strength in quality and strong
distribution networks. The spices market in India is valued at Rs 40,000 crore (US$ 5.87
billion) annually, of which the branded segment accounts for 15 per cent. In fact, the Spices
Board of India has decided to set up a spice museum at Willingdon Island in Kochi to attract
and educate tourists and seafarers about the history and growth of Indian spices industry.

Indian agrochemical industry is expected to grow at 7.5 per cent annually to reach US$ 6.3
billion by 2020 with domestic demand growing at 6.5 per cent per annum and export demand
at 9 per cent per annum.

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Investments
Several players have invested in the agricultural sector in India, mainly driven by the
government’s initiatives and schemes. According to the Department of Industrial Policy and
Promotion (DIPP), the Indian agricultural services and agricultural machinery sectors have
cumulatively attracted Foreign Direct Investment (FDI) equity inflow of about US$ 2,278.3
million from April 2000 to March 2016.

Some major investments and developments in agriculture in the recent past are as follows:

Intertek Group, a UK-based total quality assurance provider, has launched an agricultural
technology (Agritech) Laboratory in Hyderabad, which will perform high-tech
deoxyribonucleic acid (DNA) analyses for the agri-biotech, plant seeds.

ITC Ltd, one of India's leading fast-moving consumer goods (FMCG) company, plans to
make Andhra Pradesh a hub for its agricultural business operations.

Mahindra and Mahindra Ltd has acquired 35 per cent stake in a Finnish combine harvesters
manufacturer, Sampo Roselnew Oy, for US$ 20.46 million and will jointly focus on the
combine harvester business in Asia, Africa and Eurasian Economic Union countries.

The Small Farmers’ Agri-Business Consortium (SFAC) plans to organise camps in Madhya
Pradesh and Chhattisgarh to promote its venture capital assistance scheme (VCAS), which
seeks to provide capital and project development facility (PDF) to agri-business
entrepreneurs. Agri-research institute ICRISAT’s incubation arm is looking to set up a
Rs.100 crore (US$ 14.67 million) fund in a year, an initiative that could help small
entrepreneurs from the agri-business and nutrition space raise money.

Mahindra & Mahindra (M&M), India’s leading tractor and utility vehicle manufacturer,
announced its entry into pulses retailing under the brand ‘NuPro’. Going forward, the
company plans to foray into e-retailing and sale of dairy products. Fertiliser cooperative
IFFCO launched a joint venture with Japanese firm Mitsubishi Corp for manufacturing
agrochemicals in India.

Acumen, a not-for-profit global venture fund, has invested Rs 11 crore (US$ 1.7 million) in
Sahayog Dairy, an integrated entity in the segment, based at Harda district in Madhya

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Pradesh. Rabo Equity Advisors, the private equity arm of Netherlands-based Rabo Group,
raised US$ 100 million for the first close of its second fund – India Agri Business Fund II.
The fund plans to invest US$ 15–17 million in 10–12 companies. Oman India Joint
Investment Fund (OIJIF), a joint venture (JV) between the State Bank of India (SBI) and
State General Reserve Fund (SGRF), invested Rs 95 crore (US$ 13.94 million) in GSP Crop
Science, a Gujarat-based agrochemicals company.

Challenges
The important paradigm shifts in agriculture post liberalisation are from the following.

a.) Subsistence farming to commercial farming

b.) Imported-oriented to export-oriented
c.) Crop specialised to farm diversified
d.) Organic inputs to bio-inputs
e.) Exploitative agriculture to experimental and sustainable agriculture
f.) Limited post harvest technology to more post harvest technology
g.) Supply-driven technology to demand-driven technology
h.) Transfer of subsidies to investment
i.) Unorganised farming and peasantry to organised/co-operative farming
j.) Risk-aversion to risk acceptance (appetite?)

The paradigm shifts are giving rise to new challenges to both the people and the government.

The main challenges are as follows.

a.) Adaptation to Micro/Medium Scale agribusiness projects in India

b.) Imperative of Infrastructure Development - Agri-Infrastructure
c.) Agri-Education
d.) Agri-Clinics
e.) Agri-Profesionals
f.) Better Management of Public Expenditure.
g.) Public Private Partnerships
h.) Management Contract

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 i.) Rural development in terms of rural resource utilisation, rural livelihood and rural
ecology
j.) Indian farm-holdings are very small
k.) Existing Government schemes have inequitable distribution and/or have led to market
distortions.
l.) Economies of Scale build up difficult
m.) WTO Challenge
n.) Movement form a subsidy-supported set-up to a equity-based set-up
o.) Fiscal compression in Agriculture
p.) Emerging ecological issues such as “ecological footprint” and “hoof prints”10

Each of these challenges in turn need though examination if one has to acquire the
wherewithal to confront them. The positive thing here is that our agriculturists nay, the farm
mangers need not have to begin from a scratch. They can build up on the accumulated
knowledge and experience. For example they have an experience of crisis management as
acquired in the 60s. Indian farmer is very intelligent. He knows his land very well. Similarly
the success stories of Farmer Groups/SHGs /Co-operatives are many. These success stories
provide a strong fundamental spirit for resurgence. Added to this we have the efforts made by
institutions like banks and corporate houses, apart from the government (Central as well as
state) in developing the necessary ingredients in the form of collateral management services,
price risk mitigation products, food parks, bill of exchange of farmers etc. There are signs of
new products such as farmer-friendly ATM cards. Governmental efforts in developing large
infrastructural facilities like international airports are also welcome signs in this direction.
Micro-finance movement is creating financial revolution in the countryside. We also hear the
call for “going beyond micro credit” or “new frontiers for microfinance” Agribusiness has
made agriculture-led services sector growth a reality.

Government Initiatives
Given the importance of the agriculture sector, the Government of India, in its Budget 2016–
17, planned several steps for the sustainable development of agriculture.

Budget 2016-17 proposed a slew of measures to improve agriculture and increase farmers’
welfare such as 2.85 million hectares to be brought under irrigation, Rs 287,000 crore (US$

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42.11 billion) grant in aid to be given to gram panchayats and municipalities and 100 per cent
village electrification targeted by May 01, 2018. The government has set an ambitious target
of producing a record 270.1 MT of foodgrains in 2016-17, 7 per cent higher than the 252.23
MT of production estimated for 2015-16. The Government of India has started work on 99
major and medium irrigation projects, slated to be completed by 2019. These projects will
bring 7.6 million hectares of land under irrigation in some of the most drought-prone regions
of India.

The government has already taken steps to address two major factors (soil and water) critical
to improve agriculture production. Steps have been taken to improve soil fertility on a
sustainable basis through the soil health card scheme and to support the organic farming
scheme ‘Paramparagat Krishi Vikas Yojana’. Other steps include improved access to
irrigation through ‘Pradhanmantri Gram Sinchai Yojana’; enhanced water efficiency through
`Per Drop More Crop’; continued support to Mahatma Gandhi National Rural Employment
Guarantee Act (MGNREGA) and the creation of a unified national agriculture market to
boost the incomes of farmers.

The Government of India recognises the importance of microirrigation, watershed

development and ‘Pradhan Mantri Krishi Sinchai Yojana’; thus, it allocated a sum of Rs
5,300 crore (US$ 777.6 million) for it. It urged the states to focus on this key sector. The state
governments are compelled to allocate adequate funds to develop the agriculture sector, take
measures to achieve the targeted agricultural growth rate and address the problems of
farmers.

The Department of Agriculture and Cooperation under the Ministry of Agriculture has inked
MOUs/agreements with 52 countries including the US. In addition, the Department of
Agriculture Research & Education (DARE) and the Department of Animal Husbandry,
Dairying & Fisheries (DAHD&F) under the Ministry of Agriculture have signed
MOUs/agreements with other countries, taking the number of partnerships with other
countries to 63. These agreements would provide better agricultural facilities in areas such as
research and development, capacity building, germ-plasm exchange, post-harvest
management, value addition/food processing, plant protection, animal husbandry, dairy and
fisheries. The agreements could help enhance bilateral trade as well.

Given the correlation between improvement in agriculture and the development of the
country, the Government of India adopted several initiatives and programmes to ensure

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continuous growth. It allocated Rs 25,000 crore (US$ 3.67 billion) for the Rural
Infrastructure Development Fund (RIFD), Rs 1,500 crore (US$ 220 million) for the long-term
rural credit fund, Rs 45,000 crore (US$ 6.60 billion) for the short-term cooperative rural
credit finance fund and Rs 25,000 crore (US$ 3.67 billion) for the short-term Regional rural
bank (RRB) refinance fund. It also marked an ambitious target of Rs 8.5 lakh crore (US$
124.71 billion) of agriculture credit during 2015–16.

Some of the recent major government initiatives in the sector are as follows:

a.) The government has drawn up a five-year roadmap to increase pulse production from
nearly 17.06 MT in 2015-16 to 24 MT in 2020-21 through a dedicated action plan.
b.) Prime Minister Mr Narendra Modi has unveiled the operational guidelines for the
Pradhan Mantri Fasal Bima Yojana which aims to provide farmers with crop
insurance as well as
c.) The Cabinet Committee on Economic Affairs (CCEA) has approved ‘Blue
Revolution’, an umbrella scheme for integrated development and management of
fisheries by Government of India, with total financial outlay of Rs 3,000 crore (US$
440.15 million) for a period of five years.
d.) Mr Piyush Goyal, Minister of Power, Coal, New and Renewable Energy has
announced that government’s plans to invest Rs 75,000 crore (US$ 11.08 billion) in
an energy-efficient irrigation scheme over the next three to four years.
e.) The new crop insurance scheme for farmers 'Bhartiya Krishi Bima Yojana' aims to
cover 50 per cent of the farmers under the scheme in the next two-three years,
f.) India and Lithuania have agreed to intensify agricultural cooperation, especially in
sectors like food and dairy processing.
g.) Gujarat Government has planned to connect 26 Agricultural Produce Market
Committees (APMCs) via electronic market platform, under the National Agriculture
Market (NAM) initiative.
h.) The State Government of Telangana plans to spend Rs 81,000 crore (US$ 11.88
billion) over the next three years to complete ongoing irrigation projects and also
undertake two new projects for lifting water from the Godavari and Krishna river.
i.) The National Dairy Development Board (NDDB) announced 42 dairy projects with a
financial outlay of Rs 221 crore (US$ 32.42 million) to boost milk output and increase
per animal production of milk.

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Government of India has set up an inter-ministerial committee, which will look into ways to
examine the potential of Indian agriculture, identify segments with potential for growth, and
work towards doubling farm incomes by 2022. The Government of India has allocated Rs
200 crore (US$ 29.9 million) for electronically linking 585 major wholesale agriculture
markets across the country, thereby creating a National Agriculture Market (NAM) in July
2015 for three years

Road Ahead
The agriculture sector in India is expected to generate better momentum in the next few years
due to increased investments in agricultural infrastructure such as irrigation facilities,
warehousing and cold storage. Factors such as reduced transaction costs and time, improved
port gate management and better fiscal incentives would contribute to the sector’s growth.
Furthermore, the growing use of genetically modified crops will likely improve the yield for
Indian farmers.

According to the National Institution for Transforming India Aayog (NITI Aayog), India’s
agriculture sector is expected to grow 6 per cent in FY 2016-17 in case of normal monsoon
during the June-September period. The 12th Five-Year Plan estimates the foodgrains storage
capacity to expand to 35 MT. Also, a 4 per cent growth would help restructure the agriculture
sector in India in the next few years.

Exchange rate used: INR 1= US$ 0.0149 as of September 26, 2016

References: The Economic Survey 2015–16, Agricultural and Processed Food Products
Export Development Authority (APEDA), Department of Commerce and Industry 2015–16,
Union Budget 2016–17, Press Information Bureau, Ministry of Statistics and Programme
Implementation, Press Releases, Media Reports

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Legal Issues

Agricultural marketing support

In the United States the Agricultural Marketing Service (AMS) is a division of USDA and
has programs for cotton, dairy, fruit and vegetable, livestock and seed, poultry, and tobacco.
These programs provide testing, standardization, grading and market news services and
oversee marketing agreements and orders, administer research and promotion programs, and
purchase commodities for federal food programs. The AMS also enforces certain federal
laws. USDA also provides support to the Agricultural Marketing Resource Center at Iowa
State University and to Penn State University.

In the United Kingdom support for marketing of some commodities was provided before and
after the Second World War by boards such as the Milk Marketing Board and the Egg
Marketing Board, but these were closed down in the 1970s. As a colonial power Britain
established marketing boards in many countries, particularly in Africa. Some continue to
exist although many were closed down at the time of the introduction of structural adjustment
measures in the 1990s.

In recent years several developing countries have established government-sponsored

marketing or agribusiness units. South Africa, for example, started the National Agricultural
Marketing Council (NAMC) as a response to the deregulation of the agriculture industry and
closure of marketing boards in the country. India has the long-established National Institute
of Agricultural Marketing (NIAM). These are primarily research and policy organizations,
but other agencies provide facilitating services for marketing channels, such as the provision
of infrastructure, market information and documentation support. Examples include the
National Agricultural Marketing Development Corporation (NAMDEVCO) in Trinidad and
Tobago and the New Guyana Marketing Corporation.

Several organizations provide support to developing countries to develop their agricultural

marketing systems, including FAO's agricultural marketing unit and various donor
organizations. There has also recently been considerable interest by NGOs to carry out
activities to link farmers to markets.

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Agricultural marketing development
Well-functioning marketing systems necessitate a strong private sector backed up by
appropriate policy and legislative frameworks and effective government support services.
Such services can include provision of market infrastructure, supply of market information
(as done by USDA, for example), and agricultural extension services able to advise farmers
on marketing. Training in marketing at all levels is also needed. One of many problems faced
in agricultural marketing in developing countries is the latent hostility to the private sector
and the lack of understanding of the role of the intermediary. For this reason “middleman”
has become very much a pejorative word.

Agricultural advisory services and the market

Promoting market orientation in agricultural advisory services aims to provide for the
sustainable enhancement of the capabilities of the rural poor to enable them to benefit from
agricultural markets and help them to adapt to factors which impact upon these. As a study by
the Overseas Development Institute demonstrates, a value chain approach to advisory
services indicates that the range of clients serviced should go beyond farmers to include input
providers, producers, producer organizations and processors and traders.

Market infrastructure
Efficient marketing infrastructure such as wholesale, retail and assembly markets and storage
facilities is essential for cost-effective marketing, to minimize post-harvest losses and to
reduce health risks. Markets play an important role in rural development, income generation,
food security, developing rural-market linkages and gender issues. Planners need to be aware
of how to design markets that meet a community's social and economic needs and how to
choose a suitable site for a new market. In many cases sites are chosen that are inappropriate
and result in under-use or even no use of the infrastructure constructed. It is also not
sufficient just to build a market: attention needs to be paid to how that market will be
managed, operated and maintained. In most cases, where market improvements were only

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aimed at infrastructure upgrading and did not guarantee maintenance and management, most
failed within a few years.

Rural assembly markets are located in production areas and primarily serve as places where
farmers can meet with traders to sell their products. These may be occasional (perhaps
weekly) markets, such as haat bazaars in India and Nepal, or permanent. Terminal wholesale
markets are located in major metropolitan areas, where produce is finally channelled to
consumers through trade between wholesalers and retailers, caterers, etc. The characteristics
of wholesale markets have changed considerably as retailing changes in response to urban
growth, the increasing role of supermarkets and increased consumer spending capacity. These
changes require responses in the way in which traditional wholesale markets are organized
and managed.

Retail marketing systems in western countries have broadly evolved from traditional street
markets through to the modern hypermarket or out-of-town shopping center. In developing
countries, there remains considerable scope to improve agricultural marketing by
constructing new retail markets, despite the growth of supermarkets, although municipalities
often view markets as sources of revenue rather than infrastructure requiring development.
Effective regulation of markets is essential. Inside the market, both hygiene rules and revenue
collection activities have to be enforced. Of equal importance, however, is the maintenance of
order outside the market. Licensed traders in a market will not be willing to cooperate in
raising standards if they face competition from unlicensed operators outside who do not pay
any of the costs involved in providing a proper service.

Economic Issues

Market information
Efficient market information can be shown to have positive benefits for farmers and traders.
Up-to-date information on prices and other market factors enables farmers to negotiate with
traders and also facilitates spatial distribution of products from rural areas to towns and
between markets. Most governments in developing countries have tried to provide market
information services to farmers, but these have tended to experience problems of
sustainability. Moreover, even when they function, the service provided is often insufficient

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to allow commercial decisions to be made because of time lags between data collection and
dissemination. Modern communications technologies open up the possibility for market
information services to improve information delivery through SMS on cell phones and the
rapid growth of FM radio stations in many developing countries offers the possibility of more
localised information services.

In the longer run, the internet may become an effective way of delivering information to
farmers. However, problems associated with the cost and accuracy of data collection still
remain to be addressed. Even when they have access to market information, farmers often
require assistance in interpreting that information. For example, the market price quoted on
the radio may refer to a wholesale selling price and farmers may have difficulty in translating
this into a realistic price at their local assembly market. Various attempts have been made in
developing countries to introduce commercial market information services but these have
largely been targeted at traders, commercial farmers or exporters. It is not easy to see how
small, poor farmers can generate sufficient income for a commercial service to be profitable
although in India a new service introduced by Thomson Reuters was reportedly used by over
100,000 farmers in its first year of operation. Esoko in West Africa attempts to subsidize the
cost of such services to farmers by charging access to a more advanced feature set of mobile-
based tools to businesses.

Enabling environments
Agricultural marketing needs to be conducted within a supportive policy, legal, institutional,
macro-economic, infrastructural and bureaucratic environment. Traders and others cannot
make investments in a climate of arbitrary government policy changes, such as those that
restrict imports and exports or internal produce movement. Those in business cannot function
if their trading activities are hampered by excessive bureaucracy. Inappropriate law can
distort and reduce the efficiency of the market, increase the costs of doing business and retard
the development of a competitive private sector. Poor support institutions, such as
agricultural extension services, municipalities that operate markets inefficiently and export
promotion bodies, can be particularly damaging. Poor roads increase the cost of doing
business, reduce payments to farmers and increase prices to consumers. Finally, the ever-
present problem of corruption can seriously impact on agricultural marketing efficiency in
many countries by increasing the transaction costs faced by those in the marketing chain.
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Recent developments
New marketing linkages between agribusiness, large retailers and farmers are gradually being
developed, e.g. through contract farming, group marketing and other forms of collective
action. Donors and NGOs are paying increasing attention to ways of promoting direct
linkages between farmers and buyers within a value chain context. More attention is now
being paid to the development of regional markets (e.g. East Africa) and to structured trading
systems that should facilitate such developments. The growth of supermarkets, particularly in
Latin America and East and South East Asia, is having a significant impact on marketing
channels for horticultural, dairy and livestock products. Nevertheless, “spot” markets will
continue to be important for many years, necessitating attention to infrastructure
improvement such as for retail and wholesale markets.

Marketing training
Farmers frequently consider marketing as being their major problem. However, while they
are able to identify such problems as poor prices, lack of transport and high post-harvest
losses, they are often poorly equipped to identify potential solutions. Successful marketing
requires learning new skills, new techniques and new ways of obtaining information.
Extension officers working with ministries of agriculture or NGOs are often well-trained in
horticultural production techniques but usually lack knowledge of marketing or post-harvest
handling.

Ways of helping them develop their knowledge of these areas, in order to be better able to
advise farmers about market-oriented horticulture, need to be explored. While there is a range
of generic guides and other training materials available from FAO and others, these should
ideally be tailored to national circumstances to have maximum effect.

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CONCLUSION
Technology has played an important role in Indian agriculture since 1960s. Now management
has to take the initiative. The so-called second green revolution or farm diversity is essential
not only for promotion of agribusiness and agritrade but also for eradication of poverty and
unemployment in the country. In the light of diversities, shifts and challenges in agriculture,
there is a need for reform in agricultural education – a management education – for rural
labourers and entrepreneurs: education that gives knowledge and not just disseminating
information or providing data. The impact of real and managerial education will be on cost
(reduction and control), quality (enhancement) and knowledge (sharing).

Knowledge and expertise in the green revolution days of the 60s were highly concentrated
and/or costly. Today it is diluted and cheap, and many a times, localised. That makes
agriculture less dependent too. To conclude, from a “backward agriculture” to a “value added
agriculture”, Indian Agriculture has come a long way. But there are miles to go. And Indian
farmers, beyond doubt have the required amount of patience needed to undergo a
metamorphosis for bringing about the healthy transition from inhibitive farming to innovation
farming. That is agribusiness after all.

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