UNIT- 1

POLICIES AND PERFORMANCE IN AGRICULTURE

INTRODUCTION
Agricultural sector plays a strategic role in the process of economic development of a
country. It has already made a significant contribution to the economic prosperity of
advanced countries—and its role in the economic development of less developed countries is
of vital importance. In other words, where per capita real income is low, emphasis is being
laid on agriculture and other primary industries. The history of England is clear evidence that
Agricultural Revolution preceded the Industrial Revolution there. In U.S.A. and Japan,
agricultural development has helped to a greater extent in the process of their
industrialisation. Similarly, various under-developed countries of the world engaged in the
process or of economic development have by now learnt the limitations of putting over-
emphasis on industrialisation as a means to attain higher per capita income. Thus industrial
and agricultural developments are not alternatives but are complementary and are mutually
supporting with respect to-both inputs and outputs. It is seen that increased agricultural output
and productivity tend to contribute substantially to an overall economic development of a
country. It will be rational and appropriate to place greater emphasis on further development
of the agricultural sector.

Agriculture in Indian Economy

Agriculture in India remains as one of the most important sectors of the Indian economy. The
share of agriculture in the total gross domestic product (GDP) has sharply declined from
about 57.7 percent during 1950-51 to only 20.8 percent in 2004-05 but the share of
agriculture in total employment has declined only marginally from 73.9% in 1973-74 to
56.5% in 2004-05 and currently it has further declined to about 14% and the total
employment is about 42%. The Union Budget 2017 - 18 gave high priority to the agricultural
sector and aimed to double farmers’ incomes by 2022.
India also plays a major role in the economy by producing a large proportion of food grains,
fodder, edible oils and fruits and vegetables, milk ,meat and food products etc. The
agricultural sector also provides bulk of raw materials to most traditional agro-based
industries. In addition, agricultural sector also makes a notable contribution to export and
accounts for nearly one eighth of total exports of the country.
AGRICULTURAL GROWTH AND PRODUCTIVITY
Growth of agriculture
The deplorable condition of agriculture in the 1950s gave in the need for new strategies. To
bring about increase in agricultural productivity and also increase rural employment, the then
Planning Commission set up the Five Year Plans inclusive of various agricultural
programmes and service such as: setting up of community development programmes and
agricultural extension services throughout the country, expansion of irrigation facilities,
fertilisers, pesticides, agricultural machinery, high- yielding varieties of seeds and expansion
of transportation, power marketing, and institutional credit.

Agricultural progress under the Five Year Plans

Agriculture under First Plan (1951-56): The First Plan aimed at solving food crisis, hence
highest priority to agriculture with allocation of more than 14% of the total plan outlay. The
growth in agriculture remained 2.71%.

Agriculture under Second Plan (1956-61): This plan saw significant reduction in
agricultural outlay. It was 11.7% of the total plan outlay. This plan witnessed a growth of
3.15% in agricultural sector.

Agriculture under Third Plan (1961-66): The Second Plan experience and recognition that
agricultural production is the limiting factor, this Plan fixed ambitious targets of production
for all agricultural crops and to achieve self-sufficiency in food grains. This plan also saw the
introduction of Intensive Agricultural District Programme (IADP), followed by High
Yielding Variety Programme (HWP). However, Agricultural growth fell to a low of 0.73%.

Agriculture under the Annual Plan (1966-69): The Fourth Plan could not be introduced in
April 1966, instead the Govt. introduced the annual plans for three years-1966 to 1969, also
known as the ‘Plan Holiday’. This plan witnessed the adoption of New Agricultural Strategy.

Agriculture under the Fourth Plan (1969-74): This plan aimed at systematic application of
science and technology to improve agricultural practices. The allocation to agriculture sector
was 15% of the total plan outlay. This Plan aimed at sustained agricultural productivity of
about 5% per annum over the next decade. However, agricultural growth reached a level of
4.16% during this plan. The target of food self-sufficiency receded further and the country
was forced to import 3.6 million tonnes of food-grains in 1973 and 48 mn. tonnes in 1974.
The unsatisfactory performance of the agricultural sector was the root cause of the stagnation
of national income and inflationary pressures since 1972-73.

Agriculture under the Fifth Plan (1974-79): This was the only period, when the actual
foodgrain production exceeded the targeted production-The agricultural growth under this
plan was 3.28%.

Agricultural under the Sixth Plan (1980-85): The Sixth Five Year Plan was started in an
extremely different circumstances as the year of 1979-80 witnessed a severe drought. It
affected agricultural production adversely. However, the achievements of the plan came to be
considered a great success. As against the annual growth rate of 3.8% for agriculture, the
actual growth rate was 4.3%. The year 1983-84, of the plan is hailed as the Second Green
Revolution.

Agricultural Development under the Seventh Plan (1985-90): Total plan outlay on
agriculture was 6% of the total outlay and except cotton, none of the targets fixed for various
sectors was achieved. During this plan agricultural growth was 3.47%.

Agricultural Development under the Eighth Plan (1992-97): The Eighth Plan gave priority
to the “growth and diversification of agriculture to achieve self-sufficiency in food and
generate a surplus for exports.” Investment in agriculture, irrigation and allied sectors showed
a sharp rise over the previous plans. Agriculture growth rate in this plan was 2.44% on
account of weather and climate conditions being favourable. The agricultural sector
registered an impressive growth rate of 4.68%

Agricultural Development under the Ninth Plan (1997-2002): The agricultural development
strategy during Ninth Five Year Plan was based on the policy of food security announced by
the Government to double the production and make India hunger free in ten years.
Agriculture growth rate in this plan was only 2.44%. All the set targets were not achieved and
hence, 9th Plan was a failure on agriculture front.

Agricultural Development in the Tenth Plan (2002-07): This plan adopted the prescription
of the National Agricultural Policy (NAP), 2000 and therefore, envisaged better management
of resources, soil and water, so as to promote sustainable and inclusive agricultural growth.
The agricultural sector growth was at 2.3%.

Agricultural Development under the Eleventh Plan (2007-12): This Plan witnessed an
average annual growth of 3.6% in the Gross Domestic Product (GDP) from agricultural and
allied sector against a target of 4.0%. While it may appear that the performance of the
agriculture and allied sector has fallen short of the target, production has improved
remarkably, growing twice as fast as population.

Agricultural Development under Twelfth Plan (2012-17): The objective of this plan was to
achieve “Faster, More Inclusive and Sustainable Growth”. As against the target of 4% growth
for the agriculture and allied sectors, the growth registered was 4.2% in 2013-14, -0.2% in
2014-15 and 1.01% in 2015-16.

*In the year 2015, the Planning Commission was replaced by Niti Aayog with the framework
of a 15-year vision.

The Productivity of Agriculture in India

Although India has attained self-sufficiency in food staples, the productivity of its farms is
below that of Brazil, the United States, France, and other nations. Indian wheat farms, for
example, produce about a third of the wheat per hectare per year compared to farms in
France.

Rice productivity in India was less than half that of China. Other staple’s productivity in
India is similarly low. Indian total factor productivity growth remains below 2% per annum;
in contrast, China’s total factor productivity growth is about 6% per annum, even though
China also has smallholding farmers. Several studies suggest India could eradicate its hunger
and malnutrition and be a major source of food for the world by achieving productivity
comparable with other countries.
The following table shows India’s position in agriculture in the World:
The table below shows the largest states of important crops:
AGRARIAN STRUCTURE AND TECHNOLOGY
Land ownership was highly unequal at the time of Independence. There was a parasitic class
of intermediaries who played no role in production. On the other hand, the vast majority of
actual cultivators were either tenants or subtenants, without any security of tenure. According
to the National Commission on Agriculture (1976), this was the root cause of the state of
chronic crisis in which Indian agricultural economy was enmeshed before the attainment of
Independence. The main characteristics of the agrarian structure which independent India
inherited were:
a) absent of land ownership;
b) exploitation of tenants through high rents and insecurity of tenure;
c) unequal distribution of land;
d) tiny and fragmented holdings; and
e) lack of adequate institutional finance to agriculture.
To bring about equality and justice in rural India, the strategy used by the Planning
Commission was land reforms which included the removal of intermediaries, like the
Zamindaris, the protection of tenants through tenancy legislation, ceiling of land holdings and
distribution of surplus land among land- less labourers and small and marginal farmers.
Before Independence, there were three major systems of land tenure, namely Zamindari
System, Mahalwari System and Ryotwari System.
The Zamindari system was introduced by Lord Cornwallis in 1793 through permanent
settlement that fixed the land rights of zamindars in perpetuity without any provision for
fixed rents or occupancy rights for actual cultivators. Under the Zamindari system, the
landlord is simply the provider of land and the tenant provides all the management and
labour. The landlord gets the pre-determined share of the produce and is responsible for the
payment of land revenue to the state. The actual tiller does not come into contact with the
state. The landlord acts as an intermediary.
Under the Mahalwari system, land is maintained by a collective body; usually the village
serves as a unit of management. Revenue is collected from them, the responsibility of paying
revenue to the state rests with the village. It was prevalent in parts of United Provinces and
Punjab.
Under the Ryotwari system, every individual is registered, and holder is recognized as the
proprietor of land and is responsible for the payment of land revenue to the Government. The
Ryot possess the right to sublet his land or to transfer the land by gift, sale or mortgage. A
ryot cannot be ejected by the Government till he pays his land revenue. This system was
prevalent in the provinces of Madras and Bombay.
The prevalence of these intermediaries led to the need for land reforms. It was basically to
stop exploitation of the actual tiller of the soil and pass on the ownership of land to them that
land reforms were introduced in the post –independence period in India.
Objectives of land reforms:
The major objectives of land reforms in India are as follows:
1. Restructuring of agrarian relations to achieve egalitarian social structure
2. Elimination of exploitation in land relations
3. Actualisation of the goal of “land to the tiller”
4. Improving the socio, economic conditions of the rural poor by widening their land base
5. Increasing agricultural production and productivity
6. Infusion of a greater measure of equality in local institutions

To realize these objectives, the government took the following steps:

1.Abolition of intermediaries
2.Tenancy reforms:-
(a) regulation of rent (b) security of tenure (c) conferment of ownership rights for tenants
3.Reorganisation of agriculture:-
(a) redistribution of land (b) consolidation of holdings and (c ) co-operative farming

Progress of Land Reforms

1.Abolition of the Zamindari System
The Zamindari system manifested absentee landlordism at its worst and was largely
responsible for the continuously deteriorating condition of tenant farmers. This system led to
the exploitation and moral degradation of the tiller. Immediately after independence, a strong
voice was raised against these vested interests in land. As a result, a high priority was given
to the abolition of the Zamindari system. Accordingly, by 1952, necessary legislation had
been enacted in all the states. As a result of the abolition of intermediaries more than 2 crore
cultivators have been brought under direct relationship with the state. A considerable area of
cultivable wastelands and private forests belonging to the intermediaries have been vested in
the state. This has facilitated the distribution of 57.7 lakh hectares to landless agriculturists.
2.Tenancy Reforms
Tenants can be classified into (a) occupancy tenants, (b) tenants at will, and (c) subtenants.
The rights of the tenancy of the occupancy tenants are permanent and heritable. Hence, the
occupancy tenants do not face the fear of eviction so long as they pay rent on time. But the
position of tenants-at-will and sub-tenant is very precarious; since such tenants depend on the
mercy of land lords. Hence, special laws had to be enacted and implemented to protect these
tenants. These laws relate to (i) regulation of rent (ii) security of tenure and (iii) conferment
of ownership rights on tenants.
(i) Regulation of rent : During the pre-independence period, rents were fixed either by
custom or were the result of market forces of demand and supply. The rate of rent prevalent
were one-half of the produce which were considered excessive by any standard of social
justice. Consequently, the first and second plans recommended that rents should not exceed
one-fourth or one-fifth of the gross produce. Accordingly, various states have passed
necessary legislation in this regard, but there were variations in the rates of rent fixed in
different states.
(ii) Security of tenure: Legislations have been passed in most of the states to protect tenants
from ejectment and grant them permanent rights in the land. The purpose of these legislations
is to ensure that (a) ejectment are lawful (b) land resumed by an owner is only for personal
cultivation, and (c) the tenant is assured of a prescribed minimum area in case of resumption.
Due to the enactment of tenancy legislation, Indian tenants have acquired security in only 9
percent of total cultivated area of the country
(iii) Conferment of ownership rights: Legislative provisions have been made in many
states for conferment of ownership rights on tenants or allowing cultivating tenants to acquire
ownership rights on payment of compensation. It has been estimated that as a result of laws
conferring ownership rights on tenants in various states, approximately 12.42 million tenants
have acquired ownership rights over 6.32 million hectares of land.

3. Reorganisation of Agriculture:
It includes (i) ceiling on agricultural holdings (ii) consolidation of holdings and (iii) Co-
operative farming
(i) Ceiling on Agricultural Holdings:
By ceiling on land holdings, we mean the fixing of the maximum size of holdings that
an individual cultivator or a household may possess. The basic aim of ceiling is to
accomplish the elimination of excess ownership of land. In this system, the land
over and above the permissible limit for personal cultivation would be taken over
by the state. The surplus land is distributed among the landless labourers and small
and marginal farmers.
(ii) Consolidation of Holdings:
Consolidation of fragmented agricultural land has been an integral part of the land
reform policy. By consolidation of holdings, we mean bringing together into one
compact block scattered fragments of land of a cultivator. Initially the programme of
consolidation was started on a voluntary basis but was later made compulsory.
Recognizing the importance of consolidation, legislations have been passed in most
of the states to prevent sub division and fragmentation of land. However ,progress
under the programme has been very slow. As on March 31,2002 consolidation of
holdings had taken place only in an area of 66.10 million hectares against a total
cultivable area of 142 million hectares. In fact ,only 15 states have passed laws of
consolidation.
(iii) Co-operative Farming :
Co-operative farming has been one of the major objectives of the land reforms
programme in India. By developing Co-operative farming the small holdings will be
pooled and cultivated jointly to increase the size of the operational unit. Four kinds of
Co-operative farming were identified by the Co-operative Planning Committee. These
are (i) Co-operative collective farming, in which members have to give up their land
forever but are paid wages and gain a share in the surplus produces. (ii) Co-operative
tenant farming ,in which land owned by a society is divided into holdings and then
distributed among them. Each farmer has to pay a rent for his portion of land. However,
the produce of his holdings is entirely his own. (iii) Co-operative better farming where
farmer get together to perform agricultural activities with improved methods but on
their own separate lands; and (iv) Co-operative joint farming where in small farmers
pool their lands together for better cultivation without giving up the ownership of their
lands. Co-operative farming in India has not been a success.

Impact of Land Reforms

India’s achievement in the field of land reforms have been praiseworthy which may be
described as follows:
The abolition of exploitative agrarian relation- marked by intermediary tenures-was
the first and foremost task of the country after independence. This task has been
accomplished in an appreciable manner. Zamindari and all intermediaries were completely
abolished by the end of the First plan. It has been estimated in all about 173 million acres of
land were acquired from the intermediaries. As a result, about two crore tenants were
brought into direct relationship with the government.
As regards tenancy reforms , nearly 124.22 lakh tenants got their rights protected
over an area of 156.30 lakhs acres by September 2000. The total quantum of land declared
surplus in the entire country in 73.49 lakh acres in September 2000, out of which about 64.84
lakh acres were taken possession of and 52.99 lakh acres distributed to 55.10 lakh
beneficiaries. About 147.47 lakh acres of public waste land have been distributed among the
poor so far. Further ,a total of 39.19 lakh acres of land was acquired under Bhoodan land.
As far as a consolidation of fragmented agricultural land holdings in concerned, an
area of 1633.47 lakh acres has been consolidated all over the country so far. As regards
updating and maintenance of land records, the computerization of land records scheme is
being implemented in 554 districts of the country. Co-operative farming has failed to serve
the end.

Evaluation :
An evaluation of the implementation of land reforms brings out that land reforms in
India achieved only a partial success. Whereas legislation succeeded in the matter of abolition
of intermediaries, other objective of land reforms namely tenancy reforms and ceilings on
landholdings were only partially realized. The partial success of land reforms is attributable
to the fact that the reform measures were generally promulgated by ruling elites composed of
the upper echelons of agrarian society.
The distribution of land has remained much skewed despite the enactment of
legislation for land reforms. The Indian rural scene is characterized by extreme inequality in
land and asset distribution. The latest data brings out that the concentration ratios of both the
ownership and the operational holdings continue to be very high. It was the failure of land
reforms which made the government easily attracted towards the new policy of the Green
Revolution in the coming times—land reforms had failed to increase agricultural production,
thus the government opted for the route of increasing, productivity to reach the same goal,
i.e., initiation of new techniques of agriculture.
Green revolution
Green Revolution or alternatively known as the New Agricultural Strategy was introduced in
the Third Five Year Plan, i.e., during the 1960s. It is characterized by the introduction of new
techniques of agriculture which was centered around the use of the High Yielding Variety
(HYV) of seeds developed by the US agro- scientist Norman Borlaug doing research on a
British Rockefeller Foundation Scholarship in Mexico. The new wheat seeds which he
developed claimed to increase its productivity by more than 200 %.

Components of Green Revolution

1. High Yielding Variety (HYV) Seeds: These seeds were popularly called the dwarf variety
of seeds. With the help of repeated mutations, Mr. Borlaug had been able to develop a seed
which was raised in its nature of nutrients supplied to the different parts of the wheat plant—
against the leaves, stem and in favour of the grain. This made the plant dwarf and the grain
heavier— resulting in high yield. These seeds were non-photosynthetic, hence non-dependent
on sun rays for targeted yields.
2. The Chemical Fertilizers: The seeds were to increase productivity provided they got
sufficient level of nutrients from the land. The level of nutrients they required could not be
supplied with the traditional composts because they have low concentration of nutrients
content and required bigger area while sowing—it meant it will be shared by more than one
seed. That is why high concentration fertilisers were required, which could be given to the
targeted seed only— the only option was the chemical fertilisers—urea (N), phosphate (P)
and potash (K).
3. Irrigation: For controlled growth of crops and adequate dilution of fertilizers, a controlled
means of water supply was required. It made two important compulsions—firstly, the area of
such crops should be at least free of flooding and secondly, artificial water supply should be
developed.
4. Chemical Pesticides and Germicides: As the new seeds were new and non-acclimatized
to local pests, germs and diseases than the established indigenous varieties, use of pesticides
and germicides became compulsory for result- oriented and secured yields.
5. Chemical Herbicides and Weedicides: To prevent costlier inputs of fertilisers not being
consumed by the herbs and the weeds in the farmlands, herbicides and weedicides were used
while sowing the HYV seeds.
6. Credit, Storage, Marketing/Distribution: For farmers to be capable of using the new and
the costlier inputs of the Green Revolution, availability of easy and cheaper credit was a
must. As farmlands suitable for this new kind of farming was region-specific (as it was only
Haryana, Punjab and western Uttar Pradesh in India) storage of the harvested crops was to be
done in the region itself till they were distributed throughout the country. Again, the countries
which went for the Green Revolution were food-deficient and needed the new yield to be
distributed throughout the country and a proper chain of marketing, distribution and transport
connectivity was necessary. All these peripheral infrastructures were developed by the
countries going for the Green Revolution with softer loans coming from the World Bank—
India being the biggest beneficiary.

Impact
(a) Favourable Impact
1. Increase in Agricultural Production: The direct impact of green revolution is the rapid
increase in agricultural production. The foodgrain production increased from 50.8 million
tonnes in 1950-51 to 230.8 million tonnes in 2007-08.
2. Increase in profitability of farmers: The condition of farmers who were having low
income prior to green revolution due to poor per hectare yield improved a lot. The compound
growth rate in productivity of all crops was 1.21% during 1949-50 to 1964-65. It increased to
2.4 % during 1967-68 to 2007-08 period.
3. Change in Attitude: Another healthy contribution is the change in the attitude of the
peasants in those areas where modern technology was brought into practice. Increase in
agricultural production has enhanced the status of farmers from a low level subsistence
activity to the commercial activity.
4. Burden on Foreign Exchange Reduced: The country had to import large quantities of
food to feed the ever increasing population. Thus a heavy bill of imported food had to be paid
year after year. Now, instead, the nation has started generating surplus for export.
5.Impact on Employment: It has been correctly recognised that modern agricultural
techniques are just one step ahead of labour-intensive techniques. But it is expected that it
leads to increase in employment opportunities as new agricultural strategy is characterized by
the frequent application of water, therefore, associated industries have created quite a large
volume of transportation, marketing and food processing. As a result, it has helped to
generate additional employment opportunities both in agricultural and non- agricultural
sectors.
6. Shift from traditional Agriculture: A revolutionary impact of green revolution is that it
has broken away from the old and outdated traditional practices and paved the way for using
the latest and modern technology to raise productivity.
7. Significant Change in Cropping Pattern: The green revolution agricultural strategy has
helped to a greater extent to make significant changes in cropping pattern. In the pre-green
revolution period, we have hardly two main crops (wheat and maize). But new strategy has
ushered the new trend and new cropping pattern emerged in the country. Now farmers are
keenly interested to grow oilseeds, pulses, cereals and other commercial crops.

(b) Unfavorable Impacts

The green revolution/new agricultural strategy has changed the fate of rural areas by raising
production and generating more farm income. But it has also unfavorable impact in rural
sector. This very impact is explained in detail below
1. Ecological Problems: By increasing production, natural resources have been over
exploited due to which problems like fall in water table, poor soil health, increasing pest
resistance, fall in bio-diversity etc. have become serious.
2. Personal and regional Inequalities: Technological changes in agriculture have not only
promoted inequalities but it has also widened the existing gulf between rich and poor in the
rural sector of the economy. It also promoted inequalities among different regions of the
country. Only few regions were made available the irrigation facilities and other new
facilities.
3. Limited Coverage: The spread of green revolution was restricted to few crops like paddy,
rice.
4. New Technology not readily available: The new technology/green revolution requires the
knowledge of its application and most of the farmers were uneducated and illiterate. It is,
thus, not possible to adopt latest technology without expert guidance and training.
5. Expensive in cost: The adoption of new technology is a costly affair and the Indian
farmers were not in a position to buy expensive inputs like fertilizers, pumping sets, tractors,
etc.
6. Displacement of labour: The green revolution also led to displacement of labour. The
new mechanical innovation and appliances introduced eventually replaced human labour.
CAPITAL FORMATION
Capital formation is the process of building up the capital stock of a country through
investing in productive plants and equipment. Capital formation, in other words, involves the
increasing of capital assets by efficient utilization of the available and human resources of the
country.
Gross Capital Formation and Public Investment
The gross capital formation in agriculture stood at Rs.1034 crores in 1950-51,
constituting 22.14 per cent of the gross domestic capital formation. During the first decade,
the gross capital formation in agriculture increased at the rate of 5.19 per cent per annum. By
1970-71, the gross capital formation reached Rs.7379 crores, the percent share in the gross
capital formation being 15.63, During the same period, the public and private sectors
respectively, contributed 28.51 and 71.49 per cent. In the next decade , there were substantial
improvements in the gross capital formation in agriculture. Between 1980-81 and 1985-86,
the gross addition of capital formation in the agriculture sector was Rs.2404 crores, the per
cent contribution from public and private sector being 37.54 and 62.46 respectively. In 1985
gross capital formation in agriculture contributed just 8.43 per cent to the gross domestic
capital formation. The gross capital formation in agriculture and allied sectors as a proportion
of total GDP stood at 2.66 per cent in 2004-05 and improved to 3.34 per cent in 2008-09.
Another notable change during the period was the significant cut in the public sector
contribution and improvement in the private sector share.

*The key difference between current price and constant price is that GCF at current price is
the GCF unadjusted for the effects of inflation and is at current market prices whereas GCF at
constant price is the GCF adjusted for the effects of inflation.

Agricultural Credit
Agricultural production depends on factors like the availability of land, quality of
seeds, irrigation facilities, the application of fertilizers and timely availability of credit, and a
host of other factors. Credit is a critical input for revitalizing agriculture. Over the years,
India adopted a multi-agency approach for providing agricultural credit. The major agencies
which provided agricultural credit are the co-operatives, the RRBs (Regional Rural Banks)
and the commercial banks. These agencies provide short term, medium term or long term
credit.

Types of Agricultural Credit:

Short term credit is normally given for a period of 15 months, exclusively for purchasing
seeds, manures, fertilizers, labour charges and similar quick needs of the farmers. Short term
credit is repaid immediately after the harvest. Medium term loans are provided for purposes
like sinking of wells, purchase of bullocks, pumping plants and to make improvements in
implements. The period of medium term loan is from 15 months to 5 years. Loans repayable
over a long period of time, normally above 5 years are included in the long term credit.

Sources of Agriculture Credit

The sources of credit can be divided into institutional and non-institutional . The main
non institutional sources are the money lenders , relatives ,friends, land lord ,etc. Institutional
sources include- cooperative banks, regional rural banks, farmers service societies, NABARD
etc. Intuitional loans are generally for productive purposes and carry much lower interest rate.
A. Non Institutional sources of credit
Money lenders are the oldest source of agricultural credit. Over the years, the influence of
money lenders has declined sharply in the farm credit scenario of India, still they play a
significant role. They are popular even today because they have only limited formalities;
they give loans at any time of the year for any agricultural purpose and are easily
approachable . According to AIDIS(All India Debt and Investment Survey) report, non-
institutional sources were dominant in 1951, accounting for 90 per cent of the outstanding
debt of cultivator households, but their share declined sharply to 37 per cent in 1981. After
1981, the rate of decline slowed down, and the share of non-institutional sources was 35 per
cent in 1991. Thereafter a reversal of this pattern resulted in higher share of 39 per cent in
2002 which again dropped to 36 per cent in 2013. As per NAFIS(NABARD All India Rural
Financial Inclusion Survey) Report 2016-17, the share of non-institutional credit in 2015 was
28 per cent.
B. Institutional sources of credit
Institutional sources of credit to agriculture has expanded at a very rapid rate after
Independence. share of institutional credit in agriculture increased from 10.2 per cent in 1951
to 63 per cent in 1981 and thereafter the share of institutional credit was hovering in the range
of 63-65 per cent during 1981 to 2013. As per NAFIS, in 2015 the share of institutional credit
was approximately 72 per cent.
The chart below shows the distribution of agricultural households according to type of

Sources of loans. NAFIS Report 2016-17

According to NAFIS, institutional sources were preferred by agricultural households to avail

credit as approximately 61 per cent of them avail credit from them. However, a significant
portion, i.e. approximately 30 per cent of agricultural households still avail credit from non-
institutional sources only which is a cause of concern. There is a need to ascertain the reasons
why 30 per cent are still left out from getting institutional credit. The probable reasons could
be that their credit demand could be for consumption purposes or they could be tenant
farmers, sharecroppers and landless labourers who are not able to offer collateral security to
avail institutional credit, or they are involved in unviable subsistence agriculture or banks
don’t find them credit worthy. As a result, these farmers find it convenient to borrow money
from non-institutional sources due to easy accessibility.
Institutional sources of credit can be classified in the following and explained:
(i) Co -operative credit societies :
There are two separate wings of the co-operative credit structure in India; one
provides short term and medium term loans; whereas the second provide long term
loan. The former has three tier structure with 31 state co –operative banks at the
apex, 371 central co-operative banks at the district level and 94,942 primary
agricultural credit societies at the village level .Long term credit is provided by 20
state co-operative Agricultural and Rural Development Banks and 697 primary co-operative
Agricultural and Rural Development Banks. It is seen that the co-operative credit stood Rs
4403 crores in 1991-92, which improved to Rs 10,047 crores in 1993-94. In the later years,
the co-operative credit gradually improved and reached Rs.48,258 crores in 2007-08. It is
also noted that the share of the co-operative stood at 39.03 percent in 1991-92 but only 20 per
cent in 2008-09. Short term co-operative credit constituted 62.18 per cent of the total short
term credit in 1991-92, and 46 percent in 2003-04. In the case of the medium and long-term
credit, it is also seen that the shares of the co-operatives were zero in 1991-92
and 12.90 per cent in 2006-07. Agriculture and Rural Development Bank gives only
meager amount for the long term agricultural development. It shows that the role of
co-operative credit in augmenting investment in agriculture is very limited.
(ii)Commercial Banks:
The second institution providing credit to agriculture is the commercial banks.
One of the objectives of bank nationalization was to provide the maximum credit to the
farming operations throughout the country. The commercial bank credit constituted
20.89 per cent in 1990-91 and reached about 68 per cent in 2008-09. Compared to the
long term credit, the short term credit constituted a major part of commercial bank
credit for agriculture.
(iii) Regional Rural Banks (RRBs)
The Regional Rural Banks were set up in 1975. The main objective of the RRB’s was to
take banking to the door steps of the rural masses, particularly in areas without banking
facilities. In 1991-92, RRBs disbursed just Rs.336 crores to agriculture, that too as short term
credit. This subsequently increased and reached Rs. 26,724 crores in 2008-09. In 2008-09 the
share of the short term credit remained at 60 per cent.
(iv) National Bank for Agricultural and Rural Development(NABARD):
The NABARD was set up on July 12,1982. It has taken over the functions of the
agricultural credit department of RBI and the Agricultural Refinance and Development
Corporation (ARDC). NABARD is now the apex bank for rural credit. The amount of loan
sanctioned by NABARD increased from Rs. 16,867 crores in 2004-05 to Rs. 35,243 crores in
2006-07.

Other Programmes
(a)Kisan Credit Card Scheme: This scheme aims at providing adequate and timely credit
support from the banking system to farmers for their cultivation needs in a flexible, hassle
free and cost effective manner has been operationalised. The farmers may use the cards for
the purchase of agricultural inputs such as seeds, fertilizers, pesticides etc. and also draw cash
for their production needs. Credit limits are fixed on the basis of size of operational land
holding, cropping pattern, scale of finance, etc. In the year 2008-09, 85.93 lakh cards were
issued and the credit disbursed amounted to RS.53,085 crore. As per 2019 data, there were
total 66.2 million operative KCC accounts (Source: RBI and NABARD).
(b)Self Help Groups-Bank Linkage: This programme was initiated in 1992 with a view to
improving the flow of credit to the resource poor section of the society. The main objective of
the SHG-Bank linkage programme is to provide thrift-linked credit support to the members of
SHGs. This enables the rural poor to have access to the formal banking system and get loan
in a reasonably short time and at a low cost. By December 2005-06, 18.29 lakh SHGs have
been financed by banks with credit of over Rs.8,319 crores. Over 90per cent of the SHGs are
exclusive women groups. This programme has emerged as the largest and fastest growing
micro finance programme in the country.

PRICING AND PROCUREMENT

Food Security and Agricultural policy in India
The problem of insufficient food has been one of the major problems of India both before and
after Independence. With the adoption of new agricultural strategy, the intensity of food
problem in India has declined, however, as Indian agriculture is continuing its dependence
upon weather conditions, the production of food grains fluctuates abruptly with the variation
of weather conditions. Thus, even in recent years, the country had to import foodgrains
although in a lesser quantity.
Agricultural price policy is one of the important instruments in achieving food security by
improving production, employment and incomes of the farmers. There is a need to provide
remunerative prices for farmers in order to maintain food security and increase the incomes
of farmers and plays an important role in achieving growth particularly in agricultural sector.

Need of Agricultural Price Policy:

Movement of price is a common feature. But rapid and violent movement or fluctuations in
the prices of agricultural commodities have serious consequences on the economy of the
country. As the sudden steep fall in the price of a particular crop, result in huge loss to the
farmers producing that crop as their income declines. This will force the farmers not to
cultivate the crop next year, leading to a serious shortage in the supply of that food item and
that may force the government to import that food crop from foreign countries. Alternatively,
a sudden hike in the price of a particular crop may cause huge suffering to the consumers
which may force the consumers to discard it or to curtail their other expenditure substantially
for meeting the consumption expenditure on that crop. In both ways, the large scale
fluctuation in the price of agricultural produce will create a disastrous effect on the economy
of the country.
Objectives
The major underlying objective of the Indian government’s price policy is to protect both
producers and consumers and achieve food security at both the national and household levels.
The following objectives are given:
1) To protect or insure the producer through guaranteed minimum support price, which as a
stabilization measure reduces the variability in product prices and therefore price risk of the
farmers. The impact of the risk reduction is expected to induce farmers to undertake large
investments and to adopt improved production technology.
(2) To induce the desired outputs of different crops according to growth targets.
(3) To induce an increase in aggregate agricultural output through large input use and
adoption of high yielding seed, fertilizer and water responsive technology.
(4) To induce farmers to part with a large proportion of foodgrains production as a marketed
surplus.
(5) To protect the consumer against the excessive rise in prices, especially to protect the low
income consumers in periods when supplies lag behind demand and market prices rise
continuously.

Features of Agricultural Price Policy in India:

Following are some of the important features of agricultural price policy followed by the
Government of India since independence:
(i) Setting up Institutions:
The Government of India has set up some institutions for the implementation of agricultural
price policy in the country. Accordingly, the Agricultural Price Commission was set up in
1965 which announced the minimum support prices and procurement prices for the
agricultural products. In 1985, the name of this institution was changed into Agricultural Cost
and Prices Commission.
(ii) Minimum Support Price:
The government fixes the minimum support prices of agricultural products like wheat, rice,
maize, cotton, sugarcane, pulses etc., regularly for safeguarding the interest of farmers. The
FCI also make their purchases of food grains at the procurement prices so as to maintain a
rational price of foodgrains in the interest of farmers. Accordingly, minimum support price of
foodgrains fixed by the government increased from Rs 388.26 per quintal in 2003-04 to Rs
429.22 in 2007-08 and then to Rs 829.94 (at average) in 2012-13.
(iii) Protecting the Consumers:
In order to safeguard the interest of the consumers, the agricultural price policy has made
provision for buffer stock of foodgrains for its distribution among the consumers through
public distribution system.
(iv) Fixation of Maximum Prices:
In order to have a control over the prices of essential commodities the government usually
determines the maximum price of agricultural products so as to protect the general people
from exorbitant rise in prices.

Effects of Agricultural policy

Important effects of Agricultural Price Policy are as follows:
(i) Incentive to Increase Production:
Agricultural price policy has been providing necessary incentive to the farmers for raising
their agricultural output through modernisation of the sector. The minimum support price
should be determined effectively by the government which will safeguard the interest of the
farmers.
(ii) Increase in the Level of Income of Farmers:
The agricultural price policy has provided necessary benefit to the farmers by providing
necessary encouragement and incentives to raise their output and also by supporting its
prices. All these have resulted in an increase in the level of income of farmers as well as their
living standards.
(iii) Change in Cropping Pattern:
The agricultural price policy has resulted in a considerable change in cropping pattern of
Indian agriculture. The production of wheat and rice has increased considerably through the
adoption of modern techniques by getting necessary support from the Governments. But the
production of pulses and oilseeds could not achieve any considerable change in the absence
of such price support.
(iv) Benefit to Consumers:
The policy has also resulted in considerable benefit to the consumers by supplying the
essential agricultural commodities at reasonable price regularly.
(v) Benefit to Industries:
The agricultural price policy has also benefitted the agro industries of the country, like sugar,
cotton textile, vegetable oil etc. By stabilising the prices of agricultural commodities, the
policy has made provision for adequate quantity of raw materials for the agro industries of
the country at reasonable prices.
(vi) Price Stability:
The agricultural price policy has stabilized the prices of agricultural products to a large
extent. It has become successful to contain the undue fluctuation of prices of agricultural
products. This has created a favourable impact on both the consumers and producers of the
country.

Major Instruments of Price Policy

Government adopted the system of procurement of food grains. Under the system,
government procures foodgrains from market every year. For this purpose, procurement
prices or minimum support prices are announced by government every year for all the
important foodgrains and all the government purchases are made at these prices. It helps in
protecting farmers against the malpractices of traders and commission agents
The following points highlight the four major instruments of price policy. The instruments
are: 1. Minimum Support Prices 2. Procurement Prices 3. Public Distribution System 4.
Buffer Stock.
1. Minimum Support Prices:
The minimum support price is the foremost instrument in the nature of a long-term guarantee
to producers. These prices are generally announced well in advance of the sowing season.
Once the minimum price for a product is announced, it implies that the Government is
committed to purchase, by all means at the announced level of support price. By changing the
relative rate of return on different crops, support prices may also help to give a boost to some
crops at the expense of others. The theoretical basis for the guaranteed minimum price policy
has several elements such as price stabilization, improvement of agricultural terms of trade
and provision of insurance to the agricultural producer.
2. Procurement Prices:
Price policy also aims at to stabilize prices on the part of the consumers especially in the case
of food grains. In a situation of shortage, saleable supplies of food grains in the free market
would generally be available at very high prices. Under such circumstances, the poor people
of the community would be put to extreme hardship. Therefore, in view to achieve the
objective of stabilizing prices on the part of the consumers, the government, may adopt the
system of public distribution. It can be in the form of rationing, fair price shops. It is of
importance to note that public distribution system cannot operate unless necessary stocks are
acquired by it. The best way to attain the stocks would be through the open market. But
during the period of scarcity, it would only be possible if the government, offers higher price
than the market price. In view of this, the government adopts the procurement policy, under
which producers are required to sell to the government a part of their produce.
3. Public Distribution System:
Public distribution is another major instrument of price policy. The most important
component of the food security system is public distribution of foodgrains through a network
of fair price shops. The basic objective of the public distribution system is to protect the
interest of the vulnerable sections of population against high prices. It operates through a
network of fair price shops. With a network of more than 4.47 lakh fair price shops,
distributing consumption items worth more than Rs 30000 crore annually, to about 16 crore
families, the PDS in India is the largest distribution network of its kind in the world.
4. Buffer Stock
Buffer stocks refer to the buying and selling out stock with sole purpose of moderating the
price fluctuations. Buffer stocks serve as shock absorbers in the economy and provide a
defense mechanism against widely fluctuating price levels.
Under this policy, the government builds stocks of food, agricultural goods and other
essential commodities either through direct purchase from the domestic market or through
imports from outside and release these stocks for sale in the domestic market when prices are
going up. Thus, the government, through supplementing the market supply prevents any
sharp rise in prices which would have occurred if these supplies were not released from the
stocks built up by it. On the contrary, if due to good harvest, there is excess supply in the
market, the prices would fall which leads to a decline in the farmer’s income. In such a
situation, the government, enters the market and makes direct purchases, thereby prevent a
fall in prices. Therefore, buffer stock operations aim at eliminating unduly low prices
consequent to bumper crops.

Additional note on PDS

PDS broad features are as follows :
1. Selected essential commodities are distributed through the fair price shops and
cooperatives.
2. The Govt. maintains a buffer stock and replenishes the same through the system of
procurement .
3. Prices charged are lower than the market prices .
4. Free market mechanism co- exists with the public distribution system .
5. It has been basically an urban – oriented system.

Objectives
The important objectives of the system are:-
1. To improve the distribution of basic goods e.g. rice, wheat, edible oil, sugar, kerosene, etc.
2. To control prices of essential commodities
3. To meet consumption needs of masses
4. To maintain good quality at low cost
5. To bring stability in prices
6. To weave production and marketing system into a unified whole.
Problems:
The main problems of public distribution system are as under:
(i) Restricted Scope: It is restricted in its scope in terms of the range and quantities of
different commodities supplied through the system.
(ii) Urban Biased: The PDS is largely urban- biased. In the 60s and early 70s, public
distribution was probably urban biased, but in the 80s a distinct change appeared to have
taken place. A recent study analysed the public distribution data collected by the NSSO for
the year 1986-87 and found that the criticism that the PDS was urban-biased was no longer
correct.
(iii) Limited Coverage: As against its declared objective, the system has largely benefited the
well to do sections of the society with majority of the rural poor still out of its reach due to
lack of economic and physical access. The poorest in the cities and migrants are left out for
they do not generally possess ration cards.
(iv) Inadequate Infrastructure: The system has been faced with serious operational problems
like inadequate procurement and storage facilities, finance, administrative capability etc.
(v) High cost: The cost of operating the system has been very high.
(vi) Malpractices: The operations of fair price shops and cooperatives have led to serious
malpractices, like issuing ration against bogus cards, charging higher prices for controlled
commodities, delay in lifting of stocks etc.
(vii) Increase in Price: The operations of the PDS in fact result in an all- round price rise.
This is because by procuring large quantities of food grains every year the government
actually reduces the net quantities available in the open market.

Evaluation:
Public distribution system is being seen more as an anti-poverty programme with the
onset of the Structural Adjustment Programme. In January 1992 the Govt. introduced a
scheme of revamped PDS in 1700 blocks located in most difficult areas of the country .
Food grains are allocated to these blocks at Rs 50 per quintal lower than normal issue
price .The other programmes under which food grains are distributed are National Food
for Work Programme, Antyodya Anna Yojana, Midday Meals Scheme, etc. Public
distribution system has been widely criticized for its failure to serve the population below the
poverty lines, its urban bias, limited coverage in the states with high concentration of the
rural poor and lack of transparent and accountable arrangements for delivery. In order to meet
some of these objectives, in June 1997, the Govt. of India launched the Targeted Public
Distribution System (TPDS) with focus on the poor.
Targeted Public Distribution System (TDPS)
Under the Targeted Public Distribution System (TDPS), foodgrains are distributed to the BPL
Families at highly subsidized rate. States are required to formulate and implement foolproof
arrangements for identification of the poor for delivery of food grains and for its distribution
in a transparent and accountable manner at the fair price shop level .
Under the TPDS, the prices for the below poverty line families were 50 percent of the
economic cost of the FCI (Food Corporation of India) but the amount was only 10 kg per
family per month. APL (Above Poverty Line) families are also eligible for 10 kg per family
per month but at a higher price. Later the Govt. of India increased allocation to BPL families
from 10kg to 20 kg of foodgrains per family per month at 50 percent of the economic cost
with effect from April 1 2004. The introduction of the TPDS combined with large scale anti-
poverty programmes has, no doubt, tended to benefit the poor in India but it has also resulted
in large increases in food subsidy from Rs 7500 crore in 1997-98 to Rs 25,800 crore by 2004-
05. TPDS suffers from several other deficiencies such as urban bias in coverage, diversion of
grains to the open market etc.

TRADE
The agricultural sector is witnessing a shift from traditional farming to horticulture and to
livestock (poultry, dairy and fishery) production. The demand for fresh and processed
products of all types is increasing as the population urbanizes, incomes rise, and consumption
habits change. The growth of an efficient cold chain network from “farm to fork” will help
curb the current spoilage rate of agricultural output while helping producers capture value as
products retain quality and give benefit to consumers.
Imports of consumer-oriented foods, led by tree nuts and fresh fruits, are among the fastest
growing segments of imported agricultural products and reached $4.7 billion in 2019, down
from $5.3 billion in 2018. The market for imported foods has grown steadily due to the rise
of millennials, affluent professionals, brand-oriented importers, modern retail outlets, e-
commerce retailers, and trend-setting restaurants.
Imported nuts and fruits feed into India’s traditional retail channels, with an estimated 90
percent of imported fresh fruit sold in roadside stands and open markets. Imported packaged
and consumer ready foods are found in a small number of gourmet grocery stores, in the
imported foods sections of larger store formats, and in thousands of small neighborhood
stores. While opportunities for imported food in the Hotel, Restaurant & Institutional (HRI)
and food processing sectors are improving, the India market remains relatively small due to
high tariffs, ongoing import restrictions, and strong competition from the domestic industry.
India’s food and grocery (F&G) retail business is estimated at $500 billion.
Over the years, India has developed export competitiveness in certain specialized products,
making it the world’s 14th largest agricultural, fishery, and forestry product exporter. In
2019, India accrued an $8.25 billion trade surplus of agricultural, fishery, and forestry goods.
Leading exports consisted of Basmati rice, carabeef/meat of bovine animals, frozen shrimp
and prawns, cotton, and refined sugar.

Agricultural Marketing
Agricultural marketing system is an efficient way by which the farmers can dispose their
surplus produce at a fair and reasonable price. Improvement in the condition of farmers
and their agriculture depends to a large extent on the elaborate arrangements of
agricultural marketing.
The term agricultural marketing includes all those activities which are mostly related to the
procurement, grading, storing, transporting and selling of the agricultural produce. Thus
Prof. Faruque has rightly observed: "Agricultural marketing comprises all operations
involved in the movement of farm produce from the producer to the ultimate consumer.
Thus, agricultural marketing includes the operations like collecting, grading, processing,
preserving, transportation and financing."

Present State of Agricultural Marketing in India

In India four different systems of agricultural marketing are prevalent:
1. Sale in Villages:
The first method open to the farmers in India is to sell away their surplus produce to the
village moneylenders and traders at a very low price. The moneylender and traders may
buy independently or work as an agent of a bigger merchant of the nearly mandi. In India
more than 50 per cent of the agricultural produce are sold in these village markets in the
absence of organized markets.
2. Sale in Markets:
The second method of disposing surplus of the Indian farmers is to sell their produce in
the weekly village markets popularly known as 'hat' or in annual fairs.
3. Sale in Mandis:
The third form of agricultural marketing in India is to sell the surplus produce though
mandis located in various small and large towns. There are nearly 1700 mandis which
are spread all over the country. As these mandis are located in a distant place, thus the
farmers will have to carry their produce to the mandi and sell those produce to the
wholesalers with the help of brokers or 'dalals'. These wholesalers of mahajans again sell
those farm produce to the mills and factories and to the retailers who in turn sell
these goods to the consumers directly in the retail markets.
4. Co-operative Marketing:
The fourth form of marketing is the co-operative marketing where marketing societies are
formed by farmers to sell the output collectively to take the advantage of collective
bargaining for obtaining a better price.

Defects of Agricultural Marketing in India:

Following are some of the main defects of the agricultural marketing in India:
1. Lack of Storage Facility:
There is no proper storage or warehousing facilities for farmers in the villages where they
can store their agriculture produce. Every year 15 to 30 per cent of the agricultural
produce are damaged either by rats or rains due to the absence of proper storage
facilities. Thus, the farmers are forced to sell their surplus produce just after harvests at a
very low and un-remunerative price.
2. Distress Sale:
Most of the Indian farmers are very poor and thus have no capacity to wait for better
price of his produce in the absence of proper credit facilities. Farmers often have to go
for even distress sale of their output to the village moneylenders-cum-traders at a very
poor pace.
3. Lack of Transportation:
In the absence of proper road transportation facilities in the rural areas, Indian farmers
cannot reach nearby mandis to sell their produce at a fair price. Thus, they prefer to sell
their produce at the village markets itself.
4. Unfavourable Mandis:
The condition of the mandis are also not at all favourable to the farmers. In the mandis, the
farmers have to wait for disposing their produce for which there is no storage facilities. Thus,
the farmers will have to take help of the middleman or dalal who take away a major share of
the profit, and finalizes the deal either in his favour or in favour of wholesalers.
5. Intermediaries: A large number of intermediaries exist between the cultivator and the
consumer. All these middlemen and dalals claim a good amount of margin and thus reduce
the returns of the cultivators.
6. Unregulated Markets: There are huge number of unregulated markets which adopt
various malpractices. Prevalence of false weights and measures and lack of grading and
standardization of products in village markets in India are always going against the interest of
ignorant, small and poor farmers.
7. Lack of Market Intelligence: There is absence of market intelligence or information
system in India. Indian farmers are not aware of the ruling prices of their produce prevailing
in big markets. Thus, they have to accept any un-remunerative price for their produce as
offered by traders or middlemen.
8. Lack of Organisation:
There is lack of collective organisation on the part of Indian farmers. A very small amount
of marketable surplus is being brought to the markets by a huge number of small farmers
leading to a high transportation cost. Accordingly, the Royal Commission on Agriculture
has rightly observed, "So long as the farmer does not learn the system of marketing
himself or in cooperation with others, he can never bargain better with the buyers of his
produce who are very shrewd and well informed."
9. Lack of Grading:
Indian farmers do not give importance to grading of their produce. They hesitate to
separate the qualitatively good crops from bad crops. Therefore, they fail to fetch a good
price of their quality product.
10. Lack of Institutional Finance:
In the absence of adequate institutional finance, Indian farmers have to come under the
clutches of traders and moneylenders for taking loan. After harvest they have to sell their
produce to those moneylenders at unfavourable terms.
11. Unfavourable Conditions:
Farmers are marketing their product under advice circumstances. A huge number of
small and marginal farmers are forced by the rich farmers, traders and moneylenders to
fall into their trap to go for distress sale of their produce by involving them into a vicious
circle of indebtedness. All these worsen the income distribution pattern of the village
economy of the country.

Remedial Measures for Improvement of Agricultural Marketing:

Improvement of the agricultural marketing in India is utmost need of the hour.
The following are some of the measures to be followed for improving the existing
system of agricultural marketing in the country:
(i) Establishment of regulated markets.
(ii) Establishment of co-operative marketing societies.
(iii) Extension and construction of additional storage and warehousing facilities for
agricultural produce of the farmers.
(iv) Expansion of market yards and other allied facilities for the new and existing markets.
(v) Provision is made for extending adequate amount of credit facilities to the farmers.
(vi) Timely supply of marketing information's to the farmers.
(vii) Improvement and extension of road and transportation facilities for connecting the
villages with mandis.
(viii) Provision for standardisation and grading of the produce for ensuring good quality to
the consumers and better prices for the farmers.
(ix) Formulating suitable agricultural price policy by the Government.
National Agriculture Market
The Department of Agriculture & Cooperation formulated a Central Sector Scheme for the
promotion of National Agriculture Market through  Agri-Tech Infrastructure Fund (ATIF)
 through the provision of the common e-platform.
Implications / Benefits of various stakeholders:
Farmers
They can sell produce without the interference of any brokers or middlemen thereby making
competitive returns out of their investment.
Traders
Traders will be able to do secondary trading from one APMC to another one anywhere in
India. Local traders can get access to larger national market for secondary trading.
Buyers, Processors & Exporters
Buyers like large retailers, processors, or exporters will be able to source commodities from
any mandis in India thereby reducing the inter-mediation cost. Their physical presence and
dependence on intermediaries will not be needed.
Consumers
NAM will increase the number of traders and the competition among them increases. This
translates into stable prices and availability to the consumers.