RAYAT COLLEGE OF LAW

Project
of
INDIAN ECONOMY
On
The topic
AGRICULTURAL MARKETING
AND PRICES.

SUBMITTED TO SUBMITTED BY:

MS. NITIKA SONI SIMRANJIT KAUR

Assistant professor Class:- BCom.LLB Sem- 3RD

Rayat College of Law Roll No: 19630

Session 2022-23
 ACKNOWLEDGMENT

The dawn of each morning brings wrapped beneath its wings an opportunity to learn
and grow. Every day that I worked on this term paper I learnt so much and working without
proper guidance and expecting success is just making castles in the air. So, whenever one
wants to start any work, one requires guidance from experts.

On the completion of this term paper, I would like to place on record my sincere gratitude
towards all those people who have been instrumental in its making.

Firstly, I would like to thank Assistant Professor MS. NITIKA SONI assigning me with
such an interesting topic to research and for helping me with it. I sincerely thank her for all
the support and encouragement without which the completion of this term paper could not
have been possible.

I also owe sincere gratitude to the staff at library of college for always helping me in the
process of finding material and other sources for research.
And last but not the least; I thank my family and friends for supporting me throughout in my
endeavours.

Name SIMRANJIT KAUR ‘

Roll no 19630

Class BCOMLLB 3RD SEM

INTRODUCTION:

The term agricultural marketing is composed of two words- agriculture and marketing. Agriculture, generally
means growing and/or raising of crops and livestock while marketing encompasses a series of activities involved
in moving the goods from the point of production to point of consumption. Agricultural marketing essentially
involves the buying and selling of agricultural produce.

Agricultural marketing comprises marketing of food grain, commercial crops, plantation crops, horticultural
produce and semi-processed products.

Agricultural Marketing is a process which starts with a decision to produce a saleable farm commodity, and it
involves all the aspects of market structure or system, both functional and institutional, based on technical and
economic considerations, and include pre- and post-harvest operations viz., assembling, grading, storage,
transportation and distribution.

Definitions:

According to Thomsen –

the study of agricultural marketing comprises all the operations, and the agencies conducting them, involved in
the movement of farm produced foods, raw materials and their derivatives, such as textiles, from the farms to
the final consumers, and the effects of such operations on farmers, middlemen and consumers.

According to the National Commission on Agriculture,

Agricultural marketing is a process which starts with a decision to produce a saleable farm commodity, and it
involves all aspects of market structure or system, both functional and institutional, based on technical and
economic considerations and includes pre-harvest and post-harvest operations of –

1. Assembling,
2. Grading,
3. Storage,
4. Transportation, and
5. Distribution.

Agricultural marketing plays an important role not only in stimulating production and consumption, but also in
accelerating the pace of economic development. Its dynamic functions are of primary importance in promoting
economic development. For this reason, it has been described as the most important multiplier of agricultural
development.

An efficient marketing system is essential to maintain and accelerate the pace of increasing production through
technological development, but for success in this programme, the farmers must receive remunerative prices for
their produce. Otherwise, they would not be interested in increasing their production.

Present agricultural marketing system in india :

 Sale in villages:
Farmers in india tend to sell the bulk of their produce in the unorganized rural markets. All india rural
survey committee observes that , on an average, Indian farmers sells nearly 35 per cent of his produce
in the village itself. Agricultural produce is sold in three different ways :
1. In the rural fares/ bazaars
2. Directly to the mahajans or moneylenders
3. To mobile traders of the urban
 By selling in the rural areas, the farmers do not get right price for their produce. It is generally a distressed
sale at low prices. This is because of the following reasons:

1. Output of many farmers is so small that it is not worth while to transport it to the urban organized
markets
2. Means of transport are not affordable for the most of marginal farmers
3. Small farmers are generally indebted to the rural moneylenders who force them to sell their produce for
the repayment of loans
4. Farmers in india generally do not have enough of storage facility
5. Lack of knowledge on the part of marginal farmers regarding organized markets in the urban areas.

 Sale in markets:
Second in importance is the sale in markets of small and large towns. Markets in india are of two types:
1. Unregulated markets
2. Regulated markets

In unregulated markets ,the bulk of the farmers produce is purchased by the commission agents themselves who
also happen to be moneylenders. However, the number of unregulated markets is gradually declining. Most of
the markets are being regulated s as to offer fair price to the farmers under the direct supervision of the market
committee.

 Other markets :
Other methods include
1.sale through cooperative society and
2. government purchase system i.e purchase of agriculture produce by government directly from
farmers
In pursuance of its direct purchase system the government has established food corporation of India
jute corporation cotton corporation of India and various such institute.

Conditions for satisfactory agricultural marketing:

 Freedom from money lenders:

Farmer must be free from the clutches of money lenders who open compell the farmer for distress sale
it require provision of easy finance facility for the small and marginal formers in particular.

 Elimination of middle man:

A fair marketing system pre-supposes the elimination of middleman between the farmer and the final
customer. in India there is a long chain of mental men who appropriate the bulk of profit and the
farmer get very less amount out of the price paid by the final customer.

 Bargaining power and shortage facility:

Bargaining power of the farmer must be improved which at present is very low lying to their limited
holding capacity if there holding capacity is improve the farmer can sell their produce at times when
the price rules high is in the market satisfactory agriculture marketing also required storage facility this
will for the help the holding capacity of the farmers.

 Transport facility:
Cheaper means of transport is another essential requirement for satisfactory agriculture marketing it
enable the farmer to make their produce to the urban organised market well in time at reasonable cost

 Regulated markets :

More and more regulated market should be established so that the farmers are not exploited by the
middleman particular the commission agents these markets weights and measures should be standard
dies.
  Market intelligence:
Arrangement should be made for proper information to the farmers regarding marketing operation,
market rates ,etc. it can be throw radio television local newspaper etc.

Defects:

1. Lack of Organization:

There is lack of organization among producers. Producers are small and scattered. They have no collective
organization of their own to protect their interests.

2. Forced Sales:

The formers are forced to sell their products due to:

i. poverty and prior indebtedness.

ii. Lack of storage facilities.

iii. Time factor, particularly with regard to perishable goods.

3. Existence of Large Number of Middlemen:

There are a large number of intermediaries or middlemen between the producers and the consumers. These
middlemen sell the produce to the consumers at a higher price and give lower returns to the producers.

Approximately 50% of the price paid by the consumer goes to middlemen.

4. Multiplicity of Market Charges:

The producers pay numerous and various marketing charges. They are more than 20% of the income of the
produce. They pay market charges at different levels such as – commission to the dalal, weigh men charges,
brokerage, charges of labourers who help in unloading the cart, etc., apart from the deduction for impurities in
the produce by the wholesaler.

5. Multiplicity of Weights and Measures:

There is lack of standard weights and measures. Weights made of sticks, stones, bits of old iron are commonly
used in the villages and markets.

The multiplicity of weights and measures employed has many defects:

i. It makes supervision very difficult.

ii. It gives opportunity to cheat the producers.

6. Adulteration:

Due to adulteration, the quality of the produce is reduced. Even the good produces are subjected to customary
inclusion of impurities. The adulterants, such as – papaya seeds, are mixed with pepper; chilly powder is mixed
with red brick powder supari with sawdust; ghee with vanaspathi; and tea dust with sawdust. Medicines are also
adulterated.
7. Inadequate Storage Facility:

Storage facility is far below the requirements in rural and urban areas. The loss due to inadequate storage has
been estimated to be 5-15% in weight and quality. Grains lose weights due to the change of weather. Crops like
jowar, pulses and maize are found to be infested with insects even before harvest.

8. Lack of Transport Facility:

There are bad roads which lead to loss during transportation and cause strain to the animals. The freight policy
followed by railways in India is also not satisfactory. Railways do not have the facility for quick and safe
transport of perishable products.

9. Absence of Grading and Standardization:

There is no standard grade for important commodities like rice and wheat in the whole country. The ungraded
mixed qualities are sold at low prices.

10. Lack of Market Information:

Most of the farmers are illiterates and they are ignorant of the accurate prices ruling in the market. They depend
upon inaccurate information.

11. Lack of Financial Facility:

Most of the financial needs of the farmers in India are met by village moneylenders; the moneylenders come
forward, purchase the produce by paying low prices under the loan agreement, and again issue loans for further
cultivation or for their family needs. The loan is advanced on the condition that the produce will be sold to them
or through them.

Government measures to improve agricultural marketing:

The defects of agricultural marketing can be removed by the following measures:

 Establishment of regulated market –

Regulated mark agriculture market have been established in different parts of the country
beginning with one in Hyderabad in 1923 in Punjab these markets were established in 1941 sum of the
important features of this markets are as under a Market committee supervisors the marketing operation
the producer trader and representative of local self government are of members of these committee
traders and brokers are required to obtain licence for their work commission and brokerage and by the
Market committee only waits and measure are used under the strict provision of the committee the
committees this minute information regarding the prevailing prices in the market at the time of
independence this for only 20086 regulated agriculture market in India now number of regulated
market should at 750 566 as on March 31st 2016 site there are 2294 article agriculture market about
15% of the days rural markets are covered under some sort of regulation director of marketing and
inspection supervises the development of approach road to the market for the coordination between the
marketing committee the Government of various States have established state agriculture marketing
boards.

 Cooperative marketing societies:

cooperative marketing societies are proving to be extremely useful in the context of agriculture
marketing the farmers from the society's themselves the society's organised collective sale of the
produce of their member the farmers are thus Fred from the clutches of the middleman these
cooperative society also have their own storage facility these also for credit facility to their members
 are not able progress has been registered by the society in the state of Punjab Haryana up Maharashtra
and Gujarat these average for the second 5 year plan onwards in the year was 600080 primary
cooperative marketing societies 186 Central cooperative marketing society and 19 State cooperative
marketing society National agriculture cooperative marketing federation was established in 1963 this
was with the view to coordinating the activities of various societies as well as to encourage
international trade the society also work for the food corporation in different parts of the country.

 Grading of agriculture produce

Agriculture produce [grading and marketing] act 1937 was passed with the view to improve the
grading of agriculture produce it was amended in 1986 various Agmark centers for open for the
standardisation of agriculture product. on the recommendation of the planning commission in 1952
classification of the agriculture product meant for exports were made compulsory. Central Agmark
Laboratory as well as 16 regional ag mark labs have been established for the standardization of
agricultural product. up to 30 June 2012 nearly 205 products have been classified and standardized.
The graded goods are stamped with the seal of AG mark .

 Metric system of weight and measures:

To ensure uniform weights and measures, the government introduced metric system of weights and
measures in 1958. in 1966 old weight and measure were completely inspector for appointed supervisor
use of metric weights it has prevented exploitation of the farmers in the market to some extent now
government has enacted legal metrology at 2009 to achieve uniformity and transparency in the system
of weighting and measuring.

 Dissemination of marketing information:

The government has arranged for the examination of market information for the benefit of farmers all
India market new service has been established specifically for this purpose the prevalent daily prices in
different market is of the country are broadcasted everyday through all India radio.

 Storage and warehousing facilities –

Increase in storage and warehousing facilities is necessary to remove the defects in agricultural marketing.
Warehousing is the protector of national wealth. For constructing the network of warehouses in the town and
mandis, the
All India Warehousing Corporation has already been set up. In 1988-89,
the Central Warehousing Corporation (CMC) owned and managed nearly
465 warehouses with its total storage capacity of 6.4 million tonnes.
Moreover, State Warehousing Corporations (SWCs) also owned and
managed about 1300 warehouses in 1988-89 with its total storage
capacity of about 8.5 million tonnes. Besides, the Co-operative Societies
have also been provided with necessary financial and technical help to
promote warehousing facilities in the rural areas of the country.

 Improvement in transport facilities –

For proper marketing of agricultural goods, adequate and appropriate transport facilities are very important.

 Provision of marketing information –

The important providers of market information are: private arrangements for traders, newspapers, government
publications, regulated markets, radio and TV and cooperative societies.
  Development of cooperative marketing –

The defects of agricultural marketing are removed by the development of cooperative marketing

 National institute of agricultural marketing:

This institute started functioning in 1988. Its main purpose is development of agricultural markets. It
conducts programme in agri- business management so as to make efficient business managers for
domestic and global agri- business.

Concept of cooperative marketing:

The establishment of co-operative marketing societies was another step which

has been taken to overcome the problems arising out of the present system of marketing
agricultural produce. The objectives of economic development and social justice can be
furthered by channelising agricultural produce through cooperative institutions

A co-operative sales association is a voluntary business organization established

by its member patrons to market farm products collectively for their direct benefit. It is
governed by democratic principles, and savings are apportioned to the members on the
basis of their patronage. The members are the owners, operators and contributors of the
commodities and are the direct beneficiaries of the savings that accrue to the society. No
intermediary stands to profit or loss at the expense of the other members.
Co-operative marketing organizations are associations of producers for the
collective marketing of their produce and for securing for the members the advantages
that result from large-scale business which an individual cultivator cannot secure
because of his small marketable surplus.

Objectives:

The main object of co-operative marketing society is to secure for their members as much as possible for the
products they sell. More specific objectives designed to bring about this result include the following :

(b) Better marketing service.

(a) Lower marketing cost.

c) Improvement in the quality of the products.

(d) Influencing supply and demand in the market.

(e) More accurate grading and classification.

(f) Extension of production credit.

(g) Purchase of farm supplies.

(h) Finally, education in both production and marketing methods which will lead to more specific farm
operation.

Organization of cooperative marketing in india:

prior to 1954, cooperative marketing societies in india confined themselves solely to the activity of marketing
the produce of the member farmers. These were separated from the credit societies. The marketing societies
became multipurpose societies after the All India Rural Credit Survey Report. Presently, following types of
cooperative marketing societies operate in india:

 Primary cooperative marketing societies: these societies operate at the village level. These societies
handle the marketing problems of their members and also take care of their credit needs as well as their
need for seeds, fertilizers and other inputs. There are nearly 6980 such societies in india.
 Central Cooperative Marketing Societies: central cooperative societies are formed as a federation of
a various primary societies of a particular area. These are based both in the rural as well as urban areas.
There are nearly 186 such societies in india.
 State Cooperative Marketing Societies: these are the apex cooperative institutions of the state
concerned. These help the primary societies through the central cooperatives societies. There are 19
such societies in india.
 National Cooperative Marketing Organization : national agricultural cooperative marketing
federation of india ltd. Is the apex cooperative marketing institution . it works at the national level to
coordinate the activities of various state marketing institutions. It works at the national level to
coordinate the activities of various state marketing societies in india, as well as to stimulate domestic
and international trade related to agricultural products.

Advantages of cooperative marketing societies:

 Increases bargaining strength of the farmers: If the farmers join hands and form a cooperative
society, they will be able to increase their bargaining strength because their produce will now be
marketed by single agency.
 Direct dealings with final buyers: It outcast an intermediaries which eliminates the exploiters and
ensures fair prices to both, the producers and the consumers.
 Provision of credit: The marketing cooperative societies provide credit to the farmers to save them
from the necessity of selling their produce immediately after harvesting. This ensures better returns to
the farmers.
 Easier and cheaper transport: This reduces the cost and botheration of transporting produce to the
market.
 Storage facilities: The cooperative marketing societies generally have storage facilities. Thus, the
farmers can wait for better prices; also there is no danger to their crop from rains, rodents and thefts.
 Grading and standardization: This task can be done more easily for a cooperative agency than for an
individual farmer. For this purpose they can seek assistance from the government or can even evolve
their own grading arrangements.
 Market intelligence: The cooperatives can arrange to obtain data on market prices, demand and supply
and other related information from the markets on a regular basis and can plan their activities
accordingly.
 Influencing market prices: While previously the market prices were determined by the intermediaries
and merchants and the helpless farmers were mere spectators forced to accept whatever was offered to
them, the cooperative societies have changed the entire complexion of the game.
 Provision of inputs and consumer goods: The Cooperative marketing societies can easily arrange for
bulk purchase of agricultural inputs like seeds, manures, fertilisers, pesticides, etc., and consumer
goods at relatively lower prices and can then distribute them to the members.
 Processing of agricultural produce:  The Cooperative societies can undertake processing activities
like crushing oil seeds, ginning and pressing of cotton, etc.

Weaknesses of cooperative marketing:

1.Lack of marketing skills

 Most of the groups or cooperatives usually do not have marketing skill. They are managed by someone from
the members of a group who do not have any knowledge on marketing and managing business as such. Groups
or cooperatives will have to use marketing strategy to run their business. Some of the innovative strategies
followed are: fair price shop, branding etc. They should advocate Government to support them in providing
services and finance as a seed capital to start their business.

2. Lack of cooperation

Past experiences have shown that the group approach works only when the member of the group have similar
problems. The most common problems with the farmers are marketing of their produce and receiving all types
of inputs regularly. Farmers are reluctant to share their land or work in a common land for growing agricultural
commodities. Group has worked in the land to grow vegetables and collectively sell in the local market. So, it is
better to work in a group for collectively purchasing inputs such as seeds, fertilizers, pest, etc. so that the cost
will be reduced and also for marketing of their produce. It is evident that the single farmer will not be able to
fulfill the large order placed by the market traders. Farmers can join hands working together by bringing their
produce at the collection centres to sell the traders.

 3.Weak economic status

Most of the cooperative societies are not financially strong enough to deliver vibrant products and services to
ensure their market share. This is a basic challenge before the cooperatives. They should be made financially
self sustained by increasing the members and their contribution as a share capital.

 4.Access to local market

It is very difficult to manage and is costly in marketing of produce far from the cultivation. There aremore
market opportunities if people can identify local market needs of the consumer and farmer can easily make a
profit by selling it

 5.Poor management

Cooperatives are efficiently managed by experienced, trained and professionally qualified staff under the
supervision and control of democratically-elected boards of directors. Organisation should be led and managed
by energetic, professional and dynamic persons. Business should be conducted in accordance with modern
management principles. The managers of cooperative business should be more professional in their market
operations. They should be active enough to trace new marketing opportunities as and when they appear and
make use of them for their further growth. They should make brilliant purchase decisions by studying the
market trends. For example, investing more in fast moving products may increase the returns. Quality should be
the key in cooperatives and steps should be taken to reduce the wastages and cost of goods sold. In short, the
manager / secretary of a cooperative store should deliver his service in a professional way to prove himself
competent and his business successful.

 6.Leadership and understanding

Leadership and understanding between the team members are the success factors. If there is understanding
between the members then it will be easy for visioning and planning of activities.

There will not be any dispute and will be an attitude of helping each other. Leaders should take care of
providing marketing services to their members without his selfishness.

 7.Lack of communication and participation among the members

Interaction between the members and the management committee of cooperative is very less and takes place
when there are only economic activities. This has caused difficulty in understanding their problems and issues.
Experience has shown that success of cooperatives is due to strong relationship and trust with their membership,
which has been built over years through effective marketing support, services support and transparency of the
exchange process.
 8.Absence of common brands

To make cooperative businesses successful there is a need of more common brands which is absent today. For
example, dairy products in India have individual names in each state, and they are well-known as cooperative
products to people of that particular state only. Instead, if we could integrate them under a common brand it will
be more successful and beneficial. It will be recognized as the cooperative product of India not only by Indians
but also by the people abroad. This will reduce the marketing overheads, including promotion costs and will also
result in high reach as a single advertisement serves the purpose.

 9.Poor management of Storage facilities

There is a common understanding that when there is oversupply produce can be stored and marketed later when
price rises. Most agricultural crops are suitable for short-term storage, maybe for few days. Storage is usually
expensive and spoils its freshness and quality. In most situations, when the produce is brought out of the store it
has to compete with freshly arrived produce. Finally, farmer will get less price, and in addition they have to pay
for the storage costs as well. There are few crops suitable for long term storage. Storage in production areas is
often not successful because the storage facilities are under utilized for most of the year and are uneconomic.

 10.Middlemen makes excessive profits

Why farmers do not get the retail market price?

If the retail price of tomatoes is set at Rs.20 and if the same information is made available in the chart, farmers
may not get the same price. There will be variation in the price received by the farmers due to various quality
factors.

Traders are blamed for making more profits. Usually traders are the middlemen, who link the farmer’s produce
with the consumers. Sometimes they also build linkages with the different market far away from the production
area. Many times, they are neglected and tried to sell directly in the market. Actually, the profit margins for the
farmers are more than 60 per cent but due to low quantity of transaction, farmers are not benefited. For
examples, if farmer sells 10 kg of chilli at the rate of Rs. 80 per kg then will get total of Rs. 800. The retail price
of chilli is Rs. 100, which shows that farmers have received 80 per cent margin where as traders margin is only
20 per cent. Traders still make good money taking advantage of selling in volume. If he sells 8 tons, which is
one mini truck load and makes profit of Rs.1,60,000.

Suggestions to improve/ strengthens cooperative marketing:

1] The area of the operations of the societies should be large enough so that they
may have sufficient business and become viable. Most of the societies at present
are not viable because of the small volume of their business.
(ii) Co-operative marketing societies should develop sufficient storage facilities in the
mandi as well as in the villages.
(iii) The societies should give adequate representation to the small and marginal
farmers in their organizational set-up.

(iv) The co-operative feeling among members should be inculcated by proper

education by organizing seminars and by the distribution of literature.

(v) In the selection of the officials of co-operative marketing societies, weightage

should be given to business experience and qualifications. After their selection,
the officials should be given proper training so that they may deal efficiently with
the business of the society. The efficiency should be rewarded, wherever
possible.
(vi) There is a need for bringing about a proper co-ordination between credit and
marketing co-operative societies to facilitate the recovery of loans advanced by
credit societies, and make available sufficient finance for marketing societies.

(vii) The societies should-acquire the transport facility to bring the produce of the
members from the villages to the mandi in time and at a lower cost.

(viii) Co-operative marketing societies should diversify their activities. They should sell
the produce and inputs, and engage in the construction of storage facilities.

Report of Shankar lal guru committee:

Shankar lal guru comittee was appointed by the government of india to offer suggestions for improving the
system of agricultural marketing in india. The committee submitted its report in November 1992, the principles
suggestions of which are as under

 NATIONAL BANK FOR AGRICULTURAL MARKETING be established with branches in all

regulated markets of the country. The bank should offer short time period , medium- term and long –
period loans to all the agencies connected with the agricultural marketing.
 There should be a STATE AGRICULTURAL MARKETING TRIBUNAL in every
 AGRICULTURAL MARKETING DEPARTMENT should be established in every state of the
country.
 CENTRAL ADVISORY COMMITTEE AN AGRICULTURAL MARKETING should be revived.
 Agricultural markets of national importance should e identified and CENTRAL AGRICULTURAL
MARKETING BOARD be established to monitor their growth.

And so on…

AGRICULTURAL MARKETING AND ELEVENTH PLAN:

for improving agricultural marketing following measures were taken in eleventh plan:

 For connecting all villages through all weather roads Pradhan mantri gram sadak Yojana and Bharat
Nirman program were further strengthen to enable the farmer to timely bring their agriculture product
to the market
 construction of cold storage unit were promoted subsidies were provided for construction of old
storage
 dry yards and platforms in front of shops were constructed so that farmer can conveniently dry their
crops
 state government were directed to amend there respective state agriculture marketing act so as so
allow private entities or cooperative sector to set up new agricultural marketing
 marketing information system was strength and so that farmer can be provided information about
current market price of the crops well in time
 grading standardisation and packing packaging of agriculture crops were promoted waiting system for
improved by installing modern work being machine in the market
 all major agriculture market sure interconnected through internet

AGRICULTURAL MARKETING AND TWELFTH PLAN:

 Modernisation of Mandi infrastructure with adequate provision of communication and transportation

 boosting private sector participation in developing new regularised agriculture marketing markets and
warehouse
 modernisation of warehouses under the edges of warehouse regulatory and development authority
  preventing cartelisation by traders and introducing electronic action platform for all the Mondays
where daily transactions are above rs 10 crore
 speeding a reforms in agriculture produce Market committee act in a time pound manner to develop
linkages for agriculture produce and marketing
 for connecting all villages through all weather roads Bharat Nirman program and Pradhan mantri gram
sadak Yojana will be further strength and so as to enable the farmers to bring their crops to the market
for the sale re monitor prices will be assumed to the farmers for their crops.

AGRICULTURAL PRICE POLICY:

The government has developed an Agricultural Price Policy in India for agricultural products to ensure that
farmers receive fair prices to encourage them to spend more on agriculture. The government establishes
minimum support prices for important agricultural products based on the Commission on Agricultural Costs and
Prices (CACP) recommendations.

At the time of independence, the Agricultural Price Policy in India was heavily influenced by the multiplicity of
regulations implemented during WWII. It comprised strict controls on agricultural movement between states,
procurement of food grains through a mandatory charge on growers, market purchases, and quotas in almost all
states.

The Government of India started experimenting with State buying and selling of food grains in April 1959,
following the suggestions of the Food Grains Enquiry Committee of 1957, which called for "domination over
the wholesale trade in food grains," and its successive approval by the National Development Council in Nov
1958.

State commerce was to be limited to two key commodities: wheat and rice. However, the idea ran into problems
since it was implemented haphazardly and without consideration for economic dynamics.

Keeping this in mind, every year the government declares Minimum Support Prices (MSP) for main agricultural
products as part of their Agricultural Price Policy in India. Through the ration shops, the government supplies
food grains to BPL families. These rates are set after conferring with the Agricultural Costs and Prices
Commission.

The Commission of Agricultural Costs and Prices (CACP) while recommending prices takes into account
important factors, such as:

1Cost of production
II. Changes in input prices
III. Input/output Price Parity
IV. Trends in market prices
V. Inter-crop Price Parity
VI. Demand and supply situation
VII. Effect on Industrial Cost Structure
VIII. Effect on the general price level
IX. Effect on the cost of living
X. International market price situation
XI. Parity between prices paid and prices received by farmers (Terms of Trade)

OBJECTIVES OF AGRICULTURAL PRICING POLICY:

 Stabilization of agriculture prices: one of the main aim of the agriculture prize policy is the
stabilization of prices of agriculture product it does not mean that their should be no change in the
 prices of the agricultural product at all it merely means that the changes in price should be with insert
in limits and their should not be to many changes in the prices of agriculture product
 encouragement of farmers to increase production : the prices of agriculture product should be
profitable for farmers so that they are encouraged to use the latest technology to increase their output
minimum sport price of various agriculture should be determined.
 protection of the interest of consumer : the agriculture prize policy also aimed at providing adequate
quantities of agriculture product to customer at reasonable price in this manner the interest of the
customer is also protected.

MAIN FEATURES OF AGRICULTURAL PRICE POLICY:

(i) Raising Capital Formation:

The new policy has undertaken a strategy to raise the rate of capital formation
in agricultural sector as the same is maintaining a decreasing trend from 18.7
per cent of total gross capital formation in 1978- 79 to only 9.5 per cent in
1993-94.
As the invisible resources are being diverted from agriculture to industry and
sectors, the new policy, thus introduces measures to rechnelise available
resources for productive investment in the sector. The policy will focus to
create a better investment climate for the farmers by introducing a favourable
price and trade regime.
(ii) Enhancing Public Investment:
In order to raise the volume of public investment, new agricultural policy will
take steps to create public investment for building supportive infrastructure
for agriculture. Conservation of water and use of alternative and renewable
sources of energy for irrigation and other agricultural works have also been
encouraged. Such enhancement of infrastructural investment will reduce the
regional imbalances and generates more value added exportable surpluses.
(iii) Raising the Flow of Credit:
The policy will make an attempt to enhance the flow of credit to the
agricultural sector. In this connection, the Co-operative credit societies were
engaged for such purpose.
(iv) Improving Agricultural Marketing:
An attempt will be made to improve the marketing arrangement of
agricultural produce through agro- processing, marketing and storage.
(v) Ensuring Remunerative Prices:
The new policy has entrusted the Government to undertake responsibility for
ensuring remunerative prices of agricultural produce to the farming
community by adopting necessary price support policy.
(vi) Raising Agro-Exports:
The new policy has made an attempt for harnessing the comparative natural
advantage in agricultural export of the country. The policy has laid special
thrust on the exports of fruits, vegetables, flowers, poultry and livestock
products so as to raise the share of agricultural exports.
(vii) Land Reforms:
The new policy will make efforts to take land reform measures for the interest
of small and marginal farmers and raise agricultural output.
(viii) Development of Land:

The policy has made an attempt to develop land permanently for cultivation
to meet the growing needs of population. In order to develop rainfed areas of
the country watershed management scheme has been given much importance
so as to bring integrated development of the land.
(ix) Treating Agriculture at Par with Industry:
The steps for creating a positive trade and investment climate for agriculture
and also to treat agriculture at par with industry for the purpose will be taken.
(x) Crop Insurance Scheme:
Considering the problems of crop failure and high risk of instability in
production, the policy stressed for redesigning the crop and livestock
insurance schemes in a comprehensive manner so that the farmers can
recover their losses arising out of natural disasters.

Effects of agriculture policy

 increase in production : as a result of the agriculture prize policy the farmers get appropriate prices
for their produce as a result of this there is incentive for them under take agriculture modernisation they
have started using better seeds chemical fertilizers and modern equipments because they are confident
that prices will not fall even with an increase in production and the minimum price will be determined
by the government keeping the increasing cost in the mind sense of security encourageous the farmer to
try and increase their per hectare output
 change in cropping pattern : the agriculture price policy has also resulted in the change in the
cropping pattern the output of weight rice etc has gone up due to appropriate prices and uses of modern
method of production on the other hand their has been only a small increase in the output of pulses and
oil seeds
 advantage to the farmer: the agricultural price policy has also resulted in considerable benefits to
the farmers the income of the farmers mainly depends upon the quantity of the produce and its price the
agriculture prize policy encourage farmer to increase their produce and they are also able to sell their
produce at suitable prices all these factors have resulted in an increase in the income of the farmers and
has a lift their standard of living
 price stability: as a result of agriculture police price policy the prices have establ ished to large extend
and half neither increased or not decreased too much

SHORT COMINGS OF AGRICULTURAL POLICY:

 Limited coverage : prices of only 25 agriculture commodities are fixed by the

Government agriculture policy has not been extended to other commodities
 less remunerative prices : agriculture prize policy has failed to provide
remunerative prices for agro product prices fixed under minimum sports price policy
where remunerative only in case of weight and rice but in case of other crops like job
cotton jute pulses etc prices have been on remunerative
 fail to achieve price stability: one of the objective of this policy was to achieve the
price ability but it has failed to attend this objective in the year 2014-15 agriculture
price index went up 6.1% and does battery effecting poor sections of the society
 less number of regulated markets : for effective implementation of agriculture
prize policy more regulated markets are required but in India there number is less
 inflationary effect: farmer often demand higher MSP for their crops to please them
government raise MP MSP with lead to inflation in primary products and goods of
daily need it further contributes to overall inflation in the country
 in appropriate criteria for fixing MSP: for determining MSP cost of production is
main criteria while demand factor is totally ignore for example in case of pulses the
cost of production is low so low MSP is fixed by the government it does not induced
the format to grow pulses but in reality the demand for pulses is high so higher and SP
should have been fixed to motive the farmers to grow more pulses and ensure
adequate supply.
CONCLUSION:

The agricultural marketing plays a vital role in easy way agro produce distribution to the
customers. Like all the
marketing activities, it also aims in profit making. It helps the
farmers to reach their customers within very short lead time.
In order to avoid isolation of small-scale farmers from the
benefits of agricultural produce they need to be integrated and
informed with the market knowledge like fluctuations, demand
and supply concepts which are the core of economy