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Agriculture Marketing
Agriculture Marketing
Agriculture Marketing
many Globalization & WTO global agreements modernization & technology regulated markets minimum support price reforms in agriculture marketing --PDS --co-operative marketing ---E-choupal ---contract farming
meaning
Agriculture marketing is the study of all activities,
agencies and policies involved in the procurement of farm inputs by the farmers and the movement of agriculture products from the farms to the consumers.
Objectives :-
Allocate resources
Leads to development & progress of agriculture sector Increase in overall productivity of the economy
& consumption but also in accelerating the pace of economic development: 70% of population depends on agriculture. Nearly 35% of the output of food grains & all cash crops are
marketed. Agriculture supplies raw materials to various industries . Any increase in the efficiency of the marketing process & reduction in the cost of mkt is direct benefit to the nation. It will stimulate the growth of number of agro-based industries mainly in the field of processing. Will lead to stabilization of price level, benefiting society
and contributes about 29% of GDP of the country. In advanced nations like the US, agriculture accounts for a mere 2% of GDP, and employs 4% of the total labour force. The position is similar in other advanced countries. For example, agriculture contributed 2% of GDP in France with 6% share in labour force; in Germany the contribution of agriculture to GDP was 1% with 3% share in labour force. The corresponding figures for UK were 2% and 3% (World Bank 2000). Agriculture also provides the foodgrains to feed the large population of the country. Agriculture contributes a sizeable share in Indias exports. Besides, it provides fodder for the large cattle population. Being the largest source of employment and income to millions of people, it provides a vast market for our industrial products.
marketing problems
Fundamentally there are 3 entities involved in the
marketing system with their own respective objectives and conflicting interests The producer Consumers The middlemen
Two major reasons to improve the marketing system Encourage farmers to produce more, by ensuring good
returns Supply of food grains & commodities at reasonable price to the consumers
Lack of organization among producers Forced sales Superfluous middlemen Multiplicity of market charges Malpractices of middlemen Multiplicity of weights & measures Absence of grading & standardization Inadequate storage facility Lack of market information Adulteration Cost of borrowing Underdeveloped infrastructure
Lines of improvement
Establishment of Regulated markets (govt inititiative) Standardization of weights and measures Transportation facilities Warehousing Standardizations of contracts Provision for grading and standardization. Provision of marketing news
PRIVATE INITIATIVE
CONTRACT FARMING E-CHOUPAL ROLE OF MARKETING CO-OPERATIVE
consisting of nominees from state govt, brokers, farmers, local bodies etc Committee formulates the rules and regulations Finance is obtained from govt grants, market fees, rent of go-downs, license fees etc Charges, allowance, fees commission fixed by the committee Disputes settled by the sub- committee
to indulge in mal-practices relating to multiplicity of charges, adulteration, methods of sale etc Improvement in weighing practices by using standardized weights & measures Initiative taken by regulated market committee to improve transportation facilities. Providing for storage facilities in regulated markets Regulated market legislations play an active role in implementing standardization of contract Market committees initiative to bring about an improvement in the market information system
Contract farming
Contract farming is defined as a system for the production
and supply of agricultural or horticultural products under forward contracts between producers/suppliers and buyers. The essence of such an arrangement is the commitment of the cultivator to provide an agricultural commodity of a certain type, at a time and a price, and in the quantity required by a known and committed buyer, typically a large company. According to the contract, the farmer is required to plant the contractors crop on his land, and to harvest and deliver to the contractor a certain amount of produce, based upon anticipated yield and contracted acreage. This could be at a pre-agreed price, but need not always be so. The typical contract is one in which the contractor supplies all the material inputs and technical advice required for cultivation, while the farmer supplies land and labour.
began with the entry of Pepsi Foods Ltd (PepsiCo) in 1989 by installing a tomato processing plant in Hoshiapur, Punjab. PepsiCo followed a method whereby the cultivator plants the companys crops on his land, and the company provides selected inputs like seeds/saplings, agricultural practices, and regular inspection of the crop and advisory services on crop management. Subsequently PepsiCo and other companies have used similar methods for the cultivation of food grains (Basmati rice), spices (chillies) and oilseeds (groundnut) as well, apart from other vegetable crops such as potato. Until recently, this model of contract farming was considered a success in terms of diversifying cultivation in Punjab and improving the incomes of farmers.
business arrangement between private companies & farmers, which facilitates letting out of farmland owned by farmers co-operative to the company it strikes a contract with, the company makes investment & buying & selling price are worked out mutually, the ownership of the land remains with the farmers
The Maharashtra govt has invited top retailers
including Wal-mart, Reliance fresh, Big Bazar, ITC s choupal, Pepsi-co farm fresh, Birla groups Trivani. The State govt needs to formalize these arrangements by roping them in contract farming
Low Margins
Low Investment
Low Productivity
development A transformational initiative is to : Create markets before Serving them * Create Collaboration to provide quality information and extension services to build capacity to manage * Create Competition both supply side and demand side
To Make available reliable and cost effective inputs To Connect with markets national & international
* Eliminate wasteful and parasitic intermediation Thus, capture larger share of growing consumer spend for the farmer
E-choupal
Is an IT enabled business model which aims at
For its agri business it has formed Kiosks, the programme includes 3 major activities Dissemination of latest information to farmers & ITC They serve as a e-procurement system for ITC & in the process help farmers to earn higher price for produce --it has created 3 platforms which provide direct access to farmers for selling produce & procuring inputs 1) www.soya choupal.com 2) www.planternet.com 3) www.aquachoupal.com
3) E- choupal has began using its network of choupals & warehouses for a two way trading process, which also takes products & services to the farmers, apart from agri-inputs it also sells FMCG products & services such as insurance through the choupals How does it function? ITC procures the farm produce through the network of choupals Which are managed by village based entrepreneurs known as Sanchalaks 50 sanchalaks are managed by a sanyojak(co-ordinator) who acts as a link between the sanchalak & ITC
(Weather, Prices, Farming Practices etc) In the house of one trained farmer, Sanchalak Within walking distance of target farmers
Warehousing Hub with Internet Access
Managed by the erstwhile middleman, Sanyojak Within tractorable distance of target farmers
Today 4100 Choupals are serving over 2.5 million farmers and villagers across 25000 villages (adding 6 a day)
Dealing with wider variety of crops Pilots in watershed management and livestock management are being scaled up Creating infrastructure for Education and Healthcare services Enhancing Quality of Life in rural India
Maharashtra
Rajasthan Karnataka Andhra Pradesh Choupals Villages Farmers
900
500 100 150 5,150 31,000 3,500,000
22
15 2 3 127
Adding Six New Choupals Every Day Intend Scaling up to 100,000 Villages in 15 States by 2010
Markets
Micro marketing
Product/Services Demos Marketing and Brand Building activities
Pilots
Bhoomi eHealth with Private Health Service Providers eEducation Rural BPO
Agriculture co-operative
Role/objective of agriculture co-operative marketing Structure of co-operative
Impact of co-operative
Institutions in support of co-operative NABARD
NAFED
Principles of co-operatives
There are seven most important principles of co-
operatives which all must adhere to: 1. open membership 2. democratic control 3. limited interest on capital 4. distribution of surplus to the members in proportion to their transaction 5. political & religious neutrality 6. promotion of education 7. co-operation among co-operatives & cash trading
Evolution of co-operatives
Evolution of co-operatives can be noted on 3 lines system Rochdale Raffeisen Schulze
industry, sector or economy as a whole. The government of India have taken initiatives in the cooperative movement and have initiated several institutions to play a crucial role in various sectors where co-operative are organized
Types of co-operatives
Agriculture marketing co-operative Industrial co-operatives Housing co-operatives Labour co-operatives Dairy co-operative Credit co-operatives Institutional assistance to co-operatives in rural sector NABARD NAFED KVIC
Marketing Co-operatives
Definition According to RBI it is a co-operative
association of cultivators formed primarily for the purpose of helping the members to market their produce more profitably than is possible through private trade.
Thus they are an association of cultivators on co-
Collective bargaining
Availing of the facility of standardization & grading Standardization of contracts & higher returns to the
producers Provide better infrastructure facilities Supply of timely inputs at reasonable rates Ensuring of standardization of weights & measures Linking credit, processing & farming Relief from illegal deductions & practices adopted by unscrupulous traders
Impact/ drawbacks
Lack of involvement by farmers Faulty operations & lack of planning
levels of co-operatives Credit & marketing societies compete among themselves instead of working in co-operation Favoritism, corruption, mismanagement by the marketing committee of the societies Insignificant contribution & support from regulated markets due to their size & inefficiency Concentrated on distribution & ignored processing & production.
Cont
Lack of supervision & control Marketing societies suffer from insufficient funds &
capital required for developmental activities Due to lack of expertise & trained personnel they are unable to compete with the traders Societies are not evenly distributed, states like Punjab, Haryana & Maharashtra have more number