Organized Marketing of Agricultural Commodities in India

Topics: Marketing, Agriculture, Marketing research Pages: 11 (3672 words) Published: February 13, 2013
In India, the organised marketing of agricultural commodities has been promoted through a network of regulated markets. Most state governments and UT administrations have enacted legislations to provide for the regulation of agricultural produce markets. While by the end of 1950, there were 286 regulated markets in the country, their number as on 31 March 2006 stood at 7566. In addition, India has 21780 rural periodical markets, about 15 per cent of which function under the ambit of regulation. The advent of regulated markets has helped in mitigating the market handicaps of producers/sellers at the wholesale assembling level. But the rural periodic markets in general, and the tribal markets in particular, remained out of its developmental ambit. 11.2 Present Constraints in the System: The purpose of state regulation of agricultural markets was to protect farmers from the exploitation of intermediaries and traders and also to ensure better prices and timely payment for their produce. Over a period of time, these markets have, however, acquired the status of restrictive and monopolistic markets, providing no help in direct and free marketing, organised retailing and smooth raw material supplies to agro-industries. Exporters, processors and retail chain operators cannot procure directly from the farmers as the produce is required to be channelised through regulated markets and licensed traders. There is, in the process, an enormous increase in the cost of marketing and farmers end up getting a low price for their produce. Monopolistic practices and modalities of the state-controlled markets have prevented private investment in the sector. Post-harvest losses are estimated to be of the order of 5-7 per cent in food grains and 25-30 per cent in the case of fruits and vegetables. 11.3 Need for Reforms: The agriculture sector needs well-functioning markets to drive growth, employment and economic prosperity in rural areas of India. In order to provide dynamism and efficiency into the marketing system, large investments are required for the development of post-harvest and cold-chain infrastructure nearer to the farmers’ field. A major portion of this investment is expected from the private sector, for which an appropriate regulatory and policy environment is necessary. Also, enabling policies need to be put in place to encourage the procurement of agricultural commodities directly from farmers’ fields and to establish effective linkage between the farm production and the retail chain and food processing industries. Accordingly, the state governments were requested to suitably amend their respective APMC Acts for deregulation of the marketing system in India, to promote investment in marketing infrastructure, thereby motivating the corporate sector to undertake direct marketing and to facilitate a national integrated market. 11.4 The Department of Agriculture and Cooperation also formulated a model law on agricultural marketing for guidance and adoption by the state governments. The model legislation provides for the establishment of private markets/yards, direct purchase centres, consumer/farmers’ markets for direct sale and promotion of Public-Private Partnership (PPP) in the management and development of agricultural markets in India. Provision has also been made in the Act for constitution of State Agricultural Produce

Marketing Standards Bureau for the promotion of grading, standardisation and quality certification of agricultural produce. This would facilitate pledge financing, direct purchasing, forward/future trading and exports. Several state governments have initiated steps for amending their respective APMC Acts. A table indicating the state-wise status of reforms in APMC Acts as on 31 December 2006 is given below: Sl No. Stage of Reforms 1.

States/ UTs


States/ UTs where APMC Acts have Madhya Pradesh, Himachal Pradesh, Punjab, been suitably amended. Sikkim, Nagaland, Andhra Pradesh,...
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