13

CHAPTER- II

REVIEW OF LITERATURE

Introduction

There were many studies carried out by different scholars,

committee on agriculture, and agricultural marketing and so on. The

following are the previous research work carried on agricultural

marketing systems.

J.K. Kirk in his article shows how the marketing of

agricultural products differs from the marketing of consumer goods,

dealing chiefly with marketing in the home-produced sector. He

presents a general survey of the main structural features of leading

UK marketing boards and private enterprise systems of distribution.

Also suggests some future trends in agricultural marketing, which

will take place on entry into the European Economic Community,

effecting sources of supply and absolute and relative prices of most

food commodities1.

Martin Hingley and Adam Lindgreen in their article focuse

on the relationship between marketing approach and marketing o f

agricultural products. The article provides specific insights into and

comparisons between suppliers of two particular agricultural

1 J.K. Kirk, The structure of agricultural marketing in the United Kingdom, European Journal of

Marketing, Vol.2, Issue 1, 1986, pp.37-45.

14

products sectors: in Britain, the fresh produce (fruits and

vegetables) sector and in New Zealand, the wine sector. The ar ticle

examines the nature of marketing relationships from the perspective

of the suppliers in these sectors and their relationships, networks,

and interactions with importers and retail buyers in the food and

beverage industry. The research methodology is qualitative and

inductive in nature and utilises multiple cases. Interpretation is first

through content analysis of each individual case in order to identify

important themes, clusters, and patterns in the research data and

secondly through across-case analysis. Investigated marketing

issues include the following: nature of relationship marketing,

implementation of relationship marketing, and monitoring and

measurement of relationship marketing2.

Aloysius M. Offiongodon examine in his study that the

marketing of cocoa in Nigeria as a pilot study to formulating new

strategies for the marketing of agricultural commodities. Three

interrelated and interdependent approaches have been developed

namely, institutional, functional, and market structure strategies.

These reveal how exchange, physical, and facilitating functions can

be effectively utilised to expedite the distribution of cocoa through

the marketing system. However, methods in use by the cocoa

2 Marting Hingley, Adam Lindgreen, Marketing of agricultural products: case findings, British Food

Journal, Vol. 104, Issue 10, 2002, pp. 806-827.

15

farmers are not efficient due to problems of shortages and the

policies of the Marketing Boards and the commodity boards.

Improved methods of cocoa cult ivation and the removal of

impediments on granting credit facilities are recommended3.

Sue Evan-Wong presents a methodology for marketing an

information service effectively; focuses on the market intelligence

system being developed by the Organization of Eastern Caribbean

States’ agricultural diversification co -ordinating unit (OECS-

ADCU). The methodology developed is based on a strategic

approach to marketing, which involves: analysis of the system’s

environment; segmentation and needs assessment of its client

groups; an information audit of the existing system; analysis of

market and product opportunities; and the development of

recommendations for a tactical marketing programme and its

evaluation so that the system continues to reflect the priorities of

its clients. The marketing strategy developed emphasizes client

input and may be adopted by libraries, information centres, and

systems wishing to develop and market their services4.

Brian W. Ilbery outlines the UK Hops Marketing Board's

marketing arrangements prior to, and since, entry into the European

3 Aloysius M. Offiongodon, Towards Improved Agricultural products Marketing Strategy, European

Journal of Marketing, Vol.22, Issue 6, 1988, pp. 7-20. 4 Sue Evan Wong, Marketing agricultural information services in the Eastern Caribbean, Library

Management, Vol. 17, Issue 3 , 1996, pp. 22-28.

16

Economic Community (EEC) as a case study of changing marketing

techniques in the agricultural sector. Examines the views and

attitudes of hop growers in the West Midlands towards the changing

structures. Concludes that the UK hop grower is unhappy over his

future role, with a considerable resentment of both the EEC and

new marketing practices5.

J.T.J. Lamont reports on a comparative study of the types

and degrees of horizontal and vertical integration within the seed

potato industries of The Netherlands and Northern Ireland. Using an

integration analysis grid, presents descriptive models of the

integrative functions in both industries. Given the superior

marketing performance of the Dutch industry, and the way in which

this is facilitated by its highly integrated organizational structure,

makes a case for the utilization of both horizontal and vertical

integration in improving marketing performance in seed potato

industries6.

In January 1988, the Institute of Trading Standards

Administration published a report, Imitation Dairy Products — The

Identity Problem, highlighting problems facing the dairy industry

and consumers alike, given the profusion of alternative foodstuffs,

5 Brian W. Ilbery, The marketing of hops in Great Britain: A study of changing structures and farmers’

attitude, European Journal of Marketing, Vol.18, Issue 4, 1984, pp.45-55. 6 J.T.J. Lamount, Agricultural Marketing Systems: Horizontal and Vertical Integration I the Seed Potato

Industry, British Food Journal, Vol.94, Issue 8, 1992, p.3.

17

which “mimic” their dairy counterpart. Based on the report the

principal causes for concern are reviewed in some detail7.

The agricultural and fisheries sectors of Spain and Portugal,

the new member states of the European Community, are relatively

more important than those in the rest of the Common Market,

making a greater contribution to production, but needing more in

the way of funds from the Common Agricultural Policy. The

marketing, trade and policy implications of the Iberian Peninsula’s

accession to the EC are examined, and it is seen that the importance

of “Mediterranean” products will increase, and this enlargement is

likely to increase the urgency of reform of the Common

Agricultural Policy8.

Armenia’s 1991 privatization and land redistribution process

handed ownership and control of agricultural production to over

300,000 inexperienced, financially distressed, subsistence farmers

operating extremely small fragmented plots, and the processing

sector to similarly distressed managers. As seen elsewhere across

Eastern Europe, the result was chaotic turmoil characterized by

pervasive delayed payments, massive disinvestment, and rapid

output declines. However, unlike elsewhere, Armenia could not rely

7 David Walker, British Food Journal, Imitation Dairy Products – The identify problem, Vol. 90, Issue 3,

pp.117-119. 8 John Davis, Some food marketing policy implications of European enlargement, European Journal of

Marketing, Vol. 21, Issue 7, 1987, pp.18-27.

18

upon the entry of FDI to correct channel incentives and revitalize

its agricultural and rural financial markets. Instead, an alter native

exogenous stimulus was required. This study analyzes the

instrumental case of how a quasi -public third party, the USDA

Market Assistance Program and Agricultural Production Credit

Clubs, successfully imitated FDI-induced incentive structures

through market linkages, social capital, and microcredit to establish

economically sustainable marketing channels. The findings provide

important insights into the design of market -linked microcredit

programs9.

George Philip, A. MacNabb, WLJ. Martin in their paper

depicted that the second of a two-part report on a British Library

Research and Development funded project, which surveyed the

information needs of, and provision for industry, commerce and

agriculture in Northern Ireland. This article examines information

provision for the agricultural sector while part one was concerned

with the industrial and commercial sectors. The main information

providers to the agricultural sector were identified as the

Department of Agriculture for Northern Ireland, The Ulster Farmers

Union, The Northern Ireland Agricultural Producers Association,

The Milk Marketing Board, The Livestock Marketing Commission

9 Hamish R. Gow, Aleksan Shanoyan, Lilya Abrahamyan Marianan Alesksandryan, Agricultural

production credit clubs in Armenia: facilitating investment through market linkages, social capital and

micro credit, Agricultural Finance Review, Vol. 66, Issue 2, 2006, pp.316-329.

19

and the agricultural education and research establishments. Each of

these providers was interviewed as was a 2% sample of farmers

throughout Northern Ireland. The survey of farmers showed that for

the most part, farmers were satisfied with the present level of

provision. It was noticeable that their information needs were not as

acute as those of the industrial and commercial sectors. This could

be attributed to the fact that most farms in Northern Ireland are

small and there is a heavy reliance on tradition. Most farmers

surveyed were of the impression that the information was available

if needed. It was entirely coincidental that this survey was

conducted at a time when active consideration was being given to

the possible imposition of charges for the Department of

Agriculture Advisory Services. Farmers rated the present advisory

services quite highly, although few were aware of the full range of

services available to them. This survey should be a useful pointer to

existing trends in the use of services and should also indicate gaps

in provision10

.

Adel. I El-Ansary in his article argued that despite the

noticeable gains in agricultural productivity in the last decade,

people are still dying from starvation and malnutrition. While part

of the problem is inadequate food supplies at the national level,

10 George Philip, A. MacNabb, W.J. Martin Alesksandryan, Agricultural information in Northern Ireland,

Vol. 41, Issue 1, 1989, pp.11-22.

20

nutrition problems relate to physical and economic access to food.

The key to improving access to food for the rural and urban poor

consumers in developing countries lies in reforming the food

distribution or marketing system. The objective of this paper is to

define food marketing system parameters, delineate the imperatives

of marketing system reform, and recommend actionable managerial

strategies for their reform11

.

Mark P. Leach, Luiz Mesquita, W. David Downey in their

case study observed that large agricultural producers often demand

seed with high yielding genetics along with specialty traits specific

to their particular needs. Dairyland Seed Company prides itself on

its superior genetics and a research program that adds specialty

traits while retaining the qualities of the original variety. Dairyland

sources specialty trait technology from two competing suppliers –

DuPont and Monsanto. Each of these suppliers is currently pursuing

a strategy of forward integration through aggressive mark eting

programs and acquisitions. The implications for access to future

technologies and long-term survival are profound, and leave

Dairyland and other smaller seed companies with strategic

decisions to make. This paper examines a channel of distribution

for agricultural biotechnologies and the decisions faced by a small,

11 Adel I. EI-Ansary, How better systems could feed the world, International Marketing Review, Vol. 3,

Issue 1, 1986, pp. 39-49.

21

reputable seed company when dealing with its large multinational

biotechnology suppliers12

.

Kari Mikko Vesala, Jusso Peura, Gerard McElwee, in this

research, shows that entrepreneurship is currently at the focus of

much theoretical, practical and political interest. In Europe,

agriculture has faced increasing pressures for restructuring:

facilitation of marketing and entrepreneurial skills of farmers and a

stronger entrepreneurial orientation have been suggested as a

possible solution for the emerging problems. The purpose of this

paper is to examine the concept of entrepreneurial capability of

farmers to diversify. The central focus of this article is on the

entrepreneurial identity of portfolio farmers in Finland and the

extent to which the differences between portfolio farmers, other

farmers, and non-farm rural businesses can be explained. Findings

– It emerges that portfolio farmers have a stronger entrepreneurial

identity than conventional farmers. Compared to conventional

farmers, the portfolio farmers in the sample perceive themselves as

growth-oriented, risk-takers, innovative, optimistic, and having

more personal control upon their business activities.

This research suggests that a major challenge for the agricultural

sector is to enable farmers to develop their entrepreneurial and

12 Mark P. Leach, Luiz Mesquita, W. David Downey, Case study: Partnering strategies in a bio tech.

world: the case Dairyland Seed Company, Vol. 16, Issue 3, 2001, pp.219-238

22

marketing skills. This might require increased economic support

and greater emphasis on vocational education and training13

.

Gerard McElwee, Alistair Anderson, Kari Vesala in their

article explore the strategy of an enterprising farmer. The

background problem is that in Europe, agriculture has faced

dramatic pressures for restructuring, and facilitation of the strategic

skills of farmers and a stronger entrepreneurial orientation have

been suggested as a possible solution for the emerging problems.

Case study is used to show how strategy formation and

implementation may require different skills, competencies and

attitudes, issues of strategy formation and implementation. Whilst

the findings from the case may not be generalisable, our analysis

provides an opportunity to conceptually reflect on the issues. These

issues may have wider implications beyond the research site. The

theoretical and case study analyses reveal that the concept of

entrepreneurial strategy is ambiguous. Yet, if proper care is taken

to distinguish the concept from, and relate it to, the elements in

which it is embedded, the notion is a useful tool for both theory and

empirical investigation. By applying such a procedure, we show

that the contexts of conventional farming and business

diversification call for an understanding about the clearly different

13 Kari Mikko Vesala, Juuso Peura, Gerard McElwee, The split entrepreneurial identity of the farmer,

Journal of small Business and Enterprise Development, Vol 14, Issue 1, 2007, pp. 48-63.

23

entrepreneurial skills and appropriate strategies and strategic

implementation. This research suggests that a major challenge for

the agricultural sector is to enable farmers to develop their

strategic, marketing and entrepreneurial skills. This requires

economic support and greater emphasis on education and training.

It is hoped that this research will assist in this challenge14

.

Gagik Sardaryan depicts that the major uncertainties about

the eventual success of macroeconomic stabilization measures, the

eventual ownership and control of privatized enterprises, the

viability of certain enterprises and sectors can have significant

influence on the market economy of Armenia during the transition

period. In the face of these uncertainties, inadequate transport and

access to markets remain major obstacles to economic development

and employment. After liberalization in 1991, consumer subsidies

were eliminated and consequently food prices rose. Local price

increases combined with the decline in real income and out

migration led to a fall in domestic demand for food products as well

as significant changes in food consumption patterns. Possibly the

chief obstacle to increasing farm income and the most difficult

problem for food processing companies to overcome are the

marketing constraints. There is no appropriate scale marketing and

14 Gerard McElwee, Alistair Anderson, Kari Vesala, The strategic farmer: a cheese producer with cold

feet?, Journal of Business Strategy, Vol. 27, Issue 6, 2006, pp. 65-72.

24

transport infrastructure for small farmers. The lack of market

information system is another problem, resulting in many farmers

producing the same crops, which were previously profitable,

causing a glut. The break-up of collective agriculture in Armenia

resulted in over 300,000 small diversified farms, which grow five

or more crops and have two or more animal species. With limited

export markets, the country lacks adequate markets for much of its

agricultural production, as well as the economies of scale for the

investments in agri-processing and manufacturing industry, which

are necessary to stimulate employment and farm income. Armenia is

in a prime position to take advantage of the organic market

opportunities. If the developed world is going to subsidize organic

food production, Armenia may have competitive advantage with low

cost production and very little use of fertilizers, pesticides and

other restricted materials for the last ten years15

.

Gordon Foxall depicts that the United Kingdom differs from

most of its partners in the European Community in that its farmers

generally prefer non co-operative channels of distribution for their

produce. The proportion of farm produce distributed through co -

operatives is considerably smaller than is generally the case in

Europe. This paper is concerned with the contribution of co-

15 Gagik Sardaryan, Food consumption and market development under the transition in Armenia, British

Food Journal, Vol. 104, Issue 8, 2002, pp. 688-700.

25

operative organisational structure and behaviour to the variations in

co-operative market shares found in European agriculture. It is

argued that there is a clear relationship between organisational

factors and the market position of the co-operative sector in each

country and that this has implications for the encouragement of co -

operative organisation, which is an aim of UK public policy16

.

Alejandro Nin Pratt, Bingxin Yu, and Shenggen Fan aim to

measure and compare agricultural total factor productivity (TFP)

growth in China and India and relates TFP growth in each country

to policy milestones and investment in agricultural research. TFP is

measured using a non-parametric Malmquist index, which allows

the decomposition of TFP growth into its components: efficiency

and technical change. Comparing TFP growth in China and India it

is found that efficiency improvement played a dominant role in

promoting TFP growth in China, while technical change has also

contributed positively. In India, the major source of productivity

improvement came from technical change, as efficiency barely

changed over the last three decades, which explains lower TFP

growth than in China. Agricultural research has significantly

contributed to improve agricultural productivity in both China and

India. Even today, returns to agricultural R&D investments are very

16 Gordon Foxall, Cooperative marketing in European agriculture: Organizational structure an market

performance, International Marketing Review, Vol.1, Issue 3, pp.42-57.

26

high, with benefit/cost ratios ranging from 20.7 to 9.6 in China and

from 29.6 to 14.8 in India. The applied methodology and the

comparison between TFP growth patterns contribute to a better

understanding of the consequences that the different approaches to

agricultural reform followed by China and India had on the

performance of agriculture in both countries17

.

This paper seeks to apply a framework of collaborative

planning, forecasting and replenishment (CPFR) to develop a

procurement model for agricultural products. Considering the

biological nature, seasonality and perishable characteristics of

agricultural raw materials and products, the paper revises the CPFR

reference model. Then, the paper constructs an n -tier CPFR

procurement model by extending a two-echelon supply chain to a

multi-echelon supply chain and incorporating upstream suppliers in

the supply chain. Moreover, the concept of collaborative

transportation management (CTM) is integrated into the n -tier

CPFR procurement model. Finally, a case study is analys ed and the

efficacy of the proposed model is also validated.

The finding suggests that CPFR approach is applied in the

procurement of agricultural products. The case results show that the

service level is increased and inventory variance is reduced. The

17 Alejandro Nin Pratt, Bingxin Yu, Shenggen Fan, The total factor productivity in China and India: new

measures and approaches, China Agricultural Economic Review, Vol. 1, Issue 1, 2009, pp. 9-22.

27

proposed model can thus improve the accuracy of forecasting and

reduce inventory losses. The paper offers a useful insight into

procurement of agricultural products. The proposed model is a

useful development for the agricultural industry in implementing

CPFR in the future18

.

Quiaoqiao Zhang explains in his survey that provision of

document delivery services should be an integral part of the supply

of bibliographic databases. After the implementation of a national

agricultural information project funded by the Asian Development

Bank, which provided Chinese agricultural research and training

institutions with CD-ROM workstations and databases, CAB

International and its Chinese counterpart began to look into the

feasibility of establishing a document delivery service in China.

The paper presents the results of a survey conducted as a part of the

feasibility study and gives a critical overview of China’s document

delivery services provided in the agricultural sector19

.

The agricultural sector is a critical component of the world's

economy and society. Its long-term health depends heavily upon

international transfers driven by comparative advantages. This

18 Xiao Fang Du, Stephen C.H. Leung, Jin Long Zhang, K.K. Lai, Procurement of agricultural products

using the CPFR approach, Supply Chain Management: An International Journal, Vol. 14, Issue 4,

2009, pp.253-258. 19 Quiaoqiao Zhang, Document delivery services in China’s agricultural sector: a survey, Interlending &

document Supply, Vol. 27, Issue 1, 199, pp. 4-12.

28

article's basic theorem is that effective export programmes must be

simultaneously founded on grassroots political support, economic

comparative advantage, and domestic vertical development. The

mechanics for establishing broad-based political support are

addressed first, followed by criteria for targeting to international

markets with the most favourable demand and government

incentives. Finally, the evolutionary aspects of comparative

advantage are discussed in the context of long -term economic and

political support from producers, processors, and related technology

suppliers involved in targeted export strategies20

.

This paper aims to determine the effects of agricultural,

recreational and urban variables on Oklahoma land prices. An

econometric model is estimated using price of agricultural land

parcels as the dependent variable and independent variables

representing agricultural, recreational and urban uses. Recreational

variables include county-level recreational income from

Agricultural Census data as well as deer harvest for each county.

Urban variables are functions of population and income for each

county. The agricultural variables include rainfall as well as crop

returns for cropland and cattle prices for pasture. Agricultural

variables are the most important, followed by urban and then

20 Sandra M. Huszagh, Fredrick W. Huszagh, Understanding Agricultural Exports, International

Marketing Review, Vol. 4, Issue 1, 1987, pp.16-30.

29

recreational variables. Transaction prices are higher than commonly

used land-value survey data. The major recreational variable is deer

harvest, which is more important in small tracts. The value of

pasture is now greater than cropland. Small tract sizes receive

substantial premiums. Agriculture is still an important part of the

Oklahoma economy, so the findings might differ in more densely

populated states. As with most econometric models, there are

possible biases due to errors in measurement or missing explanatory

variables. The paper provides information that could be used by

those wanting to estimate land value or wanting to manage land to

increase its value. The paper differs from previous work in both

variables considered and the data used. Also, most previous work

has not as directly addressed the issue of the relative importance of

agricultural, recreational and urban variables21

.

Brian E. Hill examines some of the peculiarities of

agricultural markets and prices in a pre-EEC context. Argues that,

although long-term price trends can lead to remarkable changes in

prices and consumption without market disruption, short -term price

instability demands concerted action22

.

21 Pamela Guiling, Damona Doye and B. Wade Brorsen, Agricultural, recreational and urban influences

on agricultural land prices, Agricultural Finance Review, Vol. 69, Issue 2, 2009, pp. 196-205. 22 Brian E. Hill, Some aspects of price behaviour in agricultural markets, European Journal of Marketing,

Vol. 13, Issue 4, pp. 153-159.

30

This paper analyses the policies related to the development of

the agricultural and industrial sectors in Malaysia. The objective of

the paper is to determine whether there exist b iases in government

policies pertaining to these two sectors. The paper begins by

providing a brief overview of Malaysian economic development.

This section analyses the policies introduced to develop the two

sectors. The next section contains an analysis of the policies,

government expenditure and employment in the agricultural and

industrial sectors to test the presence of policy biases. The paper

concludes that there are no significant policy biases between these

two sectors23

.

With the collapse of the Soviet Union, the formation of the

European Union, and current economic crises and cos t

considerations in various countries around the world, interest has

been developing in cross-national and cross-cultural marketing

opportunities in the sector of food. Today in the United States the

food industry is of paramount importance, a trend that i s evident in

other nations. Opportunity exists for commercial growth on an

international level by companies large and small. An understanding

of the food marketing systems of different nations and cultures is

necessary for growth and development by these companies.

23 Nor Zakiah ahmad, Mariani Abdul Majid, Mohd Azlan Shah Zaidi, Agricultural and Industrial

Development in Malaysia: Policy Bias?, Vol. 17, Issue 1, 2001, pp. 61-76.

31

Different organizations and scholars have been studying various

aspects of the field of cross-national and cross-cultural food

marketing on a micro level. Analyzing these different studies

evidences a need to conduct further study and to develop more

theory—specifically on cross-national and cross-cultural food

marketing at a macro level24

.

Xiwen Chen depicts in his paper that the start of the twenty -

first century China has stepped into a new stage of harmonious

urban-rural development. Based on the brief review of policy

changes since the new century, the purpose of this paper is to figure

out the comprehensive policy framework, and analyze its

background and reasons. First, this paper offers a brief review of

China's rural reform with focus on the policy framework and

changes since the reform of rural tax and fee system in 2000. Next,

the paper focuses on food security to discuss grain price increase

and China's grain imports, then the current problems facing China's

agricultural and rural development are discussed and

countermeasures provided.

The paper finds that several policies have been implemented

toward the coordination between urban and rural areas and toward

24 Erdner Kaynak, Cross-National Cross-cultural Issues in Food Marketing, International Journal of

Commerce and management, Vol. 11, Issue 3/4, 2001, pp. 158-160.

32

the integration of urban and rural development. However, China's

grain production is still facing big challenges, both from the

increasing demand and the resource constraint. Therefore, food

security should be given priority in future. China's current rural

reform and development is also facing the problems such as slo w

growth of farmer's income, the impacts of migrant rural labourer on

economy and society and the outflow of rural resources.

Originality/value – This paper reviews systematically major

policies of China's agriculture and rural development, and analyzes

the characteristics of and reasons for China's grain price increase.

Meanwhile, the constraint of resources, especially land and water,

is also studied in detail. The paper's analysis can provide important

advice for future policy making25

.

One of the major changes associated with economic

globalization is the increasing importance of intellectual property.

In the area of food production, the procurement of intellectual

property rights over life forms, particularly seeds, by the new life

industry, is radically transforming agricultural produ ction relations.

One major effect of this transformation is the redefinition of

farmers as contract growers by the life industry. This new status of

farmers, which is part of a trend that was set in motion with the

25 Xiwen Chen, Review of China’s agricultural and rural development: policy changes and current issues,

China Agricultural Economic Review, Vol. 1, Issue 2, 2009, pp. 121-135.

33

commodification of food, is making them f ree-lancing quasi-

employees of agricultural businesses, including the life industry26

.

The paper further probes the export behaviour of fresh fruit -and

vegetable-marketing firms in an international context. The case

study investigations comprise examination of Belgium, C hile,

Canada (The Government of Ontario), New Zealand (The New

Zealand Apple and Pear Marketing Board), Turkey, and South

Africa (The Outspan Organization and Unifruco Ltd), identifies

selected firms' export behaviour, export objectives, export stimuli,

and export inhibitors, explains the concept of export success and

delineates profiles of successful exporters. The author concludes

that fresh fruit and vegetables provide scope for future

contributions with reference to general theory of export

marketing27

.

This article presents a conceptual framework for the analysis

of vegetable supply chains in a South East Asian context and the

role wholesale markets play in these chains. Following a review of

the literature on food marketing systems in developing countri es

and preliminary fieldwork in South East Asia, a holistic framework

26 Samuel Abaidoo, Globalization, biotechnologization of agriculture and framers – The quasi-employees

of the new high technology farms, International Journal of Manpower, Vol. 21, Issue 6, 2000, pp. 481-

491. 27 Safak Aksoy, Erdner Kaynak, International Marketing Review, Export behaviour of Fresh produce

marketers: Towards a co-ordination with General Theory of Exporting, Vol. 11, Issue 2, pp.16-32.

34

is proposed, including what are perceived to be the critical factors

in the development of improved fresh food marketing systems:

domestic legal and policy factors, international trade p olicies and

food markets, history, geography, and cultural and social norms.

The particular role of trust and collaboration among stakeholders in

the Ho Chi Minh City vegetable marketing system is highlighted28

.

Davinder Kumar Madaan carried on his studies on “World

Trade Organization (WTO) and Indian Agricultural Development”.

The positive finding of his study was that WTO ensures level

playing filed to Punjab agriculture in the international market by

reducing subsidies and thereby reducing ar tificial lower prices of

some rich countries. However the negative impact of WTO on

Punjab agriculture according to the study was that high domestic

support, export subsidy and denial of market, export subsidy and

denial of market access through various ta riff and non–tariff

barriers in the developed countries have resulted in a fall in global

agricultural commodity prices in the post WTO period.29

An interesting study on “Marketing Operations of Himachal

Pradesh Apples –An Overview” by Jai Singh Parmar , analyses the

28 Jean-Joseph Cadilhon, Andrew P. Fearne, Paule Moustier, Nigel D. Poole, Modelling vegetable

marketing systems in South East Asia: phenomenological insights fro Vietnam, Supply Chain

management: An International Journal : Vol. 8, Issue 5, 2003, pp. 427-441. 29 Davinder Kumar Madaan, WTO and Indian Agricultural Development: A Case study of Punjab,

Indian Economic Journal, Vol.50.S.No: 304, 2002-04, pp. 35-45.

35

production and export of apple. He obtained this secondary data

from Directorate of Horticulture, Himachal Pradesh. He concluded

that though government has taken many steps, still the apple

growers face many problems in marketing their produce due to

increase in marketing costs and other expenses30

.

Joshi Ashok Gulati , carried out a study on “Agricultural

Diversification in South Asia”. To carry out the study, data were

obtained from Food and Agricultural Organization (FA O) statistical

data base and data covering a period 1980-81 to 1999-2000, were

divided into 1980-81, 1989-90 and 1990-91, 99-2000. Hypothesis

was framed as “slowing down the green revolution and gradual

opening up of the economy will lead to greater divers ification of

agriculture in favour of high value commodities”. The major

findings of the study was the share of crop sectors in the

agricultural gross domestic produce marginally declined from 76.25

per cent during 1980 to 73.65 in 199031

.

According to marketing survey in Facts For You (2005), that

the Indian Council of Medical Research has recommended that the

vegetable requirement per person in India should be 280 gms per

30 Jai Singh Parmar “ Marketing operations of Himachal Apples- An overview”, Indian journal of

Marketing, pp. 29-32. 31 PK Joshi Ashok Gulati, ”A study on Agricultural Diversification in South Asia” Economic and

Political Weekly, June 12,2004.pp. 24-56.

36

day. But the per capital availability, of vegetables in the country is

much lower, which is just about 120 gms per day per person32

.

India’s production of vegetables in 2002-03 registered a

growth of 12.56 per cent, and export of fresh vegetables registered

a steady growth of 46.19 per cent over the previous year. The

working group on Agriculture for the 11th

Five Year Plan (2007-

2012) has suggested shifting “agricultu re marketing” from the state

list to concerned list to speed up the reforms and evolved unified

national market33

.

The group headed by former chairman, CACP, Prof. Shabd.

S. Acharya, has recommended redefining agriculture in terms of

production, processing transport, marketing and trade in food feed

and fibre and other agricultural products including livestock and

fisheries”34

.

The State Department of Agriculture and the Karnataka State

Agricultural Marketing Board has roped in the Canada based

Toronto Consulting Group (TCG) to conduct workshop on

management of wholesale agriculture markets. And further Bikram

32 Facts For You ,Mar 2005.p.21 33 Business line ,April 15, 2007. 34 Ibid.

37

Lamba , the CEO of TCG said that it was not enough to be good,

but also had to be competitive. 35

Royal Commission on Agriculture reviewed the agricultural

situations in India in 1920, and it noticed the apparent absence of

information on many vital aspects of marketing leading to

exploitative circumstances disfavouring producing community in

particular36

.

The Domestic and Export Intelligence Cell of the Centre for

Agricultural and Rural Development studies of the university, after

studying situations carefully, has advised farmers to store small

onion till June to get a better price37

.

Tamil Nadu accounted for five per cent of onion area and

contributed to 3.74 per cent of production. Trade sources according

to Tamil Nadu Agricultural University (TNAU) said that 70 per

cent of the total onion area was occupied by small onion production

of onion in Tamil Nadu, in 2006, in an area of 26,220 hectares was

2,67,000 tonnes38

.

Singh has authored a book on ‘Cooperative Marketing in

India and Abroad’ in which cooperative marketing scenario is the

35 Business Line, Feb 13,2002. 36 G.R. Batia, “Agricultural situations”, Sep 1980. pp.5 -10. 37 The Hindu, Feb 13,2007. 38 Ibid

38

central theme of the book. This book covers on analysis of different

problems faced by these cooperative marketing movements. It has

been written in the form of guide, handbook manuals for teachers,

partners, and also professional managers. 39

According to Ministry of Agriculture, the total quantum of

onion exports during the fiscal year 2006-07 stood at 10.23 lakhs

tonnes valued of Rs 870 crore was on 17th

February 2007. In the

last five years. Onion exports have more than doubled in both

quantity and in terms of value40

.

Sundara Varadarajan and Jahanmohan in their study

probed into Marketing Channel of Cashew in Tamil Nadu and

conclude that transportation cost was found to be the major cost

followed by loading and unloading charges41

.

Nazir in his study discusses causes and effects of distress

sale in Tamil Nadu. Distress sale denotes the situation, which a

farmer is forced to sell his produce for a price lower than even cost

of production. The hypothesis “small farmers go for distressed sale

than other farmers” is tested and proved42

.

39 The Hindu Nov 20,2001. 40 The Business Line Mar 20 2007. 41 K.R.Sundaravaradarajan, K.R.Jahanmohan “Marketing cost., Margin, Price Spread and Marketing

Efficiency of Cashews in Tamil Nadu” Agricultural Marketing Vol, XIV, No4, pp. 17-21. 42 M.Nazir ,”Distress sale of a agricultural produce and Role of Marketing agencies in Tamilnadu”,

Indian Journal of Marketing, Vol. 2, Issue 1, pp. 13-19.

39

Sharma and Others (1989) studied pattern of marketable

surplus on tribal farm of Himachal Pradesh and concluded that the

Horticulture remains to be the main occupation. The marketable

surplus in case of horticultural crops is as high as 80 to 90 percent

in the case of apples43

.

Jayarathnam (2002) made a SWOT analysis on farmers

market in Tamil Nadu and concluded that fair price is fixed by the

officers of the agriculture marketing committee and representative

of farmers for the vegetable and fruits everyday. Generally the

price fixed is 20% higher than the whole sale prices and 15% less

than the retailer’s price”44

.

Senam Raju in his case study, has probed, the apprehension

of farmers on working on regulated agricultural market. It was

revealed that farmers do not have good facility of hoarding their

stock in the vicinity of sample market45

.

Sujit Sikidar and Dababrrata Das has articulated the need

for attaining welfare of the people as the final end of economic

growth.46

43 S.K.Sharma , R.K.Sharma and T.V.Moorthy, Competitiveness of India’s Agriculture during WTO

Regime Agricultural Marketing , Sep 1989. pp.18-21. 44.Jayarathnam, Famers market (Uzhavar chandhai) in Tamil Nadu, Indian Journal of Marketing,

Vol. XXXII ,Aug 2002, pp.3-5. 45 M.S. Senam Raju,” Apprehension of farmers working of Regulated Agricultural Market-A Case

Study” Indian Journal of Marketing , Vol. XXI ,Aug 2003, pp.9-13. 46 Sujit Sikidar and Dababrata Das, Globalisation , Poverty and Globalisation, Third Concept, October

2001, p.71.

40

Calkins and Weston (1980) used Economic efficiency index

(E) to evaluate marketing efficiency of two varieties of cotton.47

Cost Marketing of Sum

Margin sAgent' Marketing of Sum1E

Rao J.K., (2001) in his study revealed that the total food

grain production has reached all time high of 202.54 million tonnes

during 1998-99, thanks to the green revolution.48

Sivanappan has made an attempt to study agri -business

development in India. He concluded that India is the third largest

producer of vegetables (27.83 MT) and second largest producer of

vegetables (54MT).49

Sunil Kumar in his study made an attempt to find out the

producers share of consumer rupee of chillies in Andhra Pradesh.

He concluded that the net shares of producers in the consumer rupee

was very low (41.48 per cent) . It was due to the presence of large

number of intermediaries in between producer and consumers. So,

the farmers were not getting good remunerative for their produces50

.

47 Calkins.,Improving Marketing of Perishable Commodities: A Case Study of selected vegetables in

Taiwan”.Technical Bulletin.,Asian Vegetable Research Development Centre,Taiwan,1980,p.16 48 J.K. Rao Sustainable land Management: Concepts and Approaches, Kissan World 28(8):9—10,2001 49 RK Sivanappan” Agri-Business Development in India” Kissan World 27(50 55-57 50 Sunil Kumar Babu G et al., ‘Price spread and marketing of green chillies- A case study in

Andhrapradesh, Agriculture Marketing, Vol. XVVI No:1, Aprial – June-2003, pp.21-26.

41

Food and Agriculture Organization and Association of Food

and Agricultural Marketing Agencies in Asia and Pacific organized

an international seminar from 3rd

to 8th

February 2003. The seminar

observed that timely dissemination of relevant market information

remarked a major problem facing many marketing information

system. Small farmers, in particular would have to depend on the

broadcast media for many years to come. Further the seminar felt

that knowledge recorded and stored on paper or other media needs

to be transformed into information for the benefits of farmers and

other stake holders. Agencies involved in organizing Marketing

Information System should translate price time series and other

marketing information into a usable form for farmers and ensure its

dissemination.

Andrew Shepherd in his paper discussed marketing

information services. He said that Accuracy, Availability and

Analysis are the three “A”s of market information.51

Dhankar (2003) in his work discussed internet based Market

Information System in India AGMARKNET-the application

software facilities for all commodities being transacted in

wholesale market for their use and analysis. Seeing up marketing

51 Andrew W. Shepherd, “Making marketing information services relevant to farmers”, Agricultural

Marketing, Vol. XLV, No.4, Jan-March 2003 pp.4-6.

42

information network covering 810 nodes during 2000 -2001 and

2002 under IX five year plan involved an expenditure of Rs.99.74

million.52

Ajay Verma (2002) in his paper discussed the importance of

market, marketing, and export performance of vegetables in the

world market. He concluded that Indian vegetables have more

export potential than other crops. In 2000-01 the country exported

other fresh vegetables to the tune of Rs.190.84 crores over

Rs.144.14 crores in the preceding year, representing a growth of

32.89 percent53

.

Gadre & Et al (2002) in their study used shepherd’s equation

to calculate marketing efficiency. The shepherd’s equation is,

ME = V / I - 1

Where

ME = Index of Marketing Efficiency

V = Value of Good Sold (Customer’s Price)

I = Total Marketing Profit54

52 Ibid p.4. 53 Ajay Varma, Sudhir Kumar and P.M. Singh, marketing and export of Fresh Vegetables”, Agricultural

Marketing, Vol. XLV, No.3, Oct-Dec.2002, pp.18-21. 54 Gadre AV, Talathi JM and Wadkar SS “ Price spread in marketing of white onion in Rajkot district of

Maharastra”, Agricultural Marketing, Vol. XLI, No.3, Oct-Dec. 2002, pp. 22-26.

43

Wadhavani in his study concluded that the marketing

constraints of vegetables as being the high perishability, cost of the

harvest due to decay, over ripening, mechanical injury, weigh t loss,

trimming and sporting. The spillage also results from the grower’s

lack of knowledge in proper post -harvest handing, improper

grading, and packaging, lack of storage and proper transportation

facilities, contributed to low quality55

.

Banafar in his study used multistage stratified random

sampling to select the block, cluster of villages and respondents of

Soybean growers56

.

Suri (2005) in his study discussed the need for net based

marketing information system for agriculture. He quoted that in

order to improve the present marketing information system.

Ministry of Agriculture has to formulate a central sector scheme for

linking all regulated market spread all over the country.57

Promod Kumar (2003) studied the storage loss and marketing

of onion in Uttar Pradesh. He concluded that three storage patterns

for onion were used by producers is kuccha floor, pacca floor,

55 Wadhwani, “Economics of production, post harvest management and price behaviour of cole crops in

Western U.P.- An Empirical analysis”, Agricultural Marketing, Vol. XXVI, No:1, April-June, 2003,

pp.17-20. 56 Banafar, K.N.S., Gauraha A.K, “Marketing of Soyabeen in Sehore District of Madhya Pradesh”,

Agricultural Marketing, Vol. XLVI, No.1, Apirl-June, 2003,pp. 24-26. 57 Suri P.K.,NICET based Agricultural Marketing information Network(AGMARKNET)-A Farmers

Centric Portal on Agricultural Marketing in India and a step towards Globalising Indian Agriculture,

Agricultural Marketing ,Jan- March -2005 Vol. XLVII NO.4 pp. 2-11.

44

bamboo mats. The marginal farmers used kuccha floor followed by

bamboo mats and pacca floor.58

Lalitha Sudha (2003) in her study made a conclusion that

marketing efficiency was more in channel -I, where no middleman

existed than in channel-II.59

Mohammed Jaffer (2003) made a study on efficiency of

banana in Theni district of Tamil Nadu. He recommended that

cooperate marketing society exclusively for banana trade will

replace the domination of middle men like pre-harvest contractors

in this trade, and introduction of cold storage and transportation

facility will solve the problem of distress sale of banana.60

Bhatia (1990) critically discussed some important issues in

agricultural marketing in India. He also suggested that rural

markets with wholesale and terminal market for regulations

management and development thereof61

.

Lathia Achoth (1985) in this study analysed the cost of

manufacture of tea in the Nilgiris District. The study observed that

58 Promod Kumar & el al “A Study of Storage – losses & Marketing of Onion in district Jaipur of

Eastern Uttar Pradesh, “Agricultural marketing, Vol.No-XVII,NO-4,Jan-March 2003 ,pp.26 59 Lalitha Sudha &el al ,” Price Spread & Marketing of Gingely in Visakapattianam District of Andra

Andra Pradesh “,Agricultural marketing, Vol.No-XVII,NO-4,Jan-March 2003 ,PP.29-31. 60 Mohamed Jaffer “ Market Efficiency of Banana in Theni District , Tamil Nadu”, Agricultural

Marketing, Vol.No-XVII,NO-4,Jan-March 2003 ,P..31. 61 G.R Bhatia and A.K. Bhattacharya, “Marketing of Agricultural produces of Bhuttan”, Agricultural

marketing, Jan-Mar,1990,Vol. pp . 25-26.

45

parking materials, statutory levies, and fuel costs together

constitute more than 50 per cent of the cost of manufacture. He also

suggested that the tax component needs rationalization especially

during years of poor prices62

.

Ram Kumar Singh (1985) in his study examined the selling

behaviour of farmers. He observed that the percentage of

marketable surplus sold quite late at higher price was more and still

more in respect of medium and large farmers, for they had better

storage and retaining capacity because of being economically well

off. But small farmers offered their wheat just after harvest and

fetched the lowest price because of large arrivals at this time63

.

Rajagopal (1985) examined the trade practices of farmers in

his study. He concluded that the price of paddy is low in the month

of November – January. It was high during February. The Benefits

of high rates goes to big size farmers who have facilities and

potentialities to store the produces. He further suggests that in

order to protect the interests of small farmers, the food department

of state government to enter into marketing. He seeks the district

authorities to fix minimum price of various commodities and give

62 G.S. Lathia Achoth, Chandrasekar and PG Chengappa, “An analysis of the cost of manufacture of Tea

in the Nilgiri District “, Agricultural Marketing, Jan- mar 1985, vol. pp. 29-31 63 Ram Kumar Singh , ‘Impact of Farm Prices on firm Economy”, Agricultural Marketing ,Jan-mar,

1985.

46

wide publicity to them among the villagers if necessary and they

should purchase at the price directly from the farmers64

.

Rahman(1988) in his study emphasizes the role of

Government in agricultural marketing. He concluded that an

efficient and viable marketing system can not be realized without

an institution which provides finance, assumes risk, settle disputes

in trade, set weights and measures grades and standards, and help to

disseminate market information65

.

Bhatia (1989) in his study threw light on the role of

agricultural marketing research, surveys, and planning. He

discussed the agriculture marketing research during five year plans.

He concluded that in order to provide effective supporting service

and sustain the tempo of agricultural production programmes higher

outlays in proportion to the magnitude of the multi -dimensional

tasks need to be provided. He suggested for more fund for new

projects, and research and survey programmes to agricultural

marketing66

.

64 Raja Gopal, “Agriculture Marketing in Tribal Areas –A Case Study of Bastar District of Madya

Pradesh”, Agricultural Marketing Oct-Dec 1985, Vol. pp. 65 M.L.Rahman “ Role of Government in Agricultural Marketing in Bangladesh” ,Agricultural

Marketing, Oct-Dec 1988. 66 G.R.Bhatia “Agricultural Marketing Research surveys and Planning in India “, Agricultural Marketing,

July-Sep 1989.

47

Mathur (2005) in his speech contribution, threw light on

export potential of onion in India. He highlighted that onion is one

of the important vegetable crops in India. In terms of area India

ranks first in the world with over 480 thousand hectares accounting

for around 21 percent of the world area planted to onion. He

concluded that in the case of private trade in onions to commissi on

agents, in assembling regulated market and the commission agents

sell the onion to sub wholesales or directly to retailers, who in turn

sell to consumer67

.

The TIFAC report analysed the problems of Nasik onion

formers. It concluded that it was no more affordable to the farmers

to cultivate onions. The wages of farm-hand seem too high with no

proper returns for the crop68

.

Kumar in his contribution analysed market prospects for

upland crops in India. He observed that among the horti cultural

commodities, processed fruits and vegetables accounted for the

largest share of export followed by mesh fruits and vegetables.

Among fresh vegetables, onion, tomato, and mushroom are reported

to have high export competition69

.

67 V.C.Mathur “ Export potential of Onion : A Case Study of India “, Regional Workshop on

Commodity Export Diversification and Poverty Reduction in south and South East Asia, Bankok.3-5

April 2005. 68 Onion Farmers in Western Nazik Committee Suicides”, April 16,2006. 69 Kumar ‘Market Prospects for Upland Crops in India CGPRT Centre, Working Paper Series No.20.

48

Selvaraj and Gandhimathy (2003) in their study made an

attempt to study the constraints of coffee growers; analysed the

production problems and marketing problems. They concluded th at

the major defect in agricultural marketing is the inability of the

majority of the farmers to meet their commitment to pay for their

debt, the grower is forced to sell his produces at any price offered

to him and they concluded that transport, under weighment and lack

of financial facilities etc were the major areas of concern70

.

UNCTAD-LCD Report 2006 contends at the outset that

despite higher rates of economic growth and exports notched up by

many least developed foundries than in the past. The fact remains

that they do not translate efficiency into poverty reduction and

improved well being71

.

Economic Census 2005 revealed that despite all efforts, crop

production and Plantation sector still employ 73 per cent of the

total labour force and of 375 million in the country though it

contributes just about 22 per cent to GDP72

.

According to 1995-96 Agricultural Census, there were 115.58

million farming families or operational holdings in India. Of these

70 A. Selvaraj , P. Gandhimathi,”A Study on Constraints Faced by Coffee Growers in Tamil Nadu”,

Indian Journal of Marketing ,Feb 2003, pp .3-5 71 Business Line July 21,2006. 72 Business Line July 12, 2006.

49

71.18 million were marginal holdings of less than one hectare with

average size of 0.40 hectare. Another 21.64 million constituted

small holding of 1-2 hectare. Only 30 per cent of marginal and

small holding are wholly irrigated73

.

Jaswant in his contribution ‘A Call to Honour - In Service of

Emerging India’ contented that the most powerful anti -poverty

programme of all is a consistency high gross domestic product74

.

Most of the small onions are exported to Sri Lanka. As Sri Lanka

has hiked import duty on onion to Rs.28 per kg from Rs.5 lakhs

importers stopped placing orders75

.

Babu and Jayabal (2005) observe that India is among the top

three world producers of rice, wheat, milk, poultry products, fruits,

vegetables, coconut, tea, spices, maize and freshwater produ cts

including shrimp and fish. The agriculture sector provides 25 per

cent of the GDP and 64 per cent of employment and accounts for 18

per cent of India’s export76

.

The Centre for Monitoring Indian Economy (CMIE) is of the

opinion that the growth in farm output would be three per cent

against the earlier projection of 0.7 per cent fall (for 2005 -06)

73 Business Line July 27, 2006. 74 Ibid. 75 The Hindu Jan 3, 2008. 76 T.D.Balu & G.Jayapal, “The need of value addition in Indian Agriculture”, Facts for You , March

2005, Vol.25 No.6.

50

indicating the dependence of Indian economy on farm sector for its

development77

. Such a vital sector has been neglected for quite a

long period. The major problem faced by agriculturists is

marketing. Marketing of agricultural products is more complicated

as the practice of pricing, the interference of intermediaries, the

channels of distribution, the government policies, storing and

transportation besides financing are all complicated activities and

are strange to the illiterate, ignorant and innocent Indian farmers.

Several measures have been taken in this connection to make them

simpler, right from the British regime down to the Swadesi

governments of the current times.

As per the information available f rom the Ministry of

Planning, the contribution of agriculture to Indian GDP was 22.4

per cent for the years 2001-02 to 2003-04. Further the total

agricultural production is expected to rise by 2.2 per cent against an

anticipated fall of 3.4 per cent for the year 2005-06, as per CMIE

estimation. In short, it may be said that the economic growth as

planned in the 2005-06 budget is mainly depending on agricultural

sector, since the growth in other sectors namely, industries,

manufacturing, construction and service sectors are estimated to be

lesser than the growth in 2004-05 by 9.1 per cent. The food grains

77 Deccan Chronicle , Business Column Dated 13th August 2005.pp. 6

51

as well as non-food grains production are the accelerating force for

economic growth.

The problem of marketing is multi dimensional. Unlike the

industrial producers the agricultural producers are either at the

mercy of the traders or at the mercy of the government to fix the

price for their products. Further more, production in agriculture is

‘a gamble on monsoon.’ The cost of production is ever increasing

and the farmers have only a limited say upon them. Such a pathetic

condition of the Indian farmers fetch them only poor income. If the

marketing conditions are improved and the practices are altered the

farmers may secure command over the market and may b e respected

as producers.

The Indian agricultural marketing scenario is witnessing many

changes and requires still more changes to look better. Though, the

agriculturists have very little control over majority of the marketing

operations, under the present set-up their role may be made

significant by fine-tuning the marketing structure and practices.

Regulated markets, farmers’ markets, the Ryothu Bazaar in Andhra

Predesh, Apna Mandis in Punjab and Haryana and Uzhavur Sandhai

(Farmers’ Markets) in Tamil Nadu are some of the structural

changes brought in the field of agricultural marketing to benefit

farmers and promote them as prestigious producers to have

52

reasonable control over the market. Such changes have helped

elimination of middlemen, healthy marketing practices, conducive

marketing environment, and some amount of say over pricing to the

farmers.

Tamil Nadu is basically an agricultural state and the problems

of farmers elsewhere in India is equally applicable to farmers in

Tamil Nadu. The State Government has to take steps to promote

agricultural marketing and protect the interests of the farmers. As

part of the main stream regulated markets were started in Tamil

Nadu. Their operations have helped to a certain extent in solving

the marketing problems of farmers in Tamil Nadu. Though, Tamil

Nadu is predominantly an agricultural state, the GDP contribution

of agricultural sector to the state was not significant. As per the

Ministry of Planning only 14.5 per cent was the contribution from

agriculture for the year 2001-02 to 2003-0478

.

The three toppers among the states of India in respect of

agriculture contribution to country’s GDP are, Bihar, the highest

contributor, contributing 41.6 per cent and the next two are Punjab

and Uttar Pradesh in order and the least contributors were Delhi and

Chandigarh, each 1.1 per cent. However, the contribution to GDP in

78 Deccan Chronicle, Business Column Dated 13th August 2005.

53

no way could minimize the significance of marketing problem or

even the importance of agriculture since there is no significant

decline in the number of people depending on agriculture.

Mishra (2003) in his article “Marketing Co -operatives in

Agriculture - Gearing up for Emerging Challenges” has described

the features of Indian agricultural marketing system. As per his

observations the establishment of Regulated Markets all over the

country has brought in changes in marketing practices in terms of

sale of the produce in regulated markets instead of vill agers selling

directly or selling to the itinerant traders. The rates payable for

various services have been standardized. The Price Support

Programme for 24 major agricultural crops had reduced the price

risk to the farmers. Co-operative Marketing Societies have been

organized by small and marginal farmers and they enabled the

farmers to get reasonable prices for their products as obtained by

large farmers.

Provision of rest houses, quicker means of transportation and

information about prices are the major attractions to the small and

marginal farmers to whom the above were either not available or

very costly prior to the organization of regulated markets. The

elimination of unauthorized deductions, reduction of market

charges, and discontinuance of under cover and hidden marketing

54

practices had helped farmers to have a clear understanding of the

marketing practices and to actively involve in the marketing

activities.

Anyhow P.K. Mishra is of the view that the farmers’ practice

of rushing for sales immediately after harvest has not been given up

for they have to face the risk of holding stocks where the storage

and pledge-loan facilities were totally absent79

.

Agriculture, a major sector of Indian economy has several

problems. Of all the problems marketing is the most critical one.

Only in agricultural marketing the scope for exploitation and

defrauding the farmers producers are more. As the producer-farmers

are scattered and unorganised the problem takes different

dimensions. Grading, preserving, processing and pricing are

facilitating activities for better marketing of agricultural produce.

In India, agriculture markets and facilities are either missing or

inadequate. Therefore, farmers’ markets were organized to improve

the conditions of Indian agriculture marketing. They will solve to a

certain extent the cold storage and go-down requirements of small

and marginal farmers, especially the vegetable cultivators, as

arrivals and sales are on daily basis. They were started with

79 P. K. Mishra “Marketing Co-operatives in Agriculture - Gearing up for Emerging Challenges”

Kurukshetra, April 2003, Vol.51, No.6.

55

specific purposes, the attainment of which is to be verified, so that

the operation of the markets may be improved and benefits may be

passed on to the farmer-producers and the consumers at larger

proportions.

Gopal Rao in his study ‘Experience in Agricultural Marketing

in India’ states, “It is only now that the developing countries have

increasingly recognized that the agricultural marketing syste m

plays a crucial role in economic development, not only by

physically distributing increased production through incentives but

also distributing the benefits of growth. As a result, many

governments have now tried many approaches to develop the

marketing system, with varying degrees of success.”80

Economic

Development depends not only on production but also in marketing.

Marketing should receive the same priority as production for

attaining prosperity.

Singh in his article “Improving Food Marketing System -Some

Policy Issues” has analysed the maladies prevailing in food

marketing in India and has suggested several measures for

improving this system. According to him “A market mechanism can

be a source of considerable development leverage or can be a

80 H.S. Gopal Rao ‘Experience in Agricultural Marketing in India; A case of Regulated Markets’

Southern Economist, August 01, 2000, p 15.

56

barrier to development. The needed improved performance of food

(Agriculture) marketing system is no more likely to occur witho ut

investment in research education and training than informing and

such programme should receive same priority consideration as

agricultural production.”81

E.Sridhar and A. Shepherd in their work,” Marketing

extension services for small farmers” had indicated that it has been

accepted that the farmers to increase production, adequate attention

needed to be paid to the fact that their increased outpu t must be

marketed at a rewarding price. Commercialisation of the small farm

agricultural sector essentially means the development of market -

oriented production as opposed to the occasional sale of subsistence

surpluses. Success in commercialising this sec tor would depend on

the orientation of production to meet market demand and on the

removal or reduction of a broad range of marketing constraints.

Proper organization of markets for agricultural produce will not

only remove the ills of the agricultural marketing but in a way they

will help farmers motivated towards higher production and

continuance in agriculture. Commercialisation of agricultural and

market oriented production are the prescription of the authors.

Farmers’ market is an attempt in this direc tion namely

81 L. P. Singh “Improving Food Marketing System- Some Policy Issues” Kurukshetra Vol.53 No.6 April

2005.

57

commercialisation as well as market oriented production. Hence the

study is focused to understand how the farmers produce to meet the

market demand.82

Nizamuddin Khan , in his paper “Needing Remunerative

Agricultural Marketing” has highlighted the various ills prevailing

in agricultural marketing. According to him, Agriculture marketing

in India is suffering from different infrastructural, organizational,

and functional intersections; it is inefficient and non -remunerative

to producers, the sellers. Distress sa les, especially in villages, were

the common practice during the glut seasons. Small and marginal

farmers were adversely affected and they were forced to mortgage

their surplus to the commission agents in order to obtain loans at

the time when they were in distress. Inadequate infra structural

facilities like weather roads and storage, farmers of small size,

marketable surplus, non suitable linkage to the regulated and rural

markets from the villages as well as producers. Weak organizations

were the significant factors, which prevent the growers to fair price

from their per unit of marketed surplus in the markets. Proper

organization of markets of agricultural produce will not only

remove the ills of the agricultural marketing but in a way they will

82 Sridhar. E. and Shepherd. A ‘Marketing Extension services for small farmers’, Agricultural Marketing,

Vol. XXX, No.4 March 1988, p.5

58

help farmers motivated towards higher production and continuance

in agriculture.83

Jayarathinam in his article “Farmers Market (Uzhavar

sandhai) in Tamil Nadu- A SWOT analysis” has suggested that the

farmers should be educated on modern methods of farming by the

Department of Agriculture84

. The farmers’ Markets are established

with three objectives of creating awareness, securing remunerative

prices and protecting from the middlemen.

Archana Sood (1990) in his article observed that the arrival

of agricultural commodities in the regulated markets is generally on

the increase with the growing awareness among the farmers where

their crucial role in getting remunerative prices and saving from the

exploitation of the middlemen.85

Kiran Sankar Chakraborty (2001) observes, “in the

agricultural marketing the farmer has been in all cases a price taker.

Therefore, if the farmer’s share in the consumer’s price is

inadequate he will not be encouraged for further production”.86

83 Nizamuddin Khan. ‘Needing remunerative Agricultural Marketing’ Kurukshetra. Vol. XXXIX, No.2

No. 1990, P.8. 84.M.Jeyarathinam, ‘Farmer’s Market (Uzhavar Sandhais) in Tamilnadu – a SWOT Analysis, Indian

Journal of Marketing Aug. 2002, Vol.XXXII No.8 85 Archana Sood, ‘Agricultural Marketing Needs Strengthening’, Kurukshetra. Vol. XXXIX, No.3

December 1990, P.10. 86 Kiran Sankar Chakraborty “Market and Marketing channel of agricultural process on Tripura’

Southern Economist Aug 15, 2001. P.No:12.

59

Mittendrof (1998) in his study “The need for strengthening

the agricultural marketing services” has emphasized the importance

of passing on the benefits of growth to the farmers. He is of the

view that “Governments of developing countries and aid donors had

recognized increasingly that agricultural and food marketing system

played a crucial role in economic and social development not only

by distributing increased production physically but also by

providing production incentives and by distributing the benefits of

growth. Thus, Marketing helps passing on the benefits of growth to

the farmers, which is more important for increasing production. The

efforts of the government and other agencies including farmers in

increasing the production will yield fruits only if such benefit

passed on to the farmers who actually put in the efforts”.87

Vishwanathagupta (1990) in his article ‘Agricultural

Marketing Scenario Today’ subscribes that organized market will

alone ensure fair price to producers as well as consumers. Farmers’

markets operate in the same line. Vishwanathagupta opines that, “if

marketing of agricultural produce is properly organized, it can fetch

a good price to the farmer and he will be inspired to produce more.

The interest of the consumer will also be taken care of side by side.

87 Mittendrof. H.J., ‘Need for Strengthening Agricultural Services’, Indian journal of Marketing, vol.

XXVIII No.5 1998 p.27.

60

An efficient and properly organized marketing should, therefore,

insure fair price to the producer as well as to the consumer88

.

Sunilkumar (2003) in his article “Role of future markets in

stabilisation of agro commodity prices” expressed concern over the

wide price fluctuations in the commodity markets and the absence

of market based risk instruments and the plight of farmers towards

less risky cultivation which perpetuates the growth of Indian

agriculture89

.

Patil (2001) in his article, ‘Urban demand for consumable

primary agricultural products (fruits and vegetables) for Mumbai

Metropolitan Regional population’, have estimated the demand for

vegetables and fruits by 2025, as 6.82 lakhs tonnes and 2.32 lakhs

tonnes respectively. They felt that for such a heavy demand, cold

storage and go-down facilities are a must.90

Biswas and Parasher (1990) have made certain observations

and brought to the light some facts. According to them during the

last few years, the concepts of agricultural produce markets have

88 Vishwanathagupta ‘Agricultural Marketing Scenario Today’, Kurukshetra, Vol. XXXIX, No.3

December 1990, p.14. 89 Sunil Kumar, ‘Role of Futures Markets in Stabilisationj of Agro Commodity Prices, Yojana, Vol.47,

No.10, Oct.2003. 90 H.K. Patil, A.C. Deorukhkar, S.S. Wadkar and J.M. Talathi, “Urban Demand For Consumable Primary

Agricultural Product (Fruits And Vegetables) For Mumbai Metropolitan Regional Population , Indian

Journal of Marketing, Vol. XXXI No.7-8, July-Aug. 2001

61

been totally changed. Now, the Government had taken the functions

of regulating the marketing practices and providing ‘mandis’, in the

market yards.91

Shanmuga Sundaram and Natarajan (2001) in their

article “A study on Uzhavar Sandhai” (With Special Reference to

Beneficiaries Attitude Towards Suramangalam Uzhavar Sandhai,

Salem) have examined the operations of farmers’ market and found

that farmers’ markets help the farmers to get a reasonable price for

their produce avoiding all unwanted and unreasonable charges. The

consumers were facilitated to get fresh vegetables at a cheaper

price without any malpractice in weighing. Their investigation

prompted them to suggest establishment of telephone facilities,

extension of business time (working hours) and working of the

market both in the morning and evening.92

Bhagirath Singh has analysed ‘developing infrastructure for

post-harvest management, processing, marketing, and agri -business

and its enhancement of export potential in selected areas that have

the comparative advantage’93

. There exist today a wide variety of

91 R.K. Biswas and Parasher, “Development of Agricultural Produce Markets in India’ Agricultural

Marketing Vol. XXXIII, No.1 June 1990, p.20. 92 S.Shanmuga Sundaram and C.Nataranjan, ““A study on Uzhavar sandhai” (With Special Reference to

Beneficiaries Attitude Towards Suramangalam Uzhavar Sandhai, Salem), Indian Journal of Marketing

March – April. 2001. Volume XXXI No 3-4. 93 Bhagirath Singh ‘New Horizons of Indian agricultural; An analysis’ Southern Economist October 01,

2001.

62

concepts of marketing and its nature. The very definitions of

marketing have also undergone considerable development in the

second half of the second century, which is reflected in the

literature mentioned below. Today we encounter several basic

concepts of marketing and its nature. The five main marketing

concepts are listed below94

.

The production approach - being a managerial orientation

assuming that customers would prefer products, which are

both accessible and affordable. The main managerial function

would then be the improvement of production efficiency and

of the distribution system.

The product approach - being a managerial orientation

assuming that customers would prefer products of the highest

quality for a given price. The firm should accordingly devote

its main resources to improvement of product quality.

The sales approach-being a managerial orientation assuming

that customers would (or would not) acquire the firm's

products, in proportion to the efforts made by the firm to

generate an interest in the product. The firm should

94 Hornik, Jacob: Marketing Management: Systems, Theories and Strategies Everyman's University

Press. Tel Aviv 1985 Vol. I P.P. 31-36.

63

accordingly locate potential customers and try to convince

them, sometimes aggressively, that its products are something

they cannot do without.

The marketing approach-being a managerial orientation

maintaining that the key to the attainment of the firm’s

objectives consists in the determination of the needs and

aspirations of the target market, and in tailoring the

organization so as to cater to consumers desires in a better

and more efficient manner than competing firms.

The marketing-social approach-being a managerial

orientation, which calls for focusing upon the diagnosis of the

needs of the target market and their fulfilment; in parallel,

public welfare should be upheld in the long term.

These approaches outline the general framework of theoretical

and practical thinking about marketing. Let us now review the

various definitions of marketing as put forward in various studies

over the last three years, in order to trace the development of this

subject.

The first definition, dated back to 1952, refers to marketing

as a production-dependent activity. The definition states

“marketing is the means by which you dispose of the output of a

64

farm, of factories, mines, quarries, forests, fisheries, hunting, oil,

as well as everything imported.95

The following is added by way of

explanation: From the seller’s viewpoint, marketing is the ability

of the marketing system to transfer everything produced from the

producer to the consumer. On the other hand, from the consumer’s

viewpoint, marketing is simply the ability to transfer goods in

which he is interested, in the form and the manner he desires, and at

the lowest price to him. By making a synthesis of these two

viewpoints, it should be clear to us that marketing is in fact a series

of foregone decisions, based on a suitable market survey, as to what

are the goods one should produce or import, and in what quantities.

In fact, these definitions teach us the basi c concept of

marketing. Inside any marketing system, we find the producer on

the one hand, and the consumer on the other hand; and in between

them we find the mechanism, which causes the products and

services to pass from the producer's side on to the consumer’s side.

Another definition of the same period, which stresses the

passage from the producer to the consumer and also the importance

of production says the following: "Marketing in gen eral may be

95 Maynard. H.H. and Beckman, T.N.: Principles of Marketing, The Ronald Press Company - New

York Fifth Edition - 1952 P. 26

65

defined as the whole process by which real marketable surplus,

belonging to the producers, reaches the consumers96

.

Marketing is to be understood that “all activities involved in

the process of transfer of goods and services from the manufacturer

who produces to the final consumers who actually consumes it”.

“There will always, one can assume, be the need for some

selling. But the aim of marketing is to make selling superfluous.

The aim of marketing is to know and understand the customers so

well that the product or services fits him and sells itself”. Ideally,

the marketing should result in a customer who is ready to buy. All

should be needed then is to make the product or services

available97

.

American Marketing Association defines marketing as “ the

process of planning, and executing the conception, pricing,

promotion and distribution of ideas, goods and services to create

exchanges that satisfy individual and organization.98

Dixie (1989) relates what he describes as a definition of

marketing, which is:

96 Chaturvedi, J.N: The theory of marketing in Underdeveloped countries, Kitab Mahal Publications,

Alahabad, 1959, p.3. 97 Peter and Drucker, Management: Tasks, Responsibilities, Practices, New York: Harper and Row 1973,

pp 64-65 98 Philip Kotler , Marketing Management ,XI Edition, prentice ,Hall of India ,Private limited, New

Delhi,2004.p 9.

66

“The series of services involved in moving a product (or

commodity) from the point of production to the point of

consumption.”99

Ottenson and others (1966) explained marketing as "The

firm is the bridge of decision-making between the market series and

the sources from which it buys. The buyer’s market constitutes the

main source of income, whereas the selling market is the main

absorber of the firm's outlays100

.

During the 80's, the centre of gravity of marketing definitions

shifted from its former midway position between the producer and

the consumer, to the side of the consumer. The consumer and

society are the main issues nowadays, and the manner of satisfying

their needs. Successful marketing is that which accounts for the

consumer and its environment, as this is outlined by the following

definition. Consumer satisfaction with social responsibility has

been regarded as the centre around which all marketing activities

should revolve101

.

99 G. Dixie, (1989), Horticultural Marketing: A Resource And Training Manual For Extension Officers,

FAO Agricultural Services Bulletin, Food and Agricultural Organization of the United Nations, Rome,

pp. 1–5. 100 Ottenson, F.S. Panchar, W.G. and Patterson, J.M.: Marketing the Firms Viewpoint, The Macmillan

Company, N.Y. 1966, p.82 101 Agrawal, G.R.: Institutions for marketing by women as special groups’ problems and required

i mprovements, Centre for economic development and administration, Tribhuvan University,

Kirtipur, Katmandu 1984, p.1.

67

Marketing being a bit more specific, marketing might be

defined as the set of economic and behav ioural activities that are

involved in coordinating the various stages of economic activities

from production to consumption.

If the term marketing is understood as flow of goods from

producer to consumer, then agricultural marketing is a process by

which the agricultural produce transferred from form to consumer’s

house. The term agriculture marketing consists of two words viz.

‘agriculture’ and ‘market’. There are many concepts to be

understood in a right sense.

Agriculture in a broader sense is activities aimed at the use of

natural resources, for human welfare, but in particular it refers to

growing and / or raising crops and livestock. Marketing connotes a

series of action ties involved in moving the goods from the point of

production to the point of consumption.

Agriculture marketing in its widest sense comprises of all

activities involved in movement of food and raw materials from

farm to final consumer. According to Sharma and Shah “In

agricultural marketing, we are concerned with demand and supply

conditions, marketing operation including marketing functions,

68

functionaries and costs, price fixation, market structure, conduct

and performance and marketing efficiencies102

.

According to National Commission on Agriculture [XII

Report]103

“Agriculture marketing is a process, which starts with a

delusion 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

includes pre and post harvest operation, assembling, grading,

storage, transportation, and distribution.

According to Acharya and Agarwal “Agricultural marketing is

the study of all activities and policies involved in the procurement

of farm inputs by farmers and movement of agricultural products

from the farmer to the consumer. Agricultural Marketing is a link

between farm and non-farm sectors. It includes organization of

agricultural raw materials supply to processing industries, the

assessment of demand for term-inputs and raw-materials, the policy

relating to the marketing of farm–inputs and raw-materials, the

policy relating to the marketing of farm produce and inputs104

.

102 J.S.Sharma and S.L.Shah, problem Identification in Marketing Research, Seminar on Emerging

Problems of Agricultural Commodities, The Indian Society of Agricultural Economics, Bombay

(1972), p.42 103 S.S. Acharya and Agarwal N.L. “Agricultural Marketing in India”, Oxford IHB publishing Pvt. Ltd,

New Delhi, 1992, p.2. 104 Ibid., p.2.

69

Kohls and Downey (1972) define marketing as “the

performance of all business activities involved in the flow of goods

and services from the point of initial agricultural production until

they are in the hands of the ultimate consumer105

.

Marketing also includes all the auxiliary act ivities such as

financing, risk bearing and disseminating information to the

participants, mainly farmers in the marketing process. For the

farmers, the strategic function of a marketing system is to offer him

a convenient outlet of his produce. To the consumer and the

manufacturer of agricultural raw materials, assurance of a steady

supply in the vital service. Agricultural marketing also includes

supplies as fertilizers, pesticides, and other agricultural chemicals,

livestock feed and farm machinery, tools and equipment106

.

Economic development is a continuous process, which breaks

down vicious circle of poverty and unemployment and thereby leads

a country to a stage of self -sufficiency. The tempo of agricultural

production calls for a simultaneous improvement in the marketing

system, to safeguard the interest of the farmers107

. Thus the vital

105 Richard L.Kohls and W.David Downey, Marketing of Agricultural products, New York: Macmillan,

1972, pp 8-9. 106 Anil Sinha,”Manpower Planning for Agricultural Marketing”,Kurushetra,Vol XXXIII (9), (June1985)

p.4 107 R.T. Mirachandani and Hiranandani, G.T. “Regulated Markets – Their Review and their impact on

market structure and efficiency”, seminar on “Emerging problems of Agricultural Marketing

commodities”, Indian Society of Agricultural Economics”, 1965, p.72.

70

role played by the efficient marketing of agricultural produce in the

planned economy of a country, predominantly dependent upon

agriculture can never be overstressed.

An efficient market and reliable marketing system by itself

can stimulate increase in agricultural products, while lack of it

lesser, subdue and shrink the impact of any number of production

programmes, administrative efforts, and volume of investment108

.

Now it is known what marketing is, and how the various

approaches have developed in understanding this process, let us

examine and learn what agricultural marketing is. Let us try to find

out, if what holds for marketing in general also hold for agricultural

marketing, and for marketing in traditional rural areas in

developing countries. It is fairly clear that when we consider a

marketing method suitable for a traditional agricultural society, it

will have to be adapted to the pattern of the traditional society for

which the said programme is in tended109

.

Traditional rural areas are distinguished by a subsistence

economy. In such villages the production unit is the family, which

produces the food for its own consumption, and for the payment of

rent or tax, at the equivalent monetary value. Surplus is offered for

108 Dwided, R.C, “New strategy at Agricultural Development in India”, Loyal Book Depot, Meerut,

p.202. 86. Abbot, J.C, Marketing problems and Improvement programs F.A.O.MARKETING Guide NO.1

Rome 3rd Printing 1966 p.42

71

sale only after a particular plentiful cultivation season. The family

unit considered as a production unit, is quite small and such units

operate separately. This situation makes it difficult to concentrate

the produce for efficient marketing. In certain areas the vast

majority of the population is not at all used to thinking in terms of

commerce and barter trading. Another characteristic of these areas

lies in the fact that many of the traditional peasants would be

prepared to switch over to the cultivation of market crops, provided

a price system is set up, which gives them an incentive110

.

The traditional peasant in developing countries sells his

produce at the time and for the price, which are the least

advantageous for him. He sells in order to pay his debts, but the

cycle is repeated, and he becomes involved in new debts. In

developing countries, the peasants sell a forced surplus. The

peasant is forced to sell a sizeable part of his produce, sometimes

much more than he would have sold if he had had the choice. In

fact, the surplus marketed in the developing countries is determined

as follows: If we work out the total produce of the peasant, deduct

from this the family’s own consumption, plus payments he makes

by handing over produce, as well as the payment of various debts,

110 Ibid. pp.6-9

72

usually to money-lenders, we finally obtain the amount left to the

peasant for marketing111

.

Maynard and Beckman in their study list out the main

functions of agricultural marketing. These include purchasing,

sales, transportation, storage, sorting and grading, financing, added

risk, and marketing informat ion. Purchase and sale involve change

of ownership. A thing sold is also bought, and anything bought is

also sold. Transportation involves the transfer from a place of

surplus to a place of shortage. This is the geographical dimension,

while storage involves the transfer from a period of surplus to a

period of shortage time112

.

Mathur (1971) in his study explains the stages involved in

agricultural marketing113

. He argues that marketing starts at the

peasant's field and includes the following: collecting produce

surplus from individual peasants, transportation to a nearby depot,

sorting and grading, stocking up, processing, storage, packing,

transportation to consumer centres, contact between producer and

consumer, and sale to the consumer.

Most of the operations of the potential marketing require

capital, and are carried out at a high risk. The agricultural produce

111 Chaturvedi. pp.6-9. 112 Maynard. Ibid p 37. 113 Mathur. Ibid p.345.

73

is usually transported in bulk. Storage and transportation are

very costly. The produce is seasonal, whereas the demand for it

continues all year round. The traditional peasant is a small

marketing unit. Hence produce collection is complicated and

expensive. Agricultural marketing involves losses, damage, and

quality impairment during storage and transportation. It is difficult

for the traditional peasant to undertake the marketing operations,

and therefore most of these operations are carried out by the

middlemen.

The obstacles in traditional marketing are the following: The

marketing circle is long and archaic. The marketing circle: stages

through which the products pass, starting with the producer, and on

until they reach the consumer. Within the framework of a

traditional market, the stages, which the products go through are

extremely long and weighed down by a plethora of middlemen.

The infrastructure of transportation is archaic, the roads are

bad or do not exist at all, producers are a long way from the market,

and consequently transportation costs are very high. The fact that

there is no planning in the production and the irregularity in

supplying causes either a surplus or a seasonal scarcity of products

on the market; imported products compete with the local

production. Lack of sorting, processing and of warehouses and lack

74

of organization of producers and consumers are also some of the

drawbacks.

Mathur goes on to classify the traditional markets. In the

first place, we have the primary market. This market is at the

village level. The market does not function every day, but at fixed

intervals of a few days. The market usually serves an area of about

one km radius.

Next we have the secondary market. This already operates

day by day, and the action is wholesale. The market i s regional,

located in the central area of the region, close to arterial roads, and

it embraces a wider radius of activities.

The final market is the one in which the produce passes

directly to the consumer, or goes on to be processed, or to be

prepared for transportation to markets abroad. An example is a

market located close to a harbour. One must distinguish between the

traditional market and the market which functions regularly every

day and also includes warehouses and wholesale services of private

or state ownership114

.

114 Forman.S. and Reigelhaupt , “Market Place and Marketing System: Towards a Theory of Peasant.

Economic Integration” Comparative Studies in Society and History Vol. XII No. April 1970. p.114.

75

The local traditional market is usual ly maintained in areas

where transportation is almost impossible for the rural population

with its limited means. And the goods and services are intended for

local consumption. The local market is usually located in a market

place. This is a site in which the goods offered change from season

to season. Such local market forms a network, in which one market

is linked to another through the passage of goods, services and

people. The local market is a meeting place of occasional sellers,

who set up at random in sales shacks, and come together at fixed

time intervals at that fixed site. This is where goods and services

are distributed between the villagers, who act both as buyers and

sellers115

.

The itinerant village trader is the main ope rator in the

primary market. Sometimes he himself is the producer. In other

cases, he is the one who transports goods to and from the secondary

markets. He attends to the storage and sees firsthand reaction from

the agricultural produce. In some cases, he hands out advances on

account of the produce, and thus finances the peasants. The second

type of trader forms the link between the village level and the

secondary market level. He sells produce on a commission basis,

which he collects both from the sel ler as well as from the buyer.

115 Ibid. pp. 189-193.

76

He often finances the village level, and thus forces the peasants to

sell through him.

The third type of traders is, those who represent more serious

purchasing outfits. They operate on a commission basis. They take

care of cleaning up the produce, as well as processing it, weighing,

packing, and dispatch to centres of transportation. These people

have a large amount of capital at their disposal and finance their

business independently116

.

Another factor worthy of mention is the price of marketing,

which includes all the subsidiary expenses of the marketing

process. These expenses usually give rise to the difference between

the consumer price and what the producer gets paid. The reasons

for this are many. Farms are widely dispersed and production units

are too small. There is no uniformity in the quality of the produce.

Transportation is difficult, and marketing information is faulty.

There is insufficient capital for the processing and storage. Ther e

are too many middlemen, and no regulation of the distribution

among markets.117

The mechanism of market prices is composed of the

following. The price of a product is determined by the supply and

116 Mathur. Ibid, p.346. 117 Ibid. pp.347-348.

77

demand in the market. The supply represents the quantity of

products offered the same day on a certain regional market. The

demand represents the willingness to buy the same products by the

consumers, the same day on the market. The price of the product on

the market is not the price that the producer receives. The following

expenses will be deducted from the price paid by the consumer:

(a) Transportation costs: distance, the means of transportation,

kind of product transferred and it’s processing are the factors,

which determine the cost of transportation. As the distance in

transportation becomes shorter and the quantity for transfer

increases, so the cost of transportation, which comprises part of the

cost price of the product, diminishes considerably.

(b) Processing: presentation of the product must be enticing, in

unit packing, thus allowing direct consumption to the consumer.

(c) Sales: cash sales are convenient to the producer. Credit sales

are also convenient as they increase the range of customers;

however, the risk of unpaid debts and the interest involved in credit

terms, may lead to these sales being written off as Bad Debts.

(d) Storage of the surpluses during times when demand is higher

than supply. The cost of storage is influenced by the following

factors:

78

- Construction costs

- Maintenance and depreciation (labour & financing expenses)

- Volume of products produced, due consideration being taken

of the storage capacity.

- Special conditions for storage of various products

(perishable food, liquids, etc.).

- Average, burglary and losses.

(e) The more plentiful the products offered to the market, the

harder it will be for the consumer to take a decision, viz. in regard

to:

- Advertising

- Presentation of the product

- Trademark.

(f) To sum up : the selling price of a product is determined by the

law of supply and demand. The price the producer receives is lower

than the selling price. The price of the product sold implies the

evidence of all the above-mentioned factors, as well as the profit of

the middlemen, wholesalers, and retailers.

Market in the ordinary sense can be understood as the place

where buyers and sellers meet. It is a place where transfer of

79

consideration takes place. Market refers to a place or actual force

that results in the exchange of goods from one head to another118

.

According to Backman and Davidson (1973) market is a

place sphere within which making forces operate and in which

exchange of title tend to be accompanied by actual movement of

goods affected. They consider that market is the place of action for

the price making factors119

.

Agricultural Markets

In the agrarian economy the exchange value and commodity

production for the market has become an important aspect. As

understood it is a market for agricultural commodities, but at the

end the real beneficiaries is the middlemen. Many attempts have

been made to safeguard the small and marginal farmers. The first

attempt was made in 1987, to regulate agricultural markets in India.

An act passed in that year authorized the then British Resident in

Hyderabad Assigned District to declare any place within his

jurisdiction, a market for sale and purchase of agricultural produce

and to constitute a committee to supervise and regulate the

markets120

.

118 R.D. Tousely. 119 Backman, Davidson, “Marketing, Ronald Press Company, New York, 1973, p.4. 120 J.C Abbot, “Role of Marketing in Development of Backward Agricultural Economics, “Journal of

Farm Economics, A4, 1962, pp.349-62.

80

National Commission on Agriculture in its report in 1976

quoted many lunacies and suggested measures to strengthen it121

.

Another study states that role of marketing system is to increase the

amount of marketed surplus, to open up new vistas of production

and to provide new outlets for the produce.

It is the fact that the small and marginal farmers suffer much.

In order to meet the financial commitments and pay of their debts,

the grower is forced to sell his produce at any price forced to

him122

. The Royal Commission on Agriculture urged that all

provinces should establish regulated markets to help orderly

marketing of all agricultural produce.

Technological developments in agriculture, such as the

evolution of high variety of seeds increased modern inputs and

cultivation practices in the agricultural sector have resulted in

substantial increase in farm production. As a result producer is left

with enough marketed surplus, which will in turn make production

– conscious farmers to income/price conscious.

Agricultural marketing plays a dual role in economic

development in countries whose resources are primarily

121 Jayarathnam, “Farmers’ Market IIX Tamil Nadu – A SWOT analysis, “Indian Journal of

Marketing, Volume, XXXII, Aug. 2002, p.3. 122 A. Selvaraj, A. Study on constraints faced by coffee growers in Tamil Nadu, “Indian Journal of

Marketing, Vol. XXXIII, Feb. 2003, p.5.

81

agricultural, increasing demands for money with which to purchase

other goods leads to increasing sensitivity to relative prices on the

part of the products and specialization in the cultivation of those

crops on which the returns are the greatest, subject to socio -

cultural, ecological, and economic constraints. It is the marketing

systems, which transmits the crucial price signals123

.

Producers’ surplus of Agricultural Commodities

In any economy, the producer’s surplus of agricultural

produce plays a significant role. In general sense, it is the quantity,

which is actually made available to the non-producing population of

the country. As for as the marketing is concerned, producer’s

surplus is more important.

Marketable Surplus

Marketable surplus is the quantity that can be marketed. The

rate at which the agriculture expands, determines the pace of

agricultural developments, while the growth in the marketable

surplus determines the pace of economic development. Therefore

marketable surplus is vital for economic development.

Marketable surplus refers to the amount, which would be the

excess or balance left with producer (farmer) after meeting his

123 S.A. Acharya., N.L., Agarwal., op. cit., p.34.

82

requirements for family consumption, farm need for seed and need

for cattle, payment to hard labour in kind, payment to artisans,

payment to landlord as rent and social, religious payments in kind.

Market surplus is the residue left with the product -farmer after his

consumption and other needs.

Equation

MS = TP-TR

Where,

MS = Marketable Surplus

TP = Total Production

TR= Total requirement (Consumption, seed requirement and

payment in kind)

As per Sen and Banerjee, marketable surplus is the difference

between quantity produced and all types of retentions in kind

including self-consumptions by farmer124

.

Marketed Surplus

Marketed surplus forms part of producer’s surplus or

marketable surplus that has been sold or marketed. It is the actual

quantity of produce sold.

124 Ipsita Sen and Hironkumar Bnarjee, “Behaviour Marketable surplus of some major and minor food

grains in India”, Indian Journal of agricultural economics 50(1) 1995, pp. 80-85.

83

According to S.S. Acharya , marketed surplus is that quantity

of the produce, which the product farmer actually sells in the

market, irrespective of his requirement for family consumption,

farm needs and other payments125

.

The marketed surplus would be more than marketabl e surplus

when the farmers retain a smaller quantity than the actual need and

requirement for formerly and farm needs. This would be true

especially in the case of small and marginal farmers. This selling

of more than marketable surplus is being termed a s distress or

forced sale126

.

Equation:

Marketed surplus = Marketable surplus = Ideal sales.

Marketed surplus = Marketable sales = Better sales; better

price.

Marketed surplus > Marketable = Distress Sales.

Condition Kinds People Involved

Marketed surplus = Marketed

Sales

Ideal Sales All kinds of farmers

Marketed surplus < Marketed

Sales

Wise-sales Only Large farmers

Marketed surplus >

Marketed Sales

Distress

Sales

Small and Marginal

farmers

125 S. S. Acharya, op.cit., p.39. 126 Prasad., op.cit., p.240.,

84

Price is operated on demand-supply basis. When a market is

dumped with excess arrival or supply, naturally the price for that

particular commodity will get decreased. On the other hand if

supply is less than the demand the price for that particular

commodity will get higher and higher.

Price is therefore resultant of the two important market forces

viz. demand and supply. During off season, demand for a product

is high and at the same time supply will be comparatively less as a

consequence price tends to be high. Therefore it is wise to sell off

the produce during off-season at a higher price.

The small and marginal farmers sell their surplus, which is

termed as distress sales; purchase the same produce from the market

in a latter period to meet their family and farm needs.

Channels of Distribution

Marketing channel decision plays a major role in any

marketing mix. As stated, marketing is flow of goods from producer

to final consumer, and channel is the route / intermediaries through

which farm produce reaches the final consumers.

Beckman (1857) defined marketing channel as the route taken

by title of a product in its passage from its owner, the agricultural

85

producer or manufacturer as the case. May be to the last owner, the

ultimate consumer or the business user127

.

The marketing intermediaries make up a marketing channel.

Memoria and Joshi defined marketing channel as “a group of

interrelated intermediaries who directed to produce to

consumers128

.”

According to Stern and Ansari, marketing channels are sets of

interdependent organization involved in the process of making a

product or service available for the use of consumption129

.

Bilgrani defined marketing channel as a distributor that

involved direct or indirect transfer of a title to a product as it

moved from producer to consumer or industrial user.

Therefore in any marketing activity, marketing channel is

inevitable. They play a crucial role in agricultural marketing.

Marketing channel for fruits and vegetables vary from commodity

to commodity from producer to producer. In rural areas and small

towns, many producers perform the functions of retailors and

sellers.

127 Beckman, T.N., Manyner H. Mand. Division W.K. principles of marketing”, OXFORD INDIAN

BOOK HOUSE PUBLISHING COMPANY, 1857, p.7. 128 C.B. Memoria, R.L. Joshi, Principles of Marketing in India, Kitabmahal Ltd., New Delhi, 1982, p.82. 129 B. John Bosco, “An Enquiry into marketing of Lower in Dindigul District”, Unpublished thesis

March, 2003, p.186.

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Channel for vegetable fruits

The common marketing channels for vegetables and fruits:

Channel 1. Producer→ Consumer

Channel 2. Producer→ Primary Wholesaler Retailer

Consumer

Channel 3. Producer Processor

Channel 4. Producer Primary Wholesaler Processor

Channel 5 Producer Primary wholesaler

Secondary Wholesaler

Retailer Consumer

Marketing Functionaries

Producer

Mostly all farmers perform one or more marketing functions.

They sell the surplus either in the village or in the periodic market

or ‘Uzhavarsndhai’. The large farmers assemble the produces of

small formers and transport it to the nearby market a nd sell there

and gain. Therefore a producer here denotes farmers who are

engaged with sowing, growing and harvesting different agricultural

produce.

Producers or farmers are generally classified as small

farmers, marginal farmers, medium farmers and larg e farmers. They

are the important social agents of economic transformation.

87

Commission Agents (Arhatiya)

The Commission Agent is a middleman, who occupies a key

position in the agricultural marketing. They bridge the growers and

primary wholesalers, retailers and thereby link between growers and

consumers.

Wholesaler

Wholesalers are those merchant-middlemen who buy and sell

produce in large quantities. They may bring the commodities either

from the farmer producer or from other wholesaler. They sell their

produce to retailers, other wholesalers or processors or exporters.

They normally do not sell significant quantities to final

consumer130

.

Retailers

Another important link in the channel of marketing of flowers

is the retailers. They buy commodities from wholesaler and sell

them to consumers in small quantities. They are the producers’

personal representatives131

.

Village trader

Village traders are also known as Itinerant ‘Veopari’.

Itinerant traders are petty merchants, who move from village to

130 S.S. Acharya op.cit, p.159. 131 Ibid.

88

village and directly purchase the produce from the cultivators, and

they transport to the nearest market. Village merchants have small

establishment in their villages. They also act as financers to small

farmers.

The direct marketing enables farmers to meet the specific

demands of wholesalers or traders from the farmers’ inventory of

graded and certified produce on one hand and consumers based on

consumers’ preference on the other hand helps the farmers to

dynamically take advantage of favourable prices reduce marketing

cost and thus their net margins. This encourages farmers to

undertake cleaning sorting grading and quality marking at the farm

gate. This will obviate the need to haul the produce to the regulated

markets, which are not necessarily equipped with all required

services and facilities affecting the marketing efficiency adversely.

It is reported that the consumer’s prices declined by the 20 to 30

per cent and producers received the prices, rose by 10 to 20 per

cent in South Korea as a consequence of expansion of direct

marketing of Agricultural Products.

Contract Farming

Contract Farming may be defined as an agreement between

processing and or marketing firms for production support at pre-

determined prices. This stipulates a commitment on the part of the

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farmers to provide a specific commodity in terms of quality and

quantity as determined by the purchaser and commitment on the

part of company to support the farmer for production th rough inputs

& other technical support, contract farming is becoming popular in

recent years and there are number of success stories like Maul,

NDDB, PEPSI Co. etc. The Contract Farming needs to be further

developed after identifying areas, commodities, and markets for

market oriented and demand driven production planning. However,

while providing this system of alternate marketing under the APMC

Act, it is necessary to draft any appropriate legislation separately

for ensuring definition of terms and condit ions of the agreement

keeping in view of the objectives.

Direct Contract between Producers and Processing

Factories

Presently the farmers are not in a position to enter into direct

contract with the processors/manufacturers located outside the

market area as the commodity has to channel through regulated

markets or in other words producer is not free to sell his produce by

entering into direct contract without attracting the provisions of

this Act whether inside or outside the market area. The direct

contract between the producers and processing factories or bulk

processors will provide monetary gains to the producers through

90

improved competitiveness and the consumers by way of reasonable

prices. The provision has to be made through an amendment in the

present market act.

Direct Purchase from farmers without any license

As per the provisions of the present act once a market area is

notified no person can set up or establish or use any place for the

purchase, sale, storage, and regiment curing, pressing or processing

of any agricultural produce or products of livestock or for the

purchase or sale of livestock except in accordance with the

condition of a license granted by the market committee. This

provision prohibits free sale and purchase of agricultura l

commodities thereby adversely affecting the competitive pricing

adds to marketing costs to the produces in the event of bringing the

produce to the market yard for improving competitiveness and

greater marketing efficiency and pricing edge, the producer may be

allowed to sell the produce at the farm gate or threshing floor.

Many of the farmers feel that they run too high a risk of not being

able to sell their produce at a fair price. The traditional farmer’s

need above all, is to have faith in the marketing system. It is

possible to conclude and shall return to this point further once that

one of the main ways of improving the farmer’s productivity does

not consist merely in improving the inputs and the production

91

methods. It is important to secure a reliable market, a suitable

price, and a system by way of which the farmer can market his

produce, and at the same time receive the highest possible share of

the price paid by the consumer for that produce132

.

When the farmer sets about marketing his produce, he faces

many constraints. Overcoming them will help us in restoring his

self-confidence, and will help him to develop. The first group of

constraints is those due to physical conditions. The primary

condition is the general infrastructure, which includes insuffici ent

means of transportation, bad roads, and undeveloped markets. A

further factor is the absence of agreed standards. There are no

agreed standard rates and measures, and in most places the scales

used are biased to the detriment of the farmer. The next f actor is

the means of storage. Insufficient storage space and faulty facilities

give rise to losses. The lack of storage facilities prevents the farmer

from keeping over his produce until the season when its price rises,

resulting in loss of income. Handling does not exist, or is in very

bad repair. Transport methods are out dated, and packing and

containers are unsuitable. The points of unloading, loading and

supply are unsuitable. The supply inputs are unsatisfactory to the

132 International Federation of Agricultural Producers: Improving Marketing and Farm Inputs Supply in

Developing Countries: A Plan of Action for Farmers’ Organisations farm Leaders’ Seminar, Federal

Republic of Germany. April 1986.pp.3-4.

92

farmer. These are not provided in the quantities requested, neither

when they are needed, nor again they are of the kinds and qualities

required. The constraints of agricultural marketing, which hamper

the traditional farmer, also include components, which are more

specifically related to marketing.

Commercial efficiency is hardly accorded any attention,

particularly by government and semi-government institutions, and

sometimes also in cooperative societies set up by the government.

The farmer has a very slim bargaining edge, and this fact is

exploited by the private traders. The traditional farmer has no

financial means. Further constraints he faces are related to the

marketing price and the pricing policy. In many cases, the price

paid to the farmer leaves him no profit at al l.

The input prices are too high in relation to the marketing

prices. The price fluctuations are excessive, and this in addition to

high and unjustified marketing levies as well as import taxes and

exports taxes. The system of payment and the manner of p ayment to

the farmer is also significant. Usually the farmer receives payment

too late, at too low a rate, not in cash, and occasionally only part of

the sum due.

93

This factor is bound up with the next factor, which is credit.

Credit to farmers is virtually non-existent. When it does exist, it is

insufficient. When it is granted, the price for it is too high.

Marketing information is an important factor, which in most cases

is not at the farmer's disposal. Information concerning prices,

markets and other data is faulty and deficient. Information

concerning supply and demand in markets at various places is

almost non-existent, which prevents the farmer from rationally

regulating the supply of his produce.

The government agrarian policy affects the farmer in a major

way. Many governments have a general policy of food imports, or

received food products through foreign aid, which reach that

country at prices far below the prices required by the farmer in

return for his produce. Unrealistic exchange rate polic y results in

unprofitable exports, and gives rise to cheap imports, which

compete with the local producer. Many governments do not carry

out a real agrarian reform policy, which could help out the farmers.

The small farmer finds himself in a vicious circl e. Companies and

marketing organizations have no economic interest in providing

marketing services to a far ranging and non-uniform farmer

population, scattered in remote and hard to reach places. Without

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such services, the small farmers will not take on the risk of

stepping up production beyond their proper consumption.

Reforms required

In order to have vibrant competitive marketing systems the

Government has to bring about reforms in existing policies rules

and regulations with a view to remove all legal provisions

inhibiting free marketing system. This is necessary to explore

market access opportunities provided by liberalization. Some of the

legal provision inhibiting development of vibrant dynamic and

assimilative marketing structure and systems is t he Agricultural

Produce Marketing (Regulation) Act.

The expert committee on strengthening and development of

agricultural marketing suggested various reforms in the statutory

arrangements relating to agricul tural marketing as well as policies

and programmes for development and strengthening of agricultural

marketing with a specific reference to needed investment package

of incentives, easy and adequate marketing credit.

This committee also recommended a rev iew of the existing

legal frame work, removal of restrictive provisions, to promote

competitive marketing structure, to promote direct marketing by the

farmers, to improve price realization, to encourage forward and

95

future trading, to reduce price risk, to induce increase the flow of

funds to agricultural sector, to support pledge financing by treating

it as a direct priority sector lending, and to promote market led

extension to use of information technology for improving marketing

services to the farmers .

An inter-ministerial task force under the Chairmanship of

Additional Secretary Department of Agriculture and Co -operation

Government of India deliberated on these recommendations and

identified nine areas. To work out action plan, nine inter -

ministerial sub-groups were constituted. These sub-groups

presented suggestions on legal reforms in agricultural marketing

under the chairmanship of the Joint Secretary (Marketing).

Conclusion

This chapter dealt with the various research services

carried out by eminent scholars and concepts relating to agricultural

marketing and concepts. It highlightened the problems of farmers of

various categories and the defects of agricultural marketing

systems.