Agricultural marketing in India encompasses the entire process from decision-making on producing marketable farm commodities to various aspects of market structure, both functional and institutional, driven by technical and economic considerations. This includes pre and post-harvest operations, assembly, grading, storage, transportation, and distribution.
Challenges associated with agricultural marketing in India:
1. Institutional Issues:
- Barriers due to licensing: The compulsory requirement of owning a shop/godown to obtain a license as commission agents/traders acts as a significant entry barrier in existing Agricultural Produce Market Committees (APMCs) for new entrepreneurs.
- High market charges: APMCs are authorized to collect market fees ranging from 0.5% to 2.0% of the sale value of the produce. Additionally, other charges such as purchase tax and weighment charges are also levied, resulting in total charges as high as 15% in some states.
- Absence of standardized grading mechanism: The lack of a standardized grading mechanism before sale prevents farmers from fetching appropriate prices based on the quality of their produce.
2. Infrastructural Issues:
- Inadequate infrastructure in agricultural markets: Studies indicate that only two-thirds of the regulated markets have covered and open auction platforms, while only one-fourth have common drying yards. Cold storage units exist in less than one-tenth of the markets, and grading facilities are available in less than one-third.
- Poor economic viability of projects: Agriculture marketing infrastructure projects have a long gestation period, and the seasonality and aggregation of small surpluses further hamper their economic viability, discouraging investments.
3. Market information system issues:
- Delay in demand signals: The absence of efficient real-time informational channels leads to a delay in receiving demand signals, causing farmers to rely on price trends as indicators of supply.
- Limited information channels and content: Current information dissemination systems, such as local newspapers and APMC display boards, provide information on prices of major commodities but are often distant from farmers’ locations and not available in local languages.
Steps taken to address these issues:
- Model APMC Act, 2003: A model act was created to facilitate the amendment of existing rules and address the aforementioned issues. However, only sixteen states have amended their acts, and only six have notified the amended rules.
- Consumer/Farmer Market (Direct Sale by the Producer): Various states have experimented with direct marketing by farmers to consumers, such as Apni Mandi in Punjab, Rythu Bazaars in Andhra Pradesh, and Shetkari Bazar in Maharashtra.
- AGMARKNET: This G2C e-governance portal serves as a single window for providing agricultural marketing-related information to stakeholders such as farmers, industry, policy makers, and academic institutions.
- Gramin Agricultural Markets (GrAMs): Efforts are being made to develop and upgrade existing 22,000 rural haats (Rural Primary Markets) into GrAMs. These markets will have strengthened infrastructure, better road linkages, and will remain outside the regulation of the APMC Act while being linked to e-NAM.
- Initiatives like Kisan Rail: The movement of vegetables, fruits, and other perishables through dedicated trains aims to ensure safe, reliable, and fast transportation, leading to better price realization for farmers.
- Scheme for Formation and Promotion of Farmer Produce Organizations (FPOs): This scheme aims to create 10,000 FPOs within a five-year period and provide support to each FPO to enhance the marketing capabilities of farmers.
A well-developed marketing infrastructure and an efficient marketing system are crucial for facilitating the sale of agricultural products. These factors influence the demand and supply status, market volume, and prices, ultimately impacting the value realized by farmers through competitive trade.