India : Agriculture Knowledge by indiaagronet

Agricultural marketing is one of the important branches of agricultural economics. Farmers have one commodity or the other in surplus. This surplus has to be disposed off or sold so as to earn some money to satisfy other needs, which cannot be satisfied on the farm or in the village. Thus, agricultural marketing has two-fold objective

i)	Sale of surplus commodities and
ii)	Buy other commodities to satisfy family needs.

In modern commercial agriculture, the surpluses with farmers are steadily rising so also their family needs are changing with the change in lifestyle. Therefore, agricultural marketing has assumed important place. Traditionally, market is place or building where buying or selling of goods takes place. But in modern times with fast and long distance communication facilities like telephone becoming available, market is no more restricted to particular place only, but it has become wider and has assumed regional, national or even international status. Buying and selling is finalized on telephones only from distant places. Thus the concept of market has radically changed.

The concept of marketable surpluse is very important for the development of markets. Marketable surplus is different in different commodities. Marketable surplus is a surplus which is available for sale after meeting i) family needs ii) seed requirement iii) kind wages iv) gifts to relatives and friends etc. In the case of foodgrains surpluses are generally low. They vary from zero (with small and marginal farmers) to 70-80 percent with large farmers and in surplus areas. In general marketable surpluses in foodgrains are in the range of 45 to 50%. In cash crops and in those commodities which are raw materials of industry, surpluses are 80-100 %. In fruits and vegetables, which are grown on commercial scale, surpluses are above 90%. Thus, for the commodities which have large surpluses markets have to be well-organized and efficient ones.

Agriculture marketing comprises of all the operations involved in the movement of produce from the farm till it reaches the ultimate consumer. Several functions are involved in this process.

1.	Buying and assembling.
2.	Transporting and loading/unloading.
3.	Grading.
4.	Storing/warehousing.
5.	Processing.
6.	Financing.
7.	Risk-bearing.
8.	Retailing.

The above functions are carried out by various functionaries which are as follows :

1.	Traders.
2.	Transporters.
3.	Hamals.
4.	Graders.
5.	Weigh men.
6.	Financers/Bankers.
7.	Warehouses.

1.	Village/Itinerant merchant.
2.	Wholesaler in assembling market.
3.	Commission agent or Dalal.
4.	Preharvest contractor (in fruit crops).
5.	Wholesaler in consuming markets.
6.	Processor.
7.	Retailor.

1.	Wholesale markets.
	i) In producing area. ii) In consuming area.
2.	Retail market in consuming area.
3.	Daily Mandis and weekly markets in rural areas Producers selling directly to local consumers.
4.	Annual and occasional fairs.

As per definition, agricultural markets should be perfectly competitive markets as there are large number of buyers and sellers. But these markets are not really perfectly competitive. The traders as buyers are generally educated, have full knowledge of market-practices (demand, supply, prices, etc.) and are organizationally strong. This is not the case with farmers-sellers. They are mostly ignorant, weak and unorganized. When the prices are fixed in the open market, the farmers do not get the reasonable and correct prices as they sell their produce under forced or distress situation. Therefore these markets are imperfect markets.

1.	Open auction.
2.	Closed tender.
3.	Under cover or Hatter system.
4.	Private agreement.
5.	Quoting on sample.
6.	Dara sale.

First method i.e. open auction, is most popular and is followed in regulated markets as prices are fixed in the presence of all concern.

	Government.
	Co-operative.
	Private traders.
	1. Government Channel Producer - Govt. Department - consumer.
	2. Co-operative channel Producer>co-operatives->consumer.
	3. Private channel Producer-> village merchant->wholesaler-> commission agent (Dalal) -> Retailer-> consumer.

In some fruit crops, in addition to the above, there is preharvest contractor who takes fruit gardens while fruits are still on the trees.

In private channel, there are many intermediaries, which result into high costs and market margins. Therefore, the commodities become costly for the final consumer and this reduces the producer’s share in consumer’s prices. This is a traditional channel and is quite popular with the farmers. Nearly 60 to 70% agricultural produce is sold through this channel.

The co-operative channel is quite weak in the country. In Maharashtra, this channel is used partially in important fruit crops like grapes, pomogranate, banana, ber, orange along with private channel. It is also used in milk in Maharashtra, Gujrathi etc. along with Govt. and private channels.

Government channel is used mainly for foodgrains like rice, wheat and sugar. In some essential commodities, when the prices are unduly high or low the Govt. enters into market to buy the commodities and sell them to protect the interests of both-producer and consumer. The examples are onion, edible oils etc. Government channel operates with the co-operative or private channels. In Maharashtra, Govt. channel operates in the marketing of milk along with co-operative and private channels.

The channels of marketing is an important aspect of agricultural marketing affecting the prices paid by consumers and shares of them received by the producer. The shorter the channel, lesser the market costs and cheaper the commodity to the consumer. When the channel is long with more intermediaries, prices are more and producer’s is less. The channels of marketing and price for different commodities has been the main focus of research in agricultural marketing. The channel which provides commodities at cheaper price to consumer and also ensures greater share to producer is considered as the most efficient channel Several studies have been carried out in India on this topic for different commodities and in different regions and the results are of mixed nature due to local socio-economic conditions and infrastructure facilities.