Importance of Agricultural Marketing

Posted by Prof. Mangala V Reddy On 09/06/2023 10:08:28

Agricultural marketing in India is a process that begins with the decision to produce a saleable farm commodity and encompasses all aspects of the market structure or system, both functional and institutional, based on technical and economic considerations and includes pre- and post-harvest operations such as assembling, grading, storage, transportation, and distribution. 

Importance of Agricultural Marketing:

Increase in marketable surplus - The availability of high-quality seeds and other technological advancements have aided in increasing production and productivity, resulting in an increase in the marketable surplus of most agricultural commodities.

Market demand for horticultural crops - Horticultural crops are bulky and perishable in nature, so they must be handled carefully throughout the food supply chain until they reach the final consumer.

Price discovery and price signals - Agricultural marketing is concerned with price discovery at various stages of marketing as well as the transmission of price signals in the marketing chain, specifically from consumers to farmers.

Focus shift to market-led production - Economic development, urbanisation, liberal trade policies, and consumer awareness of safe and high-quality food have all led to an increase in agricultural opportunities.

Feeding the urban population - This will necessitate not only production but also an effective marketing system to facilitate the efficient movement of agricultural commodities from the point of production to the point of consumption.

Making smallholdings a viable option - Small and marginal farmers play an important role in meeting the food needs of a growing, increasingly wealthy, and urbanised population. Adopting a market-oriented approach can greatly increase the earning potential of such smallholders.

A marketing system that is open and integrated - The GoI's Doubling Farmers' Income (DFI) report emphasises the development of an integrated marketing system by transforming Rural Periodic Markets (RPMs) into Gramin Agricultural Markets (GrAMs) to function as collection and distribution centers in rural areas, as well as by integrating markets with knowledge centers and other services such as warehouse/cold storage and banks

India’s Agricultural Marketing System: 4 primary agricultural systems-

  • A direct sale to moneylenders and traders
    • Farmers sell the majority of their crops to local traders and money lenders.
    • The moneylenders then act as the wholesalers' agents
  • Village Haats
    • This market is limited to a single village, where producers, intermediaries, or consumers meet to buy and sell farm products.
    • They are conducted weekly, and the agents of wholesalers and various brokers come to buy the product.
    • The Haats are ill-equipped, with no storage, drainage, or other utilities.
    • In these markets, the products made in that village are sold.
    • The local market, also known as the growers' market, is available in rural areas.
    • They are usually located in small towns or in convenient locations where rural producers can bring their produce and sell it to buyers.
  • Mandi
    • These markets can be found in district headquarters as well as in other towns.
    • These are regular wholesale markets that provide a consistent location for daily transactions.
    • The quantity of commodities exchanged is in bulk. Commodities in large quantities arrive in these markets from other markets.
    • As a result, the marketing system includes middlemen, market agents, weighmen, and commission agents.
    • Grading, packing, warehousing, loading, transportation, telephone, and banking services are also available in these markets.
    • The Mandis are governed by several state APMC legislation.
  • Co-operative marketing
    • Farmers create cooperative marketing groups to take advantage of collective bargaining.
    • A marketing organisation collects excess from its members and sells it collectively in the Mandi.
    • This increases the members' negotiating power, allowing them to negotiate a higher price for the produce.
    • In addition to selling food, these organisations provide a variety of other services to its members.

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