Agricultural marketing

Agricultural marketing can be defined as the commercial functions involved in transferring agricultural products consisting of farm, horticultural and other allied products from producer to consumer. It includes all activities involved in moving agricultural produce through time (storage), space (transport), form (processing) and transferring ownership at various levels of marketing channels.

• There is considerable regional variation in methods of marketing. These processes can be broadly divided into three categories:
• Traditional Marketing Methods: start with sale by farmer and involve a number of intermediaries at different levels from rural markets to terminal markets.
• Close to 50% of the agricultural produce in India is sold via these channels.
• Cooperative based marketing: agri-products are directly purchased from farmers through marketing network of NAFED (National Agricultural Cooperative Marketing Federation of India Limited), thus eliminating middlemen.
• Over the course of time, there have been various successful cooperative marketing models like Anand Pattern Cooperatives (APC), Chicory contract farming coordination in Jamnagar Gujarat and Kerala
• Emerging models of agricultural marketing: With the emergence of new inputs, business opportunities and technologies in the market, several innovative marketing methods have evolved over the time, like-
• National Agriculture Market (eNAM): pan-India electronic trading portal which networks the existing APMC mandis to create a unified national market for agricultural commodities.
• Till date, more than 1 lakh traders and over 66,000 commission agents have been registered on the portal. As of 2018, trade recorded on the e-NAM portal stood at a value of Rs 50,575 crore, and in terms of volume it was more than two crore tonnes.
• Commodity and Futures markets: exchanges and trading options for further facilitation and better price discovery for farmers.
• For example, creation of National Spot Exchange Limited (NSEL).
• Private sector initiatives: Several start-ups and businesses have created innovative pilot solutions for agricultural markets.
• For example, Indian Tobacco Company’s e-choupal.
• other methodologies like Farmer Producer Organizations (FPOs) and Contract Farming.
• Twin goals to provide remunerative price to producers and to provide affordable price to the consumers
• For agricultural marketing government provides no subsidies but does provide some interest structural help. Successful only when there will be least number of intermediaries between the producer and the consumer
• 1950s government introduced agricultural produce marketing act which said every state government should be setting up agricultural produce marketing committee APMC is which were to protect the farmers from exploitation by setting up markets for them.

Why is having a well-functioning agricultural market important?

• Monetizing the Produce: Marketing facilitates the sales of agricultural products.
• Acting as a source of market information and price signal.
• Reducing the role of intermediaries.
• Encouraging capital formation and investment in technology.
• Value addition in agriculture by increasing access of agricultural produce to downstream industries. For example, large scale ‘Makhana’ snack industry in Bihar.

What are the issues these markets face in India?

• Institutional Issues like licensing barriers for owning a shop or godown, very high incidence of market charges (as large as 15% in some cases) and absence of standardized grading mechanism of agricultural produce.
• Infrastructural Issues like limited access of Agricultural Produce Markets in some areas in the country, poor Infrastructure in Agricultural Markets (like Cold Storage facilities) and poor economic viability of agricultural infrastructure projects.
• Market information system issues like absence of real time informational channels creating lag in demand signals, information to farmers is limited to major commodities and poor awareness among farmers regarding new channels of information (like SMS based advisories).
• Absence of a National Integrated Market: Although, there exists a national level physical market in the form of APMCs, there is no national level regulation for the same.
• Limited public investment: Public expenditure on agricultural marketing sub-sector ranges 4-5 % of the total public expenses on agriculture, while expenditure on marketing infrastructure development has been less than 1 %.

Efforts made by Governments to overcome these issues

• Creating a Model APMC Act, 2003: only sixteen States have amended their Act and only six states have notified the amended Rules. There are some States which do not have APMC Act and some have partially amended their Act.
• Consumer/Farmer Market (Direct Sale by the Producer): Direct marketing by farmers to the consumers experimented at the State level. For example, Apni Mandi of Punjab, Rythu Bazaars in Andhra Pradesh, Shetkari Bazar in Maharashtra etc.
• AGMARKNET: G2C e-governance portal that caters to the needs of various stakeholders such as farmers, industry, policy makers and academic institutions by providing agricultural marketing related information from a single window.
• Gramin Agricultural Markets (GrAMs): Efforts to develop and upgrade existing 22,000 rural haats (Rural Primary Markets) into GrAMs. These markets will have several features like:
• Physically strengthened infrastructure enabled through MGNREGS and other schemes along with better road linkages with habitations.
• An Agri-market infrastructure fund with a corpus of Rs. 2000 crore has been envisaged for the initiative.
• GrAMs will be linked to e-NAM and will remain outside the APMC Act regulation.
• Initiatives like Kisan Rail for movement of vegetables, fruits and other perishables. It aims to ensure their safe, reliable and fast transportation which will aid in better price realisation for the farmers. India’s first Kisan Rail was recently flagged off in Maharashtra.
• AGRIDEX: National Commodity and Derivatives Exchange (NCDEX) commencement of trading in the country’s first agriculture futures index called AGRIDEX.
• Scheme for Formation and Promotion of Farmer Produce Organizations (FPOs): to create 10,000 FPOs in five years period from 2019-20 to 2023-24 and also provide handholding support to each FPO.
• Other initiatives affecting agricultural marketing– Pradhan Mantri Gram Sadak Yojana (PMGSY), Pradhan Mantri Kisan SAMPADA Yojana, Mega Food Park Scheme, Agri-infrastructure development fund etc
• Agricultural marketing and farmer friendly reforms index NITI Aayog ranking based on provisions of APMC act and progress by states show competitiveness efficiency and transparency in agri markets.
• 1st Maharashtra, Gujarat, Rajasthan, MP.
• to prevent black marketing of certified seeds, the Rajasthan govt has decided to distribute seeds with subsi­dy to the farmers only through the village cooper­ative societies, also ex­ pected to strengthen coop­erative infrastructure in the State.
• Shankar guru committee 2001 govt intro model APMC act 2003 centre could only advise states to adopt it 

E Nam 

• Electronic National Agriculture Market is a pan - India trading portal launched in April 2016 for farm produce to create a unified national market for commodities by APMC
• device to create a national network of mandis which can be accessed online.
• seeks to influence the physical infrastructure of the mandis through an online trading portal.
• enables buyers situated in state or even outside the state to participate in trading
• aim is to improve marketing aspect of the agriculture sector with one license for the entire state and with single point levy. 
• Through e-NAM an entire state becomes a market for sellers and the market fragmentation within the same state gets abolished.
• improves the supply chain of commodities and reduces wastages
• remunerative prices for farmers by plugging the trade malpractices in mandis. 
• While the farmer is the primary stakeholder, e-NAM also provides traders, commission agents and exporters better business opportunities through a unified and extensive marketplace. Bulk buyers, processors, exporters etc. benefited by being able to participate directly in trading at the local mandi level

What is the performance of e - NAM since its launch from 2016?

•  roped in 585 mandis across the 16 states and 2 Union territories, linking more than 1,65,04,866 farmers, 1,25,167 traders and 69,842 commission agents.
• trades in 150 commodities, and goods worth Rs 52,173 crore have been traded so far.
• available in 8 languages like Hindi, English, Telugu, Odiya, Bangla, Tamil, Gujarati and Marathi.
• interconnection of mandis, farmers have just been exposed to an entirely new way of conducting business which enabling them to get higher returns, induce more transparency and use technology for maximum benefits.

How e - NAM became a game changer?

• No middlemen involved in buying- selling of agri products; hence better deal for farmers
• Less transaction cost
• Single license valid across all connected mandis
• Single point levy of all products
• Quality testing procedure introduced for buyers and sellers

These advantages of e-NAM continuously attract the farmers to trade their produce through this online portal.The higher registration of traders and APMCs with more transaction on the portal made it a big game changer in agriculture trading sector.In future NAM not only becomes the big service provider to the farmers and traders but consumers will also benefited by produce price stability and availability.

What are APMCs and what role do they play?

• APMC is a statutory market committee constituted by a State Government in respect of trade in certain notified agricultural or horticultural or livestock products, under the APMC Act, 2003 issued by that state government.
• APMCs are a part of the wholesale marketing system. They were established to fulfill objectives like increasing transparency in the pricing systems, providing extension services to farmers, value addition in agriculture and also data generation for agri.-market information systems.
• As of now, APMCs provide facilities like auction halls, weigh bridges, warehouses, soil testing labs, water treatment plants etc.
• Currently, all States and UTs except Union Territories of Andaman and Nicobar Islands, Dadra-Nagar-Haveli, Daman and Diu, Lakshadweep and States of Bihar, Kerala and Manipur are under respective Agricultural Produce Marketing (Regulation) Acts.

Role of APMCs

• Create agricultural market Mandi’s and regulate it 
• Authorised to issue licences to the market functionaries also renew or cancel the licences
• To levy marketplace for sale of the product
• Price to be determined by auction

The collective result of these issues has been low price realization for farmers, creation of food and nutritional insecurity and high wastages in the supply chain. (For instance, the total post-harvest losses estimated by Indian Council of Agricultural Research were at about Rs 92,651 crores at average prices value of 2014.)