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Title: Agricultural Marketing Trade and Prices
Description: Introduction Market structure conduct and performance Marketing channels, marketing cost, marketing efficiency and market integration External trade in agricultural products Cooperative agricultural marketing institutions State trading and quality control Warehousing and food corporation of India Agricultural prices and risk management
Description: Introduction Market structure conduct and performance Marketing channels, marketing cost, marketing efficiency and market integration External trade in agricultural products Cooperative agricultural marketing institutions State trading and quality control Warehousing and food corporation of India Agricultural prices and risk management
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Agricultural Marketing Trade and Prices
Author
TNAU, Tamil Nadu
Index
LN Name
Page No
1
Introduction
4 - 23
2
Market structure conduct and performance
24 - 42
3
Marketing channels, marketing cost, marketing efficiency and market
integration
43 - 75
4
External trade in agricultural products
76 - 92
5
Cooperative agricultural marketing institutions
6
STATE TRADING and QUALITY CONTROL
143 - 160
7
Warehousing and food corporation of India
161 - 203
8
Agricultural prices and risk management
204 - 220
93 - 142
Agricultural Marketing Trade and Prices
1
CHAPTER 1
INTRODUCTION
Mankind is considered the superior to the living things in the world
...
Land cultivation and food
production marked the beginning of civilization particularly in the riparian lands
...
Land
cultivation, otherwise known as farming is influenced by the behavior of natural events
like rainfall, drought, flood, storm and so on and so forth
...
In other words, food
production is restricted to specific locations where the soil, weather and moisture favor
that activity
...
A group of people specializing in food
production and identified as farmers shoulder the noble responsibility of feeding the
entire world
...
It is in this juncture, marketing
plays its vital role
...
Therefore, market reform and marketing system improvement ought to be an integral
part of policy and strategy for agricultural development
...
This has been largely attributed to the fact that not enough
attention has been devoted to the facilities and services which must be available to
farmers that would support agricultural sector for its development
...
Concept and Definition
The term agricultural marketing is composed of two words – agriculture and
marketing
...
e
...
But, generally, it is used to mean growing and/or raising crops and livestock
...
AgriMoon
...
It includes all activities involved in the
creation of time, place, form and possession utility
...
American Marketing Association defined marketing as the performance of business
activities that directs the flow of goods and services from producers to users
...
Agricultural marketing is the study of all the activities, agencies and policies
involved in the procurement of farm inputs by the farmers and the movement of
agricultural products from the farms to the consumers
...
It includes the organization of
agricultural raw materials supply to processing industries, the assessment of demand for
farm inputs and raw materials, and the policy relating to the marketing of farm products
and inputs
...
Agricultural marketing system in developing countries including India can be
understood to compose of two major sub-systems viz
...
The actors in the product marketing sub-system include farmers,
village/primary traders, wholesalers, processors, importers, exporters, marketing
cooperatives, regulated market committees and retailers
...
However, as Acharya has described, in a dynamic and growing agricultural
sector, the agricultural marketing system ought to be understood and developed as a
link between the farm and the non-farm sectors
...
AgriMoon
...
The expansion in the size of farm output stimulates forward
linkages by providing surpluses of food and natural fibres which require transportation,
storage, milling or processing, packaging and retailing to the consumers
...
Further, if the increase in
agricultural production is accompanied by a rise in real incomes of farm families, the
demand of these families for non-farm consumer goods goes up as the proportion of
income spent on non-food consumables and durables tends to rise with the increase in
real per capital income
...
Agricultural marketing, therefore, can be defined as comprising of all activities
involved in supply of farm inputs to the farmers and movement of agricultural products
from the farms to the consumers
...
Of late trade in the
domestic and international markets also become the part of it
...
Thus, the subject of agricultural marketing includes
product marketing as well as input marketing
...
The importance of
output marketing has become more conspicuous in the recent past with the increased
marketable surplus of the crops and other agricultural commodities following the
technological breakthrough
...
Input marketing is a
comparatively new subject
...
These inputs were available with them; the purchase of
inputs for production of crops from the market by the farmers was almost negligible
...
AgriMoon
...
The new agricultural technology is input-responsive
...
In this
book, the subject-matter of agricultural marketing has been dealt with; both from the
theoretical and practical points of view
...
Specially, the subject of agricultural marketing includes marketing functions,
agencies, channels, efficiency and costs, price spread and market integration,
producer's
surplus,
marketing
institutions,
government
policy
and
research,
imports/exports of agricultural commodities and commodity and futures trading
...
Therefore, the
framework under which agricultural produce markets function and the factors which
influence the prices received by the farmers now need to be understood in a different
perspective compared to that in the past
...
Markets and Marketing
Market – Meaning
The word market originated from the latin word 'marcatus' which means
merchandise or trade or a place where business is conducted
...
g
...
g
...
g
...
g
...
g
...
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Agricultural Marketing Trade and Prices
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There is an old English saying that two women and a goose may make a market
...
Other
terms used for describing markets in India are Haats, Painths, Shandies and Bazar
...
Some of the
definitions of market are given below:
1
...
2
...
3
...
4
...
5
...
6
...
7
...
A market exists when buyers wishing to exchange the money for a good or
service are in contact with the sellers who are willing to exchange goods or services for
money
...
The concept of a market is basic to most of the contemporary economies, since in a free
market economy, this is the mechanism by which resources are allocated
...
These conditions
should be both necessary and sufficient
...
1
...
The existence of buyers and sellers;
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Agricultural Marketing Trade and Prices
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3
...
Business relationship or intercourse between buyers and sellers; and
5
...
Dimensions of a Market
There are various dimensions of any specified market
...
Location or place of operation
2
...
Time span
4
...
Nature of transactions
6
...
Degree of competition
8
...
Stage of marketing
10
...
Type of population served
12
...
Classification of Markets
Markets may be classified on the basis of each of the twelve dimensions already
listed
...
On the Basis of Location or Place of Operation
On the basis of the place of location or place of operation, markets are of the
following types:
(a) Village Market: A market which is located in a small village, where major
transactions take place among the buyers and sellers normally residing in that village, is
called a village market
...
In these markets, a major part of the produce is
brought for sale by the producer-farmers themselves
...
(c) Secondary Wholesale Markets: These markets are located generally at
district headquarters or important trade centres or near railway junctions
...
AgriMoon
...
The bulk of the arrivals in these markets are from other markets
...
There are, therefore, specialized
marketing agencies performing different marketing functions, such as those of
commission agents, brokers and weighmen in these markets
...
(d) Terminal Markets: A terminal market is one where the produce is either
finally disposed of to the consumers or processors, or assembled for export
...
Commodity exchanges exist in these markets which provide facilities for forward trading
in specific commodities
...
Delhi, Mumbai, Chennai, Bengaluru, Kolkata and Cochin are terminal markets in
India for many commodities
...
These are generally seaport towns
...
2
...
The village markets exist mostly for perishable commodities in small lots, e
...
,
local milk market or vegetable market
...
Regional markets in India usually exist
for food grains
...
Earlier national markets existed for only durable goods like jute and tea
...
(d) World or International Market: A market in which the buyers and sellers are
drawn from more than one country or the whole world
...
These markets exist for the commodities which have a
world-wide demand and/or supply, such as coffee, machinery, gold, silver, etc
...
AgriMoon
...
It is expected that the
international trade in such commodities will become free from many restrictions that exist
now
...
On the Basis of Time Span
On this basis, markets are of the following types:
(a) Short period Markets: The markets which are held only for a day or few
hours are called short-period markets
...
In these
markets, the prices of commodities are governed mainly by the extent of demand for,
rather than by the supply of, the commodity
...
Major commodities traded in these markets is the farm
produce grown in the hinterlands
...
These are similar to 'spontaneous
markets' in several developed countries
...
The commodities traded in these markets are less perishable and
can be stored for some time; like foodgrains and oilseeds
...
(d) Secular Markets: These are markets of a permanent nature
...
Examples are markets for machinery and manufactured goods
...
On the Basis of Volumes of Transactions
There are two types of markets on the basis of volume of transactions at a time
...
These markets are generally located in either
towns or cities
...
These
markets occupy an extremely important link in the marketing chain of all the commodities
including farm products
...
The wholesale markets for
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Agricultural Marketing Trade and Prices
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farm products in India can be classified as primary, secondary and terminal wholesale
markets
...
The transactions in primary wholesale markets take
place mainly between farmers and traders
...
The transactions in these
markets take place between primary wholesalers and traders of terminal market
...
(b) Retail Markets: A retail market is one in which commodities are bought by
and sold to the consumers as per their requirements
...
The retailers purchase the goods from
wholesale market and sell in small lots to the consumers in retail markets
...
The distinction between the wholesale and retain market can be made mainly on
the basis of buyer
...
But sometimes-bulk consumers also purchase from the wholesale markets
...
5
...
(b) Forward Markets: A market in which the purchase and sale of a commodity
takes place at time t but the exchange of the commodity takes place on some specified
date in future i
...
, time t + 1
...
Instead, the differences in the
purchase and sale prices are paid or taken
...
On the Basis of Number of Commodities in which Transaction Takes Place
A market may be general or specialized on the basis of the number of
commodities in which transactions are completed:
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Agricultural Marketing Trade and Prices
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(a) General Markets: A market in which all types of commodities, such as
foodgrains, oilseeds, fibre crops, gur, etc
...
These markets deal in a large number of commodities
...
For every group of commodities,
separate markets exist
...
7
...
Extreme forms are almost
non-existent
...
In addition to these
two extremes, various midpoints of this continuum have been identified
...
(b) Imperfect Markets: The markets in which the conditions of perfect
competition are lacking are characterized as imperfect markets
...
He exercises sole control over the quantity or price of the
commodity
...
Indian farmers operate in monopoly market when purchasing electricity for
irrigation
...
(ii) Duopoly Market: A duopoly market is one which has only two sellers of a
commodity
...
AgriMoon
...
The market situation in which there are only two
buyers of a commodity is known as the duopsony market
...
A market having a few (more
than two) buyers is known as oligopsony market
...
The difference is made conspicuous by different trade marks
on the product
...
Examples of
monopolistic competition faced by farmers may be drawn from the input markets
...
8
...
, are termed as commodity markets
...
9
...
Such markets
are located in producing areas
...
Such markets are generally
located in areas where production is inadequate, or in thickly populated urban centres
...
On the Basis of Extent of Public Intervention
Based on the extent of public intervention, markets may be placed in any one of
the following two classes:
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Agricultural Marketing Trade and Prices
12
(a) Regulated Markets: These are those markets in which business is done in
accordance with the rules and regulations framed by the statutory market organization
representing different sections involved in markets
...
(b) Unregulated Markets: These are the markets in which business is
conducted without any set rules and regulations
...
These markets suffer from many ills, ranging from
unstandardised charges for marketing functions to imperfections in the determination of
prices
...
On the Basis of Type of Population Served
On the basis of population served by a market, it can be classified as either
urban or rural market
...
The nature and quantum of demand for
agricultural products arising from the urban population is characterized as urban market
for farm products
...
There is considerable difference in the nature of embedded
services required with a farm product between urban and rural demands
...
According to the survey of the Directorate of Marketing and Inspection (DMI) of
Government of India, only 46 per cent of rural primary markets, of the country have the
facility of market yards; 6
...
2 per cent have cattle shed,
3 per cent have canteen, 4
...
1 per cent have auction
platforms, 12
...
2 per cent markets have
electricity facility
...
12
...
Over the years, there has
been a considerable increase in the producers or consumers co-operatives or other
organizations handling marketing of various products
...
AgriMoon
...
In
the case of marketing activities undertaken by producers or consumers co-operatives,
the marketing margins are either negligible or shared amongst their members
...
On the
basis, the market can be (a) farmers markets, (b) cooperative markets or (c) general
markets
...
A 12-dimensional classification of markets is shown
in Chart 1
...
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Agricultural Marketing Trade and Prices
Chart: 1
...
AgriMoon
...
Its dynamic
functions are of primary importance in promoting economic development
...
India's age-old farming practices have taken a turn in recent decades
...
This technological breakthrough has led to a substantial increase in
production on the farms and to the larger marketable and marketed surplus
...
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Agricultural Marketing Trade and Prices
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The agricultural marketing system plays a dual role in economic development in
countries whose resources are primarily agricultural
...
It
is the marketing system that transmits the crucial price signals
...
On the basis of IADP experience, Kiehl has shown that the "marketing problem"
begins to emerge in the process of shifting from traditional to modern agriculture
because of production surpluses generated by the shift
...
The scope for moving towards modern
agriculture must include market dimensions if the momentum of production
transformation is to be sustained
...
An efficient marketing system can also contribute to an
increase in the marketable surplus by scaling down the losses arising out of inefficient
processing, storage and transportation
...
(ii) Increase in Farm Income
An efficient marketing system ensures higher levels of income for the farmers
reducing the number of middlemen or by restricting the cost of marketing services and
the malpractices, in the marketing of farm products
...
This again
results in an increase in the marketed surplus and income of the farmers
...
The need for providing adequate incentives for
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Agricultural Marketing Trade and Prices
17
increased production is, therefore, very important, and this can be made possible only by
streamlining the marketing system
...
e
...
The widening of the market helps in increasing the
demand on a continuous basis, and thereby guarantees a higher income to the
producer
...
Many industries like cotton, sugar, edible oils, food processing and jute depend on
agriculture for the supply of raw materials
...
This work is carried out through transmitting
price signals
...
New technology requires higher investment and farmers would
invest only if they are assured of market clearance at remunerative price
...
Persons
like commission agents, brokers, traders, retailers, weighmen, hamals, packagers and
regulating staff are directly employed in the marketing system
...
(viii) Addition to National Income
Marketing activities add value to the product thereby increasing the nation's
gross national product and net national product
...
Any plan of
economic development that aims at diminishing the poverty of the agricultural
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Agricultural Marketing Trade and Prices
18
population, reducing consumer food prices, earning more foreign exchange or
eliminating economic waste has, therefore, to pay special attention to the development
of an efficient marketing for food and agricultural products
...
It is, in fact,
a part of production itself, for production is complete only when the product reaches a
place in the form and at the time required by the consumers
...
The following four types of
utilities of the product are created by marketing:
(a) Form Utility: The processing function adds form utility to the product by
changing the raw material into a finished form
...
For example,
through processing, oilseeds are converted into oil, sugarcane into sugar, cotton into
cloth and wheat into flour and bread
...
(b) Place Utility: The transportation function adds place utility to products by
shifting them to a place of need from the place of plenty
...
(c) Time Utility: The storage function adds time utility to the products by making
them available at the time when they are needed
...
Products are transferred through
marketing to persons having a higher utility from persons having a low utility
...
Foodgrain marketing, therefore,
provides income to most Indian farmers so that they may buy the required inputs for the
farm as well as purchase items of domestic need;
(b) The foodgrain marketing business provides livelihood to lakhs of traders,
processors, commission agents and other persons engaged in the foodgrain trade; and
(c) The foodgrain marketing system helps in providing food for consumers and
fodder for livestock
...
AgriMoon
...
Agricultural marketing is a process which starts with _________________ of a
saleable farm commodity
...
The subject matter of agricultural marketing includes _____________ as well as
_____________ marketing
...
The word MARKET originated from the latin word _______________________
4
...
Commodity exchanges exist in _________________ markets
...
__________________ markets are of a permanent nature
...
Which of the following is an imperfect market?
a
...
oligopoly
c
...
none of these
Ans: c
d
...
Ans : c
8
...
One buyer
b
...
two buyers
9
...
Heterogenous and differentiated form of a commodity is noticed in
monopolistic competition
...
Different trade marks are used in monopolistic competition
...
Different prices prevail for the same basic product
...
Sellers in monopolistic competition mutually agree to charge a common price
...
Converting groundnut into oil creates
a
...
form utility
c
...
possession utility
...
11
...
Place utility b
...
time utility
d
...
Ans: a
...
Storing milk creates
a
...
form utility c
...
possession utility
...
13
...
Place utility b
...
time utility
d
...
Ans: d
...
Commodities traded in secular markets are not durable in nature
...
Retail markets are very near to consumers
...
In forward markets, exchange of commodity takes place in future time
...
AgriMoon
...
In perfect markets, commodity prices at a point of time differ only by the cost of
transport between the markets
...
Fertilizer market is an example of oligopoly market
...
Raw materials are sold in capital market
...
Retail markets are located in the consuming markets
...
Traders frame the rules for the conduct of the business in regulated markets
...
Marketing margins are usually high in cooperative marketing
...
Number and size of the firms existing in the market is a measure of market
conduct
...
AgriMoon
...
A
function modifies the structure, and the nature of the existing structure limits the
performance of functions
...
It also includes the manner of the operation of the market
...
Market structure refers to those organizational characteristics of a market
which influence the nature of competition and pricing, and affect the conduct of business
firms,
2
...
Market structure is the formal organization of the functional activity of a
marketing institution
...
Components of Market Structure
The components of the market structure, which together determine the conduct
and performance of the market, are:
1
...
This is
measured by the number and size of firms existing in the market
...
A high degree of market concentration restricts the
movement of goods between buyers and sellers at fair and competitive prices, and
creates an oligopoly or oligopsony situation in the market
...
Degree of Product Differentiation
Homogeneous or other nature of the product affects the market structure
...
When
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Agricultural Marketing Trade and Prices
products are heterogeneous, firms have the tendency to charge different prices for their
products
...
3
...
Sometimes, a few big firms do not allow new firms to enter the
market or make their entry difficult by their dominance in the market
...
4
...
5
...
Firms plan their strategies in respect of the methods to be employed in
determining prices, increasing sales, coordinating with competing firms and adopting
predatory practices against rivals or potential entrants
...
Dynamics of Market Structure – Conduct and Performance
The market structure determines the market conduct and performance
...
Specifically, market conduct includes:
(a) Market sharing and price setting policies;
(b) Policies aimed at coercing rivals; and
(c) Policies towards setting the quality of products
...
Society has to decide the
criteria for satisfactory market performance
...
Efficiency in the use of resources, including real cost of performing various
functions;
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2
...
Dynamic progressiveness of the system in adjusting the size and number of
firms in relation to the volume of business, in adopting technological innovations and in
finding and/or inventing new forms of products so as to maximize general social welfare
...
Whether or not the system aggravates the problem of inequalities in interpersonal, inter-regional, or inter-group incomes
...
The market structure, therefore, has always to keep on adjusting to changing
environment if it has to satisfy the social goals
...
For a satisfactory market performance, the market structure should
keep pace with the following changes:
(i) Production Pattern
Significant changes occur in the production pattern because of technological,
economic and institutional factors
...
Emergence of producers groups or group marketing practice is
likely to alter market structure
...
The market structure should be reoriented to keep it in harmony with the changes in demand
...
(iii) Costs and Patterns of Marketing Functions
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Marketing functions such as transportation, storage, financing and dissemination
of market information, have a great bearing on the type of market structure
...
Government policies with regard to purchases, sales and subsidies affect the
performance of market functions
...
Number of players in the market must be in
accordance with the marketing functions performed and size of operations to take
advantage of size economy
...
Establishment of retail chains and entry of MNCs in the food retailing
effected conspicuous change in the structure of vegetable markets in India
Agricultural Marketing and Economic Development
Orderly and efficient marketing of food grains plays an important role in solving
the problem of hunger
...
If marketing system is not efficient, price signals arising at
the consumers' level are not adequately transferred to the producers, as a result farmers
do not get sufficient price incentive to increase the production of the commodities which
are in short supply
...
In agricultural-oriented developing
countries like India, agricultural marketing plays a pivotal role in fostering and sustaining
the tempo of rural and economic development
...
The development of an efficient marketing system is important in ensuring that
scarce and essential commodities reach different classes of consumers
...
The objectives of price stability, rapid
economic growth and equitable distribution of goods and services cannot be achieved
without the support of an efficient marketing system
...
For example,
Thomsen has classified the marketing functions into three broad groups
...
AgriMoon
...
According to them, the classification is as follows:
(i)
Physical Movement
Storage
Functions
Packing
Transportation
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Agricultural Marketing Trade and Prices
Grading
Distribution
(ii)
Ownership Movement
Determining Need
Functions
Creating Demand
Finding Buyers and Sellers
Negotiation of Price
Rendering Advice
Transferring the Title to Goods
(iii)
Market Management
Formulating Policies
Functions
Financing
Providing Organization
Supervision
Accounting
Securing Information
Marketing Agencies
In the marketing of agricultural commodities, the following agencies are involved:
(i) Producers
Most farmers or producers, perform one or more marketing functions
...
Some farmers, especially the large
ones, assemble the produce of small farmers, transport it to the nearby market, sell it
there and make a profit
...
Frequent visits to markets and constant touch with market functionaries, bring home to
them a fair knowledge of market practices
...
They do this at different stages in the marketing process
...
They buy and sell on their own and gain or lose, depending on the difference in
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the sale and purchase prices
...
Merchant middlemen are of following types:
Wholesalers: Wholesalers are those merchant middlemen who buy and sell
foodgrains in large quantities
...
They sell foodgrains either in the same market or in other markets
...
They do not sell significant quantities
to ultimate consumers
...
The wholesalers perform the following functions in marketing:
(a) They assemble the goods from various localities and areas to meet the demands
of buyers;
(b) They sort out the goods in different lots according to their quality and prepare
them for the market;
(c) They equalize the flow of goods by storing them in the peak arrival season and
releasing them in the off-season;
(d) They regulate the flow of goods by trading with buyers and sellers in various
markets;
(e) They finance the farmers so that the latter may meet their requirements of
production inputs; and
(f) They assess the demand of prospective buyers and processors from time to
time, and plan the movement of the goods over space and time
...
They are producers' personal representatives to consumers
...
Itinerant Traders and Village Merchants: Itinerant traders are petty merchants
who move from village to village, and directly purchase the produce from the cultivators
...
Village
merchants have their small establishments in villages
...
Village merchants also supply essential consumption goods to the
farmers
...
They often visit nearby markets and
keep in touch with the prevailing prices
...
Mashakhores: This is a local term used for big retailers or small wholesalers
dealing in fruits and vegetables
...
AgriMoon
...
They usually sell to the bulk consumers like hotelwalas, paramiliary units or small retailers/vendors in lots of around 5 kg to 10 kg each
...
In other words, the mashakhores are now working
more like ordinary retailers
...
They do not take title to
the produce and, therefore, do not own it
...
They sell services to their principals and not the goods or commodities
...
They serve as buyers or sellers
in effective bargaining
...
He is
usually granted broad powers by those who consign goods or who order the purchase
...
All these facilities are extended to buyer-firms as well, if
asked for
...
They sometimes provide advance money to farmers and itinerant traders on the
condition that the produce will be disposed of through them
...
A Pacca arhatia acts on behalf of the traders in the consuming market
...
In regulated markets, only one category of commission agent exists under the
name of 'A' class trader
...
He is, therefore, preferred by the farmers to the
co-operative marketing society for the purpose of the sale of the farmer's produce
...
AgriMoon
...
They retain the sale proceeds, and pay
to the farmers as and when the latter require the money;
(iii)
They offer advice to farmers for purchase of inputs and sale of products;
(iv)
They provide empty bags to enable the farmers to bring their produce to the
market;
(v)
They provide food and accommodation to the farmers and their animals when
the latter come to the market for the sale of their produce;
(vi)
They provide storage facility and advance loans against the stored product up
to 75 per cent of the value;
(vii)
They arrange, if required by the farmer, for the transportation of the produce
from the village to the market; and
(viii)
They help the farmers in times of personal difficulties
...
The
main function of a broker is to bring together buyers and sellers on the same platform for
negotiations
...
They may claim brokerage from the
buyer, the seller or both, depending on the market situation and the service rendered
...
Brokers have no establishment in the market
...
There is no risk to them
...
In most
regulated markets, brokers do not play any role because goods are sold by open
auction
...
But they still play a
valuable role in the marketing of other agricultural commodities, such as gur, sugar,
edible oil, cotton seed and chillies
...
They are not regular buyers or sellers of produce
...
They buy at low prices when arrivals are substantial and
sell in the off-season when prices are high
...
They make profit from short-run as well as long-run price fluctuations
...
AgriMoon
...
Some
processors employ agents to buy for them in the producing areas, store the produce and
process it throughout the year on continuous basis
...
(e) Facilitative Middlemen
Some middlemen do not buy and sell directly but assist in the marketing process
...
But the efficiency of the system
increases when they engage in business
...
The important
facilitative middlemen are:
Hamals or Labourers: They physically move the goods in marketplace
...
They assist in weighing the
bags
...
Hamals are
the hub of the marketing wheel
...
Weighmen: They facilitate the correct weighment of the produce
...
Generally, the scalebeam balance is used
...
The weighbridge system of
weighing also exists in big markets
...
They facilitate the process of
prices settlement between the buyer and the seller
...
The main transport means are the railways and trucks
...
Communication Agency: It helps in the communication of the information about
the prices prevailing, and quantity available, in the market
...
The post and telegraph, telephone, newspapers, the radio
and informal links are the main communication channels in agricultural marketing
...
AgriMoon
...
Newspapers, the radio,
television and cinema slides are the main media for advertisements
...
Marketing Institutions
Marketing institutions are business organizations which have come up to operate
the marketing machinery
...
They perform one or more of the Marketing functions
...
Some important
institutions in the field of agricultural marketing are:
(a) Public Sector Institutions
(i)
Directorate of Marketing and Inspection (DMI)
(ii)
Commission for Agricultural Costs and Prices (CACP)
(iii)
Food Corporation of India (FCI)
(iv)
Cotton Corporation of India (CCI)
(v)
Jute Corporation of India (JCI)
(vi)
Specialized Commodity Boards
•
•
Tea Board
•
Coffee Board
•
Spices Board
•
Coconut Board
•
Oilseeds and Vegetable Oils Board
•
Tobacco Board
•
Cardamom Board
•
Arecanut Board
•
Coir Board
•
Silk Board
•
National Horticulture Board (NHB)
•
34
Rubber Board
National Dairy Development Board (NDDB)
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Agricultural Marketing Trade and Prices
(vii) Others
•
Central Warehousing Corporation (CWC)'
•
State Warehousing Corporations (SWCs)
•
State Trading Corporation (STC)
•
Agricultural and Processed Food Export Development Authority (APEDA)
•
Export Inspection Council
•
Marine Products Export Development Authority (MPEDA)
•
Silk Export Promotion Council (SEPC)
•
The Cashewnuts Export Promotion Council of India (CEPCI)
•
Agricultural Produce Market Committees (APMC)
•
State Agricultural Marketing Boards (SAMB)
•
Council of State Agricultural Marketing Boards (COSAMB)
•
State Directorates of Agricultural Marketing
•
Research Institutions and Agricultural Universities
(b) Cooperative Sector Institutions
(i)
National Cooperative Development Corporation (NCDC)
(ii)
National Agricultural Cooperative Marketing Federation (NAFED)
(iii)
National Cooperative Tobacco Growers Federation (NTGF)
(iv)
National Consumers Cooperative Federation (NCCF)
(v)
Tribal Cooperative Marketing Federation (TRIFED)
(vi)
Special Commodity Cooperative Marketing Organizations (Sugarcane, Cotton,
Milk)
(vii) State Cooperative Marketing Federations
...
This is the quantity which is actually made available to the non-producing
population of the country
...
The arrangements for marketing and
the expansion of markets have to be made only for the surplus quantity available with
the farmers, and not for the total production
...
AgriMoon
...
The rate at which agricultural production expands determines the pace of
agricultural development, while the growth in the marketable surplus determines the
pace of economic development
...
Though
the marketing system is more concerned with the surplus which enters or is likely to
enter the market, the quantum of total production is essential for this surplus
...
The knowledge of marketed and marketable surplus helps the policy-makers as
well as the traders in the following areas:
i
...
The knowledge of
quantum of marketable surplus helps in framing these policies
...
Developing Proper Procurement and Purchase Strategies: The procurement
policy for feeding the public distribution system has to take into account the quantum
and behaviour of marketable and marketed surplus
...
Checking Undue Price Fluctuations: A knowledge of the magnitude and extent of
the surplus helps in the minimization of price fluctuations in agricultural commodities
because it enables the government and the traders to make proper arrangements for the
movement of product from one area, where they are in surplus, to another area which is
deficient
...
If surplus is expected to be less than what is necessary,
the country can plan for imports and if surplus is expected to be more than what is
necessary, avenues for exporting such a surplus can be explored
...
Development of Transport and Storage Systems: The knowledge of marketed
surplus helps in developing adequate capacity of transport and storage system to handle
it
...
AgriMoon
...
The producer's surplus is of two
types:
1
...
It is a theoretical concept of surplus
...
This may be
expressed as follows:
MS = P – C
Where
MS
= Marketable surplus
P
= Total production, and
C
= Total requirements (family consumption, farm needs, payment to
labour, artisans, landlord and payments for social and religious work)
...
Marketed Surplus
Marketed surplus is that quantity of the produce which the producer-farmer
actually sells in the market, irrespective of his requirements for family consumption, farm
needs and other payments
...
Whether the marketed surplus increases with the increase in production has
been under continual theoretical scrutiny
...
This results in distress sale on some farms
...
An increase in the real income of farmers also has a positive effect on on-farm
consumption because of positive income elasticity
...
Bansil writes that there is only one term – marketable surplus
...
Subjectively, the term marketable surplus refers to
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Agricultural Marketing Trade and Prices
theoretical surplus available for sale with the producer-farmer after he has met his own
genuine consumption requirements and the requirements of his family, the payment of
wages in kind, his feed and seed requirements, and his social and religious payments
...
Relationship between marketed surplus and marketable surplus
The marketed surplus may be more, less or equal to the marketable surplus,
depending upon the condition of the farmer and type of the crop
...
The marketed surplus is more than the marketable surplus when the farmer retains a
smaller quantity of the crop than his actual requirements for family and farm needs
...
This situation of selling more than the marketable surplus is termed as
distress or forced sale
...
The quantity of distress sale
increases with the fall in the price of the product
...
2
...
This situation holds true under the following conditions:
(a) Large farmers generally sell less than the marketable surplus because of their better
retention capacity
...
Sometimes, farmers retain the produce even up to the next
production season
...
With the fall in
the price of the crop relative to a competing crop, the farmers may consume more of the
first and less of the second crop
...
The marketed surplus may be equal to the marketable surplus when the farmer
neither retains more nor less than his requirement
...
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Agricultural Marketing Trade and Prices
Factors Affecting Marketable Surplus
The marketable surplus differs from region to region and, within the same region,
from crop to crop
...
On a particular farm, the quantity of
marketable surplus depends on the following factors:
(i) Size of Holding: There is positive relationship between the size of the holding
and the marketable surplus
...
(iii) Price of the Commodity: The price of the commodity and the marketable
surplus have a positive as well as a negative relationship, depending upon
whether one considers the short and long run or the micro and macro levels
...
(v) Requirement of Seed and Feed: The higher the requirement for these uses, the
smaller the marketable surplus of the crop
...
For example, in the case of cotton, jute and
rubber, the quantity retained for family consumption is either negligible or
very small part of the total output
...
Even among food crops, for such
commodities like sugarcane, spices and oilseeds which require some
processing before final consumption, the marketable surplus as a proportion
of total output is larger than that for other food crops
...
For example, in Punjab, rice forms a relatively small
proportion of total cereals consumed by farm-families compared to those in southern or
eastern states
...
The functional relationship between the marketed surplus of a crop and factors
affecting the marketed surplus may be expressed as:
M = f(x 1 , x 2 , x 3 , x 4 )
where
M
39
=
Total marketed surplus of a crop in quintals
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...
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Agricultural Marketing Trade and Prices
x1
=
Size of holding in hectares
x2
=
Size of family in adult units
x3
=
Total production of the crop in quintals
x4
=
Price of the crop
Relationship between prices and marketable surplus
Two main hypotheses have been advanced to explain the relationship between
prices and the marketable surplus of foodgrains
...
This
hypothesis was presented by P N
...
Ezekiel
...
This implies that the farmers' consumption is a
residual, and that the marketed surplus is inversely proportional to the price level
...
The argument is that, in the poor economy of underdeveloped countries, farmers sell
that quantity of the output which gives them the amount of money they need to satisfy
their cash requirements; they retain the balance of output for their own consumption
purpose
...
In other words, with a rise in the prices of
foodgrains, they sell a smaller quantity of foodgrains to get the cash they need, and vice
versa
...
Olson and Krishnan have argued that the marketed surplus
varies inversely with the market price
...
Positive Relationship
V
...
Dandekar and Rajkrishna put forward the case for a positive relationship
between prices and the marketed surplus of food grains in India
...
With a rise in the prices of
food grains, farmers are tempted to sell more and retain less
...
The converse, too, holds true
...
AgriMoon
...
Market conduct includes
a
...
Policies aimed at coercing rivals
c
...
Efficiency in the use of resources
Ans: b
...
Knowledge of marketable surplus helps the
a
...
non farm population
c
...
neither a nor b
...
Marketable surplus will be more in the case of
a
...
jowar c
...
gram
Ans: c
4
...
rice b
...
sugarcane d
...
All the following have positive relationship with marketable surplus except
a
...
size of holding c
...
a and b
Ans: a
...
Commodity price and marketed surplus would have negative relationship in the case
of
a
...
cotton c
...
jute
...
Primary function of marketing includes
a
...
transport
c
...
banking
Ans: a
...
Secondary function of marketing includes
a
...
grading c
...
banking
Ans: b
...
transport c
...
insurance
Ans: d
9
...
Assembling
10
...
Grading
b
...
selling d
...
11
...
Processing b
...
selling d
...
12
...
Processing b
...
buying d
...
13
...
AgriMoon
...
Storage
b
...
financing d
...
14
...
Packaging b
...
negotiation of price d
...
15
...
Distribution b
...
determining need d
...
16
...
Assembling b
...
advancing loans d
...
17
...
Profit
b
...
per cent of quantity sold d
...
18
...
Not owning the commodity b
...
g
services they offer d
...
Ans: c
...
Risk taking is a function of
a
...
merchant middlemen c
...
facilitative
middlemen
Ans: c
...
Pick the odd man out from the following
a
...
CWC c
...
Spices board
Ans: c
...
Growth in producers’ surplus determines the pace of economic development
...
Minimising the price fluctuations in agricultural commodities requires knowledge
on marketable surplus
...
Export – import policies of a country is designed based on the marketable
surplus expected in the country
...
Higher the rice price in the market, more will be the supply of paddy to the market
by the farmers
...
Agent middlemen do not take title to the produce
...
Brokers do not take title to the produce
...
Processors play a dominant role in agricultural marketing in developed countries
...
Commission agents are important for better performance of Rythu bazaars in
India
...
AgriMoon
...
A
very small proportion of farm produce moves directly from farmers to consumers
...
The role played by marketing agencies and institutions in the marketing
system in quite indispensable as these perform important marketing functions
...
The production of a produce is complete only when it reaches the hands of those
who need it – the consumers
...
Hence, there is a need for their
movement from producers to consumers
...
There is a complete absence of middlemen or intermediaries
...
(ii) Indirect Route: Agricultural commodities generally move from producers to
consumers through intermediaries or middlemen
...
In the modern era of specialized production, both the horizontal
and vertical distance between the producer and the consumer has increased, resulting in
a reduction of direct sales
...
The role, functions and other details of some of these institutions have been
discussed in relevant chapters
...
The length of the channel varies from commodity to
commodity, depending on the quantity to be moved, the form of consumer demand and
degree of regional specialization in production
...
AgriMoon
...
,
the chain of intermediaries through whom the various foodgrains pass from producers to
consumers constitutes their marketing channels
...
Factors Affecting Length of Marketing Channels
Marketing channels for agricultural products vary from product to product,
country to country, lot to lot and time to time
...
Packagers play a crucial role in the
marketing of fruits
...
For example, consumers in
developed countries demand more processed foods in a packed form
...
Most enables have to be cooked and packed properly
before they reach the consumers
...
In
developing countries like India, However, most foodgrains are purchased by consumers
in the raw form and processing is done at the consumer's level
...
For example, small farms usually sell their produce to village traders; it may
or may not enter the main market
...
The produce sold immediately after
the harvest usually follows longer channel than the one sold in later months
...
Marketing Channels for Cereals
Marketing channels for various cereals in India are more or less similar, except
the channel for paddy (or rice) where rice millers come into the picture
...
The flow chart in Fig
...
1 enables us to know
the marketing channels for general food grains in India
...
AgriMoon
...
agency (FCI, etc
...
The channels for paddy-rice and pulses are broadly the same, except that the
rice millers or dal millers come into the picture before the produce reaches retailers or
consumers
...
The flow chart in Fig
...
2 reveals the movement of oilseeds from producers to
consumers in India
...
Marketing Channels for Fruits and Vegetables
Marketing channels for fruits and vegetables vary from commodity to commodity
and from producer to producer
...
Large producers directly sell their produce to the
wholesalers or processing firms
...
);
(iv)
Producers
primary wholesalers
(v)
Producers
primary wholesalers
retailers or hawkers
(vi)
45
Producers
retailers or hawkers
consumer;
processors;
secondary wholesalers
consumers;
local assemblers
primary wholesalers
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...
Com
Agricultural Marketing Trade and Prices
retailers or hawkers
consumers
...
The
wholesale markets of these urban centres work as transit points and thus play an
important role in the entire marketing channel for fruits and vegetables
...
, Delhi, Kolkata,
Bangalore, Chennai, Mumbai, Jaipur, Nagpur, Vijayavada, Lucknow and Varanasi
...
Further, the transit trade takes place through the cities with more than 20 lakh
population which account for 68 per cent of the fruits and vegetables grown in the
respective regions
...
Each market, on an average, serves a population of about 7 lakhs
...
Sometimes, the wholesaling and retailing functions are performed by a single
firm in the channel
...
But as the
commercialization (market orientation) of agriculture is increasing and as the farmers
and consumers are located in different states or different countries, the marketing
channels that are emerging go across state or even national boundaries
...
Such an analysis was done by Acharya for
gram grains in Rajasthan
...
, farmer level, wholesaler level (from outside the
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Agricultural Marketing Trade and Prices
state) and processor level (also from outside the state)
...
Assuming the farmers' surplus entering the marketing
channel as 100 units, the entry from outside the state at wholesaler and processor level
was 4
...
The percentage quantities moving in 28
channels are given in Table 3
...
Table 3
...
Agencies involved
Quantity (%)
1
...
17
2
...
76
3
...
91
4
...
17
5
...
65
6
...
13
7
...
02
8
...
70
9
...
68
10
...
30
11
...
80
12
...
76
13
...
32
14
...
44
15
...
80
16
...
88
17
...
04
18
...
02
19
...
45
Sub Total
100
...
-
-
P
-
-
O
1
...
O
-
-
P
-
-
C
0
...
47
O
O
-
-
P
S
R
C
0
...
AgriMoon
...
07
23
...
22
24
...
04
25
...
11
26
...
56
27
O
-
W
P
S
R
C
0
...
O
-
W
P
-
R
C
0
...
17
Grand Total
104
...
S
...
308-12
...
Perishable farm produce should move quickly from farmers to consumers
...
Therefore, direct marketing by the
farmers is being encouraged as an alternative channel
...
Apni
Mandi is also called 'Kisan Mandi', as it is different from the traditional mandi or market
yard, where the produce moves to the buyer through either a commission agent or
trader
...
This system does away with the middlemen
...
The price spread in Apni Mandi is considerable low
...
These, 'Apni Mandi' are similar to the
Saturday markets of United Kingdom and United States of America
...
AgriMoon
...
History
The first Apni Mandi was started in Punjab by the Punjab Mandi Board at
Chandigarh in February, 1987
...
Similarly, in
Haryana, the first Apni Mandi was started at Karnal in 1988
...
The initiative is worth emulating
...
The
Market Committee Staff need to work hard with dedication for the success of Apni
Mandis
...
This scheme is
being implemented with certain resistance from middlemen
...
However, farmers as well as consumers would benefit from the
Apni Mandi Scheme and its popularity may pick up after sometime
...
AgriMoon
...
This sub-market yard is situated nine kms away from Pune city
...
This is one of the ideal
markets in the country for marketing of vegetables
...
The market has modern weighing machines for
weighing the produce
...
or 100 numbers
...
The purchasers make payment of the value of produce directly
to the farmer
...
Disputes, if any, arising between
buyers and sellers are settled by the supervisor of the market committee after calling the
concerned parties
...
(iii) Rythu Bazars
Rithu bazaars have been established in the major cities of Andhra Pradesh state
with the prime objective to provide direct link between farmers and consumers in the
marketing activity of fruits, vegetables and other essential food items
...
Further, marketing costs are at the minimum level as middlemen are completely
eliminated from the marketing activities in Rythu Bazars
...
Rythu Bazars started functioning in the Andhra Pradesh State from January 20,
1999
...
There is no government involvement in price fixation
...
Generally, in the Rythu Bazar, prices are fixed 20 per cent over the wholesale
prices and 15 to 20 per cent less than local market prices
...
The major highlights of Rythu bazaars are:
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Agricultural Marketing Trade and Prices
•
District collectors are making the land available for the Rythu Bazars
...
•
The vegetable cultivators in the identified villages are provided the photo identity
cards and only these cultivators are permitted to sell vegetables in these bazaars
...
•
Temporary storage facilities are on anvil
...
•
A distinct and common identity of such markets across the state is being
established
...
•
Vegetable production programme in the area is also undertaken by the horticulture
department of the state to ensure regular supplies of vegetables to the consumers
...
(iv) Uzhavar Sandies
Uzhavar Sandies (Farmers' Market) were established in selected municipal and
panchayat areas of the Tamil Nadu by the state government
...
Farmers are additionally benefited in the form of interaction
with other farmers and with departmental personnel
...
The consumers in these markets are
benefited by getting fresh vegetables at relatively lower prices
...
AgriMoon
...
The government provides following incentives for opening of the Krushak Bazars
in the state:
(a) Provides 1 to 2 acres of land at suitable place, free of cost, for establishing the
bazaar
...
(c) The identified farmers are allowed to use marketing facilities so that there is no
intervention of middlemen and farmers get better prices for their produce
...
, drinking water, electricity, toilet, canteen and rest
house are provided to farmers by the Krushak Bazars
...
(vii) Mother Dairy Booths
Mother Dairy, basically handling milk in Delhi, was asked to try its hand in retail
vegetable marketing by direct purchasing vegetables from the farmers, moving them in
specially built vehicles, storing them in air conditioned godowns and distribute them to
the consumers through its retail outlets in 1989 after the notorious onion and potato price
crisis
...
Market Integration, Efficiency, Costs, Margins and Price Spread
Market Integration
Meaning
Integration shows the relationship of the firms in a market
...
The behaviour of a highly integrated market is different from that of a
disintegrated market
...
Kohls and Uhl have defined market integration as a process which refers to the
expansion of firms by consolidating additional marketing functions and activities under a
single management
...
AgriMoon
...
In each case, there is a concentration of decision making in the hands of a
single management
...
(i) Horizontal Integration
This occurs when a firm or agency gains control of other firms or agencies
performing similar marketing functions at the same level in the marketing sequence
...
In most markets, there is a large number of agencies which do not effectively
compete with each other
...
Horizontal integration is advantageous for the members who join the group
...
Horizontal integration of selling firms is generally not in
the interest of the consumers of buyers
...
1
...
All the four business firms perform
the same type of marketing function but their locations and areas of operations are
different
...
Frequently a firm will
have a central headquarter with a large number of local branches that carry on
operations at the local level
...
It also helps the firm to organize some
complex types of operations and services which are needed by the local units but
individually, they may not be able to perform with ease and/or efficiency
...
It is a linking together of two or more functions in the
marketing process within a single firm or under a single ownership
...
Another example of vertical integration is a flour mill which engages in
retailing activity as well
...
AgriMoon
...
9
...
In this arrangement a firm is not only engaged in grain purchasing and storage of grains
but also owns trucks for transporting the produce from threshing floors/villages to mandi
and vice versa
...
There have been many reasons for the development of such integrated
operations
...
Vertical integration leads to some economies in the cost of marketing
...
Vertical integration reduces
the number of middlemen in the marketing channel
...
(a) Forward Integration: If a firm assumes another function of marketing which is
close to the consumption function, it is a case of forward integration; for example, a
wholesaler assuming the function of retailing
...
Firms often expand both vertically and horizontally
...
Retailing firms have grown horizontally by expanding either retail
stores or a number of commodities they deal in
...
(iii) Conglomeration
A combination of agencies or activities not directly related to each other may,
when it operates under a unified management, be termed a conglomeration
...
(processed vegetables and soaps), Delhi
Cloth and General Mills (Cloth and Vanaspati), Birla Group, Tatas, J
...
Group and
NAFED
...
3
...
For example, the firm may be dealing in foodgrains trading; processing of
horticultural products; cloth milling; selling and repairs of electronic equipments; and
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Agricultural Marketing Trade and Prices
manufacturer of vanaspati
...
Most of the business firms have some degree of vertical integration, horizontal
integration and conglomerate character
...
The most common type of integration which exists in
our rural markets is that a firm which buys and sells the grains is also engaged in selling
of fertilizers, insecticides and pesticides, feed and such other items with the main
objective of meeting the multiple needs of their customers, most of whom are farmers
...
(i) Ownership Integration
This occurs when all the decisions and assets of a firm are completely assumed
by another firm
...
(ii) Contract Integration
This involves an agreement between two firms on certain decisions, while each
firm retains its separate identity
...
Another example of
contract integration is tie up of a dal mill with pulse trades for supply of pulse grains
...
Like decentralization, integration in the marketing process may have
both advantageous and disadvantageous effects
...
The vertical integration of firms may be actuated by the following motives:
(i)
More profits by taking up additional functions;
(ii)
Risk reduction through improved market co-ordination;
(iii)
Improvement in bargaining power and the prospects of influencing prices; and
(iv)
Lowering costs through achieving operational efficiency
...
AgriMoon
...
Horizontal integration in the food industry is limited because of its potential
impact on competition
...
Marketing Efficiency
Marketing efficiency is essentially degree of market performance
...
It encompasses many theoretical manifestations and
practical aspects
...
Expectations
from or objectives assigned to the system are of critical importance in assessing the
efficiency because various participants have different expectations from the system,
which quite often conflict with each other
...
They expect the market to buy the products when they are offered for sale at reasonable
prices;
(ii) Consumers expect ready availability of products in the form and quality
desired by them at lower prices;
(iii) Traders and other functionaries expect steady and increasing incomes; and
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Agricultural Marketing Trade and Prices
(iv) Government expect the system to safeguard the interest of all the three
sections and in a proportion which is considered to be fair so that overall long-run
welfare of the society is maximized
...
Some of the
definitions are given below:
Kohls and Uhl: Marketing efficiency is the ratio of market output (satisfaction) to
marketing input (cost of resource)
...
A reduction in the cost for the
same level of satisfaction or an increase in the satisfaction at a given cost results in the
improvement of efficiency
...
Clark: Marketing efficiency has been defined as having the following three
components:
(i)
The effectiveness with which a marketing service is performed;
(ii)
The cost at which the service is performed; and
(iii)
The effect of this cost and the method of performing the service on production
and consumption
...
Efficient Marketing
The movement of goods from producers to consumers at the lowest possible
cost, consistent with the provision of the services desired by the consumer, may be
termed as efficient marketing
...
But a change that reduces costs but also reduces consumer satisfaction
need not indicate increase in marketing efficiency
...
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Agricultural Marketing Trade and Prices
An efficient marketing system for farm products ensures that:
(i) Increase in the farm production is translated into a proportionate increase in
the level of real income in the economy, thereby stimulating the emergence of additional
surpluses;
(ii) Good production years do not coincide with low revenues to the producers
achieved through effective storage, proper regional distribution and channelising of
latent demand; and
(iii) Consumers derive the greatest possible satisfaction at the least possible
cost
...
It can be harnessed to improve the quality of life of the masses
...
Efficiency is said to have increased when cost of performing a function for each unit of
output is reduced
...
, storage, transportation, handling,
and processing
...
(ii) Pricing or Allocative Efficiency
Pricing efficiency means that the system is able to allocate farm products either
overtime, across the space or among the traders, processors and consumers (at a point
of time) in such a way that no other allocation would make producers and consumers
better off
...
In simple terms, the pricing efficiency is achieved when following conditions hold:
a
...
Intra-year price rise is not more than storage cost; and
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c
...
The pricing efficiency refers to the structural characteristics of the marketing
system, where the sellers are able to get the true value of their produce and the
consumers receive true worth of their money
...
The efficiency of
marketing is concerned with the extent to which the prices (after these functions are
performed) deviate from what the cost of performing these functions warrant
...
Marketing efficiency in this context may be termed as the pricing efficiency of the
marketing system
...
The above two types of efficiencies are mutually reinforcing in the long run; one
without the other is not enough
...
If 'O' and 'I' are respectively output and input of the marketing system and 'E' is
the index of marketing efficiency; then
E=
O
× 100
I
A higher value of E denotes higher level of efficiency and vice versa
...
The
measurement of 'value added' is not easy
...
Assuming that degree of imperfection is pervasive, this measure
has been used to compare the marketing efficiency of two spatially separated markets,
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of two commodities or at two points of time
...
Marketing Costs, Margins and Price Spread
Market functionaries or institutions move the commodities from the producers to
consumers
...
The intermediaries or middlemen
make some profit to remain in the trade after meeting the cost of the function performed
...
Sometimes, this is
termed as marketing margin
...
e
...
The absolute
value of the marketing margin varies from channel to channel, market to market and time
to time
...
(i) Concurrent Margins
These refers to the difference between the prices prevailing at successive stages
of marketing at a given point of time
...
Concurrent
margins do not take into account the time that elapses between the purchase and sale of
the produce
...
The length of time between the two points denotes
the period for which the seller has held the product
...
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The method of calculating lagged margins is based on the same principle as that
involved in the first in-first out method of accounting
...
Importance of Study of Marketing Margins and Costs
Studies on marketing margins and costs are important, for they reveal many
facets of marketing and the price structure, as well as the efficiency of the system
...
It refers to the efficiency of
the intermediaries between the producer and the consumer in respect of the services
rendered and the remuneration received by them
...
The cost incurred by each agency in different channels and the share of each
agency in the cost have been revealed
...
Excessive margins point to the need for public
intervention in the marketing system
...
A study of
marketing margins should include an estimation of the producers' share in the
consumer's rupee, the cost of marketing functions and the margins of intermediaries
...
Even for the same commodity, the margin may vary from place to place and time to time
...
The method of sale,
weighment and other facilities, too, affect the marketing costs
...
AgriMoon
...
Adequate precautions have, therefore, to be taken when
comparing marketing margins for commodities under different situations
...
These studies have used different approaches, and vary considerably in their
depth
...
(i) Lot Method
A specific lot or consignment is selected and chased through the marketing
system until it reaches the ultimate consumer
...
The difficulties or limitations of this method are:
(a) It is difficult to chase the movement of a lot from the producer to the ultimate
consumer
...
(c) There is no assurance that the lot selected is representative of the whole
product
...
(ii) Sum of Average Gross Margins Method
The average gross margin at each successive level of marketing is worked out
by dividing the difference of the money value of sales and purchase by the number of
units of the commodity transacted by a particular agency
...
The following formula may be used to work out the total marketing margins:
S − Pi
MT = ∑ i
Q
i =1
i
n
where
M T = Total marketing margin
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S i = Sale value of a product for ith firm
P i = Purchase value of a product paid by the ith firm
Q i = Quantity of the product handled by ith firm
i
= 1, 2, ……n, (number of firms involved in the marketing channel)
This method requires considerable effort in the location and examination of the
records kept by the intermediaries
...
It would then be difficult
to obtain complete and accurate information
...
(iii) Comparison of Prices at Successive Levels of Marketing
Under this method, prices at successive stages of marketing at the producer's,
wholesaler's and retailer's levels – are compared
...
The margin of an intermediary is worked out by deducting the ascertainable
costs from the gross margin earned by that intermediary
...
The main difficulties encountered in the use of this method
are:
(a) Representative and comparable series of prices for the same quality of
successive stages of marketing are not readily available for all the products;
(b) Adjustment for a loss in the quality of the product at various stages of
marketing due to wastage and spoilage in processing and handling is difficult;
(c) The price quotation may not cover the price of a product of a comparable
quality; and
(d) The time lag between the performance of various marketing operations is not
properly accounted for
...
vegetables and milk, where the time lag
between the commodity entering the
marketing system and the time of final
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consumption is very small
...
the prices prevailing on the same date
at successive levels of marketing
...
same date either for the same market
or for a pair of markets
...
Various measures of the price spread and for the computation of marketing costs
and margins, and the procedures followed have been given in the paragraphs that
follow
...
This is equal
to the wholesale price at the primary assembling centre, nminus the charges borne by
the farmer in selling his produce
...
e
...
If P r is the retial price, the producer's share in the
consumer's rupee (P s ) may be expressed as follows:
P S = (P F ÷ P r ) 100
Marketing Margin of a Middleman
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This is the difference between the total payments (cost + purchase price) and
receipts (sale price) of the middleman (ith agency)
...
(a) Absolute margin of ith middleman (A mi )
A mi = P Ri – (P Pi + C mi )
(b) Percentage margin of ith middleman (P mi )
P mi =
PRi − ( PPi + C mi )
× 100
PRi
(c) Percentage mark-up of the ith middleman (M i )
Mi =
PRi − ( PPi + C mi )
× 100
PRi
where
P Ri = Total value of receipts per unit (sale price)
P pi = Purchase value of goods per unit (purchase price)
C mi = Cost incurred on marketing per unit
The margin thus calculated include the profit of the middleman and the returns
which accrue to him for storage, the interest on capital and overhead, and establishment
expenditure
...
+ C mn
where
C = Total cost of marketing of the commodity,
C F = Cost paid by the producer from the time the produce leaves the farm till he
sells it, and
C mi = Cost incurred by the ith middleman in the process of buying and selling the
product
...
The former is a fixed charge, while latter is a variable one
...
100 worth of
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produce sold
...
100 worth of produce sold
...
, cost of performing various marketing functions,
statutory taxes or levies payable in the marketing channel, and net marketing margins
(NMM) retained by market functionaries
...
Marketing costs depend on the perishability of the commodity, need for cold
storage facilities, need for processing before consumption, necessity of storage and
transportation, distance for transportation and nature of packaging needed
...
Statutory marketing charges include
taxes and levies (sales tax, market fee, octroi, special duty or cess on commercial crops
etc
...
The rates of these charges vary from state to state, market to market and
commodity to commodity
...
The market players have no
control on these taxes and levies as these are of statutory in nature
...
Net marketing margin (NMM) is the amount retained by different
market functionaries
...
Larger the net marketing
margin, greater is the inefficiency of the marketing system
...
The factors, which cause high marketing costs,
could be geographical localization of production away from the markets, necessity of
storage from production season to the lean season and involvement of processing
function in the marketing process
...
, consumer satisfaction is not
given any weightage
...
On
the other hand, GMM increased in fruits and vegetables due to the expansion in the
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markets for these crops and their products
...
A comprehensive review of Indian Literature reveals that studies on price-spread
and marketing margins for the period 1960 to 1975 are available for only a few crops
(wheat, rice, sorghum, pearl millet, chickpea and groundnut)
...
e
...
(For a summary of results
see Acharya, 2003)
...
Disregarding the extremities, the farmers share in consumers rupee has been estimated
as 56 to 89 per cent for paddy, 77 to 85 per cent for wheat, 72 to 86 per cent for coarse
grains, 79 to 86 per cent for pulses and 40 to 85 per cent for oilseeds
...
The studies in general reveal that the producer's share in consumer's rupee has
varied with the marketing channel adopted by the farmers
...
2) that the costs were higher when farmers adopted private channels in
marketing of surplus produce compared to the institutional channels and hence farmer's
share was lower when they sell through private channels
...
AgriMoon
...
2
Price Spread in Private and Institutional Channels in Selected Agricultural
Commodities in India (1982-83)
(Percentages of Consumer's Price)
Commodities
Costs
Margins
65
...
0
17
...
0
27
...
0
65
...
0
14
...
8
27
...
7
Private
41
...
0
23
...
2
26
...
6
Private
40
...
7
23
...
2
36
...
7
Private
63
...
0
17
...
6
11
...
2
Source: Directorate of Marketing and Inspection, Government of India, Faridabad
(1985)
...
This implies that for wheat supplied to a consumer in Goa in the month of
next March, the share of a Punjab wheat grower (based on the price received in the
preceding harvest month of May) in the consumer's price is 44
...
This also
means that the statutory charges and marketing costs (storing wheat from May to next
March and transportation from Punjab to Goa included) add up to 55
...
Sale of fruits through pre-harvest contractors is also common in fruit producing
areas
...
The gross marketing margins in marketing of agricultural products have also
been worked out from National Accounts Statistics by Acharya, S
...
(1998)
...
AgriMoon
...
Based on an aggregate accounting, the gross marketing margin
(GMM) as percentage of consumer's price is 19
...
2 in oilseeds, 32
...
7 in milk and milk products, and 37
...
3 per cent for all agricultural commodities
...
3
...
3
Gross Marketing Margins for Major Agricultural Commodities in India Using
Aggregate Accounting Approach Based on data for 1986-87
(Percentages)
Crop Groups/Crops
Gross Marketing Margin
Cereals
19
...
2
Fruits & Vegetables
32
...
7
Sugarcane/Sugar/Gur
37
...
3
Source: Acharya, S
...
, AgriculturalMarketing in India: Some Facts and Emerging Issues,
Indian Journal of Agricultural Economics, 53(3), July-September 1998, pp
...
Factors Affecting the Cost of Marketing
Studies on the cost of marketing reveal that there is a large variation in the cost
per quintal or per Rs
...
The factors which affect marketing costs
are:
(i) Perishability of the Product: The cost of marketing is directly related to the
degree of perishability
...
(ii) Extent of Loss in storage and Transportation: If the loss in the quality and
quantity of produce, arising out of wastage or spoilage or shrinkage during the period of
storage or in the course of transportation is substantial, the marketing cost will go up
...
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(iv) Regularity in the Supply of the Product: If the supply of the product is
regular throughout the year, the cost of marketing on per unit basis will be less than in a
situation of irregular supply or supply restricted to a few months of the year
...
(vi) Extent of Adoption of Grading: The cost of marketing of ungraded product
is higher than that of the products in which grading can be easily adopted
...
(viii) Bulkiness of the Product: The marketing cost of bulky products is higher
than that of which are not bulky
...
(xi) Extent of Risk: The greater the risk involved in the business for a product
(due to either the failure of the business, price fluctuations, monopsony of the buyer or
the prevalence of unfair practices), the higher is the cost of marketing
...
), the higher the cost of marketing
...
The factors responsible for this phenomenon are:
(i) Widely Dispersed Farms and Small Output per Farm: There are
innumerable producers of agricultural products, each producing a small quantity
...
Hence the cost of assembling is high
...
This results in a higher cost of transportation
...
Each
lot has to be personally inspected during purchase and sale – a fact which increases
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marketing costs
...
(iv) Irregular Supply: Agricultural products are characterized by seasonal
production
...
In times of glut,
prices go down and the cost of marketing functions, on value basis
...
The processing of
agricultural products is a necessity because all the agricultural products are not
consumed in the raw form
...
Losses
of agricultural products in storage are also high because of their perishability
...
Contrarily,
there are mainly restrictions on the entry into the trade of industrial products
...
The larger the number of
middlemen, the higher the marketing costs
...
The higher risk leads to higher risk premium, which adds to the marketing cost
...
The factors responsible for this difference are:
(i) Foodgrains are sold in a relatively unprocessed form in India, whereas in
developed countries, consumers want them mostly, in a processed form
...
Therefore, the cost of
marketing is lower, and the farmers' share in consumer's rupee is higher in India
...
Marketing Costs of Foodgrains Over Time
Over time, there has been an increase in the marketing cost of foodgrains in
India
...
AgriMoon
...
The cost of moving foodgrains from
producers to consumers has, therefore, increased
...
Specialization in
production and the evolution of short duration high-yielding varieties have resulted in
large-scale production, thereby necessitating their storage
...
(iii) Change in the Form of Consumer Demand: There has been a change in
the consumer's behaviour over time
...
The desire for
attractive packaging and home delivery system, too, has had its influence on consumer
demand
...
How to Reduce Marketing Costs
There are various ways of reducing marketing costs
...
However, a combination of factors may
bring about a significant reduction in the cost of marketing
...
Some major areas in which improved
efficiency may result in a reduction in marketing costs are:
(a) Increasing the Volume of Business: By increasing the quantity to be
handled at a time, one can effectively reduce marketing costs and increase marketing
efficiency
...
(c) Managerial Control: The adoption of proven management techniques
increases efficiency
...
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(d) Change in Marketing Practices and Technology: Changes in marketing
practices and technology (such as sale of orange juice instead of orange, retailing food
services through super markets, and integration of marketing functions) reduce
marketing costs and increase marketing efficiency
...
The risk may be reduced by:
(a) The adoption of hedging operations, improvements in market news service,
grading and standardization; and
(b) Increasing the competition in the marketing of farm products
...
Only in extreme cases are all the benefits derived either by the
producers or by the consumers (when there is no change in the price received by the
producers)
...
The extent to which these benefits are shared is determined by the
nature or characteristics of the supply of, and demand for, the product
...
g
...
g
...
Relationship of Farmer's Price, Marketing Costs and Consumer's Price
The farmer receives what the consumer pays after the various costs of marketing
have been deducted
...
The farmer's share may be calculated as
follows:
FS =
(RP − MC)100
RF
OR FS =
× 100
RP
PF
where
FS = Farmer's share in the consumer price expressed as a percentage
RP = Retail price of foodgrains
MC = Marketing costs, including margins
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PF = Price received by the farmer
The farmer's share in the amount of the consumer's outlay at the retail level is
not static and undergoes change with the change in market conditions
...
The effect of change in marketing charges or
costs on the farmer's share are shown in Fig
...
4
...
It is evident that
all the factors which bring about changes in marketing costs affect the farmer's share as
well
...
e
...
The basic reason for sticky marketing costs is
that many of the items in them are related to the physical volume handled rather than to
the value of the product
...
With any given level of sticky marketing margin or cost, the farmer's share (price
received) moves directly with the retail price; that is, if the retail price increases, the
farmer's share also increases
...
To illustrate: let the retail price,
the marketing costs/margin and the farmer's price be Rs
...
50 and Rs
...
Suppose, in period t 2 , the retail price decreases to Rs
...
e
...
If the absolute gross marketing margin remains the same,
i
...
, Rs
...
40 per unit, i
...
, a fall of 20 per cent
...
This has been shown in Table 3
...
Table 3
...
)
(Rs
...
)
Retail price
100
90
10
10
Marketing margin (gross)
74
t2
50
50
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Agricultural Marketing Trade and Prices
Farmer's price
50
40
10
20
Another point that emerges from Table 9
...
4 per cent of the price paid by the consumer
...
Model Quiz
1
...
Horizontal integration b
...
Conglomeration
d
...
Pepsico company engaging in tomato procurement directly from farmers is
a
...
Vertical integration
c
...
Forward integration
Ans: b
3
...
Lot method
b
...
Comparison of prices at successive levels of marketing
d
...
Farmers’ share in consumer rupee will be the least in marketing of
a
...
Milk c
...
Gram
Ans: c
5
...
Rice
b
...
Green leaves
d
...
Vertical integration enhances specialisation in a particular trade
...
Enterprise diversification is an act of conglomeration
...
Pricing efficiency is beneficial to both traders and consumers
...
Marketing efficiency is enhanced by increasing both operational efficiency and
allocative efficiency
...
Margin earned by intermediaries is not included in price spread
...
Marketing cost incurred by intermediaries forms part of price spread
...
Concurrent marketing margin method does not take into account the time that
elapses between the purchase and sale of produce
...
Lagged margin method considers the price difference between traders in the
same stage of marketing
...
AgriMoon
...
As far as an
individual country is concerned, external trade is done in the form of either exports or imports
...
Imports, on the other hand, though reduce the
foreign exchange reserves, augment the domestic availability of goods and if these pertain to
the capital goods or inputs, expand or improve the production capacity but in the short run, they
depress the domestic prices
...
One other point to be noted in this regard is that
the levels of exports and imports of a country are inter-related as the capacity of imports
depends on its ability to export
...
Usually the currencies are different and convertibility is quite often not automatic
...
that are imposed by the national governments
...
Trade Policy for Agriculture
Over the last five decades of Indian planning, the perception about the importance of
external sector in economic development has gone through a number of changes
...
e
...
(ii) During mid 1950s and 1970s (1955 to 1975), the foreign trade was seen as a
constraint on growth and India followed a moderately outward looking economic policy
...
Rather
several items were under export restrictions
...
AgriMoon
...
Various export promotion measures were introduced in the form
of fiscal incentives, import entitlement scheme, direct financial incentives and marketing
incentives from the government
...
The promotion of India's exports continued during
the fourth five year plan period (1969-74)
...
This period was also
marked by the establishment of organizations aimed at providing services to the exporting
community
...
(iii) During late 1970's to early 1980's, the external trade got more prominent place
...
V
...
Rao, in its report submitted to the
Government of India, criticized the adhocism applied to agricultural trade
...
The report suggested that long term policies should be formulated and frequent changes in
export policies should be avoided
...
E
...
The Committee in its report submitted in 1978, recognized that the export control
measures for agricultural commodities have resulted in supply uncertainties and loss of market
share
...
Another Committee on trade policies under the
chairmanship of Abid Hussain was appointed by the Government of India in 1984 to review the
trade policies and suggest rationalization and improvements in these policies
...
The report proposed rationalization of
duty drawback schemes, tax concessions, and increased fiscal concessions to increase the
relative profitability of exports
...
It began in mid 1980s but gathered pace only since 1991
...
During this
period, the main policy objectives were to ensure stability of domestic prices of agricultural
items
...
AgriMoon
...
Monitoring of agricultural
exports was done on adhoc and short term basis to keep the domestic supply of agricultural
goods stable
...
These include devaluation of rupee in 1991 and making rupee partially
convertible
...
India signed the Uruguay Round Agreement on 15th April 1994 at Marrakesh
...
The aim of
this treaty was to eliminate physical controls on agricultural trade by replacing them with bound
tariff rates
...
The macro-economic reforms recently introduced in India aim at liberalization of trade
and industry and at progressively moving towards linking the Indian economy with the world
economy
...
The export of agricultural commodities as also agro-based processed products is being
encouraged and controls/restrictions on trade in agricultural commodities have been
increasingly relaxed
...
Apart from the macro-economic reforms, the end of the cold war, the disintegration of
the erstwhile Soviet Union – one of India's major trading partners accounting for about 16 per
cent of total Indian export basket and a source for about 8 per cent of India's imports – and the
new international trade agreement under WTO have important implications for the agricultural
sector
...
Share of Agricultural Products in Total Imports/Exports of India
In 1960-61, exports of agricultural and allied products (AAP) were valued at Rs
...
2 per cent of total value of exports
...
In 1990-91, exports were valued at Rs
...
4 per cent of
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4
total exports (Table 4
...
After 1990-91, the exports of AAP from India in value terms increased
at a faster rate
...
21,138 crores
...
Even then, the share of AAP in
total exports from India at about 20 per cent, was higher than that during the preceding five
years
...
29,312 crores
...
The
share of agricultural and allied products export in India's total exports during the last four
decades (1960-61 to 2001-02) has, however, been declining continuously
...
As regards the imports, the country during 1960-61 imported food articles (cereals and
fats) valued at Rs
...
6 per cent of total imports
...
89 crores during 1980-81, but their share in total imports
Table 4
...
in crores)
Year
Imports
Exports
Total
Food
Share of
Total
Agricul-
Share of
Imports*
articles*
food articles
Exports
tural and
agricultural
in total
allied
& allied
imports (%)
products
products
in total
Exports
(%)
1960-61
186
16
...
20
1970-71
1634
252
15
...
72
1980-81
12549
809
6
...
65
1985-86
19658
880
4
...
70
1990-91
43193
508
2
...
41
1995-96
122678
2340
1
...
88
1998-99
79
1122
178332
8799
4
...
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5
1999-00
215236
9007
4
...
68
2000-01
230873
6183
2
...
04
2001-02
245199
562
0
...
02
* Includes only cereals, cereal preparations and animal and vegetable oils and fats
...
declined to 6
...
In 1985-86 the imports of food articles increased to Rs
...
5 per cent of total imports
...
It came down to Rs
...
2 per cent of total imports in 1990-91
...
2340 crores in 1995-96 and to Rs
...
The share of imports of food articles in total imports has shown a mixed
trend, i
...
, first reduced to 1
...
2 per cent in 1999-2000
and again shown a declining trend both in absolute as well as in the per cent share thereafter
...
6 per cent to 2
...
Changes in India's Agricultural Export Basket
A number of agricultural commodities are exported from India
...
(ii) Non-Traditional items but uncertain – These items are raw jute; raw wool; gums,
resins and lac, essential vegetable oils; and non-essential vegetable oils (excluding castor oil)
...
The growth in the export of non-traditional new items has been at a rate higher than that
of traditional items (Table 4
...
Tea, coffee, tobacco, cashew kernels and spices are the
traditional export items
...
1 per cent of the total
AAP exports but their share decreased to 23
...
As against this, the exports
of non-traditional items like marine products, basmati rice, fruits, vegetables, oil meals and
processed foods have been increasing in the export basket of the country
...
Rice
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Agricultural Marketing Trade and Prices
6
accounted for 7
...
8 per
cent in 2001-02
...
The relative importance of various commodities in total agricultural and
allied products exports has substantially changed during the last four decades
...
2
Exports of Agricultural and Allied Products from India
(Value in Rs
...
S-84-86
...
AgriMoon
...
The impetus for accelerated growth in agricultural exports is
envisaged through increased infrastructure support and by building up conducive policy
environment
...
Some of India's major export markets for various agricultural commodities are shown in
Table 4
...
Table 4
...
GEMS & JEWELLARY
61,369
...
33
62,586
...
00
2
...
18
10,624
...
05
16,889
...
RMG COTTON
INCL ACCESSORIES
25,535
...
21
27,520
...
54
4
...
71
4,468
...
59
5,839
...
49
21,833
...
97
INSTRUMENTS
5
...
87
& FINE CHEMLS
6
...
57
3,767
...
05
4,439
...
62
3,700
...
44
4,199
...
97
3,533
...
33
3,674
...
IRON ORE
14,505
...
71
15,074
...
PRMRY & SEMI-
11,641
...
62
17,856
...
13
3,933
...
AgriMoon
...
PLASTIC &
11,239
...
82
13,132
...
45
12
...
94
2,295
...
02
4,985
...
ELECTRONIC GOODS
1,910
...
82
2,522
...
92
8,584
...
80
1,738
...
30
1,930
...
44
6,417
...
53
6,029
...
48
9,207
...
96
4,923
...
46
14,323
...
76
4,433
...
76
5,182
...
42
4,152
...
29
6,390
...
59
4,078
...
62
3,645
...
84
LINOLEUM PRODUCTS
8,454
...
INORGANIC/ORGANIC/ 7,726
...
MANMADE YARN,
FABRICS,MADEUPS
16
...
74
6,401
...
DYES/INTMDTES
& COAR TAR CHEML
18
...
PROCESSED
MINERALS
20
...
RMG MANMADE
FIBRES
22
...
66
894
...
21
1,037
...
10
814
...
44
927
...
08
772
...
55
903
...
38
741
...
51
786
...
30
716
...
61
856
...
21
661
...
38
807
...
54
3,016
...
39
23
...
PRDCTS
EXCPT FOOTWR
24
...
CARPET(EXCL
...
FOOTWEAR OF
LEATHER
27
...
RESIDL CHEMICL
& ALLIED PRDCTS
83
2,865
...
AgriMoon
...
GLS/GLSWR/CERMCS
/REFTRS/CMNT/
2,856
...
58
3,450
...
01
30
...
14
614
...
56
545
...
LEATHER GOODS
2,648
...
39
2,849
...
64
32
...
20
572
...
80
615
...
MEAT & PREPARATIONS 2,474
...
11
2,925
...
34
34
...
02
2,255
...
88
504
...
31
1,107
...
86
35
...
WASTE
2,233
...
IRON&STL BAR/ROD ETC
2,229
...
77
3,394
...
59
37
...
51
444
...
64
495
...
SPICES
1,894
...
11
2,718
...
71
1,867
...
93
1,744
...
29
1,799
...
32
381
...
52
370
...
RMG OF OTHR TEXTLE MATRL1,595
...
44
1,855
...
68
43
...
85
359
...
71
409
...
RMG WOOL
1,508
...
95
1,530
...
11
45
...
70
316
...
37
289
...
COFFEE
1,391
...
5
1,717
...
24
47
...
17
233
...
41
234
...
15
227
...
38
312
...
36
222
...
65
157
...
09
1,167
...
10
39
...
HANDMADE CRPTS)
1,539
...
NATRL SILK YARN,
FABRICS,MADEUP
41
...
48
...
16
49
...
FRESH FRUITS
938
...
GUERGUM MEAL
929
...
06
1,016
...
81
52
...
16
207
...
67
212
...
TOBACCO UNMANUFACTURED
200
...
72
244
...
MISC PROCESSED ITEMS
886
...
31
997
...
74
55
...
98
195
...
84
218
...
FRESH VEGETABLES
84
887
...
33
186
...
54
291
...
AgriMoon
...
ALUMINIUM OTHR THAN
PRODUCTS
798
...
52
1,191
...
37
COMPONENTS
723
...
42
883
...
5
59
...
71
159
...
70
104
...
SESAME SEEDS
659
...
95
703
...
94
61
...
72
134
...
62
90
...
WHEAT
556
...
85
35
...
90
63
...
16
122
...
88
129
...
SPORTS GOODS
532
...
35
529
...
56
65
...
71
116
...
35
139
...
JUTE HESSIAN
460
...
10
349
...
01
67
...
07
98
...
21
123
...
GROUNDNUT
430
...
18
698
...
79
69
...
99
96
...
67
118
...
00
84
...
85
46
...
89
83
...
86
584
...
44
77
...
13
75
...
MANMADE STAPLE FIBRE
335
...
89
790
...
02
74
...
58
67
...
89
73
...
POULTRY PRODUCTS
298
...
52
262
...
71
76
...
26
65
...
05
60
...
TOBACCO MANUFACTURED
274
...
08
372
...
00
78
...
87
61
...
57
70
...
FLORICLTR PRODUCTS
272
...
56
356
...
56
80
...
82
52
...
53
49
...
OTHER JUTE MANUFACTURES
227
...
48
249
...
00
82
...
223
...
39
212
...
74
83
...
5
49
...
25
74
...
JUTE YARN
210
...
46
229
...
53
85
...
64
32
...
05
29
...
LEATHER FOOTWEAR
70
...
SOFTWARE IN
PHYSICAL FORM
71
...
WOLLEN YARN,FABRICS
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Agricultural Marketing Trade and Prices
11
86
...
05
21
...
28
26
...
FRUITS / VEGETABLE SEEDS
75
...
10
97
...
51
88
...
07
15
...
07
15
...
NIGER SEEDS
53
...
13
56
...
47
90
...
93
6
...
37
26
...
56
91,452
...
44 112,437
...
Under this policy, the international trade was made free subject to a negative
list of imports and exports
...
(ii) Permitted through Canalising Agency Onion (NAFED), Niger Seed (NAFED/TRIFED), Powdered Milk (NDDB), Ghee (NDDB)
...
Negative List of Imports
(i) Canalised Items All fertilizers (MMTC), edible oils (STC, HVOC), seeds of oilseed crops (STC, HVOC),
Cereals (FCI)
...
The import of pulses, raw cashewnut, seeds of vegetables and flowers, plants, tubers
and bulbs of flowers etc
...
The philosophy underlying these massive trade policy reforms include the following:
(i) Trade – both exports and imports can flourish in a free regime
...
AgriMoon
...
(iii) Liberalization and removal of licensing, quantitative restrictions and other
discretionary controls on matters relating to exports and imports are essential to trade policy
reforms
...
The process of pruning the negative list and decanalization has continued in recent
years
...
•
Scheme of Special Economic Zones (SEZ) strengthened
...
•
Transport subsidy provided for export of fruits, vegetables, floriculture, poultry and dairy
products
...
•
Widening of the scope of Market Access Initiative Scheme to include setting up of
Business Centres in Indian Missions abroad for focused market promotion of exports
...
Agri-Export Zones
The Government announced the proposal to set-up Agri-Export Zones in the EXIM
Policy 2001-02 for the purpose of developing and sourcing raw materials and their
processing/packing leading to final exports
...
Under the scheme, the state government would identify products with export potential which
have comparative advantage in the local area
...
Till December, 2002, the Central Government has sanctioned and notified 41 AgriExport Zones (AEZs) which are being set up in 16 states-West Bengal, Uttaranchal, Karnataka,
Punjab, Uttar Pradesh, Tamil Nadu, Maharashtra, Andhra Pradesh, Tripura, Jammu & Kashmir,
Madhya Pradesh, Bihar, Gujarat, Sikkim, Himachal Pradesh, Orissa and Jharkhand
...
AgriMoon
...
A projected export of more than Rs
...
These 41 AEZs will entail
an estimated investment of Rs
...
5 crores, out of which Rs
...
68 crores will flow from
various Central Government agencies like APEDA, NHB, Ministry of Food Processing Industry
and Ministry of Agriculture; Rs
...
61 crores from state governments and Rs
...
24 crores
from the private sector
...
It took effect on 1st January, 1948 and ended when 117 member states
signed the Uruguay Round of negotiations in Marrakesh, Morocco on 15th April, 1994
...
GATT established a code of conduct for international trade, based on the principle that
the trade should be conducted without discrimination, tariffs should be reduced through
multilateral negotiations, and member, countries, should consult each other to overcome trade
problems
...
Under GATT, a total of eight round of talks of trade negotiations brought about phased
reductions in tariffs and other trade barriers
...
In this, the participants agreed to expand the
negotiations to include banking investment, intellectual properties and telecommunications
...
Trade in the agricultural commodities was included in the agreement for the first
time
...
This round
also established the World Trade Organisation (WTO)
...
It brought international trade rules to areas previously
excluded or subjected to weak rules (agriculture, textiles and clothing), services, Trade Related
Investment Measures, and Trade Related Intellectual Property Rights (TRIPS) and
strengthened the dispute settlement mechanism
...
AgriMoon
...
Against these challenges, the ministerial conference in
Doha in November, 2001 adopted the Development Agenda, which calls for a more coherent
approach to trade and development and puts the needs and interests of the developing
countries at the heart of the WTO's work program
...
The
Uruguay Round of trade talks concluded in 1994 resulted in setting up of the World Trade
Organisation (WTO) to take over the functioning of GATT for encouraging multilateral trade in
goods and services
...
The Agreement on
Agriculture (AoA) under WTO requires clear understanding
...
(d) If dumping is proved, the countries will have the freedom to increase the import duty
...
If AMS in the base period (1986-88) is more than
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15
the permissible limit, it should be reduced by the following amount during the implementation
period:
Country
Permissible AMS
Reduction commitment if
(% of GDP)
exceeds the limit (%)
* Developed
5%
20%
* Developing
10%
13%
NA
-
-
0
* Less Developed
* Those with BP problem
(iii) Export Subsidies
The reduction commitment for export subsidies require that (a) the developed countries
would reduce it by 36 per cent in six year; and (b) the developing countries would reduce it by
24 per cent in 10 years
...
In the case of default, the importing countries
are allowed to prohibit imports from defaulting countries
...
According to AoA, all the countries are required to
provide for arrangements for protection of plant varieties
...
The main features of the WTO Agreement on Agriculture (AoA), which are of concern to
India, are:
(i) India has been maintaining quantitative restrictions (QRs) on import of 825 agricultural
products as on 1st April, 1997
...
India had sought to remove them in three phrases within an overall time frame of six
years i
...
upto 31st March, 2001
...
(ii) The Agreement also imposed constraints on the level of domestic support provided to
the agricultural sector
...
However, the
Agreement allows us to provide domestic support to the extent of 10% of the total value of
agricultural produce
...
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16
(iii) Disciplines on export subsidy do not affect us as India is not providing any export
subsidy on agricultural products
...
Model Quiz
1
...
Export
b
...
Both a and b d
...
Globalisation of Indian economy was initiated in the year
a
...
1985
c
...
1995
Ans: c
3
...
Increased share of agricultural and allied products in total export earnings
...
Increase in absolute value of total exports
...
Both a and b
d
...
Pick the odd man out
a
...
b
...
NAFED
d
...
Market access commitment
c
...
Aggregate measure of support
d
...
AOA allows unlimited support to activities such as
a
...
Public stock holding for food security purpose
...
domestic food aid
d
...
In the absence of any public intervention in the domestic market, the producers gain by
exporting and lose by importing
...
Capacity of a country to import depends on its ability to export
...
Devaluation of the country’s currency would benefit the exporters
...
Processed fruits and juice are the traditional export products of India that show good
prospects
...
AgriMoon
...
17
Rice is an important non traditional good exported from India
...
Code of conduct established by GATT does not permit the member countries to consult
each other to overcome trade problems
...
GATT was a bilateral treaty to liberalise the world trade
...
As per WTO provisions, countries will have the freedom to increase the import duty if
dumping is proved
...
Reduction commitment is more for developed countries than for developing countries in
the case of AMS
...
Reduction commitment is less for developed countries than for developing countries in
the case of export subsidies
...
AgriMoon
...
5
COOPERATIVE AGRICULTURAL MARKETING INSTITUTIONS
Co-operative Marketing
The establishment of co-operative marketing societies was another step which
has been taken to overcome the problems arising out of the present system of marketing
agricultural produce
...
Private agencies dominate the Indian food grains trade
...
The efforts of the government to improve the
marketing system of agricultural commodities have been only partially successful in
creating healthy conditions for scientific and efficient marketing
...
The need for strengthening co-operative
organization has, therefore, been recognized for the marketing of the produce of farmers
and for making inputs available for them at the right price and time
...
These organizations pool the produce of the small farmers having a small surplus to
market and improve their bargaining power
...
Meaning
A co-operative sales association is a voluntary business organization established
by its member patrons to market farm products collectively for their direct benefit
...
The members are the owners, operators and contributors of the
commodities and are the direct beneficiaries of the savings that accrue to the society
...
Co-operative marketing organizations are associations of producers for the
collective marketing of their produce and for securing for the members the advantages
that result from large-scale business which an individual cultivator cannot secure
because of his small marketable surplus
...
AgriMoon
...
The profit earned by the society is distributed among the members on
the basis of the quantity of the produce marketed by him
...
It emphasizes the concept of commercialization
...
These societies
resemble private business organization in the method of their operations; but they differ
from the capitalistic system chiefly in their motives and organizations
...
History
The history of co-operative marketing in India dates back to 1912, when the Cooperative Marketing Societies Act, 1912 was passed
...
In 1918, The South Canara Planters Co-operative Sale Society was formed
in the then Composite Madras Province for joint sale of arecanut
...
AgriMoon
...
The Central Banking Enquiry Committee (1931) also underlined the
need for organized marketing
...
In 1945, the Cooperative Planning Committee recommended that at least 25 per cent of the marketable
surplus should be channelised through Co-operative societies within the next 10 years
by forming one society for a group of 200 villages
...
In a simple of 75 districts surveyed,
there was no co-operative marketing society in 63 districts
...
The committee suggested the establishment of primary co-operative marketing
societies and linking of credit with marketing
...
In 1958, the National Agricultural Co-operative Marketing Federation (NAFED)
was established as the apex body of co-operative marketing
...
The Mirdha Committee (1965) recommended that the
membership of agricultural marketing societies should be restricted to the agriculturists
and traders should not be allowed to join agricultural marketing societies
...
Based on the survey of the co-operative marketing societies in 1968, the
Reserve Bank of India recognized that effective linking of credit with marketing was
necessary
...
There is a multi-state cooperative
marketing Act in place now
...
AgriMoon
...
They get sufficient
business from the farmers producing that single commodity
...
(ii) Multi-Commodity Co-operative Marketing Societies
They deal in the marketing of a large number of commodities produced by the
members, such as foodgrains, oilseeds and cotton
...
(iii) Multi-purpose, Multi-commodity Co-operative Marketing Societies
These societies market a large number of commodities and perform such other
functions as providing credit to members, arranging for the supply of the inputs required
by them, and meeting their requirements of essential domestic consumption goods
...
In the states of Assam, Bihar, Kerala, Madhya Pradesh, Karnataka, Orissa, Rajasthan
and West Bengal, there is a two-tier pattern with primary marketing societies at the
taluka level and state marketing federation as an apex body at the state level
...
At the
national level, NAFED serves as the apex institution
...
These
societies market the produce of the farmer members in that area
...
They are located in the primary wholesale market, and their field of operations
extends to the area from which the produce comes for sale, which may cover one or two
tehsils, panchayat samitis or development blocks
...
Their main job is to market the produce brought for sale by the primary cooperative marketing societies of the area
...
The primary co-operative
marketing societies are members of these unions in addition to the individual farmer
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members
...
(iii) State Level
At the state level, there are apex (State) co-operative marketing societies or
federations
...
Their members are
both the primary co-operative marketing societies and the central co-operative unions of
the state
...
The cooperative marketing network of the country includes 27 state level
marketing federations 199 district/regional marketing co-operative societies, and 4398
primary cooperative marketing societies besides NAFED at the national level
...
They
have the right to participate in the deliberations of the society, share in the profits and
participate in the decision making process
...
Nominal members do not have the right to participate in decision
making and share in the profits of the societies
...
2
...
At 2003 prices, it should be at least Rs
...
00 lakhs
...
Members may purchase as many shares as they like
...
They are also persuaded
to invest their dividend and bonus in the shares of co-operative marketing societies
...
AgriMoon
...
(iii) Subsidy
The Co-operative marketing societies get a subsidy from the government for the
purchase of grading machines and transport vehicles to meet their initial heavy
expenditure
...
Functioning
The important functions carried out by the co-operative marketing societies are:
(i) Sale on Commission Basis
Co-operative marketing societies act as commission agents in the market, i
...
,
they arrange for the sale of the produce brought by the members to the market
...
The main
advantage, which the farmer-members get by selling the produce through co-operative
marketing societies instead of a commission agent, is that they do not have to accept
unauthorized deductions or put up with the many malpractices, which are indulged in by
individual commission agents
...
This type of marketing is not risky for co-operative societies
...
These tactics of
the traders reduce the business of co-operative marketing societies
...
(ii) Purchase of Members' Produce
Co-operative marketing societies also enter the market as buyers
...
The commodities thus purchased by a society are sold again when prices are higher
...
If the managers of societies lack business experience, they
hesitate to adopt the outright purchase system
...
AgriMoon
...
e
...
(iii) Advancement of Credit
Co-operative marketing societies advance finance to farmers against their stock
of foodgrains in the godowns of the societies
...
Generally, societies advance credit to the extent of
60 to 75 per cent of the value of the produce stored with them
...
This function involves no
risk to the society
...
(iv) Procurement and Price Support Purchases
Co-operative marketing societies act as agents of the government in the
procurement of foodgrains and other agricultural commodities at the announced
procurement or support prices
...
(vi) Integrated System of Co-operative Marketing
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An integrated programme of co-operative development embracing credit,
marketing, processing, warehousing and storage has been formulated
...
Cooperative Processing
Co-operative processing is also making good progress in addition to co-operative
marketing
...
e
...
g
...
Progress
Information on the progress of co-operative marketing societies in India is given
in Table 5
...
Table 5
...
1960-61
13
...
71
34
...
27
179
649
1950
7100
36
317
1114
2475
56
123
179
231
155
234
327
327
300
-
-
2300
Primary Agricultural Co-operative
Marketing Societies:
2
...
Crores)
3
...
Crores)
4
...
Number of Cotton Co-operative
Ginning & Processing Societies
6
...
AgriMoon
...
53 crores in 1955-56 to Rs
...
The
produce marketed through these societies account for 8 to 10 per cent of the marketed
surplus
...
The progress of cooperative marketing societies has varied from State to State and within each State from
commodity to commodity
...
The other important function performed by these societies is the marketing of
agricultural inputs viz
...
Over 70,000 retail outlets of these societies deal in these
inputs
...
36 crores in 1960-61 to more than Rs
...
During the last forty years, the number of Primary Agricultural Cooperative
Marketing Societies increased from 3108 in 1960-61 to 7871 in 1991-92
...
These apart, there
are 16 commodity-marketing federations, National Agricultural Cooperative Marketing
Federation (NAFED) and National Cooperative Development Corporation (NCDC) at the
national level
...
179 crores in 1960-61 to over Rs
...
In addition, these
institutions had supplied inputs to their members for agricultural activities valued at
Rs
...
36 crores in 1960-61
...
The cooperatives have constructed warehouses with a total storage capacity of
13
...
0 lakh tones by the end of
March, 1961
...
, cotton and oilseeds, growers societies in
cooperative sector also exist at regional level with state level federations at state level to
deal with the specific problems in marketing of these crops produced in specific areas
...
AgriMoon
...
The cooperative sugar factories account for around 60 per cent of the total
sugar produced by 408 sugar factories in the country
...
There was also two-fold increase in cotton spinning and processing societies in the
country during the last forty years
...
In Maharashtra and
Uttar Pradesh, 75 per cent of sugarcane, in Maharashtra and Gujarat, 75 per cent of
cotton, and in Karnataka 84 per cent of plantation crops are marketed by the cooperative societies
...
Instead, they use the services of
commission agents
...
(i) The performance of cooperatives in dairy and sugarcane sectors is
noteworthy
...
(ii) The success of cooperatives and transforming the social and economic
landscape of Gujarat state and some other parts of the country is a testimony of the role
of cooperatives in agricultural marketing in the country
...
However, the cooperatives as a whole account for only 10 per cent of the total
quantities of agricultural commodities marketed by the farmers
...
Reasons of slow Progress of Cooperative Marketing
The main reasons of the slow process are:
(i)
Co-operative marketing societies are generally located in big markets/towns and
quick and cheap transport facilities are not available for the carriage of the
produce from the villages to the societies;
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Agricultural Marketing Trade and Prices
(ii)
Farmers are indebted to local traders and enter into advance contracts with them
for the sale of the crop;
(iii)
Farmers are in immediate need of cash after the harvest to meet their personal
obligations
...
Nor do they make an
advance payment of the value of the produce purchased or sold through them;
(xii) Co-operative marketing societies are not capable of carrying on their business in
competition with traders and commission agents, because of the absence of
adequate business expertise among their employees; and
(xiii) There is a lack of sufficient storage facilities with the societies
...
Suggestions for Strengthening of Cooperative Marketing Societies
(i)
The area of the operations of the societies should be large enough so that they
may have sufficient business and become viable
...
(ii)
Co-operative marketing societies should develop sufficient storage facilities in the
mandi as well as in the villages
...
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(iv)
The co-operative feeling among members should be inculcated by proper
education by organizing seminars and by the distribution of literature
...
After their selection,
the officials should be given proper training so that they may deal efficiently with
the business of the society
...
(vi)
There is a need for bringing about a proper co-ordination between credit and
marketing co-operative societies to facilitate the recovery of loans advanced by
credit societies, and make available sufficient finance for marketing societies
...
(viii) Co-operative marketing societies should diversify their activities
...
(ix)
Marketing societies, like the private traders, should provide accommodation and
the drinking water facility for their members when the latter come to the mandi
...
NAFED
The National Agricultural Co-operative Marketing Federatiopn of India (NAFED)
is an apex organization of marketing cooperatives in the country
...
The NAFED is also the central nodal agency for undertaking price support
operations for pulses and oilseeds and market intervention operations for other
agricultural commodities
...
The State Level Marketing Federations and the National
Co-operative Development Corporation are its members
...
NAFED's area
of operation extends to the whole country
...
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Objectives
The main objectives of NAFED are:
(a) To co-ordinate and promote the marketing and trading activities of its affiliated cooperative institutions;
(b) To make arrangements for the supply of the agricultural inputs required by member
institutions;
(c) To promote inter-state and international trade in agricultural and other
commodities; and
(d) To act as an agent of the government for the purchase, sale, storage and
distribution of agricultural products and inputs
...
The objectives of internal trade
operations are both the market support to farmers and maintaining steady supply of
commodities to consumers of reasonable prices
...
Turn over of NAFED over five years period from 2004-05 is presented in Fig
...
1
NAFED Domestic Turn over
700000
in lakhs Rs
...
5
...
AgriMoon
...
The NAFED
exports agricultural commodities, particularly onions (canalized), potatoes, ginger, garlic,
nigerseed, sesameseed, gum, deoiled cake of groundnut, soyabean and cottonseed,
fresh and processed fruits and vegetables; spices – black pepper, cardamom, turmeric,
cuminseed, coriander seed; cereals – rice, barley, bajra, jowar, and ragi and jute bags to
various countries including Sri Lanka, England, Mauritius, Australia, Belgium, Canada,
Fiji, Hong Kong, Japan, Malaysia, the USA and number of African, West Asian and Gulf
countries
...
Export turn over of NAFED in
lakhs of Rs
...
5
...
EXPORT TURN OVER OF NAFED
120000
LAKHS RS
...
5
...
(c) Price Support Operations
NAFED is being appointed as the agency of the government to undertake
support price purchases of commodities like groundnut since 1976-77, soyabean and
mustard seed since 1977-78, gram, tur, moong and urad since 1978-79 and bajra, jowar,
maize, barley, toria and sunflower seed since 1985-86
...
AgriMoon
...
NAFED has
standing instructions to intervene in the market when ruling market price falls below the
minimum support levels for oilseeds and pulse crops
...
Price support purchases of pulses and oilseeds are shown in
table 5
...
Table 5
...
28858
163918
1984-85
76614
1985-86
13445
1988-89
69
1992-93
2746
1993-94
66
2000-01
247956
2001-02
329524
2002-03
467629
62726
4480
1999-00
494938
2000-01
54754
1989-90
25
1992-93
790
1998-94
14925
2000-01
107
3709
1998-99
Safflower Seed
1984-85
1985-86
4
...
88
2000-01
Mustard Seed
1992-93
1993-94
2
...
AgriMoon
...
1992-93
1994-95
Sunflower Seed
2020
1993-94
5
...
Business in Oilseeds
Purchases
NAFED procured around 35044 MTs of various oilseeds and oils including Assorted
Oils,Copra,Mustard Oil,Mustard Seed,Sunflower Seed and Sunflower Oil valued at Rs
...
29 crores in outright account, as per details given below:
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Purchase of Oil and Oilseeds by NAFED
[ qty
...
lakhs
]
S
...
in lakhs)
1
Assorted Oils
2
Copra
3
Mustard Oil
4
Mustard Seed
5
Sunflower Seed
79
...
97
6
Sunflower Oil
61
...
15
35043
...
31
0
...
06
710
...
74
Total
301
...
41
34131
...
89
Sales
A total quantity of around 56293 MTs of various oilseeds valued at Rs
...
10 crores
was sold in outright account during the year 2008-2009
...
NO
Commodity
Quantity(in MTs)
Value(Rs
...
27
80
...
29
154
...
N
...
27
1508
...
12
11
...
40
12806
...
94
840
...
68
107
...
97
15509
...
Gram,
Masoor, Arhar, Moong, Urad,Rajmah,Moth and Peas,Assorted Pluses valued at Rs
...
56 crores in its outright account
...
AgriMoon
...
in mts/value in rs
...
NO
Commodity
1
Gram
2
Quantity(in MTs)
Value (Rs
...
61
4723
...
58
223
...
20
124
...
06
321
...
96
8
...
08
4
...
37
99
...
03
551
...
89
6055
...
107
...
Sale of Pulses by NAFED
S
...
in lakhs)
28342
...
11
Masoor
764
...
03
3
Moong
5722
...
08
4
Peas
476
...
83
5
Rajmah
282
...
40
6
Moth
63
...
74
7
Arhar
4280
...
17
8
Urad
3695
...
04
9
Assorted Pulses
Total
110
1456
...
46
555
...
41
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Agricultural Marketing Trade and Prices
Business in Horticulture Products
Purchases
During the year 2007-08
...
13
...
The details of various horticultural commodities
purchased are given below:
Purchase of Horticulture Commodities by NAFED
[ qty
...
lakhs ]
S
...
in lakhs)
OUTRIGHT
1
Onion
7407
773
...
44
3
Apples
734
250
...
70
5
Garlic
30
14
...
96
11764
1354
...
6
...
NO
Commodity
[ qty
...
lakhs ]
Quantity (in MTs) Value (Rs
...
03
2
Potato
3391
235
...
00
4
Ginger
75
17
...
26
6
Fresh Fruits & Veg
...
22
Total
111
Onion
5686
605
...
AgriMoon
...
NAFED purchased 948572 MTs foodgrains, such as, Bajra,
Guar, Jowar, Maize, Paddy, Rice and Wheat Barely valued at Rs
...
85 crores in its
outright account besides procuring 24930 MTs Rice valued at Rs
...
38 crores on Tieup basis
...
NO
Commodity
Quantity (in MTs)
Value (Rs
...
58
2
Guar
2592
419
...
09
4
Maize
32160
2117
...
82
6
Rice
485519
43997
...
49
8
Barley
3557
295
...
64
Sub Total
TIE-UP
1
Rice
24930
Total
3337
...
52
Sales
During the year 2007-08, NAFED sold 849203 MTs foodgrains, such as Bajra, Guar,
Jowar, Maize, Paddy, Rice and Wheat valued at Rs
...
96 crores in outright account
...
NO
Commodity
Quantity(in MTs)
Value(Rs
...
50
2
Guar
2283
379
...
46
4
112
Bajra
Maize
45771
3355
...
AgriMoon
...
43
6
Rice
447057
50729
...
00
8
Barley
3586
333
...
52
Sub Total
Business in Spices
Purchases
During the year 2008-09,NAFED procured around 4511 MTs of various spices
viz
...
valued at Rs
...
22 crores in its outright account
...
in mts/value in rs
...
NO
Commodity
1
Turmeric
2
Black Pepper
3
Quantity (in MTs)
Value(Rs
...
90
73
...
10
5570
...
50
2
...
09
50
...
15
0
...
06
61
...
60
61
...
40
5821
...
55
...
in mts/value in rs
...
NO
1
Tumeric
203
...
23
2
113
Commodity
Quantity(in MTs)
Value(Rs
...
08
231
...
AgriMoon
...
65
5058
...
35
1
...
09
55
...
02
75
...
01
Neg
8
Methi Seed
227
...
29
Total
5048
...
78
Miscellaneous Business
Purchases
NAFED procured around 28852 MTs of various miscellaneous agricultural commodities
valued at Rs
...
34 crores in outright account as per details given below:
Purchase of Miscellaneous commodities by NAFED
[ qty
...
lakhs ]
S
...
in lakhs)
1
Rubber
959
...
28
2
Tea
173
...
44
3
Misc
...
20
671
...
46
309
...
54
16507
...
48
Salt
293
...
32
Barrel
791
...
73
Total
28852
...
43
Sales
A quantity of 28498 MTs of various miscellaneous agricultural commodities valuing
Rs
...
26 crores was sold during the year 2008-09 in outright account as per details
given below
...
in mts/value in rs
...
NO
1
114
Commodity
Rubber
Quantity(in MTs)
824
...
in lakhs)
787
...
AgriMoon
...
00
13
...
63
186
...
Items
9769
...
41
5
Atta
-
6
Sugar
7
47
...
68
44
...
33
4053
...
82
37
...
60
49
...
94
6025
...
NAFED also imports some of the machines and spare parts from abroad to ensure
timely availability of genuine spare parts at reasonable prices
...
The NAFED
through its service centres also sells farm tools, agricultural implements and spare parts
produced by Krishi Yantra Udyog, Bhiwadi in Rajasthan
...
The NAFED has set up a unit for production of rhizobium culture at Indore
(Madhya Pradesh) in 1985 with a capacity to produce biofertilizers for 12 lakhs hectares
a year
...
(e) Promotional Activities
NAFED maintains expert staff which conducts market studies, collects data and
circulates the results among the members
...
(f) Developing Co-operative Marketing of Tribal Produce
A separate cell to develop the marketing of produce of the tribal areas (minor
forest products) having economic value has been set up with the assistance of NAFED
...
AgriMoon
...
Keeping in view the importance of marketing of tribal produce, a separate Tribal Cooperative Marketing Development Federation (TRIFED) has been set up
...
NAFED has also made pioneering effort in finding ways of developing modern
storages
...
(h) Processing of Fruits, Vegetables and Others
NAFED has set up a multi-commodity fruit and vegetables processing unit at
Delhi and at Vellore (Tamil Nadu)
...
NAFED also manufactures
jute goods in joint venture with Konark Jute Limited – promoted by Industrial
Development Corporation of Orissa
...
4706
...
6381
...
26
...
It incurred a net
loss of Rs
...
69 crores due to huge interest liability on account of outstanding loans due
to Tie-Up business defaulters
...
1097
...
3
...
Membership of the Federation increased from 824 to 832 upto
31
...
2008
...
124
...
NAFED
continued to be the nodal agency of the Govt
...
NAFED
continued to be one of the canalizing and monitoring agencies for export of Onion
...
NAFED was
allowed to import Pulses by Government of India under zero percent duty with
reimbursement of losses to the extent of 15%
...
412
...
NAFED imported 92500 MTs Crude palm Oil and 9500
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Agricultural Marketing Trade and Prices
MTs Soya Degum Oil in its commercial account to improve availability of edible oil in the
country to stabilize domestic prices
...
NAFED procured 796817 MTs of Paddy valuing Rs
...
55 crores during
2007-08
...
170
...
The exports of NAFED during the year were of the order of
Rs
...
30 crores which include exports of different agricultural commodities in its
outright account besides Onions through its Associate Shippers
...
504
...
0
...
2
...
0
...
1
...
0
...
00 crores), and Wheat(Rs
...
33 crores)
...
27
...
In its commercial
operations, NAFED achieved a turnover of Rs
...
35 crores in domestic trading of
various agricultural commodities, which also include PSS/Tie-up business
...
88
...
It also
distributed Seeds of various crops valuing over Rs
...
13 crores to State Seed
Corporations and State Agricultural Departments as also farmers through network of
marketing societies
...
NAFED marketed consumer products like edible oils, processed foods,
spices, tea, rice, pulses etc
...
36
...
To assist poultry
farmers and consumers, NAFED procured and marketed eggs valued at Rs
...
72 crores
...
6
...
NAFED
handled jute products valued at Rs
...
26 crores on agency/consignment basis in
domestic trade
...
Renovation & repair works
of warehouse at Vashi, Navi Mumbai was also started
...
51900 MTs, in addition to 4400 MTs capacity for storage of Onion
...
At Umranala and Sausar in Chindwara (Madhya Pradesh)
...
AgriMoon
...
The futures trading activities are being
undertaken in almost all agricultural commodities viz
...
Achieved turnover of Rs
...
NAFED inducted fresh M
...
A
...
Other National Cooperative Organizations
National Cooperative Development Corporation (NCDC)
The National Cooperative Development Corporation (NCDC) was set up in
March, 1963 under an Act of Parliament for promoting, guiding and supporting rural
economic activities on cooperative principles
...
It tries to equip cooperatives with facilities
for promoting income-generating activities including poultry, fishery, handlooms and
minor forest products
...
The NCDC provides financial assistance to cooperative societies through or on
the guarantee of the state governments
...
This includes:
(a) State level cooperative marketing/commodity marketing federations for margin
money to raise working capital from banks or increasing marketing and distribution
activities
...
AgriMoon
...
NCDC has not only provided financial support to the cooperatives but also
provided technical guidance to them
...
Tribal Cooperative Marketing Federation (TRIFED)
The Tribal Cooperative Marketing Federation (TRIFED) was established in 1987
to develop the system of marketing of forest products produced by the tribals in the
country
...
Co-operative Marketing and Processing of Milk and Oilseeds
Milk
With a view to providing marketing support to the milk producers, a sound
network of dairy cooperatives has taken shape in the country which has been
instrumental in what is called the 'White Revolution' in the country
...
Apart from providing
market support to the producers in rural areas, this network has been instrumental in
supplying liquid milk and dairy products to the urban consumers at reasonable prices
...
AgriMoon
...
NDDB's programmes and
activities seek to strengthen farmer cooperatives and support national policies that are
favourable to the growth of such institutions
...
Philosophy of NDDB
•
Cooperation is the preferred form of enterprise, giving people control over the
resources they create through democratic self-governance
...
•
Progressive evolution of the society is possible only when development is
directed by those whom it seeks to benefit
...
•
Technological innovation and the constant search for better ways to achieve our
objectives is the best way to retain our leading position in a dynamic market
...
The National Dairy Development Board (NDDB) was founded in 1965 to replace
exploitation with empowerment, tradition with modernity, stagnation with growth,
transforming dairying into an instrument for the development of India's rural people
...
The mission achieved thrust and
direction with the launching of "Operation Flood", a programme extending over 26 years
and which used World Bank loan to finance India's emergence as the world's largest
milk producing nation
...
As on March 2009, India's 1,33,349
village dairy cooperatives federated into 177 milk unions and 15 federations procured on
an average 25
...
13
...
Since its inception, the Dairy Board has planned and spearheaded India's dairy
programmes by placing dairy development in the hands of milk producers and the
professionals they employ to manage their cooperatives
...
AgriMoon
...
Constitution
The National Dairy Development Board has been constituted as a body
corporate and declared an institution of national importance by an Act of India's
Parliament
...
The
new body corporate was declared an institution of national importance by the Act
...
Office Network
Head Office
PB No
...
coop Telegram: DAIRYBOARD
Regional Offices
PB No
...
coop
3rd Floor, SCO-230-231 Sector 34-A Chandigarh 160 022
Telephone: (0172)
5071283/5001282 Fax: (0172) 5071282 email: chandigarh@nddb
...
coop
(0836) 2257237/2257238
38, Sunder Nagar Girdhar Marg, Malviya Nagar Jaipur 302 017 Telephone: (0141)
2550191/2723765 Fax: (0141) 2550086 email: jaipur@nddb
...
coop
1st Floor, IPL Building 3, Gokhale Marg Lucknow 226 001 Telephone: (0522)
4006952/4006953 Fax: (0522) 4006834 email: lucknow@nddb
...
9074 Western Express Highway Goregaon (East) Mumbai 400 063 Telephone:
(022) 26856675/26856678 Fax: (022) 26856122 email: mumbai@nddb
...
A-3 Sector-1 Noida 201 301 Telephone: (0120) 4262336/4262337 Fax: (0120)
4262347 email: noida@nddb
...
coop
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India Tower Edapazhinji Junction Vazhuthacaud Thiruvananthapuram 695 014
Telephone:
(0471)
2321355/6572895
Fax:
(0471)
2335543
email:
trivandrum@nddb
...
Maris Stella College Vijayawada 520 008 Telephone:
(0866) 2492398/2473764 Fax: (0866) 2492400 email: vijayawada@nddb
...
The OF programme
not only propelled the growth of dairy development in India, it also helped India become
the world's largest milk producer
...
It has become India's largest Dairy
Development Programme
...
It paved the way to take up new initiatives and create new
conditions to firm up India's world leadership in milk production
...
The response is Perspective 2010, a plan that attempts to take the dairy
cooperative movement to its highest potential
...
These include Strengthening
Cooperative Business, Production Enhancement, Assuring Quality and creating a
National Information Network
...
The plan is designed keeping at helm the benefit to farmers at large
...
Perspective 2010 Goals
Increase liquid milk procurement by cooperatives to 33 per cent (488 lakh
kilograms per day) of the marketable surplus in Operation Flood areas, constituting 80
per cent of the national milk produced (i
...
Quadruple liquid milk procurement by year
2010)
...
e
...
AgriMoon
...
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Agricultural Marketing Trade and Prices
•
Standardisation of artwork, colour, logo and retail outlet design across
regional cooperative brands with a view to promoting better recall by
consumers under a common mnemonic umbrella
•
Introduction and improvement of marketing systems and processes
necessary to perform better in a competitive marketplace
•
Training and development of management and staff of milk unions and
federations
Legislative Framework
Supporting efforts aimed at enactment of progressive legislative framework for
the cooperatives at the State and the Centre
Encouraging and assisting dairy cooperatives in incorporation under progressive
and enabling laws
Women's Participation
Increasing women membership in dairy cooperatives to 50 per cent recognising
the potential of this segment as decision makers having practical knowledge about
animal husbandry practices
Undertaking measures for significantly improving women's participation in the
governance of dairy cooperatives at all levels
Promoting organisation of women's thrift and credit groups/cooperatives
Production Enhancement
Action Plan
Breeding
•
•
Increase percentage of animals in milk
•
124
Increase productivity of cows and buffaloes
Expand AI coverage
www
...
Com
Agricultural Marketing Trade and Prices
•
Increase inseminations
•
Reduce AI per conception
•
Take up genetic improvement programmes in selected milksheds to
supply semen
of evaluated bulls to all milksheds
•
Animal Health and Veterinary Services
•
Create first-aid facilities in DCSs
•
Increase vaccination for HS and BQ
•
Increase de-worming of animals
•
Promote mastitis control
•
Undertake Brucellosis control activities in affected areas
•
Promote use of GIS in AI and veterinary health services
•
Create Disease Free Zones by
-
Ear-tagging and passbooks
-
Animal movement management
-
Effective outbreak management
•
Undertaking mass vaccinations
Sero-monitoring
Disease control in Animals
-
Enactment of national legislation for Prevention of Infectious and
Contagious Diseases in Animals
•
•
125
Animal Nutrition
Raise installed cattle feed plant capacity
www
...
Com
Agricultural Marketing Trade and Prices
•
Raise cattle feed plant utilisation capacity
•
Increase and strengthen quality control laboratories
•
Increase number of mineral mixture plant
•
Increase production and utilisation quality fodder seeds
•
Husbandry Extension
•
Enable dairy cooperatives to operate as full-service extension centres for
their members by providing
-
Introduction and support of technology
-
Link actively with union's technical experts
Strategy
Identify and address quality related problems at every stage from the producer at
the village cooperative, to the dairy plant and the process of final delivery to the
consumer
Facilitate improvement of hygiene, sanitation, food safety and operating
efficiency in the dairy plants and sensitise dairy personnel to product quality aspects as
per international standards
Assuring Quality
Action Plan
•
Phytosanitary, bacteriological and organoleptic quality at all stages
•
Development of a comprehensive database on raw milk quality at every
stage from producer to consumer
•
Identification of key intervention technologies for each stage
•
Orientation of Union technical inputs and other support services to
emphasise compliance to national and international quality standards
•
Encouragement
of
quality
incentives
supported
by
educational
programmes for Dairy Cooperative Society staff, transporters and farmer
producers
•
Establishment of village-level chilling as first stage in cold chain reaching
to the plant and on to the consumer
•
Facilitating dairy cooperatives in ISO-9000-2000 (Quality Management
Systems), ISO HACCP (Safety Management Systems) certification and
maintain the required plant conditions under the accreditation on a
sustainable basis
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Agricultural Marketing Trade and Prices
Information and Policy Research
Strategy
•
Link large cooperatives, Unions, Federations and NDDB in a national
network that collects, adds value and disseminates information
•
Ensure availability of analytical information for Policy Planning and
Decision Support
•
Action Plan
•
Integrated Dairy Industry Information Service
•
Facilitate decision-making at various levels in cooperative institutions with
the help of an extensive on-line computer network that analyses relevant
data obtained from :
-
127
Village Dairy Cooperative Societies
www
...
Com
Agricultural Marketing Trade and Prices
-
District Milk Producers' Unions
-
State Milk Marketing Federations
-
NDDB
-
Research Institutions and others
•
National Database
•
Generate data on following :
-
Milk supply (producer, animal and village data)
-
Milk and milk product demand (consumer and urban data)
-
Performance data (societies, unions and federations)
-
Secondary data (domestic and international)
•
Geographical Information System
•
Monitor following field activities :
-
Milk procurement
-
Veterinary health care
-
Artificial Insemination
-
Society information
•
Policy Research
•
Take up problem specific and area specific need-based special studies
for policy support
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•
Conduct regular field studies concerning business interest
Dairy Cooperatives account for the major share of processed liquid milk marketed in the
country
...
The Dairy Board's programmes and activities seek to strengthen the functioning of Dairy
Cooperatives, as producer-owned and controlled organisations
...
Over the years, brands created by
cooperatives have become synonymous with quality and value
...
Nandini (Karnataka), Milma
(Kerala) and Gokul (Kolhapur) are among those that have earned customer confidence
...
(HDDCF)
Himachal Pradesh State Cooperative Milk Producers' Federation Ltd (HPSCMPF)
Karnataka Cooperative Milk Producers' Federation Ltd (KMF)
Kerala State Cooperative Milk Marketing Federation Ltd (KCMMF)
Madhya Pradesh State Cooperative Dairy Federation Ltd (MPCDF)
Maharashtra Rajya Sahakari Maryadit Dugdh Mahasangh (Mahasangh)
Orissa State Cooperative Milk Producers' Federation Ltd (OMFED)
Pradeshik Cooperative Dairy Federation Ltd (UP) (PCDF)
Punjab State Cooperative Milk Producers' Federation Ltd (MILKFED)
Rajasthan Cooperative Dairy Federation Ltd (RCDF)
Tamilnadu Cooperative Milk Producers' Federation Ltd (TCMPF)
West Bengal Cooperative Milk Producers' Federation Ltd
...
Oilseeds growers co-operative
societies at the village level and State Co-operative Oilseeds Growers Federations have
been organized in many States
...
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In Rajasthan, the State level Co-operative Oilseeds Growers Federation, known
as Tilam Sangh was set up in July, 1990
...
Tilam Sangh has established eight plants for processing of mustard in different
mustard growing areas with a total processing capacity of 1
...
These plants are located at Kota, Fatehnagar (Udaipur); Bikaner, Jalore, Mertacity
(Nagaur); Jhunjunu, Sriganganagar and Gangapurcity (Sawai Madhopur)
...
In addition
to mustard plants, Tilam Sangh has also established soyabean and groundnut
processing plants
...
With a view to making available improved seeds of oilseed crops, a
farm of 40 hectares has also been transferred by the State Government to the Tilam
Sangh
...
Presently, Tilam Sangh is supplying 'Tilam brand'
edible oils in 1, 2, 5 and 15 litres/kgs packing to the consumers
...
The Rajasthan Cooperative Marketing Federation (RAJFED) was established on November 26, 1957
...
The main aim of establishing RAJFED is to cooperatively handle purchase and sale of agricultural commodities for the benefit of
farmers as well as consumers
...
AgriMoon
...
Farmer-producers get fair prices of
the produce
...
In its marketing operations, the RAJFED collaborates with NAFED, Tilham
Sangh and other co-operatives
...
RAJFED pays commission to these societies for this work
...
(c) Production of Animal Feed
RAJFED has established a unit of production of animal feed at Jaipur with a
capacity of 12,000 tonnes per annum
...
(d) Production of Isabgol Bhushi
RAJFED has established a Isabgol Bhushi production plant at Abu Road in 1982
with the help of NAFED with a capacity of 450 tonnes per annum
...
(f) RAJFED works as an important state agency for price support operations whenever
need arises
...
It is a federation of marketing cooperative societies
...
To achieve this objective, MARKFED's present activity
includes sale of farm inputs (fertilizers, seeds and pesticides); maintenance of godowns
and procurement of agricultural commodities through its member societies
...
(iii) Other State Federations – Almost all states have state level federations of
cooperative marketing societies
...
Some examples of state level federations are State
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Agricultural Marketing Trade and Prices
Dairy Cooperative Federations,
State Oilseed Federations
and State Cotton
Federations
...
, popularly known as
"TANFED"
Tamil
commenced its business on 20
...
1959
...
From the inception
(i
...
1959) till June 1976, there was elected board of Management
...
6
...
Now TANFED is functioning under the control of Special Officer
...
(b) Thanjavur Cooperative Marketing Federation Limited, Tiruvarur
...
Authorised and paid up share capital
The authorised share capital is Rs
...
The admission fee is Rs
...
Details of share
capital as on 31
...
2008 are furnished in Table 5
...
Table 5
...
in lakhs)
S
...
Name of the Member
No
...
94
(2)
Thanjavur Co-operative Marketing Federation
1
0
...
10
(4)
Government of Tamil Nadu
1
118
...
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Agricultural Marketing Trade and Prices
Organisation
From the inception till June 1976, there was elected board of Management
...
6
...
functioned under the elected Board of
Management
...
5
...
Organisational Setup
The Head Office consists of functional
divisions
such as Administration,
Accounts, Internal audit, Fertilizers, Seeds and Pesticides, Agricultural Marketing and
Civil Engineering
...
Two General Managers in the cadre of
Joint Registrars are in charge of Inputs and Finance, Marketing and Estate
...
At district level there are
18 Regional Offices in Tamil Nadu State
...
5
...
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Functions and Objectives
1
...
2
...
3
...
4
...
5
...
Activities
A) Distribution of Fertilisers
The crop loan issued by Cooperative banks consists of cash portion and kind
portion
...
TANFED
Fertilisers
from
KRIBHCO, FACT,
the
purchase Chemical
leading manufacturers like M/s
...
and
distributing
through Primary
Agricultural Cooperative Banks
...
4
Chemical Fertilizers Distributed by TANFED
Year
Quantity (Mts)
Value (Rs
...
78
2004 - 2005
1,46,765
90
...
80
2006 – 2007
2,18,077
141
...
14
2008 – 2009
8,83,144
606
...
03
2010-2011
81,094
56
...
5
...
AgriMoon
...
B) MANUFACTURE OF FERTILISERS
Pamani Fertilizer Plant at Mannargudi
TANFED is undertaking manufacture of its own granulated mixtures of Pamani
17:17:17 fertilisers with right mix up of NPK with special ingredient, ie
...
This product is very popular among the farmers in Tamil Nadu
...
110/- lakhs with an annual
production capacity of
30,000 Tonnes
...
Details of production and sale of Pamani NPK 17:17:17 for the last 5
years are given below in Table 5
...
Table 5
...
in MTs
...
in MTs
...
in Lakhs)
Value
(Rs
...
10
3421
278
...
45
6279
513
...
47
15186
1244
...
95
18099
1492
...
98
20322
1649
...
85
12039
1004
...
AgriMoon
...
42
14248
1189
...
82
826
75
...
5
...
Government has permitted TANFED to
In addition, Tamil
Nadu
appoint private dealers, to sell the Pamani
17:17:17 from Dec
...
TANFED has proposed to increase its production
from 2 shifts to 3 shifts at the Pamani Fertiliser Plant
...
Details of production and sale of Mixtures for the last 5 years are as given in Table 5
...
Table 5
...
in MTs
...
in MTs
...
in Lakhs)
(Rs
...
71
1021
4020
2004-05
1933
62
...
59
5474
228
...
69
8810
375
...
57
10961
476
...
42
20856
894
...
53
19838
850
...
36
2441
129
...
5
...
The details of the value of these inputs distributed during past few years are as given in
Table 5
...
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Table 5
...
in Lakhs)
Year
Pesticides
...
75
7
...
32
18
...
44
3
...
04
30
...
88
28
...
02
142
...
87
23
...
87
106
...
80
34
...
77
187
...
53
33
...
67
171
...
00
189
...
00
441
...
20
11
...
69
37
...
5
...
3/- lakhs where quality paddy seeds are processed and
distributed to the farmers to the extent of 300 MTs annually
...
Procurement operation is undertaken through the Cooperative Marketing
Societies
and
the Regulated
Markets to fetch remunerative price for the farmers
...
Year-wise performance made in the activity of Agricultural Marketing
is
as follows in
Table 5
...
Table 5
...
in MTs
...
in Lakhs)
2003-04
137
2287
645
...
AgriMoon
...
92
2005-06
1334
272
...
86
2007-08
1072
209
...
93
2008-09
2486
443
...
45
27045
12035
...
16
2505
1114
...
5
...
5
2010)
TANFED sell crackers at very reasonable price to the general public
...
19
...
99
...
TANFED also act as Nodel Agency for distributing crackers to the rural area through
PACBs in the State during the last 3 years
...
The
storage space are allotted on monthly rental basis
...
07 lakhs
Cold Storage II
56%
9
...
5
...
The installed capacity of this godown is 1350 tonnes
...
9
...
NCDC Loan
2
...
Share Capital assistance
-
3
...
94 lakhs
-
4
...
71 lakhs
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--------Total
-
9
...
and subsidy from Ministry of Food Processing
...
1
...
00 lakhs
2
...
Share Capital assistance
55
...
TANFED Share
47
...
Subsidy from Ministry of Food Processing Industries
...
00 lakhs
---------------
Total
198
...
In addition to
the own godowns TANFED hired 9 godowns with the capacity of 3,450 MTs
...
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H) KEROSENE DISTRIBUTION
TANFED
installed
one kerosene bunk at Kodambakkam
with a storage
capacity of 15 Kilo Litres in the year 1969 and continue its function as wholesaler till
date
...
Around 50,000 litres of kerosene is supplied to the card holders every month in
each of these retail outlets
...
The details of distribution of Kerosene as wholesaler and retailer
during the past years are as follows in Table 5
...
9
Distribution of Kerosene by TANFED
Year
Qty
...
in Lakhs)
2003-04
2517
267
...
20
2005-06
3428
288
...
94
2007-08
3019
250
...
33
2009-10
2703
228
...
09
2010 – 2011 (Upto 31
...
2010)
Finance and Accounts
Sources of Funds
TANFED has raised its funds from
a) Share Capital paid by members
b) Reserves & Surplus from out of profit
c) Borrowings in the form of short term loans, long term loan from State / Central
Government, NCDC and cash credit from financing bank,
i
...
, Tamilnadu State Apex Cooperative Bank
...
But instead of preparing Trial
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Balance, TANFED is preparing Receipts and Charges statement as directed in
the Tamil Nadu Cooperative Societies Act from the Receipts and Charges statement,
the final accounts are prepared
...
The Annual accounts are prepared as per the Act
...
The computer environment commenced from 1
...
1998 at the
10/- lakhs
...
package
...
Plan to switch
over the present software to latest software is under progress
...
The Internal Audit
constituted with the own staff of TANFED
...
There are one Assistant Director, 5 Cooperative Audit Officer and 1 Co-operative Auditor working in TANFED on concurrent
basis
...
The audit for 2007 –
2008 has been completed
...
Cotton Corporation of India was established during the year
a
...
1965
c
...
1975
Ans: c
2
...
Cotton
b
...
Milk
d
...
Ordinary members of co operative society do not have right in the profit share of
the society
...
Nominal members of co operative society have the right to participate in decision
making
...
State government do not subscribe to share capital of co operative marketing
societies
...
Co operative marketing societies act as agents of the government in the
procurement of food grains
...
AgriMoon
...
NAFED is not functioning under co operative principles
...
NAFED does not take part international trade
...
AgriMoon
...
This may require direct intervention on its part in trading of
agricultural commodities
...
Types of State Trading
State trading may be partial or complete, depending upon the extent of
intervention desired by the government
...
Traders are free
to buy and sell in the market
...
The government enters the market for the purchase
of commodities directly from producers at notified procurement price
...
In this
way, it safeguards the interest of producers and consumers alike, and keeps a check on
the undesirable activities of traders
...
AgriMoon
...
The purchase and sale of commodities is undertaken entirely by
the government or its agencies
...
Under this form of state trading, the government remains the sole
purchaser and distributor of the commodity
...
In India,
complete wholesale trade in wheat was taken over by the government in 1973; but it had
to be given up very soon
...
It was intended to eliminate the wholesalers, who were considered
to be responsible for creating an artificial scarcity by hoarding with a view to raising
prices
...
Under the wholesale trade takeover scheme, public sector agencies like the
Food Corporation of India, the Civil Supply Departments of State Governments and Cooperative Marketing Societies were entrusted with the responsibility of purchasing the
marketed surplus and its subsequent disposal to consumers through a network of fair
price shops
...
It was planned to purchase 30 to 35 per cent of the total
production of wheat in the country during that year; but government agencies could
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procure only half of the targeted quantity of 8
...
The reasons of
the failure of the scheme were:
(i)
Very low procurement prices, i
...
, Rs
...
Traders were the main sufferers when
this scheme was introduced; and they undermined the arrivals of wheat in the
market;
(iii)
Over-estimation of the marketable surplus in various States;
(iv)
Inconvenient public purchase system resulting in a long wait by farmers for many
hours, and sometimes for more than one day for their turn to hand over the
produce and get payment for it
...
The government realized that takeover of rice trade would be much more difficult
than wheat trade due to its operation on a wide area in the country and also due to the
existence of surplus regions within deficit states
...
However, partial state trading has continued mainly
through Food Corporation of India and National Agricultural Cooperative Marketing
Federation
...
Exports by STC vary from traditional agricultural commodities to sophisticated
manufactured products
...
STC makes purposeful use of its
world-wide connections, abundant experience, up-to-date information about the market
trends and long term perspective on various commodities to ensure competitive prices,
right quality and adherence to delivery schedules to the buyers abroad
...
AgriMoon
...
IMPORTS INTO INDIA
STC imports a number of essential commodities to cover the domestic shortfalls
and hold the price line
...
In the process, the Corporation makes best use of its strength
in handling bulk imports, vast infrastructure and above all an experience of over four
decades in fulfilling the needs of the industry
...
For them, STC
finds the best Indian manufacturers, undertakes negotiations, fixes delivery schedules,
oversees quality control - all the way to the final shipment to the entire satisfaction of the
buyer
...
STC helps thousands of Indian manufacturers to find markets abroad for their
products
...
Some of the other services
offered by STC to the Indian manufacturers include :
* Financial assistance to exporters on easy terms
...
AgriMoon
...
* Import of machinery and raw material for export production
...
* Supply of imported goods in small quantities as per convenience of buyers
...
To the Indian Consumer
The Indian consumers also benefit from STC's expertise and infrastructure
...
During the last one decade, STC imported sugar, wheat and pulses to meet
domestic requirements at a very short notice
...
Subsequent to the
placement of imports of Edible oils under OGL by the Govt
...
Imports are undertaken against the firm advance
indents of the prospective buyers
...
The entire operation is based on actual costs plus a fixed service margin
charged by STC
...
CIF cost of
the goods
...
Customs duty, taxes and levies, as applicable from the time to time
...
(presently estimated @ Rs
...
Storage charges on actuals or at a fixed rate wherever STC's own storage tanks are
used
...
Service charge : a nominal service charge is taken
...
Delivery period : generally 30 days from the date of arrival/PHO clearance of the oil
...
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(b) Domestic buyers are required to make payment prior to taking delivery
...
STC charges interest on funds deployed at the
cash credit rate plus 1% per annum basis (currently 12
...
a
...
EMD is returned to the party together
with interest after satisfactory execution of the contract by the buyer
...
Any constructive proposal
from the buyer is analyzed objectively in the interest of growth of business
...
23701074 (direct), 23313177 / 23701100 Extn : 2064 at our Corporate Office at New
Delhi or Branch Manager of STC's offices at Ahmedabad, Mumbai, Chennai, Hyderabad,
Kolkata
...
gov
...
stc
...
in
Branch Offices
Mumbai
The State Trading Corporation of India Ltd
...
stc@nic
...
"Nilhat House", 9th & 10th Floor, 11, R
...
Mukherjee Road, Kolkata - 700001, INDIA
Phone: 91-033-22305464, 22436490, 22435492 Fax : 91-033-22480777, 22488165
E-mail: kolkata
...
in
Chennai
The State Trading Corporation of India Ltd
...
AgriMoon
...
stc@nic
...
"H
...
House, 6th Floor", Behind Jivabhai Chambers,
Ashram Road, Navarangpura, Ahmedabad - 380009, INDIA
Phone : 91-079-6580797, 6589605, 6581021 Fax
: 91-079-6587533
E-mail : ahmedabad
...
in
Bangalore
The State Trading Corporation of India Ltd
...
stc@nic
...
5th Floor, Mogul's Court, Basheerbagh,
Hyderabad - 500001, INDIA
Phone : 91-040-23237389, 23296460 Fax
:91-040-23236786
E-mail : hyderabad
...
in
Jalandhar
The State Trading Corporation
...
A-6, Sports & Surgical Goods Complex, Kapurthala Road,
Jalandhar - 144021, INDIA
Phone : 91-0181-2650436
Fax
: 91-0181-2650461
E-mail : jalandhar
...
in
Agra
The State Trading Corporation of India Ltd
...
G
...
The Directorate has prescribed grade standards for various
agricultural products under the Agricultural Produce Grading and Marking Act, 1937
...
AgriMoon
...
Graded products bear the AGMARK label, indicating
the purity and quality of the product
...
The details of the mechanics of grade standards for agricultural products and
the progress of grading in India have been discussed in Chapter 4
...
Manufacturers have to use proper ingredients in specified proportions and follow
the technique of manufacture given in the standards laid down by the Indian Standards
Institution
...
Indian Standards Institution (ISI)
Standardization on an organized basis started in India with the establishment of
the Indian Standards Institution
...
The ISI frames standards in consultation with, and as a result of the cooperation of, the community – industrialists, scientists, administrators and the public
...
Apart from
helping the commercial movement and industrial exchanges, standards conserve the
production effort by reducing costs and making mass production possible
...
The institution operates under an Act of Parliament (ISI Certification Marks Act), under
which manufactured items are stamped with the ISI mark of certification
...
The World Standards Day is celebrated annually on 14th October, for it was on
this day in 1946 that the United Nations Co-ordinating Committees decided to set up the
International Organization for Standardization
...
The aims and objects of the ISI are:
(i)
Preparation of standards for products, commodities, materials and processes on
national and international bases;
(ii)
Promotion of the general adoption of the standards prepared by it at national and
international levels;
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(iii)
Certification of industrial products and assistance in the production of quality
goods;
(iv)
Dissemination of information relating to standards and standardization;
(v)
Conduct of surveys and training programmes for assistance to Indian industries
in organizing their in-plant standards activity;
(vi)
Collaboration with international organizations dealing with standardization for
promotion of international trade;
(vii) Imparting training in industrial standardization to scientists and technologists from
abroad; and
(viii) Performing a watching function in regard to the quality of Indian exports
...
The Indian Standards Institution functions through nine Divisional Councils,
which are responsible for the work of standardization in their respective fields
...
ISI has set up about 2,000 technical committees, sub-committees and panels
dealing with different subjects with a membership of more than 24,000 experts
representing various interests such as manufacturers, purchasers, consumers, scientific,
technical and research organizations and government departments
...
Each standard
specification is finalized after an exhaustive process of testing in laboratories, discussion
in the committees and circulation to hundreds of interested parties all over the country
...
In addition, Central and State
Governments; local bodies and statutory organizations generally adopt standards in their
purchases
...
ISI also uses different media of public relations and publicity to spread the
message of standardization
...
Various promotional and
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instructional programmes are carried out
...
The instructional programmes comprise
survey, training programmes and seminars
...
This Act
enables ISI to grant licences to manufactures to use the ISI mark on their products
...
During the operation of the licence, ISI carries out regular and surprise
inspections of the manufactures to make sure that the scheme of testing and inspection
is being properly adhered to
...
As a
safeguard for the consumer the scheme provides for free replacement of ISI marked
goods found to be of substandard quality
...
The licencee covers a range of
570 products including consumer products and industrial items such as biscuits, infant
milk food, ink, cables, conductors, jute products, steel, paints, shoe polish, pressure
cookers, aluminium utensils, coffee, electrical appliances, sports goods and water
meters
...
Some items in the market, however,
do not conform to these standards because they are produced in the small and tiny
sectors without any facility or funds for quality testing
...
Since 1961, ISI has
promoted the concept of in-plant standardization through conferences, symposia and
training programmes
...
These laboratories also undertake investigational
work covering food, chemical, electrical and mechanical items for the purposed of
evaluation of standards
...
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ISI serves the interests of the country in the field of international standardization
by close collaboration with the international organizations such as ISO (International
Organization for Standardization) and the IEC (International Electro Technical
Commission) for standardization
...
The ISI also works in close collaboration with the similar organizations for
standardization in other countries of the ECAFE (Economic Commission for Asia and
Far East) Region with a view to promoting standardization activities
...
The ISI has benefited the consumers as well as the manufacturers
...
It protects the
consumers through assured quality
...
The scheme
brings to the consumers the benefits of lower price, better quality, more safety and repair
services
...
This
reduces wastage, cost of material, cost of production and increases the chances of
profits
...
The ISI took up the
steel economy project involving a comprehensive standardization programme to give a
fillip to the steel industry and introduce economies in the use of structural and special
alloy steels
...
Another notable achievement is the preparation of the
National Building Code streamlining housing construction practices all over the country
...
Along with the change in its name, its
status and scope of activities have also been enlarged
...
The Bureau has been established by the Bureau of Indian Standards Act, 1986
and has become a statutory body
...
, standards
formulation, product certification, quality assurance, consultancy services, quality
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assessment, testing and development of test methods have assumed statutory status
...
Over the past five decades, it has built up over 17,000 Indian Standards covering
products in different sectors like food and agriculture, chemicals, civil, mechanical and
electrical engineering, electronics, textiles and many other products
...
The production of small-scale items based on Indian standards
provides competitive capability with large-scale sector
...
The BIS has
also formulated three standards for water
...
It has become an institution of quality
assurance for the consumers
...
Provision of voluntary certification for
items such as colour television, control switches, sodium vapour lamps, jute and canvas
products, bus and truck tyres and greases also exists
...
Now BIS quality certification is
on the lines of international norms and is accredited by RVA Neitherlands
...
(iii)
BIS is also undertaking HACCP certification
...
It is based on Quality Management System and IS 15000 which is
equivalent to CODEX ALI NORM 97/13A
...
(vi)
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Consumer Protection
Food products have the distinction of meeting an essential need of all the
consumers, irrespective of their economic and social status
...
The consumers are
often cheated through deceptive and defective weights and measures and adulteration
...
e
...
The doctrine put forward in his favour with the growing
consumer awareness is "caveat venditor", that is, 'let the seller beware'
...
Some of the main Acts enacted and statutory orders passed by the
Government to subserve the interest of the consumers are:
1
...
2
...
3
...
4
...
5
...
6
...
7
...
8
...
9
...
10
...
11
...
12
...
13
...
14
...
The Consumer's Protection Act, 1986, 1991, 1993, 2002
...
In practice the situation appears obscure due to poor enforcement of them
...
e
...
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Many voluntary agencies are working in the country for giving strength to the
consumers movement and the protection of consumers
...
The Government has established
Consumer's Protection Councils at the State and district levels for the protection of the
consumers
...
The main contributions of the organizations are in areas of consumer
education (providing information about availability of goods, prices and trade practices),
product rating (testing of products) and liaison with government and producers of
products
...
K
...
It has harmed our business both on the export front and in the local
market
...
Therefore, there is a need to change this perception to make
a significant dent in the food export market especially in the processing sector
...
As such
adoption of HACCP concept is important
...
This concept was not so important when the food chain was localized and people
consumed locally produced fresh harvested or cooked food without prolonged storage
...
Good-looking fresh fruits and
vegetables might contain hazardous chemicals and bacteria which may cause ill effects
on the health of the consumers, instantaneously or at a later date
...
AgriMoon
...
A new era in food safety started in 1960s when USA planned to send astronauts
in spaceship to moon
...
With this objective, Pillsbury of
N
...
S
...
(National Aeronautics and Space Administration) developed and used HACCP
as preventive system for preparation of food for astronauts
...
The concept of HACCP gained recognition and acceptance globally as a
system of choice for good safety due to following reasons:
(i)
To identify food safety hazards for different farm products and their process of
production
...
(iii)
Necessity of creating awareness among people to realize their role and
responsibility for food safety
...
International food safety standards are developed by the Codex Alimentarius
Commission (CODEX)
...
As per the WTO requirement, only Codex standards are
acceptable for international trade
...
Based on this analysis, appropriate action
can be taken to ensure that the areas identified as critical control points are kept under
control and are not allowed to endanger the items produced
...
(i)
Conduct a hazard analysis
...
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(vi)
Establish procedure for verification to confirm that the HACCP system is working
effectively
...
Food safety is analysed in terms of hazards and risks
...
The probability that a defined harm will
occur is the risk associated with the hazard
...
The benefits of testing food by HACCP are;
(i)
Avoids human sufferings;
(ii)
Reduces burden from over burdened health care system;
(iii)
Increases the export of food products;
(iv)
Attracts more foreign tourists; and
(v)
Increases earning potential of citizens
...
This scheme is administered by the
Bureau of Indian Standards (BIS)
...
For a product to be eligible for
ECOMARK, the product shall confirm to the relevant Indian Standards as well as
additional requirement incorporated for ensuring environment friendly nature of the
product
...
(c) Mark to Identify Vegetarian/Non-Vegetarian Food Products
The Government of India by an amendment in the Prevention of Food
Adulteration Act, 1955 on 4th October, 2001 and 20th June, 2002 has made it mandatory
for the manufacturers of food products to put a label indicating whether the food has
been prepared using meat and allied products or otherwise
...
This
amendment is applicable throughout the country
...
AgriMoon
...
This indicates the quality of the product and conveys that the
production of processed fruit products has been carried out under clean and sanitary
conditions
...
Currently, there are 27 laws relating to food in the country
...
Consumer Education and Research Centre (CREC)
The Consumer Education and Research Centre (CREC) is a political, non-profit
organization situated at Ahmedabad
...
The CREF is recognized as consumer organization by
the Government of Gujarat
...
The main objectives and functions of this centre are:
(i)
To create an enlightened consumer consciousness and public opinion through
the mass media;
(ii)
To study analytically and do research on the working of the public utility services;
(iii)
To carry academic programmes for training the workers and leaders for
consumer protection;
(iv)
To approach the legislators for lobbying with them for taking up consumer
protection issues on the floor of parliament/assemblies
...
(vi)
To take recourse to court for redressal of grievances of the consumers
...
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Model Quiz
1
...
AGMARK b
...
BSI d
...
International food safety standards are developed by
a
...
CODEX
c
...
WTO
Ans: b
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CHAPTER 7
WAREHOUSING AND FOOD CORPORATION OF INDIA
Warehousing
Meaning and Functions
Warehouses are scientific storage structures especially constructed for the
protection of the quantity and quality of stored products
...
It may be called the protector
of national wealth, for the produce stored in warehouses is preserved and protected
against rodents, insects and pests, and against the ill-effect of moisture and dampness
...
The important functions of warehouses are:
1
...
The product is protected against quantitative and qualitative losses by the use of
such methods of preservation as are necessary
...
Financing: Warehouses meet the financial needs of the person who stores
the product
...
3
...
Farmers or traders can store their products during the post-harvest season, when prices
are low because of the glut in the market
...
They thus help in the stabilization of agricultural prices
...
Market Intelligence: Warehouses also offer the facility of market information
to persons who hold their produce in them
...
This facility helps in preventing distress sales for immediate money needs or
because of lack of proper storage facilities
...
Types of Warehouses
Warehouses may be classified on two bases:
1
...
AgriMoon
...
The method of operation and the charges for storage are
regulated by the government
...
These warehouses are licensed by the government for this
purpose
...
In other words, the goods stored in this warehouse are bonded
goods
...
The following
services are rendered by bonded warehouses:
(i) The importer of goods is saved from the botheration of paying customs duty all
at one time because he can take delivery of the goods in parts
...
(iii) Entrepot trade (re-export of imported goods) becomes possible
...
He is thus saved from the botheration of first making the payment of customs
duties on imported goods and then getting a refund on re-exported goods
...
On the Basis of Type of Commodities Stored
(a) General Warehouses: These are ordinary warehouses used for storage of
most of foodgrains, fertilizers etc
...
(b) Special Commodity Warehouses: These are warehouses which are
specially constructed for the storage of specific commodities like cotton, tobacco, wool
and petroleum products
...
(c) Refrigerated Warehouses: These are warehouses in which temperature is
maintained as per requirements and are meant for such perishable commodities as
vegetables, fruits, fish, eggs and meat
...
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Warehousing in India
In 1928, the Royal Commission on Agriculture underscored the need for a
warehousing system in India
...
The Reserve Bank of India emphasized the need for warehouses
as early as in 1944, and proposed that every State Government should enact legislation
to regulate the functioning of warehouses
...
As a result of the recommendations of the
Committee, the Government of India enacted the Agricultural Produce (Development
and Warehousing) Corporations Act, 1956
...
In 1962, the Government of India decided to break up the Act of 1956 into two
separate Acts – the National Co-operative Development Corporation Act, 1962, and the
Warehousing Corporations Act, 1962
...
The Act defines the specific functions and the area of
operations of Central and State Warehousing Corporations
...
(a) National Co-operative Development and Warehousing Board
This board was set up on 1st September 1956 to perform the following functions:
(i) To advance loans and grants to State Governments for financing co-operative
societies engaged in the marketing, processing or storage of agricultural produce,
including contributions to the share capital of these institutions;
(ii) To provide funds to warehousing corporations and the State Governments for
financing co-operative societies for the purchase of agricultural produce on behalf of the
Central Government
...
AgriMoon
...
In March 1963, the Board was converted into the National Co-operative
Development Corporation (NCDC), and its functions were limited to co-operative
development
...
Under the new Act, the Central Warehousing Corporation was formally reestablished on March 18, 1963
...
87 lakh
tones at the end of March 2001
...
CWC is operating 487 Warehouses across the country with
a storage capacity of 10
...
Warehousing activities of CWC include food grain warehouses, industrial warehousing,
custom bonded warehouses, container freight stations, inland clearance depots and air
cargo complexes
...
The Central Warehousing Corporation provides safe and reliable storage facilities for
about 120 agricultural and industrial commodities
...
The functions of the Central Warehousing Corporation are:
(i) To acquire and build godowns and warehouses at suitable places in India;
(ii) To run warehouses for the storage of agricultural produce, seeds, fertilizers
and notified commodities for individuals, co-operatives and other institutions;
(iii) To act as an agent of the government for the purchase, sale, storage and
distribution of the above commodities;
(iv) To arrange facilities for the transport of above commodities;
(v) To subscribe to the share capital of State Warehousing Corporations; and
(vi) To carry out such other functions as may be prescribed under the Act
...
AgriMoon
...
Warehouses of the corporation are fairly full all through the year
...
Special storage facilities have been
provided by the Central Warehousing Corporation for the preservation of hygroscopic
and fragile commodities
...
It has set up special warehouses at some
centres for the storage of jaggery
...
The Corporation has also evolved techniques for the storage of
spices, coffee, seeds and other commodities
...
It has also undertaken the
storage and handling of export and import cargo at the international air-port at Palam,
New Delhi
...
It has put up a similar air cargo complex at Amritsar for the
export/import of goods
...
It has already established a sizeable capacity at
Mumbai, Kolkata, Cochin, Chennai, Mangalore, Paradeep, Kandla, Haldia and Vizag
...
The Central Warehousing Corporation also provides a package of
services, such as handling and transport, safety and security of goods; insurance,
standardization, documentation, and other connected services and facilities
...
CWC has 17 Regional
Offices located in major state capitals of the country
...
AgriMoon
...
B
...
Saha, IAS (Retd
...
cwhc@nic
...
B
...
Pattanaik,
Managing Director, Central Warehousing Corporation,
Tele: 91-11-26515160 Fax : 91-11-26967844
E-mail: mdcwc@nic
...
G N Nair,
Director ( Finance), Central Warehousing Corporation,
Tele: 91-11-26966295, 26566107 / 103
Fax : 91-11-26534146
E-mail: gnnair
...
in
4
...
Mathialagan, Director ( Personnel), Central Warehousing Corporation,
Tele: 91-11-26852825, 26566107 / 104 Fax : 91-11-26850575
E-mail: dirpers
...
in
5
...
K
...
cwhc@nic
...
Vineet Pandey, Chief Vigilance Officer, Central Warehousing Corporation,
Tele: 91-11-26966219 Fax : 91-11-26964082 E-mail : cvo
...
in
7
...
S C Batra, OSD (Recovery), Central Warehousing Corporation,
Tele: 91-11-26851410 Fax : 91-11-26852248 E-mail :
8
...
cwhc@nic
...
cwhc@nic
...
A V Jawakar, Secretary, Central Warehousing Corporation,
Tele: 91-11-26518013, 26566107 / 104
Fax : 91-11-26966268
Email: secycwc@nic
...
N K Grover, General Manager (F&A)
Central Warehousing Corporation,
Tele: 91-11-26515148, Fax : 91-11-26964082 E-mail: grover
...
in,
11
...
General Manager (Per
...
AgriMoon
...
Scientific Storage Facilities for more than 200 commodities
including hygroscopic and perishable items through network of 487 warehouses in India
with its 5,765 trained personnel
...
Bonded Warehousing facilities ,
Disinfestation services Handling, Transportation & Storage of ISO Containers
...
As such, concept of Rail Side
Warehousing facilities was evolved by the Corporation as value addition to the rail
transport system which extends benefits to the users in avoiding multiple handling of
their stocks and resultant escapable losses on this account; curtailing handling cost and
having a hassle free efficient operation
...
Under the purview of MoU entered between MoR and CWC, the Corporation has
commenced the expansion of RWC facilities at Whitefiled, Bangalore to meet even
growing demand of users
...
A subsidiary in the name of "Central Railside Warehouse Company Ltd
...
AgriMoon
...
07
...
07
...
Aircargo Complexes
Ambitious expansion of CWC over the years has also brought CWC in the
operation of Aircargo Complexes which is a major step towards providing complete
services as a multi-modal transport operator
...
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Agricultural Marketing Trade and Prices
Disinfestation and Pest Control Services
Govt
...
Over the years, CWC has developed the expertise in Pest Management in the following
areas
•
Rodent Control
•
House hold Pest Management- Cockroaches, Mosquitoes, House Flies, Bed
Bugs, Spiders, Lizards, Carpet Beetles, Fleas, Crickets, Ants, Wasps, Locusts
etc
...
•
Ship Fumigation(on Board)
•
Pre-shipment fumigation of Export Cargo
•
Rail Coach disinfestations
•
Aircraft disinfestations
•
169
Storage Pest Management
...
AgriMoon
...
•
Disinfestations of Oil Refineries
•
Disinfestations of Airports & Ports
•
Disinfestations of Delhi Metro Rail Premises
CWC the only organization in the public sector recognized by the Directorate of
Plant Protection Quarantine and Storage, Ministry of Agriculture, Govt
...
CWC earned a major breakthrough in
disinfestation of aircrafts of Air India using timer device
...
CWC has taken lead in accreditation of its pest control operators under newly
introduced National Standards on Phytosanitary Measures NSPM 11 & 12 to facilitate
MBr fumigation treatment of export/import cargo carrying wood packaging material
(WPM) in compliance to the FAO/IPPC guidelines issued through International Standard
on Phytosanitary Measures ISPM -15
...
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Agricultural Marketing Trade and Prices
Major clients of CWC for pest control services include:-Many leading grain
exporters, shippers for containerized cargo, Indian Railways, Air India, Air Sahara, Air
Deccan, Indian Airlines, Jet Airways, Airport Authority of India, Indian Oil Corporation,
GAIL (India) Limited, Reserve Bank of India, AIIMS, Central Public Works Department,
VSNL, ONGC, AIR etc
...
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Some of the Grain exporters who have availed CWC’s pest control services during the
recent past include:Satnam Overseas, Cargill India Ltd
...
, MMTC, PEC, STC,
Vicnivas Agencies, PUNSUP, Seaways, Bishan Swaroop Ram Kishan Agro, Olam
International, LMJ International, SS Exports, V
...
CWC is keen to enter into agreements with users for providing Pest Control
Services as well as Strategic Alliance with other pest control service providers/firms
dealing with pest control related activities for further widening its clientele
...
Sher Jagjit Singh, Dy
...
Telefax: 011-26862977 Mobile: 9891937407
e-mail: cwcpcs07@gmail
...
The first state warehouse was set up in Bihar in 1956
...
38 lakh tones
...
The total share capital of the State Warehousing Corporations is
contributed equally by the concerned State Governments and the Central Warehousing
Corporation
...
Working of Warehouses
Acts: The warehouses (CWC and SWCs) work under the respective
Warehousing Acts passed by the Central or State Governments
...
Eligibility: Any person may store notified commodities in a warehouse on
agreeing to pay the specified charges
...
The commodity is inspected, and the quality of the product is
determined
...
AgriMoon
...
This receipt
mentions the name and location of the warehouse, the date of issue, a description of the
commodities, including the grade, weight and approximate value of the produce based
on the present price
...
A delivery of part of the goods may be taken through
this warrant by the depositor
...
Use of Chemicals: The produce accepted at the warehouse is preserved
scientifically and protected against rodents, insects and pests and other infestations
...
Financing: The warehouse receipt serves as a collateral security for the purpose
of getting credit
...
Delivery of Produce: The warehouse receipt has to be surrendered to the
warehouse owner before the withdrawal of the goods
...
The main provisions of the Act governing the grant of a license to run
warehouses were:
(a) Any person, including a company, association or corporate
body may apply to the State Government for the grant of a license to carry on the
business of warehousing
...
(c) The license has to be renewed periodically on payment of prescribed fees
...
(e) It is the responsibility of the warehouse owner to keep the premises clean,
keep different lots of goods separately in the warehouse, and carry on such operations
as are necessary to protect the goods against losses from damage and pilferage
...
AgriMoon
...
As a result, a large
number of warehouses/godowns have been built throughout the country in all important
rural and urban centres, metropolitan cities, ports and railway stations
...
1
...
1
Number and Capacity of Warehouses in India (including hired)
Year
Number
Capacity in Lakh Tonnes
CWC
SWC
Total
CWC
SWC
Total
1957-58
7
-
7
0
...
07
1960-61
40
266
306
0
...
78
3
...
36
18
...
47
1980-81
330
1050
1380
37l89
50
...
89
1990-91
495
1331
1826
66
...
54
160
...
41
90
...
15
1993-94
458
1364
1822
63
...
58
159
...
31
101
...
03
1995-96
458
1371
1829
69
...
71
183
...
79
123
...
53
2000-01
466
1639
2105
83
...
99
232
...
17
815
...
66
Source: a) Central Warehousing Corporation of India; quoted in Fertilizer Statistics,
Various issues, Fertilizer Association of India, New Delhi, December 1994,
p
...
b) Government of India, Annual Report, 1995-96, and Foodgrains – Monthly
Bulletin, July 1996, Ministry of Food, New Delhi
...
The number of warehouses, which had increased from only seven during 1957-58, to
306 during 1960-61, and 703 during 1970-71, went up to 1380 during 1980-81 and
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Agricultural Marketing Trade and Prices
further to more than 2000 during 2001-02
...
Out of the total storage capacity of 275 lakh tones, nearly 89 lakh tones was with the
Central Warehousing Corporation and remaining 186 lakh tones with State Warehousing
Corporations
...
These include foodgrains, fibre crops, fertilizer, cement, rubber, cotton yarn, textiles,
paper and leather
...
The
government felt the necessity of an organization which can act as its main agency for
handling food grains, acquire a commanding position in the food grain trade as a
countervailing force to the speculative activities of private traders and, at the same time,
work on commercial lines
...
Legislation was
enacted; and the Food Corporation of India (FCI) was born on January 1, 1965
...
•
Distribution of food grains throughout the country for public distribution system
•
Maintaining satisfactory level of operational and buffer stocks of food grains to
ensure National Food Security
In its 45 years of service to the nation, FCI has played a significant role in India 's
success in transforming the crisis management oriented food security into a stable
security system
...
AgriMoon
...
10
...
01
...
Most of the
Revenue Districts in the country are covered by FCI
...
03
...
03
...
The general
superintendence, direction and management of the affairs and business of the
Corporation shall vest in a board of directors which exercise all such powers as may be
exercised or done by the Corporation under this Act
...
Today, the FCI is the unrivalled food marketing agency, serving the interests of
both the farmers and consumers
...
It ensures a prompt and uninterrupted supply of food grains to the
vulnerable sections of society all over the country
...
Financially, it is one of the largest public sector undertakings, with an annual turnover of
over Rs
...
Functions
The main functions of the Food Corporation of India are:
(a) To procure a sizeable portion of the marketable surplus of foodgrains and
other agricultural commodities at incentive prices from the farmers on behalf of the
Central and State Governments;
(b) To make timely releases of the stocks through the public distribution system
(fair price shops and controlled items shops) so that consumer prices may not rise
unduly and unnecessarily;
(c) To minimize seasonal price fluctuations and inter-regional price variations in
agricultural commodities by establishing a purchasing and distribution network; and
(d) To build up a sizeable buffer stock of foodgrains to meet the situations that
may arise as a result of shortfalls in internal procurement and imports
...
AgriMoon
...
Each region has district
offices
...
Organisational Structure of FCI
The tremendous growth of the organization is the direct result of the staggering increase
in the volume of its business
...
It also undertakes massive price support operations for cereals
on behalf of the Central and State Governments to protect the interests of the growers
...
It also handles huge stocks of food grains procured by other agencies for the
central pool, and utilizes the services of co-operative societies to the maximum extent
possible
...
The quantities procured in different years by the Food Corporation of
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India are given in Table 7
...
A glance at the procurement of food grains by the
Corporation would show the vital and effective role it has played in the national
economy
...
, cereals and pulses, are
also made by the Corporation at market prices with a view to supplying them to the
defense services
...
2
Procurement of Food grains by Food Corporation of India
(thousand tones)
Calendar year
Rice
Wheat
Coarse grains
Total
1965
2951
375
705
4031
1970
3043
3183
488
6714
1975
5042
4098
423
9563
1980
5210
5866
102
11178
1985
9568
10355
184
20107
1990
12792
11094
105
23991
1995
9997
12327
-
22324
1995-96*
10047
12327
-
22374
1996-97*
12960
8157
-
21117
1997-98*
15486
9298
-
24784
1998-99*
12590
12652
-
25242
1999-00*
18207
14143
-
32350
2000-01*
20824
16356
-
37180
2001-02*
22129
20630
-
41910
2005-06
14785
27656
1154
43595
2006-07
9226
25107
0
...
of India, Department of Food, New Delhi
...
of India, Agricultural Statistics, At a Glance, 2002 and 2003, New
Delhi
...
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Agricultural Marketing Trade and Prices
(ii) Storage
The provision of adequate and proper scientific storage facilities for food grains
from the time of procurement till their distribution is another important function performed
by the Corporation
...
Food grains are
stored in go downs which are scientifically constructed for protection against dampness,
rats and fungus
...
With the onset of the green revolution, there was an
urgent necessity of augmenting substantially the storage facilities for food grains at the
production and consumption centres
...
It also encouraged private parties to
construct modern food grain go downs on a guaranteed occupation basis
...
New and cheap methods for the preservation of stocks have
been developed by the technical experts of the Corporation
...
The activities undertaken by the FCI for this purpose are:
(a) It has constructed 28
...
CAP storages are in large open areas and
are scientifically planned to hold thousands of bags of grains under polythene covers
...
Silos are tall and massive
structures with huge storage facilities and facilities for mechanical handling
...
As a result, the losses arising out of
handling are reduced
...
The construction of
silos has been taken up in Punjab, Haryana, Uttar Pradesh and Delhi
...
(d) The FCI has a chain of 138 quality control laboratories which develop quality
control measures to ensure the safe storage of food grains
...
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Agricultural Marketing Trade and Prices
Storage Capacity with FCI
( in Million Tonnes as on 1st April)
Capacity
...
82 12
...
91
12
...
94
12
...
97
Hired
13
...
85
10
...
90
9
...
71
12
...
59 23
...
37
22
...
28
21
...
98
CAP ( Cover and Plinth)
Owned
2
...
21
Hired
2
...
36
0
...
51
Total
5
...
57
2
...
72
31
...
24
26
...
25
2
...
55
2
...
20
2
...
63
0
...
42
2
...
23
2
...
20
23
...
71
(iii) Transportation
The Food Corporation of India organizes swift and massive movement of food
grains, both by rail and road, to ensure timely arrivals in the areas of consumption and of
storage
...
It is one of the largest users of the railways
...
238 million tones, which
increased to an average of more than 20 million tones during the last five years
...
This responsibility was entrusted to it by the government in 1969-70
...
(v) Distribution
Another important function of the Corporation is the distribution of procured/
imported food grains through nearly 4
...
Food grains
are issued on the basis of the allocations made by the Central Government
...
The quantity of food grains distributed through public distribution and
open sales has varied between 17
...
8 million tones during the last 5 years
...
AgriMoon
...
It has acted as a pace-setter in the modernization of food processing
operations
...
It has also set up a Paddy Processing
Research Centre at Tiruvarur in Tamil Nadu in collaboration with the Government of
Tamil Nadu and the Union Ministry of Agriculture with a view to evolving a new
technology for increasing the outturn of rice at rice mills, better utilization of bran for the
extraction of edible oil and proper use of by products
...
These have served as models for private interests in
this line to set up such mills elsewhere
...
The FCI has also set up a solvent extraction plant at Ujjain (M
...
) to
process groundnut
...
It has set up a dal mill at Lucknow (U
...
) to
meet the purchase requirements of the army
...
(vii) Consultancy
The Food Corporation of India has taken a new function of consultancy service,
and provides technical and scientific assistance to other public and private undertakings
as well as co-operatives in the country and abroad
...
The service includes the conduct of feasibility and technoeconomic studies,
management systems and optimization studies, and market surveys
...
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Buffer Stocking, Procurement and Distribution of Food grains
Buffer Stocks
The term buffer stock of food grains refer to the stock of food grains maintained
by the government to be used as a buffer to cushion the shocks of fluctuating supply and
price, to meet the emergency needs and to meet the situations arising out of serious
unexpected shortages resulting from transport bottlenecks, natural calamities like war,
flood, famine, earthquakes, and from the influx of refugees
...
The government enters the market and purchases food grains for the
maintenance of the buffer stock
...
It is maintained by the Food Corporation
of India and has averaged more than 10 million tones annually since 1976, as against a
normal stock of less than 5 per cent tones before that year
...
The all-time record off take of 14
...
2 million tones, and the estimated exports of 2 million tones of
food grains in repayment of a wheat loan led to a sharp decline in the size of stocks
...
5 million tones by the end of
July 1981
...
In mid-eighties, a buffer stock of 10 million tones comprising 5 million tones of
wheat and equal quantity of rice was considered adequate
...
Considering both together, a stock
of around 20 million tones was considered necessary for a country of India's size
...
On July 1, 1990, the food rains
stock with the government of India was 20
...
But on the same day, a year
before (July 1, 1980), the stock was only around 13 million tones
...
AgriMoon
...
The Food Corporation of India has a storage capacity of 21 million tones
...
The CAP storage capacity consists of cemented floor as the base and
tarpaulins or other similar sheets as the cover (Table 7
...
Table 7
...
42
130
...
95
14
...
69
Total
195
...
16
221
...
24
57
...
90
Hired
40
...
29
Total
208
...
66
266
...
10
83
...
48
Hired
141
...
07
Total
2001-02
119
...
17
83
...
55
Source: Food Corporation of India, New Delhi and Ministry of Food, Government of
India, New Delhi
...
77
166
...
56
2006-07
168
...
90
250
...
28
160
...
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Agricultural Marketing Trade and Prices
2008-09
27
...
22
336
...
55
143
...
62
*Position as on 31
...
2009
PROCUREMENT OF RICE (INCLUDING PADDY IN TERMS OF RICE)
Total Procurement during KMS 2009-10 = 153
...
00
2009-10
State
Quantity
% of Quantity
2008-09
Quantity
Procured
Andhra Pradesh
% of
Quantity
Procured
9
...
87
14
...
74
Chhattisgarh
11
...
34
10
...
72
Haryana
18
...
74
13
...
05
0
...
26
0
...
40
Madhya Pradesh
Source: Annual Report-2009-10, Department of Food & Public Distribution
Procurement of Rice (Including Paddy in terms of rice) During KMS 2008-09
for the Central Pool Total procurement = 336
...
61
26
...
48
8
...
25
4
...
45
0
...
61
0
...
90
8
...
53
25
...
99
3
...
87
10
...
49
1
...
AgriMoon
...
18
32
...
70
336
...
30
100
...
12
...
18
0
...
37
51
...
48
3
...
00
25
...
24
98
...
12
0
...
00
Maharashtra
0
...
29
100
...
06
0
...
42
Orissa
0
...
69
131
...
84
95
...
33
0
...
00
Uttar Pradesh
1
...
44
100
...
05
0
...
00
Total
7
...
82
170
...
65
Others
0
...
09
1
...
85
Grand Total
7
...
96
171
...
59
The State-wise procurement of wheat and the share of different States during the last 5
years is given below:Total Paddy procured during KMS 2009-10 (As on 31
...
2009)
State
Quantity Procured
% of Quantity Procured by
(In Lakh Tonnes)
State Agencies to Total
FCI
Andhra Pradesh
0
...
42
0
...
37
51
...
48
Chhatisgarh
Haryana
State
3
...
00
25
...
24
98
...
AgriMoon
...
12
0
...
00
Maharashtra
0
...
29
100
...
06
0
...
15
137
...
15
Tamilnadu
0
...
33
100
...
44
1
...
00
Orissa
0
...
69
Uttarakhand
NEG
0
...
05
100
...
35
162
...
22
95
...
30
83
...
52
95
...
21
1
...
56
163
...
12
...
29
22
...
50
52
...
84
Neg
0
...
09
90
...
46
67
...
40
1
...
02
3
...
35
69
...
P
...
68
Punjab
107
...
50
U
...
5
...
49
5
...
37
0
...
00
0
...
32
38
...
35
All India
147
...
26
111
...
89
253
...
55 million tones
up to March 2002
...
14 lakh tones
...
AgriMoon
...
These co-operative
godowns are used by the Food Corporation of India in times of need, and provide a
readily available cushion when the procurement of foodgrains is at peak
...
The available storage facility is also poor in
the hilly and desert areas
...
4
Storage Capacity Available in India 2000-01
(Million Tonnes)
Storage capacity (owned)
Storage Capacity Created by the Agency
1
...
68
15
...
State Governments
2
...
Central Warehousing Corporation (CWC)
0
...
5
4
...
83
11
...
Cooperatives
2
...
6
6
...
5
-
10
...
91
70
...
Others
Total Storage Capacity
Source:(i) Government of India, Planning Commission, Fourth Five-Year Plan 1969-74,
New Delhi, 1969, p
...
S
...
M
...
127
...
(iii) Planning Commission, Tenth Five Year Plan (2002-07), pp
...
(d) Total Storage Capacity in India
There are three main agencies, which are involved in the creation of storage
facility in the public sector in the country viz
...
AgriMoon
...
Cooperative Marketing
Societies also provide storage facilities at the primary marketing level
...
Total storage capacity available in India is shown in Table 4
...
Total storage capacity available in the country in 1969 was only 10
...
This has increased in 70
...
However, this is considerably
short of the requirements
...
Private sector has also created facilities for storage of
agricultural commodities nearby their place of business but most of these storage
structures are unscientific and are located in the congested lanes of cities/towns
...
The storage plan of the Ministry aims at providing the capacity required for buffer
and operational stock of food grains to maintain the public distribution system and
general warehousing
...
The Ministry has also been
making efforts to improve the traditional storage practices in vogue at the farm level
...
Food Corporation of India (FCI) Central Warehousing Corporation (CWC) and
17 State Warehousing Corporation (SWCs)
...
While the capacity available with FCI
is used mainly for storage of food grains that with CWC and SWCs is used for storage of
food grains as well as certain other items
...
5
Storage capacity of FCI , CWC and SWCs 01
...
2010
(Figure in lakh MT)
State
FCI
Andhra Pradesh
37
...
87
19
...
07
0
...
00
0
...
22
Arunachal Pradesh
188
CWC
SWC
Grand Total
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Agricultural Marketing Trade and Prices
Assam
2
...
65
2
...
86
Bihar
6
...
24
2
...
60
Chhatisgarh
8
...
79
8
...
40
Delhi
3
...
51
0
...
18
Goa
0
...
41
0
...
56
Gujrat
6
...
95
1
...
09
23
...
07
16
...
32
Himachal Pradesh
0
...
07
0
...
32
Jammu & Kashmir
1
...
00
0
...
29
Haryana
Jharkhand
1
...
35
0
...
55
Karnatka
8
...
70
9
...
32
Kerala
5
...
23
2
...
62
Madhya Pradesh
10
...
36
18
...
78
Maharashtra
19
...
98
13
...
82
Manipur
0
...
00
0
...
20
Meghalaya
0
...
11
0
...
23
0
...
00
0
...
28
0
...
00
0
...
60
3
...
09
13
...
76
6
...
07
128
...
53
3
...
67
27
...
11
0
...
00
0
...
70
6
...
37
22
...
51
0
...
00
0
...
51
0
...
00
3
...
55
11
...
60
70
...
38
0
...
00
3
...
10
6
...
26
282
...
67
2
...
24
19
...
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The capacity of the FCI includes101
...
Details of the Storage capacity constructed by FCI and CWC over years are
given
...
94
1
...
59
2
...
97
0
...
20
0
...
17
2
...
78
2
...
14
3
...
98
2
...
02
CWC
0
...
53
4
...
56
Capital Structure
The authorized share capital of the Corporation is Rs
...
00 crores
...
03
...
68
...
Physical Performance
Growth in Storage Capacity
As would be seen from the following table 7
...
Table 7
...
03
...
32
74
...
03
...
12
27
...
91
31
...
2002
58
...
28
89
...
03
...
53
27
...
14
31
...
2004
65
...
70
94
...
03
...
57
35
...
86
31
...
2006
66
...
77
100
...
03
...
47
66
...
21
102
...
AgriMoon
...
03
...
63
31
...
78
31
...
2009
67
...
65
105
...
02
...
91
38
...
47
Capacity Utilisation
The average utilization of the Warehousing Capacity of the Corporation during
the year 2009-10 has been to 86 % upto 01
...
2010)
...
As on 31
...
2009 it
had 75 Custom Bonded Warehouses & ( as on 01
...
2010 72 Custom Bonded
Warehouses
...
Holds a Category – I Pan India license
to operate container trains
...
64 crores in
the year 1998-99 to RS 849
...
The Corporation has
been consistently earning profits and paying dividends to the Government of India and
other stakeholders
...
Receipts for Food Corporation of India in Rs
...
Others
Total
1998-99
255
...
50
4
...
67
8
...
34
48
...
49
3
...
16
2001-02
339
...
33
7
...
11
13
...
94
90
...
49
6
...
6
2003-04
471
...
62
4
...
36
7
...
87
60
...
50
3
...
15
2005-06
619
...
00
7
...
40
14
...
44
133
...
10
8
...
33
2007-08
778
...
76
11
...
14
20
...
25
110
...
23
9
...
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Agricultural Marketing Trade and Prices
Internal Resources
The Corporation has been generating internal resources which have grown
significantly over the years and are sufficient for funding its own storage construction
programmed as well as contributing to the State Warehousing Corporation equity
...
25 Lakh MTs at 1993
locations
...
60
...
03
...
The
State Warehousing Corporation paid a total dividend of Rs
...
88 crores to the Central
Warehousing Corporation during 2008-09
...
(in Lakh Tonnes)
As on
Owned
Hired
Total
31
...
2000
82
...
54
123
...
03
...
80
41
...
13
31
...
2002
104
...
50
182
...
03
...
55
47
...
31
31
...
2004
158
...
76
206
...
03
...
84
66
...
20
31
...
2006
127
...
41
197
...
03
...
55
72
...
20
31
...
2008
124
...
05
187
...
03
...
30
70
...
82
01
...
2010
133
...
16
205
...
The utilization of the capacity of State Warehousing Corporations increased from 64 per
cent in 1960-61 to 75 per cent in 1968-69
...
Of the total storage capacity with CWC, 57 per cent is utilized
for foodgrains, seven per cent for fertilizers and 36 per cent for other purposes
...
A study has
indicated that only 29 per cent of the warehousing capacity of the Central Warehousing
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Agricultural Marketing Trade and Prices
Corporation and six per cent of that of State Warehousing Corporations was utilized by
farmers or their cooperatives
...
Lack of knowledge about the facility of warehousing available for the farmers;
2
...
Complicated and time-consuming procedure of depositing and withdrawing the
produce from the warehouses;
4
...
Small quantity of surplus produce available with most farmers, and the
pressing need for finance
...
Causes of slow progress
The following are the main causes of the slow progress of warehousing in the
agricultural sector in India:
(i) Indian farmers are small landowners
...
Often, it is not worthwhile for them to store the produce in a
warehouse;
(ii) Indian agriculture is largely dependent on the monsoon and occasional
failures of crops in one or another part of the country are common resulting in lack of
regular business for the warehousing;
(iii) Agricultural products are more perishable than industrial products;
(iv) Agricultural commodities are heterogeneous
...
This facility is not available in most of the
markets;
(v) The warehouses are located in urban centres, near railway stations and big
cities
...
Often, the lenders are not
interested in lending against this collateral security
...
AgriMoon
...
It is
not only the charges of the warehouse that are to be paid but also the interest on the
value of the produce and the premium for risk of a lower price at a later date are to be
met
...
Moreover, the intra-year price rise may not cover the entire cost of
storage every year
...
This
means that the gains from storage depend on the decision on the timing of the purchase
and sale
...
This apart, farmers in surplus-producing states like Punjab and Haryana sell
their produce at the minimum support price to the public agencies and as the minimum
support price remains the same till the next harvest season, such farmers do not gain by
storing the produce, unless open market prices in the lean season rise to such levels as
to cover the cost of storage and still leave a margin as an incentive to store, which rarely
happens
...
Even if the facility is utilized by the traders, it indirectly helps the farmers by
way of augmenting the demand for commodities stored by the traders
...
This gap has to be
bridged as early as possible if advantage is to be taken of the benefits of increased
agricultural production
...
The Working Group, in its report submitted to
the Ministry of Agriculture made the following recommendations:
(i) A network of rural storage centres should be built on a priority basis in order to
prevent distress sales, wastage and loss arising out of inadequate and defective storage
facilities;
(ii) These storage centres may be constructed and managed by panchayats, cooperatives and other suitable agencies selected by the State Government;
(iii) These centres may have a storage capacity of 100 to 250 tonnes, mainly for
foodgrains and other agricultural produce;
(iv) The cost of the construction of these structures, may be met by a 50 per cent
subsidy and 50 per cent bank loans
...
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Agricultural Marketing Trade and Prices
(v) Each rural storage centre should have a manager, preferably from the area
served by the centre
...
Each receipt should be a negotiable instrument to enable them to obtain credit
from banks;
(viii) The banks should provide credit to the extent of 90 per cent of the value of
the stocks stored by the farmers; and the credit should be provided at concessional rates
of interest;
(ix) The scheme of rural storage centres should be linked with the procurement
machinery for foodgrains and also with the public distribution system, and
(x) The programme should be co-ordinated by a state level co-ordination
committee, of which representatives of State Governments, the department of
agriculture, rural development, co-operation and panchayats, the SWC, FCI and
nationalized banks, should be the serving members
...
Steps taken by the Government of India to
overcome the problems in marketing of agricultural commodities include the following
among others
...
P rovide proje ct im port s ta tus a ta concessional customs duty of 5 per cent with full
exemption from service tax to the initial setting up and expansion of ♦
Cold storage,
cold room including farm pre-coolers for preservation or storage of agriculture and
related sectors produce ; and Processing units for such produce
...
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Agricultural Marketing Trade and Prices
P rovide conce s s iona l cus toms duty of 5 pe r ce nt to s pe cifie d a gricultura l m a chine ry
not manufactured in India;
P rovide ce ntra l e xcis e e xe m ption to s pe cifie d e quipm e nt for pre s e rva tion, s tora ge
and processing of agriculture and related sectors and exemption from service tax to the
storage and warehousing of their produce; and
Cold Storages
The term cold storage refers to a refrigerated chamber for the storage of such
perishable commodities as fruits, vegetables, fish, eggs, meat, dairy products, etc: In
these storage structures, the temperature is controlled and maintained so that the stored
perishable products may not deteriorate in quality
...
1oC to 10oC (30o to 50oF)
...
1oC (30oF), and the product
remains in a frozen state
...
This would not have been possible without the cold storage facility
...
(iii) It helps in widening the market for the products, lowering marketing costs,
raising the price realized by the producer and lowering the price to consumers, and
ensures that products are available throughout the year
...
Till recently, the establishment of cold storage industry remained under
regulation
...
However, some State Governments like that in West Bengal, Uttar Pradesh,
Punjab and Haryana were permitted to promulgate their own orders
...
It was being administered by the Directorate of Marketing and
Inspection to achieve the following objectives:
(i) To ensure hygienic and proper refrigeration conditions in the cold storage;
(ii) To regulate the growth of the cold storage industry in a planned manner;
(iii) To render technical guidance for scientific preservation of foodstuffs; and
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Agricultural Marketing Trade and Prices
(iv) To safeguard the interests of farmers and other depositors
...
West Bengal and Uttar
Pradesh sought permission to enact their own Acts in 1960 and 1975
...
Under the Cold Storage Order, the prospective entrepreneur was required to
obtain the permission from the Agricultural Marketing Advisor to the Government of India
for construction of a cold storage
...
50 cubic metres to obtain a licence before
storing any foodstuff
...
The Cold Storage Order, 1980 was rescinded in May, 1997
...
Most of the cold storages are in the private sector
...
As a follow-up, the National Cooperative Development
Corporation prepared a project for setting up 4
...
The first cold storage was established in India as early as in 1892 at Kolkata
...
Even up to 1955, the total cold storage capacity in the country was only 0
...
The number of cold storage units and their capacity in India are given in Table
7
...
Table 7
...
Growth of Cold Storage Facility in India
Year
197
Number of Cold storage
Storage Capacity
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Agricultural Marketing Trade and Prices
Units in Operation
(Lakh Tonnes)
1947
4
0
...
592
1955
NA
0
...
055
1965
615
6
...
380
1975
1615
20
...
650
1985
2522
50
...
150
1995
3167
85
...
300
2001
4199
153
...
(ii) Directorate of Marketing and Inspection, Ministry of Agriculture and Rural
Development, Government of India, Faridabad
...
The cold storage capacity increased to 3
...
38 lakh tones
in 1970, 39
...
15 lakh tones in 1990 and further to 153
...
The total number of cold storage units in the country in 1996 has been
3253, which increased to 4199 in 2001
...
Table 7
...
04)
146
...
98)
Cooperative
310 (7
...
80 (4
...
57)
0
...
60)
Total
4199 (100)
153
...
AgriMoon
...
Source:
Report of Expert Committee on Strengthening and Developing of Agricultural
Marketing, Ministry of Agriculture and Cooperation, Government of India,
June, 2001
...
Out of the total
capacity utilization, 88 per cent is used for storing potato
...
9
...
Similarly, to run the cold store, the cost on electricity input is very high
and it amounts to 50 per cent of total running or variable cost
...
Table 7
...
0
88
...
1
0
...
9
0
...
8
0
...
3
0
...
1
0
...
7
8
...
1
1
...
0
100
...
For promotion of cold storage units in the private sector to meet their increasing
needs, a capital investment subsidy scheme for construction/expansion/modernization of
cold storages/storages for horticultural produce has been initiated by Government of
India
...
Under this scheme,
the promoters of cold storage units are provided 25% back-ended capital investment
subsidy, 50% is provided as term loan and 25% is promoter's contribution
...
AgriMoon
...
This scheme is implemented in those
States/Union Territories, which do not control rentals for cold storages under any
statutory or administrative order
...
It is barely sufficient for 15 per cent of potato production and for less than
one per cent of fruits, vegetables and fish production
...
There is a considerable scope for expansion of the cold storage industry in India
...
The lack of cold
storage facilities is leading to heavy losses and violent fluctuations in prices of fruits and
vegetables
...
In India, the production patterns, dietary habits and economic considerations
warrant long period of storage in large quantities of onion and potato
...
While the potato
requires low temperature and high relative humidity, onions require low temperature and
low relative humidity
...
For other vegetables, temporary storage
structures for short period usually not exceed a week are needed along the route of their
movement from producing areas to consuming centres
...
There is also need for
technological upgradation for cost effective refrigeration machinery and improvement in
the methods of scientific preservation of perishable commodities
...
Their availability was nil in fifties but
increased in recent years to 400
...
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Agricultural Marketing Trade and Prices
Considering the fact that an average farmer may not need and have access to
mechanical refrigerated cold stores; ventilated storages like direct evaporation cooled
structures; energy cool chambers; cool homes and forced evaporation cool stores have
been developed
...
These can be constructed with locally available materials
...
However, other improved structures can be constructed by
growers co-operatives or owners of large size farms
...
The report is jointly prepared by
Assocham and international advisory company – KPMG
...
7 million tonnes, leading
to a loss of about 40% of the agri-produce post harvest
...
Long and fragmented supply chain in India
along with inefficiencies lead to huge losses due to wastage or shrinkage of perishable
commodities
...
At present, the Indian cold chain market is worth $2
...
This market is
expected to grow to $12
...
Uttar Pradesh and West Bengal have 65% of
the total installed capacity of cold storage in the country
...
Further, the report said that entire supply chain in the country
is dominated by unorganised players with several intermediaries adding to wastage from
farm to consumer via retailer, processor or exporter
...
Secondly, absence of any structured market hampers discovery of correct
price and availability of consistent quality of produce
...
AgriMoon
...
“The level of wastage of agricultural food items is estimated to
be about Rs 50,000 crore (a year), occurring at various stages of handling after
harvesting,” food processing minister Subodh Kant Sahai said in a written reply in the
Rajya Sabha
...
Deliberating in the oneday seminar on ‘Sensitizing Programme
on Food Safety Systems,’ organised by the Confederation of Indian Industries (CII), K
Rajeshwara Rao, Joint Secretary, Ministry of Food Processing Industries said, “it is vital
to sensitize masses about important aspects of protecting themselves against foodborne
diseases
...
’’
“Safe farm produce could be unfit for human consumption during transportation,
storage, packaging, food preparation in kitchens, if handled unhygienically,’’ said Utpal
Sen Gupta, chairman, CII AP chapter and vice chairman, Agrotech Foods Limited
...
Food Corporation of India was established in the year
a
...
1965
c
...
1975
Ans: b
2
...
Price fall
b
...
Food securityd
...
Building buffer stock is possible by
a
...
import c
...
None of these
Ans: c
TRUE or FALSE
1
...
(False)
2
...
AgriMoon
...
Warehouses do not provide market intelligence to persons who hold their
produce there
...
A farmer cannot store the commodity in a public warehouse
...
Bonded warehouses are meant for use by exporters and importers only
...
State warehousing corporation cannot get loan from the National Cooperative
Development and Warehousing Board (False)
7
...
(True)
8
...
AgriMoon
...
, minimum support prices, statutory
minimum prices, procurement prices and issue prices
...
This Commission was originally
set up in January, 1965 in the name of the Agricultural Prices Commission (APC)
...
K
...
The price policy of the
country aims at evolving a balanced and integrated price structure taking into
account the overall needs of the economy and with due regard to the interests of
both the groups of the economy
Price Policy
The government has formulated a price policy for agricultural produce that aims
at securing remunerative prices to farmers to encourage them to invest more in
agricultural production
...
These prices are fixed after
taking into account the recommendations of the Commission for Agricultural Costs and
Prices (CACP)
...
AgriMoon
...
Since
1966, the Commission has set up a fairly logical scheme for arriving at the administered
prices of farm products
...
, minimum support prices and procurement prices
...
The
Commission submits separate reports recommending these prices for the kharif and rabi
season crops
...
The Commission for Agricultural Costs and Prices (CACP), which was
instrumental in evolving a balanced and integrated price structure in the country, has
been manned by several eminent and experienced agricultural economists
...
Towards the end, minimum support prices for major
agricultural products are announced each year which are fixed after taking into account,
the recommendations of the Commission for Agricultural Costs and Prices (CACP)
...
Cost of Production, Changes in Input Prices, Input/Output Price Parity, Trends in
Market Prices, Inter-crop Price Parity, Demand and Supply Situation, Effect on Industrial
Cost Structure, Effect on General Price Level, Effect on Cost of Living, International
Market Price Situation and Parity between Prices Paid and Prices Received by farmers
(Terms of Trade)
...
Government organises Price Support
Scheme(PSS) of the commodities, through various public and cooperative agencies
such as FCI, CCI, JCI, NAFED, Tobacco Board, etc
...
For
commodities not covered under PSS, Government also arranges for market intervention
on specific request from the States for specific quantity at a mutually agreed price
...
The price policy paid
rich dividends
...
AgriMoon
...
2
...
per quintal)
CROP
1995-96
1996-97
Paddy
360
380
415
440
490
510
Jowar
300
310
360
390
415
445
Bajra
300
310
360
390
415
445
Maize
310
320
360
390
415
445
Ragi
300
310
360
390
415
445
X
1997-98
Y
1998-99
1999-2000
2000-01
Wheat
380
475
510
550
580
Barley
295
305
350
385
430
Tur(Arhar)
800
840
900
960
1105
1200
Moong
800
840
900
960
1105
1200
Urad
800
840
900
960
1105
1200
Gram
700
740
815
895
1015
Groundnut
900
920
980
1040
1155
1220
600
620
670
705
755
775
-in- shell
Soyabean
Black
Soyabean
680
700
750
795
845
865
Sunflower seed 950
960
1000
1060
1155
1170
Rape & Mustard 860
890
940
1000
1100
Toria
825
855
905
965
1065
Safflower
800
830
910
990
1100
Yellow
1150
1180
1330
1440
1575xx
1625xx
1350
1380
1530
1650
1775
1825
510 T
570
650
750
785
42
...
90
48
...
70
56
...
00
19
...
50
22
...
00
26
...
50
25
...
00
28
...
50
22
...
per kg
...
AgriMoon
...
60
...
6
...
XX
Y
- For J-34 variety also
...
55 per quintal payable on wheat offered for sale
to the procurement agencies for central pool up to 30
...
98
...
Risk is
inherent in all marketing transactions
...
There is a time lag between the production and consumption of farm products
...
The risk associated with marketing
cannot be dispensed with, for this risk contributes to profit
...
But most of the risk is taken by market middlemen, as they have
the capacity to bear it
...
One who holds the commodity in the process is the bearer of the
risk, because of which he may be better off or worse off
...
It may be due to fire, flood, earthquake, rodents, insects,
pests, fungus, excessive moisture or temperature, careless handling and unscientific
storage, improper package, looting or arson
...
Such losses are a
loss to society, too, and must be averted to the extent possible
...
AgriMoon
...
The changes in prices may be upward or downward
...
A price fall may cause a loss to the trader or farmer who stocks the
produce
...
(iii) Institutional Risks: These risks include the risks arising out of a change in
the government's policy, in tariffs and tax laws, in the movement restrictions, statutory
price controls and the imposition of levies
...
A risk cannot
be eliminated because it also carries profit
...
The risk management by the adoption of some of the measures listed below
may minimize the risks:
1
...
2
...
There are specialized professional agencies to bear such risks
...
In this way, the company insures a number
of farmers against losses
...
Minimization of Price Risk
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The risk associated with the variations in the prices may be minimized by the
adoption of the following measures:
(a) Fixation of minimum and maximum prices of commodities by the government
and allowing movements in prices only within the specified range:
(b) Marketing arrangements for the dissemination of accurate and scientific price
information to all sections of society over space and time
...
The price risk associated with the
commodities for which the facility of forward trading is available may be transferred to
professional speculators through the operation of hedging
...
Risk Management Strategies in Agricultural Marketing
Speculation and Hedging
Speculation and hedging are important ways of minimizing price risk in business
...
Speculation
The fundamental idea underlying speculation is the purchase or sale of a
commodity at the present price with the object of sale or purchase at some future date at
a favourable price
...
He purchases when prices are low
...
The difference in the prices prevailing at two times constitutes his profit
...
The essentials of a speculator are:
(i)
He enters the trade at current prices;
(ii)
The transactions of speculators are completed on some future date;
(iii)
The speculators enter the trade with the sole object of making profit from price
movements
...
AgriMoon
...
Only the difference in the prices is paid or taken; and
(v)
Speculators are not regular buyers and sellers in the market
...
Based on the legalities involved, speculation is of two types:
(i) Speculation Proper
Speculation proper refers to speculation on the part of a person who makes it his
profession
...
The decisions of
the speculator are not hunch decisions
...
This type of speculation is beneficial for the economy as a whole and is
usually accepted by the society
...
The speculators adopt such manipulative practices
as create conditions of artificial scarcity in the market and lead to a rise in prices
...
This type of speculation is not based on
any rationale, though it influences the prices of products
...
Economic Benefits of Speculation
(i) Speculation Dampens Price Fluctuations: Speculators buy at current prices in
anticipation of a rise in prices in the future which results in pushing up the current prices
...
Other speculators, who sell
in the present period in the expectation of a fall in future prices, bring about a fall in the
current prices, which encourages consumption and discourages production
...
(ii) The price differentials in different markets are bridged to some extent
...
Related Terms
(i) Spot/Cash Transactions: A transaction in which payment is made on the
spot or within a prescribed short period, and delivery is taken on the same day or within
a specific period are known as spot or cash transactions
...
AgriMoon
...
(ii) Futures Transactions: This is a transaction in which prices of commodities
are settled in cash but the commodities are delivered on some future date as agreed
...
In futures transactions, two groups of persons are involved, i
...
, the bulls and the
bears
...
The futures transactions take place
as a result of action on the part of these two groups of persons
...
Hedging
Meaning
Hedging is a trading technique of transferring the price risk
...
Hedging has been defined as follows:
"Hedging is executing opposite sales or purchases in the futures market to offset
the purchases or sales of physical products made in the cash market"
...
-
Hoffman:
Hedging refers to the purchase or sale of a commodity in a futures market
accompanied by a sale or a purchase in the cash market
...
It is assumed that prices in
the two markets move exactly parallel, and that the losses arising in one market are
offset by profit in another market
...
e
...
(b) The mechanics of hedging includes the making of simultaneous transactions,
but of opposite nature, in the futures and cash markets
...
AgriMoon
...
Hedging is employed by many traders to protect themselves against losses due
to market price fluctuations by executing cash purchases and sales practically
simultaneously with future transactions in the opposite side
...
In short, there are two
opposite responsibilities balancing each other
...
Suppose, a cotton trader contracts a deal with some overseas firm in February 2010 to
supply 1000 quintals of cotton lint at a price of Rs
...
In order to protect himself from a possible loss, he buys cotton futures at a ruling
futures price of say Rs
...
Now in the month of May 2010, he discovers
that the ruling spot price of cotton is Rs
...
As he had contracted to ship
1000 quintals at a price of Rs
...
50 per quintal on this deal
...
4260 per quintal, in sympathy with the spot
or ready or cash prices
...
4260 per quintal (which he
purchased at Rs
...
50 per quintal
...
Difference between Speculation and Hedging
The basic differences between speculation and hedging are:
Speculation
(i)
Hedging
Purchases and sales in the cash as
The purchases and sales in the cash
well as in future markets are made with
and futures markets are made to
the objective of making profit
...
(ii)
212
The activities of buyers and sellers are
not necessarily opposed to each other
...
It is not necessary that the two types of
It is obligatory to buy and sell the goods
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...
Com
Agricultural Marketing Trade and Prices
transactions should be of equal
in equal quantities in the two markets
...
(iv)
Under speculation, the speculator
The commodities are not stored by
purchases goods and sells them when
traders
...
is given or taken on the due date
...
Stockists, processors or
manufacturers utilize the futures contracts to transfer the price risk faced by them
...
But since hedging is its
raison deter, it is also known as hedge-trading
...
Widely divergent views exist on the effects of futures trading
...
Others not only disagree with this view but vigorously allege that, more often
than not, futures trading aggravate the price trends and increase both the magnitude and
frequency of price variations
...
Futures trading in various groups of commodities was established about the end
th
of 19 century
...
The Europeans took a
hand in founding the Bombay Cotton Traders Association in 1875 for the regulation of
cotton trade, which was the first step in the evolution of an organized futures market
...
Subsequently, similar markets for these commodities were established at other
places also
...
The
Act was enacted with a view to regulating forward contracts prohibiting options in goods
and dealing with certain other related matters
...
The
government has regulated or banned forward trading in several commodities in order to
213
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Com
Agricultural Marketing Trade and Prices
check unhealthy speculation
...
The Forward Markets Review Committee, set up by the Government of India
under the chairmanship of Prof
...
L
...
Commodities for Futures Trading
The commodities permissible under futures trading must satisfy the following
conditions:
(i) Commodities should be in plentiful supply
...
(ii) The commodity must have a minimum degree of perishability, i
...
, it must be
storable for futures delivery
...
(iv) The commodity should have a large demand from a number of independent
consumers so that a single buyer may not be in a position to impose his terms for his
purchase
...
It
should be available with a large number of suppliers
...
Services Rendered by a Forward Market
The forward market renders the following services to the economic system:
(i) It enables the merchants, stockists and processors to protect themselves
against the risk of adverse fluctuations in the prices of the commodity
...
AgriMoon
...
Dangers of Forward Market
The dangers arising out of the forward market are:
(i) The forward market opens out the way for a large number of persons with
insufficient means, inadequate experience and information to enter into commitments
which may be beyond their means
...
(ii) It enables unscrupulous speculators, with little interest in the actual supply of,
and demand for, a particular commodity, to corner the supplies and organize bear raids
and bull raids on the market in the hope of making easy money for themselves
...
Forward Market Commission
The Forward Market Commission (FMC) was established Under Section 3 of the
Forward Contracts (Regulation) Act, 1952 and has executive as well as advisory
functions
...
(ii) To keep forward markets under observation
...
(iv) To collect and publish information as regards trading conditions in respect of
markets falling under its jurisdiction
...
AgriMoon
...
Contract Farming/Contract Marketing
(Farmer – Processor Linkages)
Meaning
Contract farming or marketing essentially is an arrangement between the farmerproducers and the agri-business firms to produce certain pre-agreed quantity and quality
of the produce at a particular price and time
...
Contract farming is emerging as an important mode of procurement of raw
materials by agri-business firms in India due to the development in the field of
agricultural marketing, changes in food habits and in agricultural technology in the new
economic environment
...
The distinction between 'sales' and 'contract to sell' needs to be understood
clearly
...
A contract to sell is not
in the true sense of the word a sale, rather it is merely an arrangement to sell
...
In contract farming, companies or organizations engaged in processing and
marketing of agricultural products are entering into contracts with the farmers
...
Following type of inputs and services are normally provided by the company to the
farmers:
•
Seeds of the variety they need for processing/marketing
•
Guide lines to grow the crops
•
Pesticides which do not result in residual toxicity
•
Extension services
•
Fertilizers/harmones required for the crop
•
Other material if not locally available
...
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Com
Agricultural Marketing Trade and Prices
Normally, the contract is entered before the start of the sowing or planting because the
buyer can then stipulate the conditions of cultivation, use of the seed variety needed by
them, use of pesticides and insecticides, and requirement of onfarm grading, sorting,
packaging and processing
...
Following documents are obtained/given to selected farmers by the companies:
•
Application/Registration form
•
Contract farming agreement
•
Issue of pass book
•
Issue of ID Card
Advantages of Contract Farming
Contract farming/marketing is beneficial both for the producer-farmers as well as
to the processing company in several ways:
To the farmer, contract farming
(i)
Reduces the risk of price/production
(ii)
Ensures the price as market is assured
(iii)
Increases the quality consciousness
(iv)
Ensures higher production because of better quality seeds and pesticides
(v)
Reduces marketing costs
(vi)
Provides financial support in cash or kind
(vii) Ensures efficient/timely technical guidance almost free of cost
...
(ii)
Canalizes direct private investment in agricultural activities
...
Government is increasingly looking towards the corporate sector to augment the
rural incomes and employment through agro-processing
...
Flip Side of Contract Farming
The important weaknesses of contract farming are:
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Com
Agricultural Marketing Trade and Prices
(i) Contract farming is involved mostly in cash crops which may lead to shift in
area from food crops which, beyond a limit may endanger food security, biodiversity and
agricultural crops cycle of the country
...
(iii) The temptation of getting commercial profits from cultivation of a variety of
the crop may cause permanent damage to the land
...
However, contract farming is a welcome development
...
The terms of
the contract should be spelt out in advance and a consent letter is obtained both from
the farmer and the company
...
Experience in Contract Farming
The following companies are presently under the tie-ups in India for contract
farming for the products specified:
Poultry
-
Contract farming of broilers between the Coimbatore
hatchery with farmers
Pulpwood
-
ITC/WIMCO/JK Papers and farmers in Andhra Pradesh,
Orissa, Punjab and Uttar Pradesh
...
Dairy Processing
-
Chitale of Pune and small farmers in Maharashtra and
Gujarat
...
AgriMoon
...
However, there is enormous scope for contract farming/marketing because with the
increasing income, consumers are becoming more health and quality consciousness
and look for branded products
...
It will succeed if both the parties share the risks and rewards
...
Under
this scheme, a grant of 10 per cent of value of raw material purchased from the contract
farmers (subject to a maximum of Rs
...
The Ministry has also prescribed a model agreement
form
...
(v)
The claim for reimbursement should be recommended by the State Nodal
Authority
...
AgriMoon
...
Which of the following is correct about CACP?
a
...
b
...
c
...
d
...
Ans: c
TRUE or FALSE
1
...
Of India during sowing
period every year
...
Procurement prices of food grains are usually lower than their market
price
...
Most of the risk in agricultural marketing is borne by middlemen
...
The longer the time lag between production and consumption, the greater
will be the marketing risk
...
Risk in marketing forms the part of profit earned
...
Risk in marketing always rests with the owner of the commodity
...
Hedging is the trading technique of transferring physical risk
...
Persons who expect the prices will go up in future are known as bears
...
Hedging involves purchasing and selling in both cash and futures market
...
AgriMoon
...
Moore, J
...
, S
...
Johl and A
...
Khusro, Indian Foodgrain Marketing, Prentice-Hall of
India Private Limited, New Delhi, 1973, p
...
2
...
L
...
N
...
, Marketing of Agricultural Products, Macmillan Publishing
Co
...
, New York, 1980, p
...
3
...
S
...
S
...
S
...
X, No
...
11
...
Acharya, S
...
, Agricultural Production Marketing and Price Policy in India, Mittal
Publications, New Delhi, 1988
...
Pawar, P
...
, K
...
Waykar, B
...
Mali and S
...
Bhosale, Need of Shetkari Bazar for
Marketing of Fruits and Vegetables in Maharashtra, Ind
...
Marketing,
15(3), Sept
...
, 2002, pp
...
6
...
N
...
Indian J
...
Marketing, 15(3), Sept
...
2001, pp
...
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Title: Agricultural Marketing Trade and Prices
Description: Introduction Market structure conduct and performance Marketing channels, marketing cost, marketing efficiency and market integration External trade in agricultural products Cooperative agricultural marketing institutions State trading and quality control Warehousing and food corporation of India Agricultural prices and risk management
Description: Introduction Market structure conduct and performance Marketing channels, marketing cost, marketing efficiency and market integration External trade in agricultural products Cooperative agricultural marketing institutions State trading and quality control Warehousing and food corporation of India Agricultural prices and risk management