1.11. Problems in Agricultural Marketing

Indian system of agricultural marketing suffers from a number of defects. As a consequence, the Indian farmer is deprived of a fair price for his produce. The main defects of the agricultural marketing system are discussed here:-

♤ Improper warehouses: - There is an absence of proper warehousing facilities in the villages. Therefore, the farmer is compelled to store his products in pits, mud-vessels, "Kutcha" storehouses, etc. These unscientific methods of storing lead to considerable wastage. Approximately 1.5% of the produce gets rotten and becomes unfit for human consumption.

Due to this reason supply in the village market increases substantially and the farmers are not able to get a fair price for their produce. The setting up of Central Warehousing Corporation and State Warehousing Corporation has improved the situation to some extent.

♤ Lack of grading and standardization: - Different varieties of agricultural produce are still not graded properly. The practice usually prevalent is the one known as "dara" sales wherein heap of all qualities of produce are sold in one common lot thus the farmer producing better qualities is not assured of a better price. Hence there is no incentive to use better seeds and produce better varieties.

♤ Inadequate transport facilities: - Transport facilities are highly inadequate in India. Only a small number of villages are joined by railways and pucca roads to mandies. Produce has to be carried on slow moving transport vehicles like bullock carts. Obviously such means of transport cannot be used to carry produce to far-off places and the farmer has to dump his produce in nearby markets even if the price obtained in these markets is considerably low. This is even truer with perishable commodities.

♤ Presence of a large number of middlemen: - The field of agricultural marketing is viewed as a complex process and it involves a large number of intermediaries handling a variety of agricultural commodities, which are characterized by seasonality, bulkiness, perishability, etc. The prevalence of these intermediaries varies with the commodities and the marketing channels of the products. Because of the intervention of many middlemen, the producer’s share in consumer’s area is reduced.

♤ Malpractices in unregulated markets: - Even now the number of unregulated markets in the country is substantially large. Arhatiyas and brokers, taking advantage of the ignorance, and illiteracy of the farmers, use unfair means to cheat them. The farmers are required to pay arhat (pledging charge) to the arhatiyas, "tulaii" (weight charge) for weighing the produce, "palledari" to unload the bullock-carts and for doing other miscellaneous types of allied works, "garda" for impurities in the produce, and a number of other undefined and unspecified charges. Another malpractice in the mandies relates to the use of wrong weights and measures in the regulated markets. Wrong weights continue to be used in some unregulated markets with the object of cheating the farmers.

♤ Inadequate market information: - It is often not possible for the farmers to obtain information on exact market prices in different markets. So, they accept whatever price the traders offer to them. With a view to tackle this problem the government is using the radio and television media to broadcast market prices regularly. The news papers also keep the farmers posted with the latest changes in prices. However the price quotations are sometimes not reliable and sometimes have a great time-lag. The trader generally offers less than the price quoted by the government news media.

♤ Inadequate credit facilities: - Indian farmer, being poor, tries to sell off the produce immediately after the crop is harvested though prices at that time are very low. The safeguard of the farmer from such "forced sales" is to provide him credit so that he can wait for better times and better prices. Since such credit facilities are not available, the farmers are forced to take loans from money lenders, while agreeing to pledge their produce to them at less than market prices. The co-operative marketing societies have generally catered to the needs of the large farmers and the small farmers are left at the mercy of the money lenders.

♤ Small and scattered holding: - The agricultural holdings are very small and scattered throughout the country, as a result of which the marketable surplus generated is very meagre. It is not an easy task organizing how the goods can be assembled for efficient marketing. Moreover there are many varieties of particular crops and this poses problems in pricing.

♤ Forced sales: - The financial obligations committed during production force farmers to dispose the commodity immediately after the harvest though the prices are very low. Such forced sales or distress sales will keep the farmer in vicious cycle of poverty. Report has it that the farmer, in general, sells his produce at an unfavourable place and at an unfavourable time and usually he gets unfavourable terms.

♤ Technological development problems in farm production: - Evidence has it that technological change in performing certain farm operations brought in new problems in agricultural marketing. For example, paddy harvesters are identified to increase the moisture content problem in paddy; mechanical picking of cotton associated with the problem of mixing trash with cotton; potato diggers are found to cause cuts on the potato; sugarcane harvesters effects the problem of trash mix with the cane, etc. These problems lead to the reduction of price for the farm products. Unless corrective measures are affected, the production technologies accentuate the marketing problems.

♤ Poor handling, packing, packaging, and processing facilities: - For efficient and orderly marketing of agricultural products, careful handling and packing are required. Present packing and handling are inadequate. For instance, many times we see rough and careless treatment in the packing and initial handling of fruits and vegetables. Green vegetables are packed in heavy sacks which will be heated up quickly at the centre, wilt and rot soon. Workers or passengers are allowed to ride on top of a load of vegetables, which will result in physical damage. Careless handling of fruits and insanitary handling of the produce are other problems. Poor handling and packing expose the products to substantial physical damage and quality deterioration. If there are no processing facilities, say, for tomatoes, it means all the harvested crops must be sold within a given time and because there are packaging problems, quite a substantial part of the produce may be lost before getting to the market. Not only do these losses cut down the supply of products reaching the consumers, but also raise the price of the remaining portion, which must bear all costs.

♤ Growth of urban centres: - The growth of urban centres creates more marketing problems, concerned with inadequate supply to meet the increase in size; the need to create new markets and storage problems.

♤ Communication problem: - One of the key elements of efficient agricultural marketing system is the availability of proper communication infrastructure. Rural areas are inadequately placed with reference to posts, telegraphs and telephone. The literacy rate being low among the farmers, it poses difficulty of the communication tasks.

♤ Lack of farmer's organization: - The farmers are scattered over a wide area without any common organization. In the absence of such organization, farmers do not get anybody to guide them and protect their interests. On the other hand, traders are an organized body. Thus, the marketing system, therefore, constitutes unorganized farming community on one side and organized and powerful traders on the other side. Under such situations, farmers will be generally exploited and do not get remunerative prices for their produce.

♤ Inadequate research on marketing: - Until recently, all efforts have been geared towards producing more without thinking about how to market them. There is need to know about new technologies in food storage and preservation. There is also need for research on consumer demands and preferences, handling and packaging.

♤ Problems caused by Globalization: - The globalization has brought drastic changes in India across all sectors and it is more so on agriculture, farmers and made a deep impact on agricultural marketing. It is basically because of majority of Indians are farmers. It has brought several challenges and threats like uncertainty, turbulence, competitiveness, apart from compelling them to adapt to changes arising out of technologies. If it is the dark cloud there is silver lining like having excellent export opportunities for our agricultural products to the outside world.