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Agricultural Market System

The system through which goods reach markets all over the country depends on the market channels. The process of agricultural marketing involves assembling, storage, transportation, processing, grading and the distribution of the various agricultural products across the country.

Before independence, farmers suffered because of faulty weighing and manipulation of accounts while selling their products. Farmers generally did not have information on the prevailing prices of packaging and transportation, hence were forced to sell at low rates. They also lacked proper storage facilities and so could not store and sell their produce at a higher price in the future. Even today 10% of farm produce is wasted due to improper storage. Thus, the intervention of the state became necessary to regulate the activities of the private traders.

Some of the measures that were taken in order to improve the marketing scenario were:
  • The initial step taken was to regulate the markets to create orderly and transparent market conditions. This was very beneficial for the farmers as well as the consumers but there still around 27000 rural periodic markets as regulated market places is required in order to realize the full potential of the rural market.
  • Next, the provision of physical infrastructural facilities like railways, roads, warehouses, godowns, cold storage and processing units were being introduced but the current infrastructural facilities are quite inadequate.
  • The third initiative taken was to introduce cooperative markets so as to realize fair prices for the farmer's produce. The success of the milk cooperatives in Gujarat is a testimonial of the success of this initiative taken. The milk cooperatives have transformed the social and the economic landscapes of Gujarat and have made a big impact on the standard of living of the farmers. The cooperatives have had a setback during the recent past due t lack of proper coverage of farmer members, improper and insufficient links between the marketing and processing cooperatives and inefficient management of the finances.
  • The fourth initiative taken is the introduction of policy instruments like:
    • Assurance of minimum support price (MSP) for 24 agricultural products.
    • Using the Food Corporation of India to maintain a buffer stock of rice and wheat.
    • Using the PDS to distribute rice and grains.
The instruments were started with the purpose of distributing food grains at subsidized rates and reducing the expenditure and protecting the income of the farmers.

Despite all this, private trade by moneylenders, rural politicians, rich merchants and farmers dominates the agricultural markets. Only 10% of the agricultural market consists of the products handled by the government agencies, the rest is handled by the private sector.

Of course, agricultural marketing has come a long way since government intervention. With the advent of globalization, there are a plethora of opportunities in the agricultural sector along with a great market for agro based products through processing. This has to be encouraged and awareness about these opportunities should be spread amongst the farmers in order to improve their marketing ability.

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