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VSRD-IJBMR, Vol. 2 (9), 2012, 476-487

R RE ES SE EA AR RC CH H C CO OM MM MU UN NI IC CA AT TI IO ON N

The Role of NAFED in the Agricultural Development in India


1

Harshit Sinha*

ABSTRACT
National Agricultural Cooperative Marketing Federation of India (NAFED) was setup with the object to promote Co-operative marketing of Agricultural Produce to benefit the farmers. The objectives of NAFED are to render assistance to farmers through the marketing cooperative societies in the production, procurement, processing and marketing of agricultural and allied products within the country and outside and arrange for supplies of their requirements viz. agricultural inputs, machinery and consumer articles. It also undertakes various activities in support of farmers as well as the consumers at the instance of the central and state governments for time to time. This paper is the normative study focus on the constitution of NAFED, Principles of NAFED, Critical study of NAFED Management, challenges faced by NAFED, and critically analyze roll of NAFED in Agricultural development of India. Keywords : NAFED, Agricultural Input, Support of Former, Allied Product.

1. INTRODUCTION
National Agricultural Cooperative Marketing Federation of India. (NAFED) was established on the auspicious day of Gandhi Jayanti on 2nd October 1958. Nafed is registered under the Multi State Co-operative Societies Act. Nafed was setup with the object to promote Co-operative marketing of Agricultural Produce to benefit the farmers. Agricultural farmers are the main members of Nafed, who have the authority to say in the form of members of the General Body in the working of Nafed. Agricultural production will be maintained in the coming years with the increased irrigating facilities, fertilizers consumption, increased availability of credit and advancement in technology. Agriculture is considered to be the
____________________________ 1

Research Scholar, MBA Department, *Correspondence : harshitsinha128@yahoo.com

Singhania

University,

Jhunjhunu,

Rajasthan,

INDIA.

Harshit Sinha / VSRD International Journal of Business & Management Research Vol. 2 (9), 2012

backbone of Indian economy from the very beginning. It enjoys a key position in the Indian economy as it has contributed a great deal to the overall economic growth through the supply food, raw materials and exports. Kindle Berger lists five important ways through which agriculture can assist economic development, "In the first place, it can provide workers to industry; secondly, it can furnish demand for industrial output; thirdly, it can provide savings for use in industry or by the Government in forming social overhead capital; fourthly, it may pay taxes to Government rather than lend to it, and lastly, agriculture can earn foreign exchange through exports, to pay for important capital equipment and raw materials needs in other sector". Broadly the cooperative marketing structure in India is two-tier, the primary cooperative marketing societies at the mandi/taluka level and the apex marketing federations at the state level. However in Gujrat, Andhra Pradesh, Haryana, Uttar Pradesh and Punjab an intermediate tier of district cooperative marketing societies exists. In states north eastern states like Assam and Meghalaya, cooperative agricultural marketing is entrusted to Gram panchayat multi-purpose cooperative societies (GPMCS). The pattern of organization of cooperative marketing societies is not uniform throughout the country while in some of the states, particularly, in Assam, Bihar, Kerala, Madhya Pradesh , Karnataka, Orissa, Rajasthan and Hest Bengal there is two-tier pattern of organization namely, primary marketing societies at the level of the secondary market and the apex marketing societies at the state level. In others, there is a three-tier system consisting of primary marketing societies at the base, i.e., secondary markets. The central marketing societies generally at the district level and the apex marketing society at the state level. The central level marketing societies exist in the state of Andhra Pradesh, Gujarat, Chennai, Maharashtra, Punjab and Uttar Pradesh. There is divergence of opinion about the need for a district level organization. The existence of these societies is favoured on the ground that they will be helpful in inter-districts trade, maintaining liaison with the district authorities, wilt help in the processing of agricultural produce on a large scare and in bulk distribution of chemicals, fertilizers and other agricultural inputs. A two-tier structure is favoured an the ground that the district headquarter, is not, in most cases, a channel of commercial trade and therefore its role is bound to be limited in so far as actual marketing is concerned. The apex societies could as well perform the function expected of the district marketing societies of the less cost by opening its branches at the district level. The factors that contribute to the constructive growth and role of cooperatives are : professional orientation to management and control; planed programme under a cooperative priority; use of participative techniques; executive adaptation to change with the necessary support of elected management; maturity of social commitment; and action oriented corporate management.

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2. A BRIEF STUDY OF CO-OPRATIVE PRINCIPLES AND THE THEME OF DEMOCRATIC CONTROL


The concept and practice of co-operation was originally started by the Rochdale Pioneers of England in 1844 against the capitalists' exploitation of workers. The objectives of the society were to provide pecuniary gains and the improvement of the social and democratic conditions of its members. The society started functioning according to certain rules. Subsequently, these rules, after some refinements and modifications, were recognized as the basic principles of cooperation. To define, cooperative is an association of persons, usually of limited means, who have voluntarily joined together to achieve a common economic and through the formation of a democratically controlled business organisation, making equitable contributions to the capital required and accepting a fair share of risks and benefits of the undertaking.

2.1. Principles
The principles of cooperatives may briefly be elucidated as follows : (a) (b) (c) (d) (e) (f) Open and Voluntary Membership Self help and Mutual Help Unity or Political and Religious Neutrality Limited Interest on Capital and Patronage Rebate The Principle of Liberty The Principle of Openness

2.2. The Theme of Democratic Control


The affairs of the cooperatives are democratically managed and controlled. The members elect the office bearers on a 'one member one vote' basis with the voters physically present in the general body meeting. The elected members directors from a board of management. The board is accountable to the general body and conducts the entire business of the society on its behalf. Hence the right to vote is not linked with the degree of capital investment.

3. A CRITICAL STUDY OF NAFED'S MANAGEMENT 3.1. General Body


The general body is supreme in the NAFED. The ultimate authority of the federation vests in the general body. The members of the NAFED are the owners of the federation and have an important role in developing good and effective management. It is one of their democratic duties, not merely to provide the capital, but to follow up and to check what is done with it. This body functions through general meetings of the members.

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The annual general body meeting is announced at least 21 days clearly in advance and in the case of special general body meeting at least 15 days in advance by a written notice. The day and date, hour and place fixed for holding the meeting and the nature of the business to be transacted are given in the notice served to the members. The quorum of a meeting is determined by 1.5 (one half) of the total members (excluding the nominal members) or 20 whichever is less. The meeting may be abandoned or adjourned to another day if on the day of the meeting there is no quorum. Thus the members are the association; they own it and have the right to control it. No doubt, there are substantial powers in the hands of members. But the members, generally, are apathetic and hardly have any interest in the affairs of the federation. NAFED'S STRATEGY : The federation has also been playing a balancing role in respect of commodities like onion, the export of which is canalised through it. It has been playing a multiple role of extending informal prices support during gluts through massive procurement, supplies of consumers at reasonable periods of scarcity and regulating exports, while at the same time, ensuring realization of maximum possible foreign exchange. The foreign exchange realization in all the commodities canalized through NAFED has registered substantial increase in per unit recovery. The operational activities of the NAFED are directly influenced by the crop prospects in various commodities, the international factors influencing the supply and demand, the policies of the Government concerning movement and export and the ability of the primary marketing societies. The need for cooperatives to expand their business activities is keenly felt. As a result, the central organization of the marketing cooperatives in the country for handling various agricultural commodities.

3.2. NAFEO Retirement


The NAFEO may retire the shares held by the Government of India; Government organization s and the National cooperative Development Corporation at such time and in such manner as may be agreed upon between it and the government of India / government organization /national cooperative development corporation as the case may be.

3.3. Normal Membership


Such other persons/ societies institution not covered by (i) National level federations, (ii) state level marketing federations, (iii) Apex/level marketing federations in union territories, (iv) State-level tribal & commodity federations (v) Primary marketing/Processing societies, (vi) National cooperative Development corporation, (vii) Government of India and (viii) National cooperative consumers Federation and any other national level cooperative organization, with whom the NAFED is likely to do business or store goods, or arrange sale thereof provided the application for admission such membership is duty accepted by the Board of Directors, may be admitted as nominal members.

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4. CHALLENGES FACED BY NAFED


NAFED has failed to provide the infrastructural facilities to the farmers. Till now NAFED has not been in a position to compete with the private trades. The exports of agricultural commodities through NAFED and cooperative societies are in between 20% and 30%. This should reach the level of 40% by the beginning of the 21" century. The success in the sphere of agricultural production needs efficient agricultural marketing services so that farmers may get remunerative prices of their produce. The role of NAFED in the supply of agricultural inputs is limited. The supply of agricultural inputs on custom hire basis by NAFED should be made available by establishing Agro-service centers in villages. The bulk of the business of the NAFED and state federations is on agency basis/price support on behalf of the central government. While such operations help them in increasing business turnover it makes a little impact on their working and the services provided to their members. Mostly the NAFED is controlled by the Managing Director/the general Body. While the day-to-day Administration should be fully vested with the Managing Director, it is necessary that certain authority should be delegated down the line, so that the expected performance may be achieved. The requirement of the NAFED, especially in the context of developing economy like India, is that management position should be marked by professionally educated, skilled and trained personnel. NAFED should act as a nodal point for planning of all marketing activities within the country and should work out detail wise and district wise marketing plan in consultation with concerned state feds and primary cooperative societies. NAFED must also ensure that the benefits of cooperative marketing are given wide publicity among the farmers and demonstrate through various media to educate the farmers on the advantages of cooperative marketing. Besides, though state feds are the members of NAFED and marketing societies are the members of state feds yet there is no effective business linkage among them.

5. IMPORTANT FCILITIES PROVIDED BY THE NAFED TO THE FARMERS


The objectives of the NAFED are to organize, promote and develop marketing, processing and storage of agricultural, horticultural and forest produce, distribution of agricultural machinery, implements and other input, undertake inter-state, intra-state import and export trade, wholesale or retail trade as the case may be and to act and assist for technical advice in agricultural production for the promotion the working of its members and cooperative marketing, processing and supply societies in India. In addition to the above objectives, the following activities have also been undertaken in the Nafed. Objectives of the study of the role of NAFED to facilitate, coordinate and promote the marketing and trading activities of the cooperative institutions in agricultural and other commodities, articles and goods;

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To undertake purchase, sales and supply of agricultural products, marketing and processing requisites, such as manure, seeds, fertilizer agricultural implements and machinery, packing machinery, construction requisites processing machinery for agricultural commodities, forest produce, dairy, wool and other animal products;

To act as warehouseman under the Warehousing Act and own and construct its own godowns and cold storages;

To act as agent of any government agency or cooperative institution for the purchase, sale, storage and distribution of agricultural, horticultural, forest and animal husbandry produce, wool, agricultural requisites and other consumer goods.

To act as an insurance agent and undertake all such work which is incidental to the same; To organize consultancy work in various fields for the benefit of the cooperative institutions in general and for its members in particularly;

To undertake manufacture of agricultural machinery and implement, processing packing etc To subscribe to the share capital of other cooperative institution as well as other public, joint and private sector enterprises as and when considered necessary for fulfilling the objectives of NAFED;

To arrange for the training of employees of marketing/ processing/supply cooperative societies; To maintain common cadres/pools of managerial/technical personnel required by the marketing/processing supply cooperative society;

To establish processing units for processing of agricultural, horticultural and forest produce and wool; To undertake grading, packing and standardization of agricultural produce and other articles; To acquire or take on lease or hire, lands, buildings, furniture, and vehicles and to sell, give on lease or hire them for the business of NAFED;

To arrange for the training of employees of market/ processing/supply cooperative societies; To maintain common cadres/pools of managerial/technical personnel required by the marketing/processing supply cooperative societies;

To establish processing units for processing of agricultural horticultural and forest produce and wool; To acquire or take on lease or hire, lands, buildings, furniture, and vehicles and to sell, give on lease or hire them for the business or NAFD;

To advance loans to its members and other cooperative initiations on the security of goods or otherwise; To guarantee loans or advances or give undertakings on behalf of any such society or company as

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mentioned above to any financing institution and. Nafed has also set up various industrial units for production of agriculture inputs for motivating farmers to increase their products; Nafed also provides marketing assistance to the farmers by arranging disposal of their produce on consignment basis; Market Yard facilities, Storage facilities, Grading and processing facilities, Transportation facilities, Credit facilities provided by the NAFED to the farmers. NAFED has ventured into consumer marketing as a step towards diversification of its activities to make available essential items of daily need to the consumers at affordable rates. Presently, NAFED is running five retail outlets in Delhi and two in Shimla in the name and style "NAFED BAZAAR". Besides direct retailing, we are also supplying grocery and other items in the prestigious institution in the country including Rashtrapati Bhawan, reputed Hospitals, Hotels, Public Sector Undertaking, IRCTC, Schools, etc. During the year NAFED continued to sell items of daily needs like onion and yellow pea dal at subsidized rates to the consumers when prices of these commodities were skyrocketing. Ministry of Consumer Affairs has sanctioned grant-in-aid for an amount of Rs 50.00 Lakhs to NAFED for the purchase of 5 mobile vans for publicity and Consumer Awareness Campaign in Delhi. All these mobile vans have been made operational and they are carrying stock to various institutions, own outlets and to the different residential colonies for making available essential commodities at affordable prices to the consumers. The total turnover of NAFED upto 2010-11 Rs 2,00,851.44, with a marginal improvement over the last five years performance.

6. ROLE OF THE NAFED IN THE AGRICULTURAL MARKETING


The National Commission on agricultural defined agricultural marketing as "A process which starts with a decision to purchases a saleable farm commodity and it involves all the aspects of market structure or system, both functional and institutional based on technical and academic considerations and includes pre and post harvest operations, assembling grading, storage, transportation and distribution." Thus, marketing is a process which begins with the production of a commodity and ends at the distribution to the ultimate consumer. Some authors are of opinion that marketing is deeply concerned with demand and supply. Sharma and Shah stated : "In agricultural marketing, we are concerned with demand and supply conditions, marketing operations including marketing functions, functionaries and costs, price fixation, market structure and performance and marketing efficiency." The marketing of agricultural produce is the crux of the rural economy in our country. The whole programme of production undertaken individually or collectively with tall our efforts in planning would be of no use if it were not followed by a same and sound marketing system.

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7. COMMODITY WISE MARKETING THROUGH NAFED RELATED TO INTERNAL TRADE (2006-2007 TO 2010-2011)
The interpretation from data as well as the analysis mentioned in the study are based on the data collected from the organization and their might be some variation in the same. Marketing agricultural commodities in India pose greater challenges than perhaps in any other country. Agriculture produces the largest number of different agricultural commodities in varied agro-climatic conditions. Commodities have to be transported over long distances for marketing purposes. In addition to the perishable nature of agricultural commodities they are susceptible to climatic variation which results in a bumper harvest in one season, leading to seasonal gluts and fall in prices, while on the other hand, there could be a crop failure leading to shortage resulting in scarcity and high consumer prices. Table 1 (Qty. in Mts) Particulars OUTRIGHT Foodgrains Pulses Spices, Tea & Rubber Oil & Oilseeds, Tribal Jute, Cotton Horticulture Poultry/Groceries Processed Foods Agricultural Foods Industrial Units Others TOTAL JT. VENTURE Foodgrains Pulses Oil & Oilseeds Fruits & Vegetables Cotton/Cottonseed Raw Jute Other Total AGENCY/CONSIGNMENT Foodgrains Pulses Oil & Oilseeds Fruits & Vegetables Jute & Packaging Material Other Total 2006-07 2077.93 5533.10 1268.50 9110.66 352.85 138.65 262.26 573.33 147.58 382.14 19847.00 9.98 10.39 0 2.43 2811.93 9.57 0 2844.3 0 131.05 621.61 1299.12 985.29 985.29 3037.07 25728.37 2007-08 2385.73 3040.80 4563.38 5296.19 502.43 194.12 86.24 384.30 132.38 183.93 16769.50 566.13 8.82 15.77 0 2009.27 74.91 101.6 2844.3 0 0 34.43 105.9 1098.25 2.42 1241 20786.56 2008-09 2516.05 3606.49 2435.65 5347.38 2518.98 230.85 54.53 163.29 354.69 0.00 17227.91 336.24 0 20.01 0 1621.58 0 0 2776.06 0 0 0 75 2136.03 2605.96 2605.96 21811.70 2009-10 2137.39 11103.84 2275.46 22125.90 3.56 181.91 5.32 414.82 160.90 2673.08 41082.18 50.46 37.31 0 0 844 21.58 20.99 1977.83 0 0 3.8 912.73 2048.32 0 2964.85 45021.37 2010-11 3111.76 11576.01 1012.51 62234.38 143.93 167.01 0.00 757.84 95.25 6882.69 85981.38 19.4 0 0 0 0 24.11 0 43.51 28.76 0 0 267.7 4040.38 0 4336.84 90361.73

Market support to farmers and maintaining the steady supply of commodities to consumers at reasonable prices are the objectives of its internal trade operation. These operations cover a vide range of items like food grains,

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pulses, cilsees, spices, fruits and vegetables, organic and inorganic fertilizers, pesticides etc. NAFED purchases agricultural commodities through the cooperative marketing net work which is to farmers own organization. In disposals it gives preference to cooperatives, public sector organization and state agencies. Internal trade operations are generally aimed at fulfilling the dual objective of providing fair prices to the farmers and stabilizing the prices of essential agricultural commodities and maintaining consumers supplies at reasonable prices round the year. NAFED also undertakes the supervision of the movement of fertilizers on account of state marketing federations. Internal trade operations comprise business undertaken on outright, Joint venture and agency / consignment through : (a) Agency/Commission Basis. (b) Foreign Trade (c) Price Support Operations (d) Production and Supply of agricultural Input and Bio-Fertilizers. (e) Marketing of Tribal Produce

8. CONCLUSION, FINDINGS AND SUGGESTIONS


National Agricultural co-operative marketing federation of India (NAFED) was established as the national apex body of the co-operative marketing system in the year 1958 to promote agricultural marketing. The NAFED shall be to organise, promote and develop marketing, processing and storage of agricultural, horticultural and forest produce, distribution of agricultural machinery, implements and other inputs, undertake inter-State, import and export trade, wholesale or retail as the case may be and to act and assist for technical advice in agricultural production for the promotion and the working of its members and cooperative marketing, processing and supply societies in India. In furtherance of these objectives, the NAFED may undertake one or more of the following activities : To facilitate, coordinate and promote the marketing and trading activities of the cooperative institutions in agricultural and other commodities, articles and goods; To undertake or promote on its own or on behalf of its member Institutions or the Government or Government Organisations, Inter-State and international trade and commerce; To undertake purchase, sale and supply of agricultural products, marketing and processing requisites, such as manure, seeds, fertiliser, agricultural implements and machinery, packing machinery, construction requisites, processing machinery for agricultural commodities, forest produce, dairy, wool and other animal products; To act as warehouseman under the Warehousing Act and own and construct its own godowns and cold storages; So to what extent, the NAFED has improved the agricultural marketing system as well as the infrastructural facilities being provided, how far these have helped in increasing agricultural production and getting better prices of the same, and its impact on the farmers' income are some of the major issues which will be dealt with in a nut-shell in the following lines:-

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The bulk of the business of the NAFED and state federations is on agency basis/ price support on behalf of the central government.

NAFED has failed to provide the infrastructural facilities to the farmers. The success in the sphere of agricultural production needs efficient agricultural marketing services so that farmers may get remunerative prices of their produce.

The role of NAFED in the supply of agricultural inputs is limited. The farmers generally approach to the private businessmen for getting the inputs like fertilizers, pesticides and agricultural implements and they have pay the higher prices for lower quality materials. Sometimes farmers fail to get the inputs in due time. Its directly affects the agricultural production.

Sometimes NAFED is not utilizing the agency of state federations and marketing societies as collection centres for procurement of commodities, but operate through its own branches.

Mostly the NAFED is controlled by the managing Director/the general Body. While the day-to-day administration should be fully vested with the managing Director,

The requirement of the NAFED, especially in the context of developing economy like India, is that management position should be marked by professionally educated, skilled and trained personnel.

Besides, though statefeds are the members of NAFED and marketing societies ace the members of statefeds yet there is no effective business linkage among them.

It has been observed that in other fields of cooperation the gains of cooperative marketing societies have also, by and large, accrued to the large farmers. This is no account of the hold exercised by these farmers on the rural economy.

NAFED takes key personnel on deputation from central government. This should be avoided and as far as possible their own cadre of employees should be developed.

9. FUTURE SCOPE
The federal of cooperative marketing societies in India consists of, like structure the NAFED consists of the following :- National Agricultural Co-operative Marketing Federation at the national level, State Marketing Federations at the state level, and District or Regional Marketing Societies at the intermediate level, the

pattern of organization of cooperative marketing societies is not uniform throughout the country while in some of the states, particularly, in Assam, Bihar, Kerala, Madhya Pradesh , Karnataka, Orissa, Rajasthan and Hest Bengal there is two-tier pattern of organization namely, primary marketing societies at the level of the secondary market and the apex marketing societies . Marketing support to farmers and maintaining steady supply of commodities to consumers at reasonable prices are the objectives of its internal trade functions.

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These functions cover a wide range of items like. food grains, pulses, oilseeds, spices, fruits and vegetables, eggs, tribal produce, packing material, agricultural machinery and implements, organic and inorganic fertilizers pesticides etc. NAFED purchases agricultural commodities through the co-operative marketing network which are the farmer's own organization. In disposals, it gives preference to co-operatives, public sector organisations and state agencies. Export of agricultural commodities through the co-operative marketing system developed on a large scale after the establishment of NAFED. The Government of India has canalised the export of sensitive items like onion, nigerseed sesame seed, bajra, jowar, ragi and Gum Karaya through NAFED. NAFED has been able to purchase onion, HPS Groundnut, Nigerseed, sesame seed etc. from the 'producing areas by providing remunerative prices to the growers without adaversely affecting the internal supply as well as consumer prices. Simultaneously, per unit value realizations in export and total export earnings has increased substantially. The agricultural inputs division of the NAFED is helping farmers by supplying them agricultural machinery like tractors, harvesting combines, spare parts and inputs. Farmers are also provided after-sale service of tractors. A unit named as Krishi Yantra Udyog has set up at Bhiwadi in Rajasthan by the federation to meet the requirements of farm tools, agricultural imp1ements and spare parts for tractor and harvest combines. Thus, the NAFED has improved the agricultural development system as well as the infrastructural facilities being provided, how far these have helped in increasing agricultural production and getting better prices of the same.

10. REFERENCES 10.1. Reports and Articles

[1] Annual Report of NAFED from 2006-07 to 2010-11 [2] Annual Report of NAFED, Since Inception [3] Annual Reports of NCDC, Since 2006-07 to 2010-11 [4] Dantwala, M.L. "Report of the Committee on Co-operative Marketing", R.B.I. 1976. [5] Mehta, V.L. Report of the Committee on Co-operative Credit, R.B.I., 1980. [6] Report of the Committee Co-operative Marketing 2009. [7] Report of the Committee on Direction. [8] Report of the committee on Structure and Role of National Co-operative Societies, 1997. [9] Sharma, N.K. Agricultural Marketing Services NAFED's Progress and Plans." The Tamilnadu Journal of Co-operation, Vol. 76(2) August, 2008. [10] Singh S. "Emerging Problems of Agricultural Marketing in Punjab." Agricultural Situation in India, Vol. XL (5) August, 2005.

10.2.

Journals/Magazines/Periodicals

[11] National Co-operative Development Corporation Bulletins Monthly, New Delhi. [12] The Co-operative Development Corporation Bulletins Monthly, New Delhi.

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[13] The Co-operative Development Corporation Bulletins Monthly, New Delhi. [14] Yojana-Fortnightly, Ministry of Information and Broadcasting Government of India, New Delhi. [15] The Tamilnadu Journal of Co-operation, Monthly Tamilnadu Co-operative union, Madras. [16] Co-operative Perspectives, VMNICM, Pune. [17] Southern Journal of Agricultural Economics. [18] American Journal of Agricultural Economics Quarterly. [19] Management Perspectives - Quarterly Journal, All India Management Association East, Delhi-13. [20] Reserve Bank of India Bulletins, Bombay. [21] Bharat Jyoti - Weekly, Bombay. [22] Indian Farming. [23] Commerce, Bombay. [24] Indian Co-operative Review, NUCI, Bombay.

10.3.

Web Addresses

[25] www.nafed-india.com [26] economictimes.indiatimes.com [27] www.thehindubusinessline.com [28] www.business-standard.com [29] www.dailypioneer.com [30] indiancooperative.com [31] www.toboc.com [32] www.dnaindia.com

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