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COLLEGE SADHANA Journal for Bloomers of Research,

Vol. 2,

No. 2,

FEBRUARY 2010

An Emprical Analysis of Marketing of Oilseeds in Erode District of Tamilnadu State


P.Komarasamy
Department of Management Studies, Nandha Arts and Science College , Erode Abstract - Edible oilseeds mainly comprise groundnut, mustard, sesame, safflower, soyabean, and sunflower. Oilseeds contribution to GDP stands only next to cereals and milk. Edible oil accounts for about 5.5 per cent of the family budget occupying the third place, next to cereals and milk. Among the edible oil seeds, groundnut is the most important one accounting for about 46 per cent of the total area under oil seed, about 67 per cent of the total oil seeds production and about 59 per cent of the total edible oil production in India. In oil seeds marketing various intermediaries are involved and they transfer the oilseeds from producers to ultimate consumers. So the farmer should identify right time and right place to market their produce. Processing and marketing of oil seeds are some of the major factors responsible for the stagnation in the oil seed economy.

only next to cereals and milk. Edible oil accounts for about 5.5 per cent of the family budget occupying the third place, next to cereals and milk. India, a net exporter of oilseeds and oilseed products for long, turned into a net importer during 1976-77 to 1987-88 consequent to edible oil imports worth about Rs.800 crores per annum. The main features of recent developments in the sector are: i) Contribution of South comprising Andhra Pradesh, Tamil Nadu, and Karnataka to the groundnut production has been quite high. ii) Imports of edible oils have been slashed on account of foreign exchange crunch. iii) Price fluctuations have been substantially reduced. iv) Difference between sowing and harvest time prices has been considerably reduced. Among the four major oil seed crops of India, groundnut ranks first. India ranked first both in acreage and in production in the world [10]. Among the edible oil seeds, groundnut is the most important one accounting for about 46 per cent of the total area under oil seed, about 67 per cent of the total oil seeds production and about 59 per cent of the total edible oil production in India. It is about seven million hectares yielding six million tones of production. Tamilnadu state is one of the important oil seed producing state in India. Oil seed on an average, accounted for about 15.4 percent of the gross cropped area in the state. The major oil seed crops grown in the order of importance in the state are groundnut, sunflower and castor.

1. INTRODUCTION India has the second largest area under oilseeds cultivation, next only to USA. However, it falls behind to the fourth place in terms of production due to comparatively low yields. Yields remain lower largely on account of dependence on dry land farming. During the early seventies shortages of edible oils led to substantial increase in the prices. Severe intra-year and intraseasonal fluctuations in the prices are a common feature of the oilseed economy. Edible oil prices have significantly contributed to the national inflation levels during the recent years. Price movement in edible oils and oilseeds was perceived as a consequence of demand-supply gaps. Addressing these issue several policy options have been adopted in the last one and a half decade. Despite, the production remained stagnant until 1987-88. Only, since then a resurgence has taken place. Edible oilseeds mainly comprise groundnut, mustard, sesame, safflower, soyabean, and sunflower. Oilseeds contribution to GDP stands

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P.Komarasamy - An Emprical Analysis of Marketing of Oilseeds in Erode District of Tamilnadu State

2. IMPORTANCE OF THE STUDY The farmers those who are interested in cultivating the oilseeds find difficult to sellout their product with good profit as many farmers depend the middlemen to market the product, and for the financial help they depend on private moneylenders, Some farmers who obtain financial assistance from moneylenders are unable to repay promptly and at one stage they are mortgaging or selling out their land due to the financial crises. At this stage the poor farmer should be given good awareness through the agriculture department about the latest technology of oilseeds cultivation and provided with the adequate information regarding various source of funding public sector banks and cooperative banks. In oil seeds marketing various intermediaries are involved and they transfer the oilseeds from producers to ultimate consumers. So the farmer should identify right time and right place to market their produce. Inspite of these difficulties, farmers prefer to grow this crop because of its short duration, fair returns and ready cash income it fetches, suitable for rainfed conditions, besides fitting well in the crop sequence as a commercial crop. The study of various marketing practices in oil seed marketing is useful to understand about the various intermediaries involved in marketing of oil seeds. It is used to find out the various intermediaries share in the consumers rupee. It will be helpful to suggest the farmers how to get more share in the consumers rupee. 3. STATEMENT OF THE PROBLEM Erode District is very famous for agricultural cultivation comparing to other Districts. The people living in Erode district are hard working by nature and introducing novel techniques to get high yield. The land lords are big farmers slash the market price of oilseeds in general which indirectly affects the small farmers and marginal farmers. The government department is also not considering the small and marginal farmers

and whenever approaching these officials, they never respond properly and fail to convey the latest technique of oilseeds cultivation. Similarly the bank officials also practice unwanted delay in sanctioning the agriculture loan whenever the farmers approach the bank for finance crises. Even if sanctioned loan stringent actions are initiated against the defaulters or delay in payment. Whereas the big farmers could be able to avail a sizable amount of loan very easily and not at all repay the loan. All on a sudden the government announces waiving policy (loan right off), where the big farmers are enjoying these facilities in lakhs and lakhs of rupees. Due to poor literacy, they are very weak in marketing their products. Some farmers having little awareness hire the trucks and lorries and bring their products to neighbouring town and earns good money through proper selling. But, majority of oilseeds growers depend only on intermediaries to sell out their products. These intermediaries swallow a lion share of profit. Even in the regulated market these intermediaries confuse the farmers by using various tricks at the time of bidding. Some of the leading oil refineries indulge with a contract at the time of sowing through a fixed financial commitment. The representatives of a private vendor and oil refineries always quote a very low price and adopt some mal activities during the weighing of oilseeds. The other burning issues are with the laborers. With these drawbacks, the farmers are try to produce and market the oilseeds with stiff competitions. Based on the above issues the following questions are probed 1. What kind of marketing problems faced by them after producing the oilseeds? 2. To what extent the oilseed growers are suffering due to lack of knowledge 4. OBJECTIVES
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To ascertain the sales performance of Oil

seeds

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COLLEGE SADHANA Journal for Bloomers of Research,

Vol. 2,

No. 2,

FEBRUARY 2010

To identify the pattern of marketing of Oil seeds by the farmers and to the extent of utilization of the regulated markets
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To study the common problems faced by the farmers in marketing of Oil seeds
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5. METHODOLOGY For the present study Erode district was purposively selected due to their aggressive involvement in agricultural activities. There are seven taluks in Erode district and among them all taluks are selected based on the productivity of oilseeds. And also the refineries were more when compared to all other districts of Tamilnadu. Farmers are selected by using stratified random sampling method from the selected taluks
Table 1. Geographical representation of sample respondents S. Name of the Taluk No.of No. Respondents 1 Bhavani 150 2 Gobichettipalayam 150 3 Perundurai 140 4 Erode 140 5 Kangayam 140 6 Tarapuram 140 7 Sathy 140 Total 1000

Further, particulars regarding the cost of transport, cost of packing, preparation to market, commission paid and other expenses incurred in the market were collected from the farmers to assess the cost of marketing of their product. The details on the mode of operation, the method of pricing, method of grading, the terms and conditions of trade were collected. The primary data were supplemented by a spate of secondary sources of data. The secondary data pertaining to the study was gathered from the records published by the office of the Joint Directorate of Agriculture, Erode, marketing committee of Erode. Latest information was gathered from well equipped libraries in Bangalore, Chennai and Tamilnadu Agriculture University Coimbatore and from Internet web resources. Further, the secondary data were also collected from various leading journals. A number of standard text books were studied to obtain pertinent literature on production and marketing of oilseeds. 6. TOOLS OF DATA COLLECTION By virtue of a mass of data obtained from research survey, as well as data from secondary sources collected and presented in the present report, descriptive and analytical research was considered most appropriate for the study. The research problems and the questionnaire were all framed accordingly. The researcher used closedended and open-ended questions in the questionnaire to collect primary data. 7.CONSTRUCTION OF QUESTIONNAIRE The key aspect of the present research was identified through the preliminary interviews (Pilot study) with some selected farmers. The questionnaire so drafted was circulated among some research experts, Joint Director of Agriculture, Erode, Secretary of marketing committee, Erode and Research Scholars for a critical view with regard to wording, format, sequence and the like. The questionnaire was redrafted in light of their comments.

Data Collection The validity of any research is based on the systematic method of data collection and analysis. In the present study both primary and secondary data is used. A set of questionnaires were prepared, for enquiry at the level of marketing. The primary data was collected from the farmers who were are all cultivating and marketing the oilseeds in all taluks of Erode District. The informations were gathered through personal interview method. From the selected farmers, method of marketing, loss in transportation, agencies involved in marketing process, prices, cost incurred in marketing at various stages, places of disposal and problems in marketing were collected.
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P.Komarasamy - An Emprical Analysis of Marketing of Oilseeds in Erode District of Tamilnadu State

8. APPROACH TO THE EXTENT OF MARKETING OF OILSEEDS The difference in the extent of production and marketing of oilseeds between the different types of respondents based on their Age, Gender, Marital Status, Experience in cultivation of oilseeds, Income Level, Family Size, Nature of the Family and Wealth Positions of the farmers was studied. 9. SCOPE OF THE STUDY This study would be of practical utility to provide guide-lines to the oilseed growers, in maximizing their profit. This could help in formulating suitable production strategies to identifying the proper channel, which will increase the share of the producer in utilizing the Regulated market effectively. This study would help to identifying the major problems faced in by the farmers oilseed production and marketing and provide suggestions to solve these problems. 10. RESULTS AND DISCUSSIONS 10.1 Sources of information about oilseed market The farmers, who are cultivating oilseeds having good knowledge in production, but they are very much lack in the knowledge of marketing these oilseeds. An attempt was made to identify the sources of knowledge acquired was studied by selecting four major classifications namely through newspapers, commission mundis, through broker and neighbours Henry Garrett ranking method was employed to arrive the results accurately and the details are shown in the following table.
Table 2. Sources of information about oil seed market Sl. Informations Total Mean Rank No Score Score 1 News paper 2736 2.7360 II 2 Commission Mundis 2188 2.1880 IV 3 Through Brokers 2753 2.7530 I 4 Neighbours 2323 2.3230 III

ranked first with a Garrett score of 2753 points. It is followed by the news paper source with a Garrett score of 2736 points. The other sources such as neighbour and commission mundis are placed in the third and fourth ranking with the Garrett score of 2323 and 2188 points respectively. From the analysis, it is concluded that brokers and newspapers are the major sources providing information about oilseed market 10.2 Problems with regulated market T h e g o v e r n m e n t o f Ta m i l N a d u introduced regulated market in every District to make ease to market their oilseeds. Even though the Government directly intervened, still the agriculturist suffering with various types of problems in different angles. The common problem faced by the farmers with regulated market are studied by selecting the four major issues such as waste of time, trick among the buyers to fix the price through mutual understanding, storage cost and delay in payment. These problems were studied with the help of Henry Garrett ranking method and the details are shown in the following table.
Sl. No 1 2 3 4 Table 3. Problems with regulated market Problems Total Mean Rank Score Score Waste of time 3032 3.0320 I Trick among buyers 2728 2.7280 II Storage cost 2108 2.1080 IV Delay in payment 2132 2.1320 III

It was learned from the above table that brokers are playing the major role to provide information about oilseed market, which was

It was learned from the above table that officials in the regulated market taking more time unnecessarily at the time of marketing their oilseeds, which was ranked first with a Garrett score of 3032 points. It is followed by the tactics played by the buyers in fixing the price through the mutual understanding was represented with a Garrett score of 2728 points. The problems such as delay in payment and storage cost were ranked in the third and fourth positions with the Garrett score of 2132 and 2108 points respectively.

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10.3 Multiple regression analysis A regression is a statistical tool used to find out the relationship between two or more variables. One variable is caused by the behavior of another one. The former variable is defined as independent and the latter variable is defined as dependent. When there are two or more independent variables, the analysis that describes the relation between the two is called multiple regression analysis. The main objective of using this technique is to predict the variability of the dependent variable based on its covariance with all independent variables. It is useful to predict the level of dependent

phenomenon through multiple regression analysis, if the levels of independent variables are given.
The following analysis shows the relationship between quantity of oilseeds production, marketing and eleven independent variables that were studied. It was found that, these eleven variable, six variables were closely associated with the quantity of oilseeds produced by the agriculturalist. In order to measure the inter dependence of independent factor and their total contribution to the volume of oilseeds produced and marketed in the study area, the results of the analysis were put into multiple regression analysis, and detailed results are shown in the following table.

Model (Constant) GENDER AGE EDU MARRIED F_SIZE F_CULTI EXP IN_AGRI LAND_ALLOCATED TECH_EMP SOURCE

Table 4. Multiple regression analysis Un standardized Un standardized Standardized Coefficients - B Coefficients - Std Coefficients Error Beta .797 .251 -5.283E-02 .135 -.009 -2.822E-02 .034 -.023 -2.270E-02 .026 -.023 -2.142E-03 .058 -.001 -1.874E-02 .040 -.014 2.089E-03 .036 .002 -5.741E-03 .027 -.006 -5.024E-02 .028 -.049 1.042 .041 .700 2.259E-03 .033 .002 3.340E-02 .019 .042 Dependent Variable : quantity of oilseeds produced R2-Value 0.889 Degree of freedom-V1 9 Degree of freedom-V2 990 F Value 42.352

t 3.174 -.392 -.839 -.889 -.037 -.464 .058 -.214 -1.772 25.460 .069 1.736

Sig .002 .695 .402 .374 .970 .643 .954 .831 .077 .000 .945 .083

R-Value .0943

Significance 1%Level

The multiple linear regression component is found statistically a good fit as R2 value is 0.8464. It shows that six independent variables contribute about eighty five percent on the variations in the quantity of oilseeds produced are statistically significant at 1% level and 5% level respectively The table indicates that the co-efficient of number of member engaged in cultivation, technology employed in oilseeds cultivation and
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sources of information's are positively associated with the quantity of oilseeds produced and marketed. Further it indicates that these variables that contribute to the quantity of oilseeds marketing are statistically significant implying that their influence is stronger than the other variables. The rate of in the quantity of oilseeds produced shows better results of the independent variables such as the unit change in number of

P.Komarasamy - An Emprical Analysis of Marketing of Oilseeds in Erode District of Tamilnadu State

family members involved in cultivation of oilseeds with 0.058, with 25.460 units change in area of land allocated for oilseeds, with 0.069 units change in technology employed and with 1.736 units change in sources of information gathered by the respondents on cultivation of oilseeds. The factors such as sex of the respondents (-.390), Age (-.839), Education(-.889), Marital status (-.037),Family size(-.464), Experience (-.214), and income earned from agriculture (-1.772), are negatively associated with the oilseeds marketing. Thus from the above analysis, the following observation could be made. The quantity of oilseeds produced by the selected sample respondents in the study area are positively associated with the factors like number of members in the family involved in cultivation income, area of land allocated for oilseeds cultivation, technology employed and sources of information. 10.4 Methods of selling oilseeds The farmers cultivating oilseeds are find difficulty to sell their agriculture produced. In this study an attempt was made to identify the methods of selling the oilseeds. The common methods are pre-harvest contract, using regulated market, selling through commission agents and direct sales to oilmills. The details are analyzed with the help of percentage analysis and furnished in the following table.
Table 5. Method of selling oilseeds by the respondents Sl. Methods No. of % No. Respondents 1. Pre harvest contractors 121 12.1 2. Regulated market 326 32.6 3. Commission agents 281 28.1 4. Direct sales to oil mills 272 27.2 Total 1000 100

respondents are using commission agents to sell their agricultural produce. 27.2% of the respondents directly selling the oilseeds to oil mills. On the other hand, 12.1% of the respondents underwent pre- harvest contract with the private brokers. 10.5 Methods practiced to sell oilseeds during volatility market The oilseed market often fluctuates and the farmers find difficult when they are finding no standardized market. In this study an attempt was made to identify the various methods practiced by the sellers to sell the oilseeds during volatility in the market. The details are furnished in the following table It could be seen from the above table that 42.8% of the respondents using aggressive method of selling the oilseeds during peak market 19.1% of the respondents storing the oilseeds in their godowns during inflation period and 38.1% of the respondents selling the oilseeds immediately after harvesting. From the analysis, it is found that aggressive marketing strategy is followed during peak market.
Table 6. Methods practiced to sell the oilseeds when market is volatile Sl. Demand No. of % No. Respondents 1. Aggressive selling during peak market 428 42.8 2. Store the oil seeds in the godowns during inflation 191 19.1 3. Selling the oilseeds immediately after harvesting 381 38.1 Total 1000 100

10.6 Methods of pricing the oilseeds


Normally pricing methods are studied as penetrating pricing strategy, skimming pricing strategy market based pricing and auctions. In this study, the style of pricing practiced by the oilseed growers was studied with the help of percentage analysis and the details are shown in the following table.

It is examined from the above table that 32.6% of the respondents using regulated market to sell their oilseeds. 28% of the

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Table 7. Pricing method of oilseeds practiced by the respondents market practiced Sl.No. Pricing Method No. of Respondents Percentage 1. Auction price made in the Regulated market 386 38.6 2. Selling of oilseeds according to market price 580 58 3. Penetrating pricing Strategies 21 2.1 4. Skimming pricing Strategies 13 1.3

It could be observed from the above table that 38.6% of the respondent using auction price made in the regulated marked 58.0% of the respondents selling their oilseeds according to the market prices, 2.1% of the respondents using penetrating pricing strategies, 1.3% of the respondents using skimming pricing strategies. From the analysis, it is inferred that most of the respondents selling the oilseeds according to the prevailing price in the market. 10.7 Respondents opinion on grading on oilseeds In the era of competitive business, customers preferred a good standard of products in general, and in particular, to oilseeds. The respondent's opinion on grading the oilseeds in the market were gathered and analysed with the help of percentage method. The detailed opinions are furnished in the following table.
Table 8. Respondents opinion on oilseeds grading in the market Sl. Opinion on No. of % No. Grading Respondents 1. Assessed based on size 212 21.2 2. Assessed based on weight 267 26.7 3. Measuring Oil content level with the help of equipments 521 52.1 Total 1000 100

11 . S U M M A R Y O F F I N D I N G A N D SUGGESTIONS The study is aimed at measuring the benefits enjoyed by the farmers and the problems faced by them during production and marketing of oilseeds in the study area. Field survey technique was employed to collect the first hand information from the sample respondents. Interview schedule was the main tool employed to collect the pertinent data. The data thus collected were arranged in simple tabular forms and appropriate statistical tools were used for data analysis. Based on this analysis, Interpretations were made systematically. An attempt was made to recapitulate the key findings and conclusion. Based on these findings, a few suggestions have also been made. 11.1 Findings The production, consumption and exports of major oilseeds have witnessed a significant transformation in the last 14 years. During this 14 years period, in absolute terms, world oilseed production increased by 79% consumption by 72% and world trade by an impressive 131.4%.
l l The consumption of vegetable oils worldwide has gone up by 3.6% in the last seven years (2000-07). It has shown an upward trend with variable rates - from a minimum of 3% in 2001-02 to as high as 7.5% in 2004-05. In the last two years (2005-06 and 2006-07), the growth percentage has declined (year on year), and has stood at 6.7% and 5% respectively

It is witnessed from the above table that 52.1% of the respondents measuring oil content level in each seed with a help of specially designed equipment. 26.7% of them assessed based on weight. On the other hand 21.2% of the respondents opined that they were assessed based on the size. From the analysis, it is found that 52.1% of them measuring the seeds graded them based on the oil content level

The multiple regression analysis results shows that out of eleven variables selected for the analysis shows only six variables are closely associated with the quantity of oilseeds produced by the agriculturist. The multiple linear
l

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component is found statistically a good fit as R2 is 0.8464. It shows that six independent variables contribute about 85% on the variation in the quantity of oilseeds produced are statistically significant at 1% level and 5% level respectively
l Sources of information about oilseed market was studied and found that brokers and news papers are the main sources providing about information about oilseed market.

officers may be appointed and these seed officers and agricultural officers should approach the farmers in the early morning hours and provide the latest informations and suggestions to i m p r o v e t h e o i l s e e d s p r o d u c t i v i t y. Simultaneously they should provide adequate information through specialized Journals in agriculture The regulated market staff should be trained psychologically to take the farmers issue amicably. Necessary training is very much essential to make them to work efficiently without making unnecessary time delay The following suggestions are recommended for strengthening the marketing of oilseeds: (i) Better enforcement of regulated markets, so that more farmers feel attracted to use them (at present less than half), getting the benefit of higher prices and for correct quality and quantity. (ii) Strengthening cooperative marketing institutions and introduction of forward marketing and contract farming, which will also help the farmer to get a better price for his produce. (iii) Promoting market integration, which will also get a better price for the farmers. (iv) Price incentives for edible oil storage in the lean season. (v) Reducing the cost of storage by introducing bulk storage facilities. (vi) Alleviating the over-regulation of markets and introduction of future markets and hedging practices. Rewarding better quality produce with better price. (vii) Streamlining the six statutory regulations regarding quality. (viii) Enhancing earnings from oilcakes and oil meals through removal of restrictions on livestock industry, improving the transport system for animal feed and improving the quality of de-oiled cakes.

Problems with regulated market was studied and it was learned that the officials in the regulated market taking more time unnecessarily at the time of marketing the oilseeds. It is followed by the tactics played the buyers in fixing the price through mutual understanding.
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Methods of selling oilseeds was studied and found that regulated market and commission agents are the main modes of selling oilseeds. During volatility the farmers using aggressive selling strategies when the market is peak positions. Some farmers store the oilseeds in the godowns during the inflation
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while analyzing the pricing methods practiced in the oilseeds market, it is noted that majority (58%) of the respondents selling oilseeds according to the market price and 38.6% of the respondents using auction price made in the regulated market.
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11.2 Suggesstions Among the selected oilseeds, castor seed crops showing high yield in the tribal area and forest areas. The tribal people are producing good yield of castor seeds but finds difficult to sell out in the market. Hence, it is suggested that the Government of India should support the tribal people financially by opening National Tribal Co-operative Federation in Anthiur Hils and Thalavadi Hill areas with the support of NABARD. From the study it is divulged that the farmers producing oilseeds have collected latest information only from the fellow farmers. Hence, it is suggested that more number of seed

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12. CONCLUSIONS
Oils and oilseeds played an important role in the Indian economy for a long time India produces a large variety of oilseeds including groundnut, gingelly, sunflower and castor seeds that earn the country a huge share of foreign exchange while analyzing the world level oilseed productivity, India occupies the second place for groundnut productivity and in sunflower seeds though Russian federations are in top, India tries to fulfill the domestic demand. The production, consumption and exports of these selected oilseeds have witnessed a significant transformation in the last 14 years. Further it is advised that the farmers are suffering more due to lack of adequate working capital. A separate Co-operative marketing society exclusively for oilseed growers may be established and it should help the farmers who are in that need of adequate working capital.

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