Asian Research Consortium

Asian Journal
of Research in

Asian Journal of Research in Marketing
Vol. 4, No. 1, February 2015, pp. 203-214.

Marketing

ISSN 2277-6621

www.aijsh.org

Sustainable Agri-business Development and Food
Marketing Management - Opportunities & Challenges in
India
MRK Murthy*; PM Naikwadi**
*District Agri-Business Expert & In-charge of Market Linkage Specialist,
Convergence of Agricultural Interventions in Maharashtra (CAIM),
GoM, IFAD, SRTT.
**District Agri-Business Expert,
Yavatmal.
Convergence of Agricultural Interventions in Maharashtra (CAIM),
GoM, IFAD, SRTT.

Abstract
A well-organized and efficient marketing system plays a vital role in the economic growth or a
nation. An efficiently organized marketing system not only facilitates the proper and smooth
disposal of the produce but also acts as a catalyst to stimulate increased production in terms of
incentive prices. A vast majority of the population lives in the rural areas. Rural prosperity is
largely linked with agriculture as about 56 per cent of the populations are engaged in agriculture
and about 18 per cent of the national income is generated through it. In order to usher rural
prosperity farm incomes has to be maximized by diversifying agriculture through integrated crop,
livestock, fisheries and horticultural enterprises, which pre-supposes the need for a well, organized
marketing system for these commodities.
Agri-business includes not only all the agriculture related activities but also that portion of
industrial sector which covers the sources of farm supplies i.e. farm machinery, fertilizers and
chemicals, etc., or the processors of farm products. Thus, there are five major agri-business
segments, namely, input manufactures, input suppliers, integrated agri-business, market
intermediaries, food processors and marketers. In the view of Agribusiness plays an important role
in improving the quality of products and accessibility etc. The changed economic scenario and the
global order have modified substantially the organization and management of agri-business. After
the 'Green Revolution‟, which ensured abundant production and food security in India, we should
gear up ourselves to have, Marketing Revolution with all its, rainbow colours so as to seize the

203

Marketing Management. since changes are swift. Davis of Harvard University in 1955. 4. agribusiness means the business and management activities concerning farm inputs. 1993). pp. It can serve as a useful guideline in structuring the competencies required in farm graduates. In short. Sustainable Agriculture. processing and distribution. finance and marketing of finished farm products. The modern concept of agribusiness is depicted in Fig.Murthy & Naikwadi (2015). No. which essentially refers to producers and manufacturers of agricultural goods meaning only the input sector is considered. 1. in the recent times two definitions of agribusiness have been accepted (Downy and Erickson. Asian Journal of Research in Marketing. ________________________________________________________________________________ Introduction The term „Agribusiness‟ was first used by John H. Food chains. outputs. farm production and distribution (Downey and Erickson. 203-214. Secondly a broader view of agribusiness includes any firm whose activities relate to any part of input. This would ensure a fair price to the farmer and availability of qualitative products to the consumer at reasonable prices.1. transportation. Vol. opportunities provided by the liberalized international market. 1993). a serious thought on the question of meeting the challenges sustaining of the transformation is the need of the hour. processing. FARM INPUT SUPPLY SECTOR FARM MACHINERY FERTILIZER FINANCE SEED OTHER INPUTS M A FARM OUTPUT PRODUCING SECTOR / FARM FIRMS R PROCESSING K E PROCESSING UNITS T DISTRIBUTION I N G CONSUMERS 204 . The first includes a narrow and traditional definition of agribusiness. Keywords: Agribusiness. Agribusiness can be broken down into economically independent sectors: input supply. The whole gamut of agri-business is under scrutiny. farm production and output. which elucidates the various processes of inputs. However. farm production.

processing. The lead taken by Tamil Nadu Agricultural University. market intermediaries. Secondary data collected through literature. fertilizers and chemicals. some existing own data. bulk quantities. Coimbatore and Tamil Nadu University of Veterinary and Animal Science. Their role is vital especially in the area of production and propagation of plants and animals. farm machinery. National Academy of Agricultural Research Management (NAARM. etc. the concerned SAUs may undertake an in depth study to survey the scenario as applicable regionally and accordingly plan for providing the required skills for the farm graduates and post-graduates in the curriculum. Objective  To improve Sustainable Agri-business development and Food Marketing system based on experiences and evidences from the present study. However. especially for small and marginal farmers. These Universities have introduced commercial farm production courses and optional skill oriented courses on farm operations at UG level. which also draws the attention of concerned marketing authorities. on the projected potential of Agribusiness). This indicated land is being fragmented in India. and value-addition to agricultural produce through storage. because of perishable nature of the products. pp. an assured remunerative price to the farmers for their produce is necessary. in this direction is indeed laudable. or the processors of farm products. Research Method and Methodology The study data was collected from mainly in-depth telephonic interviews with the sample size of 46 private colleges and 20 certificate course agricultural institutions in the year 2013. For ensuring growth of the agriculture sector along with other sectors. input manufactures. chemical and non-chemical input products. No. Agricultural graduates who shall seek wage and self-employment in these enterprises need to have comprehensive technical knowledge and skills and also need to learn basic agribusiness management practices relevant to their area of operations (refer Mckinsey report 1993. and so the role of marketing becomes important. seasonality of production. Agribusiness and related industrial ancillary units are mostly in the private sector and to a lesser extent in the public/cooperative sector. input suppliers. 4. manufacturing of engineering goods/instrumentation/operation. irregular supply. food processors and marketers. 203-214. These are in addition to the Rural Agriculture Work Experience Programme (RAWE) for a cropping season in the villages. Agricultural marketing is different from marketing of other manufactured products. Thus. Agriculture occupies the central stage of Indian economy. There is an urgent need for all the SAUs to adopt such innovations in the curriculum. The National Institute for Agricultural Extension Management (MANAGE. Agribusiness includes not only all the agriculture related activities but also that portion of industrial sector which covers the sources of farm supplies i. Vol. Hyderabad). namely. marketing and exports. quality control.e. variation in quality.. transportation. integrated agri-business.Murthy & Naikwadi (2015). small size holdings and scattered production. 205 . there are five major agri-business segments. Asian Journal of Research in Marketing. Hyderabad) have already introduced a PG course in Agribusiness Management. Chennai.1.

Aggregation Model for Smallholder Farmers Farmer/Producer Bank support Warehouse (Collection /storage) Agreement with Corporate Company Transport SHGs (Mahila Bachat Gat)/ Producer Groups Processing (Cleaning.Murthy & Naikwadi (2015). fish products. transportation systems. Farm Input Generation: Farm input supply sector provides opportunities for farm graduates and necessitates to develop competencies and skills in areas such as tissue culture. seed production and multiplication. processing and packing. quality control. Some of such competencies can be identified as listed below. sericulture etc. 4. supply and servicing of farm machinery etc. pp. Post Harvest Processing and Value Addition: It involves technologies of different kinds of storage methods. Farm Production: Farm production sector also offers a lot of opportunities in areas such as egg and meat products. Fig 2. Grading. apiculture. 3. No. 1. Farm graduates can establish commercial enterprises in the areas of floriculture. 2. 206 . market research and strategies. Projecting demand and selecting appropriate value additional technologies and then creating necessary business linkages to be able to produce and market commercially viable technologies is an important and priority component in the professional competence of graduates and post-graduates of agricultural science in the future economic scenario. Packing etc) Operated by SHGs Retailers Consumers Consumers Source: Author The potential for agribusiness varies as per the agro-ecological zones. horticulture aquaculture. vermin-culture. biotechnology. feeds and fodders. hybrid seed production.. breeding stock of animals. fish products.1. dairy products. biotech products. 203-214. mushrooms. Vol. whose products are export oriented. organic & inorganic fertilizer production. Asian Journal of Research in Marketing. Weighing.

Projects Management: Management tools and techniques such as Programme Evaluation and Review Technique (PERT). 207 . Asian Journal of Research in Marketing. project investment analysis. financial management and accounting systems. It is also quite likely that agriculture might be accorded the status of corporate sector as a policy in the coming years. Hence. In this context. pp. Hence. privatization of agricultural profession is on the anvil. However. In other words. which in turn offer opportunities for self-employment. There is an explosion of private sector involvement in collaboration with foreign agencies in a variety of agribusiness sectors investing huge amount of money. It was suggested in one of the recent documents (Steering Committee Report on National Livestock Policy.Murthy & Naikwadi (2015). are some of the important functions for agricultural professionals to develop competencies at the graduate and post-graduate level. Information and Knowledge Centers: With the advent of fast changing technology in Information dissemination and feedback the farm graduates have immense potential to provide consultancy and other technical services using the concept of Agricultural Technology Information Centers. etc. 5. it is all the more important to visualize foreseeable changes that are likely to occur in such an event. work-unit structures. Critical Path Method (CPM). No. log-frame. an investment during the next five years to develop business management curriculum and faculty development to handle new academic avenues should be a priority on the agricultural front. corporate law and structures. 4. 203-214. banking. The experience of MSS Research Foundation in this regard will help in designing and developing the necessary skills and systems for farm graduates to learn and contribute. Vol. In years to come. It is very appropriate to suggest that there is need for Agribusiness support system to provide professional extension services and to create the necessary infrastructure to private sector entrepreneurs and commercial agriculture operators as being done in Russia (Russian Initiative Self Employment. 4. higher competency development for graduates with the requisite personality attributes for providing service to the cause of the national agricultural effort is to be envisioned. corporate agricultural services like in the West are likely to emerge. which offer immense potential of private sector employment and development of ancillary units around these corporations.1. 6. RISE. 1994). more such initiatives are required to establish management departments in the SAUs and the meager isolated efforts in this direction do not suffice the purpose. 1996) that fresh veterinary graduates and those already in government departments will have to take up private practice in their field of specialization both for earning livelihood and for resource generation.. One must give full credit to some of the State Agricultural University (SAUs) for the dynamic initiative and leadership in this direction by developing post-graduate and vocational programmes with such perspective I mind. and it might assume the proportions of medical and legal specializations. activity analysis and scheduling. Business Management: Understanding of agricultural and economic policies. resources generation and personnel management are perhaps some of the necessary professional management competencies required in future for graduates and post-graduates.

specialization in production increased and as a consequence marketed surplus on almost all size groups of farms. and it will also help the private colleges to play a major role in the area of social sciences and not necessarily in the technical field of agriculture. Sale slips are issued to the farmers showing the quantity and the price at which sold. 2. introduction of standard weights and measures. Asian Journal of Research in Marketing. there are about 46 private colleges and 20 certificate course institutions which are offering degree programmes in agriculture outside the National Agricultural Research System. the farmers in regulated markets or towns/mandies sell around 70 per cent of the marketed surplus. it is worthwhile to suggest that these colleges and institutions can be developed for the purpose where investments for infrastructure development can be judiciously spent without duplicating the effect of National Agricultural Research System (NARS). The tendency of village sale considerably went down. small and marginal farmers with low quantity of produce for sale also got the same price as realized by large farmers.Murthy & Naikwadi (2015).1. Farmers have been able to reduce their price risks by availing the facility of the price support programme for 24 major agricultural crops put in place by the government. In the event of prices falling below the support level. These institutions of learning do not have adequate infrastructure and facilities for practical skills and training. 3. Such of these private colleges can play a partnership role with ICAR and SAUs in the area of agri-business and management so that there is a synergetic effort. 4. No. Agricultural Marketing System: Salient features of the Indian Agricultural Marketing System are 1. Presently. Thus. Although these colleges are in need of huge investments for infrastructure development. the potential of the private institutions can bring into the mainstream of NARS. have changed owing to the abolition of barter system. pp. which worked against the farmer-sellers. the farmers off-loaded their surpluses to the public agency at the minimum support price (MSP). abolition of sale by 208 . The concept of production for home shifted to 'production for the market'. At present. Farm production and marketed surplus increased manifold with the adoption of new technologies of production. 6. Regulation of marketing system and establishment of regulated markets all over the country brought changes in the farmers' marketing practices in terms of sale of their produce in regulated markets instead of village sale or sale to the itinerant traders. Vol. 4. Regulation also helped in reducing the charges paid by the farmers while selling their produce in the regulated market yards. Under such an arrangement. 5. This increased marketed surplus enthused the farmers to become price conscious and marketing aspects started receiving greater attention. The rates of various services payable by farmers have been standardized in several markets. And it is also contingent upon us to note that these institutions are outside the purview of accreditation of Indian Council of Agricultural Research (ICAR). Further. Several practices. 203-214. Farmers have increasingly organized themselves in cooperative marketing societies.

These mandies are called Apni Mandies as farmer producers bring the produce for sale directly to the buyers or consumers. quicker means of transportation. Department of Agriculture & Cooperation. pp. 8. 203-214. reduction of rates of commission. Apni Mandi: In Apni Mandi. the Ministry of Agriculture constituted a Task Force on 4 th July. No. Vol. 4.1. discontinuance of realization of unauthorized deduction of market charges. there is a direct contact between the farmers and ultimate consumers.Murthy & Naikwadi (2015). requirement for repayment of loans. and Uzhavar Sandies. The tendency among farmers to sell their produce immediately after harvest has not changed much owing to the cash needs. and information about prices in the market have become common features that attracted the farmers to the regulated markets. Rythu Bazaars. The Task Force thereupon identified some priority areas to work out a road map for strengthening the agricultural marketing system in the country. The important among the Identified is:  Direct marketing  Forward and future markets  Price support policy  IT in agricultural marketing  Marketing extension. The Committee in its Report has suggested various reforms as well as the reorientation of the policies and programmes for development and strengthening of agricultural marketing in the country. Asian Journal of Research in Marketing. Direct Marketing Innovative Marketing Channels Direct marketing by farmers is being encouraged as an innovative channel. inability to bear risk of holding the stocks and to an extent unavailability of storage and pledge-loan facilities. With a view to examining the findings and recommendations of the Expert Committee and to suggest measures to implement them. 1. Hadaspar Mandi. cover under cloth (hatha) system. Some examples of these channels are Apni Mandi. and provisions of storage facilities for farmers at reasonable rates. training and research. 2001 under the Chairmanship of the secretary. The availability of staying facilities in rest houses free of cost. 209 . Agriculture Marketing Reforms Government of India in the Ministry of Agriculture appointed an Expert Committee on 19 th December 2000 to review the present system of agricultural marketing in the country and to recommend measures to make the system more efficient and competitive. 7.

Asian Journal of Research in Marketing. monopoly purchase and open market purchases of commodities by NAFED. 1952 are currently with the parliamentary standing Committee. The market has modern weighing machines for weighing products. strengthening of FMC by including professionals as . The purchasers make payment of the value of produce directly to the farmer in cash 3. procurement of food grains. development of other productivity enhancing agricultural services and better price risk management Amendments to some of the provisions of the forward Contract (Regulation) Act. Forward and Future Markets Introduction of a negotiable warehouse receipt system to facilitate increased liquidity in rural areas. These amendments include defining futures trading. have attained importance in recent years.time Members. fruit and food items at 25-30 per cent less prices than the prevailing prices in nearby markets. 2. removal of ban on options trading. etc. There is a considerable variation in the structure of taxes and fee on the agricultural produce in various states which also distorts the operation of the domestic market. gives wrong signals to the producers and leads to considerable fallacy in the efficiency of the operation of 210 . Hadaspar Vegetable Market: Hadaspar vegetable market is a model market for direct marketing of vegetables in Pune city. The entry of these public and cooperative agencies has alerted the existing channels and also their importance in terms of quantity marketed through them. Both producers and consumers are benefited from Rythu Bazaars as producer's share in consumers rupee is more by 15 to 40 per cent and consumers get fresh vegetables. provisions of registration of brokers. Farmers also get good quality seeds and other inputs in the market itself. The basic objective of entry of these agencies in purchase of different commodities is to safeguard the interest of producer . Uzhavar Santhaigal: The state Government of Tamil Nadu established Uzhavar sandies (farmers markets) in selected municipal and panchayat areas of the state. shorter and more efficient supply chains. In this market. pp. enhance reward for grading and quality. market intervention scheme (MIS). In this market. 4. No.1. farmers enjoy better marketing infrastructure free of cost and receive considerable high prices for the products than what they receive from middlemen at villages or primary markets at towns. CCI. Rythu Bazaars: Rythu bazaars have been established in Andhra Pradesh with the prime objective to provide direct link between farmers and consumers in marketing of fruits. lower cost of financing. 203-214. JCI and State Oilseed Federations etc. there are no commission agents/middlemen.. Price Support Policy Government intervention in purchase of agricultural commodities under minimum price support programme.farmers alongside the protection of consumers from excessive prices in some years. Vol. 4. It belongs to the Pune Municipal Corporation and fee for using the space in the market is collected by the Municipal Corporation from the farmers. This is one of the ideal markets in the country for marketing of vegetables.Murthy & Naikwadi (2015). vegetables and essential food items. enhancing the penalty provisions.

The information that is important and useful rates to product specialization's with regard to quality. helped in increasing the access of farmers to such orderly market places. IT in Agricultural Marketing Strengthening of ongoing central sector scheme of establishing Market Information Network and making it as a vehicle of market led extension. rules and regulations of the destination markets. 203-214. This development. transport cost involved and the marketing charges likely to be delivered. Marketing Infrastructure Regulated Markets The benefits available to the farmers from regulated markets depend on the facilities/amenities available rather than the number of regulated markets in the area. Encouragement needs to be provided to generate and host useful portals.. Expansion of such physical infrastructure in rural areas 211 . especially for on line demand of different products. coupled with construction of approach roads network linking primary markets with secondary wholesale and terminal markets. providing facility of electronic trading or ecommerce on the Market Information Network portal to enable producers to directly transact business with the buyers. pp. facilities available to the farmers in the buying market. The cold storage units exist in only nine per cent of the markets and grading facilities exist in less than one. No. other specific information as may be conducive for the seller to transact the business with the purchasers. information packages and other software. Asian Journal of Research in Marketing. To avoid blockage of funds and consequent burden on government exchequer due to huge compulsory procurements under price support operations. 4.third of the markets. There is a need for bringing uniformity in the state level tax structure for agricultural commodities for improving the marketing efficiency. also improved the process of price discovery at the primary market level where most of the small farmers dispose of their produce. and the legal provisions related to storage. godown and platform in front of shop exist in 63 per cent of the markets. databases. generic as well as customized. shop.1.Murthy & Naikwadi (2015). Traders modules viz. Info Kiosks should be promoted to be set up in the markets and with farmer‟s organizations. loading and unloading facilities and weighing equipment are available in more than eighty per cent of the markets. One-fourth of the markets have common drying yards. from a meager 286 at the time of Independence to 7177 in 2001. quantity and time frame of supply. internal roads. on agricultural marketing. private trade vis-à-vis farmers‟ cooperatives and public agencies. boundary walls.. Further. electric light. The establishment of regulated markets helped in creating orderly and transparent marketing conditions in primary assembling markets. if they are located outside the state at a distant place. Both covered and open auction platforms exist in two-thirds of the regulated markets. Farmer's rest house exists in more than half of the regulated markets. web sites. associations of traders and other functionaries for exploiting the opportunities of information revolution. The basic facilities viz. increase in the number of regulated market yards. Vol. pack size and packaging material. alternate systems may be devised to compensate the farmers when the prices are abnormally low. Use of information technology in agricultural marketing is becoming increasingly indispensable. transportation and pyto-sanitary requirements.

the status of rural connectivity. 212 . total road length. Under this Act. agricultural commodities worth Rs. the length of national highways and state highways in the country.e. 203-214.commerce vi. The purpose of the proposed alternate marketing structure is to establish modern and efficient trade practice as a catalyst for changes in the market towards improved transparency and efficiency.4 per cent of the villages are connected by roads. has helped small and marginal farmers more by increasing their access to the markets. Forward markets and futures exchanges v. pp.Murthy & Naikwadi (2015). continues to be poor. The demand for packaging services is growing at a very rapid rate. Forms of Alternative Marketing: The different forms of alternative marketing could be: i. only 48. Electronic trading . 62000 crores were traded in these regulated wholesale markets. The only way to modernize marketing is to set up Alternative Marketing System' that may operate parallel to. Vol. 4. which affects the farmers most. the situation is far from satisfactory particularly at the farmer's level. Transportation & Storage Grading of products per their quality standards before sale fetches higher price to the farmers.1. However. Asian Journal of Research in Marketing. which account for about 43 per cent of the value of marketed surplus. Setting up of terminal markets by the private sector iv. grade standards for a number of agricultural commodities have been prescribed for sale in domestic market. To bring uniformity in grading over time and space. Introduction of negotiable warehouse receipt system Grading. 1937 was enacted. Grading and good packaging have also acquired a very crucial role in marketing of products at retail level in urban and semi-urban markets and also for export markets. So far. and in addition to present Mandies. Indian Institute of Packaging (IIP) working since 1966 is evolving better packaging material and packaging techniques. for export and farm level grading. the Agricultural Produce (Grading and Marking) Act. Direct marketing by producers ii. During 1992-93. Setting up mega markets covering all marketing functions for domestic as well as export trade vii. Marketing through Farmers Interest Groups iii. No. Although there has been a considerable increase in the railway route length. Alternative Marketing System Role of government in managing markets is on the decline worldwide.

38 million tonnes by the end of March 2001. Cold Storage and Cool Chain Infrastructure In view of the expected market surplus of fruits and vegetables by 2007 and the available cold storage capacity. we are gearing ourselves to have “Marketing Revolution”. Presently.1. 4. Market Research Surveys. it has been envisaged to create an additional capacity of 56. Vol. No. the information on the type and nature of markets that are prevailing and based on the trends of the production of different commodities in the national as well as international markets.Murthy & Naikwadi (2015). Marketing Information Network. Testing. The additional storage capacity of 130 lakh tonnes is likely to be created in the country with a total investment of Rs. a total of 4199 cold stores with the capacity of 15. Conclusion After the 'Green Revolution‟. During the next five years. which is being strengthened. which ensured abundant production and food security in India.0 million tonnes in 1980. 40306 million has been envisaged for development of marketing related activities such as Market Infrastructure.50 lakh tonnes during the Tenth Plan period. 8. including back-ended subsidy of Rs. etc. Investment for Market Reforms Market Infrastructure The investment for development of market infrastructure has been projected.38 million tonnes exist in the country in different sectors. Through information technology. the new concepts could be developed. including construction of bulk storage facilities and also conventional godowns under "Gramin Bhandaran Yojna". Cold Storage The central government issued the Cold Storage Order in 1964 (amended in 1980) for construction and maintenance of cold stores and storage of commodities in them in good condition. Market Research and Development This would be the most critical area. Standardization. The cold storage capacity increased from 300 thousand tonnes in 1960 to 4. This would also help us for dissemination of information on various related issues.7 million tonnes in 1996 and further to 15. Facilities. This would also include research and development of market infrastructure. Storage Infrastructure The Government of India has also formulated a National Storage Policy aimed at harnessing the resources of the public and private sector for augmentation of infrastructure to handle food grains. 5700 million from the Government of India. Asian Journal of Research in Marketing. pp. Grading. 34800 million. This would not only 213 . 203-214. a total investment of Rs. With all its rainbow colours so as to seize the opportunities provided by the liberalized national and international market.

1993.Murthy & Naikwadi (2015). David and Erickson P. No. pp. Asian Journal of Research in Marketing. 203-214. References Downey W. Steven. McGraw-Hill International Publications.1. 4. Vol. Agricultural Series. “Agribusiness Management”. ensure a fair price to the farmer but also ensure availability of quality products to the consumer at reasonable prices. 214 .