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INDIAN FARMER,

AGRICULTURE, MARKETS
and CONSUMER

3/23/2010
WORD COUNT: -
2850 (WITHOUT
REFERNCE)
CONTENTS

1. ABSTRACT…………………..………………………..………………….
………..3

2. AIMS………………………………………………………………….…….
…………..3

3. INTRODUCTION………………………………………………………..
………..4

4. INDIAN AGRICULTURE MAINLY RICE AND WHEAT………5- -7

5. EFFECTS OF TRADE AGREEMENTS ON FARMERS…….7- -9

6. SUPER MARKETS, CONSUMER, POLICIES AND INFLATION

……………
…….….10- -11

7. CONCLUSION...................................................................
...12- -13

8. REFERENCES...................................................................
....14- -15

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INDIAN FARMER, AGRICULTURE, MARKET AND
CONSUMER

Abstract

Farmer is called the back bone for India economy; India agriculture has
a long history dating back to 10,000years. In the present world India
ranks second in farm output. Agriculture, forestry and logging account
17% of the India GDP, it is the largest producer in the world of milk,
cashew, dry fruits, tea, ginger, turmeric, black pepper, second largest in
cattle, wheat, rice, sugar, ground nut, fish, and third largest producer of
tobacco. The contributions of various sectors in the Indian GDP for
2007, 2008-2009 are as follows: -
Agriculture: - 17%
Industry: - 29%
Service Sector: - 54%
(Source: -tradechakra.com) but the Indian farmer is undergoing great
struggles in all states of India to stop exploitation by buyers and retail
marketers, the farmers are not even getting their invested price for their
crop. India was markedly pertaining cities with huge industrial sectors,
as it is the main source of income. The government and society are least
concern about the country side. In this present situation many of the
farmers are afraid to do farming because mainly of the falling minimum
support price, secondly the non supportive climatic condition, and the
non cooperative government and society.
Aims

 FARMER DEMANDS .

 GOVERNMENT SUBSIDIES .

 A PROFITABLE AND STANDARD SELLING PRICE , DEPENDING UPON THE


CROP , DEMAND , CLIMATE AND PLACE .

 CENSOR THE PRIVATE MERCHANTS .

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 AWARENESS, REGARDING THE MARKET AND ITS DEMAND .

 QUALITY PRODUCTS TO CONSUMERS AT LOWER PRICES .

INTRODUCTION

In India agriculture was practised in the past on a survival basis; the villages
were self sufficient with its goods and the trade is done in barter system;
exchange goods for services and vice versa. Now agriculture has become
commercial in character, the farmer grows the crops that fetch standard
earnings to his livelihood. But in modern marketing, agriculture has to undergo
series of transfers from one hand to another and finally reaches the consumer.
When coming to the present scenario farmer has to work hard to sell his crop
which involves all aspects of market arrangements both functional and
institutional based on the technical and economic considerations, and includes
pre and post harvest operations, transportation and storage etc,. A spite doing all
this also the farmer is not familiar to the market system which has become more
and more complicated and lastly the farmer becomes handicapped by several
disabilities; sells his produce at an unfavourable price, place and time. The
objectives for the farmer and consumer to get a healthy price for the crop he
sells and the buying price of the commodity are,
Ensure that the principal producers are getting the best price.
By providing facilities for lifting all the produce, as the farmer is ready to sell at
an encouragement price, it reduces the price difference between the farmer and
the final consumer. This is to make all the products of farm origin to consumers
at reasonable price without impairing on the quality of the produce.

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WHEAT, RICE, SUGAR

Rice is the highly consumed grain in many parts of the world especially the
East Asian and South East Asian countries. Rice is cultivated in countries with
low labour costs and in heavy rain fall regions. The production of rice in the
world has steadily grown from about 200 million tons of paddy rice in 1960 to
700 million tons in 2006. The top three producers of rice were China (31% of
the world population), India (20%) and Indonesia (9%). More than 75% of the
global trade is accounted by India, Japonica 12%, Basmati 10%, and the
remainder glutinous rice. The major rice growing areas in India are West
Bengal, Uttar Pradesh, Madhya Pradesh, Orissa, Bihar, Andhra Pradesh,
Assam, Tamil Nadu, Punjab, Maharashtra, Karnataka, Haryana, Gujarat,
Kerala, Jammu- Kashmir, Tripura, Meghalaya, Manipur, Rajasthan, Nagaland,
Arunachal Pradesh, Himachal Pradesh, Mizoram, Goa, Pondicherry, Sikkim,
Andaman & Nicobar Island and Dadra & Nagar Haveli. Rice in India is
generally prepared by boiling the rice immediately after harvesting and before
removing the husk, this is referred to in English as parboiled rice. (Source: -
www.commodityonline.com).
Wheat is the second largest cereal crop and most important food grain in the
world. It is the staple and important part of the daily diet for millions of people.
The largest wheat producing states of India is placed in the north part of the
country with Uttar Pradesh, Punjab, Haryana, Madhya Pradesh, Rajasthan
and Bihar, where their total production is around 93%. It is seeded during the
month of November and January and the harvesting is done during March to
April, where as April is assumed to be the marketing season India. The
government announces a minimum support price for the acquiring goods. The
government acquired wheat ranges from 8 to 20 million tons which accounts
15 to 20 percent of the total production. And the rest 80 to 85 percent of the
production is handled by the private merchants, which later on gets in to the
consumer hands through super markets, local retails and exports etc. (source:
- www.commodityonline.com)

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From 2008, 2009-2010
At present the world food prices saw a dramatic increase in creating a global
crisis and causing political and economical instability and social unrest in both
poor and developed countries. It shows impact on the rice farmers in India,
before the farmers take loan from the bank or the private sectors the climate
seems to be supportive to seed, but more than a half a million rice farmers in
rural India are affected by the bad weather and the restricted rules passed by
the WTO which are not favourable to the farmers.
The same global crisis are also effecting the wheat production, the
surplus crop which is harvested sits mouldering in muddy fields, where as the
previous year’s wheat sits untouched and they are forced to sell it, as it shows
no increase in price. This happened because of the heavy imports of wheat
from Australia and US. After the harvest is over, the farmers life depends on
selling his ripen crop, they stock the wheat for couple of months to get good
price, but there is sluggishness at the wheat market. The government or the
society is least bothered, in providing them subsidies or increasing the market
share, when compared with the European or US farmers. The prices offered
are so low that they are not even able to meet their basic needs. The farmers
are unable to see the globalisation at work, no wonder the farmers are

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befuddled, as the critics say this scene is the best example of how the WTO
acts against the farmer’s interests in the developing world. Whereas the
incalculable companies have given ways to shopping malls in the agricultural
lands and a promise of the new luxury life style which is unaffordable for the
poor, and some of the farmers have swapped wheat for cash crops. This
happens because most of the wheat farmers are spending 10 times more of
their costs and earning 50 to 70 percent less than their investment. The
labours in agriculture are gradually decreasing because of the increase in
industrial work which offers good salary when compared to the hard work on
the fields; many younger people of the rural areas are leaving to cities in
search of employment. (Source: -www.commodityonline.com,
www.indiatogether.org)
The rice and wheat cropping patterns are many and varied, with at least
two and sometimes three or more crops grown in one calendar year. The
more intense cropping patterns are found in the east where the average
temperature is warm than in west. But this continues system sometimes
break, for example sugar cane is used in rotation with the rice and wheat,
where it occupies the land for two or more years before returning to rice and
wheat. The density of high population in the regions is fact that agriculture is
the main form of employment and income mean that farm size is relatively
small. The present trend in farming has been changed from bullock carts to
tractors, were most of the small farmers can’t afford to maintain them.

Effects of trade agreement on farmers


The world trade organisation is formed in the year 1995 as a successor
organisation for general agreement of tariff and trade. Under the WTO many
trade related agreements are signed by the member countries. According to
some of the comprehensive fiscal studies, the WTO had overseen the effects
of trade in general and its agreements in particular. There are issues related
to agreement on sanitary and Phytosanitary measures and technical barriers
to trade that effects the Indian agriculture. Rather than the WTO’s Doha
Round from individual free trade agreements with the EU, US and China, the
multilateral trade would be better off to India. However, lifting the tariffs under
a Doha agreement, there would be loss of prices for key commodities like

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Wheat and rice in India. When we look in to the past a study by National
Council of Applied Economic Research (NCAER, 1997) estimates the export
demand and supply elasticity’s to predict the effects of WTO agreements on
agricultural exports but qualifies the findings by saying that domestic non-
price supply constraints may impede agricultural exports. While the direction
of the change in the welfare of the developing countries like India, as
predicted by the various economic studies may be correct, certainly, the same
cannot be said about the magnitude and distribution of these changes. If one
takes into account some empirical and some theoretical considerations of the
Indian agricultural trade and the WTO agreements, the gains to Indian
agriculture will be severely lower than what has been anticipated. The
economics found it to be the swap effect, which leads to the increase in
agricultural supply, where as the income and wealth effects will cause it to
decline and the net effect is vague.
Fiscal year 1 April — 31 March2009
Currency 1 Indian Rupee (INR) (₨) = 100 Paise
Trade organizations WTO, SAFTA, G-20 and others

STATISTICS
GDP $1.242 trillion (2009)
$3.528 trillion (2009)
GDP growth 6.7% (2008/2009)
GDP per capita $1,032 (2009)
$2,932 (2009)[1] (PPP; 128th)

GDP by sector
AGRICULTURE (17.5%),
INDUSTRY (20%),
SERVICES (62.6%) (2009 est.)
Inflation (CPI) 9.89% (February 2010 est.)
Population below poverty line 22% (2008)
Gini index 36.8 (List of countries)
Labour force 467 million (2009 est.)

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Labour force by occupation
AGRICULTURE (52%),
INDUSTRY (14%),
SERVICES (34%) (2003)
Unemployment 9.5% (2009 est.)

Main industries telecommunications, textiles, chemicals, food processing,


steel, transportation equipment, cement, mining, petroleum, machinery,
information technology
(Source: CIA World Fact Book)

Super markets, Consumer, Policies and Inflation


The key driver for consumer confidence is economic growth. The household
consumption and agriculture are considered as economic indicators. They
tend to increase consumption when they feel confident about the current and
future economic situation of the country and their own financial situation.
Super markets are alarming threats to India. Major chains are
taking over the agriculture products and food retail business in India and
many parts of the world. As the food retail chains are expanding rapidly in less
developing countries, the good to do upper and middle classes are no longer
the only people to shop in the super markets, they now even have branches in
poor areas, small towns and villages. The international companies like M&S,
Tesco, Carrefour and Wal-Mart etc, are playing an increasingly important role
in market change and consumer attitude. In the past a large share of people
worked in trade, the exchange of goods were organised in a relaxed way.
Before the super markets, the consumers used to buy fresh goods with good
quality at an affordable price, but now the super markets have changed the
principles of marketing, starting with the selection of crop to segregations

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according to the quality and pricing according to quality and demand.
Because of this the middle class and low class people are highly affected,
most of the people are afraid to go to the super markets because of its higher
prices when compared to the local market. However, the super market model
is ill-assorted when compare to the predictable work. Education levels, start-
up capitals and various infrastructures are relevant in this context, while many
of the rural and town people can hardly read or write, super markets generate
a self important over head to cope up. On top of this super market have
different terms and condition to buy the produce; were only a well equipped
and well trained farmer can do. And if there is such matured entrepreneur to
satisfy the demands of the super markets, there won’t be business for local
markets. Most of the super markets are importing goods from the wealthy
nations to gain more marginal profits in its sales, which directly effects the
local farmer and his family, the present situation in India is happening so that
every hour approx two farmers are hanging themselves to death. This is
because of the direct investments of the huge retail chain companies in to the
country and their imports. However, export and domestic markets are entirely
different. Markets in the rich world enforce product standards that do not
normally apply in domestic trade in developing countries.
The inflation had shown effect on the farmer and consumer, the
balance between supply and demand was gone out of control changing the
buying habits of the consumers and forcing to decrease the price of the
agricultural products. The producers could not be able to control the cost of
raw material and labour, hence there is an increase in the price of the final
product. This could result in no profit and forcing them out of their farms.
The export and import policy has recently announced that the
quota has been abolished in the 714 of the consumer goods in which
agricultural goods act as the main part. Import of large number of agricultural
goods will target the rich class not the middle and low class people, where
India is having a high scale of middle and low class. The policy will directly
affect the farmer, while the markets enable to sell the imported goods, the
impact will also be on the common man to afford the price for the good he
buys. The policy may not mean the instant change but sooner or later the
imported goods are going to be in to the market, initially making profits for the

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foreign companies and importers, indeed some of the products for China may
be price competitive.

Conclusion

The farmer needs reforms not


concession. The farmers need financial
reforms to ensure the credit flow, risk
alleviation program, well organised
extension services mechanism and a
moderately good price. The government
should rise public funding and allow the
private investment in to agriculture, and
restrain the uncontrolled fraud in
markets. The government should promise
them the dignity and respect of the life
to succeed in farming because the farmer
becomes the initial competitor for the
global market. As the government is still

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having the essential commodity act, the
farmers are not allowed to inter-state
movement, free value addition, exports
and contract farming on constant
process. The farmers should get a good
price as they do a drudgery work in the
fields to develop the crop. Mainly the
middle man, so called the private
merchants and government employees in
agriculture sector and schemes should be
banned in order to maintain healthy
relations between the customers, price,
product, market and farmer. All the small
and eligible farmers should be equally
treated to get benefits from the
government. The authorities should
ensure to supply good seed for the best
price, and uninterrupted electric supply,
because the seed sector after 1997 was
been liberated to the private companies
which are supplying specious seeds;
leads to crop loss and death of the
farmers. When compare to China, India
agriculture is feeble for the last fifteen to
twenty years where as China has boosted
up from seven to nine percent in the last
years. In order to produce the best
quality crop with a best price the farmer
should enjoy certain primary facilities.

o The government should insure his crop for free


before he seeds.

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o He should be given proper facilities for storing
his crop.

o Farmers should be given incentive to buy the


new technology.

o He should have holding capacity that he should


be able to wait for times when he could get
better prices for his produce and not to dispose
of his stocks immediately after the harvest
when the prices are very low.

o The government and the expanding super


markets should stop importing the same good
and start utilising the domestic produce.

o He should be given clear information about the


market and its conditions for prices.

o The number of private merchants should be


decreased, so that the middleman’s profits are
reduced and increase the returns for farmers
and healthy buying price for the consumers.
(Source: - www.thaindian.com)