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Study on Marketing of Cotton in Khargone

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 Journal of Recent Advances In Agriculture
Study on Marketing of Cotton in Khargone District of Madhya
Pradesh; India
Birla H., Meena L. K., Lakra K., Bairwa S.L. and Beohar B. B.

J Recent Adv Agr 2014, 2(6): 244-251

Online version is available on: www.grjournals.com

 ISSN: 2322-1534 BIRLA ET AL.

Original Article

Study on Marketing of Cotton in Khargone District

of Madhya Pradesh; India
1
Birla H., 2Meena L. K., 3Lakra K., 4Bairwa S.L. and 1Beohar B. B.
1
Jawaharlal Nehru Krishi Vishwa Vidyalaya, Department of Agricultural Economics Jabalpur (M.P.) 482004.
2, 3, 4
Department of Agricultural Economics, Institute of Agricultural Sciences, Banaras Hindu University, Varanasi (U.P.) -221005.

Abstract
The study was carried out to estimate the price spread and marketing efficiency in the marketing of cotton
in different channels by using different tools such as price spread, marketing costs, marketing margins and
marketing efficiency. The study showed that Producer received maximum net profit in channel IV (3213Rs/q)
minimum in channel I (3163 Rs/q). Thus it could be concluded that as the length of marketing channels
increases, the cost of marketing ought to be more i.e. Rs 376. The ultimate consumer also ends up paying much
higher than that in other channels i.e. 3825 Rs/q. Under channel V Traders margin was 106 Rs/q and
commission agent margin was Rs 130. Thus it could be concluded that as the length of marketing channels
increases, the cost of marketing ought to be more i.e. Rs 356. The ultimate consumer also ends up paying higher
than that in other three channels (channel I, channel II and Channel III) i.e. 3795 Rs/q. The maximum quantity
of cotton was sold by the channel I (60%) and minimum by channel V (7.5%). The highest marketing efficiency
of channels was in channel III (136.57%) and minimum in channel IV (123.67%). The price spread of
marketing channels was maximum in channel IV (465 Rs/Q) and minimum in channel III i.e. 295 Rs/Q. As the
length of marketing channels become lengthy, the cost of marketing ought to be more.

Keywords: Cotton, marketing costs, margin, marketing efficiency and marketing channel.

Corresponding author: Jawaharlal Nehru Krishi Vishwa Vidyalaya, Department of Agricultural Economics Jabalpur (M.P.) 482004.
Received on: 02 May 2014
Revised on: 12 May 2014
Accepted on: 19 June 2014
Online Published on: 30 June 2014
244 J. Recent. Adv. Agr., 2014, 2(6): 244-251
 STUDY ON MARKETING OF COTTON IN KHARGONE DISTRICT OF
Introduction
Cotton, the White gold is one of the most
important natural fibre crop and plays a vital role in
trade, employment, industry, economy, and foreign
exchange earnings. It is known as King of fibers
and being important cash crop of the country. In
India, cotton is cultivated in an area of 12.19
million hectare which is the largest in the world,
with production of 37.10 million bales ranking
second next to China. The average productivity of
cotton in India is the lowest among cotton growing
nations of the world (AICCIP, 2011-12). Major
losses in cotton production are due to its
susceptibility to about 162 species of insect pests
and number of diseases (Manjunath, 2004). Several
thorough reviews have been published telling the
history of cotton, including its origin,
domestication, and taxonomy. For the most recent
review, please consult (Hague et al., 2009). There
are 49 recognized species of cotton, and four of
these species are domesticated: G. hirsutum and G.
barbadense are tetraploids and G. arborium and G.
herbaceum are diploids. These four domesticated
species are cultivated throughout the world between
37N and 32S latitude (Hague et al., 2009).Cotton
production, processing, and uses of its raw material
(primarily cotton fiber) are detailed in a review by (
Campbell and Hinze 2010). Whole cottonseed is a
source of protein (20%), energy (87%), and fiber
(22%) for livestock (Ely and Guthrie 2008).
Cottonseed oil and meal are the two most valuable
products of cottonseed. Oil makes up 16% of the
products resulting from crushing cottonseed in an
oil mill. Cottonseeds contain a significant amount of
tocopherols, forms of Vitamin E, which contribute
to the long shelf life of cottonseed oil (Smith and
Creelman 2001). Animal nutritionists recognize
ginned whole cottonseed as a premium supplement
for cattle and other ruminant animals (Blasi and
Drouillard 2002). Seed cotton yield and fibre
quality are very important for farming community,
ginning industries and textile industries. More than
60 million people in India are engaged in
cultivation, marketing, processing (ginning,
spinning and weaving) and other cotton related
services. Cotton in the dominant raw material of
Indian textile industries which contributes to more
245
than 10% of annual value addition of industrial
production, more the 30% of total export and 4% of
its gross domestic product. Cotton is an important
cash crop and source of livelihood for nearly 15
million farmers in 10 India States. At the end of
2008-09 the total area under cotton crop in the
country was 9.41 million hectares, which accounts
for 6% of the net cropped area and total production
was 5.27 million tones at the end of the 2008-09.
Cotton production cross to 30 million bales in 2007-
08, which was the countries highest ever. India is
the third largest producer of cotton in the world,
after China and the United States with 9.41 million
hectares. India account for approximately 25% of
the world total cotton acreage but only 14% of
production despite being one of the largest cotton
growers globally, cotton yield in India is one of the
lowest in the world because of severe pest attack
and because cotton is predominantly cultivated
under rainfed condition. Cotton is cultivated in
India from sub-Himalayan region of the Punjab in
the north to Kerala in South and from dry regions of
Kutch to high rainfall area of Manipur in East. It is
mostly concentrated in the black cotton soil of the
north India. The major cotton growing States in
India are Maharashtra, Gujarat and Andhra Pradesh,
which account for 67% of the country's acreage
under cotton. Cotton has a problem unique to the
crop it can only be grown under specific soil
condition and is very sensitive to insects and pests.
This makes cultivation risky and any inputs to
mitigate the risk are costly. Another problem is
poor market support, which is trade linked making
recovery of costs difficult. From the estimates
available of the total pesticide consumption of Rs
2,800 Crore in Indian agriculture more than 50% is
use on cotton. Madhya Pradesh is fifth largest
producer of cotton in India. Malwa and Nimar
regions are main cotton growing areas of Madhya
Pradesh and a large part of the economy of this
region revolved around cotton based economy.
Madhya Pradesh is one of the major cotton
producing States in the country. Cotton is cultivated
in an area of 0.62 million hectares in 2008-09.
Khargone is the largest producer of cotton in
Madhya Pradesh. Cotton is cultivated in an area of
193.5 million hectares and production was 144
million tones. 60-65% area covered cotton crop in
J. Recent. Adv. Agr., 2014, 2(6): 244-251
 BIRLA ET AL.

khargone district. The study was carried out to
estimate the price spread and marketing efficiency
in the marketing of cotton in different channels.
Research Methodology
The present study was conducted in khargone
district of Madhya Pradesh. Madhya Pradesh is fifth
largest producer of cotton in India. Malwa and
Nimar regions are main cotton growing areas of
Madhya Pradesh. The study was confined to
Barwaha block of Khargone district of Madhya
Pradesh was selected purposively as it covered
highest area (31.53%) under cotton crop in
Khargone district. Three villages Dasoda, Baswa
and Nalwa were selected on the basis on highest
area in cotton crop from the selected block and from
each village 40 farmers were selected randomly.
Thus 120 farmers were considered detailed
investigation, to fulfil. The village merchant, traders
and commission agent were also selected for
collection on information related to marketing of
cotton. Primary and secondary data were collected
from different sources. The primary data in the
study pertains to the agriculture year 2009-10 and
secondary data were related to the period of 2003-
04 to 2009-10. Marketing cost, Margin, price spread
and marketing efficiency were also worked out at
producers and different market agencies levels in
the study area.
Results and Disccusion

Table 1: Marketing channels prevailing in selected villages.

S.N. Marketing Channel Village-Dasoda Village-Baswa Village-Nalwa Total
1 C1 24 (60) 21 (52.5) 27 (67.5) 72 (60)
2 C2 4 (10) 7 (17.5) 3 (7.5) 14 (11.66)
3 C3 3 (7.5) 8 (20) 5 (12.5) 16 (13.33)
4 C4 5 (12.5) 1 (2.5) 3 (7.5) 9 (7.5)
5 C5 4 (10) 3 (7.5) 2 (5.0) 9 (7.5)
6 Total 40 (100) 40 (100) 40 (100) 120
(Figure in parenthesis shows percentage to total no. of farmers).
Marketing channels of cotton - C1=Producer-Mandi, C2=Producer-village Merchant-Mandi, C3=Producer-
Traders-Man, C4=Producer-village merchant-Commission agent-Mandi and C5=Producer-Trader-Commission
agent-Mandi.

The table 1 showed that farmers of all the farmers in all villages i.e. 72 followed by channel 3,
selected three villages having different marketing channel 2, channel 4 and channel 5 with 16, 14, 9
channel, according to their convince. The channel and 9 farmers.
first was adopted by the maximum number of

Table 2: Average costs and margins of various agencies in the marketing of cotton through channel
I. (Producer-Mandi).
S.N. Particulars/Market functionaries Amount (Rs/Q)
Cost incurred by Producer
1 Packaging expenses 12 (0.36)
2 Transportation 100 (2.98)
3 Hammali 10 (0.29)
4 Weighing charges 15 (0.45)
5 Other expenses 50 (1.49)
Sub Total 187 (5.58)
Producer sale price 3350 (100)
Producer net received 3163 (94.42)
(Figure in parenthesis shows percentage to consumer price or mandi price).

246 J. Recent. Adv. Agr., 2014, 2(6): 244-251

 STUDY ON MARKETING OF COTTON IN KHARGONE DISTRICT OF

It was the simplest marketing channel having made between Producers and ultimate consumer,
no involvement of market intermediaries in the (Mandi), resulted minimum cost in marketing of
marketing of cotton as interaction was directly cotton, i.e. Rs 187 (one hundred eighty seven).

Table 3: Average costs and margins of various agencies in the marketing of cotton through channel-II.
(Producer-Village merchant-Mandi).
S.N. Particulars/Market functionaries Amount (Rs/Quintal)
(A) Cost incurred by Producer
1 Packaging expenses 12 (0.33)
Transportation 25 (0.69)
3 Hammali 10 (0.28)
4 Weighing charges 15 (0.42)
5 Other expenses 25 (0.69)
Sub Total 77 (2.14)
Producer sale price/Village Merchant paid 3290 (91.52)
(B) Cost incurred by Village Merchant paid
6 Packaging expenses 12 (0.33)
7 Transportation 75 (2.64)
8 Hammali 12 (0.33)
9 Weighing charges 15 (0.42)
10 Other expenses 43 (1.20)
Sub total 157 (4.98)
Village merchant sale price 3595 (100)
Village merchant margin /Marketing margin 126 (3.50)
Absolute margin of Village merchant 126 (3.50)
Percentage margin of Village merchant 3.53 (0.09)
Mark up margin of Village merchant 3.83 (0.10)
Total Marketing cost 234 (6.52)
(Figure in parenthesis shows percentage to consumer price or mandi price).

The table 3 shows the market margin and total table that marketing margin of village merchant was
marketing cost of channel-II I.e. Producer-Village 136 Rs/q which comprises marketing cost 179 and
merchant-Mandi (consumer). It is revealed from the total marketing cost was 274 Rs/q.

Table 4: Average costs and margins of various agencies in the marketing of cotton through channel
III. (Producer-Traders-Mandi).
S.N. Particulars/Market functionaries Amount (Rs/q)
(A) Cost incurred by Producer
1 Packaging expenses 12 (0.33)
2 Transportation 35 (0.98)
3 Hammali 10 (0.28)
4 Weighing charges 15 (0.42)
5 Other expenses 25 (0.69)
Sub Total 97 ( 2.70)
Producer sale price/Traders paid 3290 (91.77)
(B) Cost incurred by Traders
6 Packaging expenses 12 (0.33)
7 Transportation 45 (1.26)
8 Hammali 12 (0.33)
247 J. Recent. Adv. Agr., 2014, 2(6): 244-251
 BIRLA ET AL.

9 Weighing charges 15 (0.42)

10 Other expenses 35 (0.98)
Sub total 119 (3.31)
Traders sale price 3585 (100)
Traders margin /Marketing margin 176 (4.90)
Absolute margin of Traders 176 (4.90)
Percentage margin of Traders 4.9 (0.14)
Mark up margin of Traders 5.35 (0.15)
Total Marketing cost 216 (0.62)
(Figure in parenthesis shows percentage to consumer price or mandi price).

The table 4 shows the market margin and total marketing margin of traders was 176 Rs/q which
marketing cost of channel-III i.e. Producer-Traders- comprises marketing cost 119 and total marketing
Mandi (consumer). It is revealed from the table that cost was 216 Rs/q.

Table 6: Average costs and margins of various agencies in the marketing of cotton through channel
IV. (Producer-Village Merchant-Commission Agent-Mandi).
S.N. Particulars/Market functionaries Amount (Rs/Quintal)
(A) Cost incurred by Producer
1 Packaging expenses 12 (0.31)
2 Transportation 35 (0.91)
3 Hammali 10 (0.26)
4 Weighing charges 15 (0.39)
5 Other expenses 25 (0.65)
Sub Total 97 (2.54)
Producer sale price/Village Merchant paid 3310 (86.53)
(B) Cost incurred by Village Merchant paid
Packaging expenses 12 (0.31)
Transportation 95 (2.48)
Hammali 12 (0.31)
Weighing charges 15 (0.39)
Other expenses 45 (1.17)
Sub total 179 (4.68)
Village merchant sale price 3595 (93.98)
Village merchant margin 106 (2.77)
Absolute margin of Village merchant 106 (2.77)
Percentage margin of Village merchant 2.95 (0.07)
Mark up margin of Village merchant 3.20 (0.08)
(C) Cost incurred by commission agent
Packaging cost 12 (0.31)
Transportation 35 (0.91)
Hammali 15 (0.39)
Weighing charges 12 (0.31)
Other expenses 26 (0.68)
Sub total 100 (2.61)
Commission charge 230 (6.01)
Commission agent margin 80 (2.19)
Absolute margin of Commission agent 80 (2.19)
Percentage margin of Commission agent 2.23 (0.05)
248 J. Recent. Adv. Agr., 2014, 2(6): 244-251
 STUDY ON MARKETING OF COTTON IN KHARGONE DISTRICT OF

Mark up margin of Commission agent 2.21 (0.049)

Total Marketing cost 376 (9.83)
Total marketing margin 246 (6.43)
(Figure in parenthesis shows percentage to consumer price or mandi price).

The table 6 shows the market margin of Village
merchant and commission agent. It revealed from
the table that under channel IV. Village merchant
margin was 116 Rs/q and commission agent margin
was Rs 130. Thus it could be concluded that as the
length of marketing channels increases, the cost of
marketing ought to be more i.e. Rs 376. The
ultimate consumer also ends up paying much higher
than that in other channels i.e. 3825 Rs/q.

Table 7: Average costs and margins of various agencies in the marketing of cotton through channel
V. (Producer-Trader-Commission Agent-Mandi).
S.N. Particulars/Market functionaries Amount (Rs/Quintal)
(A) Cost incurred by Producer
1 Packaging expenses 12 (0.31)
2 Transportation 35 (0.92)
3 Hammali 10 (0.26)
4 Weighing charges 15 (0.39)
5 Other expenses 25 (0.65)
Sub Total 97 (2.55)
Producer sale price/Trader purchase price 3300 (86.96)
(B) Cost incurred by Trader paid
Packaging expenses 12 (0.31)
Transportation 75 (1.97)
Hammali 12 (0.31)
Weighing charges 15 (0.39)
Other expenses 45 (1.18)
Sub total 159 (4.19)
Trader sale price 3565 (93.94)
Trader margin 106 (2.79)
Absolute margin of Traders 106 (2.79)
Percentage margin of Traders 2.97 (0.07)
Mark up margin of Traders 3.21 (0.08)
(C) Cost incurred by commission agent
Packaging cost 12 (0.31)
Transportation 35 (0.92)
Hammali 15 (0.39)
Weighing charges 12 (0.31)
Other expenses 26 (0.68)
Sub total 100 (2.60)
Commission charge 230 (6.06)
Commission agent margin 80 (2.21)
Absolute margin of Commission agent 80 (2.21)
Percentage margin of Commission agent 2.24 (0.07)
Mark up margin of Commission agent 2.10 (0.065)
Total Marketing cost 356 (9.38)
Total marketing margin 236 (6.21)
(Figure in parenthesis shows percentage to consumer price or mandi price).
249 J. Recent. Adv. Agr., 2014, 2(6): 244-251
 BIRLA ET AL.

The table7 shows the market margin of traders
and commission agent. It revealed from the table
that under channel V. Traders margin was 106 Rs/q
and commission agent margin was Rs 130. Thus it
could be concluded that as the length of marketing
channels increases, the cost of marketing ought to
be more i.e. Rs 356. The ultimate consumer also
ends up paying higher than that in other three
channels (channel I, channel II and Channel III) i.e.
3795 Rs/q.

Table 8: Marketing efficiency of different marketing channel of cotton.

Marketing channel Value added Marketing cost Marketing efficiency in %
Channel-I _ _ _
Channel-II 305 234 130.34
Channel-III 295 216 136
Channel-IV 465 376 123.67
Channel-V 445 356 125
Average 322 244.4 132

The table 8 shows the marketing efficiency of
different marketing channels. It revealed form the
table under channel III their marketing efficiency
was 136% because only one market intermediaries
involve in this channel fallowed by channel II,
channel V and channel IV i.e. 130.34%, 125% and
123.67% respectively. Thus it could be concluded
that as the length of marketing channels increases
the marketing efficiency is decreases.

Table 9: Price spread for a quintal of cotton through imported marketing channels.
Price spread Marketing channels
I II III IV V
Producer net received 3163 3193 3193 3213 3203
Producer cost 187 77 97 97 97
Village merchant purchase price - 3290 - 3310 -
Village merchants cost - 157 - 179 -
Village merchants margin - 126 - 116 -
Village merchants sale price - 3595 - 3595 -
Traders cost - - 119 - 159
Traders margin - - 176 - 106
Traders purchase price - - 3290 - 3300
Commission agent cost - - - 100 100
Commission agent charge - - - 180 180
Consumers (Mandi ) purchase price 3350 3595 3585 3775 3745
Price spread - 305 295 465 445

The table 9 shows the Price spread of different Conclusion

marketing channels. It revealed form the table under
channel IV their Price spread was 465 because
length of market intermediaries to be more in this
channel fallowed by channel V, channel II and
channel III i.e. 445, 305 and 295 respectively. Thus
it could be concluded that as the length of
marketing channels increases the price spread ought
to be more.
250 J. Recent. Adv. Agr., 2014, 2(6): 244-251
Producer received more net profit in channel IV
(3213Rs/Q), channel V (3203 Rs/Q),channel
II(3193 Rs/Q), channel III(3193 Rs/Q) and channel
I (3163 Rs/Q).Under channel I It was the simplest
marketing channel having no involvement of market
intermediaries in the marketing of cotton as
interaction was directly made between Producers
 STUDY ON MARKETING OF COTTON IN KHARGONE DISTRICT OF

and ultimate consumer, (Mandi) , resulted minimum References

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channels increases, the cost of marketing ought to
be more i.e. Rs 376. The ultimate consumer also
ends up paying much higher than that in other
channels i.e. 3825 Rs/q. Under channel V The table
shows the market margin of traders and commission
agent. It revealed from the table that under channel
V. Traders margin was 106 Rs/q and commission
agent margin was Rs 130. Thus it could be
concluded that as the length of marketing channels
increases, the cost of marketing ought to be more
i.e. Rs 356. The ultimate consumer also ends up
paying higher than that in other three channels
(channel I, channel II and Channel III) i.e. 3795
Rs/q. The maximum quantity of cotton was sold by
the channel I, channel III, channel II, channel IV
and channel V with the 60, 13.33, 11.66, 7.5 and 7.5
percent respectively. The highest marketing
efficiency of different channels were channel III,
channel II, channel V and channel IV with the
136.57, 130.34, 125 and 123.67 percent
respectively. The price spread of different
marketing channels were channel IV, channel V,
channel II and channel III with the 465, 445, 305
and 295 Rs/Q respectively. As the length of
marketing channels become lengthy, the cost of
marketing ought to be more.

251 J. Recent. Adv. Agr., 2014, 2(6): 244-251

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