Professional Documents
Culture Documents
DEFINITION
Market:
‘Market means not a particular market place in which things are bought and sold but the
whole of any region in which buyers and sellers are in such a free intercourse with one another that
the prices of the same goods tend to equality, easily and quickly.’-Cournot
Marketing:
‘Marketing as a process by which goods and services are exchanged and their value is
determined in terms of money prices.’ – H. E. Mitchell
Agricultural Marketing:
According to National Commission on Agriculture – XII Report “Agricultural
marketing is the process which starts with a decision to produce a suitable farm commodity or
product & it involves all aspects of market structure or systems, both functional and institutional,
based on technical and economic considerations and include pre and post harvest operations like
assembling, grading, storage, transportation, and distribution. ”
Peshwas Regime:
External trade: China, Afghanistan and Persia.
Internal trade: Was carried out through water and land
Main commodities: sugar, spices, dry fruits, and food grains.
Trade centers: Poona, Satara, Kolhpur, Nasik, Solapur, Kalyan and Miraj.
Colonial period:
The Colonial Administration converted the traditional payment to the State, in the form of a
proportion of actual produce in kind, into a fixed payment of land revenue in the form of cash.
The land revenue was calculated to be 5% of gross produce per acre in Central Provinces, 7%
in Berar, 7% to 13% in Delhi & Bombay and 20% Gujrat.
Zamindari system was introduced during this period. This all led to debt traps to the poor
farmers.
Brokers and dalals came in to existence between the farmer and the consumer.
Post independence/ modern period:
Five-year plan was introduced:
First five year plan:
Regulated markets were established in Bombay, Madras, Punjab, Hyderabad, Mysore
and Madhya Pradesh where the management of these markets was vested in the committees in which
growers (farmers) were also represented. In this plan the main thrust was laid on cooperative
marketing and its aim was to have minimum 425 regulated markets in India.
Second five year plan:
To recognize the existing system so as to secure for farmer his due share of price paid by
customer and sub serve the needs of planned development.
Total agriculture produce markets were 2500 out of which 725 were regulated markets.
Third five year plan:
Bring remaining markets to regulation, and
Expand grading program for the commodities.
Fourth fie year plan:
Aim to improve agriculture market system and
In interest of producer the measure tasks undertaken were developments of road, market yards
and grading units.
Fifth five year plan:
Development of agriculture marketing through cooperatives. The main thrust here was of
establishing Cooperative Marketing System.
Sixth five year plan:
The main thrust was on
Further expansion of regulated markets in terms of both more markets and more commodities
to be brought under the scope of regulation.
Strength and stream lining the arrangement for enforcement to ensure regulated system of open
auction, trade practices and margins of intermediaries.
Development of rural markets and potential markets.
Seventh five year plan:
Further expansion of regulated markets in terms of area and commodities.
Eighth five year plan:
Strength of marketing infrastructure with special reference to perishable commodities.
1. RURAL CONSUMER:
a. Size of rural consumer population
Majority of the population of India still exist in the Rural Area itself. States like Uttar
Pradesh, Madhya Pradesh, Rajasthan and Kerala have > 80% of the population in the rural areas
only. While, States like Bihar and Orissa still have > 90% in the rural area.
b. Consumer Characteristics:
Low purchasing power
Low standard of living
Low per capita income
Low literacy level
Low economic and social position
Tradition bound community
Religion, culture and even superstition
c. Location Pattern
Urban: Population concentrated in 3200 cities & towns
Rural: Population scattered over 576000 villages.
6300 villages have population more than 5000 persons
More than 55% villages have population of 500 or less people
More than 1.5 lakh or nearly 25% of the villages have population of 200 or less.
Inference: Rural demand is scattered over a large area.
d. Literacy level:
Rural India – 23% literacy as compared with 36% of whole country
In absolute numbers 11.5 crore of literate people are in Rural India compared with 12 crore
in urban India.
Every year 60 lakh is getting added to the literate population of rural India.
e. Rural income:
Evidently, rural prosperity and the discretionary income with the rural consumer
are directly tied with agricultural prosperity because, nearly, 60% of rural income is from
Agriculture.
Inference: Rural Demand is Seasonal and Festival linked.
f. Rural savings:
The commercial and co-operative banks have been marketing the saving habit in the rural areas
for quite some years. 70% of rural households are saving and majority of them belong to salary
earners and self-employees non -farmers.
2. SIZE AND COMPOSITION OF RURAL DEMAND:
Size of Rural market in non-food consumption items has been increasing from Rs. 5000 crores in
1969-70 to Rs. 22000 crores in 1993-94.
(Size of market at current prices)
Composition of demand: Many new products have entered the consumption basket of rural
consumer.
Product categories like cooking utensils, packaged tea, ornament or jewellery, bathing soaps,
washing soaps, detergents, etc.
As per an IMRB study, more than 60% of the villages in India now have shops stocking soaps,
detergents, packaged tea and batteries.
There has also been a rapid growth in consumption of Agri-inputs :
Between 1971 and 1991 consumption of fertilizers grew at an annual compound growth rate of
10%.
Pesticide consumption grew at compounded rate of 12%.
Tractors - 15%.
Pumps and Tube wells – 11%.
No. of consumers
Large is in terms of
Business
2. Heterogeneous Market:
The relative status of the rural areas of different states differs. Parameters on which
they differ are Health and education facilities, nature of facilities, availability of public transport,
electricity, TV transmission, banks, post offices, water supply etc.
IMRB study reveals that an average village in India has 33 development index
points, Kerala’s average Is 88; Bihar’s average is just 22; while MP, Rajasthan and UP are close to
Bihar; and states like Maharashtra, Haryana, Karnataka range between 40 and so.
3. Demand, Seasonal and Agriculture dependent:
The basic occupation of people in Rural Indian is Agriculture and agriculture is
seasonal. Rural people have money only during the harvest period and most of the harvest periods
are celebrated as Festivals in India. Hence, rural demand is not only harvest linked but also festival
linked.
4. Characterized by Great Diversity:
The rural consumers of India are vastly diverse in terms of religious, social, cultural and
linguistic factors.
5. Steady growth despite inhibiting factors:
The market has grown not only in quantitative terms, but qualitatively also. Many new products have
made entry into rural consumer basket.
- At villages
CWC/SWC does not extend their network of warehouses in rural parts. Warehouses
owned by cooperatives provide warehousing service only to their members.
A business firm has to manage with the CWC/SWC n/w, which stops with the nodal
points, or it has to establish its own depots or stock points run by its stockiest / distributors.
iii. Communication Problems:
Communication infrastructure, consisting of posts or telegraph and telephones, is quite inadequate in
rural areas.
Cost-service dilemma –
Maintaining the required service in the delivery of the products at the retail level becomes very
difficult. At the same time, physical distribution costs gets escalated with 80% of the total rural
consumers living in the less than 1000 people category of villages. It means higher costs of
transportation; higher inventory carrying costs and transit or storage losses.
Consequently, the total distribution per unit is higher by as much as 50 % on an average in the rural
market, as compared to the urban market. Some companies have fared two and a half times increase
in the cost of distribution in rural areas compared to urban areas.
Solutions / Firms cope with Physical Distribution:
1. The Firm can share Physical Distribution responsibility with its stockists or clearing – cum –
forwarding agents:
With a view to keeping the costs low, some of the firms try out remote control marketing –
simply consigning the goods and retiring the bills through banks – unfavourable for the long
term.
Instead, the firms have a network of stockists or c & f agents at the strategic locations for
facilitating Physical Distribution of its products in the rural areas.
Advantage – The costs of physical distribution can be shared by the firm and the stockiest.
2. Combining different Modes o Transport may be Advantageous:
o The system of rail-cum-trucks for long distance movement;
o Trucks for medium / short distance movement;
o Delivery vans and bullock carts for local haulage;
o Water transport.
Advantages – Bullock carts are cheaper, they are available in plenty and are ideal for rural
roads.
3. Company Delivery Vans:
Companies like HLL, Tomco, Brooke Bond-Lipton and ITC use delivery vans. These vans
take the products to the retail shops in every nook and corner of the rural market. It enables
the firm to establish direct salescontact with thousands of rural consumers, it also helps the
firm in the sales promotion.
Disadvantages: the cost of operating such vans is high.
This can work only if the market / area assures business substantial enough to
cover such costs.
4. Syndicated Distribution:
The firms come together and encourage an independent agency to operate such delivery
vans with a view to hiring its service. The delivery vans here becomes a syndicated service.
II. Channel Management in the Rural Markets:
i. Multiple tiers, High costs and Administrative Problem:
Rural Consumer
ii. Scope For Manufacturers’ Own Outlets Limited, Greater Dependence on Dealers
Inescapable-
Dependence of the firm on intermediaries is very much enhanced.
Control is mostly indirect.
iii. Non Availability of Dealers:
Even if the firm is willing to start from scratch and try out rank newcomers, the choice of
candidates is really limited.
iv. Poor Viability of Retail Outlets:
Manufacturer incurs additional expenses on distribution and still the retail outlets find that the
business is unremunerated to them.
v. Inadequate Bank Facilities:
Rural outlets need banking support for three important purposes:
To facilitate remittances to principals and to get fast replenishment of stocks
To receive supplies through bank (retiring documents with the bank)
To facilitate securing credit from banks.
vi. Inadequate Credit Facilities from Banks:
The rural outlets are unable to carry adequate stocks due to lack of credit facilities. They are
unable to extend credit to their customers. And the vicious circle of lack of credit facilities
leading to inadequate stocking or loss of business finally resulting in poor viability of outlets
gets perpetuated.
Solutions:
The Existing Market Structure:
Indian rural market is composed of 22,000 primary rural markets and 20 lakh retail sales outlets of
which nearly one lakh are FPS (Fair Price Shops) of the public Distribution System (PDS). One
retail shop serves on average 60-70 families in the rural areas.
The structure involves stock points in feeder Towns to service. These retail outlets at the village
level. The stock points belong to either the manufacturer or the marketer / distributor for the area.
The Available Channel Choices:
Private shops- FPS
Co-operative Societies – Village Shandy/ Weekly markets.
The co-operative societies are mainly concerned with distribution of agricultural inputs are the FPS
with distribution of essential commodities. The village shandy is widely used in rural marketing, but
its role is limited in marketing branded products.
The Private Village Shops:
They are the main channel in the rural market for a large variety of consumer products; they are also
the cheapest and the most convenient channel to align with.
According to the Operations Research Group (ORG) there are 2.02 sales outlets in rural India.
It is quite natural that firms seeking an effective presence in rural marketing willingly embrace the
private village shops. It has to select its outlets from out of existing shopkeepers or select a few
fresher & appoint them as the outlets. The choices are usually confined to the following categories:-
- Existing traditional private shops.
- Moneylenders willing to branch off to trade.
- Land owners willing to branch off to trade.
- Educated unemployed persons.
Satellite Distribution:
The firm appoints stockiest in feeder tours. They take care of financing of goods, warehousing of
goods and sub-distribution of goods in the area covered by the feeder town. The firm also appoints a
no. of retailers in and around the feeder towns and attaches them to the stockiest. The firm supplies
the goods to the stockiest either on cash or credit or on consignment basis. The stockiest take care of
the sub-distribution job or the terms or conditions determined by the firm.
Over a period of time, some retailers grow in terms of business turnover. If such retail
points also happen to be transportation centers within the feeder town area, the firm elevates them as
stockiest. The area of operation of the original stockiest shrinks in this process, but care is taken to
see that his volume of business does not shrink. This is achieved, in practice, on account of the
growth in demand & deeper market penetration. The process continues as long as the market keeps
expanding.
Advantages:
It helps & facilitates market penetration in the interiors of rural market.
Solutions
1. Selecting the media mix:
Evidently, in the rural context the firm has to choose a combination of formal and non-formal
media.
Formal / Organized : TV, Cinema, Press, Other print media, direct mail, radio, point of purchase
(Pops), outdoors, etc.
Non-formal / rural Specific Media:
A V vans / Publicity vans, Dance-dramas, Puppet Shows, rural specific art forms like Harikatha and
Villupatu performed at village melas and temple festivals, demonstrations, study classes, mike
announcements, processions, caparisoned elephants, decorated bullocks carts carrying ad panels,
music records, house to house campaigns by special promotion squads, information centers on
companies products.
TV: 77 % of villages in India now receive TV transmission and 27 % of all rural people actual watch
TV.
Radio; is a well established medium in rural areas while radio as a medium cannot match TV in
potentiality or effectiveness, radio does have a major role in rural communication.
Cinema: 29 % of all rural people do see cinema as a matter of regular lifestyle or habit. Short feature
films with disguised advertisement. Messages, direct advertisement, films or documentaries, that
combine knowledge or advertisement can be employed for rural communication.
Out Doors: Hoardings, wall paintings, illuminations and other displays in rural areas.
Pops: More than written words, symbols, pictures and colours must be used.
A V vans: Films can exhibit its films or other A-V presentations such as slide shows, sound or sight
presentations, puppet shows, etc. The van is a comprehensive mobile promotion station at the
exclusive command of the concerned firm. Portable exhibition kits can be carried in the vans.
Disadvantage: The cost is high
Syndicated AV vans: Firms which cannot effort to operate publicity vans of their own utilize the
syndicated AV van service offered independent agencies.
2. Communication for the Rural Market has to be uniquely assembled and delivered:
The theme, the message, the copy, the language or the delivery must match the rural context.
In rural marketing, usually a greater time lag is involved between introduction of a product and its
economic size sale. This is the rural buyer’s adoption process is usually more time consuming.
METHODS OF SALE:
1. Under cover of a cloth (Hatha system):
The prices of the produce are settled by the buyer and the commission agent of the seller by
pressing/twisting the fingers of each other under cover of a piece of cloth. Code symbols are
associated with the twisting of the fingers and traders are familiar with these. The negotiations in this
manner continue till a final price is settled. When all the buyers have given their offers, the name and
the offer price of the highest bidder is announced to the seller by the c.a.
Disadvantage: Provides opportunities for cheating the seller this system has been abolished by the
government.
2. Private Negotiations:
Unregulated markets. The individual buyers come to the shops of commission agent at a time
convenient to the latter and offer price for the produce which, they think are appropriate after the
inspection of the sample. If the price is accepted the commission agent conveys the decision to the
seller and the produce is given after it has been weighed, to the buyer. In village, private negotiations
take place directly between the buyer and seller.
Disadvantage: Time consuming, slow, not suitable when either large quantities have to be sold or
a large number of buyers exist in the market.
Advantage: Seller gets good price, for buyers are not aware of the price offered by other buyers.
3. Quotations on sample, taken by commission agent:
The commission agent takes the sample of the produce to the shops of the buyer. The price is
offered, based on the sample, by the prospective buyers. The commission agent makes a number of
rounds to prospective buyers until none is ready to bid a higher price then the one offered by a
particular buyer. The produce is given to highest bidder.
4. Dara Sale Method:
The produce is mixed and then sold as one lot.
Advantage: Within a short time a large number of lots are sold off.
Disadvantage: produce of good quality and one of poor quality fetch same price. Therefore, loss
of incentive to the farmers to produce quality goods.
5. Moghum Sale Method:
The sale of produce is effected on the basis of a verbal understanding between the buyer and the
seller without any pre-settlement of price but on the distinct understanding that the price of the
produce to be paid by the buyer to the seller will be the one as prevailing in the market on that day or
at that rate at which other sellers of the village sold the produce. This method is common in villages,
for farmers are indebted to the local moneylenders.
6. Open Auction Method:
The prospective buyers gather at the shop of the commission agent around the heap of the produce,
examine it and offer bids loudly. The produce is given to the highest bidder after taking consent of
the seller farmer. In most of regulated markets the sale of produce is permissible only by this
method.
Advantage:
1. Fair dealing to all the parties.
2. Auction serves as meeting place for supply of and demand of the goods.
3. It disposes of the market supply promptly.
4. The payment of the price of goods is made immediately after the sale if an auction has been
completed.
Disadvantages:
1. Requires more time for both buyer and seller have to wait for the day and rime of auction.
2. In big market centers, especially in peak marketing season the time allotted for auction is short.
As a result sellers may receive a low price.
3. Buyers sometimes join hands.
4. Auction leads to a buyer market for buyers have full information about the supply of and demand
for the product.
3 types of open auctions:
a. Phar system of open auction:
One bid is given for all the lots in a particular shop and all the lots are sold at that price. One extreme
case of this method is when one bid is given for the product in the whole market.
b. Random Bid system of open auction:
The commission agent invites a few buyers when the produce is brought to his shop for sale. All the
prospective buyers are not informed. As a result competition is poor.
c. Rostev Bid system of open auction:
The bidding starts from a point in the market at a notified time about which the prospective buyers
are given information in advance. The bidding party after the auction the produce at one shop
moves to the next in a clockwise or anti clockwise directions till the auction of the produce at all the
shops is over or the scheduled auction time expires. The auction is supervised by the auction clerk or
the person nominated by the market committee.
7. Close Tender System:
The produce displayed at the shop of the commission agent is allotted lot numbers. The prospective
buyers visit the shops inspect the lots offer a price for the lot which they want to purchase on a slip
of paper, and deposit the slip in a sealed box by buying at the commission agent’s shop. When the
auction time is over the slips are arranged according to the lot number and the highest bidder is
informed by the commission agent that his bid has been accepted and that he should take delivery of
the produce.
Advantage: Time saving, involves minimum physical labour, no possibility of collision among the
buyers. Regulated markets in Tamilnadu have close tender system method.
The producer’s surplus is the quantity of produce, which is, or can be, made
available by the farmers to the non-farm population.
The producer’s surplus is of two types:
1) Marketable Surplus: - is that quantity of the produce, which can be made available to the non-
farm population of the country. The marketable surplus is the residual left with the producer-
farmer after meeting his requirements, for family consumption, farm need, for seeds, and feed
for cattle, payment to Labour in kind, payment to artisans – carpenter, blacksmith, potter and
mechanic – payment to the landlord as rent, and social and religious payments in kind. MS1=P-
C; where MS1= Marketable surplus, P= Total production and C= Total requirements.
2) Marketed Surplus: - is that quantity of produce, which the producer-farmer actually sells in the
market, irrespective of his requirements for family consumption, farm needs and other
payments.
Bansil writes that there is only one item- marketable surplus, which may be defined
subjectively and objectively.
Subjectively, the term refers to theoretical surplus available for sale with the producer-farmer
after he has met his own genuine consumption requirements and the requirements of his family,
the payment of wages in kind, his feed and need requirements; and his social and religious
payments.
Objectively, the marketed surplus is the total quantity of arrivals in the market out of the new
crop.
Limitations: a) Limited geographic coverage
b) Small and marginal farmers
c) Inconvenience in borrowing
Relationship between marketed and marketable surplus:
Marketed surplus can be <, >, or = Marketable surplus
1) Marketed Surplus > Marketable surplus: - When the farmers retain a smaller quantity of the
crop than his actual requirements for family and farm needs. This is true especially of small
and marginal farmers, where need for cash is immediate. This situation of selling more than the
marketable surplus is termed as distress or forced sale.
2) Marketed Surplus < Marketable Surplus: - When the farmer retains some of the surplus
produce. This situation holds true under the following conditions:
a) Large farmers generally sell less than the marketable surplus, because of their better
retention capacity. They retain extra produce in the hope that they would get a higher
price in the later period.
b) Farmers may distribute the crop for another crop, either for family consumption purpose
or for feeding their livestock, because of the variation in the prices. With the fall in price
of the related to a competing crop, the farmers may consume more of the 1st crop and less
of the 2nd crop.
3) Marketed Surplus = Marketable Surplus: - When the farmer retains neither more nor less than
his requirements. This holds true for perishable commodities and of the average farmers
MARKETING AGENCIES
1. Producers
2. Middlemen:
i) Merchant Middlemen- Wholesalers, Retailers, Beoparies.
ii) Agent Middlemen- Commission Agents, Arahatias, Brokers.
iii) Speculative Middlemen- Those middlemen who take title to the product with a view to
making a profit on it. They specialise in risk-taking.
iv)Facilitative Middlemen- some middlemen do not buy and sell directly but assist in the
marketing process. E.g. Hamals/Labourers, Weighmen/Tolas, Grades, Transport Agency,
Communication Agencies, Advertising Agencies, etc.
1) Beoparis:
Village Beoparis- have their small establishments in villages. They purchase the produce of
those who have either taken finance from them or those who are not able to go to the market.
Village beoparis also supply essential consumption goods to the farmers. They act as financiers
of poor farmers. They often visit nearby markets or keep in touch with the prevailing prices.
They either sell the collected produce in the nearby market or retain it for sale at a later date in
the village itself.
Itinerant Beopari -is petty merchants who move from village to village, and directly purchase
the produce from the cultivaters. They transport it to the nearby primary or secondary market
and it there.
(ii) Arahatias/Commision Agents-
Kaccha Arahatias – primarily act for the sellers, including farmers. They sometimes
provide advance money to farmers or itinevant beoparies/traders on condition that the produce
will be disposed of through them. They charge arahatias/commission in addition to the normal
rate of interest on the money they pay in advance.
Pacca Arahatias- act on behalf of the traders in the consuming market. The processors
(vice millers, oil millers or cotton/jute dealers) and big wholesalers in the consuming markets
employ Pacca arahatias as their agents for the purchase of a specified quantity of goods within
a given price range.
MARKETING FINANCE
Agricultural credit is of two types:
1. Production credit 2.Consumption credit
1. Production credit:
(i) Short term: - 15 to 18 months
Loans to meet daily working capital requirements of
Farmers’ purchase of
Inputs, payment of wages, hike charges of machinery or
Tools, electricity charges etc.
(a) Cash component
(b) Kind component: Co-operative marketing societies.
(ii) Medium term: - Survey committee 15 months to 5 years.
NABARD 18 months’ to7 years.
Creating capital assets.
Purchase of livestock, agricultural machinery, equipment etc.
Only a part of medium term loan is expected to be ventured in current
production. The remaining is carried forward over the period of 7 years.
(iii)Long term: - 5/7 years to 20/25 years.
Land fencing, mechanization, construction of farm
Houses, storage facilities etc.
2. Consumption credit:
It is basically for survival of farm families.
Sources of agricultural credit:
a) Co-operative credit:
i) Primary co—operative credit: Short term
ii) C-operative Land Development Bank: Medium term
Limitations:
i) Limited geographic coverage
ii) Small and marginal farmers
iii) Inconvenience in borrowing
IV) Huge over dues
V) Linked with ownership landholding
b) RBI:
Appointed AIRCSC, recommended:
i) The National Agri. Credit (Long term operations) fund;
ii) The National Agri. Credit (Stabilization fund)
RBI issues guidelines:
Margins and security
Credit norms finance: 30:70 cash: kind
Recovery or default
c) SBI:
It provides financial assistance to marketing for processing co-operatives as well as for
co-operative sugar factories, LDB’s, industrial co-operatives etc.
d) Commercial Banks:
Direct finance is granted for agricultural operations for short and medium periods.
Indirect finance is granted by providing advances for distribution of fertilizers or other inputs. These
banks also finance for operation of FCI, State Government and their agencies for procurement.
e) Agricultural Refinance:
Parliament established Devt Corporation: 1963
To co-ordinate, guide and assist long-term finance lending institution.
Helping in reduction of regional imbalances.
Reduction of regional disparities within states.
Economic upliftment of weaker section.
f) R.R.B: (Features)
Rural Based
Cater to the needs of backward areas.
Authorized capital structure: Authorized Capital- Rs. 1 Crore, Paid-up capital- Rs 25 Lakhs,
Share Capital Ratio – 50:15:35 i.e. Govt: Own Deposits: Sponsoring Commercial Bank.
Problems:
Problems in organization (Multi-agency control)
Increasing Losses.
Recovery Problems.
Problems in Management.
g) NABARD: Apex Body, which looks after the financial needs of agricultural and rural
development.
h) Government Finance:
Takkavi loans to release distress caused by the draughts, floods and the other natural calamities.
TO assist the farmers to overcome emergencies.
Land Improvement loans Act 1883 – Long-term loans.
Agriculturists’ Loans Act 1884 – Short-term loans.
Please Note
The material being circulated is just my personal copy any addition or deletion is left to the
discretion of the concerned faculty. This notes is neither a text book nor a guide, but just a reference
material.
With Regards,
Mrs. Malini Nagabhushan
Satellite Distribution
A concept that has come to be known as satellite distribution can be tried in developing a
distribution channel in the rural market. Under this system, to start with, the firm appoints stockists
in feeder towns. They take care of financing goods, warehousing of goods and sub- distribution of
goods in the area covered by the feeder town. The firm also appoints a number of retailers in and
around the feeder towns and attaches them to the stockists. The firm supplies the goods to the
stockists either on cash or on credit or on consignment basis. The stockists take care of the sub-
distribution job on the terms and conditions determined by the firm.
Stockist
Feedeer Town
The sales volume of the retailers will vary depending on the potential of the area covered and the
capacity of the dealer concerned. Over a period of time, some retailers grow in terms of business
turnover. If such retail points also happen to be transportation centres within the feeder town area,
the firm elevates them as stockists. The area of operation of the original stockist shrinks in this
process, but care is taken to see that his, volume of business does not shrink. This is achieved, in
practice, on account of the growth in demand and deeper market penetration. If twenty retailers
operate in the network of an original stockist, five or six of them get elevated over a period of time
as stockists. Out of the retailers some remain attached to the original stockist and others are attached
to the new stockists, depending on location, service convenience and other relevant factors. The
process continues as long as the market keeps expanding just like the second-generation stockists, a
set of third generation stockists get established in course of time. And at any point of time, enough
retail points invariably hover around a particular stockist. Hence the name satellite distribution. The
main advantage of this system is that it facilitates market penetration in the interiors of the rural
market. However, the firm must ensure that in the process, the motivation of the earlier generation
stockists is not destroyed due to overzealous and premature elevation of the retailers into stockists.
Note: This can be asked for 2 marks. You can also use this to explain physical distribution strategies
to be adopted by companies if the question is asked or use it in case study.
Note: Each of these markets can be asked for 02 marks. Also the differences among them can come
for 02 marks.
Note: Apart from above mentioned classification, some more classifications can be done into
agricultural markets, they are not mentioned in the syllabus, just have a look at it.
Classification of Markets
1. Location:
Village Markets – Located in small villages, major transaction takes place among buyers
and sellers of a village.
Primary Wholesale Market
Secondary Wholesale
Terminal Markets
Sea board Markets – Located near sea shore, meant for import / export of goods.
2. Area / Coverage:
Local / Village Markets – Buying and selling activities are confined among buyers and
sellers drawn from same village or nearby villages, mostly perishable commodities in
small lots. Ex: fresh milk, vegetables
Regional Markets – buyers and sellers for commodities are drawn from a larger area. Ex:
food grains
National Market - buyers and sellers are at national level. Ex: dural commodities like
jute, tea
World Market - buyers and sellers are drawn from whole world. Ex: coffee, gold, silver,
cotton
3. Time Span:
Short period Market – few hours, products of highly perishable nature. Ex: fish, milk
Long Period Markets – larger period, less perishable. Ex: food grains, oilseeds
Secular Markets – permanent nature. Ex: manufacture goods, timber
4. Volume of Transaction:
Wholesale Markets – Commodities are bought and sold in large quantities / bulk.
Transaction is between traders.
Retail Markets – Commodities are bought and sold as per consumer requirements.
5. Nature of Transaction:
c. Spot or Cash Market: A market in which goods are exchanged for money immediately after the
sale.
d. Forward Market: Purchase and sale of commodities takes place at time ‘t’ but the exchange of
commodity takes place on some specific date in future i.e. ‘t+1’.
6. No of Commodities:
c. General Market: All types of commodities such as food grains, oilseed, fibre crops etc. are bought
and sold.
d. Specialised Market: Transactions take place only in one or two commodities e.g. food grains
market, cotton markets, mango markets.
7. Degree of competition:
c. Perfect Market: Large number of buyers and sellers.
d. Imperfect Market: Monopoly, Duopoly, Oligopoly, Monopolistic competition large no of
sellers deal in heterogeneous and differentiated form of a commodity.
8. Nature of Commodities:
d. Commodity Market: deals in goods and raw materials such as wheat, barley, cotton etc.
e. Capital Market: deals with bonds, shares and securities.
f. Service Market: deals in providing service e.g. consultancy
9. Stage of marketing:
c. Producing market: Those markets, which mainly assemble the commodities for future distribution
to other markets. Located in producing areas.
d. Consuming Markets: Which collect the produce for final disposal to the consuming population
located in areas where production is inadequate or in thickly populated urban centers.
Marketing Agencies
A very large number of intermediaries have come to exist between producer and consumers of
these the major ones are:
1. Village Beopari is by far the most usual purchaser of the produce, who deals in his individual
capacity. They purchase the produce of those who have either taken finance from them or those
who are not able to go to the market. Village beoparis also supply essential consumption goods
to the farmers. They act as financiers of poor farmers. They often visit nearby markets or keep
in touch with the prevailing prices. They either sell the collected produce in the nearby market
or retain it for sale at a later date in the village itself. He usually collects the produce from the
villages and hats and brings it to the wholesale markets and from there it reaches the
consumers. Beoparies generally purchase when prices are low and sell it when they are high.
2. Itinerant Beopari are petty merchants who move from village to village, collects the produce
from the cultivaters and takes it to the nearest market, transport it to the nearby primary or
secondary market. They usually purchase at cheaper rates owing to the lack of competition
from other beoparies.
3. Tola or Weigh men also to some extent function as intermediaries. Technically speaking they
are supposed to only weigh the produce and charge a commission for certifying its weight. But
it is more than often seen that these tola also arrange the sale of the producer by carrying
samples to dealers in towns. They obliviously charge a commission for this and also ‘Tolai’.
4. Local landlords and cultivators, especially the medium size holders also sell the produce
directly to the village beoparies or town dealers visiting the village markets.
5. Arhatiyas (Brokers or Commission Agents) : They usually occupy a very important position
among all the intermediaries. They are of 2 types:
a. Kutcha arhatiya mainly concentrates on the work of collecting and assembling the
produce. Primarily act for the sellers, including farmers. They sometimes provide advance money to
farmers or itinevant beoparies/traders on condition that the produce will be disposed of through
them. They charge arahatias/commission in addition to the normal rate of interest on the money they
pay in advance.
b. Pucca arhatiya on the other hand arranges for the sale and distribution of the produce.
Act on behalf of the traders in the consuming market. The processors (vice millers, oil millers
or cotton/jute dealers) and big wholesalers in the consuming markets employ Pacca arahatias as their
agents for the purchase of a specified quantity of goods within a given price range.
Both work together in tandem as master and apprentice. They also advance loans to the village
merchants and traders on the condition that the produce will be sold to them or through them.
Note: This can come for 2 marks or can form a part of 10 marks question
Methods of Sale
Under cover of a cloth (Hatha system):
The prices of the produce are settled by the buyer and the commission agent of the seller by
pressing/twisting the fingers of each other under cover of a piece of cloth. Code symbols are
associated with the twisting of the fingers and traders are familiar with these. The negotiations in this
manner continue till a final price is settled. When all the buyers have given their offers, the name and
the offer price of the highest bidder is announced to the seller by the commission agent.
Disadvantage: Provides opportunities for cheating the seller as he is unaware of the price offered,
only the commission agent and the ultimate buyer who really knows the negotiated price. This
system has been abolished by the government.
Private Negotiations:
Unregulated markets. The individual buyers come to the shops of commission agent at a time
convenient to the latter and offer price for the produce which, they think are appropriate after the
inspection of the sample. If the price is accepted the commission agent conveys the decision to the
seller and the produce is given after it has been weighed, to the buyer. In village, private negotiations
take place directly between the buyer and seller.
Disadvantage: Time consuming, slow, not suitable when either large quantities have to be sold or
a large number of buyers exist in the market.
Advantage: Seller gets good price, for buyers are not aware of the price offered by other buyers.
Note: Either each system can be asked or distinction among 2 system can be asked for 02 marks.
Methods of sale full question can appear for 10 marks.
Some of these charges are highly outlandish like the farmer has to pay for various charities,
which he would be otherwise not inclined to pay for. Also charges such as ‘Shagirdi’ where the seller
is supposed to pay fro the Arhatiya’s sweepers and water carriers are uncalled for. Only some of
these charges are justifiable. Among these are:
Arhat or Commission
Hamali
Tulai
Charges for sewing
Any deductions in the name of charity in any kind are unwarranted. Similarly payments to the
muneem or the apprentice of the Arhatya are uncalled for. Especially when the principle arhatya gets
full commission for the services performed by him. Again there is no case for claming allowances
for quality and weight where the produce is subject to thorough examination by the buyer before it is
offered for sale. Hence in the light of numerous unwanted deduction and high market charges, it is
suggested that markets be regulated.
5. Malpractices of Middlemen:
Due to improper market structure traders or middlemen have become all powerful. They have
bent the rules in such a way that it is possible for them to cheat and get away. Moreover the
unorganized producers and the market machinery are no match to the powerful trader legally. Even
in regulated government markets middlemen resort to malpractices. Some of the malpractices
commonly resorted to by middlemen are as follows:
a) Scales and weights are manipulated against the seller. This practice is rendered easier by the
fact that there are no standardised weights and measures nor any provision for regular
inspection.
b) There are all kinds of arbitrary deductions for religious and charitable purposes and for other
objects. The burden falls entirely on the seller and he has no effective means of protest against
such practice.
c) Large quantities are taken away from the produce of the cultivator as bangi or sample.
d) Bargains between the agent who acts for the seller and the one who negotiates on behalf of the
buyers are made secretly under a cloth so that the seller remains ignorant of what actually takes
place.
e) The broker whom the cultivator employs is more likely to favour the purchaser with whom he
comes into contact almost daily than the seller whom he only sees very occasionally. This
tendency becomes all the more pronounced when, as it frequently happens, the same works for
both parties.
f) When disputes arise the cultivator has no means of safeguarding his interest.
g) Differential prices for the same grade of produce
h) Levying unfair charges for basic services
i) Restrictive trade practices
j) Arbitrary deductions on account of alleged adulteration and inferior quality
Some of the practices obtaining in the market amount to nothing less than common theft.
6. Absence of Grading and Standardization:
Although the agricultural produce (grading and marketing) act was passed in 1937 even today
in most unregulated markets the practice of grading is unheard of. Whatever limited grading is
accomplished is technical in character i.e., commercial grading, which can be understood by the lay
farmer, is almost completely absent. If sales of agricultural produce at a higher price are to be
augmented without personal physical inspection of every lot by open auction in the regulated
markets, commercial standardization and grading are essential. Also if lots are to bulk through cheap
and efficient warehousing and transport, standardization and grading becomes imperative.
Absence of grading and standardising agricultural produce is another defect. The reputation of
Indian agricultural producers in the world’s market is low.
There are no standard grades commonly accepted throughout India even for such important
commodities as rice and wheat. In the absence of certain standard grades accepted by the whole
trade as the basis for commercial transaction, attempt of individual producers merely secures the
ordinary market rate. In fact the present practice of dara sales, wherein heaps of both good and bad
produce are sold together as one lot common in most markets, gives a premium to the inefficient
producer as the good produce is made to carry along with it the poor stuff also. The practice of
selling un-graded products of mixed quality has naturally reduced the reputation of Indian
agricultural produce in the world markets.
7. Inadequate storage facilities:
In most of the villages ryots store their produce in pits or receptacles variously known as
kudurus, kallis or thekkas. In the upcountry markets produce is stored in kothis or kuthalas (earthen
cylinders) and khattis (pits in ground lined with mud and straw) and in a few centres in pakka khattis
made of concrete. But that there is a general inadequacy of good storage facilities both in rural and
urban areas can hardly be denied. The indigenous methods of storage adopted in the villages as well
as in most of the upcountry markets do not adequately protect the produce from dampness, weevils
and other vermin’s.
The losses due to inadequate storage have been estimated to range from 1.5% (Food grains
Investigation Committee) to 2% to 2.5% (The Prices Sub-Committee) to 5% (as estimated by Dr.
Baljeet Singh). A recent estimate puts the loss at from 5 to 15% by weight of the production and it is
due to defective stage. This in turn is due to moisture absorption, excessive heat, insects, mites,
rodents and birds. Even at 5% the loss of cereals, millets, spices, oilseeds, jute, cotton, tobacco
would come to over Rs. 4,000 million every year in India.
With the change of temperature, grains loose weight. When wheat is harvested, it contains
some moisture, which evaporates in summer and is regained during the monsoon month. Dampness
raises the moisture content of the grain thereby making it soft and therefore susceptible to insects.
The damage is greater when the grain is stored in kachacha underground pits where the sub-soil
water table ranges from 8 to 10 feet below the surface.
It is quite obvious that the food grains stocks held by co-operative societies, grain merchants
and even by farmers are not kept in proper conditions. Therefore, the losses are substantially larger.
In addition there are crops like jawar, pulses and maize, which are infested by stored grain pests even
before harvest. The insects form inside the kernel and are visible until the threshed grains are put in
storage. By the time the infection is detected, internal damage to grain becomes very great.
Losses due to rodents are also very great. The rats start damaging the grain right from the field
to the time it is consumed. According to Dr. P. J. Deoras, there are approximately 2400 million rats
in India. He has estimated that about 20 rats could consume the quantity of food sufficient for one
person. On a gross estimate this would mean that rats are spoiling at least one fifth of the grain
produced. Calculating on this basis of a tonne of grain being consumed by 100 rats per year, the
total consumption by the rat population of 2,400 rnillions would amount to about 24 in. tons. In
terms of money this would come to about Rs. 18,000 million when calculated at the rate of Rs. 750
per tonne.
The nature of damage studied by Dr. Deoras is as follows:-
(i) It has been noticed that apart from damaging crops and food grains in storage, rats carry food
grains to their nests in burrows. As much as 15 kgs. of grain have been recovered while digging
out nests from about 30 rats burrows.
(ii) The rats damage 10 times the quantity of food material they eat. They would execrate about
86 faecal pellets in 24 hours, which would get mixed up with foodgrains.
(iii) They void 1½ gallons of urine during the year, and further contaminate grain by shedding
thousands of hair from their bodies.
(iv) In Bombay as many as 9,000 bags of foodgrains are auctioned as they are unfit for human
consumption because they are damaged by rats in yards and godowns.
(v) The small mice in the paddy fields have been found to climb up to the paddy plant and eat
every grain while the big field rat usually cuts the whole plant.
Besides rats, “Insects, beetles and moths are prolific and each couple lay anywhere between
100 to 400 eggs and their lifecycle is completed in 4 to 6 months. It has been estimated that
weevilled grain in the case of wheat varies from 1 to 2% or more, peas one to 5% or more and arhar
upto 2%.”
8. Underdeveloped Transport System:
Transport plays a very important role in the marketing of the agricultural produce. A smooth
and efficient system of transport from the farmer’s village to the consumer door goes a long way in
not only helping the agriculturalist to bring his produce to the market without much difficulty but
also helping the consumer in securing his needs with a reasonable time and cost.
In India with her vast distances, the existing means of transport are woefully inadequate.
“Communications from the field to the village andfrom village to the mandi are often extremely
poor and defective. Bad roads, lanes and tracts connecting villages with the markets not only add to
the loss of transportation and aggravate the strain on bullocks and other pack animals, but also lead
to the multiplication of small dealers and intermediaries. They also restrict market by hindering
cheap and rapid movement of agricultural produce.” Thus the rural transport network is very bad.
The railways established by the British have not been developed further and hence are inadequate by
today’s standards. Bad roads lead to delay in supply and also due to the time lag the produce may be
damaged.
The bullock carts do most of the transport in rural areas. Some of the agricultural produce
needs special storage systems even while being transported. Carts both pulled by bullocks or tractors
cannot provide these kinds of facilities. Hence it is very much needed that an initiative be taken to
improve transportation facilities.
9. Lack of Marketing Information:
The importance of an efficient marketing new service particularly for the producer-seller in
regulated markets hardly needs any emphasis. This news service acquaints him with the ruling price
and thereby strengthens his bargaining power and position. The price information if available grade
wise helps him to know the approximate returns he is likely to get for his produce. It also induces
him to produce better quality crops and thus raise the standard of farming. Generally the producer-
sellers have to depend upon oral information about market conditions, market arrivals, demand
conditions, ruling prices and market trends etc. that reach them through village sahukar or
commission agent or their own neighbors.
Absence of market intelligence as to prices is another defect. The villagers have practically no
contact with the outside world nor are they in touch with the trend of market prices and they mostly
depend on hearsay reports received from the village bane who is not at all interested in supplying
them the correct information as to prices obtaining in the wholesale market. Even in cases where
information as to prices is available prices are not comparable on account of:
1. the lack of standard grades acceptable to the whole country
2. variation in the amount of refractions allowed and the terms of standard contracts obtaining in
different markets
3. inaccuracy of information supplied by various agencies concerned
4. variation in the price quotations give by the local and Central government
5. The considerable variations in weights and measures used in several markets in the absence of
standardisation of weights and measures.
10. Cost of Borrowing:
The most important requirement of growers to facilitate their production activities is credit.
Though cooperative credit has been increasingly spreading its fold in the agricultural sector it is still
far from occupying a pre-dominant position.
The cultivator is financed by the village sahukar-cum-trader who is in his own turn financed by
arhatiya and the indigenous banker. In the absence of warehouses and the lack of facilities for
making advances against the security of warehouse receipts there cannot be any system of cheap
finance against security of goods. There is at present no proper link between indigenous bankers or
commercial bankers and The Reserve Bank of India. The various marketing agents borrow funds at
a high rate of interest. This naturally leads to a rise in the cost of marketing with the ultimate result
that the share of the price received by the producer is correspondingly reduced.
The case for borrowing private finance and the flexibility in the repayment make it attractive
despite many malpractices. Through various surveys it has been proved that though government has
taken active measures to provide cheap institutional finance a large majority of farmers are
dependent on private moneylenders and commission agents in obtaining credit. It may be noted here
that the activities of traders and commission agents through money lending curtail the freedom of the
grower-seller to dispose off their produce profitability in market yards and make them permanently
indebted. The official machinery has to realize the gravity of the situation and take effective steps to
realize the poor and innocent agriculturist from the clutches of the moneylenders cum commission
agents.
11. Multiplicity of Weights and Measures
Till recently, there had been an absurd multiplicity of weights and measures in India. The
chaotic state of weights and measures in India has been more clearly brought out in all the reports
published by the Central marketing staff. Weights made of sticks, stones and bits of old iron are
common feature in the markets and villages.
This multiplicity of weights and measures employed in India has deplorable effects in several
ways.
Firstly, it affords greater opportunities for cheating the ignorant cultivator and unscrupulous
dealers readily avail themselves of such opportunities.
Secondly, it gives rise to needless complications in practice as between one market and
another, which is by no means conducive to the interests of trade and commerce.
Thirdly, for the collection of data on price movements the relative level of prices in different
regions, the volume of agricultural production, etc. lack of standard weights and measures is bound
to be a great handicap and seriously affects the accuracy of statistical calculation.
The multiplicity of weights and measures make supervision difficult and afford greater
opportunities for cheating the producers, creates an element of uncertainty in trade and renders fraud
on the part of retailers as easy as it is profitable.
The report of the Marketing Sub-Committee has rightly observed that, “Deliberate
malpractices, ignorance and carelessness have all combined to make the consumer in India pay an
unnecessarily high price for many goods of different quality.”
12 Adulteration:
Adulteration is often resorted to while marketing crops and one of the most important reasons
for such deliberate adulteration of agricultural produce is the high amount of refraction (khad)
allowed in most markets and the non-mutual terms. In most of the wholesale markets in the
producing areas a fixed deduction is made for impurities (say 5%) and the terms are non-mutual, i.e.,
a producer offering, cleaner produce which has only 1 % of impurities receives the same price as the
producer offering produce containing 5% impurities. Naturally when this is the case the seller
whether he be the middlemen or the farmer takes care to see that the produce is adulterated to the
maximum limit allowed in the market.
Adulteration of Commercial Crops
Various devices of adulteration are in vogue. Such as: -
Damping of cotton is done by the middlemen on the contention that the kapas comes in so very
hot that if one puts one's hands into it they would grass while curry powder in several cases has been
found to be heavily adulterated with horse dung.
“Tomato sauce is often only a mashed pumpkin with a small percentage of tomato, Vinegar in
some cases has been found to be acetic acid. Small chippings of white stone have been found in rice
in some localities.
“Most of the common salt contains large-quantities of white chalk, while turmeric is
adulterated with lead chromate which has a deep Yellow colour. In red chillies, many unscrupulous
traders use lead oxide to brighten the colour and add weight.”
Note : If the question on defects in agricultural marketing is asked for 10 marks, please explain
each point in short (around 1 or 2 paragraphs) Each of the above points can be asked for 02 marks
also, hence prepare yourself accordingly, filter the data & decide what to write. The points like
problem of middleman, Grading & standardisation , storage, transportation, marketing news, weights
& measures can be asked for 10 marks. In such cases you will first discuss problem & the line of
improvement associated with such problem.
Lines of Improvement
Due to various defects in the agriculture market of India the traders (middlemen) occupy a
unique position and due to such a unique position, the traders succeed in manipulating the market
scenario and to take home a major proportion of the price paid by the consumer. In some cases like
rice nearly 48% of the prices charged to the final consumer is siphoned away by the middlemen. A
very small proportion of the consumers paid up price actually goes to the producer-seller.
It has been observed that well regulated markets create in the minds of cultivators a feeling of
confidence. The producers believe that they get a fare deal in these regulated markets. Such a
scenario provide for a mood where the farmer is willing to accept new ideas and strives to increase
his agricultural produce. The value of such regulated markets thus can be exaggerated but it is yet to
catch on in India.
If the agriculturalist in India is to receive a higher price for his produce, if the needs and
preferences of the consumer are to be conveyed to the producer with a minimum amount of delay
and friction, and if the large scale industries are to secure a steady and reliable supply of raw
material of uniform quality, obviously the defects in machinery for marketing of agricultured
produce should be remedied as quickly as possible.
It would be useless to increase the output of food, it would be equally futile to setup optimum
standards of nutrition, unless means could be found to move food from the producer to the consumer
at a price, which represents a fair remuneration to the producer and is within the consumer’s ability
to pay. Similar considerations also apply to other agricultural products and to fish and forest
products. It is therefore necessary to remove the defects in the machinery for marketing of
agricultural produce.
An improved system of agricultural marketing, which will secure for the cultivator a larger
proportion of consumer’s price is a ‘sin qua non’ for agricultural improvement in India.
The following are the various Lines of Improvements:
1. Establishment of Regulated Markets
2. The market yard; amenities and facilities
3. Use of Standard weights and measures
4. Increased Provision of Storage and Warehousing facilities
5. Improvement of transportation facilities
6. Provision of marketing news
7. Standardization of contracts and payments of sales proceed
8. Improvement in Grading and Standardization
9. Remunerative Prices for Farmers
10. Development of Co-operative Marketing
Note : If the question on removing defects in agricultural marketing is asked for 10 marks, please
explain each point in short (around 1 or 2 paragraphs each). Points like Market yard, provision of
marketing news, remunerative prices for farmers can be asked for 02 marks, hence prepare yourself
accordingly, filter the data & decide what to write. The points like regulated markets, Grading &
standardisation , storage, marketing news, weights & measures can be asked for 10 marks. In such
cases you will first discuss problem & then the line of improvement associated with such problem.
Try to enrich your answer with examples.
Regulated Markets
What are Regulated Markets?
Markets that have rules and regulations with respect to the price of the product sold, the
method and the produce in which the transactions take place are other similar market operations are
said to be regulated markets. These regulated markets ensure a fair and level playing field for all viz.
the producer, middlemen and buyer. This is done by eliminating the malpractices at the grass root
level. There are members from Govt., Traders & farmers in the regulated market committee.
Co-operative Marketing
3. There are some services such as transport, storage, financing, grading, packing,
loading/unloading which are carried out by some private functionaries who charge high rates
for these services. A co-operative marketing society performs these services efficiently and at
cheaper rates.
4. A co-operative marketing society provides market finance to farmers and ensures better returns
to their produce. Besides marketing society can act as an agent of credit co-operative society
and help to recover loans advanced by credit societies. At present, most of the financial needs
of the farmers are fulfilled by trader - moneylenders at very high rates of interest and with the
condition that they will sell their produce through them. This can be avoided, if there is co-
operative marketing society.
Organization:
Under the system of co-operative marketing whole responsibility of marketing is taken up by
the farmers themselves, organized on co-operative basis. The area of operation of marketing society
is usually fixed with reference to local conditions - area based or commodity based. The commodity-
based societies related to grapes, oranges, banana, pomegranate, etc. have wider jurisdiction
covering the major areas growing each crop. There are societies at the producer's level and they
federate at state or national level to deal with bigger markets including foreign markets for export of
their produce.
Membership: Membership of a co-operative marketing society is open to individual farmer who
produces the crop for which the society is formed. Other co-operative societies in the area can also
become institutional members.
Resources:
The sources of fund of the society are as under:
1. Share capital
2. Deposits.
3. Loans from higher financial institutions including NABARD.
4. Grants or subsides from the Govt. for godowns, etc.
5. Reserve funds.
The marketing societies require short-term, medium-term and long-term capital
1. Short-term capital is needed for financial advances to members for production, packing,
transport, etc. to meet contingent expenses.
2. Medium- term capital is required for purchasing motor trucks, etc.
3. Long-term loan is required for installation of machinery, construction of building for godown,
storage, etc.
Functions:
1. To arrange for the sale of members produce to the best possible advantage.
2. To undertake activities in connection with grading, pooling and procurement of produce of the
members.
3. To provide storage facilitates to their members by renting or owning the godowns and thereby
facilitate to grant advances against pledge of produce.
4. To protect members from all types of malpractices eliminates the middleman in the chain of
marketing.
5. Co-operative marketing society ensures grading, etc. and supply of good quality material to
consumers.
6. It teaches business methods to farmers and serves them as agency for supply market
information.
7. The society is able to stabilize prices over a long period by adjusting the supply with the
demand.
8. Marketing societies are also encouraged to undertake export trade so that they can give better
prices to their members.
Few Successes:
Inspite of the difficulties encountered in the marketing of perishables like fruits, vegetables,
milk, etc. there are few examples of good success.
i. Maha-grape - co-operative federation marketing grapes in Maharashtra.
ii. Co-operatives marketing pomegranate.
iii. Co-operatives marketing banana in Jalgaon district.
iv. Vegetables co-operatives in Thane District.
v. Milk co-operatives in Maharashtra and Gujarat.
vi. Co-operative cotton marketing societies.
State Trading
State trading in its narrow sense means import and export transactions of a state-owned or state
controlled agency involving purchase of goods on commercial sale. In a broader sense, it includes
purchases from abroad for governmental use and disposal of surplus stores originally purchased for
governmental use. A Report prepared by the E.C.A.F.E. Secretariat defines state trading as “Direct
participation by the government (or its agent) in foreign trade including those trading activities in
which the government (or its agent) holds title to export before transactions and acquires titles to
import.”
The main objective of state trading is to facilitate development of trade with countries where
trade is in government hand, and to assist the government in solving difficulties and problems for
which private trading channels are found to be inadequate. State trading enables the private trading
countries to negotiate with equal bargaining power and, thus, safeguard against exploitations, which
a large number of private importers and exporters competing with each other, are confronted with
monopolistic trading agency.
2. Imports
a. To import capital goods, industrial raw materials and certain scarce commodities required
for the economic development of the country.
b. To import items which are canalised by the Government through this Corporation so as to
ensure that adequate supplies at the right time and at the economical prices are made and are
distributed to the industries and other users in a co-ordinated manner.
c. To undertake import of commodities where bulk purchase would give better terms.
d. To undertake imports from state trading countries or from where monopolies are
involved.
e. To import commodities, which is in short supply in the country.
f. To import speculative and high profit margin items with a view, to stabilise the prices and
to do distribution of such commodities in an organised manner at fair prices.
g. To ensure the implementation of trade plans with the East European countries and other
special agreements.
3. Internal Trade
a. To undertake internal trade in certain commodities like imported cars.
b. To undertake price support and buffer stock operations with a view to ensure fair prices to the
growers of certain agricultural commodities, to stabilize internal production and sustain foreign
demand.
4. Trade Promotion Agreements
To arrange for essential imports against additional exports of traditional and non-traditional items
which are specified in special agreements.
To lend increasing support in the form of financial and organisational assistance to specialised
export agencies like the Handi-crafts and Handloom Export Corporation.
Besides these, S T C had also undertaken price support operations (at the instance of the Central
Government) for natural rubber in 1970 and tobacco in 1972. Growers were assured of remunerative
prices and surplus quantities, mopped up by the S.T.C., were exported