MARKETING CHANNELS OF

CEREALS – RICE

Rice

Rice is the seed of the grass species Oryza sativa (Asian rice) or Oryza glaberrima (African rice). As
a cereal grain, it is the most widely consumed staple food for a large part of the world's human population,
especially in Asia. It is the agricultural commodity with the third-highest worldwide production (rice,
741.5 million tonnes in 2014), after sugarcane (1.9 billion tonnes) and maize (1.0 billion tonnes)

Importance of rice

 Asia’s share is more than 90 per cent. Paddy is a primary food grain crop of India.
 More than 50 percent of country’s population depends fully or partially on rice as it constitutes the
main cereal food crop of the diet.
Marketing channel

1. Producer–miller->consumer (village sale)

2. Producer–miller->retailer–consumer (local sale)

3. Producer–wholesaler->miller–retailer–consumer

4. Producer–miller–cum-wholesaler-retailer-consumer

5. Producer–village merchant–miller–retailer–consumer

6. Producer–govt. procurement–miller–retailer–consumer

The marketing channel is the route taken by the title to the goods as they move from producer to ultimate
consumer. Marketing channels are combinations of agencies through which the seller who is often, though
not necessarily markets his product to the ultimate consumer. Market channel has been defined as the vehicle
of marketing system, the unit within which all marketing activity takes place. Bilgrani has defined market
channel as a distributory that is involved in direct and indirect transfer of title to a product as it moved from
producers to consumers or industrial users. In the present, marketing channel refers to the collection of
agencies and movements associated with the exchange of rice from the primary producer to the ultimate
consumer. The rice is sold through middlemen namely commission agents, village traders, wholesalers and
retailers.

The marketing channels identified in many areas are,

Channel I = Producer - Village Traders - Miller – Consumer

Channel II = Producer - Regulated market - Consumer

Channel III Producer- Commission Agent - Retailer/Miller - Consumer.

The farmers have chosen only the commission agents in most cases as the main intermediary. Eighty per cent
of the total produce is passed through the commission agents and wholesalers cum retailers.

Choice of the Middlemen It is not only the number of days stored but also the agent or the merchant
middlemen through or to whom the produce sold influences the net price realised by the farmers.

The commission agents are the most preferred middlemen by the small farmers than the large farmers because
of the facilities offered by them. The large farmers are more or less equally distributed in all the three channels.

Criteria for selection of channels:

• There are many marketing channels involved in marketing of paddy/rice. The following are the criteria
for the selection of efficient marketing channels.

• The channel, which ensures reasonable return to producer, is considered to be good or efficient.
• Transportation cost in that channel.

• Commission charges and market margins received by the intermediaries, such as trader, commission
agent, wholesaler and retailer.

• Financial resources.

• The shorter channel with minimum market cost should be selected.

Reasons for selling rice through village traders

1. No storage cost

2. Easy method of

3. No price difference

4. Long-term practice

5. No transport cost

6. No commission charges

7. Immediate payment

Regulated Markets The direct channel which has lesser number of middlemen is the wholesaler, retailer. But
this channel is not very popular among the farmers because of various reasons.

Reasons for selling rice through regulated markets

1. No storage cost

2. Easy method of sale

3. Long term practice

4. No commission charge
 5. Credit facilities

6. Better price

7. More off-take

Sale to Commission Agent The most popular and dominant channel is the commission agent. The commission
agent advances loans with or without interest. The commission agent recovers the entire amount from the
farmers at the time of sale.
Reasons for selling rice through commission agent

1. Availability of credit facilities

2. Better price

3. Immediate cash after sale

4. Long term practice

5. Higher off-take

Means of transportation used at different stage of marketing

Marketing Agencies

(I) Producers

(II) Middlemen

(a) Merchant Middlemen: Wholesalers, Retailers, Commission Agents.

(c) Speculative Middlemen

 (d) Processors (Miller)

(e) Facilitative Middlemen: Weigh man, Graders, Transport Agency

Types of marketing channels

 Institutional marketing channels

 Private marketing channels

INSTITUTIONAL MARKETING CHANNEL

PRIVATE MARKETING CHANNEL

Marketing Constraints for Rice

 Unstable price
 Spurt in production and heavy arrivals
 Lack of marketing information
 Adoption of grading
 Inadequate storage facilities in rural areas
 Training of producer
 Malpractices in markets
  Financial problem
 Infra-structure facilities
 Superfluous middlemen

MARKETING CHANNEL OF
OILSEEDS – GROUNDNUT

Groundnut: The groundnut, also known as the peanut, and taxonomically classified as Arachis
hypogaea, is a legume crop grown mainly for its edible seeds. It is widely grown in the tropics and subtropics,
being important to both small and large commercial producers. It is classified as both a grain legumeand, due
to its high oil content, an oil crop. World annual production of shelled peanuts was 44 million tonnes in 2016,
led by China with 38% of the world total. Atypically among legume crop plants, peanut pods develop
underground (geocarpy) rather than above ground. With this characteristic in mind, the botanist Carl
Linnaeus named the species hypogaea, which means "under the earth".

Marketing channels: Marketing channels for oilseeds are different from those for food grains, mainly
because the extraction of oil from oilseeds is an important marketing function of oilseeds.

Private Instituitional channels

Following are the important marketing channels existing in the marketing of Groundnut

1. Producer - Merchant – Commission Agent- Wholesaler – Oil Miller

2. Producer – Merchant – Commission Agent – Oil Miller – Wholesaler – Retailer – Consumer

3. Producer – Oil Miller – Wholesaler – Retailer – Consumer

4. Producer – Merchant – Commission Agent – Oil Miller – Retailer – Consumer

5. Producer – Merchant – Commission Agent – Oil Miller – Wholesaler – Retailer(for Kernels)

Common Institutional Channels

Groundnut is also purchased by the public and co-operative sector agencies. It plays a very significant
role in the procurement and distribution of Groundnut. National Agricultural Cooperative Marketing
Federation of India Limited (NAFED) is the nodal agency for procurement of Groundnut. The main
institutional marketing channel for Groundnut is as under;

1. Producer- Village Co-operative Society – Processing Units of Co-operatives, State Cooperative

Federation – Co-operative Retail Stores – consumers.

2. State Co-operative Marketing - Oil Miller (Private/Co-operative) - Co-operative Retail Store/ Fair
Price Shop - Consumer.

3. Producer – Village Co-operative Society – Oil Miller – Oil Wholesaler – Retailer – Consumer.

4. Producer - NDDB - NDDB Processing Unit – Retailer – Consumer.

Criteria for selection of channel

Selection of channel by buyer and seller both depends on efficiency of the channel, which is judged
on the basis of efficiency in providing services at minimum cost and time in completing the transaction. NDDB
has purchase either directly from the farmer or through farmers’ co-operative, which may have branches at
village level. No purchase is done through traders or other intermediaries. There are many marketing channels
involved in marketing of Groundnut. The following are the criteria for the selection of efficient marketing
channels.

 The channel, which ensures reasonable return to producer, is considered to be good or efficient.
 Transportation cost in that channel.
 Commission charges and market margins received by the intermediaries, such as trader, commission
agent, wholesaler and retailer.
 Financial resources with producer.

The three marketing channels studied were;

Marketing constraints of groundnut

Processing: There is a need of improved technologies for Groundnut processing. At present, age-old
techniques were used in processing, which reduces the out put.

Improved technology: Producers were not using improved Technologies in producing Groundnut
right from the selection of improved high yielding seeds to use of improved equipments and post-harvest
operational techniques.

Aflatoxin: Groundnut is vulnerable to attack by Aspergillus flavus fungus, which produces Aflatoxin.
An Aflatoxin level up to certain limit is acceptable but beyond that the produce is not suitable for consumption.

Market information: Due to lack of market information regarding prevailing prices, arrivals etc.,
most of the producers market the Groundnut in the village itself, which deprives them of getting remunerative
returns.

Adoption of grading: Grading of Groundnut at producers’ level ensures better prices to producers and
better quality to consumers. However, most of the markets are lagging behind in providing grading service at
producers’ level.

Inadequate storage facilities: To avoid the distress sale, storage facilities in villages are found to be
inadequate. Due to lack of storage facilities at rural stage, substantial quantity is lost.

Transportation facilities: Due to inadequate facilities of transportation at village level, in most of the
states, producers are forced to sell Groundnut in the village itself to itinerant merchants or traders directly at
low prices.
 Training of producer: The farmers are not trained in marketing system. Training shall improve their
skill for better marketing of their produce.

Malpractices: Many malpractices prevail in the markets of Groundnut i.e. excess weighment, delay
in payment, high commission charges, delay in weighing and auction, different kinds of arbitrary deductions
for religious and charitable purposes etc.

Financial problem: Lack of market finance is one of the major marketing problems in the smooth
running of marketing chain.

Infrastructure facilities: Due to inadequate marketing infra-structural facilities with producers,

traders, millers and at market level, the marketing efficiency is affected adversely

Superfluous middlemen: The existence of a long chain of middlemen reduces the producer’s share
in consumer’s rupee.

REFERENCES:

http://www.fao.org/fileadmin/user_upload/ivc/PDF/Asia/08_Brown_et_al_organic_rice_Philippines.pdf
https://agmarknet.gov.in/Others/groundnut_profile.pdf