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ROLE OF AGRICULTURAL MARKET INTELLIGENCE IN UPLIFTING SMALL AND

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ROLE OF AGRICULTURAL MARKET INTELLIGENCE IN UPLIFTING SMALL AND MARGINAL FARMERS:
ASPECTS, PROSPECTS AND SUSPECTS
B. Swaminathana, K. C. Sivabalanb
aAssistant Professor, Department of Agricultural Economics, Junagadh Agricultural University, Junagadh –

362001, Gujarat, India

bAssistant Professor, Department of Agricultural Extension, Imayam College of Agriculture, Tamil Nadu

Agricultural University, Trichy – 621206 , Tamil Nadu, India

Introduction

Agriculture, including crop and animal husbandry, fisheries, forestry and agro processing constitutes the
very basis of socio economic lives of India. It is one of the world’s largest agrarian economies, as the agriculture
sector contributes about 13.7% of the country’s gross domestic product, 10.3% of the total export and also
provides direct employment to around 58% (as of 2012-13) of the total work force. Agriculture plays a critical role
in the economy as it is essential to address not only the food and nutritional security to the people and provide
livelihood and income in the rural areas, but also to meet the requirement of raw material / inputs for the agro
based industries in the domestic front. The 12th Five Year Plan Approach Paper also indicates that agricultural
development is an important component of faster, more inclusive sustainable growth approach. Small holdings
agriculture is important for raising agriculture growth, food security and livelihoods in India. Therefore the future
of sustainable agriculture growth and food security in India depends on the performance of small and marginal
farmers. Agricultural Census data shows that there were about 136 million agricultural holdings in India in 2010-
11. Around 116 million were small and marginal farmers. Average size has declined from 2.3 ha in 1970-71 to
1.17 ha in 2010-11. Small and marginal farmers account for more than 83% of total farm households. It may also
be noted that 63% of land holdings belong to marginal farmers with less than 1 ha. The average size of marginal
holdings is only 0.24 at all India level. The average size of small holdings is 1.42 ha. More importantly, their
contribution to nation’s food production is around 47% (2010-11). The role of small and marginal farms in
development and poverty reduction is well recognized. The global experience of growth and poverty reduction
shows that GDP growth originating in agriculture is at least twice as effective in reducing poverty as GDP growth
originating outside agriculture. Small holdings also face a slew of new challenges on integration of value chains,
liberalization and globalization effects, market volatility and other risks and vulnerability, adaptation of climate
change etc. Therefore, support is needed for small holdings in the context of these world-wide processes of farm
changes.
The sustainability of these farmers is crucial for livelihoods in rural areas and for the entire country. It is
true that small holdings have higher productivity than medium and large farms (Lipton, 2006). But that it is not
enough to compensate for the disadvantage of the small area of holdings. The cost of cultivation per hectare is
also high on small and marginal farmers than medium and large farms. According to NSS 2011 data, the monthly
consumption of marginal farmers was Rs.2482 and monthly income was Rs.1659. It shows that they have dis-
savings of Rs.823. The dis-savings for small farmers were Rs.655. On the other hand, for large farmers, monthly
income and consumption respectively were Rs.9667 and Rs.6418 with savings of Rs.3249. This indicates that
the poverty for small holding farmers is much higher than other farmers. The need for increase in productivity
and incomes of small holdings and promotion of non-farm activities for these farmers are obvious.
According to the Consultative Group on International Agricultural Research (CGIAR) smallholder
farmers’ livelihoods depend on much more than food production. Attention has recently been focused on not only
working with farmers to improve agricultural production and productivity, but also broadening their activities to
include processing and marketing. Challenges in making markets work for the small farmers include: building
connections and trust between actors in the market chain; supporting small-scale producers to collaborate and
coordinate to achieve economies of scale in transactions with buyers or suppliers; increasing channels of
information and market intelligence to rural producers; and helping rural producers understand and better satisfy
the product, process and delivery standards required by buyers.

Emerging Problems in Indian Agricultural Marketing System

Marketing is as critical to better performance in agriculture as farming itself. Therefore, market reform
and marketing system improvement ought to be an integral part of policy and strategy for agricultural
development. Agricultural marketing was, till recently, not fully accepted as an essential element in agricultural
development in the countries of Asia and the Far East. Although options differ as to the extent and precedence,
there was general agreement till 1970 that the question of markets for agricultural commodities had been

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neglected. Agricultural marketing occupies a fairly low place in agricultural development policies of developing
countries. The National Commission on Agriculture (1976) had emphasized that it is not enough to produce a
crop or an animal product; it must be satisfactorily marketed.
The small farmer-producers should be assured of a fair price for their produce, failing which they may
lose the incentive to increase agricultural production (Reardon et al, 2011). A fair price for the produce may be
assured when there is an orderly marketing system in the country. The improvement in the domestic marketing
system has assumed special significance with the launch of new economic policy in 1991 and opening up of the
external trade regime. The important problems which have emerged in the recent past pertain to the following
areas:
i) Increase in Production levels and Market Arrivals
With increased market arrivals, and in order to enforce strictly market regulations, it is necessary that a
large number of market yards should be developed in rural areas with all the necessary marketing facilities.
Without spacious market yards, it is not possible to centralise and effectively supervise the transactions taking
place in the area. The development of these spacious market yards is also essential for the performance of
various marketing functions, such as grading, cleaning, serving and weighment of the produce. Recently, some
market committees have constructed spacious market yards, but a majority of market committees do not have
them because of the paucity of funds and the non-availability of land.

ii) Price Instability

Agricultural prices are very unstable and fluctuate violently. These prices fall in the post-harvest
months and increase later in the year. This situation has worsened with the increased market arrivals as a result
of the emergence of surpluses, especially of wheat and rice. The increasing instability in prices adversely affects
the income of farmers as well as the tempo of increasing production. There is, therefore, a need for reducing
price instability. Several steps may be taken for farmers to get a better share in the consumer’s rupee. Some of
the steps to check price instability are: fixation of minimum support prices of the crops by the government;
purchase of the commodities if market prices fall below that level; and development of warehousing facilities to
check post-harvest sales among the farmers.
Need for ‘Well-Functioning Market’ in Agriculture
Though Green Revolution initiatives achieved self-sufficiency by increasing food grains production the
farmers have not achieved the desired level in marketing front. Better marketing prospects with increased and
assured remunerations could only foster and sustain the tempo of rural economic development. Agri Business is
a process, which starts with a decision to produce a saleable farm commodity. Agriculture sector needs ‘well-
functioning Market’ to drive growth, employment and economic prosperity. There is a need to help small and
marginal farmers in marketing their agricultural produce to fair price and to ensure remunerative returns to them.
It is also important to regulate trade of agricultural produce most effectively by devising and implementing new
technologies to reduce post harvest losses through appropriate post-harvest operations including grading, value
addition, packaging, processing and transportation so as to get remunerative price to the farmers.

An Expanded Role for Information Technology

People need information to make decisions about their livelihoods. In poor rural areas, where
agricultural productivity is low and unreliable and there is food insecurity, better information and knowledge-
exchange can be important in lessening poverty. In an enabling environment, information can empower poor
people to determine their own livelihoods (Swaminathan et al., 2014). However, the required information must be
exchanged in a way that enables small and marginal farmers to participate in the design and selection of those
information tools, media, and content that are appropriate to their specific needs. Understandably, the current
generation of small- holder farmers has little inclination and capability to access and to absorb electronically-
distributed information on agricultural technology. Thus, up-to-date agriculture-related information and data, and
their dissemination through cyberspace informatics tools, can and must equip the future small-holder farmers
with the knowledge they shall need to help them organize themselves and their farms for collective action.
In this connection, agricultural market intelligence plays a very important role in levelling the ground
which is as of now much skewed against the small and marginal farmers. The declining costs of ICTs are giving
small farmers much greater access to information (Sivabalan and Swaminathan, 2013). Mobile phone coverage
in India is expanding at breakneck speed. New subscriptions are averaging 6 million a month, many in rural
areas. Computers are now being linked through mobile phone networks to greatly expand the scope of
information.
By linking communication technologies to market exchanges in commercial centers, even small farmers can
overcome the enormous informational asymmetries that limit their bargaining power in traditional supply chains.

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The revolution in mobile phones is helping the small farmers to get information about crop prices and input prices
and other related information on agriculture. But the hope will be realized only when the small-holders are
empowered to access the crucial production resources. These resources are several: land, water, energy, and
credit; appropriate technologies, and opportunities to develop the skills and to access the information wherewith
to use them; functional and fair markets for products and inputs; health care and sanitation; and education and
reproductive and social services.
Market Intelligence (MI)
In common parlance there is a slight confusion over agricultural data, agricultural information and
agricultural market intelligence. Often data and information are taken for granted as MI. But there is very subtle
difference between the three as, Data- refers to unconnected pieces of information; whereas Information –
refers to increased knowledge by understanding the relationships of data, and Intelligence- refers to organizing
the information to understand implications and impact. Thus MI differs from data and information since it requires
some form of analysis. The purpose of this analysis is to derive some meaning from the piles of data and
information. By going through analysis and filtering, one can refine it enough so that someone can act on it and
understand their options, giving them an opportunity to make forward-looking decisions. As far as is possible
marketing decisions should be based on sound information. Thus the process of collecting, interpreting, and
disseminating information relevant to marketing decisions is known as market intelligence.
MI should put conclusions and recommendations upfront with the supporting research behind the
analysis. Market Intelligence should not simply present the facts, declaring what was found; but instead make a
statement, saying this is what can be believed as about to happen.
As MI allows one to predict or forecast what is going to happen, this in turn allows to effectively strategize in
relation to the competitive environment. Therefore, MI indulges one to remain competitive by improving strategic
decisions and this leads to better performance against the grain. At the same time, MI does not attempt to collect
and analyze all information for an exact picture, but attempts to get enough information to tell what’s going on.
Thus, Accuracy, Availability, Applicability and Analysis are the four 'A's of market intelligence.
In India, the National Information Centre (NIC) of the Ministry of Information Technology - through
initiatives such as the DISNIC-Agris Project, and AGRISNET (a NIC-net based Agricultural Informatics and
Communications Network) - seeks to reach all agricultural districts and blocks through its massive “Gateway
Networks”. Through these networks, farmers will have opportunity to learn of and benefit from new and improved
agricultural practices, to have weather- forecast-based guidance for timely agricultural operations, to be alerted
by satellite surveys of pests and diseases, and to access crop-output forecasting and marketing strategies for
domestic and for export trade. Globally, the FAO-facilitated World Agricultural Information Centre (WAICENT) is
a strategic facility for management and dissemination of information for agriculture - particularly for developing-
country agriculture. WAICENT has four priorities: human resources development, community development,
information content, and systems development. Specific collaborative programs are being established in FAO
Member Countries to enable national agencies to incorporate international information within their national
information systems.

Why small and marginal farmers need Market Intelligence (MI)?

With the increased marketed surplus and opening up of trade, the importance of market intelligence has
increased. Small farmers market the produce in the village and nearby assembling centres out of their ignorance
of the price prevailing in the nearby primary wholesale, secondary wholesale and terminal markets. Traders take
the advantage of the ignorance of the farmer because they have full knowledge of the prices prevailing in other
markets. This places the traders in a superior bargaining position.
The Directorate of Economics and Statistics, Government of India, as well as the State Departments of
Agricultural Marketing have been collecting data on wholesale and retail prices at various markets and
disseminating the information through periodical bulletins issued on the All India Radio and in the form of
publications. However, this is not a satisfactory position because the information provided is stale in the sense
that, by the time it reaches the farmers, the market prices have changed. Farmers are not able to take
advantage of available intelligence because of their illiteracy. There is, therefore, an urgent need for refinement
in the available market intelligence, so that announcements of market information may be made on the expected
prices, arrivals, demand and supply.
Process of Market Intelligence
Market Intelligence follows a two-phase process when it comes to collecting information:
• Phase I: Secondary Research (80% volume / 20% time)
• Phase II: Primary Research (20% volume / 80% time)

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Phase I (Secondary Research) leads to Phase II (Primary Research). Secondary research consists of press
releases, analyst reports, trade journals, regulatory filings, transcripts of speeches, and other published sources
of information. The bulk of the information (80% of it) comes through secondary research. Phase II-Primary
Research is more hands-on and direct, interviewing sources of published information, meeting face-to-face with
key decision makers and flushing out the critical unknowns not found in secondary research. It is here, primary
research, most time (80%) is needed on the pertinent information (20%) derived from secondary research
(Figure 1). Therefore, one should recognize the 80 / 20 rule of competitive intelligence: Spend less time in
gathering the information and more time in analyzing and refining it through primary research.

Importance of Market Intelligence for Small farmers

• Source for best practices – the only real way to isolate and find “best practices” is to engage in some
form of Market Intelligence; otherwise one would end up relying on crude and generic type
benchmarking data.
• Helps identify areas for improvement as well as risks and opportunities.
• Isolates performance gaps in relation to the competition.
• Reduces the level of risks in decision-making.
• Helps to establish what products are right for the market, which channels of distribution are most
appropriate, how best to promote products.
• MI for Supply Chain Management of small farmers
• Supply chain management (SCM) represents the management of
the entire set of production, manufacturing/transformations, distribution and marketing activities by
which a consumer is supplied with a desired product. The practice of SCM encompasses the disciplines
of economics; marketing, logistics and organizational behaviour to study how supply chains are
organized and how institutional arrangements influence industry efficiency, competitions and
profitability. Managing supply chains requires an integral approach in which chain partners jointly plan
and control the flow of goods, information, technology and capital from ‘farm to fork’, meaning from the
suppliers of raw materials to the final consumers and vice versa.
• Market Intelligence (MI) for Agri-Business vistas of small farmers
• Marketing Intelligence consists of people, equipment, and procedures to gather, sort, analyze, evaluate
and distribute timely and accurate information to decision markets. It facilitates marketing decisions,
directs the competitive process and simplifies marketing mechanisms. Commodity traders, processors,
manufacturers who convert produce into food items and retailers, among others, are interposed
between the producer and consumer. A more recently introduced link into the chain is the scientist. As
the link between food and agriculture continues to evolve, the emergence of an agribusiness i.e. where
agriculture and food become a continuum could be seen. So there is a line of argument, which says that
it makes sense that those who are closest to the consumer should assess his /her needs and interpret
them back to the primary producer. There arises the need for MI in agriculture.
• If marketing intelligence is to have any meaning for farmers and agripreneurs (entrepreneurs involved
with agriculture), the information provided must be accurate, timely and must be understandable so that
a farmer may decide how much to produce, when and where to sell and a trader may expand trade.
Similarly, a consumer may find out alternative sources of supply. MI for agriculture emphasizes the
interdependence and interrelatedness of all aspects of agribusiness, namely: from farm input supply to
the growing, assembling, storage, processing, distribution and ultimate consumption of the product. MI
differs widely according to the commodity, the systems of production, the culture and traditions of the
producers and the level of development of both the particular country and the particular sector within
that country.

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Figure 1. Methodology involved in structuring Agricultural Market Intelligence

A typical agriculture related Market Intelligence should encompass and analyze the inter-relationships
of all the following in a befitting manner,
• Present agricultural scenario and land use pattern
• Suitability of land holding to various crops/enterprises
• Crops in demand in near future
• Market prices of crops
• Availability of inputs
• Usage of inputs
• Credit facilities
• Desired qualities of the products by consumers
• Market network of the local area and the price differences in various markets
• Network of storage and warehouse facilities available
• Transport facilities
• Production technologies like improved varieties, organic farming, usage of bio-fertilizers and bio-
pesticides, IPM, INM, and right methods of harvesting

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• Post-harvest management like processing, grading, standardization of produce, value addition,

packaging, storage, certification, etc. with reference to food grains, fruits and vegetables, eggs, poultry,
fish, etc.
• Contract farming
• Private modern terminal markets
• Food retail chains
• Food safety and quality standard Certification
• WTO regulations
Challenges for Agricultural related Market Intelligence
• Market size is large and continuously expanding, and MI should keep pace
• Private trade is 80% marketed surplus
• Direct marketing “farmer – consumer “ is negligible
• 85% of the 27,294 rural periodic market, facilities for efficient trade is still almost absent and 7161
market yards/sub yards is inadequate, ill equipped and mismanaged
• Due to lack of proper handling at farm gate lead to 30 % fruits and vegetables, 7% grains, 10% spices
loss before reaching market and loss of Rs 50,000 crores /year due to poor marketing chain.
• The absence of grades and standards restricts the development of effective and efficient marketing
systems.
Possible impact of MI on small farmers
• Better facilitation and efficient allocation of productive resources
• The bargaining position of farmers with traders can be improved
• Reduction of transaction costs (i.e. the costs of selling the produce) by reducing risks.
• Farmers with timely and reliable information and the ability to interpret it, can decide to which market
they should send their produce to maximize returns or, indeed, whether to send their produce to market
at all
• Lack of MI is an entry barrier to both production and trade. Where farmers have had access to MI, shifts
in cropping patterns to higher value produce have been noted1. In the area of trade, individuals find it
difficult to begin trading without MI, so reducing competition within markets
• MI can be particularly valuable where countries are changing over from a State-controlled marketing
system to one of private enterprise, in that farmers and small traders are made more aware of market
opportunities
• By contributing to more efficient marketing, particularly improved spatial distribution, MI should be
beneficial for consumers as well as farmers and traders. Information on retail prices may also, under
certain circumstances, assist consumers to bargain
• The essence of a good MI is that it should provide commercially useful information on a timely basis.
Information is also useful to policy makers. This improves policy formulation as the functioning of
markets comes to be better understood.
• MI is also an important component of Early Warning Systems (EWS) for food security as it can assist in
identifying areas of possible shortages and can highlight whether prices are above or below normal
seasonal trends.
Scope of MI for small farmers
• As disposable incomes rise, the market tends to develop more sophisticated needs and the quality of
the raw material becomes even more critical. Where agriculture is seeking to serve a food industry, that
itself is seeking to meet these more sophisticated needs and wants, it can expect to face increasing
emphasis on quality. Equally well, agriculture can expect to share in the better return for innovative
improvements in quality. To improve the quality standards there will always be a need for MI not only
from the consumer’s side but also from the producer.
• Agricultural products were traditionally seasonal in their production and supply. Modern technology and
cultural practices mean that food manufacturers need not have their production schedules dictated by
the seasons. Indeed the capital-intensive food industry cannot afford to incur the high costs of under
utilizing its capacity. This means that farmers will have to compete in terms of reducing seasonality or
fitting into a pattern of social competitiveness.
• The competitive advantage will rest with those able to add most value and can differentiate what they
are offering from that of other suppliers.

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• In the more sophisticated food markets, healthy eating can become a priority among consumers.
Therefore, farmers will have to consider the health connotations of what they choose to grow. Farmers
have to be concerned about the nutritional value of the produce they grow. Moreover, the consumer
may be more, or equally, concerned about the food production methods i.e. the avoidance of chemicals
like herbicides, pesticides etc. This may mean a change to the farmer’s cultivation practices with
implications for the costs of production.
• For the food manufacturer, the country in which he/she manufactures, or markets, need no longer be
the source of agricultural produce. Improved transportation and communications mean that the world is
becoming his/her source of supply. This is a significant change in the competitive environment of
agriculture, which the farming community has to realize, because they have, hitherto, been largely
cocooned in their respective domestic markets.
Upscaling MI access to small farmers: the role of government
The government plays an important role in the marketing of farm products. The nature and degree of
involvement differ depending on the commodity and marketing functions. In general the involvement was
greatest in the case of grains, particularly, rice and wheat, which were staple products. In some cases,
government or state-owned enterprises were also directly involved in the marketing of specific
industrial/commercial crops such as tea, rubber, sugar, oil palm, and coconuts, which were major, export crops
of the region. The Government provides much of the infrastructure required for efficient marketing. One of the
most important is the information and extension services to farmers besides transport & communication facilities,
public utility supply, like water, electricity, fiscal and trade administration, public storage, and market facilities.
In the recent times the government has focused its attention to involve ICT (Information Communication
Technology) tools to improve the production and thereby the marketing prospects of agriculture. The government
has become keen on that the ICT should be able to provide answers to questions like what and how much to
produce, when to produce, in what form to sell, at what price to sell, when to sell and where to sell. All these
information need to be provided to the farmers and the farming community and farm-business adherents with a
‘press a button’ on the computer on a continuous updated basis. The government has brought out many online
Market Intelligence portals for agriculture like: AGMARKNET – www.agmarket.nic.in by the Union Ministry of
Agriculture, the e-Vignan initiative by the Madhya Pradesh State Government, ITC’s e-CHOUPAL, DCM
SHRIRAM’s Hariyali Kisan Bazar and Domestic Export Market Intelligence Cell (DEMIC) of Tamil Nadu.

Suggestions for better Market Intelligence (MI)

• Generation of data on market intelligence would be a huge task by itself. Various departments of
agriculture already possess much of the data. Hence, establishment of linkages between agriculture
line departments and departments of market strengthens Market Intelligence.
• SWOT analysis of the market: Strengths (demand, high marketability, good price etc.), Weaknesses
(reverse of the above), Opportunities (export to other places, appropriate time of selling etc.) and
Threats (imports and perishability of the products etc.) need to be analyzed regularly. Accordingly, the
farmers and agripreneurs need to be made aware of this analysis for planning production and
marketing. The challenge remains in motivating the extension personnel to learn the new knowledge
and skills of marketing.
• Enhancing the interactive and communicative skills of the farmers to exchange their views with
customers and other market for getting feedback and gain the bargaining during direct marketing would
help in the long run for better MI prospects.
• Establishing marketing and agro-processing linkages between farmers’ groups, markets and private
processors is the need of the hour.

Conclusion
Market participation can be viewed not only as a consequence of growth but also as a cause of
development. Getting prices right alone may not induce smallholders to participate in markets; it requires public
policy intervention to promote access to productive technologies and improve public and private goods as well as
an appropriate macroeconomic policy environment that generates incentives for farmers to save and invest in
their farms. It has been shown that without adequate public infrastructure, farmers may not even be able to
effectively use existing endowments. Smallholder agriculture has acquired prominence for several reasons. For
one, it is the realization that smallholders are only marginally integrated with markets. But market participation is
a consequence as much as a cause of development. ‘Getting prices right’ does not in itself lead to broad-based
market participation by smallholders that enhance their welfare. Instead, small farm households must have

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access to productive technologies and adequate private and public goods to produce a marketable surplus. This
in turn requires that households earn enough to save, invest and pay taxes to the government so as to fund
provision of public goods, which are essential for the functioning of markets. Significant investment, typically by
the public sector, is required in institutional and physical infrastructure necessary to ensure broad-based, low-
cost access to competitive, well-functioning markets. Public investment must, however, be supported by assets
in the hands of smallholders, without which they are unable to use existing infrastructure. This is also an area
that needs in-depth evaluation, especially to identify variables that contribute directly to investment by farmers
themselves in agriculture.
It is no doubt that an efficient Market Intelligence is essential for the development of the small and
marginal farmers and for the agricultural sector as a whole. In as much as it provides outlets and incentives for
increased production, MI contributes greatly to the commercialization of subsistence farmers. Failure to develop
the MI is likely to negate most of the efforts of the government to increase agricultural production. It is expected
that future agricultural growth would largely accrue from improvements in productivity of diversified farming
systems with regional specialization and sustainable management of natural resources, especially land and
water. Effective linkages of production systems with marketing, agro-processing and other Value added activities
would play an increasingly important role in the diversification of agriculture. Marketing excellence is the result of
correct marketing decisions and all correct marketing decisions come from Market Intelligence (MI).

Reference
Acharya, S.S, Agricultural Marketing in India – 4th editions, Oxford and IBH Publishing Company, New Delhi,
2010, pg.163.
Lipton, M. (2006) Can Small Farmers Survive, Prosper, or be the Key Channel to cut Mass Poverty? Journal of
Agricultural and Development Economics, 3(1): 58-85.
Reardon , T and Minten, B. (2011) The Quiet Revolution in India’s Food Supply Chains, International Food Policy
Research Institute (IFPRI), Discussion Paper 01115.
Sivabalan, K.C, Swaminathan, B. (2013) Agricultural Knowledge Transfer and Role of ICT Tools. Madras
Agricultural Journal, 100: 99-102.
Swaminathan, B, Anandaraja, N, Manikanda Boopathi, N, Sivabalan, K.C, and Rajesh, N. (2014). Leapfrogging
the Interventions of ICT Tools in Vegetable Intensification Pathways of Tamil Nadu: Farm Level
Perceptions. Agricultural Economics Research Review, 27: pp 93-101. DOI: 10.5958/0974-
0279.2014.00011.1

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