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UNIT - V

Standardisation / Grading
Regulated market
Cooperatives
Various Acts

Introduction
Agricultural products are heterogeneous.
They are not uniform in size, shape, quality and other
physical characteristics. Because of this, the same product
fetch different prices
Hence agricultural goods are classified into different types
to price them accordingly
The classification is done on predefined grades & standards
Standards are certain specification of basic limits that are
set and a product must conform to same in order to be
graded
Grades are guidelines on the basis of which existing
products are classified to differentiate them into various
types

Standardisation
National Commission on Agriculture enacted by GOI has
defined standardisation as:
Determination of basic limits or grades in the form of specifications
to which produced goods must conform and a class into which the
products of agriculture may be sorted

Agricultural goods are standardised on the basis of different


factors as under, based on which they are classified into
different grades
On the basis of quantity ( weights and measures)
On the basis of size and shape of produce
On the basis of colour
On the basis of quality

Advantages of standardisation
Uniform in quality: with standardised goods, there is
homogeneity and consistency in quality. This helps
consumer to do purchase quickly and without hesitation
Sale by samples: standardised products enable te
marketer to sell the produce by merely showing the
sample of the entire lot
Differential pricing: when goods are standardised and
classified into various types, one can use differential
pricing for different grades of the same product
Increase in demand: with standardised products, the
buyer is assured of quality, value for money and will lead
to more purcase, consequently, increasing the demand

Grading
Grading follows standardisation. It is a sub set of
standardisation
Grading is process of dividing a quantity of the same
kind of goods into uniform groups according to many
standards like colour, shape, size, texture, acidity etc
Grading must be done on the basis of fixed standards
There are three ways of grading agri produce:
Fixed grading: methods are fixed and do not change over
time. One has to follow the specifications if he wishes to
use these grades
Variable grading: here specifications change over time
Centralised grading ; here the grading is supervised by
government agencies

Grading in India
Grading gives many advantages, namely

Pricing
Opening up new markets
Eliminating risk and speculation
Encouragement to improve quality

To improve quality of agricultural products in India, an act was


introduced for grading & marking in 1937. There are 153
commodities in the schedule for which standards and grades
are available
Prevention of Food Adulteration act 1954 was introduced to
protect the consumer from harmful foods, prevent sale of
substandard foods and protect consumer from fraudulant
practices by manufacturer/marketer

Acts
Food Product Order (FPO) act was introduced in 1953 [ now
called Essential commodities act 1955] to exercise control
over production of food products in the interest of consumer
and manufacturer
Standards of Weight Act, 1956 was introduced to bring about
uniformity in weights and measures, further ammended in
1976 in line with international organisation of legal metrology
AGMARK is the acronym for agricultural marketing. It is a
quality certification mark under Grading and Marking act
1937. AGMARK indicates that the products meet certain
standards of purity and quality that have been laid down.
Labels of different colour are used to indicate grade of the
product. Thus agri produce can be sold at right price.

Rice Procurement by Govt Agencies


States

Punjab
Andhra Pradesh
Chattisgarh
Uttar Pradesh
Odisha
Haryana

Procurement in Lakh Tons


2012-13(Actual)
2013-14(Estimate)
85.5
83.1
60.1
64.5
48.1
55.1
22.9
27.1
36.1
26.5
26.1
23.9

Minimum support Price for procurement of


for common variety of Paddy : Rs. 1,310 per quintal
for grade A variety
: Rs .1, 345 per quintal
Total grain stock as on September 2013:
57.22 mt comprising:
Wheat 37.48 mt and Rice 19.74 mt
Target procurement for 2013-14 : 345 Lakh Tons

Intermediaries
Intermediaries are middlemen between the producer
(farmer) and the buyer(consumer)
Generally speaking, 50 to 60% of the price paid by rural
consumer is realized by the producers and the rest goes to
these middle men.
The share is much less (by the producers) in case of
perishables like milk, fish etc.
Agri production being seasonal, most farmers produce
same crop at the same time. This leads to glut and
depress the prices. In the process, the intermediaries
exploit the farmers
To ensure that farmers get better price realization,
regulated markets have been introduced through APMC
Act by all state governments
Village level cooperatives are playing effective roles in
fulfilling the philosophy of farmer protection

Features of APMC Act


Agricultural Produce Markets Act (APMC Act) enacted by
almost all state governments empower the government
to control the agricultural markets.
Salient features of the Act are:
Create market committee consisting of

farmer- producers,
commission agents,
whole sellers and
government nominees

All functionaries have to obtain license to operate


Committee shall decide charges to be levied for all
services

Features of APMC Act


Sale proceeds to be paid to the farmer-producer on the
same day itself.
All sale must be through open auction only.
Details of stocks arrived, daily transactions and price of
different commodities are to be displayed
Physical facilities are to be provided in the market such
as

cattle shed,
water,
sanitation,
grading & standardization of produce

Packing sizes allowed shall be as approved by the


committee

Cooperative Marketing
Cooperatives are established as per Cooperative Act 1882
At village level, Farmers with common interests usually form
cooperative societies to take over some of the functions by
intermediaries
The members decide the purpose for formation of the
cooperatives such as for credit, for marketing, for growers for
processing and marketing etc.
Sugar cooperatives in Maharashtra and Milk cooperatives in
Gujarat are good examples
Cooperative Oil Growers Society, Horticultural Producers
Marketing & Processing Cooperative Society (HOPCOMS) ,
Gujarat Cooperative Milk Marketing Federation (GCMMF) are few
good examples
Most preferred pattern of cooperative organization is Amul
type. This is represented in next slide

Amul Pattern of Cooperatives


FEDERATION
(State Level)
UNION
(District level)
DCS
(Village Level)
Inputs

FARMERS

Outputs

Cooperative structure
The three tier structure in cooperative society has its
own advantages and disadvantages
For example, state marketing federation places a
consolidated purchase order on a fertiliser company,
stipulating the place and quantity to be delivered to
various member societies
Each marketing society is thus spared the trouble of
arranging fund, supplier and negotiation etc.
Similarly, in case of dairy cooperatives, the milk is
collected at village level, transportation and processing is
done at district level and the federation at state level,
arranges for marketing the milk/milk products

Village cooperatives
The suppliers need not contact individual societies but
establish contact only at state level and obtain orders.
The only responsibility is to supply different goods to
different societies as directed
Primary agricultural credit societies are most prominent
in a village. The other types are non credit societies
engaged in milk collection, marketing of agri produce,
agro processing and other activities
Cooperatives are wide spread throughout the country
There are over five lakh cooperative societies and about
67% of rural families are members of such societies

Rural sales Force


Every organisation has people who are entrusted with
prospects and customers to sell their products or service
These people are the sales force. The Head of Marketing
must define following tasks to his sales force
a)
b)
c)
d)
e)
f)
g)
h)

Make them understand the selling objectives of the firm


Formulate the sales policy accordingly
Create the sales force ( recruitment / training)
Structuring the sales force
Providing resources to sales force
Allotting sales target to each
Sales communication and reporting
Sales and resource control

Structure of sales force


The structuring may be on territory basis or on the basis of
product / product line
In territory based structure, the same sales man handle all
products in his allotted territory
In case of product based structuring, several sales man of
the firm operate in the given territory, each handling different
products of the firm
The size of the sales force has to be fixed at an optimum
level based on following consideration:
a) No. of sales person needed to generate the level of sales
expected in the territory
b) Minimum no. of salesmen needed from servicing angle,
irrespective of level of sales
c) Cost involved to maintain the sales force

Traits for Rural Salesmen


Sales management is largely carried out through communication
oral or written . It is a two way process
A Salesmen whether in urban or rural market, needs additional
traits:
Willingness to work in rural areas ( not to vent feeling about poor
infrastructure or lack of entertainment facility, /eating habits /
walk through paddy or dusty roads)
Adapting to cultural differences ( respect custom and culture of
the village )
Down to earth approach ( simplicity/patience/several visits /
sitting on the floor)
Fluency in local language ( read/write and with local dialect)
Developmental approach (Self development / Lot of creativity is
required. New products/right timing/right price and use of local
people is essential )

Sales Force MARICO story


Marico Industry started in Mumbai in 1984. It introduced
successfully a branded coconut hair oil in the market. It entered
rural market in 1987 to increase sales volume
It created a parallel sales force for rural market and named it
conquest and employed over 2500 sales personnel to market
parachute brand coconut hair oil in rural market .
By hard work and determination, today Marico has 65% market
share in India and over 40% sales comes from rural market
Marico successfully introduced Shanti Amla Hair oil to take on
competition with Bajaj Amla hitherto enjoying monopoly in
rural markets in India
The hierarchy of sales force for rural market is shown in next
slide

Structure of Marico Rural sales Force


VP Sales

GM Sales (Rural)

RM Sales
(District Level)

RM Sales

RM Sales
(District Level)

(District Level)

Area sales
Manager (ASM)
Sales Executive
for Allotted
Villages

Area sales
Manager (ASM)
Sales Executive
for Allotted
Villages

RM Sales
(District Level)

Area sales
Manager (ASM)
Sales Executive
for Allotted
Villages