Agriculture has come a long way especially since the past two decades, the drivers have been

many Globalization & WTO global agreements modernization & technology regulated markets minimum support price reforms in agriculture marketing --PDS --co-operative marketing ---E-choupal ---contract farming

meaning
Agriculture marketing is the study of all activities,

agencies and policies involved in the procurement of farm inputs by the farmers and the movement of agriculture products from the farms to the consumers.
Objectives :-

Allocate resources
Leads to development & progress of agriculture sector Increase in overall productivity of the economy

Benefit to the consumer, with improved service

Encourages innovation, new methods & practices

Importance of agriculture marketing

Agri mkt plays an imp role not only in stimulating production

& consumption but also in accelerating the pace of economic development: 70% of population depends on agriculture. Nearly 35% of the output of food grains & all cash crops are

marketed. Agriculture supplies raw materials to various industries . Any increase in the efficiency of the marketing process & reduction in the cost of mkt is direct benefit to the nation. It will stimulate the growth of number of agro-based industries mainly in the field of processing. Will lead to stabilization of price level, benefiting society

IMPORTANCE OF INDIAN AGRICULTURE

Agriculture forms the backbone of the Indian economy. This sector contributes to the Indian economy in a variety of ways:

It provides direct employment to 65% of working people in the country

and contributes about 29% of GDP of the country. In advanced nations like the US, agriculture accounts for a mere 2% of GDP, and employs 4% of the total labour force. The position is similar in other advanced countries. For example, agriculture contributed 2% of GDP in France with 6% share in labour force; in Germany the contribution of agriculture to GDP was 1% with 3% share in labour force. The corresponding figures for UK were 2% and 3% (World Bank 2000). Agriculture also provides the foodgrains to feed the large population of the country. Agriculture contributes a sizeable share in Indias exports. Besides, it provides fodder for the large cattle population. Being the largest source of employment and income to millions of people, it provides a vast market for our industrial products.

 Problems of agricultural marketing are essentially

marketing problems
Fundamentally there are 3 entities involved in the

marketing system with their own respective objectives and conflicting interests The producer Consumers The middlemen
Two major reasons to improve the marketing system Encourage farmers to produce more, by ensuring good

returns Supply of food grains & commodities at reasonable price to the consumers

Problems of agriculture marketing

Lack of organization among producers Forced sales Superfluous middlemen Multiplicity of market charges Malpractices of middlemen Multiplicity of weights & measures Absence of grading & standardization Inadequate storage facility Lack of market information Adulteration Cost of borrowing Underdeveloped infrastructure

Lines of improvement
Establishment of Regulated markets (govt inititiative) Standardization of weights and measures Transportation facilities Warehousing Standardizations of contracts Provision for grading and standardization. Provision of marketing news

PRIVATE INITIATIVE
CONTRACT FARMING E-CHOUPAL ROLE OF MARKETING CO-OPERATIVE

What are Regulated Markets

Regulated under legal frame work Protect the farmers from the clutches of the middlemen

Management in the hands of market committee ,

consisting of nominees from state govt, brokers, farmers, local bodies etc Committee formulates the rules and regulations Finance is obtained from govt grants, market fees, rent of go-downs, license fees etc Charges, allowance, fees commission fixed by the committee Disputes settled by the sub- committee

Benefits of regulated markets

Farmers get a fair price as intermediaries are not able

to indulge in mal-practices relating to multiplicity of charges, adulteration, methods of sale etc Improvement in weighing practices by using standardized weights & measures Initiative taken by regulated market committee to improve transportation facilities. Providing for storage facilities in regulated markets Regulated market legislations play an active role in implementing standardization of contract Market committees initiative to bring about an improvement in the market information system

Problems of regulated markets

Location, payment & working hours Presence of middlemen Lack of information Incentives Measures to remove deficiencies Publicity Control over presence of middlemen Standardization of contracts Effective supervision Provision for marketing news

Contract farming
Contract farming is defined as a system for the production

and supply of agricultural or horticultural products under forward contracts between producers/suppliers and buyers. The essence of such an arrangement is the commitment of the cultivator to provide an agricultural commodity of a certain type, at a time and a price, and in the quantity required by a known and committed buyer, typically a large company. According to the contract, the farmer is required to plant the contractors crop on his land, and to harvest and deliver to the contractor a certain amount of produce, based upon anticipated yield and contracted acreage. This could be at a pre-agreed price, but need not always be so. The typical contract is one in which the contractor supplies all the material inputs and technical advice required for cultivation, while the farmer supplies land and labour.

 The recent spate of contract farming in India effectively

began with the entry of Pepsi Foods Ltd (PepsiCo) in 1989 by installing a tomato processing plant in Hoshiapur, Punjab. PepsiCo followed a method whereby the cultivator plants the companys crops on his land, and the company provides selected inputs like seeds/saplings, agricultural practices, and regular inspection of the crop and advisory services on crop management. Subsequently PepsiCo and other companies have used similar methods for the cultivation of food grains (Basmati rice), spices (chillies) and oilseeds (groundnut) as well, apart from other vegetable crops such as potato. Until recently, this model of contract farming was considered a success in terms of diversifying cultivation in Punjab and improving the incomes of farmers.

Recent trends in contract farming

The state Agriculture produce Act allows a contractual

business arrangement between private companies & farmers, which facilitates letting out of farmland owned by farmers co-operative to the company it strikes a contract with, the company makes investment & buying & selling price are worked out mutually, the ownership of the land remains with the farmers
The Maharashtra govt has invited top retailers

including Wal-mart, Reliance fresh, Big Bazar, ITC s choupal, Pepsi-co farm fresh, Birla groups Trivani. The State govt needs to formalize these arrangements by roping them in contract farming

Low Risk Appetite

Low Margins

Low Value Addition

Caught in a vicious cycle of underdevelopment

Low Investment

Low Productivity

Weak Market Orientation

The eChoupal Challenge

Break the Vicious Cycle and Kick start a Virtuous Cycle of

development A transformational initiative is to : Create markets before Serving them * Create Collaboration to provide quality information and extension services to build capacity to manage * Create Competition both supply side and demand side
To Make available reliable and cost effective inputs To Connect with markets national & international

* Eliminate wasteful and parasitic intermediation Thus, capture larger share of growing consumer spend for the farmer

E-choupal
Is an IT enabled business model which aims at

providing a trading platform for rural India.

For its agri business it has formed Kiosks, the programme includes 3 major activities Dissemination of latest information to farmers & ITC They serve as a e-procurement system for ITC & in the process help farmers to earn higher price for produce --it has created 3 platforms which provide direct access to farmers for selling produce & procuring inputs 1) www.soya choupal.com 2) www.planternet.com 3) www.aquachoupal.com

3) E- choupal has began using its network of choupals & warehouses for a two way trading process, which also takes products & services to the farmers, apart from agri-inputs it also sells FMCG products & services such as insurance through the choupals How does it function? ITC procures the farm produce through the network of choupals Which are managed by village based entrepreneurs known as Sanchalaks 50 sanchalaks are managed by a sanyojak(co-ordinator) who acts as a link between the sanchalak & ITC

The E-Choupal infrastructure What is it ?

ITC Kiosk with Internet Access and Local Language Content

(Weather, Prices, Farming Practices etc) In the house of one trained farmer, Sanchalak Within walking distance of target farmers
Warehousing Hub with Internet Access
Managed by the erstwhile middleman, Sanyojak Within tractorable distance of target farmers

 Today 4100 Choupals are serving over 2.5 million farmers and villagers across 25000 villages (adding 6 a day)

The ITC eChoupal Scale

Enhancing yields Higher capture of consumer spend Building capacities of rural communities

Vision Reach 100,000 villages by 2010

Dealing with wider variety of crops Pilots in watershed management and livestock management are being scaled up Creating infrastructure for Education and Healthcare services Enhancing Quality of Life in rural India

Current Network Size

State Madhya Pradesh Uttar Pradesh Choupals 1750 1750 Hubs 43 42

Maharashtra
Rajasthan Karnataka Andhra Pradesh Choupals Villages Farmers

900
500 100 150 5,150 31,000 3,500,000

22
15 2 3 127

Adding Six New Choupals Every Day Intend Scaling up to 100,000 Villages in 15 States by 2010

Other Services through e Choupal

Distribution of Products and Services to Rural

Markets

Micro marketing
Product/Services Demos Marketing and Brand Building activities

Pilots

Bhoomi eHealth with Private Health Service Providers eEducation Rural BPO

Solution : Transparency and Accuracy in Weighment

Solution : Access to Price Information Anytime & In the Village

Agriculture co-operative
Role/objective of agriculture co-operative marketing Structure of co-operative

Impact of co-operative
Institutions in support of co-operative NABARD

NAFED

Meaning & definition of co-operatives

According to ILO a co-operative is: An association of persons usually with limited means Joining voluntarily To achieve common objective Controlled democratically Members equally contribute to the capital Accepting a fair share of risk & benefits India is the Land of Co-operatives, having largest

number of co-operatives 5 lac co-operatives 207 million members

Principles of co-operatives
There are seven most important principles of co-

operatives which all must adhere to: 1. open membership 2. democratic control 3. limited interest on capital 4. distribution of surplus to the members in proportion to their transaction 5. political & religious neutrality 6. promotion of education 7. co-operation among co-operatives & cash trading

Evolution of co-operatives
Evolution of co-operatives can be noted on 3 lines system Rochdale Raffeisen Schulze

End consumer farmers traders

country of origin England Germany Germany

Institutions play a key role in the development of any

industry, sector or economy as a whole. The government of India have taken initiatives in the cooperative movement and have initiated several institutions to play a crucial role in various sectors where co-operative are organized

Types of co-operatives
Agriculture marketing co-operative Industrial co-operatives Housing co-operatives Labour co-operatives Dairy co-operative Credit co-operatives Institutional assistance to co-operatives in rural sector NABARD NAFED KVIC

THE 3 TIER STRUCTURE

CO-OPERATIVE CREDIT STRUCTURE

Agricultural Credit Societies

Non Agricultural Credit Societies

Short Term (12 to 15 months)

Long Term(Exceeding 5 Years)

1. State co-operative Bank. 2. Central Cooperative Bank

1. State Industrial Co-operative Bank 2. Central Industrial Bank

3. Primary Non Agriculture Cooperative Banks

Marketing Co-operatives
Definition According to RBI it is a co-operative

association of cultivators formed primarily for the purpose of helping the members to market their produce more profitably than is possible through private trade.
Thus they are an association of cultivators on co-

operative principles to perform marketing functions

Structure of agriculture marketing co-operative

NAFED
State co-operative marketing federation

District marketing cooperative society

Primary marketing co-operative society

Role & objective of co-operatives

Objective; Abolition of middlemen

Collective bargaining
Availing of the facility of standardization & grading Standardization of contracts & higher returns to the

producers Provide better infrastructure facilities Supply of timely inputs at reasonable rates Ensuring of standardization of weights & measures Linking credit, processing & farming Relief from illegal deductions & practices adopted by unscrupulous traders

Business operations of marketing co-operatives

Role: Commission business- acts as an agent Outright purchase- by making payment immediately Advance against stock- Pooling (for better price) Grading processing Procurement (on behalf of govt) Supply of inputs

Distribution of consumer goods-restricted to few items

Services- storing , transportation, communication etc Export

Impact/ drawbacks
Lack of involvement by farmers Faulty operations & lack of planning

Lack of linkage & co-ordination between various

levels of co-operatives Credit & marketing societies compete among themselves instead of working in co-operation Favoritism, corruption, mismanagement by the marketing committee of the societies Insignificant contribution & support from regulated markets due to their size & inefficiency Concentrated on distribution & ignored processing & production.

Cont
Lack of supervision & control Marketing societies suffer from insufficient funds &

capital required for developmental activities Due to lack of expertise & trained personnel they are unable to compete with the traders Societies are not evenly distributed, states like Punjab, Haryana & Maharashtra have more number