What are the major problems of agricultural marketing in India? (10 marks)

Approach:

  • Briefly introduce with the agricultural marketing
  • Point out the major problems of agricultural marketing in India like lack of pan India markets, APMCs, Infrastructure etc.
  • Conclude with way forward.
Model Answer :

Agricultural Marketing is the way by which the farmers dispose of their surplus production in return of fair and reasonable price. Activities like collecting, grading, processing, transportation and financing are the key components of Agricultural Marketing.

The major problems faced by agricultural marketing in India are:

  • Lack of Pan India Market: There are about 2477 APMCs and 4843 sub-market yards regulated by the respective APMCs in India. Lack of the efforts by states to integrate them have via e-NAM has resulted in ineffective price discovery and marketing.
  • Variation in Market Charges: As per the provisions of APMC Acts of different states, the market committee collects the market charges which varies state by state. For e.g. the market charges vary between 0.50 per cent in Gujarat to 2 per cent in Punjab and Haryana.
  • Poor development of Rural Markets: These markets constitute the first contact points between the producer-seller and the commercial circuits. Most of these markets lack the basic minimum facilities.
  • Grading Infrastructure: It is grossly inadequate, only about less than 10% of the quantity sold by farmers is graded before the sale.
  • Handling: Due to lack of proper handling i.e. cleaning, sorting, grading and packaging and other facilities at the village level, about 7 per cent of food grains, 30-40 per cent of fruits and vegetables and 10-15 per cent of spices are lost before reaching the market.
  • Information Asymmetry: Poor producers find themselves at a major disadvantage in agricultural markets. They have little or no information on market conditions, prices and the quality of goods. They lack the collective organisation like Farmer Producer Organisation, that can give them the power. They can be easily exploited by those with whom they have market relations.
  • Essential Commodities Act: Many State governments are still enforcing several control orders and stocking limits under this Act. These control orders give rise to rent-seeking by the enforcement functionaries at the border checkpoints creating artificial barriers on the movement and storage of agricultural commodities.
  • Proxies: The infiltration of the traders or intermediaries in the guise of farmers reduces the benefits to be reaped by the actual cultivator.

Keeping these issues in mind the government have initiated programs like the National Agricultural Market (e-NAM), SAMPADA etc. Their effective implementation is key towards resolving the issues faced in the agricultural marketing in India.

Subjects : Economy

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