Important Marketing Concepts

• Marketing Function: Any business activity that helps move goods from producer to consumer.
  • Exchange Function: Buying and selling.
  • Physical Function: Storage, grading, transport.
  • Facilitating Function: Financing, risk bearing, market information.
• Marketable Surplus: Portion of produce available for sale after self-consumption.
• Marketed Surplus: Actual quantity sold by farmers.
• Price Spread: Difference between price received by farmer and price paid by consumer.
• Market Margin: Difference between purchase price and selling price of an intermediary.
• Marketing Efficiency: Ratio of value added by marketing to total marketing cost. Formula: E= Value added / Marketing cost

• Marketing Cost: Total cost incurred from farm to consumer.

• Producer’s Share in Consumer’s Rupee: Price received by farmer as % of consumer’s price.

Market Structure in India

Marketing Channels (Flow of Produce)

• Channel-I: Producer → Consumer (direct sale)
• Channel-II: Producer → Retailer → Consumer
• Channel-III: Producer → Wholesaler → Retailer → Consumer
• Channel-IV: Producer → Commission Agent → Wholesaler → Retailer → Consumer

• Shortest and most efficient channel: Producer → Consumer.
• Most common in India: Producer → Wholesaler → Retailer → Consumer.

Grading and Standardization

• Grading: Sorting of produce into different lots according to quality.
• Standardization: Establishing quality standards to ensure uniformity.
• AGMARK: Agricultural Produce (Grading and Marking) Act, 1937.
  • Implemented by Directorate of Marketing and Inspection (DMI) under the Ministry of Agriculture.
• BIS (Bureau of Indian Standards): Provides ISI mark for industrial goods.
• FSSAI: Ensures food safety and quality standards.
• Codex Alimentarius Commission: International food standard-setting body (FAO & WHO).

Institutions Related to Agricultural Marketing

Warehousing and Storage

• Warehousing: Scientific storage of produce for future use or sale.
• First Warehouse in India: Established in 1957 (Central Warehousing Corporation).
• Types of Warehouses:
  • Public Warehouse – For general public.
  • Private Warehouse – Owned by individuals/firms.
  • Bonded Warehouse – For imported goods.
  • Cold Storage – For perishables (fruits, vegetables, milk).
• Negotiable Warehouse Receipt (NWR): Farmers can get loans against stored produce.
• Functions of Warehousing:
  • Price stabilization
  • Quality maintenance
  • Credit availability
  • Risk reduction

Minimum Support Price (MSP) & Price Policy

• MSP: Price fixed by Government to protect farmers from price fall.
• Announced by: Government of India based on CACP recommendations.
• Procurement Agency: FCI, NAFED, CCI, etc.
• Announced for: 23 major crops (7 cereals, 5 pulses, 7 oilseeds, 4 commercial crops).
• Objective:
  • Ensure remunerative prices to farmers.
  • Encourage crop diversification.
  • Stabilize agricultural markets.
• Formula for MSP: Based on A2 + FL + 50% of A2+FL (Swaminathan Committee recommendation).
  • A2 = Paid-out cost
  • FL = Family labour cost

Marketed Surplus Ratios

E-NAM and APMC

• APMC Act: Regulates buying & selling of agricultural produce in notified markets.
• E-NAM (National Agriculture Market):
  • Launched: April 2016
  • Aim: Integrate mandis across India through an online trading platform.
  • Implemented by: Small Farmers’ Agribusiness Consortium (SFAC).
• Benefits of e-NAM:
  • Transparent price discovery.
  • Reduction in middlemen.
  • National-level market access.
  • Real-time market information.

Marketing Reforms in India

• Model APMC Act (2003 & 2017): Encourages private markets, direct marketing, and contract farming.
• Contract Farming: Agreement between farmer and firm before production.
• Direct Marketing: Farmers sell directly to consumers (e.g., Apni Mandi, Rythu Bazaar, Uzhavar Sandhai).
• Private Markets: Established by individuals or companies under APMC guidelines.