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Bottlenecks in rice marketing
MEAGRE marketable surplus of small farmers together with
their weak financial position makes it difficult for them to
withhold the produce for better prices, while the remoteness
from the organised markets generally influence farmer
‘decision to sell locally at comparatively low prices.
 The
rice growers get an estimated 65 per cent of the consumer
price. The role of middlemen acting as a link between
producers and consumers is very complex and needs in-depth
analysis.
Middleman is the person who provides many economic services
to farmers and on the other hand he is considered as one of
the major “institution” exploiting farmers. They get very
high margins but their share is generally justified by
considering provision of additional services and risks which
they usually undertake at each stage of marketing.
An efficient marketing system means availability of quality
inputs and outputs at desired place, at the right time and
in the suitable form which is not possible without strong
infrastructure support, efficient transportation,
processing, grading and storage facilities.
Generally, these physical marketing facilities are lacking..
As such, agricultural products have to be handled for a
considerable time by various marketing agencies before
reaching to end consumers. It is estimated that the entire
marketed surplus passes into the trade channel in two to
three months.
Unsuitable storage methods and poor handling increases
post-harvest losses. Authentic market intelligence on
regular basis is necessary for maintaining meaningful
interaction between producers and consumers to ensure smooth
and effective flow of agricultural products.. All
stakeholders in the market should have accurate information
about demand, supply and prices.
Marketing problems: Typical problems faced by the small rice
farmers in dealing with the marketing of their comparatively
small quantities of produce are discussed below:
The total government storage capacity for food grains at
present is unable to handle the volume of production. It
hinders the creation of times utilities and losses are
sustained by storing produce in open sub-standard stores.
Due to lack of financial reserve, the small farmers have to
sell their produce at the time of harvest or a little after
and do not receive fair price. It is estimated that
producers will get 10 to 14 per cent more returns if
necessary storage facilities with credit are provided. This
will result in better standard of living for producer and
better investment power for productive farming.
Some of the fraudulent practices are, Arhtya and Dalal
(middlemen) acting both for buyer and seller, settlement
under case, false weighing and variety of charges. The
growers have no voice in the regularisation of various fees
charged from them. Many of the illegal dues are deducted
from sole proceeds. Eexcess weights are also in vogue in
various markets. Illegal deductions are also made in kind
especially from fruits and vegetables. These abuses are
almost prevalent in all the markets, which depress the
return to the grower.
Farmers’ small marketable surplus has limited the scope of
marketing strategy. For effective marketing, the economy of
scale is a critical element. A small marketable surplus
implies a weaker basis to bargain with assembly merchants or
wholesalers. Direct marketing by small farmers thus becomes
impracticable because of high marketing costs. Therefore,
they have to depend traditionally on village assembly
traders or itinerant merchants to sell their produce.
Even when the farmers are aware of an opportunity of getting
better price by selling their produce somewhere else, the
traditional "customers relationship" established with
certain other traders, prohibits the farmers from seeking a
more advantageous alternative opportunity.
The inefficient marketing practices employed by the small
farmers result in higher post-harvest losses, higher
marketing costs and lower prices. Efficient methods for
harvesting, processing and storage are essential. Without
such efficient methods, the small farmers are bound to
receive lower prices resulting in their weak competitive
position.
At various places periodic (five days or weekly) rural
markets are held which are mostly patronised by small
farmers. These markets serve as assembly points that are
linked with large secondary markets or urban wholesale
markets. Some farmers with larger marketable surpluses
bypass the rural periodic markets.
In most cases these markets are owned and managed by local
authorities or by private contractors. The itinerant
merchants and assembly traders who obtain small farmer’s
produce at cheaper rates and selling it at remunerative
prices in the secondary or urban wholesale markets also
visit these rural markets.
Most rural markets have no marketing facilities such as
storage and many do not even have the shelters. Malpractices
such as under-weighing, dubious sale and weighing practices
are freely used against the interests of the farmer-sellers.
Towards the end of the day, the bargaining power of the
farmers becomes weaker as the market turns into a 'buyer
market'. But the authorities controlling these markets do
not bother to check these malpractices and instead only
interested to collect the market fees.
One common feature of our agriculture is the high
concentration of landed wealth, 70 per cent of five per cent
landowners control the land. The bottom 20 per cent of
households receive about five per cent of the total income
while the top 20 per cent receive more than half of the
total income. On account of 70 per cent of the small
farmers, their marketable surplus is quite less and the
small farmers are not in a strong bargaining position and
there fore, cannot influence the price structure. Although
lot of work has been done in developing farm to market
roads, yet there is acute shortage of rural road net works
and transport facilities.
Of various agricultural marketing problems, the most
critical one is the lack of marketing extension service.
Although crop production extension services do exist at the
village and farm level to a certain degree, but marketing
extension work designed to provide guidance to small farmers
particularly, is non-existent. To establish and strengthen
field level marketing extension service is an important
priority area to provide direct benefit to the small
farmers.
Bank credit need for farming requires completing a number of
formalities against acceptable collaterals. But in practice
it is pretty difficult for small farmers to obtain required
loans on time with the result that they are unable to bring
any improvement in their operations to enhance production
and their incomes.
The banks do not advance marketing loans to small farmers..
Thus, the small farmers have to borrow from the commission
agents and wholesalers on harsh and unfavourable terms.
Large farmers, however, have access to the marketing loans
from the commercial banks as well..
Possible solutions: A Marketing Authority should be created
in all provinces as well as at the federal level to improve
the overall marketing system .This marketing authority may
be an autonomous body quite distinct from the existing
government marketing department/cells.
Unlike at present (when the marketing staff is working under
the provincial Agricultural Directorates although it has to
deal with the marketing of livestock products, and is also
used for agricultural extension work resulting into less
effective role to handle the purely marketing problems), the
agricultural marketing directorates in the provinces should
have an specific purpose entity. Their functions must
include marketing surveys, marketing intelligence service,
grading for internal consumption and trade; and regulation
of commodity markets.
As the growers are not getting a fair deal in selling their
produce through the wholesalers/commission agents, there is
need for creating alternate agencies like marketing board
with the active participation of growers to provide healthy
competition with the existing market intermediaries.
In order to save the growers from the exploitation by the
commission agents and other market functionaries, the
element of regulation of agricultural wholesale markets has
been introduced. But the objective has not been achieved. It
is, therefore, suggested that working of the existing
regulated markets be improved and new ones be established
with the proper control to minimise the exploitative role of
the market functionaries.
The concept of the farm service centres is based on giving a
package deal in respect of various services to the farmer
under one umbrella. The establishment of such centres in the
rural areas may provide the farmers facilities of storage,
credit, small processing units purchase of inputs like
fertilisers, pesticides, diesel oil, repair of agricultural
machinery. Arrangements for sale of farm produce through
these centres may also be made.
Due to the absence of village to mandi link roads
appreciable quantities just cannot reach the market and goes
waste in the rural areas. It needs no emphasis that an
efficient marketing information service can greatly help in
dispatching of produce more profitably. Besides, it can
assist the farmers in planning their production programme.
It will also provide dependable statistics on prices and
also other market information to the planners, research
workers and decision-making authorities. Presently market
information services provided at the Federal level or by the
provinces are by no mean adequate.
Institutional credit facilities for the agricultural produce
have so far been production-oriented. Certain allocations
are, however, made for marketing credit which are generally
made available to the trading concerns in the urban area.
Such credit facilities do not in anyway help the producers.
The credit-giving agencies should, therefore, allocate
separate funds for marketing at primary level and see that
the credit actually reaches the farmers particularly the
small farmers.
The pricing policy should aim at providing adequate return
on investment. The procurement/support price may be
announced one season earlier to elicit adequate production
response from the farmers. There is a need of timely
announcement of export policy. The export market may be
diversified as far as possible.
Modern rice mills in the public sector may be set up at
places where milling facilities are inadequate/non-existent.
Moreover, existing mills should be improved.
Courtesy: The DAWN
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