Agricultural marketing policy necessary

Siraj-ul-Hasan

ARTICLE (November 24 2002) : The agricultural marketing system in Pakistan has developed from an age-old traditional method to that characterized with a certain degree of scientific approach. Although this change has given appreciable dividends to the big farmers yet the small ones being pretty vulnerable at the marketing stage, have been least benefited.

As the small farmers constitute the bulk of farming community (about 75%), and are practising the agriculture not as a profession but as a way of life, the constraints in bettering their lots must be removed to give an impetus to the country's agrarian economy being dwindling continuously.

It is, therefore, necessary to revolutionise our agricultural marketing system giving top priority to the development of small farmers. So far improvements in the marketing system, have been made on an ad hoc basis, filling in the pitfalls for the time being.

After the lapse of about 55 years in this way with regard to the agriculture marketing, how long the country can afford to remain in such an unfavourable situation? So both the Government authorities responsible for formulating policies in various socio-economic fields and NGOs concerned must rise to the occasion to improve the marketing system with special treatment to be given to the farmers having limited resources to carry on their operations efficiently.

Almost majority of experts and consultants, both expatriate and local, are of the view that to obtain the desired results it is necessary that marketing improvements may be made distinctly at three levels - (i) Policy (ii) Managerial, and grass root/farm levels. At the policy level, it is necessary to formulate an effective medium-term policy on agricultural marketing under which various components of marketing programmes and activities can be integrated and co-ordinated.

At managerial level, the management and technical capabilities of technical bodies, involved in the implementation of the marketing policies, should be improved to enable work to be carried out more efficiently and economically.

While fulfilling the socio-economic objectives of government policies at grass-root/farm level, the marketing policies and programmes should assist farmers in selling their produce, purchasing their inputs and raising their incomes. At this level, the effectiveness of government policies and programmes often loses its impact, especially for those farmers whole marketable surplus is too small and least-oriented to marketing requirements.

Many rural development projects and programmes designed for the benefit of small farmers fail because of problems related to marketing and not because of technical production incapabilities.

Of various 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 so as to make government efforts in marketing effective at the village level and to provide direct benefit to the small farmers.

Typical problems faced by the small farmers in Pakistan in dealing with the marketing of their comparatively small quantities of produce mostly relate to (i) production-orientation, (ii) small marketable surplus, (iii) inefficient produce preparation, (iv) ineffective rural assembly markets, (v) credit availability, (vi) lack of group action, and (vii) lack of vertical co-ordination of marketing channels. These are briefly discussed below:-

(i) Production orientation: Many farmers, especially the small ones, are traditionally production -oriented and adapt more slowly to changes in marketing. They produce crops or products that they have been producing traditionally since long. Naturally, they try to find markets for them only when the changing or changed market structure require improved or entirely different produce.

It is essential that marketability be considered along with the production planning. This is particularly relevant for the highly perishable produce such as fruits and vegetables where variety, quality and timings of supplies matter much. The attitude that the market already exists or of thinking about marketing only when the produce is ready to market, leads to failures in marketing, causes frustration among the farmers and ultimately adversely affects the rural development programmes.

(ii) Small marketable surplus: A critical marketing problem for the small farmers is his small marketable surplus. Often he does not produce sufficient cereals even for his own family consumption or has only a small surplus to sell. He has a relatively greater marketable surplus of fruits, vegetables livestock and livestock products but still the quantities are not sufficient to warrant efficient marketing. He may produce cash crops for the market such as sugarcane, tobacco, oilseeds etc but the quality harvested from his small landholding, is still too small for efficient marketing.

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, small farmers have to depend traditionally on village assembly traders or itinerant merchants to market the 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.

(iii) Inefficient produce preparation: Due partly to the small marketable surplus and partly to lack of awareness, the inefficient marketing practices employed by the small farmers, result in higher post-harvest losses, higher marketing costs and lower prices. Further, fruits and vegetable packed in larger straw baskets or larger jute bags and transported by bullock-carts on bumpy roads are subject to a physical loss of 20-40 percent by the time they reach the market. Efficient methods for harvesting, sorting, grading, storage and packaging are essential. Without such efficient methods, the small farmers are bound to receive lower prices resulting in their weak competitive position.

(iv) Ineffective rural assembly markets: At various places in Pakistan periodic (5 days or weekly) rural markets are held which are mostly patronised, per force by circumstances, by small farmers. Such markets serve as assembly points that are linked with large secondary markets or urban wholesale markets. Some larger farmers with larger marketable surpluses bypass the rural periodic markets.

The small farmers remain the main users of rural markets, both for disposing their small marketable surpluses to meet immediate cash requirements as well as for procuring daily necessities such as clothing, salt, shoes and other consumer's items. In most cases these markets are owned and managed by local authorities or by private contractors. These rural markets are also visited by the itinerant merchants and assembly traders to obtain small farmer's produce at cheaper rates and selling it at remunerative prices in the secondary or urban wholesale 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'. The market authorities controlling these markets do not bother for the malpractices rampant in these markets. They are only interested to collect the market fees.

(v) Credit availability: The Agricultural Development Bank of Pakistan (ADBP) and commercial banking institutions are the two man sources to obtain the credit by the farmers for various agricultural operations on completing a number of formalities against acceptable collaterals.

In principle, such loans are available to small farmers as well. But in practice it is pretty difficult for them to obtain the required loan on time with the result that small farmers are unable to bring any improvement in their operations and ultimately to enhance their contivailing power and incomes.

The two main loan-giving agencies indicated above, perhaps have no provision in their respective charters to advance marketing loans. Thus, the farmers, in particular, the small ones, make dealings with the commission agents and wholesalers to obtain the marketing credit from them usually on terms unfavourable to the farmers. Large farmers, however, have access to the marketing loans from the commercial banks as well.

(vi) Lack of group action: For obtaining the benefits of economy of scale, group action is a critical factor to successful small farmer's marketing. In Pakistan small farmers can become members of primary agricultural co-operatives although many such co-operatives are no more active. The most common function performed by these co-operatives is to act as agents of an agricultural credit, fertiliser and other inputs providing institutions or the government food/cash crops procurement agencies.

Unfortunately, in Pakistan, co-operative effort has not been successful in agricultural field due to various reasons. Traditionally, farmers have no hesitation in joining group action for various socio-religious activities or for various crop production operations such as labour-sharing in planting and harvesting. But when it comes to economic functions such as marketing, it is not much encouraging where group action should be better understood by its members and management should be relatively more 'sophisticated'. Distrust among farmers, distrust of the management group, lack of managerial skill and technical know-how of marketing, all together make group action in marketing a bit difficult.

(vii) Lack of vertical co-ordination of marketing channels: The success of small farmers marketing depends on the degree of vertical "co-ordination in the marketing channels". Some marketing functions often focus only on one link of the marketing system. As such uncoordinated marketing channels are a great constraint on small farmers development. It is important to involve 'Channel captains', often the wholesalers and assembly traders also induce them to orient their marketing strategies to small farmers development.

Even the most ambitious and reasonable pricing and marketing policies of the government have not produced tangible results in increasing the incomes of small farmers in Pakistan, mainly due to the absence of an effective field- level marketing system. Additionally, some pretty viable and useful projects like "Marketing development project" having provision for small farmers development and getting the ECNEC approval, could not be implemented due to non-availability of its foreign exchange component by UNDP despite commitment. Similarly, a well-thought-out programme of rural market development partly financed by the German Foundation for International Development (DSE) and after making the desired progress could not get through due to reasons best known to FAO.

In this programme along with six other Asian countries viz. Bangladesh, India, Sri Lanka, Nepal, Maldives, Indonesia, Pakistan also participated. The main theme of this programme was the small farmer's development through the development of rural markets.

An a conclusion of the exposition of existing agricultural marketing working in general, and particularly in Pakistan, it may be emphatically stated that the establishment of ever-important field-oriented marketing extension system (so far conspicuous by its absence in Pakistan), especially designed to assist the small farmers in marketing their produce is a critical factor in making government marketing policies and rural development programme a success.

Source: Business Recorder