Agricultural marketing in India by the active assistance of government's innovative approach

AGRICULTURAL MARKETING IN INDIA BY THE ACTIVE ASSISTANCE OF GOVERNMENT'S INNOVATIVE APPROACH

Organised marketing of agricultural commodities has been promoted in the country through a network of regulated markets. Most of the State governments and Union Territories have enacted legislations (APMC Act) to provide for regulation of agricultural produce markets. While by the end of 1950, there were 286 regulated markets in the country, today the number stands at 7,521 (31.3.2005).

Besides, the country has 27,294 rural periodical markets, about 15 per cent of which function under the ambit of regulation. The advent of regulated markets has helped in mitigating the market handicaps of producers/ sellers at the wholesale assembling level, but, the rural periodic markets in general, and the tribal markets in particular, remained out of its developmental ambit.

Agriculture sector needs well functioning markets to drive growth, employment and economic prosperity in rural areas of the country. In order to provide dynamism and efficiency into the marketing system, large investments are required for the development of post harvest and cold chain infrastructure nearer to the farmers' field.

A major portion of this investment is expected from the private sector, for which an appropriate regulatory and policy environment is necessary. Alongside, enabling policies need to be put in place to encourage procurement of agricultural commodities directly from farmers' field and to establish effective linkage between the farm production and the retail chain and food processing industries. Accordingly, amendment to the State APMC Act for deregulation of marketing system in the country is suggested to promote investment in marketing infrastructure, motivating corporate sector to undertake direct marketing and to facilitate a national integrated market.

The Ministry of Agriculture formulated a model law on agricultural marketing for guidance and adoption by State Governments. The model legislation provides for establishment of Private Markets/Yards, Direct Purchase Centres, Consumer/Farmers Markets for direct sale and promotion of Public Private Partnership in the management and development of agricultural markets in the country. Provision has also been made in the Act for constitution of State Agricultural Produce Marketing Standards Bureau for promotion of Grading, Standardisation and Quality Certification of agricultural produce.

This would facilitate pledge financing, direct purchasing, forward/future trading and exports. Several States have initiated steps for amending the APMC Act.

Infrastructure Requirement

Investment requirement for the development of marketing, storage and cold storage infrastructure in the country has been estimated to be huge and with a view to induce investment in the development of marketing infrastructure as envisaged above, the Ministry has implemented the following Plan Schemes:

A capital investment subsidy scheme titled "Construction of Rural Godowns" is being implemented w.e.f. 1 April 2001.

The main objectives of the scheme include creation of scientific storage capacity with allied facilities in rural areas to meet various requirements of farmers for storing farm produce, processed farm produce, agricultural inputs, etc., and prevention of distress sale by creating the facility of pledge loan and marketing credit. Under the original scheme, back ended subsidy @ 25 per cent of capital cost of the project was provided. In case of NE States, hilly areas and SC/ST entrepreneurs, subsidy was provided @ 33.33 per cent of the capital cost of the project.

The Scheme has since been modified with effect from 20 October 2004, to provide subsidy @ 25 per cent to farmers, Agriculture graduates, cooperatives and Central Warehousing Corporation/State Warehousing Corporations. All other categories of individuals companies and corporations are now given subsidy @ 15 per cent of the project cost.

The scheme has been made farmers' friendly by allowing subsidy for smaller godowns of 50 MT size in general and of 25 in hilly areas. 500,000 tonnes capacity to be created is reserved for small farmers. The scheme is being implemented through NABARD and NCDC. Till 31 May 2006, 11,583 storage projects having a capacity of 348,000 USD tonnes have been sanctioned under the scheme.

With a view to establish a nation-wide information network for speedy collection and dissemination of price and market related information to farmers, electronic connectivity is being provided to all important agricultural markets in the country under a Central scheme, "Market Research and Information Network". 2,408 market nodes and 92 State Marketing Boards and Directorate of Marketing and Inspection offices have been networked on a single portal, wherein daily prices of more than 300 commodities and about 2000 varieties are being reported. It is planned to connect 2,700 markets in all, under the scheme during the 10th Plan.

The Ministry of Agriculture is implementing another Central Sector scheme for "Development / Strengthening of Agricultural Marketing Infrastructure, Grading and Standardisation".

Under the scheme, investment subsidy is provided @ 25 per cent on the capital cost of the marketing infrastructure development project subject to a maximum of USD 1068,000 for each project in all States and @ 33.3 per cent of capital cost subject to a maximum of USD 128,000for each project in case of North Eastern States, hilly areas and to Scheduled Castes/Scheduled Tribes entrepreneurs.

In respect of infrastructure projects of State Governments/State Agencies, there is no upper ceiling on subsidy to be provided under the scheme.

The scheme is reform linked, to be implemented in those States/Union Territories wherein the law dealing with agriculture markets (Agricultural Produce Marketing Regulation Act) allows setting up of competitive agricultural markets in private and cooperative sectors, direct marketing and contract farming. The States of Andhra Pradesh, Punjab, Kerala, Tamil Nadu, Manipur. Sikkim, Madhya Pradesh, Himachal Pradesh, Nagaland, Rajasthan.

Chattisgarh and Union Terriroty of Andaman and Nicobar Islands, Daman

and Diu and Dadra and Nagar Haveli have notified to receive assistance under the Scheme. The remaining States/UTs are in the process of amending their APMC Acts. 158 training and awareness programmes have been conducted in the notified States/UTs.

A total number of 259 new project proposals have been provided advance subsidy of USD1048.000 by NABARD in the States of Madhya Pradesh, Tamilnadu, Punjab, Andhra Pradesh and Kerala.

The Department has recently taken the initiative to promote modern terminal markets for fruits, vegetables and other perishables in important urban centres of the country.

These markets would provide state of art infrastructure facilities for electronic auction, cold chain and logistics and operate through primary collection centres conveniently located in producing areas to allow easy access to farmers.

The terminal markets are envisaged to operate on a 'Hub-and-Spoke' format wherein the Terminal Market (the hub) would be linked to a number of collection centres (the spokes), conveniently located in key production centers to allow easy access to farmers for the marketing of their produce.

The concept on setting up of Terminal Markets for perishable commodities was discussed with the State Governments and interested private enterprises at a national conference of State Ministers held on 20 February 2006 at New Delhi.

Based on the discussions, a Committee has been constituted under the Chairmanship of Director General, National Institute of Agricultural Marketing, Jaipur with members from participating State Governments to develop a framework for the bidding process for selecting the enterprise for the implementation of terminal market projects and to work out implementation modalities.

Central assistance to these projects is planned by way of equity participation.

The Department of Agriculture and Cooperation has three organisations dealing with marketing under its administrative control, namely, the Directorate of Marketing and Inspection (DMI), Faridabad, the Ch. Charan Singh National Institute of Agricultural Marketing (NIAM), Jaipur and the Small Farmers Agri-Business Consortium (SFAC), New Delhi.

Directorate Of Marketing And Inspection

It is an attached office of the Department and is headed by Agricultural Marketing Adviser. The Directorate has its Head Office at Faridabad (Haryana), Branch Head Office at Nagpur (Maharashtra), 11 Regional Offices and the Central Agmark Laboratory at Nagpur. Besides, there are 26 Sub-Offices, 16 Regional Agmark Laboratories (RALs) spread all over the country.

Functions of Directorate

Rendering advice on statutory regulation, development and management of agricultural produce markets to the States/UTs

Promotion of Standardization and Grading of agricultural and allied produce under the Agricultural Produce (Grading and Marking) Act, 1937

Market Research, Surveys and Planning

Training of personnel in Agricultural Marketing

Marketing Extension

Agricultural Marketing Information Network

Construction of Rural Godowns and

Development of Agricultural Marketing Infrastructure.

Grading and Standardization

The Agricultural Produce (Grading and Marking) Act, 1997 empowers the Government to fix quality standards, known as "AGMARK" standards and to prescribe terms and conditions for using the seal of 'AGMARK'. So far, grade standards have been notified for 182 agricultural and allied commodities.

The purity standards under the provision of the Prevention of Food Adulteration (PFA) Act, 1954 and Bureau of Indian Standards (BIS) Act, 2006 are invariably taken into consideration while framing the grade standards. International Standards framed by Codex/International Standards Organisation (ISO) are also considered so that Indian produce can compete in the international market.

During the year 2005-06, the final notification of Spices G & M Rules, 2005 is published, containing standards of eleven spices, namely, large Cardamom, Cardamom, Turmeric, Chillies, Ginger, Black Pepper, Coriander, Fennel, Fenugreek, Celery, Cumin, etc.

The standards of Walnut duly harmonised with the international standards have been submitted to APEDA and were discussed in the Core Group's Meeting. The approval of Standing Committee on fresh Fruits and Vegetables is awaited for commodities like Lemons, Limes, Mandarins, Oranges, Grape Fruits, Walnuts in-shell and Walnut shelled.

National Institue Of Agricultural Marketing

The National Institute of Agricultural Marketing (NIAM) started functioning at Jaipur (Rajasthan) from 8 August 1988. NIAM has been imparting training to senior and middle level executives of agricultural and horticultural departments, Agro Industries, Corporations, State Marketing Boards, Agricultural Produce Market Committees and Apex level Cooperatives, Commodity Boards, export houses recognised by Agricultural and Processed Food Products Export Development Agency (APEDA), Commercial Banks and non-governmental organizations.

Besides these clients, the NIAM also imparts training to farmers on marketing management. The main objectives of NIAM are :

1.To provide specialized training in agricultural marketing designed to develop leadership potential in the management of agricultural marketing enterprises and services

2. To undertake research in agricultural marketing for Government, Cooperative and other Institutes, both on public funding and by contract

3. To undertake appraisal of markets/marketing projects for approval and financial support by the Central Government, on consultancy basis

4. To formulate objective criteria for selective development of physical markets and to evolve a practical methodology for the application of such criteria in their planning

5. To offer advisory and consultant services on marketing policies, investment programmes and marketing development strategies and specific advice to marketing enterprises (State, Private and Cooperatives)

6. To survey, study and analyze the rural market management and to examine in depth the principal and practice of market regulation as a development sector in the agricultural economy.

The NIAM is managed by a Governing Body under the Chairmanship of Minister of Agriculture and an Executive Committee under the Chairmanship of Secretary, Department of Agriculture and Cooperation.

Training Activities

The Institute organises Training Programmes for officials, farmers and other functionaries. In 2003-04 Management Development Programmes (MDP) were introduced.

So far four MDPs have been successfully organised for leading companies like Bayer Crop Science, MICO BOSCH, etc.

The MDPs were held at NIAM campus and 120 working executives of these MNCs working in various capacities have been benefited from this programme. All these MDPs were rated excellent by the participants and many other companies have shown keen interest in organising MDPs at NIAM, Jaipur.

Research

The domestic Agricultural Marketing scenario has witnessed lot of changes in policies and regulations. The enactment of Model Act by some States have brought substantial improvements in trade and marketing. Following Research studies are being conducted by NIAM during the year 2005-06.

Contract Farming - prospects and implications

Commodity Trade Research

Market led extension - a participatory approach

Developing India GAP Standards

Information need assessment of stakeholders in Agricultural Marketing - A case ofRajasthan

Project Formulation

In order to generate resources and ensure optimum utilisation of the expertise of the NIAM faculty, the Institute is taking up several Consultancy Projects in the year 2005-06.

These include setting up Modern Terminal Market for fruits and vegetables at Nasik, Chandigarh, Nagpur, Patna, Bhopal, Rai (Haryana), Multi-utility integrated facility Centre-Pack house at Ludhiana for MARKFED, Punjab, State Master Plan for Market Development in Orissa, Price Forecasting for Agricultural Commodity in Karnataka, On-line Market information system for Karnataka, Designing, Planning and detailed Project report for CA Storage at Kolkata. Detailed Project Reports have been prepared for the Modern Terminal Markets at Nashik, Nagpur, Chandigarh, Bhopal and Rai (Haryana).

Post Garduate Programme in Agri-Business Managment (PGPABM)

The Institute has undertaken Post-Graduate Programme in Agri-Business Management (PGPABM) as a Sub-centre of MANAGE, Hyderabad from July 2001 and 50 students are presently undergoing Post-Graduate Programme in Agri-Business.

The programme is designed to assist agricultural graduates to acquire the critical know-how to compete in the domestic and global business arena and to make them efficient agri-business managers.

Small Farmers Agri-Business Consortium

The Small Farmers Agri-business Consortium (SFAC) was registered by Department of Agriculture and Cooperation as a Society under the Societies Registration Act, 1860 on 18 January 1994.

Members at present include RBI, SB1, IDBI, EXIM Bank, Oriental Bank of Commerce, NABARD, Canara Bank, NAFED, United Phosphorous Ltd., etc.

The SAFC is managed by a Board of Managers consisting of 20 members and chaired by Hon'ble Union Minister of Agriculture as its Ex-Officio President and the Secretary (Department of Agriculture and Cooperation), Government of India as its Ex-Officio Vice President.

Managing Director is the Chief Executive of SFAC. SFAC has established 18 State level SFACs by contributing a corpus fund.

The mission of the Society is to support innovative ideas for generating income and employment in rural areas by promoting private investments in agribusiness projects.

The Central sector scheme for agri-business development implemented by SFAC was approved by the Government on 19 July 2005 for implementation during remaining period of the Tenth Plan with an outlay of USD 10900,680. The scheme is being implemented by SFAC in close association with commercial banks for providing.

Venture Capital Assistance to agribusiness projects and Assist farmer/producer groups in preparation of quality Detailed Project Reports (DPR).

The main objectives of the scheme are to facilitate setting up of agribusiness ventures in participation with banks, catalyse private investment in setting up of agribusiness projects and thereby providing assured market to producers for increasing rural income and employment, strengthen backward linkages of agri-business projects with producers, assist farmers, producer groups, and agriculture graduates to enhance their participation in value chain through project development facility, arrange training and visits, etc., of agripreneurs setting up identified agribusiness projects. SFAC provides financial assistance to agribusiness projects by way of equity participation.

The quantum of SFAC venture capital assistance depended on the project cost and will be the lowest of the following:

10 % of the total project cost assessed by the bank, 26 % of the project equity

Rs 75 lakh.which is equivalent to 160,000 USD.

Higher venture capital assistance can be considered by SFAC to deserving projects on merit and/or to projects that are located in remote and backward areas, North-eastern and hilly States and projects recommended by State agencies. The outlay for implementation of the scheme during 2005-2006 was USD 2300,680 which has been utilised.

During the year venture capital assistance has been sanctioned to 44 agribusiness projects and assistance has been provided for preparation of 11 Detailed Project Reports (DPRs).

The allocation for implementation of the scheme during 2006-07 is Rs. 38 crore, that means in dollars 8600,000 USD.

Consulted resources

1. The Times of India (20-29 July 2007)

2. The Telegraph(23-30 July 2007)