economics of production and marketing of kharif maize in...
TRANSCRIPT
September, 2012 309
1. Assistant Professor, 2 and 3-Junior Research Assistant and 4 M.Sc. Scholar, Department of Agricultural Economics Mahatma Phule Krishi
Vidyapeeth, Rahuri-M. S.-413722
Economics of Production and Marketing of Kharif Maize in Ahmednagar District of
Maharashtra State
D. S. NAVADKAR1, A. J. AMALE
2, C. M. GULAVE3 AND V. M. NANNAWARE
4
Abstract
The present investigation was attempted to study
the resource use structure, to estimate the cost of
cultivation and to study the marketing of maize. In all, 90
farmers were selected from Karjat tahsil of Ahmednagar
district in western Maharashtra. The data related to the
Agricultural year 2008-09 was taken for the present study.
The sample farmers were classified into three size groups
of holdings i. e. small, medium and large. The Cobb-Douglas
type of production function was used for functional
analysis.
The findings of the study showed that the male and
female human labour utilization were 77.19 and 106.45 man
days per hectare. The bullock labour utilization was 10.68
pair days. The per hectare use of nitrogen was 110.80, 110.18
and 112.10 kg. per hectare in small, medium and large size
groups, respectively. At the overall level, per hectare cost
of cultivation of maize (i.e. Cost ‘C’) was worked out to
Rs. 40624.50. Among the different items of costs, rental
value of land was the highest (17.53 per cent). The per
hectare gross income received from maize was Rs. 42350.00,
Rs. 43580.00 and Rs. 43320.00 in small, medium and large
size groups, respectively, while it was worked out to
Rs.43083.33 at the overall level. The per hectare Cost '‘A’
was Rs. 24819.72, Rs. 26702.16 and Rs. 24552.20 in small,
medium and large size groups, respectively. Per hectare
profit at Cost ‘A’ was Rs. 17530.28, Rs. 16877.84 and
Rs. 18767.80 in small, medium and large size groups,
respectively. The per hectare total cost, i.e. Cost ‘C’ was
Rs. 40831.13, Rs. 41302.57 and Rs. 40069.00 in small, medium
and large size groups, respectively. The profit at Cost ‘C’
was Rs.1518.87, Rs. 2277.43 and Rs. 3251.00 in small, medium
and large size groups, respectively. In the Channel-I, the
marketing cost incurred during the selling of maize was
workedout to Rs. 203.28 per quintal at the overall level. The
major component of marketing cost was commission
charges (50.66 %) which is followed by expenditure on
packaging charges (25.27%) and transport (19.68%). In the
Channel II, the marketing cost incurred during the sale of
maize was workedout to Rs. 47.50. The major components
of marketing cost were packing (84.63 %) and transportation
charges (10.74 %). The producer's share in consumer's rupee
was 78.26 per cent and 73.19 per cent in Karjat and
Ahmednagar market, respectively. In Channel I, the
marketing efficiency of kharif maize in Ahmednagar market
was 1.13 and in Kajat market was 1.11. In Channel II, the
marketing efficiency at local market was 1.10. So,
Ahmednagar market was efficient for marketing of the maize.
As regards to the input use level, the inputs used for
maize cultivation were far below the recommendations. The
gap in the use of manures could be minimized if the maize
growers under take the activities such as the practices of
green manuring and vermi compost production.The
estimates of the production functions indicated that, human
labour, manures and nitrogen are the important resource
variables responsible for increasing the yield. The use of
these variables has to be carefully extended by the maize
growers to increase the yield.
INTRODUCTION
Maize is globally a top ranking cereal not only in
productivity but also as human food, animal feed and as a
source of large number of industrial products. The potential
for enhanced use of maize for specially purposes based on
existing uses and new products to meet the needs a future
generation provides the researchers with unique
challenges. Maize considered as queen of the cereal is one
of the most important cereal crop in the world, next only to
rice and wheat. Worldwide the area, production and
productivity of maize are 137 million ha, 610 million tones
and 4.43 tlha, respectively. In India during 200607 maize
was grown in an area of 7.42 million ha with the production
and productivity of 14.72 million tones and 1,983 kg/ha,
respectively. Major proportion (55 %) of maize is consumed
as food and additional use of maize include as feed, forage
and in processing industry . Broadly, maize growing states
in India can be divided into (1) Rajasthan, Maharashtra,
Gujarat, Uttar Pradesh and Madhya Pradesh, covering
about 55-60 % of area, but with yield levels lower than
national average, ranging between 0.95 t/ha in Rajasthan
to 1.3 t/ha in Uttar pradesh and (ii) Bihar, Himachal Pradesh,
Punjab, Andhra Pradesh and Karnataka with about 30 %
area and productivity levels higher than national average,
ranging from 1.8 t/ha in Bihar to 2.4 t/ha in Andhra Pradesh.
In the second group, conditions are comparatively
favorable in terms of quality of both environment and
improved maize material.
In India 55 per cent of the grain produce concurrently
is used for food purposes, about 14 per cent for livestock
310 Agricultural Situation in India
feed. 18 per cent for poultry feed, 12 per cent for starch and
1 per cent for seed. By the end of this century the expected
demand will be around 46 per cent for food, 14 per cent for
livestock feed, 19 per cent for poultry feed, 19 per cent for
starch industry and 15 per cent for seed.
The study area which belongs to Karjat tahsil in
Ahmednagar district identically suitable to large scale of
maize cultivation and farmers of this area are cultivating
maize crop on large scale. The present investigation was
attempted to study the resource use structure, resource
use productivities, cost of cultivation, marketing of maize
and constraints in production and marketing of maize.
METHODOLOGY
The selection of Ahmednagar district was done
purposively as Ahmednagar district is one of the major
districts in producing maize in Maharashtra and it has its
own problems of production and marketing. For the study,
Karjat tahsil of Ahmednagar district was selected
purposively taking into consideration the concentration
of area under maize in this tahsil. As the soil and agro-
climatic conditions prevailing in the tahsil are more favorable
for growing maize. The list of maize growing villages of the
selected tahsil was prepared on the basis of information
obtained from the respective tahsil agricultural office.
For selection of the sample cultivators, a list of maize
growers was prepared from the revenue records of each of
the villages. They were grouped into three categories on
the basis of their operational holding viz., small farmers
(below 2 ha.), medium farmers (2.01 to 4 ha.) and large
farmers (above 4.01 ha.). From each group, 5 farmers were
selected in each village randomly. In all, total 15 farmers
were selected from each village from three categories of
farms. So, the total sample cultivators were 90 comprising
of 30 small farmers, 30 medium farmers and 30 large farmers.
The primary data on aspects like details of farm
family, infrastructure, land utilization, cropping pattern,
resource use structure, farm production, cost and returns
as well as grading, packaging and transport of maize,
marketing cost and problems in production and marketing
management of maize were obtained by survey method
from the sample cultivators for the year 2008-09 with the
help of well designed questionnaire prepared for the
purpose.
Tabular analysis method based on means and
percentages was used for estimating costs and returns.
The input costs have been arrived at by three stages (i.e
Cost ‘A’, Cost ‘B’ and Cost ‘C’) on the basis of standard
cost concepts used in Cost of Cultivation Schemes under
the State Government and Central Government.
Estimation of marketing cost
It includes the grading and packing charges
comprising the wages paid to the labour, value of packing
material and other charges, transport cost includes transport
charges including loading and unloading charges and
market cost comprising hamali, weighing and commission
charges. The cost actually paid by the selected farmers
was considered and analyzed.
Marketing efficiency (ME)
It is calculated by using Acharya’s Index of ME
(Acharya and Agarwal, 1999).
FPME = ----------------
[MC+MM]
Where,
ME = Marketing Efficiency
FP = Prices received by the farmer
MC = Marketing costs
MM = Net marketing margins
RESULTS AND DISCUSSION
National Scenario of Maize:
The Karnataka produces 18% of the India’s maize
production; other top producing states include Andhra
Pradesh, Maharashtra, Bihar, Rajasthan and Tamil Nadu.
The per hectare maize production is highest in Tamil Nadu
and then after West Bengal and Andhra Pradesh are
comes.(Table 1)
TABLE 1—STATE WISE AREA, PRODUCTION AND YIELD OF MAIZE IN INDIA
(Area- Million ha., Production- Million tones and Yield- kg./ha.)
State Area % to All-India Production % to All-India Yield
Karnataka 1.24 15.01 3.01 18.02 2430
Andhra Pradesh 0.78 9.48 2.76 16.52 3527
Maharashtra 0.79 9.61 1.83 10.93 2302
Bihar 0.63 7.65 1.48 8.84 2341
Rajasthan 1.10 13.28 1.15 6.85 1044
September, 2012 311
TABLE 1—STATE WISE AREA, PRODUCTION AND YIELD OF MAIZE IN INDIA—Contd.
(Area- Million ha., Production- Million tones and Yield- kg./ha.)
State Area % to All-India Production % to All-India Yield
Tamil Nadu 0.24 2.96 1.14 6.84 4686
Madhya Pradesh 0.83 10.07 1.05 6.25 1256
Uttar Pradesh 0.71 8.58 1.04 6.21 1465
Himachal Pradesh 0.30 3.58 0.54 3.25 1839
Gujarat 0.50 6.02 0.53 3.19 1072
Jammu & Kashmir 0.31 3.76 0.49 2.91 1566
Punjab 0.14 1.68 0.48 2.84 3417
West Bengal 0.10 1.18 0.39 2.30 3943
Jharkhand 0.16 1.98 0.19 1.14 1169
Others 0.43 5.17 0.65 3.88 @
All India 8.26 100.00 16.72 100.00 2024
@- Since area/production is low in individual states, yield rates are not worked out (Source: Agricultural Statistics at a glance, GOI, 2011)
1. Resource use structure
The quantities of various inputs directly affect the
cost of cultivation and therefore, the use of different inputs
like human labour, bullock labour, seeds, manures, fertilizers
etc. in quantitative and monetary terms have been studied
in detail. The information on utilization of different resources
for maize is presented in the Table 1 on per hectare basis.
It is seen from the Table 2 that, the total labour
utilization per hectare was highest in small size group
followed by large and medium size groups of maize growers.
The male human labour utilization were 83.36, 78.45 and
72.98 man days per hectare in case of small, medium and
large size groups of maize growers, respectively. While, at
overall level, the male human utilization level was 77.19
man days per hectare.
TABLE 2—PER HECTARE RESOURCE USE LEVEL OF MAIZE
Sr. Particulars Small Medium Large Overall
no.
1. Total Human labour (Days) 198.06 175.22 181.20 183.65
a. Male 83.36 78.45 72.98 77.19
b. Female 114.70 96.77 108.22 106.45
2. Bullock power (pair days) 8.14 14.18 9.80 10.681
3. Machine power in hrs. 2.00 2.60 1.80 2.09
4. Seed ( Kgs) 33.12 30.18 35.18 33.19
5. Manures (Qtls.) 12.15 14.10 14.20 13.66
6. Fertilizers ( Kgs)
N 110.80 110.18 112.1 111.21
P 50.40 60.52 60.70 58.07
K 16.30 20.51 20.30 19.36
7. Irrigation Charges ( Rs.) 980.50 1218.40 1420.80 1250.83
312 Agricultural Situation in India
The female human labour utilization in small, medium
and large size groups of maize growers were 114.70, 96.77
and 108.22 man days per hectare, respectively and at overall
level, it was 106.45 man days per hectare.
The bullock labour utilization in case of small, medium
and large size groups of maize growers were 8.14, 14.18 and
9.80 pair days, respectively whereas, at overall level, it was
10.68 pair days. The per hectare use of nitrogen was 110.80,
110.18 and 112.10 kg. per hectare in small, medium and
large size groups, respectively. At overall level the use of
nitrogen was 111.21 kg. per hectare.
At overall level per hectare use of P and K was 58.07
and 19.36 kg. per hectare respectively. Farmers uses the
fertilizers doses as per the recommendations.
2. Per hectare cost of cultivation of maize
The per hectare cost of cultivation of maize on the
sample farms during 2008-09 has been estimated and the
same is represented in the Table 3.
It is seen from the table that, at the overall level, per
hectare cost of cultivation of maize (i.e. Cost ‘C’) was
worked out to Rs. 40624.50. Among the different items of
costs, rental value of land was the highest (17.53 per cent).
The other important items of cost were male labour (19.00
per cent), female labour (18.33 per cent) followed by bullock
labour (9.20 per cent), interest on fixed capital ( 6.57 per
cent) and fertilizer ( N) ( 4.22 per cent). The cost incurred in
respect of land revenue and other taxes and depreciation
were negligible in the cost of cultivation. Similar trend was
observed among the different size groups of maize growers.
In the total cost of cultivation, the Cost ‘A’ was
Rs. 25255.20 (62.17 per cent) and Cost ‘B’ was Rs. 35043.80
(86.26 per cent) at overall level and decreasing as well as
increasing trend in cost was observed with increase in the
size of holding.
Among the items of costs, the main items were rental
value of land (Range between 17.11 to 17.83 per cent), male
labour (Range between 19.00 to 20.42 per cent), female
labour (Range between 16.40 to 21.64 per cent),bullock
labour (Range between 6.98 to 12.02 per cent) and manures
(Range between 2.98 to 3.54 per cent)Thus, from above
forgoing discussion, it was noticed that the cost of
cultivation varied among the size groups of maize growers.
TABLE 3—ITEM WISE PER HECTARE COST OF CULTIVATION OF MAIZE
(Rs.)
Sr. Cost items Small Per Medium Per Large Per Overall Per
No. cent cent cent cent
1. Total Human labour
a. Male 4512.00 11.05 3820.00 9.25 3018.00 7.53 3628.83 8.93
b. Female 6448.00 15.79 5504.10 13.33 5979.40 14.92 5955.90 14.66
2. Bullock power 2849.00 6.98 4963.00 12.02 3430.00 8.56 3738.39 9.20
(pair days)
3. Machine power in hrs. 220.00 0.54 390.00 0.94 207.00 0.52 264.40 0.65
4. Seed ( Kgs.) 2649.60 6.49 2414.40 5.85 2814.40 7.02 2654.83 6.54
5. Manures ( Qtls.) 1215.00 2.98 1410.00 3.41 1420.00 3.54 1365.79 3.36
6. Fertilizers ( Kgs. )
N 1706.32 4.18 1696.77 4.11 1726.34 4.31 1712.59 4.22
P 1038.24 2.54 1246.71 3.02 1250.42 3.12 1196.28 2.94
K 152.41 0.37 232.79 0.56 230.41 0.58 211.61 0.52
7. Irrigation Charges ( Rs.) 980.50 2.40 1218.40 2.95 1420.80 3.55 1250.83 3.08
8. Plant protection charges 199.12 0.49 215.13 0.52 230.18 0.57 217.96 0.54
(Rs.)
9. Incidental charges ( Rs.) 115.82 0.28 325.00 0.79 112.60 0.28 176.26 0.43
10. Reapirs 210.60 0.52 260.00 0.63 290.74 0.73 261.61 0.64
11. Working capital 22296.61 54.61 23696.3 57.37 22130.2 55.23 22635.2 55.72
September, 2012 313
TABLE 3—ITEM WISE PER HECTARE COST OF CULTIVATION OF MAIZE—Contd.
(Rs.)
Sr. Cost items Small Per Medium Per Large Per Overall Per
No. cent cent cent cent
12. Int.on working capital 1337.80 3.28 1421.78 3.44 1327.82 3.31 1358.12 334
13. Depre. on farm 1115.20 2.73 1511.18 3.66 1020.30 2.55 1189.29 2.93
imliments
14. Land revenue and 70.12 0.17 72.90 0.18 73.80 0.18 72.61 0.18
other taxes
15. Cost-A 24819.72 60.79 26702.1 64.65 24552.2 61.27 25255.2 62.17
16. Rental value of land 6988.21 17.11 7190.43 17.41 7146.20 17.83 7119.79 17.53
17. Int. on fixed capital 2812.20 6.89 2115.18 5.12 2950.60 7.36 2668.78 6.57
18. Cost-B 34620.13 84.79 36007.7 87.18 34649.0 86.47 35043.8 86.26
19. Family labour
a. Male 3824.00 9.37 4025.00 9.75 4280.00 10.68 4090.54 10.07
b. Female 2387.00 5.85 1269.80 3.07 1140.00 2.85 1490.16 3.67
20. Cost-C 40831.13 100 41302.5 100 40069.0 100 40624.5 100
21. Output
a. main produce (Qtls.) 31120.00 32560.0 31904.0 31902.1
b. Bye-produce (Qtls.) 11230.00 11020.0 11416.0 11252.3
22. Cost-C net bye produce 29601.13 30282.5 28653.0 29372.2
23. per quintal cost 760.95 744.04 718.48 736.66
3. Profitability of maize
An attempt has been made to compare the per hectare
gross income, different costs and the profit at different
costs with net returns and the benefit cost ratio in maize
cultivation in different size groups of maize growers. The
details are given in the Table 4.
It is seen from the table that, the per hectare gross
income received from maize was Rs.42350.00, Rs.43580.00
and Rs. 43320.00 in small, medium and large size groups,
respectively, while it was worked out to Rs.43154.44 at the
overall level. It is indicated that medium size group has
obtained more gross income followed by large and small
size group, respectively.
The per hectare Cost ‘A’ was Rs. 24819.72,
Rs. 26702.16 and Rs. 24552.20 in small, medium and large
size groups, respectively. Per hectare profit at Cost ‘A’ was
Rs.17530.28, Rs.16877.84 and Rs.18767.80 in small, medium
and large size groups, respectively. Whereas, the profit at
Cost B was Rs.7729.87, Rs.7572.23 and Rs.8671.00 in small,
medium and large size groups, respectively.
TABLE 4—PER HECTARE COSTS, RETURN, GROSS INCOME AND B:C RATIO FOR MAIZE
Sr. Particulars Sizegroups
No. Unit Small Medium Large Overall
1. Total cost
(i) Cost ‘A’ Rs. 24819.72 26702.16 24552.20 25255.29
(ii) Cost ‘B’ Rs. 34620.13 36007.77 34649.00 35043.87
(iii) Cost ‘C’ Rs. 40831.13 41302.57 40069.00 40624.57
314 Agricultural Situation in India
TABLE 4—PER HECTARE COSTS, RETURN, GROSS INCOME AND B:C RATIO FOR MAIZE—Contd.
Sr. Particulars Sizegroups
No. Unit Small Medium Large Overall
2. Profit at
(i) Cost ‘A’ Rs. 17530.28 16877.84 18767.80 17899.14
(ii) Cost ‘B’ Rs. 7729.87 7572.23 8671.00 8110.57
(iii) Cost ‘C’ Rs. 1518.87 2277.43 3251.00 2529.87
3. Production Qtls 38.90 40.70 39.88 39.88
4. Gross income Rs. 42350.00 43580.00 43320.00 43154.44
5. B:C ratio
(i) Cost ‘A’ 1.71 1.63 1.76 1.71
(ii) Cost ‘B’ 1.22 1.21 1.25 1.23
(iii) Cost ‘C’ 1.04 1.06 1.08 1.06
The per hectare total cost, i.e. Cost ‘C’ was Rs.
40831.13, Rs. 41302.57 and Rs 40069.00 in small, medium
and large size groups, respectively. The profit at Cost ‘C’
was Rs.1518.87, Rs. 2277.43 and Rs. 3251.00 in small, medium
and large size groups, respectively.
From the above foregoing discussion, it is clear that
the cultivation of maize is profitable at every stage of
production. It is seen that large size group of maize growersgot more profit followed by medium size group and small
size group of maize growers.
4. Marketing channel
In the study area the farmers sold their maize directly
in the Agricultural Produce Market Committee (A. P. M.
C.), i. e. the producer sold their produce to the wholesaler
and then the wholesaler sold their produce (maize) to the
retailer and then retailer sold their produce to the consumer
or processing unit. Thus, in case of maize the channel of
distribution is as follows.
Marketing channel:
Producer
↓↓↓↓↓
Wholesaler
↓↓↓↓↓
Retailer
↓↓↓↓↓
Consumer/processing units
5. Marketing cost incurred by producer
The marketing cost incurred by marketing of maize is
presented in table 5.
In the channel-I marketing cost incurred during the
sale of maize has been incurred to the tune of Rs. 203.28 per
quintal at overall level. In terms of percentage, it is estimated
that the components of marketing cost viz., Packing,
transportation, hamali, tolai and commission charges have
respectively involved to 25.27, 19.68, 2.57, 1.82 and 50.66
per cent of total marketing cost.
This indicates that highest expenditure during the
sale of maize has been paid on commission which is followed
by expenditure on packaging and transportation charges.
The cost paid on other items of marketing is reasonable
and has not much inflated the total marketing cost.
TABLE 5—MARKETING COST FOR MAIZE IN DIFFERENT MARKET
( Rs./qtl.)
Sr. Particulars Channel-I Channel-II
No Karjat Ahmednagar Overall Local
1. Packing charges 45.60 57.12 51.36 40.20
(28.63) (23.10) (25.27) (84.63)
2. Transport 20 60 40.00 5.10
(12.56) (24.26) (19.68) (10.74)
3. Hamali 4.95 5.50 5.23 2.20
(3.11) (2.22) (2.57) (8.20)
September, 2012 315
TABLE 5—MARKETING COST FOR MAIZE IN DIFFERENT MARKET—Contd.
( Rs./qtl )
Sr. Particulars Channel-I Channel-II
No. Karjat Ahmednagar Overall Local
4. Tolai 3.60 3.80 3.70 0.00
(2.26) (1.54) (1.82) 0.00
5. Postage 0.008 0.007 0.0075 0.00
(0.005) (0.003) (0.004) 0.00
6. Commission 85.12 120.85 102.99 0.00
(53.44) (48.87) (50.66) 0.00
7. Total marketing cost 159.28 247.28 203.28 47.50
(100) (100) (100) (100)
(Figures in parentheses are percentages to the total marketing cost)
The marketing cost incurred by channel-II was Rs. 47.50
per qtl. The major component of marketing cost was packing
(84.63 per cent) and transportation charges (10.74 per cent).
6. Price Spread
Price spread in case of market where maize was
directly sold by producer to wholesaler to retailer in
A. P. M. C., has been worked out and presented in
Table 6.
It is seen from table that gross price received by
maize growers was Rs. 800.00 and 900.00 per quintal in
Karjat and Ahmednagar market. The producer share in
processor
TABLE 6—PRICE SPREAD IN MARKETING OF MAIZE
Sr. No Particulars Karjat Ahmednagar
Rs/qtl Rs/qtl
1. Gross price received by the producers 800.00 900.00
(78.26) (73.19)
2. Market expenses incurred by the producers 119.28 197.28
(11.67) (16.04)
3. Net price received by the producers 680.72 702.72
(66.59) (57.14)
4. Commission received by the wholesalers 46.20 64.06
(4.52) (5.21)
5. Expenses incurred by the wholesalers 32.25 36.15
(3.15) (2.94)
6. Margin of the wholesalers 24.02 28.11
(2.35) (2.29)
7. Commission received by the retailers 13.22 16.12
(1.29) (1.31)
8. Expenses incurred by the retailers 11.26 16.15
(1.10) (1.31)
9. Margin of the retailers 10.29 15.12
(1.01) (1.23)
10. Price paid by consumers in the market 1022.21 1229.76
(100) (100)
(Figures in parentheses are percentage to final price paid by the consumers)
316 Agricultural Situation in India
(consumers) price was 78.26 and 73.19 per cent in
Karjat and Ahmednagar market.The total market cost
incurred by producer was 119.28 (11.67 per cent) and 197.28
(16.04 per cent) in above said market. The net price received
by the producer was Rs. 680.72 and 702.72 per quintal in
Karjat and Ahmednagar market. The total market cost
incurred by retailer was Rs. 11.26 (1.10 per cent) and 16.15
( 1.31 per cent) in Karjat and Ahmednagar market.
7. Marketing Efficiency
TABLE 7— MARKETING EFFICIENCY
Sr. No. Particulars Channel-I Channel-II
1 Ahmednagar 1.13 —
2 Karjat 1.11 —
3 Local — 1.10
It is noted from the table 7 the Ahmednagar market
was efficient for marketing of the maize.
8. Constraints in the input use of maize
Table 4 revealed that 50 per cent cultivators had
stated the problem lack of knowledge of cultivation
practices. About 44 per cent farmers had reported the high
cost of pesticide. Nearly 39 per cent maize growers noticed
the high cost of fertilizers.
Conclusions
The per hectare gross income received from maize
was Rs. 42350.00, Rs. 43580.00 and Rs. 43320.00 in small,
medium and large size groups, respectively, while it was
worked out to Rs. 43083.33 at the overall level. The per
hectare Cost ‘A’ was Rs. 24819.72, Rs.26702.16 and
Rs.24552.20 in small, medium and large size groups,
respectively. Per hectare profit at Cost ‘A’ was
Rs.17530.28, Rs.16877.84 and Rs.18767.80 in small,
medium and large size groups, respectively. The per
hectare total cost, i.e. Cost ‘C’ was Rs. 40831.13,
Rs. 41302.57 and Rs. 40069.00 in small, medium and large
size groups, respectively. The profit at Cost 'C' was
Rs.1518.87, Rs. 227743 and Rs.3251.00 in small, medium
and large size groups, respectively. The output-input
ratio at total cost for kharif maize was 1.06 indicating
that maize is a profitable crop enterprise.
In the Channel-I marketing cost incurred during the
sale of maize has been incurred to the tune of Rs. 203.28 per
quintal at overall level. The marketing cost incurred by
Channel-II was Rs. 47.50 per qtl. The gross price received
by maize growers was Rs. 800.00 and 900.00 per quintal in
Karjat and Ahmednagar market. The producer's share in
processor (consumers) price was 78.26 and 73.19 per cent
in Karjat and Ahmednagar market. Ahmednagar market was
efficient for marketing of the maize.
As regards to the input use level, the inputs used for
maize cultivation were far below the recommendations. The
gap in the use of manures could be minimized if the maize
growers under take the activities such as the practices of
green manuring and vermi compost production. The
estimates of the production functions indicated that, human
labour, manures and nitrogen are the important resource
variables responsible for increasing the yield. The use of
these variables has to be carefully extended by the maize
growers to increase the yield. .
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in two district of western UP. Indian farmers Digest
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September, 2012 317
*Department of Agricultural Economics G.B. Pant University of Agriculture & Technology, Pantnagar-263 145. UK
Economic Analysis of Rice Production and Households’ Livelihood in Hills of Uttarakhand:
Constraints of Modern Rice Varieties Adoption
*H.N. SINGH, M. S. BISHT, J. SINGH AND S. P. SINGH
Abstract :
The productivity of rice grown in hills is not only
lower but less than 1 t / ha which is far below than the
national average 2.2 t / ha. A sample survey involving 50
randomly selected farmers representing two contrasting
rice growing environments terrace and valleys of Almora
district was conducted during 2007-08. Descriptive
statistics were applied to analyze different socioeconomic
and biophysical variables causing yield gap in distinctly
different rice growing environments. Terraces are entirely
rainfed and farmers were using traditional varieties (TVs)
with low-input use, while high yielding modern varieties
(MVs) along with high inputs are commonly used in
valleys as irrigated. Findings revealed that rice farmers
of valleys getting a net return of 50% oyer cost incurred,
where as in terrace farmers were not only in losses but
cultivation cost was 30% higher than the gross income of
rice. Interestingly, farmers were sacrificing 1.44% of their
annual income by practicing rice cultivation in terrace
which offers opportunity for employment of family labour
tor achieving food and fodder security. Analysis extended
a step further to evaluate the influence of a set of
independent socioeconomic and biophysical variables
on adoption of MVs and concluded that the biophysical
factors have greater influence on adoption of MVs. In the
response of socio-economic factors no matter remains
related to the adoption. This calls for policy intervention
to enhance the average productivity of rice in terrace
which may depend on too many factors. The policy of
research effort should be needed to increase yield potential
of TVs through participatory technologies development
research approach which may be more realistic way for
achieving goals of target area. Research efforts should
also be suggested to improve crop nutrient management
practices of rice in terrace which could be able to reduce
cost that can be transformed it into profitable enterprise.
Key Words: Environment, Productivity, Livelihood, Food
security, Biophysical
Introduction:
Rice occupies a substantial proportion in the diet of
millions of Indian people and thus stands for a prominent
place in Indian agriculture. Over the last five decades, area
and production have witnessed substantial growth.
However, in recent past the compound growth rate in
production has decelerated from 6.56 % during 1980s to
3.34% during first decade of 2000. This is largely attributed
to many factors responsible for slowing down the yield
growth from 5.45 % during the 1980s to 2.55 % during first
decade of 2000 (Dutta et al. 2006). Productivity of rice in
India is about 2.2 t/ ha.
Rice cultivation covers around to 54 per cent of the
total area of cereal crops grown during khrief in
Uttrankhand. Out of 2.86 lakh hectare, 1.44 lakh hectares
which is about 51 % is in hills and remaining area under
plains. Total production of rice in the state is about 5.32
lakh tonnes, and contribution of hills and plains come about
38.8 and 63.2%, respectively. Average productivity of rice
in the state as a whole is around 1.9 t/ha, whereas in hills it
is only 1.1 t/ha. The plains of Nainital and Udhamsingh
Nagar districts showed highest productivity and these were
about 3.0 and 2.6 t/ha respectively. Among hill districts
Tehri Garhwal recorded highest productivity (1.6 t/ha) and
lowest (about 1.0 t/ha) was found in Almora and Pauri
Garhwal districts (Singh et al. 2011).
In Uttarakhand, hill and mountain ecosystem is unique
because of varying topographical features, differing
landscape and climatic variations along the slope and
hydrological conditions of fields etc. In general, hills receive
750 to 1250 mm rainfall annually, but 80-90 per cent is received
in monsoon period (June to August). About 10 per cent of
net cultivated area was provided irrigation water in hills and
that too is confined the lower valleys. Rice productivity in
the hill districts is stagnating for the past several years and
the production is not adequate to meet the demand for the
whole year. Even though state as a whole it is in surplus with
food production but the hill districts depict a net shortage of
foodgrain about 29000 tons annually (Bisht 2007).
Considering the contribution of rice in livelihood system of
households in hill immediate improvement in productivity is
a challenging task before the researchers, administrators
and policy makers. The objective of this paper is to
characterize rice production environments households’
livelihood strategies and constraints in adoption of modern
rice varieties in hills of Uttarakhand.
Methodology :
This study was conducted in Takula and Chaukhutia
blocks of district Almora as this district has largest rice
318 Agricultural Situation in India
area but lower productivity. There are two predominantly
rice growing environments, terrace and valleys. The
selection criteria for the villages were based on acreage of
rice which represents terrace and valley, two distinctly
different rice growing environments. Out of total 50 farm-
families, 25 from each rice growing environment were
selected randomly. The investigation was carried out in
the year 200708. Pre-tested and well-structured schedule
was used to conduct intensive household survey to
gathered data on different biophysical and socioeconomic
variables. Secondary data was also used from various
sources of government and non-government organizations.
Descriptive statistics were applied to analyze the mean
and percentages of different biophysical and
socioeconomic variables. Standard deviation (SD) and ‘t’
test were applied to estimate variation and significance
level of differences in concerned variables wherever
required. Tabular analysis was used to present the results
which seems enough to capture main findings of this study.
Description of study sites :
In hills, there are two distinct features of rice
growing environment viz., Terrace and Valleys. Terraces
located on slopes and cultivated land has light-textured
brown soil, well drained, very small size and un-irrigated
plots resulting entire farming dependent on rainfall which
was characterized as rainfed condition. Terraces are
considered as unfavorable rice growing environment in
context to poor soil-moisture regime. Valleys known as
land tract in between the hills composed of plain and
lowland types with heavy textured-red loam nutrient rich
soil. Valley is well irrigated by hill canals with good water
holding capacity of soil which provides favorable condition
for rice cultivation. In hills proportion of terrace type land
is about 90% to total cultivated area where as area under
valleys was limited up to 10% only (Bisht 2007, Singh et al.
2011 and Pathak & Sharma 1985 ).
In both environments land preparation was totally
dependent on bullock power. Mechanization was not
possible due to biophysical conditions especially small
size plots and sloping land type fields. The number of parcels
was more in the terraces than valleys where as number of
plots per parcel were almost equal. However, size of parcel,
smaller in terraces due to hill slopes and undulating land
situation. Rice is planted predominantly during the kharif
season. In valleys modern varieties (MVs) are popular where
as traditional varieties (TVs) are grown in terraces only
since long back. Traditional methods of farming system
are continued in terraces due to complexity of land situation
and unavailability of irrigation. In terraces, farming activities
begin immediately after rain occurs as they are mainly
rainfed. Terraces were entirely direct seeded (dry-seed and
dry- soil), while in valleys transplanting is popular rice
establishment method. The average grain yield of rice in
valleys was almost tripled to the average yield in terraces
(table 4), Rice accounted for 48 and 58 per cent share to
total cropped area in kharif in terraces and valleys,
respectively. However, acreage of rice was 54 % to total
cropped area in kharif This clearly indicates that rice is
most important crop and economic activity in kharif season
which supports livelihood of households in the hills.
Results and Discussion :
Characteristics of Households :
The major characteristics of the selected households
are summarized in table I. The average operational holding
in terrace was slightly higher 0.30 ha as compared to 0.27
ha in valleys. The overall average operational holding was
about 0.28 ha in the hill. In valleys nearly 84 per cent of the
fields have access to irrigation through hill canals. On the
other hand, terraces are entirely dependent on rainfall for
water/irrigation. Average years of schooling of household
head were 8 and 7 years in valleys and terraces respectively.
Average age of households head was 55 years which is at
par across the environment. The average family size was
also at par for the both sites and it was 6 members per
family.
Cropping Systems :
Table 2 reveals the cropping pattern adopted on the
sample farms in two rice growing environments viz., terraces
and valleys. In valleys, MVs are popular whereas TVs are
grown in terraces. In terraces, farming activities begin
immediately after rain occurs as they are mainly rainfed.
Rice farming in terraces is attributed by direct seeded (dry-
seed and dry-soils), while in valleys transplanting was
popular rice establishment technique. Rice seems the major
cereal in the terraces and valleys as it occupied 26 and 31%
area to gross cropped area respectively. Importance of rice
also very obvious during kharif and its share were 48 and
58% to total cropped area in terrace and valleys
respectively. The other important crop of kharif was mandua
which emerged as second important cereal and occupied
27 and 20% area to total cropped area in the respective
environments. The other cereals, pulses, oilseeds and
spices were minor in importance in terms of acreage. Wheat
was a major crop in rabi season in both the environments
and covered 50 and 54% to total cropped area in terraces
and valleys respectively. Barley emerged out as a second
most important crop with 17% area to total cropped area
across the environments. The other pulses and oilseeds
crops also occupy a considerable area. In rabi season a
substantial area of land left fallow in both the environments
due to moisture stress which constrained plowing and
sowing of crops (Table 2).
Level of Input use :
Table 3 indicated information on input uses in
different rice growing environments. Seven days bullock
labour required for land preparation in terrace while in
September, 2012 319
valleys it was somewhat doubled. Farmers were applying
higher seed quantity as 160 and 67 kg./ha in terraces and
valleys respectively. While FYM application was about
one and half times greater in terraces than the amount
applied in valleys. Valleys are irrigated through hill canals
whereas terraces are entirely rainfed. Farmers of valleys
used nitrogenous and phosphoric fertilizers and their
consumption level was 60 and 23 kg./ha respectively. In
terraces consumption of fertilizer was almost zero. These
differences between inputs used were due to differential
environmental conditions representing differences in land
type and access of irrigation in these contrasting rice
producing environments.
Total labour days use in rice cultivation in valleys
was 141, where as in terraces it was 82. Transplanting a
predominant rice establishment technique fn valleys
required 33 labour days/ha which was 25% to the total
labour use. In harvesting 35 labour days was used and
threshing and winnowing together used 33 labour days in
valleys. In terraces, weeding emerged as important
component which required 29 labour days accounts for
about 35% to total labour use in rice cultivation.
Costs and Returns Analysis :
The average cost of cultivation of rice was Rs. 13609/
ha in the valley which was about 44% more than that in the
terrace (Rs. 8710). The material cost which includes bullock
power, FYM, seed, irrigation and fertilizer consumption was
worked out to be Rs. 4611/ha accounting for 53% to total
cost in terraces and Rs. 6552 for valleys accounting for
48% to total cost. Material cost was more in valleys due to
use of chemical fertilizers (table 4). Among different items
of material cost, FYM was the most important input followed
by seed, which together accounted for 37% to total cost in
terraces. While in valleys bullock power was the most
important component of material cost with 17% to the total
cost followed by FYM having 12% share to total cost of
cultivation of rice.
In two environments viz., terraces and valleys human
labour included only family labour. Labour cost in rice
cultivation included nursery management, rice establishment,
manure application, fertilizer application, weeding, harvesting
and winnowing. Labour cost was Rs. 4099 in terraces and
Rs. 7057/ha in valleys which constitute 47 and 52% to total
cost, respectively . Weeding cost emerged out as a main
component of labour cost in terraces followed by harvesting.
However, rice establishment was the most important
component of labour cost in valley followed by harvesting,
threshing and winnowing.
The yields of rice were 31.20 and 9.37 qtls/ha in
valleys and terraces respectively. The yield differences were
due to non-adoption of modem technologies in terraces
due to number of constraints discussed in details in next
sections. Price of rice in the market was slightly higher in
terraces than valleys which may be due to preferred quality
of grain and fodder of local rice varieties. There are large
differences observed in gross returns from rice cultivation
in these two heterogeneous rice growing environments
and these differences are contributed by yield levels. In
valleys gross returns was about three times (Rs. 17864/ha)
than that of terraces (Rs. 6149). Adoptions of modern
technologies especially high yielding varieties seed and
inorganic fertilizer in rice cultivation in valleys are alone
sufficient to explain the variation in yield, gross and net
returns. The net returns were negative and not losses of
Rs. 2561/ha over cost in terraces where as in valleys net
return was Rs. 4255/ha. Despite prevailing resource-
neutrality, there appears that rice is an enterprise for good
proportion of loss/profit. Therefore, it is necessary to
examine the existing circumstances which influence farmers
to go for such a business which continuously giving them
negative returns (table 4). Moreover, it is matter of fact that
there must have some positive correlation between
traditional methods of rice cultivation and existing
environmental conditions which influenced farmers for
adaptation are discussed below.
Major rice varieties grown :
The major rice varieties grown on sample farms and
their share in total rice area, number of growers, and mean
yield are given in table 5. Out of five, three TVs are planted
in terraces only and remaining two MVs are restricted to
plant in valleys. The TVs are safeddhan, laldhan and
kurmuli. Most of the farmers from terrace growing
safeddhan in their fields (92%) followed by the laldhan
(60%) and kurmuli (20%). Similarly share of area planted to
safeddhan was 62 % to total rice area followed by 1aldhan
(31%) and kurmuli (7%).
However, yield level of these TVs was almost similar
and average was 9.37 qtls/ha. Despite of lower yield and
negative net return of these TVs, farmers continued opting
cultivation of these varieties on slopping land under rainfed
conditions. This indicates that farmers give importance to few
more traits in the TVs apart from yield which have very strong
association with the sub- ecosystem in the target environment.
In valleys, China 4 and Thapachini, percolated from
neighboring countries of China and Nepal and these two
distinct old modernrice varieties were popular. However, valleys
provide favorable production condition for rice in terms of
land and soil qualities and reliability of irrigation resources.
Therefore, farmers followed a different production practices
for rice cultivation in valleys than terrace. Thapachini a
promising variety planted by almost all the farmers of valleys,
where as only 80% farmers planted China 4. Share of area
planted in these two varieties was slightly different. The
average yield of MVs in valley was 31.20 qtls./ha.
Although yield of Thapachini was 5 qtls lower than
the China 4, but other qualitative traits of Thapachini such
as shorter maturity period and grain quality were more
320 Agricultural Situation in India
favorable for the farmers. By growing of Thapachini,
farmers were able to utilize residual moisture of soil to initiate
production process of rabi season crop (Singh et al. 1995).
The relative prices of Thapachini usually higher in the
market due to consumers, strong demand. Yield of MVs
was almost three times higher than the TVs due to genetic
potential and improved production practices. Use of five
varieties by the farmers in two different rice growing
environments with different characters shows the Genotype
x Environmental interaction effect due to genotypic
phenological differences and available environmental
conditions such as soil, water, nutrient, temperature,
humidity, rainfall and sunshine hours etc. The cumulative
influence of these variables leads to adaptation of a
particular genotypes in a given environment (Fukai 2000 et
al. & Singh et al. 2000 and Bisht 2007).
Factors determining adoption of MVs :
Table 6 provides information on various biophysical
and socioeconomic variables which usually influenced
adoption of modern rice varieties in a given environment.
The yield of TVs was 9.37 and MVs was 31.20 qtls/ha and the
number of rice plots considered for respective types of varieties
cultivation were 147 and 203 respectively. Adoption of MVs
in terrace was almost zero due to complex, diverse and risk
prone (CDR) nature of rice production environment. Different
biophysical factors of this environment which my be
associated with adoption were on upper and undulating
landscape position, coarse textured soil accompanied with
poor moisture retaining capacity and rainfed conditions restrain
farmers for cultivation of MVs. Because MVs performed better
in ideal production condition and required precise agronomic
management practices (Singh et al. 2006 and 2010).
Contrary to it, biophysical factors such as lowland,
heavy textured soil, access to irrigation and moisture regime
were playing major role in valleys to influence adoption
of MVs. Interestingly, there are no significant differences
in other socio-economic variables such as average age of
household head, years of schooling, number of family
members and farm size between terrace and valleys
environment. However, distribution pattern of all socio-
economic variables seems to be symmetrical and identical
in both the rice growing environments. After in-depth
analysis of a set of independent variables; biophysical
and socio-economic and their potential influence on
adoption of MVs, it could be concluded that all the
biophysical factors considered in the analysis have greater
influence on adoption of modern rice varieties. In the
response of socioeconomic factors no matter remains
related to the adoption of MVs (Singh et al. 2000).
Sustenance income and livelihood of households :
The annual incomes of farmers from different sources
in two distinct rice growing environments are given in table
7. The sources of income in both the environments were
highly diversified. Diversified sources of income helps
household in income stabilization and to mitigate adverse
consequences, if one or more sources become failure in
income generation (Singh et al. 1995). The average annual
income of households in hills was Rs. 37854. The major
proportion of income was contributed by shops and
government jobs in equal proportion accounts 26% to total
income. Where as teaching profession provides a
substantial amount of income being 13 % followed by
private services 12 % to total income. The share of income
from crop production to total income of household was 6%
only. The other sources of income were minor in terms of
their contribution in total income such as livestock and
self employment etc.
The annual income of households in valleys was
Rs.47321 which is about 67% higher than the households
of terraces where it was Rs. 28382. Major share of income
was contributed by government jobs which accounted for
29 % to total annual income in valleys. The next important
sources of income were shops, teaching profession and
private services which contributed 26, 12 and 11%
respectively. Remaining other sources of income was about
21 % which have great importance in household livelihood
and hill economy.
Sources of income structure in terrace environment
were somewhat different from the valleys. The annual
income of households from all sources was Rs. 28382.
However, contribution of shops was highest being 26% to
total income, followed by the Government jobs, which
accounted for 20%. Private services and teaching
profession shared 15 and 14 % in total income respectively.
A substantial proportion of income 9% was also derived
from ‘others’ activities which included earning from labours
and pensions. Apart from this, few other sources of income
such as self-employed (barber, tailor and blacksmith etc.),
livestock and crop production contributed altogether 16%
to total income of households
Crop production contributes 3 and 7% to average
households’ income in terrace and valleys environment
respectively. Share of income from rice was in negative
(–1.44%) in terrace, while it was 1 per cent in valleys. The
result indicates that rice farmers of terrace were sacrificing
1.44% their income to total income by growing rice. Despite
negative net return farmers were continuing practice of
rice cultivation. This may be due to the zero opportunity
cost of family labor especially women, food pattern,
consumption behavior and food & fodder security goal.
Results also revealed that rice seems as major agricultural
and economic activity in kharif season as it occupied 48%
area to total cropped area. For family labor employment,
there is no opportunity/alternative activity other than rice
cultivation in the area (Pandey et al. 2000).
In addition to above, livestock played major role in
household's economy of hill and requirement of fodder is
September, 2012 321
another essential component for farming community.
Therefore, cultivation of rice in these adverse environments
not only secure food but also help to reduce the pressure
on forest for fodder to maintain the environmental balance
through supply of enough quantity of rice straw (Singh et
al. 1995).
Concluding remarks and policy implications :
It is concluded from foregoing results that
implications emerged call for befittingdesigning initiatives/
policy interventions that could enable to address the
problem of low productivity of rice in hills. Modern varieties
of rice were already being planted in valleys of hills which
provide ideal condition for production. Where as farmers
of terraces remained to be practice of traditional varieties
with traditional practices. Land type along with associated
factor of irrigation access proved to be the crucial factor in
decision to adopt MVs. Most of which are dependent on
good moisture regime. The persistent use of TVs proved
to be farmers' way of adapting to the biotic and abiotic
stress in their rather complex, diverse and risk-prone
rice ecosystem. Though, MVs are known for generating
higher yields, but performed better only under ideal
production conditions which restricted farmers of terrace
to cultivate them. Therefore, TVs are continued in
practice since long back in terrace where land quality is
poor and rainfed.
With the experiences of rice farmers of terrace, TVs
is only suitable option for them due to few more important
traits like quantity of straw that used as fodder. However,
there is no chance that the biophysical environment can
be changed to accommodate MVs. Therefore, efforts should
be directed to making the most of the TVs adoption by
increasing the yield potential of TVs through participatory
technologies development research approach which may
be more realistic way for achieving goal of enhancing
average rice yield in target area. Further research efforts
should also be suggested to improve crop nutrient
management practices for rice in terrace which could be
able to reduce input cost that can be transformed into
profitable enterprise.
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322 Agricultural Situation in India
TABLE 1—CHARACTERISTIC OF HOUSEHOLDS
Particulars Terrace Valley Average
No. of households 25 25 50
Average age of households head (years) 55 51 54
Average years of schooling of household head 7 8 8
Average household size (no. of family members) 6 6 6
Average operational holdings (ha) 0.30 0.27 0.28
Irrigated area (%) 2 84 41
Sources of irrigation Spring Hill Canal —
Share of rice in total cropped area in kharif (%) 48 58 54
Average rice yield (q/ha) 9.37 31.20 21.31
Average number of parcels 5 3 4
Average number of plot/parcel 19 14 16
Average size of parcel (ha) 0.040 0.084 0.04
Source: Farm survey data 2007-08
TABLE 2—CROPPING PATTERN BY RICE GROWING ENVIRONMENTS
Crops Terrace (ha) Share (%) Valley (ha) Share (%) Total (ha) Share (%)
Kharif
Rice 2.55 48 4.11 58 6.67 54
Mandua 1.45 27 1.44 20 2.89 23
Madira 0.36 7 0 0 0.36 3
Gahat 0.32 6 0.12 2 0.44 4
Soybean 0.35 7 0.52 7 0.87 7
Others 0.27 5 1.22 13 2.48 9
Sub-total 5.34 100 7.08 100 12.42 100
Rabi
Fallow 0.93 17 0.73 10 1.66 13
Wheat 2.67 50 3.79 54 6.46 52
Barley 0.9 17 1.19 17 2.09 17
Pea 0.11 2 0.06 1 0.16 1
Lentil 0.47 9 0.37 5 0.84 7
Mustard 0.24 4 0.45 6 0.69 6
Potato 0.02 0 0.41 6 0.43 3
Sub-total 5.34 100 7.08 100 12.42 100
Grand total 10.6 14.16 24.84
Others includes: Cowpea, urd, bhat, bhat+soybean, groundnut, maize, chili and ginzer etc.
Source: Farm survey data 2007-08.
September, 2012 323
TABLE 3—EXTENT OF INPUT USE IN RICE PRODUCTION BY ENVIRONMENT (Per ha).
Environments Terrace Valley Differences
Particulars
Materials used
Bullock power (days) 7 13 –6
Seed (Kg) 160 67 93+
FYM (qtls) 156 97 59+
Irrigation (no.) 0 7 –7
Fertilizers (Kg)
Nitrogen 0 60 –60
Phosphorous 0 23 –23
Labour days
Nursery management* 0 3 –3
Rice establishment** 1 33 –32
Manure application 14 10 4
Fertilizer application 0 3 –3
Weeding 29 21 8
Irrigation 0 4 –4
Total pre–harvest labour 44 74 –30++
Harvesting 18 35 –17
Threshing & winnowing 20 33 –13
Total labour days 82 141 –59+++
*Preparation of nursery bed, FYM application, irrigation, seeding and care etc. ** 10 working hrs = one day Source: Farm survey data 2007-08.
+,++ and +++ indicates significance level at 10,5 and I per cent respectively.
TABLE 4—COSTS AND RETURNS OF RICE PRODUCTION BY ENVIRONMENTS (Rs./ha)
Environments Terrace Share (%) Valley Share (%) Differences
Particulars
Material Cost
Bullock power 1370 16 2344 17 –974*
Seed 1033 12 565 4 468**
FYM 2208 25 1620 12 588*
Irrigation — — 699 5 –699
Fertilizers 1
Nitrogen — — 960 7 –960
Phosphorous — 364 3 –364
Sub–Total 4611 53 6552 48 1941
Labour Cost
Nursery management — — 116 1 –116
Rice establishment 35 0 1963 14 –1928
Manure application 549 6 380 3 169
Fertilizer application — — 166 1 –166
Weeding 1602 19 1043 8 559**
Total pre–harvest labor 2186 25 3326 24 –1140***
Harvesting 919 11 1730 13 –811
Threshing & winnowing 975 11 1659 12 –684
Sub–Total 4099 47 7057 52 –2958
Total cost 8710 100 13609 100 –4899*
Yield (qtl/ha)
Main product 9.37 — 31.20 — –21.83***
Gross return (Rs.) 6149 — 17864 — –11715
Net return (Rs) –2561 — 4255 — —
1–Source of NPK: Urea, DAP and SSP. Source: Farm survey data 2007–08
*,** and *** indicates significance level at 10,5 and 1 per cent respectively.
324 Agricultural Situation in India
TABLE 5—MAJOR VARIETIES, PLANTED AREA AND MEAN YIELD OF RICE VARIETIES BY VARIETY TYPE
Varieties No. of Maturity Planted Share (%) Yield Remarks
growers days area ( ha) (qtls/ha)'
TradionalVarieties
Safeddhan 23 (92) 95-105 1.59 62 9,39 Droopy leaf and deep
root system
Laldhan 15(60) 95-105 0.79 31 9.45 -do-
Kurmuli 5 (20) 90-95 0.17 7 8.98 Droopy leaf, scented
and soft cooked grains
Sub-total 2.55 100 9.37
Modern Varieties
China 4 21 (84) 130-140 1.81 44 34.42 Erect leaf and shallow
root system
Thapachini 25 (100) 120-135 2.30 56 29.02 -do-
Sub-total 4.11 100 31.20
Grand total 6.67 100 21.31
Figures in parentheses indicates percentage of respective values
TABLE 6—FACTORS DETERMINING MVS ADOPTION
Components Terrace Standard Valley Standard
deviation Deviation
No. of Farmers 25 — 25 —
No. plots 147 203
Extent of MVs adoption (%) 0 — 100 —
Yield (qtls/ha) 9.37 1.87 31.20*** 4.43
a. Socio-economic variables
Average age of households head 55 12 51 11
Average years of schooling of households head 7 3.84 8 4.02
Average households size (no. of family members) 6 1.37 6 1.59
Average operational holdings (ha) 0.29 6 0.26 6.54
b. Biophysical variables
Land type Upper and slopes un — Lower and plain —
Soil type Brown light-textured — Red loam heavy —
soil textured soil
Access to irrigation (%) 0 — 100 —
Moisture regime Extremely poor — Excellent —
Note : ***indicate significance level at 1% probability : Source : Farm survey data 2007-08
September, 2012 325
TABLE 7—SUSTENANCE SOURCES OF HOUSEHOLDS INCOME
(Rs./houshold/year)
Environments Terrace Valley Average
Sources of Income Income Share (%) Income Share (%) Income Share (%)
Shops 7440 26,00 12240 26 9840 26
Teacher++ 3840 14.00 5760 12 4800 13
Governmentt job 5760 .20.00 13840 29 9800 26
Self Employed** 1800 6.00 2680 6 2240 6
Livestock 2016 7.00 2110 4 2063 5
Private services*** 3980 15.00 5318 11 4649.2 12
Crop production 878 3.00 3427 7 2155 6
Rice+ –411 –1.44 326 1 –40 0
Wheat+ 504 2.00 1024 2 764 2
Others* 2668 9.00 –1945 4 2306 6
Total 28382 100 47321 100 37854 100
*Other includes : Off-farm labour, Farm Labour and Pension **Self employed Includes barber, blacksmith and tailor ***includes Hotels and
restaurants, Shop Industries, House servants, transport, corporate offece etc, + Value of these crops added in crop : production. ++includes
teacher from Government school as weil as from private school.
326 Agricultural Situation in India
Impact of Emerging Marketing Channels in Agriculture : Benefit to Producer-seller and
Marketing Costs and Margins of Potato and Kinnow in Punjab*
*AERC, Department of Economics and Sociology, Punjab Agricultural University, Ludhiana.
Backdrop
The Rice-wheat system accounts for about three -
fourth of the cropped area and over 85 per cent of the
gross value of crop output. The predominance of this
cropping system has caused disastrous impacts on the
environment, particularly in terms of reduction in the water
table and deterioration in soil fertility. The greater emphasis
on cereal production (especially rice and wheat) in the past
to achieve food security, which undoubtedly resulted in
lower output prices and higher profitability, is now
dampening agricultural growth .To revitalize agriculture in
Punjab, agricultural diversification towards high value
commodities HVCs is considered as one of the most
promising strategies. The global trade of HVCs is growing
rapidly. Facilitating the transition of an agricultural
production system dominated by cereals'towards HVCs
requires greater understanding of the processes involved
in diversification and its impact on agricultural performance.
The major constraints inhibiting such diversification efforts
have been the marketing opportunities for high value crops
especially fruits and vegetables owing to their perishable
nature. Thus there is need to evolve innovative marketing
institutions that link farmers with the markets for speedy
and remunerative disposal of fruits and vegetables.
Supply chain status of fruits and vegetables
High value commodities especially fruits and
vegetables are susceptible to inaccessibility of markets
and high price volatility. Smallholders face the added
problems of high transactions costs due to meagre
marketable surplus and production risk. Though the demand
for HVCs is increasing and there are considerable benefits
emanating from their production, absence of
welldeveloped market arrangements inhibit their expansion.
The existing markets of HVCs are inefficient, unorganized
and disintegrated. The entire marketing process of HVCs,
compared to foodgrains marketing, is complex and risky
due to the perishable nature of produce, seasonal
production, and bulkiness. It is further complicated by the
absence of sufficient infrastructure, such as specialized
markets, cold chains, packing, etc., and lack of agro-
processing facilities. Regulated markets for HVCs are very
few and cover only a few cities in the country. For HVCs
marketing from production centres to retailing requires
close coordination between producers, distributors,
processors and retailers to maintain desired quality and
quantity to meet consumers' demands. To promote
agricultural diversification towards HVCs in the wake of
urbanization liberalization and globalization, the agricultural
marketing strategy requires a paradigm shift by
strengthening marketing institutions, developing synergies
between producers and agri-business, and consolidating
the supply chain. Hence, it is of paramount importance to
examine how the farm producers of HVCs are integrated
with the markets and how innovative supply chains are
emerging for HVCs to meet the growing domestic and global
demands.
Objectives:
The “emerging” marketing channels are supposed
to reduce transaction costs and ensure that high margins
maintained by intermediaries in the supply chain are reduced
so that the farmer benefits and gets a better price as
compared to sale in regulated markets. Keeping this in mind
the study has the following objectives:
1. To analyze the share of the farmer in the final
consumer's rupee in an emergmg marketing model
vis-a.-vis the traditional marketing channel;
2. To analyze the degree of market efficiency and
incidence of post harvest losses in emerging
marketing channel vis-a.-vis traditional marketing
channel;
3. To note the market practices and services of
agencies involved in the emerging channel and
observe if they are superior to that of traditional
channels;
4. To analyze the constraints faced by farmers and
different market functionaries in the emerging
marketing channel as compared to the traditional
marketing channel.
Methodology
The present study has been conducted in the state
of Punjab covering two horticultural crops namely potato
(vegetable) and kinnow (fruit) in Jalandhar and Ferozepur
districts respectively owing to sizeable area under
cultivation. The study has been based on both primary as
well as secondary data. The primary information for the
purpose has been collected through primary surveys and
informant interviews with growers, market committee
C. Agro-Economic Research
September, 2012 327
members, processors, buyers, retailers and consumers in
lalandhar (Potato) and Ferozepur (Kinnow) districts for the
study. Secondary data pertaining to the importance of these
crops in study districts/state have been gathered from
various secondary sources. The study has been based on
a sample of 90 farmers (45 potato growers from Jalandhar
west and Bhogpur blocks of Jalandhar district + 45 kinnow
growers from Abohar and Khuian Sarvar blocks of Ferozepur
district). The required data/information on cost
components, crop yields, input and output prices and inputs
supplies to the farm producers, etc. for potato and kinnow
crops were collected through primary surveys and informant
interviews with growers. The reference period for the
primary data survey was 200910.
Traditional /Emerging marketing channels selected for the
study:
Potato : The most prominent traditional supply chain
involves farmers selling the fresh potato produced by them
in the primary wholesale markets through commission
agents to wholesalers who in turn further sell to secondary
wholesalers located in small cities and towns and local
retailers. In recent years new Supply chain for potato:
Producer → Processor (Pepsi Co.) → consumer has also
emerged.
Kinnow : The most prominent traditional supply chain for
kinnow in the region involves Producer → Pre-harvest
contractor → Commission agent → Wholesaler → Retailer
→ Consumer. Pre-harvest contractors provide advance
payments to the farmers during the time of agreement. In
this approach, farmers minimize risk due to price volatility
and post-harvest losses of course with lesser producers’
share in consumers’ rupee resulting in marketing
inefficiency. During recent years, the Farmers' Evening
Markets for fruits especially kinnow have also come up in
the study district. The practice of selling Kinnow crop to
Pre-harvest contractors has been on the decline and new
supply chain: Producer → Farmers’ Evening Markets →
Local Wholesaler → Wholesaler at distant markets →Retailer → Consumer has been emerged.
The sample size for the farmers was as follows:
Crop District Block Traditional Emerging Channel
Channel
Potato Jalandhar Jalandhar West 35 10
Bhogpur
Kinnow Ferozepur Abohar 35 10
Khuian Sarvar
The information so collected was supplemented
from intermediaries, buyers/processors, retailers and
consumers to maintain desired quality and quantity to
meet consumers' demands under the set up of the existing
supply chains in fruits and vegetables as well as under
the innovative institutional arrangements, which are
gradually emerging in fruits and vegetables. In order to
observe the supply chain of the emerging channel and
traditional channel, primary data were collected from the
following respondents with the help of pre structured
research instruments. The sample size for other
intermediaries was as follows:
Intermediary Traditional Channel Emerging Channel
Potato Kinnow Potato .Kinnow
Wholesalers 10 5 10 5
Retailer 10 5 10 5
Consumer 10 5 10 5
A focus group discussion with the Market Committee
Members/officials was also held to get a lucid depiction of
market charges, market practices, processes etc. Simple
statistical tools were used to examine the share of farmer in
terminal price in case of both traditional and emerging
channel. The post harvest losses, market practices and
constraints faced were also analysed using field level data.
Regulation of markets: rules, procedures and their
evaluation
The Royal Commission on Agriculture (1928)
recommended the regulation of market practices and the
establishment of regulated markets in India in view of the
chaotic conditions prevailing in the agricultural produce
markets. Central Banking Enquiry Committee endorsed
328 Agricultural Situation in India
these recommendations later. The Directorate of Marketing
and Inspection (DMI, 1935) recommended the regulations
of markets to the State Governments. The DMI prepared a
Model Bill in 1938 and circulated among the States. Since
then, the State Governments have enacted legislation for
the regulation of the markets. A regulated market is one,
which aims at eliminating the unhealthy and unscrupulous
practices, reducing marketing charges and providing
facilities to producers- sellers in the market. The basic
philosophy of the establishment of regulated markets is
elimination of malpractices in the system and assignment
of dominating power to the farmers and their representatives
in the functioning of their markets.
The Punjab Agricultural Produce Markets Act, 1961/Sale
of Agricultural Produce
The Punjab Agriculture Produce Markets Act, 1961
received the accent of the President of India on May 18,
1961. The act aimed to consolidate and amend the law
relating to better regulation of the purchase, sales, storage
and processing of agricultural produce in Punjab. The act
provides for the establishment of an apex body at the State
level to perform the functions under this act. The Punjab
State Agricultural Marketing Board (PSAMB) was
established. The board is an executive-cum-advisory body
and is concerned with bringing about improvements in the
regulation scheme. It also supervises the functioning of
regulated markets and advises market committees and the
State Government on related matters. The board closely
monitors the sale of agricultural produce and formulates
laws for the sale/purchase of the agricultural commodities.
APMC Act amendments since 2003
Agricultural Marketing laws, particularly the
Agricultural Produce Market Committee (APMC) Act,
inhibit the up-scaling of innovative institutional
arrangements, such as contract farming and linking farmers
with markets and agri-business. As per the APMC Act, it is
mandatory that all notified agricultural commodities,
including horticulture products, must be marketed through
regulated markets. The mandatory regulated system of
marketing prevents producers from direct sales (except
limited sales in farmers' markets) to market functionaries
such as processors and exporters. This obstructs the firms
from entering into contract farming and buying directly
from the farmers. One of the major problems of marking
through regulated markets is obligatory market charges
that add to the cost. The market fee, commission charges
and other market charges for performing various market
functions including sales tax etc accounted for about 11
percent in Punjab. These were fixed a long time ago and are
high in view of the limited services provided by the
regulated markets.
Since 2003, APMC Act was partially amended to
safeguard the interest of farmers through provisions for
private markets and contract farming. Though establishment
of private market yards was allowed but the direct purchase
was not permitted. Similarly, amendments regarding
registration of contract farming agreement with the
appropriate authority, dispute settlement mechanism and
specifications of model agreement for contract farming were
made but not adopted. The amendments regarding
registration (not licensing) of market functionaries and
single registration for trade/transaction in more than one
market has also been made but not implemented. The act
has also been amended with respect to double market fee
i.e. market fee shall not be levied for the second time in any
market area of the State by market committee as well as
market fee not to be levied more than once in commercial
transactions between traders or sale to consumers. This
amendment has been adopted by the state. Since 2003,
Government of Punjab has launched contract farming in a
number of crops such as maize, barley, sunflower, hyola,
basmati rice, etc. to substitute for a sizable area under rice-
wheat system. This model involves four parties in the
contracted transaction: farmer, extension firm, buyer
(marketing firm) and the Punjab Agro Foods Corporation
(PAFC) acting as facilitator between farmer, the extension
firm and the buyer. As a means to encourage contract
farming in the state, the Government of Punjab reduced the
combination of market fees (2%), rural development fund
charges (2%), and infrastructure taxes (1%) from a total of
5 percent to 0.5 percent. Organizations that wish to engage
in direct linkages with farmers without contracts do not
receive such exemptions (Source: www.agmarknet.nic.in).
Impact of reforms processes on Traditional and Emerging
Market Channels
The Punjab State has more or less been able to
achieve the above stated objectives of regulated markets.
However, it may be argued that the success in terms of
providing incentives for the quality of the produce has not
been significant. Till now the emphasis of the farmers has
been on producing more irrespective of the quality. Assured
purchases of food grains by the government during the
last three decades may also be termed as a culprit for
deterioration of farmers’ quality consciousness. The
benefits of regulated markets seem not to be percolating
(in terms of quality and quantity) to the fruit and vegetable
growers. Many studies have shown in recent past that the
producer's share in consumer's rupee has still been low. It
is a common fact that the increased production has often
resulted into decline in the farmer's profits. Similarly no
incentives to the farmers for better quality have been
reported till now.
Traditional marketing channels:
The existing supply chains of fruits and vegetables
involve numbers of intermediaries that add to market
inefficiency and increase price spread between farmers and
the consumers. Most of the traditional supply chains are
September, 2012 329
conducted in spot markets. Producers typically sell to
traders or wholesalers who market the product in other
markets. Coordinated sales between producers and
processors are uncommon but slowly emerging with
changing demand scenario. Important supply chains for
vegetables and fruits include:
Supply chains for vegetables
• Supply chain 1:
Producer → commission agent→ wholesaler
→ retailer → consumer
• Supply chain 2:
Producer → commission agent→ primary
wholesaler→ secondary wholesaler→ retailer
→ consumer
• Supply chain 3:
Producer→ Processor→ consumer
• Supply chain 4:
Producer → Collector/Consolidator /Agent →
Wholesaler at distant markets → Retailer →Consumer
The most prominent supply chain involves farmers
selling the fresh vegetables produced by them in the primary
wholesale markets through commission agents to
wholesalers who in turn further sell to secondary
wholesalers located in small cities and towns and local
retailers (supply chain 1). This supply chain accounts for
about half of the total vegetables sold in the state.
Supply chains for fruits
• Supply chain 1:
Producer → Pre-harvest contractor →
Commission agent → Wholesaler → Retailer
→ Consumer.
• Supply chain 2:
Producer → commission agent → wholesaler
→ retailer → consumer
• Supply chain 3:
Producer → Collector/consolidator/agent →
Wholesaler at distant markets → Retailer →Consumer
• Supply chain 4:
Producer → Processor → consumer
Supply chains 1 and 2 are the most prominent
marketing channels in fruits, accounting for about 90
percent of total sales of fruits. Pre-harvest contractors
provide advance payments to the farmers during the time
of agreement. In this approach, farmers minimize risk due
to price volatility and post-harvest losses.
In the processing, marketing channels, processors
procure the fresh vegetables and fruits from farmers through
either contract farming or directly from the wet markets.
Owing to number of intermediaries in the supply chain, the
transactions and marketing costs increase, resulting in low
marketing efficiency. The Commission Agents also exploit
the farmers by charging higher commissions, since most of
the farmers have taken loans/advances from commission
agents and are forced to sell the produce to them. These all
results into increase the price spread and reduce the
producer's share in consumer’s price. In the case of
vegetables, producer’s share in retail prices varies from 35
to 45 per cent and for fruits from 25-35 per cent.
Innovations in marketing—Emerging marketing
channels:
Farmers’ markets : Farmers' markets (Apni mandi) are an
innovative marketing approach introduced in the state
mainly to tackle the problems of marketing and exploitation
of farmers by the middlemen. Thus, the market is totally
devoid of middlemen. The main aim of farmers’ market is to
ensure fresh vegetables and fruits at remunerative prices
to the farmers and reasonable prices to consumers. The
total transactions through these markets form just negligible
portion (less than 1 %) of the marketed surplus, as only
few farmers are able to sell in these markets. The producer’s
shares in consumer’s prices for selected vegetables in these
markets varied between 80-90 per cent, compared to 35-45
per cent for sale in the traditional supply chain.
Contract farming for promoting high value agriculture :
The smallholders are also risk averters and sacrifice
production of HVCs despite prospects of higher returns.
Contract farming is an institutional response to missing
markets for credit, insurance, information, factors of
production in an environment of pervasive risks. The
concept has potential to reduce transactions costs by
coordinating production, marketing, processing and
retailing. It is defined as a system for the production and
supply of agricultural produce under forward contracts,
the essence of such contracts being a commitment to
provide an agricultural commodity of a type and in the
quality required by a known buyer. The model eliminates
the intermediaries and a part of saving is distributed
between producers and consumers. The Punjab
government is engaged in aggressively promoting contract
farming. Therefore a number of corporate agri-business
firms have signed a memorandum of understanding with
the government of Punjab to take up contract farming in
the state to promote number of commodities. The benefits
of contract farming over non-contract farming are compared
in terms of reducing transactions costs, increasing profits
and enabling access to markets. Different forms of models
330 Agricultural Situation in India
can be broadly divided in to three categories: (a)
government promoted contract-farming; (b) corporate
sector driven contract farming; and (c) informal contract
farming. The type of contract depends upon the commodity
and the nature and destination of the final product.
Government-promoted contract farming : Since 2003, the
government of Punjab has launched contract farming in a
number of crops such as maize, barley, sunflower, hyola,
basmati rice, etc. to substitute for a sizable area under rice-
wheat system. This model involves four parties in the
contracted transaction: farmer, extension firm F, buyer
(marketing firm). and the Punjab Agro Foods Corporation
(PAFC) acting as facilitator between farmer, the extension
firm and the buyer. The basic philosophy of this program is
to provide technical know-how to the producers, mitigate
price fluctuations and strengthen the marketing
infrastructure for selected agricultural commodities. The
contract specifies the quality, quantity, prices, and time
of delivery. As per the contract, the farmer brings produce
as per the specified quality at the designated place. In
case the farmer can get a higher price from the market, he
is free to sell his produce to the highest bidder/buyer,
bypassing the contract as per the open-end clause
provided in the contract. If the market prices are lower
than the contracted prices, the PAFC offers a ‘comfort
price’ that are slightly higher than the market price. As a
means to encourage contract farming in the state, the
government of Punjab reduces the combination of market
fees (2%), rural development fund charges (2%), and
infrastructure taxes (1 %) from a total of 5 percent to 0.5
per cent. Examples of companies that entered into this
type of contract arrangement with farmers included
Advanta for sunflower; Punjab Agro Foods Corporation
for Hyola; Pro-Agro and Mahindra Shubh Labh for winter
maize; United Beverages for Barley; and Rallis India”
Mahindra Shubhlabh, Escorts and DCM Shriram for
basmati rice. The program is in the evolution stage and
government is making all efforts to bring more farmers
and crops into its fold.
Private industry-driven contract farming : This is the most
common model of contract farming, driven by private
industry comprising processors, exporters and domestic
wholesalers/retailers. This model has different variants
promoted by different agro-firms: (i) processors; (ii)
exporters; and (iii) vertically integrated franchises.
Processor-driven contract farming: The first type of
arrangement consists of a processor who enters into a
contract with growers to regularly source raw material of a
desired quality to the plant. An important example of this is
'Pepsi Co model’ that pioneered the concept of contract
farming for the competitive bulk procurement of a variety
of vegetables like potato, tomato and chilies in Punjab.
Initially the Pepsi Co. initiative was quite successful in
augmenting tomato yields by 25-50 per cent and incomes
by about 40 percent. Later due to dispute and breach of
contract, the tomato processing plant was closed but the
firm is continuing contract farming in other commodities.
In this model, the processors supply seeds and seedlings
of specific varieties to the producers for meeting the
processing requirements. The firms regularly supervise and
monitor their production throughout the growing season.
The firms also provide technical advice to farmers.
Purchasing decisions vary by company in terms of the
amount and quality of products that are accepted. For
instance, Pepsi applies stringent quality standards
prescribed in the contract in their procurement. Another
example is Nijjer Foods Ltd. (started in 1991 in Amritsar),
which started" contract farming in Punjab to process
tomatoes and chilies. While the contract is a written
agreement and signed by both parties (farmer and
processor), it is not a legally valid document .A slight
variation in this model involves contract farming facilitated
by the Punjab Agro Industries Corporation (PAIC) through
joint ventures with private processors. In this model, the
PAIC acts as a facilitator and broker in the joint venture
company through equity participation. It also procures
some of the commodities. For example, PAIC procures green
peas grown in the district of Patiala for local processors. In
this case, farmers grow the improved varieties_F2l, which
are procured by the processing unit. Pea processors do
not provide any inputs or technical advice to the farmers.
The processing unit grades the produce and rejects those
not conforming to their prescribed specifications and
standards. Prices are fixed on the basis of the market prices
that prevailed in the local markets over the last 3 to
4 years.
Contract farming in vegetables : In Punjab, some corporate
houses are establishing their presence in vegetables
through contract farming for export, processing and/or
retailing; the major companies are Mahendra Subhlabh,
Bharti, and Pepsi. Recently, one of the India's leading
corporate house (namely the Reliance Industries Ltd.),
announced a mega project on agribusiness and retailing in
Punjab and other states in India.
Existing marketing regulations :
Agricultural Marketing laws, particularly the
Agricultural Produce Market Committee (APMC) Act,
inhibit the up-scaling of innovative institutional
arrangements, such as contract farming and linking farmers
with markets and agri-business. As per the APMC Act, it is
mandatory that all notified agricultural commodities,
including horticulture products, must be marketed through
regulated markets. While Punjab has a dense market system
with purchase centres within the radius of 10 km from most
villages, the system has not adapted to the changing
demands for horticulture products. The existing markets
have been developed to handle mainly food grains and not
the fruits and vegetables in the state. In Punjab, rice and
wheat accounted for a big chunk of the market fee while
September, 2012 331
the share of fruits and vegetables hovered around only
5-6 per cent. The mandatory regulated system of marketing
has two major implications. First, the regulated marketing
system prevents producers from direct sales (except limited
sales in farmers’ markets) to market functionaries such as
processors and exporters. This obstructs the firms from
entering into contract farming and buying directly from the
farmers. Secondly, it reduces the competitiveness of
production and adds unnecessary intermediaries to the
supply chain. Such increase in intermediaries normally
results in producers receiving a smaller share of the final
sales price of the commodity. To encourage contract farming
the central government has formulated a model market Act
that provides option for farmers to sell their produce to
processors and contracted buyers at reduced market
charges. Though a few states have agreed to implement
the Act, it is yet to be operationalized. One of the major
problems of marking through markets is obligatory market
charges that add to the cost. The market fee, commission
charges and other market charges for performing various
market functions including sales tax etc accounted for about
11 per cent in Punjab. Reducing the marketing charges can
help farmers in realizing higher prices and in making the
agricultural products more export competitive.
To sum up, the markets for HVCs are thin, fragmented
and unorganized, which lead to inefficiencies in marketing.
The farmers' share in retail price is low in the existing supply
chains. However, innovative marketing arrangements are
evolving. One way is by creating farmers’ markets that
bring farmers and consumers together at one place by
eliminating middlemen. But transactions through such
markets are limited and concentrated around urban centres.
More recently, agri-business is entering in HVCs for export,
retailing and processing. Punjab is encouraging corporate
houses for promoting contract farming to replace a sizable
area under rice-wheat system that is threatening the
sustainability of farming in the state. Poor infrastructure,
absence of organized retailing and farmers' (particularly
smallholders) instinct for food security pose as serious
constraints in up-scaling the success of contract farming.
However, given the scale of operations and the pace of
growth of the organized food industry, back-end operations
will scale up rapidly inducting more and more suppliers i.e.
farmers, big or small for feeding these stores.
Agro-Economic Profile of the Study Region
The total geographical area of the state is 50.36 lakh
ha. Study district Jalandhar is located on the intensively
irrigated central plain region of state between the Beas and
Sutlej rivers. The district Ferozepur is situated in south-
western region of state along the India Pakistan border.
Each of the selected districts consists of 5 tehsils/sub-
divisions and 10 development blocks. The number of
inhabited villages in these districts was 1003 and 954,
respectively. The geographical area of Jalandhar and
Ferozepur districts is 2660 square km. and 5850 square km.
covering 5.28 per cent and 11.61 per cent of the total
geographical area of the State, respectively. The topography
of the selected districts is generally plain of alluvial
formation. However, the south-east side of Ferozepur
district which is dominated by the light soils has brackish
underground water. The climate of both districts is, on the
whole, dry and is characterized by hot summer, a short
rainy season and a bracing with winter.
The important socio-economic indicators of the
study districts as well as of Punjab state are presented in
Table 1. According to 2001 census, total population of
Jalandhar district and Ferozepur district constituted 8.06
per cent (19.63 lakh) and 7.17 per cent (17.46 lakh) of the
total state population, respectively. Relatively, Jalandhar
district was found to be densely populated and more
urbanized as compared to Ferozepur district. The overall
rural literacy was also more (78 per cent) in Jalandhar as
compared to Ferozepur district (60.70 per cent). During 2009-
10, the cropping intensity in Jalandhar and Ferozepur
districts was found to be 175 and 184 per cent, respectively.
In Jalandhar district, underground is providing assured
irrigation to 98.31 per cent of the total net area sown as
compared to that of 66.03 per cent in Ferozepur district.
The rest of the area depended on Government canals in the
respective districts. Electricity use in agriculture constituted
27.98 and 52.77 per cent of the total electricity consumption
in Jalandhar and Ferozepur districts, respectively. Use of
fertilizer, the most important agricultural input was found
out to be relatively high at 502 kg per ha in Jalandhar district
as compared to that at 410 kg per ha in Ferozepur district.
Similarly the number of tractors for every thousand hectare
of net sown area was higher in case of Jalandhar district
(146) as compared to Ferozepur district (122). Productivity
of foodgrains which accounted for 81.19 and 75.98 per cent
of the gross cropped area in Jalandhar and Ferozepur
districts, respectively was found to be much higher in
Jalandhar district (6650 kg/ha) as compared to the that in
Ferozepur district (3988 kg/ha). Regarding infrastructure it
was observed that in both of the study districts, 100 per
cent villages are electrified and linked with the roads. In
comparison to state average of 146 km the road length per
square km of area were 210 and 102 km in Jalandhar and
Ferozepur districts, respectively. Each of the study
districts consists of 11 regulated markets, whereas the
number of sub-yards was 24 and 14 in the Jalandhar and
Ferozepur district, respectively. In Jalandhar district there
were 551 bank offices and 254 primary agricultural
cooperative societies. The number of same in Ferozepur
district was 215 and 310, respectively. There were 92
veterinary clinics and 29 primary health centres in district
of Jalandhar as compared to 113 and 34 in Ferozepur
district. The total number of registered industrial units in
Jalandhar and Ferozepur district were 1982 and 704,
respectively.
332 Agricultural Situation in India
Out of total 10.04 lakh operational holdings in state
the proportionate share of marginal, small, semi-medium,
medium and large farm holdings in state was 13.42, 18.22,
31.85, 29.44 and 7.06 per cent, respectively and average
size of holding in state was 3.95 ha (Table 2). In Jalandhar
district the proportion of smaller size holdings was relatively
more as compared to that in Ferozepur district with average
size of holdings in respective districts at 5.41 and 6.01 ha.
As compared to 17 per cent in district of Ferozepur, the
small and marginal holdings accounted for about 25 per
cent of the total holdings in Jalandhar district. On the other
hand large holdings constituted 9.90 and 16.02 per cent of
the total holdings in Jalandhar and Ferozepur districts,
respectively.
TABLE 1—SELECTED SOCIO-ECONOMIC INDICATORS OF SAMPLE DISTRICTS AND PUNJAB
Particulars Jalandhar Ferozepur Punjab
Population Total (thousand) 1962.7 1746.11 24358.99
(2001) Rural (thousand) 1030.72 1295.38 8262.51
Urban (thousand) 931.98 450.73 16096.49
Rural agricultural workers 52.52 74.19 66.08
(% is to total workers)
Population Density (per sq km.) 746 329 484
Female per thousand males 887 885 876
Percentage of SC Population to total 37.69 22.82 28.85
Percentage of ST Population to total — — —
Rural Literacy rate (per cent) 2001 73.9 45.3 64.7
Human Development Index (2000) NA NA 0.537
Percentage of rural families below poverty line (2002) NA NA 9.1
Per capita income at current prices at 1999-00 series in Rs. NA NA 62153
Share of agriculture sector in GDP/SDP (in 2007-2008 current NA NA 29.01
prices)
Average annual rainfall (mm), 2009-10 543.90 170.9 384.9
Average size of holdings (2000-01) 5.41 '6.02 3.95
Percentage of irrigated area to net sown area (2008-09) 100 99.80 97.40
Per cent of groundwater irrigated area to NIA (2004-05) 98.31 66.03 72.59
Electricity use in Agriculture (% to total) 2008-09 27.98 52.77 33.54
Cropping intensity (%) 2009-10 177.64 184.42 189.69
No. of fair price/ration shops per lakh population NA NA 13989
No. of banking offices per lakh population 28 12 18
No. of regulated markets per Sq. Km (2008-09) 239 482 345
Total road length per lakh population (2008-09) 241 262 256
Input use:
Fertiliser (kg/ha) (2008-09) 502 410 447
HYVs area of wheat and paddy (%), 2008-09 100 100 100
HYVs coverage as % of GCA (2008-09) 81 75 81.6
Wheeled Tractors (per 000 ha ofNSA) 2010 146 122 120
Area under major crops (per cent to GCA): 2009-10*
Total Cereals 81.00 75.47 81.90
Total Pulses 0.19 0.51 0.24
Total Foodgrains 81.19 75.98 82.14
Total Oilseeds 1.78 0.67 0.78
September, 2012 333
TABLE 1—SELECTED SOCIO-ECONOMIC INDICATORS OF SAMPLE DISTRICTS AND PUNJAB—Contd.
Particulars Jalandhar Ferozepur Punjab
Sugarcane 1.66 0.11 0.76
Cotton 0.00 14.38 6.46
Fruits and Vegetables 5.88 3.21 2.31
Productivity (kg/ha): 2009-10
Total Cereals 6663 4010 4156
Total Pulses 1000 689 784
Total Foodgrains 6650 3988 4146
Total Oilseeds 1480 1610 1345
Sugarcane 6058 6222 6167
Cotton 0 563 668
Source: GOP (2010), Statistical Abstract, Punjab.
TABLE 2—NUMBER OF OPERATIONAL HOLDINGS IN SAMPLE DISTRICTS AND PUNJAB (2000-01)
Semi- Av. Size
District Marginal Small medium Medium Large Total of
<1 ha) (1-2 ha) (2-4ha) (4-10 ha) (>10 ha) holding
(ha)
Jalandhar 3912 7041 14108 14379 4332 43772 5.41
(8.94) (16.09) (32.23) (32.85) (9.90) (100)
Ferozepur 4120 9305 22523 30286 12634 78868 6.02
(5.22) (11.80) (28.56) (38.40) (16.02) (100)
Punjab 134762 183062 319933 295749 70960 1004466 3.95
(13.42) (18.22) (31.85) (29.44) (7.06) (100)
Source: GOP (2010), Statistical Abstract, Punjab
Figures in parenthesis denotes the per cent share in total
The cropping pattern in Study districts and Punjab
state is given in Table 3. It can be observed that cropping
pattern of state as well as of the study districts is dominated
by the food grains mainly wheat and paddy which together
constituted about 80 per cent of the gross cropped area in
state. Wheat constituted 40.38 and 45.10 per cent and paddy
constituted 38.24 and 29.91 of the gross cropped in
Jalandhar and Ferozepur districts, respectively. In Jalandhar
district the maize and vegetables were the other important
crops. In Ferozepur district cotton and fruits were the other
two important crops constituting significant proportion of
gross cropped area. Potato accounted for the 4.63 per cent
of gross cropped area in Jalandhar district. Whereas kinnow
accounted for 0.49 per cent of the gross cropped area in
Ferozepur district.
TABLE 3—CROPPING PATTERN IN SAMPLE DISTRICTS AND PUNJAB, 2009-10
(Percentage to total GCA)
District Jalandhar Ferozepur Punjab
Rice 38.24 29.91 35.41
Wheat 40.38 45.10 44.51
Maize 2.38 0 1.76
Total Cereals 81.00 75.47 81.9
334 Agricultural Situation in India
TABLE 3—CROPPING PATTERN IN SAMPLE DISTRICTS AND PUNJAB, 2009-10—Contd.
(Percentage to total GCA)
District Jalandhar Ferozepur Punjab
Total Pulses 0.19 0.51 0.24
Total Foodgrains 81.19 75.98 82.14
Sugar-cane 1.66 0.11 0.76
Cotton 0 14.38 6.46
Kinnow 0.06 2.23 0.49
Total Fruits 0.35 2.59 0.85
Potato 4.63 0.11 1.05
Total Vegetables 5.53 0.62 1.46
Source: GOP (2010), Statistical Abstract, Punjab
Status of selected crops
On account of its climatic conditions Punjab however,
is not a very important producer of horticultural crops in
country. National Horticulture Mission (NHM) launched
by the Government of India is being implemented in Punjab
to promote growth of the horticulture sector covering fruits
and vegetables. The area under fruits has increased from
30 thousand hectares in 1999-2000 to 67.55 thousands
hectares in 2009-10. During the same time period the area
under vegetables in state increased from 101.70 to 183.35
thousands hectares. During 200910, Punjab accounted for
1.07 and 1.91 per cent of total area under fruits and
vegetables in India, respectively. Among major potato
producing states of India, during 2009-10, Punjab ranked
4th with about 5 per cent share in total potato production
of the country. Potato is the most important vegetable crop
of state occupying 45.29 per cent of the total area under
vegetable crops with 60.10 per cent share in total vegetable
production. During 2009-10, area under potato in state was
83 thousand hectares with corresponding production at 21
lakh metric tonnes. About two third area of the total area
under potato cultivation in state fall in five districts, namely,
Jalandhar, Hoshiarpur, Kapurthala, Ludhiana and Bathinda.
During 2009-10, Jalandhar was the leading district with 25.35
per cent share in total potato production in state. Among
other major districts, Hoshiarpur accounted for 19.08 per
cent of state production of potato followed by Kapurthala
(8.88 per cent), Bathinda (7.20 per cent) and Ludhiana (6.83
per cent). Among different citrus species commonly grown
in Punjab, kinnow mandarin occupies a prominent position
with respect to acreage and production. During 2009-10 it
accounted for about 58 per cent of total area and 64.20 per
cent share in state production of fruits. Out of the total
67553 hectares under fruit cultivation in state, kinnow
farming is carried out on 38837 hectares. Though the Punjab
state is the leading state in kinnow production, area under
its cultivation is concentrated in a few districts. About 85
per cent of the total area under kinnow cultivation fall in
four districts, namely, Ferozepur, Hoshiarpur, Muktsar and
Bathinda. The study district Ferozepur alone constitutes
about half of the total area and production of kinnow in
state. Among other major districts Hoshiarpur accounted
for 17.46 per cent of state production of kinnow followed
by Mukatsar (14.56 per cent) and Bathinda (6.89 per cent).
Comparison of Benefits and Constraints for TMC and
EMC for potato
It can be seen from Table 4 that in TMC although the
farmers in the sample received Rs 373.80 per quintal of
potato, they had to incur marketing costs of Rs. 65.07 per
quintal and hence their net price after deducting marketing
costs was Rs. 308.73 per quintal. The farmers sold to
wholesalers who incurred marketing costs and margins of
Rs. 57.44 per quintal. There was also wastage of potatoes
during the time taken to transport the produce from the
regulated market to the retail outlets. The sale price of the
potato retailer was Rs. 722.53 per quintal. Finally, it can be
seen that the share of the farmer in the retailer's price under
TMC is 42.72 per cent, while marketing costs as a
percentage of retailer’s price is 24.30 and marketing margins
as percentage of retailer's price is 32.97 per cent. With
respect to sales through EMC, it can be observed that
although the sample farmers received a higher price than
the auction price in TMC. They have to incur loading and
unloading, sorting and packing and transportation cost up
to the gates of company. Hence Rs. 520.20 was the net
price received by the farmers under EMC which was about
40 per cent higher than the price received by farmers who
sold through TMC. Since there were no intermediaries in
EMC hence the price received by the farmers was much
higher than the farmers following TMC.
The Benefit Cost Ratio (BCR) for the potato crop
September, 2012 335
reduces when family labour is included in cost of
production (Table 5). The BCR is higher in EMC as
compared to TMC. This is because, the price received in
case of sales through EMC was nearly 40 per cent higher
than that through TMC.
The post harvest losses are higher in TMC as
compared to EMC. For every quintal of potato stored, a
farmer losses about 8.14 kg. under TMC while no loss in
EMC since the potato purchased by PepsiCo is handled
by the company after purchase. Due to quality
specifications, losses in transport were more in EMC than
TMC (Table 6).
TABLE 4—PRICE SPREAD AND MARKETING COSTS FOR POTATO (2009)
Rs. per quintal
Sr. No. Price Spread TMC EMC
I Price received by farmer 373.80 520.20
II Total Marketing: costs of farmer 65.07 61.50
(a) transportation 4.50 7.44
(b) loading & unloading 2.13 1.10
( c) Sorting & packing 57.7.6 52.64
(d) weighing & other related expenses 0.68 0.32
(e) commission 0 0
Net Price received by farmer 308.73 458.70
Net Profit (Net price received- Paid Out cost) 56.23 224.05
III Marketing Costs and margins of wholesaler (through commission agent) 57.44 —
( a) market fee 5.81 —
(b) RDF 5.81 —
(c) wastage during transport 0.56 —
(d) Commission 14.49 —
(d) transportation charges 8.12 —
(e) wholesaler’s margin 22.65 —
Purchase price of wholesaler plus marketing costs & margins 431.24 —
IV Marketing cost and margins of Retailer 291.29 —
(a) Hamali from point of purchase to tempo 0 —
(b) Transport to retail outlet 11.15 —
(c) Miscellaneous expenses such as cess to corporation, watchman for unsold stock 9.46 —
(d) Wastage 6.58 —
(e) Loading/Unloading 4.45 —
(t) Packing material 36.20 —
(g) Shop rent 7.88 —
(h) Retailer’s margin 215.57 —
(f) sale price of retailer 722.53 —
V Share of farmer (%) in retailer’s price 42.72 —
VI Marketing Costs as % of retailer’s price 24.30 —
VII Marketing margins as % of retailer’s price 32.97 —
VIII Modified Measure of Marketing Efficiency (MME) 0.74 —
Source: computed from field survey data
336 Agricultural Situation in India
TABLE 5—BENEFIT COST RATIO FOR POTATO
Particulars TMC EMC TMC EMC
(cost of (cost of (cost of (cost of production
production production production includes family
includes only includes only includes labour)
Paid out costs) Paid out costs) family labour)
BCR for potato 1.48 2.22 1.36 2.03
Source: computed from field survey data.
TABLE 6—PER QUINTAL POST-HARVEST LOSSES
Post Harvest loss Potato
TMC EMC
Quantity SD Quantity SD
Loss during storage (kg) 8.14 0.58 0.00 0.00
Loss during transport (kg) 0.23 0.03 1.33 0.42
Loss at Retail level (kg) 1.40 0.74 0.00 0.00
NOTES: SD- Standard deviation, Quantity in quintals.
Source: Field Survey Data.
The reasons for preferring the marketing channel
indicated that in case of potato under TMC maximum
responses pertained to assured sales followed by low cost
of marketing and fair price. They were also influenced by
friends and relatives to participate in auctions and were in
the habit of selling in regulated market. In case of EMC,
assured sales, low cost of marketing, fair price, less physical
loss and superior services were the main reasons for
preferring this channel. Majority of farmers in TMC and
EMC expressed that the village roads were in good
condition. With respect to proximity to the market, it was
observed that the regulated market was not in the sample
villages and the majority of the farmers had to travel within
10 kms and even upto 25 kms to access the regulated market.
In EMC the farmers have to travel more than 50kms to fetch
the produce at the company gates. There were no cold
store and godown facilities in the market and auction
arrangements were good as reported by farmers following
TMC. Sorting, weighing, packing and banking facilities
were good in the market. However, there were no internal
phone and computer facilities as reported by the farmers
following TMC channel.
Awareness of the farmers regarding market
intermediaries showed that about 50 per cent farmers in
TMC were aware of the supply chain that existed till the
produce reached the ultimate consumer. In EMC there were
no intermediary and farmers were not aware about the
further process being followed by the company. Nearly
half of the farmers in TMC knew about the places where
potato was sold in the wholesale markets such as Calcutta,
Ahmadabad, Delhi, Jodhpur and other places. Nearly half of
the farmers knew about the price realized in the retail market.
Farmers also felt that the margin realized by the buyer of
their produce is high. In case of EMC, 88.57 per cent of
farmers in the sample indicated that they would continue to
sell in the same channel and to the same agent if given
higher price. Farmers have no option of export of potato.
There was no major constraint observed as opined
by 80 per cent of the potato farmers while only 20 per cent
reported that EMC buys only selected quality produce of
specific size, shape and colour. However, in TMC the entire
produce is sold. The farmers also explained that since only
quality produce is picked up by EMC, the balance produce
is treated as low quality and sold at a lower price. To ensure
higher prices and to reduce marketing margins of the
intermediaries, potato growers made several suggestions
such as potato should be exported when there is a glut in
the market, provide transport facilities, produce should be
purchased by the Govt. in case of bumper harvest, market
charges and intermediaries should be reduced.
Comparison of Benefits and Constraints for TMC and
EMC for kinnow
Table 7 shows that for kinnow in EMC, although the
sampled farmers received Rs. 1296 per quintal, they had to
incur marketing costs of about Rs. 265 per quintal and
hence their net price after deducting marketing costs was
about Rs. 1031 per quintal, which were incurred by the
contractor himself in TMC. But still the price received by
the farmer in EMC was about 20 per cent higher than those
September, 2012 337
received through TMC. The farmers/contractors sold the
produce to wholesalers who incurred marketing costs and
margins of about Rs. 204 per quintal for TMC and about
Rs. 195 per quintal in case of EMC. The sale price of the
kinnow retailer was about Rs. 1889 per quintal for TMC
and about Rs. 1874 per quintal in case of EMC. Finally, the
share of the kinnow grower in the retailer's price under
TMC was 33.70 per cent, while marketing costs as a
percentage of retailer’s price was 20.70 and marketing
margins as percentage of retailer’s price was 33.70 per
cent, while the corresponding figures in case of EMC was
55, 21.6 and 23.4 per cent, respectively.
It can be observed that the Benefit Cost Ratio (BCR)
for kinnow obviously reduces when family labour is
included in cost of production (Table 8). The BCR is higher
in EMC for kinnow in EMC as compared to TMC. This is
because as explained earlier, the price received in case of
TABLE 7—PRICE SPREAD AND MARKETING COSTS (2009)
(Rs. per quintal)
Sr. No. Price Spread Kinnow
TMC EMC
I Price received by farmer 860.0 1296.10
II Total Marketing costs of farmer — 265.30
(a) transport to APMC — 34.30
(b) loading & unloading — —
(c) weighing & other related expenses (packing, waxing etc.) — 231.0
(d) commission — —
Net Price received by farmer 860.0 1030.80
Net Profit (Net price received- Paid Out cost) 636.30 815.40
III Marketing Costs and margins of Pre-harvestor contractor 266.0 —
(a) market fee — —
(b) hamali — —
(c) wastage during transport 6.90 —
(d) transport to terminal market 32.30 —
(e) weighing & other related expenses(packing, waxing etc.) 212.0 —
(f) PHC’s margin 215.0 —
Purchase price of PHC plus marketing costs & margins 1326.0 —
IV Marketing Costs and margins of wholesaler 204.40 194.70
(a) market fee 11 9.40 116.70
(b) hamali — —
(c) wastage during transport — -
(d) transport to terminal market — —
(e) wholesaler's margin 85.0 78.0
Purchase price of wholesaler plus marketing costs & margins 1530.40 1490.80
V Marketing costs and margins of Retailer 358.40 382.90
(a) Hamali from point of purchase to tempo — —
(b) Transport to retail outlet 10.50 11.0
(c) Miscellaneous expenses such as cess to corporation, — —
watchman for unsold stock
(d) Wastage 10.90 11.90
(e) Retailer’s margin 337.0 360.0
(f) sale price of retailer 1888.80 1873.70
VI Share of farmer (%) in retailer’s price 33.70 55.0
VII Marketing Costs as % of retailer’s price 20.70 21.60
VIII Marketing margins as % of retailer’s price 33.70 23.40
IX Modified Measure of Marketing Efficiency (MME) 1.53 1.22
Source: computed from field survey data
338 Agricultural Situation in India
TABLE 8—BENEFIT COST RATIO FOR KINNOW
Particulars TMC EMC TMC EMC
(cost of (cost of (cost of ,( cost of production
production production production includes family labour)
includes only includes only includes
Paid out costs) Paid out costs) family labour)
BCR for kinnow 3.80 5.10 3.10 4.60
Source: computed from field survey data
TABLE 9—PER QUINTAL POST-HARVEST LOSSES
Post Harvest Loss Kinnow
TMC EMC
Quantity SD Quantity SD
Loss during storage (kg) — — — —
Loss during transport(kg) — — 0.80 780.10
Loss at Retail level — — 0.50 237.40
NOTES: SD- Standard deviation, Quantity in Kgs
sales through EMC is 50 percent higher than that through
TMC. During transport, there is injury to the crop due to
friction, and also secondary infection of the fruit, which
leads to rotting of the fruit and the post harvest loss
reported on this count is less than one per cent as waxing
increases the shelf life of the kinnow (Table 9). At the retail
stage, the post harvest loss reported was 0.5 per cent. The
spoilt produce is often sold at 40-50 per cent of the price.
The reasons for preferring the marketing channel
indicated that in case of kinnow under TMC maximum
responses pertained to the assured sales as the farmers
did not want to sell their produce directly in the market to
overcome the price risk as well as to save time as well as
energy while selling the produce in the market. They were
also influenced by friends and relatives to sell their produce
to the contractor. In case of EMC, fair price and superior
infrastructure were the main reasons for preferring this
channel.
The farmers did have information about price
prevailing in regulated markets. In case of EMC, the
commission agent/trader was important source of price
information. Further, most often, the farmers were aware of
the price soon after harvest. None of the farmers in the
sample got information from AGMARKNET. By and large
sample farmers revealed that the price received by them
was more or less similar to that expected by them. In case
of TMC, personal information/experience was playing an
important role in determining the price of the crop. There
have however been instances when farmers are cheated
by the commission agent/contractor while selling in the
market or to the contractor. Majority of the farmers in TMC
expressed that they received the same price as was agreed
and did not have to go to' the agent to receive payment for
the produce that was sold and received payment on time.
In case of EMC, about 80 per cent of the farmers expressed
that they got a bit higher prices for their produce than their
expectation.
Majority of farmers expressed that the village roads
were average or good quality. With respect to proximity to
the market, it was observed that the APMC was not in the
same village and in a few cases the farmers in the sample
had to travel within 10 kms to access the regulated market.
In case of kinnow growers, 60 per cent of respondents
expressed that they had to travel more than 50 kms to access
the market. With respect to other facilities such as auction,
supervision of sale, loading, sorting, weighing was either
satisfactory or good. They also opined that internal
telephone facility, computer facilities and banking facilities
were average quality.
After sale of his produce, the farmers were by and
large aware of the supply chain that existed till the produce
reached the ultimate consumer. The farmers were more
concerned with the price which they received and their
sale receipts. The farmers in the sample revealed that they
were aware that their produce went to another commission
agent or trader. About 91 per cent of the sample farmers in
case of TMC and 50 per cent for EMC opined that their
produce goes through 3 to 4 channels. The sample farmers
were also aware of the other wholesale markets where their
crop is sold both within and outside the state. About 43
per cent of sample farmers in TMC and 20 per cent in EMC
September, 2012 339
were not aware of retail price. Other farmers in the sample
were however aware of the price. Farmers also felt that the
margin realized by the buyer of their produce is high. In
case of EMC, 40 percent of farmers in the sample indicated
that they would continue to sell in the same channel while
in case of TMC the percentage of farmers was 51.4 per
cent. The main constraint faced by the kinnow growers in
the market was that the commission agent in the market
preferred the traders than the farmers for auctioning their
produce. Further, some farmers felt that the wholesalers
buy only selected quality produce and also delay payment.
Farmers made several suggestions such as exports
should be promoted and encouraged especially when
global prices are ruling high, market charges and number
of intermediaries should be reduced and credit should be
easily available.
Policy Implications
1. Potato and kinnow growers faced problem
regarding the sharp decline in the prices in case
of bumper harvest. So, there is a need for
providing facilities/concessions for promoting the
export of the produce in case of glut in the market
to stop the distress sale.
2. Cold storage cost for potato crop is very high.
Sometimes in case of low prices in the retail market
in lean periods, farmers are not able to cover their
storage cost. In that case, Govt. should provide
subsidy for the storage to augment the income of
the potato growing farmers.
3. There is a need to establish more processing units
for value addition of potato to increase the
farmers’ share in consumer rupee. Kinnow growers
opined that the processing plant established in
the region was not directly purchasing kinnow
from the farmers. There is a need to persuade the
processing units to purchase the produce from
the farmers, so that they may also get the benefit
of the plant.
4 . The facilities of waxing, grading and transportation
of the fruits and vegetables to distant markets
should be subsidized so that the farmers get
remunerative price of their produce.
5. The farmers as well as traders reported the
unhygienic conditions due to improper disposal
of the waste material and problem of stray animals
in the market. So, the market committees should
be emphasized to ensure the proper cleanliness
in the market yards.
6. As the net price received by the farmers was
higher in case of EMC, therefore the farmers
should try to sell more produce through this
channel. With respect to EMC, the main constraint
was that EMC purchased limited quantity and
only superior quality produce. EMC has to
therefore increase the scale of its operations to
purchase more agricultural products so that more
farmers are benefitted by selling through this
channel.
On the whole, it has been found that farmers have
been benefitted by selling their produce through EMC both
in case of potato as well as kinnow crops mainly because
they avoid/save marketing costs. However, the marketing
operations of EMC are very limited and restricted to
purchase of superior quality produce which enables only a
few farmers to secure higher price. Thus, expansion of such
innovative/emerging marketing channels for fruits and
vegetables in an organized manner, coupled with upgraded
market infrastructure in regulated markets can go a long
way to promote horticultural base in the state, through
reducing post harvest losses, reducing intermediaries,
increasing net returns for the producers as well as for the
benefit of the consumers.