MARKET LED AGRICULTURE:- INSTITUTIONS, ISSUES & POLICIES

SPEAKER – AMOL JAMALE

REG. NO. - J4-000905-2011

JAU.

SEMINARON

POST GRADUATE INSTITUTE OF AGRIBUSINESS MANAGEMENT

J. A. U. JUNAGADH 362001

2

CONTENT

INTRODUCTION1

EVOLUTION CONCEPT2

DIMENTIONS3

INSTITUTIONS4

ISSUES5

POLICIES6

CASE STUDIES7

CONCLUSION8

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Market led agriculture is the market ward orientation of agriculture through extension includes agriculture & economics is the perfect blend for reaching at the door steps of farming community with the help of appropriate technology.

During last 50 years emphasis was given on PRODUCTION-LED EXTENSION (PLE). India become self reliant on food production. But the farmers at individual level are not realizing remunerative prices for their produce. They prone to sell their produce “AS IS WHERE”.

Farmers need to transform themselves from producers to producers cum sellers.

INTRODUCTION

4Source: Sheela et al, (2008)

EVOLUTION OF CONCEPT OF M. L. A.

Legitimized -led agriculture :

5

Focussed mainly on rural development Some of the attempts include,

Sevagram attempt – Mahatma Gandhiji – 1920.

Shriniketan - Rabindranath Tagore – 1921.

Marthandam project - Spencer Hatch – 1921.

Gurgaon attempt – F. L. Bryne – 1927.

Etawah pilot project - Albert Mayor – 1946.

CONT…

State -led agriculture :

6

Central and State governments took responsibility.

Grow more food campaign -1947.

Intensive Agriculture Development Programme -1965.

Intensive Agriculture Area Programme -1965.

High Yielding Varieties Programme -1967.

Drought Prone Area Programme - 1971.

Agriculture Technology Management Agency - 2000.

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CONT…

Market-led agriculture :

Started in kerala in the year 1993, as an experiment by combining SHGs and market oriented production.

The GOI in collaboration with MANAGE Hyderabad as successfully pilot tested MLA with ATMA in 7 states and 28 districts.

Some of the developments are, AEZ, FIGS, Collective marketing, AGMARKNET, Rythu Bazaars (Rythara Santhe), RKVY

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To conversion of Agriculture sector into profit oriented business.

To strengthening R-E-F linkages – between various departments at various levels

To strengthening market linkages to farmers – IT application in Agricultural marketing.

To wider use of electronic mass media for Agricultural Extension.

Source : GOI, (2007) 8

NEED FOR MARKET LED AGRICULTURE

Expansion of Market - more of agribusiness and trade.

Changing consumers preference-move towards HVCs.

Revolution in Information Communication Technology (ICT).

New trade opportunities within and outside the country.

Introduction of export oriented product.

Modernization of wholesale markets with new Agricultural policy.

Conversion of P-L-A into M-L-A.

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ROLE OF EXTENSION PERSONS IN LIGHT OF MLA

Doing SWOT analysis.

Organization of Farmer Interest Groups (FIGs).

Enhancing the communication skills of farmers.

Establishing market linkages between farmers, markets and processors.

Helping in production and marketing plan.

Educating farmers about direct marketing.

Capacity building of FIGs.

10Source: Reddy and Jaya, (2002)

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DIMENSIONS

D

A

MARKETING MIX

MARKETING PLAN

MARKET ORIENTED

PRODUCTION

USE OF TECHNOLOGY

MARKET INTELLIGENCE

DIMENSIONS OF M. L. A.

E

C

B

www.agri.mah.nic.in

www.agrinto.com

www.ciks.org/agri.html

www.khetiwadi.com

www.kisan.net

www.krishiworld.com

www.nabard.org

www.nic.in/agrico

www.pravara.com

www.ycmou.com/agri

INDIAN AGRICULTURAL WEB SITES

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0%10%20%30%40%50%60%70%80%90% 84%

38%31% 31% 28% 28% 25% 22%

10%

Source : Internet and Mobile Association of India (IAMAI)

REASONS FOR NON USAGE OF INTERNET

Among rural users in India

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STATE AGRICULTURAL MANAGEMENT & EXTENSION TRAINING INSTITUTE SAMETI, JHARKHAND

A State level Training Institute of Jharkhand

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INSTITUTIONS FOR MLA

CONT…

ICAR (Indian Council of Agriculture Research).

NARSs (National Agriculture Research Systems ).

KVK (Krishi Vigyan Kendra).

APEDA (Agri. & Processed food product Export Development Authority)

SAMB (State Agriculture Marketing Boards ).

NHB (National Horticulture Board)

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Objectives.

To strengthen Research – Extension – Farmer linkages To increase the quality and type of technologies being disseminated. To develop new partnerships with the private institutions including NGOs.

Creating Farmer Advisory Committee to improve feed back. Using NGOs to organize farmers. Increased use of Information Technology (AGMARKNET, WWW)

Salient Features.

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ISSUES OF M.L.A.

Quality standards.

Marketing infrastructure building.

Bridging the information gap.

Direct marketing.

Specialized markets.

Involving corporates.

Source: GOI, (2007) 17

DIFF. BETWEEN ISSUES OF S.L.A. & M.L.A.

based on the pro-market explanations

ISSUES STATE-LED MARKET-LED

BeneficiariesSupply-driven;

beneficiaries state selected

Demand-driven; self-selected

Implementation method

Statist-centralized; transparency = low

degree

Privatized–decentralized;

transparency = high degree

Pace and nature Protracted; politically & legally contentious

Quick; politically & legally noncontentious

Land prices Higher Lower

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ISSUES STATE-LED MARKET-LED

Credit and investments

Low credit supply & low investments

Increased credit and investments

Exit options None Ample

Cost of reform High Low

Programme sequence

Farm development plans after land redistribution

Farm development plans before pace of redistribution

DevelopmentProtracted, uncertain and anaemic postland transfer development

Quick, certain, and dynamic post-land

transfer development

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POLICIES INITIATIVES

The National Agriculture Policy had highlighted the need for increase in the private sector participation in farming by leasing private land for agri-business & contract farming to private companies.

The government proposed to set up 20 Agri-Export zones in different state that would integrate the complete process from production to export stage & contract farming is being encouraged to rope in local farmers to join these export zones as members to pool in their produce.

Source : Ramasamy et al, (2008) 20

PHASES IN AGRI. POLICY & DEVELOPMENT

Phase 1.Establishing

the basics

Phase 2.Kick starting

markets

Phase 3.Withdrawal (non-agri.)

Roads/ Irrigation Systems/ Research/

Extension/(Land Reforms)

Reliable local seasonal finance, input & output

markets

Effective private sector markets

Extensive, low productivity agriculture

Profitable intensive technology. Wider uptake

inhibited by lack of inputs, finance & output markets

Effective farmer input demand & surplus prod.

Larger volumes of finance & input demand

& produce supply

GOVT. ACTION STATUS OF AGRI.

Source : Dorward, (2004) 21

NATIONAL AGRICULTURAL POLICY

Focus areas of policy document.

Sustainable Agriculture.

Food and Nutritional Security.

Generation and Transfer of Technology.

Input Management.

Incentives for Agriculture.

Investments in Agriculture.

Institutional Structure.

Risk Management.

Management Reforms.

Follow up Actions.

Cooperative Sector Reforms.

Source: GOI, (2000) 22

FUTURE POLICY DIRECTIONS

Completion of market reforms. (Min. of agriculture & state govt.)

Promotion of supply chain infrastructure. (Various ministries)

Promotion of grading, standardization and quality certification of farm produce. (Min. of agriculture)

Expansion of food processing facilities. (Min of FPI)

Ensure farmer’s linkage with future market with price discovery and price risk management. (Min. of CA. F. & PD)

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MLA WORKS WITH DIFF. FARMING SYSTEMS

Precision farming.

Contract farming.

Corporate farming.

Cooperative farming.

Integrated farming.

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To prepare the farmers for market led Horticulture/ Agriculture. To empower the Farmers and Farmers’ Forum.

To promote Hi tech Agri. /Horticulture inbuilt with precision farming

elements. To be the model hi tech production system to maximize the productivity.

Objectives.

PRECISION FARMING

(Pierce and nowak, 1999)

An application of technologies and principles to manage spatial and temporal viability associated with all aspects of agriculture production.

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MEASURABLE OUT PUTS OF P.F.

Enhancing the Productivity of crops by 50-60%.

95 percent marketable produce .

Water economy 30 to 40 %.

Electricity economy 50 %.

Less labor dependence.

25% more weight per unit volume for the produce.

Empowerment of farmers ( Technical, Economical and social

empowerment).

Source : Ajjan et al, (2008) 26

PROFITABILITY OF P.F.

No Crop Particulars Cost of cultivation

(Rs./ha)

Gross income(Rs./ha)

Marketing cost (Rs)

Net return (Rs)

% increase

in net return

1 Cucumber Project farmers 51,579 1,20,000 12,000 56,421 221

Other farmers 49,960 75,000 7,500 17,540

2 Cabbage Project farmers 64,545 1,57,500 - 92,955 136

Other farmers 73,275 1,12,500 - 39,225

3 Chilli Project farmers 1,75,500 2,10,000 29,000 92,500 111

Other farmers 1,06,250 1,50,000 22,000 43,750

4 Potato Project farmers 84,100 2,10,000 5000 1,25,000 66

Other farmers 67,000 1,43,000 5000 76,000

5 Tomato Project farmers 2,58,280 95,971 13,068 1,49,241 62

Other farmers 2,00,304 96,430 11,824 92,051

Source : Ajjan et al, (2008) 27

Brinjal: 500MT/ha, all India record

Sugar cane 110 MT / acre (22 MT against 12 MT /ha)

Snake guard’s height, 10 feet

PRECISION FARMING SUCCESS STORIES

Carrot

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Banana double density. (6000 Plants/ha)Turmeric 3000 kg dry Vs 4500 kg dry.

Service agency. Workshop on precision vegetables. 29

CONTRACT FARMING

Major StatesMaharashtra, A.P., Karnataka, Punjab, Orissa, Tamil Nadu, Madhya Pradesh etc.

Major CropsCotton, Soybean, Potato, Sugarcane, Basmati Rice, Chilli, Spices, Medical Plants, Fruits and Vegetables, Flowers, Poultry etc.

Major Sponsoring AgenciesMahindra Shubhlabh, PepsiCo, United Breweries, Dabur, Cadbury, Godrej, Himalaya Health Care, ITC Agro-Tech etc.

Forward trade agreement between the producer and sponsor (buyer) who may be processer or supplier / exporter.

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No Particulars CF NCF % Diff. to CF over NCF

1 Preparatory cultivation. 1430 1290 10.58

2 Seeds & sowing. 196 374 -47.59

3 Manures. 1702 1490 14.23

4 Fertilizers. 2013 1499 34.32

5 Inter culture operations. 2325 2150 8.14

6 Plant protection. 4873 5595 -12.91

7 Picking cost. 1930 1755 9.97

8 Post harvest operations. 0 1800 -100

9 Total cost. 14469 15954 -9.31

10 Gross return. 32020 29705 7.79

11 Net return. 17551 13751 27.63

COMPARATIVE STUDY OF COST & RETURN OF COTTEN

in CF & NCF (Rs per acre)

Source : Senthilnathan, (2008) 31

WASTAGE ACROSS SUPPLY CHAIN ADVANTAGES OF CONTRACT FARMING

Assured market price. Financial support in kind. Assured quality of seed and pesticides. Better price for producer. Elimination of middlemen. Remunerative returns and timely payment.

Assured required supply. Assured required quality. Protection from fluctuation in market price. Buyer can plan on long term basis.

To the Farmers…

To the Buyers…

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INTEGRATED FARMING

Productivity, Economics and Employment Generation of Wetland Integrated Farming System.

Farming systems

Productivity (kg/ha)

Production cost (Rs/ha)

Gross return (Rs)

Net return (Rs)

BCR Per day return (Rs)

Employment generation (man days/

ha/yr)

Cropping alone

12995 27822 64975 37153 2.43 178 369

Crop + Fish + Poultry

29609 48303 146035 97731 3.02 400 515

Crop + Fish + Pigeon

29173 47090 145868 98778 3.06 400 515

Crop + Fish + Goat

37679 55549 186667 131118 3.36 511 576

33Source : Natarajan and Sudhalakshmi, (2008)

AGRICULTURE SUPPLY CHAIN

COMPARISON WITH DEVELOPED COUNTRIES

INDIA

FarmerConsolidator

Commission agent

Trader Wholesaler RetailerConsumer

High wastage and low margins

DEVELOPED COUNTRIES

FarmerWholesaler

Retailer

Consumer

High investments – Low wastage - better

margins

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Field Losses (e.g. Pest, Diseases, Rodents etc)

Pre-Processing(e.g. inefficient harvesting, drying, milling)

Transport(e.g. spillage, leakage)

Storage(e.g. technical deficiencies)

Processing & Packaging(e.g. excessive peeling, washing)

Marketing(e.g. spoilage, rotting in stores)

Rich Countries

– High losses at a

later stage in

the value chain

Consum

erProd

ucer

Field Fork

Wastage by Consumer(e.g. overeating, food wastage)

Developing Countries – Relatively

high losses in the initial

parts of the value chain

WASTAGE ACROSS SUPPLY CHAIN

LEADS LOWER LEVEL OF PROCESSING

Source :MOFPI (2008-2009) 35

STAGES IN A COMMODITY MARKETING SYSTEM

• Independent truckers, trucking companies, railroads, airlines etc. 2: Transportation

• Grain elevators, public refrigerated warehouses, controlled atmosphere warehouses, heated warehouses, freezer warehouses

3: Storage

• Commodity buyers specializing in specific agricultural products, such commodities as grain, cattle, beef, oil palm, cotton, poultry and eggs, milk

1:Assembly

STAGES EXAMPALS

36Source : GOI, 2001 ( Draft )

• Makers of tin cans, cardboard boxes, firm bags, and bottles for food packaging or fiber products 6:Packing

• Independent wholesalers marketing products for various processing plants to retailers (chain retail stores sometimes have their own separate warehouse distribution centers)

7:Distribution and retailing

• Commodity merchants or government grading officials

4: Grading and Classification

• Food and fiber processing plants such as flour mills, oil mills, rice mills, cotton mills, wool mills, and fruit and vegetable canning or freezing plants

5:Processing

STAGES EXAMPALS

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Decision making & agreeing.

The marketing system.

Determining what market wants.

Audit of local resources.

Implementation.

Review stage.

1

2

3

4

5

6

STAGES IN PROMOTING MARKETING LED

Source: Sheela et al, (2008) 38

PARADIGM SHIFT FROM P L A TO M L A

Aspects

• Purpose or objective.

Production-Led Agriculture

• Transfer of production technologies.

Market-Led Agriculture

• Enabling farmers to get optimum returns out of the enterprise.Expected end

results.Delivery of messages. Adoption of package of practices by most of the farmers.

High returns.

Focus. Production / yields ”Seed to seed”

Whole process as an enterprise /High Returns ”Rupee to Rupee”

39Source: Reddy and Jaya, (2002)

AspectsProduction-Led

Agriculture

Messages, Training / Motivating Recommendations .

Joint analysis of the issues Varied choices for adoption Consultancy

Establishment of marketing and agroproccessing linkages between farmer groups markets and processors

Not much importance as the focus was on production

Very important as agricultureviewed as an enterprise tounderstand the cost benefitratio and the profits generated

Extensionists’ interactions

Extensionists’ role

Maintenance of Records

Limited to delivery mode and feedback to research system

Market-Led Agriculture

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CHALLENGES TO MARKET LED EXTENTION

Gigantic size of extension system.

Information technology.

Market intelligence.

Extension cadre development.

Reorganization of extension system.

41Source: Reddy and Jaya, (2002)

Affordability.

Acceptability.

Understanding the rural consumer.

Physical distribution.

Communication barriers.

Unauthentic arrival of products.

Availability.

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CHALLENGES IN RURAL MARKETING SYSTEM

Source: Balaji et al, (2008)

TYPICAL QUESTIONS IN FARMER’S MIND

Market Led trying to change it

43

WE WANT SUPPORT

But not like this…..

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CASE STUDY

Market-led Extension, an Experience with Rubber board in India

The companies were importing rubber from other countries due to high quality and low price.

Local producers were in trouble . Factories was operating at low capacity utilization Capacity was 40

tonnes/day Were operating at 10 tonnes/day.

To tackle this situation,,,,,,,,,,,,,,

Established Rubber Producer Societies (RPS).

Linking gross root level organization like SHGs to processing factories.

Trained the producers on producing high quality rubber.

Created infrastructure facility.

Source: Kumar, (2004)45

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Result.................... Result....................

Productivity increased up to 40% .

70% of rubber is processing now .

20-30% increase in farmer income.

Farmers realizing 90% of terminal market price.

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Market-led partnership - FIGs and Chitoor Poultry Association.

Groundnut is the main crop in Chitoor.

ATMA made diversification of the farmers into maize cultivation.

Poultry association and FIGs were linked with buyback arrangements.

ATMA conducted 22 awareness camps and 6 exposure visits to A.P.

Poultry association provided 2 MT of poultry manure to networked

farmers

free of cost.Result................

Crop diversification.

Area expanded to 1150 hectares from 60 hectares.

The average income from maize was raised to 20000 rupees.

Source: Charyulu, (2007)

CASE STUDY

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CONCLUSION

The focus of the market led functionaries need to be extended beyond production.

Farmers should be sensitized on various aspects on quality, consumer’s preference, market intelligence, processing and value addition and other marketing information.

With globalization of the market, farmers need to transform themselves from producers-sellers in the domestic market to producers cum sellers in a wider market sense to best realize the high returns for the produce, minimize the production costs, and improve the product value and marketability.

Farmers should not GO through life . Farmers should GROW through life .

And at last………..

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For listening me…….

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