Agricultural Marketing Reforms & Marketing Infrastructure

RABI CONFERENCE-2005

As a Farmer

I must thank all of you for your efforts and concerns But what use if I can not be facilitated to sell my produce at Remunerative Price / Quality linked returns Choose my buyer Place and time convenient to me Escape the fleecing of multiple intermediaries

PRICE SPREAD

100% 18 90% 80% 17 70% 60% 50% 40% 65 30% 42 20% 10% 0% 41 66 65 35 36 20 19 14 16 23 23

Marketing Margins Marketing Cost Farmer's Share

Rice

Wheat

Groundnut

Apple

Onion

Increasing Farmers Income

90% of effort is Production oriented Only 10% on Marketing/Post harvest phases Single intervention that can enhance income by 20-30% Private Sector Investment

Domestic Markets Scenario

o Regulated Markets.

o 7161

of 7310 Wholesale Markets Covered Under Regulation.

27,294 Rural Markets, Under Regulation 15%

o Of

Domestic Markets Scenario

o Regulated Markets Lack Need Based Infrastructure.

o Development Confined to

Wholesale Markets. Rural Markets Remain Out of Development Ambit

o Current Mandi System Has Multiple Intermediaries

and High Value Loss

o APMC Regulation Prevents Companies From Directly

Sourcing From Farmers

Domestic Markets Scenario

o Fragmented

Industry, Organized Players

with

no

Large

o High Wastage between the Farm and the

Retailer

Present Scenario in Value Chain

o Producers Share in Consumers Retail Price

40% to 60% depending on the commodity 25% of Produced Scientific Storage Food-grains

Mere

o Only

Utilise

o Less Than 2% of Fruits and Vegetables Production

Is Processed

o Post-harvest Losses estimate 10% of Food Grain

and 25% of Fruits and Vegetables Production

Problems

Competitiveness is lost Quality assurance is a ? Loss of Value Export is a problem No Grading/Standardization Consumer Dissatisfaction No Market Intelligence No Price Discovery

Paradigm Shift

Present Agriculture is Production Driven Transition to Agri-Business Market Driven What Consumer Wants ? Cutting the value Chain Knowledge led growth Private Investment

Investment Requirement (Rs. in crores)

Items Physical (Nos) X Plan XI Plan Total

Wholesale markets Modernization of markets Rural Periodic Markets Grading Centers

3213 7293 27294 5786

2410 2260 1024 400

4016 3766 1706 750

6426 6026 2730 1150

Modernizing Labs
Agribusiness Centres Warehousing
(lakhTonne)

100
1500 518

10
50 5965

10
100 6200

20
150 12165 28667

Total

12119 16548

Source of Investment

Public Investment ?? Significant role of Private Sector How do we get them into the sector Create enabling Policy and Legal framework This requires Reforms

Road Map of Reforms

Create enabling environment

Legal

and

Policy

Private / Cooperative Markets Direct Marketing and

Contract Farming Programs

Grading/Standardisation/Quality

Road Map of Reforms

Establish Effective Linkages Between Farm Production And Retail Chains PublicPrivate-Partnership to Promote Professionalism in Existing Markets
Stepping-Up of Pledge Financing and Marketing Credit

Road Map of Reforms

Introduction of Negotiable Warehouse Receipt System In Storage Projects

Link Commodity Exchange with Market Yards for Price and Risk Management Information Technology to Promote Trade/ Market Led Extension Services
Facilitate Investments

Leaders In Reforms

Kerala, Tamil Nadu Madhya Pradesh Andhra Pradesh Punjab Himachal Pradesh Sikkim Manipur Nagaland Andaman & Nicobar

Followers

Many States Enabled some components Require all Components

Scheme For Development / Strengthening Of Agricultural Marketing Infrastructure, Grading And Standardization

Objectives of the Scheme

o To

Induce Private and Cooperative Sector Investments in Market Infrastructure Development Projects Strengthen Existing Agricultural Markets, wholesale and rural periodic, to Enhance Efficiency

o To

o To Promote Grading, Standardization and Quality

Certification of Agricultural Produce at Farm/ Market Level

Coverage of the Scheme

Agriculture/Horticulture Fisheries Meat & Poultry Minor Forest Produce Dairy Medicinal plants Apiculture

Components of the Scheme

Functional Infrastructure Market user common facilities Shortening the Value Chain

Direct Marketing Contract Farming E-Trading Infrastructure

Market extension and market oriented production planning Input Supply

Functional Infrastructure

Assembling

Combine harvesters Cleaning Assembling yards Collection centers Pre-cooling Chambers Mechanical graders Color sorters

Grading

Standardisation

Functional Infrastructure

Quality Certification

Establishing a Quality Lab Accredited Certified agency Infrastructure On-Farm Quality Testing Infrastructure ( Sugarcane Quality Testing for timely harvesting and Maximum Sucrose Content) Grapes Certification

Functional Infrastructure

Labeling

Packaging

Bar coding
Pack houses Packing material manufacturing as part of the integrated project Food world Nilgiris Namdharis in Delhi

Retailing & wholesaling

Functional Infrastructure

Value addition

Decortication of Groundnut Waxing of Kinnows Curing of Honey

Market user common facilities

o Market yards o Platforms for loading/ assembling and

auctioning of the produce etc

o Modern auction Systems o Weighing and Mechanical Equipment

Shortening the Value Chain

o Infrastructure

for Direct marketing from producers to consumers/ processing units/ bulk buyers etc

o Infrastructure for supporting Contract farming

arrangements between processing/ trading units and farm producers

o Infrastructure for E-Trading, market extension

and market oriented production planning.

Scope of Infrastructure Projects

Infrastructure for supply of production inputs and need based services to farmers

AI infrastructure Fertilizer storage units Feed storage units Marketing Intelligence

Mobile infrastructure for post-harvest operations Market extension and market oriented production planning

Salient Features of Scheme

o Credit

Linked Back-ended Subsidy on Capital Investment for Setting up of General or Commodity Specific Infrastructure for Marketing of Agricultural Commodities; and

Strengthening and Modernization of Existing Agricultural Markets, Wholesale, Rural Periodic or in Tribal Areas

Salient Features of Scheme

Persons Eligible o Individuals, Farmers, Consumers, NGOs, APMC, Corporations, Cooperatives and Marketing Boards in the Entire Country.
o

State Projects Assisted by NABARD/NCDC for Modernization of Existing Markets Subject to States allowing Competitive Markets in Private Sector Direct Marketing and Contract Farming Rationalize levy of Market Fee

Funding Arrangement
S.No. Components of Scheme Tenth Plan Provision (Rs. In crores)
1.

Capital Investment Subsidy on Infrastructure Project Strengthening of Central Laboratories Awareness/Training, Consultancy and Evaluation etc. Total -

175.00

2.

10.00 5.00 190.00

3.

 Involve Women through SHGs

Expectations from Participants

Treat marketing as an integral and critical link Awareness creation & Publicity Identify viable projects Capacity Building of all players NIAM, NABCONS can assist in Capacity building, Project Preparation Assistance of Trained Project preparation Experts

Further Details & Assistance

www.agmarknet.nic.in reddywr@nic.in 011 23382416

Thank You