Agricultural Market System: History, Improvements, Emerging Markets

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Agricultural Market System

In this online world, our agricultural market is not left behind. Are you aware of E-NAM? It is an online portal that links various mandis and brings the agricultural market system to the world of the internet. It has brought more than 500 mandis online. As the agriculture markets continue to make strides every day, let us take a good look at this mechanism.

Agricultural Market System

The agricultural products that we consume daily reach to us after a long journey down the market system from their origin. The efficiency of this system has a direct impact on our everyday lives. The agricultural market system refers to the system through which agricultural products reach our tables, from their origins spread all over parts of the country.

Agricultural marketing is a mechanism through which these goods reach different places depending on marketplaces. Agricultural marketing is a process that involves assembling, storage, processing, transportation, packaging, grading, and distribution of different agricultural commodities across the country.

History of Agricultural Market System
In the pre-independence era, farmers were exploited by traders and middlemen, trapping them into selling their produce for low prices than the existing market rates. They were also victims of faulty weighing machines and wrong accounting. Moreover, they did not possess storage facilities making them unable to hold back their produce to sell at a better price in the future.

Henceforth, they were forced to sell their produce at whatever price which ultimately either led to losses or wastage of produce. Under such conditions, the state had to intervene in the agricultural market system to improve its efficiency.

Measures of Improvement

The system began to reform for good, as the government decided to step in. The government took several steps to achieve the goal of a regulated and efficient market system. Firstly, markets were regulated to obtain transparent and orderly marketing conditions. Secondly, the provisions of improvement in transport infrastructure provided easier and new channels of connectivity.

The separation of these areas was now starting to diminish. Infrastructure was uplifted to reach better heights in reference to storage, processing units, warehouses, etc. Also, cooperatives were set up that effectively bring together various farmers. This provides them with a common voice, helping them to get fair prices for their produce.

The cooperatives in Gujarat are a perfect illustration of the above-mentioned point. Lastly, measures taken by the government such as the assurance of minimum support price(MSP), maintenance of buffer stocks, and distribution through PDS were a step in the right direction.

The shortcomings of changes in the market system soon became pretty much evident. Although an active regulation of markets has improved the scheme of things, the full potential is still to be realized. The improvement in infrastructure has been improving at a slow rate, causing serious wastages and problems.

The birth of various cooperatives has been the new idea for improvement, but eventually, they are receiving backlash for inadequate coverage of farmers and low levels of connectivity. The various policies introduced by the state have led to betterment. But the private sector still controls a serious share of the trade. It becomes important to realize that a lot of work is left to be done for the agricultural market system.

The Hurdles against Improvement
In essence, the following obstacles are the ones we have to tackle first:

  • Due to lack of knowledge and vigilance, farmers often fall prey to bluffs such as faulty weighing machines and account manipulation.
  • Misinformed farmers often fall prey to the selling of produce at rates lower than the prevailing market rates.
  • Lack of access to proper and good storage facilities forces them to sell produce at whatever rate being asked. Hence they cannot store the output in order to sell it in the future when prices are high. This prevents them from earning good returns.
  • Lack of easy formal credit makes farmers knock doors of informal sources which eventually push them into debt traps.

Emerging Alternate Marketing Channels

Emerging Alternate Marketing Channels

Amidst all the positives and negatives, various marketing channels with innovative and helpful ideas have emerged on the scene. They have been successfully linking producers to consumers eliminating the need for middlemen. Hence the money lost in commision now becomes a part of the profit for the farmers.

Some illustrations are Apni Mandi (Punjab, Rajasthan, Haryana), Hadapsar Mandi(Pune), Rythu Bazars (vegetable and fruit markets in Arunachal Pradesh and Telangana), Uzhavar Sandies (Tamil Nadu). Other channels involve various national and multi-national fast food chains reaching out directly to farmers. These companies enter into deals with farmers which require them to produce the output of a certain quality.

To encourage this culture, companies ensure to provide them with necessary products like good quality seeds. This also maintains a stable income for farmers, as they are paid according to a pre-decided price for their output.


What are some obstacles agricultural marketing faces?
Some of the hindrances that agricultural marketing faces are:

  • Lack of efficient warehousing facilities.
  • Unregulated markets.
  • Malpractice in weighing and grading of goods.
  • Poor credit facilities and lack of affordable finance.