Bottlenecks in rice marketing

MEAGRE marketable surplus of small farmers together with their weak financial position makes it difficult for them to withhold the produce for better prices, while the remoteness from the organised markets generally influence farmer ‘decision to sell locally at comparatively low prices.

The rice growers get an estimated 65 per cent of the consumer price. The role of middlemen acting as a link between producers and consumers is very complex and needs in-depth analysis.

Middleman is the person who provides many economic services to farmers and on the other hand he is considered as one of the major “institution” exploiting farmers. They get very high margins but their share is generally justified by considering provision of additional services and risks which they usually undertake at each stage of marketing.

An efficient marketing system means availability of quality inputs and outputs at desired place, at the right time and in the suitable form which is not possible without strong infrastructure support, efficient transportation, processing, grading and storage facilities.

Generally, these physical marketing facilities are lacking.. As such, agricultural products have to be handled for a considerable time by various marketing agencies before reaching to end consumers. It is estimated that the entire marketed surplus passes into the trade channel in two to three months.

Unsuitable storage methods and poor handling increases post-harvest losses. Authentic market intelligence on regular basis is necessary for maintaining meaningful interaction between producers and consumers to ensure smooth and effective flow of agricultural products.. All stakeholders in the market should have accurate information about demand, supply and prices.

Marketing problems: Typical problems faced by the small rice farmers in dealing with the marketing of their comparatively small quantities of produce are discussed below:

The total government storage capacity for food grains at present is unable to handle the volume of production. It hinders the creation of times utilities and losses are sustained by storing produce in open sub-standard stores.

Due to lack of financial reserve, the small farmers have to sell their produce at the time of harvest or a little after and do not receive fair price. It is estimated that producers will get 10 to 14 per cent more returns if necessary storage facilities with credit are provided. This will result in better standard of living for producer and better investment power for productive farming.

Some of the fraudulent practices are, Arhtya and Dalal (middlemen) acting both for buyer and seller, settlement under case, false weighing and variety of charges. The growers have no voice in the regularisation of various fees charged from them. Many of the illegal dues are deducted from sole proceeds. Eexcess weights are also in vogue in various markets. Illegal deductions are also made in kind especially from fruits and vegetables. These abuses are almost prevalent in all the markets, which depress the return to the grower.

Farmers’ small marketable surplus has limited the scope of marketing strategy. For effective marketing, the economy of scale is a critical element. A small marketable surplus implies a weaker basis to bargain with assembly merchants or wholesalers. Direct marketing by small farmers thus becomes impracticable because of high marketing costs. Therefore, they have to depend traditionally on village assembly traders or itinerant merchants to sell their produce.

Even when the farmers are aware of an opportunity of getting better price by selling their produce somewhere else, the traditional “customers relationship” established with certain other traders, prohibits the farmers from seeking a more advantageous alternative opportunity.

The inefficient marketing practices employed by the small farmers result in higher post-harvest losses, higher marketing costs and lower prices. Efficient methods for harvesting, processing and storage are essential. Without such efficient methods, the small farmers are bound to receive lower prices resulting in their weak competitive position.

At various places periodic (five days or weekly) rural markets are held which are mostly patronised by small farmers. These markets serve as assembly points that are linked with large secondary markets or urban wholesale markets. Some farmers with larger marketable surpluses bypass the rural periodic markets.

In most cases these markets are owned and managed by local authorities or by private contractors. The itinerant merchants and assembly traders who obtain small farmer’s produce at cheaper rates and selling it at remunerative prices in the secondary or urban wholesale markets also visit these rural markets.

Most rural markets have no marketing facilities such as storage and many do not even have the shelters. Malpractices such as under-weighing, dubious sale and weighing practices are freely used against the interests of the farmer-sellers. Towards the end of the day, the bargaining power of the farmers becomes weaker as the market turns into a ‘buyer market’. But the authorities controlling these markets do not bother to check these malpractices and instead only interested to collect the market fees.

One common feature of our agriculture is the high concentration of landed wealth, 70 per cent of five per cent landowners control the land. The bottom 20 per cent of households receive about five per cent of the total income while the top 20 per cent receive more than half of the total income. On account of 70 per cent of the small farmers, their marketable surplus is quite less and the small farmers are not in a strong bargaining position and there fore, cannot influence the price structure. Although lot of work has been done in developing farm to market roads, yet there is acute shortage of rural road net works and transport facilities.

Of various agricultural marketing problems, the most critical one is the lack of marketing extension service. Although crop production extension services do exist at the village and farm level to a certain degree, but marketing extension work designed to provide guidance to small farmers particularly, is non-existent. To establish and strengthen field level marketing extension service is an important priority area to provide direct benefit to the small farmers.

Bank credit need for farming requires completing a number of formalities against acceptable collaterals. But in practice it is pretty difficult for small farmers to obtain required loans on time with the result that they are unable to bring any improvement in their operations to enhance production and their incomes.

The banks do not advance marketing loans to small farmers.. Thus, the small farmers have to borrow from the commission agents and wholesalers on harsh and unfavourable terms. Large farmers, however, have access to the marketing loans from the commercial banks as well..

Possible solutions: A Marketing Authority should be created in all provinces as well as at the federal level to improve the overall marketing system .This marketing authority may be an autonomous body quite distinct from the existing government marketing department/cells.

Unlike at present (when the marketing staff is working under the provincial Agricultural Directorates although it has to deal with the marketing of livestock products, and is also used for agricultural extension work resulting into less effective role to handle the purely marketing problems), the agricultural marketing directorates in the provinces should have an specific purpose entity. Their functions must include marketing surveys, marketing intelligence service, grading for internal consumption and trade; and regulation of commodity markets.

As the growers are not getting a fair deal in selling their produce through the wholesalers/commission agents, there is need for creating alternate agencies like marketing board with the active participation of growers to provide healthy competition with the existing market intermediaries.

In order to save the growers from the exploitation by the commission agents and other market functionaries, the element of regulation of agricultural wholesale markets has been introduced. But the objective has not been achieved. It is, therefore, suggested that working of the existing regulated markets be improved and new ones be established with the proper control to minimise the exploitative role of the market functionaries.

The concept of the farm service centres is based on giving a package deal in respect of various services to the farmer under one umbrella. The establishment of such centres in the rural areas may provide the farmers facilities of storage, credit, small processing units purchase of inputs like fertilisers, pesticides, diesel oil, repair of agricultural machinery. Arrangements for sale of farm produce through these centres may also be made.

Due to the absence of village to mandi link roads appreciable quantities just cannot reach the market and goes waste in the rural areas. It needs no emphasis that an efficient marketing information service can greatly help in dispatching of produce more profitably. Besides, it can assist the farmers in planning their production programme. It will also provide dependable statistics on prices and also other market information to the planners, research workers and decision-making authorities. Presently market information services provided at the Federal level or by the provinces are by no mean adequate.

Institutional credit facilities for the agricultural produce have so far been production-oriented. Certain allocations are, however, made for marketing credit which are generally made available to the trading concerns in the urban area. Such credit facilities do not in anyway help the producers. The credit-giving agencies should, therefore, allocate separate funds for marketing at primary level and see that the credit actually reaches the farmers particularly the small farmers.

The pricing policy should aim at providing adequate return on investment. The procurement/support price may be announced one season earlier to elicit adequate production response from the farmers. There is a need of timely announcement of export policy. The export market may be diversified as far as possible.

Modern rice mills in the public sector may be set up at places where milling facilities are inadequate/non-existent. Moreover, existing mills should be improved.

Courtesy: The DAWN

Muhammad Ramzan Rafique
Muhammad Ramzan Rafique

I am from a small town Chichawatni, Sahiwal, Punjab , Pakistan, studied from University of Agriculture Faisalabad, on my mission to explore world I am in Denmark these days..

Articles: 4630

Leave a Reply

Your email address will not be published. Required fields are marked *