Problems in Agricultural Marketing in India

Agricultural Marketing in any developing country would have three-fold objectives.

  1. To ensure remunerative prices for the farmers’ produce.
  2. Narrow down the price the farmer gets and price produce is sold to consumer
  3. Eliminate or rather minimize the role of middle-men

In India, the agricultural marketing poses various problems such as

  1. Lack of warehousing and storage facilities (Cold storage or otherwise) which forces farmers to sell their produce as soon as it is ready as they can’t afford to hold and wait for better prices. And the storage which is provided lacks quality leading to wastage of grains and thereby leading to inflationary push in prices of grains.
  2. Near absence of market linkages, and inadequate transport facilities prevent them from taking their produce to mandis, lack of motorable and mechanized transport and also pucca roads. Still bullock carts are used in deep rural areas.
  3. Lack of grading and standardization facilities due to which farmers are not able to get better prices, and it weakens their bargaining power.
  4. Use of substandard weights and measures due to which produce may be underweight. Still in many villages the age old system of measuring grains in ‘seer’ is used.
  5. Presence of large number of dalals (middlemen) who charge several unauthorized commissions due to which the price farmer gets reduced.
  6. Lack of credit facilities, as timely availability of credit could help farmer to withhold his produce and run his household till he gets a better price.
  7. Information asymmetry or lack of information dissemination to the farmers about the prevailing market prices and weather forecast of season which may trigger the price rise if not available for farmers.

Government has tried to address several of these issues, some backfired, some defied economic logic, some were populist measures; the political will after the green revolution which made us self-sufficient seems to be missing.

2 thoughts on “Problems in Agricultural Marketing in India

  1. duckprep says:

    Prasad Bhai, a great article as usual. I guess your next article would be how to solve the agricultural marketing problems isn’t it?

    And, in your present article you can include the low penetration of Forward markets and how the monopolization of APMC’s is retarding the creation of a uniform standard.


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