Economics of Production and Marketing of Kharif Maize in...

September, 2012 309

1. Assistant Professor, 2 and 3-Junior Research Assistant and 4 M.Sc. Scholar, Department of Agricultural Economics Mahatma Phule Krishi

Vidyapeeth, Rahuri-M. S.-413722

Economics of Production and Marketing of Kharif Maize in Ahmednagar District of

Maharashtra State

D. S. NAVADKAR1, A. J. AMALE

2, C. M. GULAVE3 AND V. M. NANNAWARE

4

Abstract

The present investigation was attempted to study

the resource use structure, to estimate the cost of

cultivation and to study the marketing of maize. In all, 90

farmers were selected from Karjat tahsil of Ahmednagar

district in western Maharashtra. The data related to the

Agricultural year 2008-09 was taken for the present study.

The sample farmers were classified into three size groups

of holdings i. e. small, medium and large. The Cobb-Douglas

type of production function was used for functional

analysis.

The findings of the study showed that the male and

female human labour utilization were 77.19 and 106.45 man

days per hectare. The bullock labour utilization was 10.68

pair days. The per hectare use of nitrogen was 110.80, 110.18

and 112.10 kg. per hectare in small, medium and large size

groups, respectively. At the overall level, per hectare cost

of cultivation of maize (i.e. Cost ‘C’) was worked out to

Rs. 40624.50. Among the different items of costs, rental

value of land was the highest (17.53 per cent). The per

hectare gross income received from maize was Rs. 42350.00,

Rs. 43580.00 and Rs. 43320.00 in small, medium and large

size groups, respectively, while it was worked out to

Rs.43083.33 at the overall level. The per hectare Cost '‘A’

was Rs. 24819.72, Rs. 26702.16 and Rs. 24552.20 in small,

medium and large size groups, respectively. Per hectare

profit at Cost ‘A’ was Rs. 17530.28, Rs. 16877.84 and

Rs. 18767.80 in small, medium and large size groups,

respectively. The per hectare total cost, i.e. Cost ‘C’ was

Rs. 40831.13, Rs. 41302.57 and Rs. 40069.00 in small, medium

and large size groups, respectively. The profit at Cost ‘C’

was Rs.1518.87, Rs. 2277.43 and Rs. 3251.00 in small, medium

and large size groups, respectively. In the Channel-I, the

marketing cost incurred during the selling of maize was

workedout to Rs. 203.28 per quintal at the overall level. The

major component of marketing cost was commission

charges (50.66 %) which is followed by expenditure on

packaging charges (25.27%) and transport (19.68%). In the

Channel II, the marketing cost incurred during the sale of

maize was workedout to Rs. 47.50. The major components

of marketing cost were packing (84.63 %) and transportation

charges (10.74 %). The producer's share in consumer's rupee

was 78.26 per cent and 73.19 per cent in Karjat and

Ahmednagar market, respectively. In Channel I, the

marketing efficiency of kharif maize in Ahmednagar market

was 1.13 and in Kajat market was 1.11. In Channel II, the

marketing efficiency at local market was 1.10. So,

Ahmednagar market was efficient for marketing of the maize.

As regards to the input use level, the inputs used for

maize cultivation were far below the recommendations. The

gap in the use of manures could be minimized if the maize

growers under take the activities such as the practices of

green manuring and vermi compost production.The

estimates of the production functions indicated that, human

labour, manures and nitrogen are the important resource

variables responsible for increasing the yield. The use of

these variables has to be carefully extended by the maize

growers to increase the yield.

INTRODUCTION

Maize is globally a top ranking cereal not only in

productivity but also as human food, animal feed and as a

source of large number of industrial products. The potential

for enhanced use of maize for specially purposes based on

existing uses and new products to meet the needs a future

generation provides the researchers with unique

challenges. Maize considered as queen of the cereal is one

of the most important cereal crop in the world, next only to

rice and wheat. Worldwide the area, production and

productivity of maize are 137 million ha, 610 million tones

and 4.43 tlha, respectively. In India during 200607 maize

was grown in an area of 7.42 million ha with the production

and productivity of 14.72 million tones and 1,983 kg/ha,

respectively. Major proportion (55 %) of maize is consumed

as food and additional use of maize include as feed, forage

and in processing industry . Broadly, maize growing states

in India can be divided into (1) Rajasthan, Maharashtra,

Gujarat, Uttar Pradesh and Madhya Pradesh, covering

about 55-60 % of area, but with yield levels lower than

national average, ranging between 0.95 t/ha in Rajasthan

to 1.3 t/ha in Uttar pradesh and (ii) Bihar, Himachal Pradesh,

Punjab, Andhra Pradesh and Karnataka with about 30 %

area and productivity levels higher than national average,

ranging from 1.8 t/ha in Bihar to 2.4 t/ha in Andhra Pradesh.

In the second group, conditions are comparatively

favorable in terms of quality of both environment and

improved maize material.

In India 55 per cent of the grain produce concurrently

is used for food purposes, about 14 per cent for livestock

310 Agricultural Situation in India

feed. 18 per cent for poultry feed, 12 per cent for starch and

1 per cent for seed. By the end of this century the expected

demand will be around 46 per cent for food, 14 per cent for

livestock feed, 19 per cent for poultry feed, 19 per cent for

starch industry and 15 per cent for seed.

The study area which belongs to Karjat tahsil in

Ahmednagar district identically suitable to large scale of

maize cultivation and farmers of this area are cultivating

maize crop on large scale. The present investigation was

attempted to study the resource use structure, resource

use productivities, cost of cultivation, marketing of maize

and constraints in production and marketing of maize.

METHODOLOGY

The selection of Ahmednagar district was done

purposively as Ahmednagar district is one of the major

districts in producing maize in Maharashtra and it has its

own problems of production and marketing. For the study,

Karjat tahsil of Ahmednagar district was selected

purposively taking into consideration the concentration

of area under maize in this tahsil. As the soil and agro-

climatic conditions prevailing in the tahsil are more favorable

for growing maize. The list of maize growing villages of the

selected tahsil was prepared on the basis of information

obtained from the respective tahsil agricultural office.

For selection of the sample cultivators, a list of maize

growers was prepared from the revenue records of each of

the villages. They were grouped into three categories on

the basis of their operational holding viz., small farmers

(below 2 ha.), medium farmers (2.01 to 4 ha.) and large

farmers (above 4.01 ha.). From each group, 5 farmers were

selected in each village randomly. In all, total 15 farmers

were selected from each village from three categories of

farms. So, the total sample cultivators were 90 comprising

of 30 small farmers, 30 medium farmers and 30 large farmers.

The primary data on aspects like details of farm

family, infrastructure, land utilization, cropping pattern,

resource use structure, farm production, cost and returns

as well as grading, packaging and transport of maize,

marketing cost and problems in production and marketing

management of maize were obtained by survey method

from the sample cultivators for the year 2008-09 with the

help of well designed questionnaire prepared for the

purpose.

Tabular analysis method based on means and

percentages was used for estimating costs and returns.

The input costs have been arrived at by three stages (i.e

Cost ‘A’, Cost ‘B’ and Cost ‘C’) on the basis of standard

cost concepts used in Cost of Cultivation Schemes under

the State Government and Central Government.

Estimation of marketing cost

It includes the grading and packing charges

comprising the wages paid to the labour, value of packing

material and other charges, transport cost includes transport

charges including loading and unloading charges and

market cost comprising hamali, weighing and commission

charges. The cost actually paid by the selected farmers

was considered and analyzed.

Marketing efficiency (ME)

It is calculated by using Acharya’s Index of ME

(Acharya and Agarwal, 1999).

FPME = ----------------

[MC+MM]

Where,

ME = Marketing Efficiency

FP = Prices received by the farmer

MC = Marketing costs

MM = Net marketing margins

RESULTS AND DISCUSSION

National Scenario of Maize:

The Karnataka produces 18% of the India’s maize

production; other top producing states include Andhra

Pradesh, Maharashtra, Bihar, Rajasthan and Tamil Nadu.

The per hectare maize production is highest in Tamil Nadu

and then after West Bengal and Andhra Pradesh are

comes.(Table 1)

TABLE 1—STATE WISE AREA, PRODUCTION AND YIELD OF MAIZE IN INDIA

(Area- Million ha., Production- Million tones and Yield- kg./ha.)

State Area % to All-India Production % to All-India Yield

Karnataka 1.24 15.01 3.01 18.02 2430

Andhra Pradesh 0.78 9.48 2.76 16.52 3527

Maharashtra 0.79 9.61 1.83 10.93 2302

Bihar 0.63 7.65 1.48 8.84 2341

Rajasthan 1.10 13.28 1.15 6.85 1044

September, 2012 311

TABLE 1—STATE WISE AREA, PRODUCTION AND YIELD OF MAIZE IN INDIA—Contd.

(Area- Million ha., Production- Million tones and Yield- kg./ha.)

State Area % to All-India Production % to All-India Yield

Tamil Nadu 0.24 2.96 1.14 6.84 4686

Madhya Pradesh 0.83 10.07 1.05 6.25 1256

Uttar Pradesh 0.71 8.58 1.04 6.21 1465

Himachal Pradesh 0.30 3.58 0.54 3.25 1839

Gujarat 0.50 6.02 0.53 3.19 1072

Jammu & Kashmir 0.31 3.76 0.49 2.91 1566

Punjab 0.14 1.68 0.48 2.84 3417

West Bengal 0.10 1.18 0.39 2.30 3943

Jharkhand 0.16 1.98 0.19 1.14 1169

Others 0.43 5.17 0.65 3.88 @

All India 8.26 100.00 16.72 100.00 2024

@- Since area/production is low in individual states, yield rates are not worked out (Source: Agricultural Statistics at a glance, GOI, 2011)

1. Resource use structure

The quantities of various inputs directly affect the

cost of cultivation and therefore, the use of different inputs

like human labour, bullock labour, seeds, manures, fertilizers

etc. in quantitative and monetary terms have been studied

in detail. The information on utilization of different resources

for maize is presented in the Table 1 on per hectare basis.

It is seen from the Table 2 that, the total labour

utilization per hectare was highest in small size group

followed by large and medium size groups of maize growers.

The male human labour utilization were 83.36, 78.45 and

72.98 man days per hectare in case of small, medium and

large size groups of maize growers, respectively. While, at

overall level, the male human utilization level was 77.19

man days per hectare.

TABLE 2—PER HECTARE RESOURCE USE LEVEL OF MAIZE

Sr. Particulars Small Medium Large Overall

no.

1. Total Human labour (Days) 198.06 175.22 181.20 183.65

a. Male 83.36 78.45 72.98 77.19

b. Female 114.70 96.77 108.22 106.45

2. Bullock power (pair days) 8.14 14.18 9.80 10.681

3. Machine power in hrs. 2.00 2.60 1.80 2.09

4. Seed ( Kgs) 33.12 30.18 35.18 33.19

5. Manures (Qtls.) 12.15 14.10 14.20 13.66

6. Fertilizers ( Kgs)

N 110.80 110.18 112.1 111.21

P 50.40 60.52 60.70 58.07

K 16.30 20.51 20.30 19.36

7. Irrigation Charges ( Rs.) 980.50 1218.40 1420.80 1250.83


The female human labour utilization in small, medium

and large size groups of maize growers were 114.70, 96.77

and 108.22 man days per hectare, respectively and at overall

level, it was 106.45 man days per hectare.

The bullock labour utilization in case of small, medium

and large size groups of maize growers were 8.14, 14.18 and

9.80 pair days, respectively whereas, at overall level, it was

10.68 pair days. The per hectare use of nitrogen was 110.80,

110.18 and 112.10 kg. per hectare in small, medium and

large size groups, respectively. At overall level the use of

nitrogen was 111.21 kg. per hectare.

At overall level per hectare use of P and K was 58.07

and 19.36 kg. per hectare respectively. Farmers uses the

fertilizers doses as per the recommendations.

2. Per hectare cost of cultivation of maize

The per hectare cost of cultivation of maize on the

sample farms during 2008-09 has been estimated and the

same is represented in the Table 3.

It is seen from the table that, at the overall level, per

hectare cost of cultivation of maize (i.e. Cost ‘C’) was

worked out to Rs. 40624.50. Among the different items of

costs, rental value of land was the highest (17.53 per cent).

The other important items of cost were male labour (19.00

per cent), female labour (18.33 per cent) followed by bullock

labour (9.20 per cent), interest on fixed capital ( 6.57 per

cent) and fertilizer ( N) ( 4.22 per cent). The cost incurred in

respect of land revenue and other taxes and depreciation

were negligible in the cost of cultivation. Similar trend was

observed among the different size groups of maize growers.

In the total cost of cultivation, the Cost ‘A’ was

Rs. 25255.20 (62.17 per cent) and Cost ‘B’ was Rs. 35043.80

(86.26 per cent) at overall level and decreasing as well as

increasing trend in cost was observed with increase in the

size of holding.

Among the items of costs, the main items were rental

value of land (Range between 17.11 to 17.83 per cent), male

labour (Range between 19.00 to 20.42 per cent), female

labour (Range between 16.40 to 21.64 per cent),bullock

labour (Range between 6.98 to 12.02 per cent) and manures

(Range between 2.98 to 3.54 per cent)Thus, from above

forgoing discussion, it was noticed that the cost of

cultivation varied among the size groups of maize growers.

TABLE 3—ITEM WISE PER HECTARE COST OF CULTIVATION OF MAIZE

(Rs.)

Sr. Cost items Small Per Medium Per Large Per Overall Per

No. cent cent cent cent

1. Total Human labour

a. Male 4512.00 11.05 3820.00 9.25 3018.00 7.53 3628.83 8.93

b. Female 6448.00 15.79 5504.10 13.33 5979.40 14.92 5955.90 14.66

2. Bullock power 2849.00 6.98 4963.00 12.02 3430.00 8.56 3738.39 9.20

(pair days)

3. Machine power in hrs. 220.00 0.54 390.00 0.94 207.00 0.52 264.40 0.65

4. Seed ( Kgs.) 2649.60 6.49 2414.40 5.85 2814.40 7.02 2654.83 6.54

5. Manures ( Qtls.) 1215.00 2.98 1410.00 3.41 1420.00 3.54 1365.79 3.36

6. Fertilizers ( Kgs. )

N 1706.32 4.18 1696.77 4.11 1726.34 4.31 1712.59 4.22

P 1038.24 2.54 1246.71 3.02 1250.42 3.12 1196.28 2.94

K 152.41 0.37 232.79 0.56 230.41 0.58 211.61 0.52

7. Irrigation Charges ( Rs.) 980.50 2.40 1218.40 2.95 1420.80 3.55 1250.83 3.08

8. Plant protection charges 199.12 0.49 215.13 0.52 230.18 0.57 217.96 0.54

(Rs.)

9. Incidental charges ( Rs.) 115.82 0.28 325.00 0.79 112.60 0.28 176.26 0.43

10. Reapirs 210.60 0.52 260.00 0.63 290.74 0.73 261.61 0.64

11. Working capital 22296.61 54.61 23696.3 57.37 22130.2 55.23 22635.2 55.72

September, 2012 313

TABLE 3—ITEM WISE PER HECTARE COST OF CULTIVATION OF MAIZE—Contd.

(Rs.)

Sr. Cost items Small Per Medium Per Large Per Overall Per

No. cent cent cent cent

12. Int.on working capital 1337.80 3.28 1421.78 3.44 1327.82 3.31 1358.12 334

13. Depre. on farm 1115.20 2.73 1511.18 3.66 1020.30 2.55 1189.29 2.93

imliments

14. Land revenue and 70.12 0.17 72.90 0.18 73.80 0.18 72.61 0.18

other taxes

15. Cost-A 24819.72 60.79 26702.1 64.65 24552.2 61.27 25255.2 62.17

16. Rental value of land 6988.21 17.11 7190.43 17.41 7146.20 17.83 7119.79 17.53

17. Int. on fixed capital 2812.20 6.89 2115.18 5.12 2950.60 7.36 2668.78 6.57

18. Cost-B 34620.13 84.79 36007.7 87.18 34649.0 86.47 35043.8 86.26

19. Family labour

a. Male 3824.00 9.37 4025.00 9.75 4280.00 10.68 4090.54 10.07

b. Female 2387.00 5.85 1269.80 3.07 1140.00 2.85 1490.16 3.67

20. Cost-C 40831.13 100 41302.5 100 40069.0 100 40624.5 100

21. Output

a. main produce (Qtls.) 31120.00 32560.0 31904.0 31902.1

b. Bye-produce (Qtls.) 11230.00 11020.0 11416.0 11252.3

22. Cost-C net bye produce 29601.13 30282.5 28653.0 29372.2

23. per quintal cost 760.95 744.04 718.48 736.66

3. Profitability of maize

An attempt has been made to compare the per hectare

gross income, different costs and the profit at different

costs with net returns and the benefit cost ratio in maize

cultivation in different size groups of maize growers. The

details are given in the Table 4.

It is seen from the table that, the per hectare gross

income received from maize was Rs.42350.00, Rs.43580.00

and Rs. 43320.00 in small, medium and large size groups,

respectively, while it was worked out to Rs.43154.44 at the

overall level. It is indicated that medium size group has

obtained more gross income followed by large and small

size group, respectively.

The per hectare Cost ‘A’ was Rs. 24819.72,


size groups, respectively. Per hectare profit at Cost ‘A’ was

Rs.17530.28, Rs.16877.84 and Rs.18767.80 in small, medium

and large size groups, respectively. Whereas, the profit at

Cost B was Rs.7729.87, Rs.7572.23 and Rs.8671.00 in small,

medium and large size groups, respectively.

TABLE 4—PER HECTARE COSTS, RETURN, GROSS INCOME AND B:C RATIO FOR MAIZE

Sr. Particulars Sizegroups

No. Unit Small Medium Large Overall

1. Total cost

(i) Cost ‘A’ Rs. 24819.72 26702.16 24552.20 25255.29

(ii) Cost ‘B’ Rs. 34620.13 36007.77 34649.00 35043.87

(iii) Cost ‘C’ Rs. 40831.13 41302.57 40069.00 40624.57


TABLE 4—PER HECTARE COSTS, RETURN, GROSS INCOME AND B:C RATIO FOR MAIZE—Contd.

Sr. Particulars Sizegroups

No. Unit Small Medium Large Overall

2. Profit at

(i) Cost ‘A’ Rs. 17530.28 16877.84 18767.80 17899.14

(ii) Cost ‘B’ Rs. 7729.87 7572.23 8671.00 8110.57

(iii) Cost ‘C’ Rs. 1518.87 2277.43 3251.00 2529.87

3. Production Qtls 38.90 40.70 39.88 39.88

4. Gross income Rs. 42350.00 43580.00 43320.00 43154.44

5. B:C ratio

(i) Cost ‘A’ 1.71 1.63 1.76 1.71

(ii) Cost ‘B’ 1.22 1.21 1.25 1.23

(iii) Cost ‘C’ 1.04 1.06 1.08 1.06

The per hectare total cost, i.e. Cost ‘C’ was Rs.

40831.13, Rs. 41302.57 and Rs 40069.00 in small, medium

and large size groups, respectively. The profit at Cost ‘C’

was Rs.1518.87, Rs. 2277.43 and Rs. 3251.00 in small, medium

and large size groups, respectively.

From the above foregoing discussion, it is clear that

the cultivation of maize is profitable at every stage of

production. It is seen that large size group of maize growersgot more profit followed by medium size group and small

size group of maize growers.

4. Marketing channel

In the study area the farmers sold their maize directly

in the Agricultural Produce Market Committee (A. P. M.

C.), i. e. the producer sold their produce to the wholesaler

and then the wholesaler sold their produce (maize) to the

retailer and then retailer sold their produce to the consumer

or processing unit. Thus, in case of maize the channel of

distribution is as follows.

Marketing channel:

Producer

↓↓↓↓↓

Wholesaler

↓↓↓↓↓

Retailer

↓↓↓↓↓

Consumer/processing units

5. Marketing cost incurred by producer

The marketing cost incurred by marketing of maize is

presented in table 5.

In the channel-I marketing cost incurred during the

sale of maize has been incurred to the tune of Rs. 203.28 per

quintal at overall level. In terms of percentage, it is estimated

that the components of marketing cost viz., Packing,

transportation, hamali, tolai and commission charges have

respectively involved to 25.27, 19.68, 2.57, 1.82 and 50.66

per cent of total marketing cost.

This indicates that highest expenditure during the

sale of maize has been paid on commission which is followed

by expenditure on packaging and transportation charges.

The cost paid on other items of marketing is reasonable

and has not much inflated the total marketing cost.

TABLE 5—MARKETING COST FOR MAIZE IN DIFFERENT MARKET

( Rs./qtl.)

Sr. Particulars Channel-I Channel-II

No Karjat Ahmednagar Overall Local

1. Packing charges 45.60 57.12 51.36 40.20

(28.63) (23.10) (25.27) (84.63)

2. Transport 20 60 40.00 5.10

(12.56) (24.26) (19.68) (10.74)

3. Hamali 4.95 5.50 5.23 2.20

(3.11) (2.22) (2.57) (8.20)

September, 2012 315

TABLE 5—MARKETING COST FOR MAIZE IN DIFFERENT MARKET—Contd.

( Rs./qtl )

Sr. Particulars Channel-I Channel-II

No. Karjat Ahmednagar Overall Local

4. Tolai 3.60 3.80 3.70 0.00

(2.26) (1.54) (1.82) 0.00

5. Postage 0.008 0.007 0.0075 0.00

(0.005) (0.003) (0.004) 0.00

6. Commission 85.12 120.85 102.99 0.00

(53.44) (48.87) (50.66) 0.00

7. Total marketing cost 159.28 247.28 203.28 47.50

(100) (100) (100) (100)

(Figures in parentheses are percentages to the total marketing cost)

The marketing cost incurred by channel-II was Rs. 47.50

per qtl. The major component of marketing cost was packing

(84.63 per cent) and transportation charges (10.74 per cent).

6. Price Spread

Price spread in case of market where maize was

directly sold by producer to wholesaler to retailer in

A. P. M. C., has been worked out and presented in

Table 6.

It is seen from table that gross price received by

maize growers was Rs. 800.00 and 900.00 per quintal in

Karjat and Ahmednagar market. The producer share in

processor

TABLE 6—PRICE SPREAD IN MARKETING OF MAIZE

Sr. No Particulars Karjat Ahmednagar

Rs/qtl Rs/qtl

1. Gross price received by the producers 800.00 900.00

(78.26) (73.19)

2. Market expenses incurred by the producers 119.28 197.28

(11.67) (16.04)

3. Net price received by the producers 680.72 702.72

(66.59) (57.14)

4. Commission received by the wholesalers 46.20 64.06

(4.52) (5.21)

5. Expenses incurred by the wholesalers 32.25 36.15

(3.15) (2.94)

6. Margin of the wholesalers 24.02 28.11

(2.35) (2.29)

7. Commission received by the retailers 13.22 16.12

(1.29) (1.31)

8. Expenses incurred by the retailers 11.26 16.15

(1.10) (1.31)

9. Margin of the retailers 10.29 15.12

(1.01) (1.23)

10. Price paid by consumers in the market 1022.21 1229.76

(100) (100)

(Figures in parentheses are percentage to final price paid by the consumers)


(consumers) price was 78.26 and 73.19 per cent in

Karjat and Ahmednagar market.The total market cost

incurred by producer was 119.28 (11.67 per cent) and 197.28

(16.04 per cent) in above said market. The net price received

by the producer was Rs. 680.72 and 702.72 per quintal in

Karjat and Ahmednagar market. The total market cost

incurred by retailer was Rs. 11.26 (1.10 per cent) and 16.15

( 1.31 per cent) in Karjat and Ahmednagar market.

7. Marketing Efficiency

TABLE 7— MARKETING EFFICIENCY

Sr. No. Particulars Channel-I Channel-II

1 Ahmednagar 1.13 —

2 Karjat 1.11 —

3 Local — 1.10

It is noted from the table 7 the Ahmednagar market

was efficient for marketing of the maize.

8. Constraints in the input use of maize

Table 4 revealed that 50 per cent cultivators had

stated the problem lack of knowledge of cultivation

practices. About 44 per cent farmers had reported the high

cost of pesticide. Nearly 39 per cent maize growers noticed

the high cost of fertilizers.

Conclusions

The per hectare gross income received from maize

was Rs. 42350.00, Rs. 43580.00 and Rs. 43320.00 in small,

medium and large size groups, respectively, while it was

worked out to Rs. 43083.33 at the overall level. The per

hectare Cost ‘A’ was Rs. 24819.72, Rs.26702.16 and

Rs.24552.20 in small, medium and large size groups,

respectively. Per hectare profit at Cost ‘A’ was

Rs.17530.28, Rs.16877.84 and Rs.18767.80 in small,

medium and large size groups, respectively. The per

hectare total cost, i.e. Cost ‘C’ was Rs. 40831.13,


size groups, respectively. The profit at Cost 'C' was

Rs.1518.87, Rs. 227743 and Rs.3251.00 in small, medium

and large size groups, respectively. The output-input

ratio at total cost for kharif maize was 1.06 indicating

that maize is a profitable crop enterprise.

In the Channel-I marketing cost incurred during the

sale of maize has been incurred to the tune of Rs. 203.28 per

quintal at overall level. The marketing cost incurred by

Channel-II was Rs. 47.50 per qtl. The gross price received

by maize growers was Rs. 800.00 and 900.00 per quintal in

Karjat and Ahmednagar market. The producer's share in

processor (consumers) price was 78.26 and 73.19 per cent

in Karjat and Ahmednagar market. Ahmednagar market was

efficient for marketing of the maize.

As regards to the input use level, the inputs used for

maize cultivation were far below the recommendations. The

gap in the use of manures could be minimized if the maize

growers under take the activities such as the practices of

green manuring and vermi compost production. The

estimates of the production functions indicated that, human

labour, manures and nitrogen are the important resource

variables responsible for increasing the yield. The use of

these variables has to be carefully extended by the maize

growers to increase the yield. .

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of agricultural economics, Indian Farming 22 (2) :

p. 244.

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progressive farming 1. 20 (5) : 19.

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September, 2012 317

*Department of Agricultural Economics G.B. Pant University of Agriculture & Technology, Pantnagar-263 145. UK

Economic Analysis of Rice Production and Households’ Livelihood in Hills of Uttarakhand:

Constraints of Modern Rice Varieties Adoption

*H.N. SINGH, M. S. BISHT, J. SINGH AND S. P. SINGH

Abstract :

The productivity of rice grown in hills is not only

lower but less than 1 t / ha which is far below than the

national average 2.2 t / ha. A sample survey involving 50

randomly selected farmers representing two contrasting

rice growing environments terrace and valleys of Almora

district was conducted during 2007-08. Descriptive

statistics were applied to analyze different socioeconomic

and biophysical variables causing yield gap in distinctly

different rice growing environments. Terraces are entirely

rainfed and farmers were using traditional varieties (TVs)

with low-input use, while high yielding modern varieties

(MVs) along with high inputs are commonly used in

valleys as irrigated. Findings revealed that rice farmers

of valleys getting a net return of 50% oyer cost incurred,

where as in terrace farmers were not only in losses but

cultivation cost was 30% higher than the gross income of

rice. Interestingly, farmers were sacrificing 1.44% of their

annual income by practicing rice cultivation in terrace

which offers opportunity for employment of family labour

tor achieving food and fodder security. Analysis extended

a step further to evaluate the influence of a set of

independent socioeconomic and biophysical variables

on adoption of MVs and concluded that the biophysical

factors have greater influence on adoption of MVs. In the

response of socio-economic factors no matter remains

related to the adoption. This calls for policy intervention

to enhance the average productivity of rice in terrace

which may depend on too many factors. The policy of

research effort should be needed to increase yield potential

of TVs through participatory technologies development

research approach which may be more realistic way for

achieving goals of target area. Research efforts should

also be suggested to improve crop nutrient management

practices of rice in terrace which could be able to reduce

cost that can be transformed it into profitable enterprise.

Key Words: Environment, Productivity, Livelihood, Food

security, Biophysical

Introduction:

Rice occupies a substantial proportion in the diet of

millions of Indian people and thus stands for a prominent

place in Indian agriculture. Over the last five decades, area

and production have witnessed substantial growth.

However, in recent past the compound growth rate in

production has decelerated from 6.56 % during 1980s to

3.34% during first decade of 2000. This is largely attributed

to many factors responsible for slowing down the yield

growth from 5.45 % during the 1980s to 2.55 % during first

decade of 2000 (Dutta et al. 2006). Productivity of rice in

India is about 2.2 t/ ha.

Rice cultivation covers around to 54 per cent of the

total area of cereal crops grown during khrief in

Uttrankhand. Out of 2.86 lakh hectare, 1.44 lakh hectares

which is about 51 % is in hills and remaining area under

plains. Total production of rice in the state is about 5.32

lakh tonnes, and contribution of hills and plains come about

38.8 and 63.2%, respectively. Average productivity of rice

in the state as a whole is around 1.9 t/ha, whereas in hills it

is only 1.1 t/ha. The plains of Nainital and Udhamsingh

Nagar districts showed highest productivity and these were

about 3.0 and 2.6 t/ha respectively. Among hill districts

Tehri Garhwal recorded highest productivity (1.6 t/ha) and

lowest (about 1.0 t/ha) was found in Almora and Pauri

Garhwal districts (Singh et al. 2011).

In Uttarakhand, hill and mountain ecosystem is unique

because of varying topographical features, differing

landscape and climatic variations along the slope and

hydrological conditions of fields etc. In general, hills receive

750 to 1250 mm rainfall annually, but 80-90 per cent is received

in monsoon period (June to August). About 10 per cent of

net cultivated area was provided irrigation water in hills and

that too is confined the lower valleys. Rice productivity in

the hill districts is stagnating for the past several years and

the production is not adequate to meet the demand for the

whole year. Even though state as a whole it is in surplus with

food production but the hill districts depict a net shortage of

foodgrain about 29000 tons annually (Bisht 2007).

Considering the contribution of rice in livelihood system of

households in hill immediate improvement in productivity is

a challenging task before the researchers, administrators

and policy makers. The objective of this paper is to

characterize rice production environments households’

livelihood strategies and constraints in adoption of modern

rice varieties in hills of Uttarakhand.

Methodology :

This study was conducted in Takula and Chaukhutia

blocks of district Almora as this district has largest rice


area but lower productivity. There are two predominantly

rice growing environments, terrace and valleys. The

selection criteria for the villages were based on acreage of

rice which represents terrace and valley, two distinctly

different rice growing environments. Out of total 50 farm-

families, 25 from each rice growing environment were

selected randomly. The investigation was carried out in

the year 200708. Pre-tested and well-structured schedule

was used to conduct intensive household survey to

gathered data on different biophysical and socioeconomic

variables. Secondary data was also used from various

sources of government and non-government organizations.

Descriptive statistics were applied to analyze the mean

and percentages of different biophysical and

socioeconomic variables. Standard deviation (SD) and ‘t’

test were applied to estimate variation and significance

level of differences in concerned variables wherever

required. Tabular analysis was used to present the results

which seems enough to capture main findings of this study.

Description of study sites :

In hills, there are two distinct features of rice

growing environment viz., Terrace and Valleys. Terraces

located on slopes and cultivated land has light-textured

brown soil, well drained, very small size and un-irrigated

plots resulting entire farming dependent on rainfall which

was characterized as rainfed condition. Terraces are

considered as unfavorable rice growing environment in

context to poor soil-moisture regime. Valleys known as

land tract in between the hills composed of plain and

lowland types with heavy textured-red loam nutrient rich

soil. Valley is well irrigated by hill canals with good water

holding capacity of soil which provides favorable condition

for rice cultivation. In hills proportion of terrace type land

is about 90% to total cultivated area where as area under

valleys was limited up to 10% only (Bisht 2007, Singh et al.

2011 and Pathak & Sharma 1985 ).

In both environments land preparation was totally

dependent on bullock power. Mechanization was not

possible due to biophysical conditions especially small

size plots and sloping land type fields. The number of parcels

was more in the terraces than valleys where as number of

plots per parcel were almost equal. However, size of parcel,

smaller in terraces due to hill slopes and undulating land

situation. Rice is planted predominantly during the kharif

season. In valleys modern varieties (MVs) are popular where

as traditional varieties (TVs) are grown in terraces only

since long back. Traditional methods of farming system

are continued in terraces due to complexity of land situation

and unavailability of irrigation. In terraces, farming activities

begin immediately after rain occurs as they are mainly

rainfed. Terraces were entirely direct seeded (dry-seed and

dry- soil), while in valleys transplanting is popular rice

establishment method. The average grain yield of rice in

valleys was almost tripled to the average yield in terraces

(table 4), Rice accounted for 48 and 58 per cent share to

total cropped area in kharif in terraces and valleys,

respectively. However, acreage of rice was 54 % to total

cropped area in kharif This clearly indicates that rice is

most important crop and economic activity in kharif season

which supports livelihood of households in the hills.

Results and Discussion :

Characteristics of Households :

The major characteristics of the selected households

are summarized in table I. The average operational holding

in terrace was slightly higher 0.30 ha as compared to 0.27

ha in valleys. The overall average operational holding was

about 0.28 ha in the hill. In valleys nearly 84 per cent of the

fields have access to irrigation through hill canals. On the

other hand, terraces are entirely dependent on rainfall for

water/irrigation. Average years of schooling of household

head were 8 and 7 years in valleys and terraces respectively.

Average age of households head was 55 years which is at

par across the environment. The average family size was

also at par for the both sites and it was 6 members per

family.

Cropping Systems :

Table 2 reveals the cropping pattern adopted on the

sample farms in two rice growing environments viz., terraces

and valleys. In valleys, MVs are popular whereas TVs are

grown in terraces. In terraces, farming activities begin

immediately after rain occurs as they are mainly rainfed.

Rice farming in terraces is attributed by direct seeded (dry-

seed and dry-soils), while in valleys transplanting was

popular rice establishment technique. Rice seems the major

cereal in the terraces and valleys as it occupied 26 and 31%

area to gross cropped area respectively. Importance of rice

also very obvious during kharif and its share were 48 and

58% to total cropped area in terrace and valleys

respectively. The other important crop of kharif was mandua

which emerged as second important cereal and occupied

27 and 20% area to total cropped area in the respective

environments. The other cereals, pulses, oilseeds and

spices were minor in importance in terms of acreage. Wheat

was a major crop in rabi season in both the environments

and covered 50 and 54% to total cropped area in terraces

and valleys respectively. Barley emerged out as a second

most important crop with 17% area to total cropped area

across the environments. The other pulses and oilseeds

crops also occupy a considerable area. In rabi season a

substantial area of land left fallow in both the environments

due to moisture stress which constrained plowing and

sowing of crops (Table 2).

Level of Input use :

Table 3 indicated information on input uses in

different rice growing environments. Seven days bullock

labour required for land preparation in terrace while in

September, 2012 319

valleys it was somewhat doubled. Farmers were applying

higher seed quantity as 160 and 67 kg./ha in terraces and

valleys respectively. While FYM application was about

one and half times greater in terraces than the amount

applied in valleys. Valleys are irrigated through hill canals

whereas terraces are entirely rainfed. Farmers of valleys

used nitrogenous and phosphoric fertilizers and their

consumption level was 60 and 23 kg./ha respectively. In

terraces consumption of fertilizer was almost zero. These

differences between inputs used were due to differential

environmental conditions representing differences in land

type and access of irrigation in these contrasting rice

producing environments.

Total labour days use in rice cultivation in valleys

was 141, where as in terraces it was 82. Transplanting a

predominant rice establishment technique fn valleys

required 33 labour days/ha which was 25% to the total

labour use. In harvesting 35 labour days was used and

threshing and winnowing together used 33 labour days in

valleys. In terraces, weeding emerged as important

component which required 29 labour days accounts for

about 35% to total labour use in rice cultivation.

Costs and Returns Analysis :

The average cost of cultivation of rice was Rs. 13609/

ha in the valley which was about 44% more than that in the

terrace (Rs. 8710). The material cost which includes bullock

power, FYM, seed, irrigation and fertilizer consumption was

worked out to be Rs. 4611/ha accounting for 53% to total

cost in terraces and Rs. 6552 for valleys accounting for

48% to total cost. Material cost was more in valleys due to

use of chemical fertilizers (table 4). Among different items

of material cost, FYM was the most important input followed

by seed, which together accounted for 37% to total cost in

terraces. While in valleys bullock power was the most

important component of material cost with 17% to the total

cost followed by FYM having 12% share to total cost of

cultivation of rice.

In two environments viz., terraces and valleys human

labour included only family labour. Labour cost in rice

cultivation included nursery management, rice establishment,

manure application, fertilizer application, weeding, harvesting

and winnowing. Labour cost was Rs. 4099 in terraces and

Rs. 7057/ha in valleys which constitute 47 and 52% to total

cost, respectively . Weeding cost emerged out as a main

component of labour cost in terraces followed by harvesting.

However, rice establishment was the most important

component of labour cost in valley followed by harvesting,

threshing and winnowing.

The yields of rice were 31.20 and 9.37 qtls/ha in

valleys and terraces respectively. The yield differences were

due to non-adoption of modem technologies in terraces

due to number of constraints discussed in details in next

sections. Price of rice in the market was slightly higher in

terraces than valleys which may be due to preferred quality

of grain and fodder of local rice varieties. There are large

differences observed in gross returns from rice cultivation

in these two heterogeneous rice growing environments

and these differences are contributed by yield levels. In

valleys gross returns was about three times (Rs. 17864/ha)

than that of terraces (Rs. 6149). Adoptions of modern

technologies especially high yielding varieties seed and

inorganic fertilizer in rice cultivation in valleys are alone

sufficient to explain the variation in yield, gross and net

returns. The net returns were negative and not losses of

Rs. 2561/ha over cost in terraces where as in valleys net

return was Rs. 4255/ha. Despite prevailing resource-

neutrality, there appears that rice is an enterprise for good

proportion of loss/profit. Therefore, it is necessary to

examine the existing circumstances which influence farmers

to go for such a business which continuously giving them

negative returns (table 4). Moreover, it is matter of fact that

there must have some positive correlation between

traditional methods of rice cultivation and existing

environmental conditions which influenced farmers for

adaptation are discussed below.

Major rice varieties grown :

The major rice varieties grown on sample farms and

their share in total rice area, number of growers, and mean

yield are given in table 5. Out of five, three TVs are planted

in terraces only and remaining two MVs are restricted to

plant in valleys. The TVs are safeddhan, laldhan and

kurmuli. Most of the farmers from terrace growing

safeddhan in their fields (92%) followed by the laldhan

(60%) and kurmuli (20%). Similarly share of area planted to

safeddhan was 62 % to total rice area followed by 1aldhan

(31%) and kurmuli (7%).

However, yield level of these TVs was almost similar

and average was 9.37 qtls/ha. Despite of lower yield and

negative net return of these TVs, farmers continued opting

cultivation of these varieties on slopping land under rainfed

conditions. This indicates that farmers give importance to few

more traits in the TVs apart from yield which have very strong

association with the sub- ecosystem in the target environment.

In valleys, China 4 and Thapachini, percolated from

neighboring countries of China and Nepal and these two

distinct old modernrice varieties were popular. However, valleys

provide favorable production condition for rice in terms of

land and soil qualities and reliability of irrigation resources.

Therefore, farmers followed a different production practices

for rice cultivation in valleys than terrace. Thapachini a

promising variety planted by almost all the farmers of valleys,

where as only 80% farmers planted China 4. Share of area

planted in these two varieties was slightly different. The

average yield of MVs in valley was 31.20 qtls./ha.

Although yield of Thapachini was 5 qtls lower than

the China 4, but other qualitative traits of Thapachini such

as shorter maturity period and grain quality were more


favorable for the farmers. By growing of Thapachini,

farmers were able to utilize residual moisture of soil to initiate

production process of rabi season crop (Singh et al. 1995).

The relative prices of Thapachini usually higher in the

market due to consumers, strong demand. Yield of MVs

was almost three times higher than the TVs due to genetic

potential and improved production practices. Use of five

varieties by the farmers in two different rice growing

environments with different characters shows the Genotype

x Environmental interaction effect due to genotypic

phenological differences and available environmental

conditions such as soil, water, nutrient, temperature,

humidity, rainfall and sunshine hours etc. The cumulative

influence of these variables leads to adaptation of a

particular genotypes in a given environment (Fukai 2000 et

al. & Singh et al. 2000 and Bisht 2007).

Factors determining adoption of MVs :

Table 6 provides information on various biophysical

and socioeconomic variables which usually influenced

adoption of modern rice varieties in a given environment.

The yield of TVs was 9.37 and MVs was 31.20 qtls/ha and the

number of rice plots considered for respective types of varieties

cultivation were 147 and 203 respectively. Adoption of MVs

in terrace was almost zero due to complex, diverse and risk

prone (CDR) nature of rice production environment. Different

biophysical factors of this environment which my be

associated with adoption were on upper and undulating

landscape position, coarse textured soil accompanied with

poor moisture retaining capacity and rainfed conditions restrain

farmers for cultivation of MVs. Because MVs performed better

in ideal production condition and required precise agronomic

management practices (Singh et al. 2006 and 2010).

Contrary to it, biophysical factors such as lowland,

heavy textured soil, access to irrigation and moisture regime

were playing major role in valleys to influence adoption

of MVs. Interestingly, there are no significant differences

in other socio-economic variables such as average age of

household head, years of schooling, number of family

members and farm size between terrace and valleys

environment. However, distribution pattern of all socio-

economic variables seems to be symmetrical and identical

in both the rice growing environments. After in-depth

analysis of a set of independent variables; biophysical

and socio-economic and their potential influence on

adoption of MVs, it could be concluded that all the

biophysical factors considered in the analysis have greater

influence on adoption of modern rice varieties. In the

response of socioeconomic factors no matter remains

related to the adoption of MVs (Singh et al. 2000).

Sustenance income and livelihood of households :

The annual incomes of farmers from different sources

in two distinct rice growing environments are given in table

7. The sources of income in both the environments were

highly diversified. Diversified sources of income helps

household in income stabilization and to mitigate adverse

consequences, if one or more sources become failure in

income generation (Singh et al. 1995). The average annual

income of households in hills was Rs. 37854. The major

proportion of income was contributed by shops and

government jobs in equal proportion accounts 26% to total

income. Where as teaching profession provides a

substantial amount of income being 13 % followed by

private services 12 % to total income. The share of income

from crop production to total income of household was 6%

only. The other sources of income were minor in terms of

their contribution in total income such as livestock and

self employment etc.

The annual income of households in valleys was

Rs.47321 which is about 67% higher than the households

of terraces where it was Rs. 28382. Major share of income

was contributed by government jobs which accounted for

29 % to total annual income in valleys. The next important

sources of income were shops, teaching profession and

private services which contributed 26, 12 and 11%

respectively. Remaining other sources of income was about

21 % which have great importance in household livelihood

and hill economy.

Sources of income structure in terrace environment

were somewhat different from the valleys. The annual

income of households from all sources was Rs. 28382.

However, contribution of shops was highest being 26% to

total income, followed by the Government jobs, which

accounted for 20%. Private services and teaching

profession shared 15 and 14 % in total income respectively.

A substantial proportion of income 9% was also derived

from ‘others’ activities which included earning from labours

and pensions. Apart from this, few other sources of income

such as self-employed (barber, tailor and blacksmith etc.),

livestock and crop production contributed altogether 16%

to total income of households

Crop production contributes 3 and 7% to average

households’ income in terrace and valleys environment

respectively. Share of income from rice was in negative

(–1.44%) in terrace, while it was 1 per cent in valleys. The

result indicates that rice farmers of terrace were sacrificing

1.44% their income to total income by growing rice. Despite

negative net return farmers were continuing practice of

rice cultivation. This may be due to the zero opportunity

cost of family labor especially women, food pattern,

consumption behavior and food & fodder security goal.

Results also revealed that rice seems as major agricultural

and economic activity in kharif season as it occupied 48%

area to total cropped area. For family labor employment,

there is no opportunity/alternative activity other than rice

cultivation in the area (Pandey et al. 2000).

In addition to above, livestock played major role in

household's economy of hill and requirement of fodder is

September, 2012 321

another essential component for farming community.

Therefore, cultivation of rice in these adverse environments

not only secure food but also help to reduce the pressure

on forest for fodder to maintain the environmental balance

through supply of enough quantity of rice straw (Singh et

al. 1995).

Concluding remarks and policy implications :

It is concluded from foregoing results that

implications emerged call for befittingdesigning initiatives/

policy interventions that could enable to address the

problem of low productivity of rice in hills. Modern varieties

of rice were already being planted in valleys of hills which

provide ideal condition for production. Where as farmers

of terraces remained to be practice of traditional varieties

with traditional practices. Land type along with associated

factor of irrigation access proved to be the crucial factor in

decision to adopt MVs. Most of which are dependent on

good moisture regime. The persistent use of TVs proved

to be farmers' way of adapting to the biotic and abiotic

stress in their rather complex, diverse and risk-prone

rice ecosystem. Though, MVs are known for generating

higher yields, but performed better only under ideal

production conditions which restricted farmers of terrace

to cultivate them. Therefore, TVs are continued in

practice since long back in terrace where land quality is

poor and rainfed.

With the experiences of rice farmers of terrace, TVs

is only suitable option for them due to few more important

traits like quantity of straw that used as fodder. However,

there is no chance that the biophysical environment can

be changed to accommodate MVs. Therefore, efforts should

be directed to making the most of the TVs adoption by

increasing the yield potential of TVs through participatory

technologies development research approach which may

be more realistic way for achieving goal of enhancing

average rice yield in target area. Further research efforts

should also be suggested to improve crop nutrient

management practices for rice in terrace which could be

able to reduce input cost that can be transformed into

profitable enterprise.

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in Almora district Uttarakhand. M. Sc. Ag. thesis

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north eastern hilly region: its scope, opportunity

and challenges', Presented in 2nd international

rice congress 2006 October 9-13,New Delhi.

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pp135-148.


TABLE 1—CHARACTERISTIC OF HOUSEHOLDS

Particulars Terrace Valley Average

No. of households 25 25 50

Average age of households head (years) 55 51 54

Average years of schooling of household head 7 8 8

Average household size (no. of family members) 6 6 6

Average operational holdings (ha) 0.30 0.27 0.28

Irrigated area (%) 2 84 41

Sources of irrigation Spring Hill Canal —

Share of rice in total cropped area in kharif (%) 48 58 54

Average rice yield (q/ha) 9.37 31.20 21.31

Average number of parcels 5 3 4

Average number of plot/parcel 19 14 16

Average size of parcel (ha) 0.040 0.084 0.04

Source: Farm survey data 2007-08

TABLE 2—CROPPING PATTERN BY RICE GROWING ENVIRONMENTS

Crops Terrace (ha) Share (%) Valley (ha) Share (%) Total (ha) Share (%)

Kharif

Rice 2.55 48 4.11 58 6.67 54

Mandua 1.45 27 1.44 20 2.89 23

Madira 0.36 7 0 0 0.36 3

Gahat 0.32 6 0.12 2 0.44 4

Soybean 0.35 7 0.52 7 0.87 7

Others 0.27 5 1.22 13 2.48 9

Sub-total 5.34 100 7.08 100 12.42 100

Rabi

Fallow 0.93 17 0.73 10 1.66 13

Wheat 2.67 50 3.79 54 6.46 52

Barley 0.9 17 1.19 17 2.09 17

Pea 0.11 2 0.06 1 0.16 1

Lentil 0.47 9 0.37 5 0.84 7

Mustard 0.24 4 0.45 6 0.69 6

Potato 0.02 0 0.41 6 0.43 3

Sub-total 5.34 100 7.08 100 12.42 100

Grand total 10.6 14.16 24.84

Others includes: Cowpea, urd, bhat, bhat+soybean, groundnut, maize, chili and ginzer etc.

Source: Farm survey data 2007-08.

September, 2012 323

TABLE 3—EXTENT OF INPUT USE IN RICE PRODUCTION BY ENVIRONMENT (Per ha).

Environments Terrace Valley Differences

Particulars

Materials used

Bullock power (days) 7 13 –6

Seed (Kg) 160 67 93+

FYM (qtls) 156 97 59+

Irrigation (no.) 0 7 –7

Fertilizers (Kg)

Nitrogen 0 60 –60

Phosphorous 0 23 –23

Labour days

Nursery management* 0 3 –3

Rice establishment** 1 33 –32

Manure application 14 10 4

Fertilizer application 0 3 –3

Weeding 29 21 8

Irrigation 0 4 –4

Total pre–harvest labour 44 74 –30++

Harvesting 18 35 –17

Threshing & winnowing 20 33 –13

Total labour days 82 141 –59+++

*Preparation of nursery bed, FYM application, irrigation, seeding and care etc. ** 10 working hrs = one day Source: Farm survey data 2007-08.

+,++ and +++ indicates significance level at 10,5 and I per cent respectively.

TABLE 4—COSTS AND RETURNS OF RICE PRODUCTION BY ENVIRONMENTS (Rs./ha)

Environments Terrace Share (%) Valley Share (%) Differences

Particulars

Material Cost

Bullock power 1370 16 2344 17 –974*

Seed 1033 12 565 4 468**

FYM 2208 25 1620 12 588*

Irrigation — — 699 5 –699

Fertilizers 1

Nitrogen — — 960 7 –960

Phosphorous — 364 3 –364

Sub–Total 4611 53 6552 48 1941

Labour Cost

Nursery management — — 116 1 –116

Rice establishment 35 0 1963 14 –1928

Manure application 549 6 380 3 169

Fertilizer application — — 166 1 –166

Weeding 1602 19 1043 8 559**

Total pre–harvest labor 2186 25 3326 24 –1140***

Harvesting 919 11 1730 13 –811

Threshing & winnowing 975 11 1659 12 –684

Sub–Total 4099 47 7057 52 –2958

Total cost 8710 100 13609 100 –4899*

Yield (qtl/ha)

Main product 9.37 — 31.20 — –21.83***

Gross return (Rs.) 6149 — 17864 — –11715

Net return (Rs) –2561 — 4255 — —

1–Source of NPK: Urea, DAP and SSP. Source: Farm survey data 2007–08

*,** and *** indicates significance level at 10,5 and 1 per cent respectively.


TABLE 5—MAJOR VARIETIES, PLANTED AREA AND MEAN YIELD OF RICE VARIETIES BY VARIETY TYPE

Varieties No. of Maturity Planted Share (%) Yield Remarks

growers days area ( ha) (qtls/ha)'

TradionalVarieties

Safeddhan 23 (92) 95-105 1.59 62 9,39 Droopy leaf and deep

root system

Laldhan 15(60) 95-105 0.79 31 9.45 -do-

Kurmuli 5 (20) 90-95 0.17 7 8.98 Droopy leaf, scented

and soft cooked grains

Sub-total 2.55 100 9.37

Modern Varieties

China 4 21 (84) 130-140 1.81 44 34.42 Erect leaf and shallow

root system

Thapachini 25 (100) 120-135 2.30 56 29.02 -do-

Sub-total 4.11 100 31.20

Grand total 6.67 100 21.31

Figures in parentheses indicates percentage of respective values

TABLE 6—FACTORS DETERMINING MVS ADOPTION

Components Terrace Standard Valley Standard

deviation Deviation

No. of Farmers 25 — 25 —

No. plots 147 203

Extent of MVs adoption (%) 0 — 100 —

Yield (qtls/ha) 9.37 1.87 31.20*** 4.43

a. Socio-economic variables

Average age of households head 55 12 51 11

Average years of schooling of households head 7 3.84 8 4.02

Average households size (no. of family members) 6 1.37 6 1.59

Average operational holdings (ha) 0.29 6 0.26 6.54

b. Biophysical variables

Land type Upper and slopes un — Lower and plain —

Soil type Brown light-textured — Red loam heavy —

soil textured soil

Access to irrigation (%) 0 — 100 —

Moisture regime Extremely poor — Excellent —

Note : ***indicate significance level at 1% probability : Source : Farm survey data 2007-08

September, 2012 325

TABLE 7—SUSTENANCE SOURCES OF HOUSEHOLDS INCOME

(Rs./houshold/year)

Environments Terrace Valley Average

Sources of Income Income Share (%) Income Share (%) Income Share (%)

Shops 7440 26,00 12240 26 9840 26

Teacher++ 3840 14.00 5760 12 4800 13

Governmentt job 5760 .20.00 13840 29 9800 26

Self Employed** 1800 6.00 2680 6 2240 6

Livestock 2016 7.00 2110 4 2063 5

Private services*** 3980 15.00 5318 11 4649.2 12

Crop production 878 3.00 3427 7 2155 6

Rice+ –411 –1.44 326 1 –40 0

Wheat+ 504 2.00 1024 2 764 2

Others* 2668 9.00 –1945 4 2306 6

Total 28382 100 47321 100 37854 100

*Other includes : Off-farm labour, Farm Labour and Pension **Self employed Includes barber, blacksmith and tailor ***includes Hotels and

restaurants, Shop Industries, House servants, transport, corporate offece etc, + Value of these crops added in crop : production. ++includes

teacher from Government school as weil as from private school.


Impact of Emerging Marketing Channels in Agriculture : Benefit to Producer-seller and

Marketing Costs and Margins of Potato and Kinnow in Punjab*

*AERC, Department of Economics and Sociology, Punjab Agricultural University, Ludhiana.

Backdrop

The Rice-wheat system accounts for about three -

fourth of the cropped area and over 85 per cent of the

gross value of crop output. The predominance of this

cropping system has caused disastrous impacts on the

environment, particularly in terms of reduction in the water

table and deterioration in soil fertility. The greater emphasis

on cereal production (especially rice and wheat) in the past

to achieve food security, which undoubtedly resulted in

lower output prices and higher profitability, is now

dampening agricultural growth .To revitalize agriculture in

Punjab, agricultural diversification towards high value

commodities HVCs is considered as one of the most

promising strategies. The global trade of HVCs is growing

rapidly. Facilitating the transition of an agricultural

production system dominated by cereals'towards HVCs

requires greater understanding of the processes involved

in diversification and its impact on agricultural performance.

The major constraints inhibiting such diversification efforts

have been the marketing opportunities for high value crops

especially fruits and vegetables owing to their perishable

nature. Thus there is need to evolve innovative marketing

institutions that link farmers with the markets for speedy

and remunerative disposal of fruits and vegetables.

Supply chain status of fruits and vegetables

High value commodities especially fruits and

vegetables are susceptible to inaccessibility of markets

and high price volatility. Smallholders face the added

problems of high transactions costs due to meagre

marketable surplus and production risk. Though the demand

for HVCs is increasing and there are considerable benefits

emanating from their production, absence of

welldeveloped market arrangements inhibit their expansion.

The existing markets of HVCs are inefficient, unorganized

and disintegrated. The entire marketing process of HVCs,

compared to foodgrains marketing, is complex and risky

due to the perishable nature of produce, seasonal

production, and bulkiness. It is further complicated by the

absence of sufficient infrastructure, such as specialized

markets, cold chains, packing, etc., and lack of agro-

processing facilities. Regulated markets for HVCs are very

few and cover only a few cities in the country. For HVCs

marketing from production centres to retailing requires

close coordination between producers, distributors,

processors and retailers to maintain desired quality and

quantity to meet consumers' demands. To promote

agricultural diversification towards HVCs in the wake of

urbanization liberalization and globalization, the agricultural

marketing strategy requires a paradigm shift by

strengthening marketing institutions, developing synergies

between producers and agri-business, and consolidating

the supply chain. Hence, it is of paramount importance to

examine how the farm producers of HVCs are integrated

with the markets and how innovative supply chains are

emerging for HVCs to meet the growing domestic and global

demands.

Objectives:

The “emerging” marketing channels are supposed

to reduce transaction costs and ensure that high margins

maintained by intermediaries in the supply chain are reduced

so that the farmer benefits and gets a better price as

compared to sale in regulated markets. Keeping this in mind

the study has the following objectives:

1. To analyze the share of the farmer in the final

consumer's rupee in an emergmg marketing model

vis-a.-vis the traditional marketing channel;

2. To analyze the degree of market efficiency and

incidence of post harvest losses in emerging

marketing channel vis-a.-vis traditional marketing

channel;

3. To note the market practices and services of

agencies involved in the emerging channel and

observe if they are superior to that of traditional

channels;

4. To analyze the constraints faced by farmers and

different market functionaries in the emerging

marketing channel as compared to the traditional

marketing channel.

Methodology

The present study has been conducted in the state

of Punjab covering two horticultural crops namely potato

(vegetable) and kinnow (fruit) in Jalandhar and Ferozepur

districts respectively owing to sizeable area under

cultivation. The study has been based on both primary as

well as secondary data. The primary information for the

purpose has been collected through primary surveys and

informant interviews with growers, market committee

C. Agro-Economic Research

September, 2012 327

members, processors, buyers, retailers and consumers in

lalandhar (Potato) and Ferozepur (Kinnow) districts for the

study. Secondary data pertaining to the importance of these

crops in study districts/state have been gathered from

various secondary sources. The study has been based on

a sample of 90 farmers (45 potato growers from Jalandhar

west and Bhogpur blocks of Jalandhar district + 45 kinnow

growers from Abohar and Khuian Sarvar blocks of Ferozepur

district). The required data/information on cost

components, crop yields, input and output prices and inputs

supplies to the farm producers, etc. for potato and kinnow

crops were collected through primary surveys and informant

interviews with growers. The reference period for the

primary data survey was 200910.

Traditional /Emerging marketing channels selected for the

study:

Potato : The most prominent traditional supply chain

involves farmers selling the fresh potato produced by them

in the primary wholesale markets through commission

agents to wholesalers who in turn further sell to secondary

wholesalers located in small cities and towns and local

retailers. In recent years new Supply chain for potato:

Producer → Processor (Pepsi Co.) → consumer has also

emerged.

Kinnow : The most prominent traditional supply chain for

kinnow in the region involves Producer → Pre-harvest

contractor → Commission agent → Wholesaler → Retailer

→ Consumer. Pre-harvest contractors provide advance

payments to the farmers during the time of agreement. In

this approach, farmers minimize risk due to price volatility

and post-harvest losses of course with lesser producers’

share in consumers’ rupee resulting in marketing

inefficiency. During recent years, the Farmers' Evening

Markets for fruits especially kinnow have also come up in

the study district. The practice of selling Kinnow crop to

Pre-harvest contractors has been on the decline and new

supply chain: Producer → Farmers’ Evening Markets →

Local Wholesaler → Wholesaler at distant markets →Retailer → Consumer has been emerged.

The sample size for the farmers was as follows:

Crop District Block Traditional Emerging Channel

Channel

Potato Jalandhar Jalandhar West 35 10

Bhogpur

Kinnow Ferozepur Abohar 35 10

Khuian Sarvar

The information so collected was supplemented

from intermediaries, buyers/processors, retailers and

consumers to maintain desired quality and quantity to

meet consumers' demands under the set up of the existing

supply chains in fruits and vegetables as well as under

the innovative institutional arrangements, which are

gradually emerging in fruits and vegetables. In order to

observe the supply chain of the emerging channel and

traditional channel, primary data were collected from the

following respondents with the help of pre structured

research instruments. The sample size for other

intermediaries was as follows:

Intermediary Traditional Channel Emerging Channel

Potato Kinnow Potato .Kinnow

Wholesalers 10 5 10 5

Retailer 10 5 10 5

Consumer 10 5 10 5

A focus group discussion with the Market Committee

Members/officials was also held to get a lucid depiction of

market charges, market practices, processes etc. Simple

statistical tools were used to examine the share of farmer in

terminal price in case of both traditional and emerging

channel. The post harvest losses, market practices and

constraints faced were also analysed using field level data.

Regulation of markets: rules, procedures and their

evaluation

The Royal Commission on Agriculture (1928)

recommended the regulation of market practices and the

establishment of regulated markets in India in view of the

chaotic conditions prevailing in the agricultural produce

markets. Central Banking Enquiry Committee endorsed


these recommendations later. The Directorate of Marketing

and Inspection (DMI, 1935) recommended the regulations

of markets to the State Governments. The DMI prepared a

Model Bill in 1938 and circulated among the States. Since

then, the State Governments have enacted legislation for

the regulation of the markets. A regulated market is one,

which aims at eliminating the unhealthy and unscrupulous

practices, reducing marketing charges and providing

facilities to producers- sellers in the market. The basic

philosophy of the establishment of regulated markets is

elimination of malpractices in the system and assignment

of dominating power to the farmers and their representatives

in the functioning of their markets.

The Punjab Agricultural Produce Markets Act, 1961/Sale

of Agricultural Produce

The Punjab Agriculture Produce Markets Act, 1961

received the accent of the President of India on May 18,

1961. The act aimed to consolidate and amend the law

relating to better regulation of the purchase, sales, storage

and processing of agricultural produce in Punjab. The act

provides for the establishment of an apex body at the State

level to perform the functions under this act. The Punjab

State Agricultural Marketing Board (PSAMB) was

established. The board is an executive-cum-advisory body

and is concerned with bringing about improvements in the

regulation scheme. It also supervises the functioning of

regulated markets and advises market committees and the

State Government on related matters. The board closely

monitors the sale of agricultural produce and formulates

laws for the sale/purchase of the agricultural commodities.

APMC Act amendments since 2003

Agricultural Marketing laws, particularly the

Agricultural Produce Market Committee (APMC) Act,

inhibit the up-scaling of innovative institutional

arrangements, such as contract farming and linking farmers

with markets and agri-business. As per the APMC Act, it is

mandatory that all notified agricultural commodities,

including horticulture products, must be marketed through

regulated markets. The mandatory regulated system of

marketing prevents producers from direct sales (except

limited sales in farmers' markets) to market functionaries

such as processors and exporters. This obstructs the firms

from entering into contract farming and buying directly

from the farmers. One of the major problems of marking

through regulated markets is obligatory market charges

that add to the cost. The market fee, commission charges

and other market charges for performing various market

functions including sales tax etc accounted for about 11

percent in Punjab. These were fixed a long time ago and are

high in view of the limited services provided by the

regulated markets.

Since 2003, APMC Act was partially amended to

safeguard the interest of farmers through provisions for

private markets and contract farming. Though establishment

of private market yards was allowed but the direct purchase

was not permitted. Similarly, amendments regarding

registration of contract farming agreement with the

appropriate authority, dispute settlement mechanism and

specifications of model agreement for contract farming were

made but not adopted. The amendments regarding

registration (not licensing) of market functionaries and

single registration for trade/transaction in more than one

market has also been made but not implemented. The act

has also been amended with respect to double market fee

i.e. market fee shall not be levied for the second time in any

market area of the State by market committee as well as

market fee not to be levied more than once in commercial

transactions between traders or sale to consumers. This

amendment has been adopted by the state. Since 2003,

Government of Punjab has launched contract farming in a

number of crops such as maize, barley, sunflower, hyola,

basmati rice, etc. to substitute for a sizable area under rice-

wheat system. This model involves four parties in the

contracted transaction: farmer, extension firm, buyer

(marketing firm) and the Punjab Agro Foods Corporation

(PAFC) acting as facilitator between farmer, the extension

firm and the buyer. As a means to encourage contract

farming in the state, the Government of Punjab reduced the

combination of market fees (2%), rural development fund

charges (2%), and infrastructure taxes (1%) from a total of

5 percent to 0.5 percent. Organizations that wish to engage

in direct linkages with farmers without contracts do not

receive such exemptions (Source: www.agmarknet.nic.in).

Impact of reforms processes on Traditional and Emerging

Market Channels

The Punjab State has more or less been able to

achieve the above stated objectives of regulated markets.

However, it may be argued that the success in terms of

providing incentives for the quality of the produce has not

been significant. Till now the emphasis of the farmers has

been on producing more irrespective of the quality. Assured

purchases of food grains by the government during the

last three decades may also be termed as a culprit for

deterioration of farmers’ quality consciousness. The

benefits of regulated markets seem not to be percolating

(in terms of quality and quantity) to the fruit and vegetable

growers. Many studies have shown in recent past that the

producer's share in consumer's rupee has still been low. It

is a common fact that the increased production has often

resulted into decline in the farmer's profits. Similarly no

incentives to the farmers for better quality have been

reported till now.

Traditional marketing channels:

The existing supply chains of fruits and vegetables

involve numbers of intermediaries that add to market

inefficiency and increase price spread between farmers and

the consumers. Most of the traditional supply chains are

September, 2012 329

conducted in spot markets. Producers typically sell to

traders or wholesalers who market the product in other

markets. Coordinated sales between producers and

processors are uncommon but slowly emerging with

changing demand scenario. Important supply chains for

vegetables and fruits include:

Supply chains for vegetables

• Supply chain 1:

Producer → commission agent→ wholesaler

→ retailer → consumer

• Supply chain 2:

Producer → commission agent→ primary

wholesaler→ secondary wholesaler→ retailer

→ consumer

• Supply chain 3:

Producer→ Processor→ consumer

• Supply chain 4:

Producer → Collector/Consolidator /Agent →

Wholesaler at distant markets → Retailer →Consumer

The most prominent supply chain involves farmers

selling the fresh vegetables produced by them in the primary

wholesale markets through commission agents to

wholesalers who in turn further sell to secondary

wholesalers located in small cities and towns and local

retailers (supply chain 1). This supply chain accounts for

about half of the total vegetables sold in the state.

Supply chains for fruits

• Supply chain 1:

Producer → Pre-harvest contractor →

Commission agent → Wholesaler → Retailer

→ Consumer.

• Supply chain 2:

Producer → commission agent → wholesaler

→ retailer → consumer

• Supply chain 3:

Producer → Collector/consolidator/agent →

Wholesaler at distant markets → Retailer →Consumer

• Supply chain 4:

Producer → Processor → consumer

Supply chains 1 and 2 are the most prominent

marketing channels in fruits, accounting for about 90

percent of total sales of fruits. Pre-harvest contractors

provide advance payments to the farmers during the time

of agreement. In this approach, farmers minimize risk due

to price volatility and post-harvest losses.

In the processing, marketing channels, processors

procure the fresh vegetables and fruits from farmers through

either contract farming or directly from the wet markets.

Owing to number of intermediaries in the supply chain, the

transactions and marketing costs increase, resulting in low

marketing efficiency. The Commission Agents also exploit

the farmers by charging higher commissions, since most of

the farmers have taken loans/advances from commission

agents and are forced to sell the produce to them. These all

results into increase the price spread and reduce the

producer's share in consumer’s price. In the case of

vegetables, producer’s share in retail prices varies from 35

to 45 per cent and for fruits from 25-35 per cent.

Innovations in marketing—Emerging marketing

channels:

Farmers’ markets : Farmers' markets (Apni mandi) are an

innovative marketing approach introduced in the state

mainly to tackle the problems of marketing and exploitation

of farmers by the middlemen. Thus, the market is totally

devoid of middlemen. The main aim of farmers’ market is to

ensure fresh vegetables and fruits at remunerative prices

to the farmers and reasonable prices to consumers. The

total transactions through these markets form just negligible

portion (less than 1 %) of the marketed surplus, as only

few farmers are able to sell in these markets. The producer’s

shares in consumer’s prices for selected vegetables in these

markets varied between 80-90 per cent, compared to 35-45

per cent for sale in the traditional supply chain.

Contract farming for promoting high value agriculture :

The smallholders are also risk averters and sacrifice

production of HVCs despite prospects of higher returns.

Contract farming is an institutional response to missing

markets for credit, insurance, information, factors of

production in an environment of pervasive risks. The

concept has potential to reduce transactions costs by

coordinating production, marketing, processing and

retailing. It is defined as a system for the production and

supply of agricultural produce under forward contracts,

the essence of such contracts being a commitment to

provide an agricultural commodity of a type and in the

quality required by a known buyer. The model eliminates

the intermediaries and a part of saving is distributed

between producers and consumers. The Punjab

government is engaged in aggressively promoting contract

farming. Therefore a number of corporate agri-business

firms have signed a memorandum of understanding with

the government of Punjab to take up contract farming in

the state to promote number of commodities. The benefits

of contract farming over non-contract farming are compared

in terms of reducing transactions costs, increasing profits

and enabling access to markets. Different forms of models


can be broadly divided in to three categories: (a)

government promoted contract-farming; (b) corporate

sector driven contract farming; and (c) informal contract

farming. The type of contract depends upon the commodity

and the nature and destination of the final product.

Government-promoted contract farming : Since 2003, the

government of Punjab has launched contract farming in a

number of crops such as maize, barley, sunflower, hyola,

basmati rice, etc. to substitute for a sizable area under rice-

wheat system. This model involves four parties in the

contracted transaction: farmer, extension firm F, buyer

(marketing firm). and the Punjab Agro Foods Corporation

(PAFC) acting as facilitator between farmer, the extension

firm and the buyer. The basic philosophy of this program is

to provide technical know-how to the producers, mitigate

price fluctuations and strengthen the marketing

infrastructure for selected agricultural commodities. The

contract specifies the quality, quantity, prices, and time

of delivery. As per the contract, the farmer brings produce

as per the specified quality at the designated place. In

case the farmer can get a higher price from the market, he

is free to sell his produce to the highest bidder/buyer,

bypassing the contract as per the open-end clause

provided in the contract. If the market prices are lower

than the contracted prices, the PAFC offers a ‘comfort

price’ that are slightly higher than the market price. As a

means to encourage contract farming in the state, the

government of Punjab reduces the combination of market

fees (2%), rural development fund charges (2%), and

infrastructure taxes (1 %) from a total of 5 percent to 0.5

per cent. Examples of companies that entered into this

type of contract arrangement with farmers included

Advanta for sunflower; Punjab Agro Foods Corporation

for Hyola; Pro-Agro and Mahindra Shubh Labh for winter

maize; United Beverages for Barley; and Rallis India”

Mahindra Shubhlabh, Escorts and DCM Shriram for

basmati rice. The program is in the evolution stage and

government is making all efforts to bring more farmers

and crops into its fold.

Private industry-driven contract farming : This is the most

common model of contract farming, driven by private

industry comprising processors, exporters and domestic

wholesalers/retailers. This model has different variants

promoted by different agro-firms: (i) processors; (ii)

exporters; and (iii) vertically integrated franchises.

Processor-driven contract farming: The first type of

arrangement consists of a processor who enters into a

contract with growers to regularly source raw material of a

desired quality to the plant. An important example of this is

'Pepsi Co model’ that pioneered the concept of contract

farming for the competitive bulk procurement of a variety

of vegetables like potato, tomato and chilies in Punjab.

Initially the Pepsi Co. initiative was quite successful in

augmenting tomato yields by 25-50 per cent and incomes

by about 40 percent. Later due to dispute and breach of

contract, the tomato processing plant was closed but the

firm is continuing contract farming in other commodities.

In this model, the processors supply seeds and seedlings

of specific varieties to the producers for meeting the

processing requirements. The firms regularly supervise and

monitor their production throughout the growing season.

The firms also provide technical advice to farmers.

Purchasing decisions vary by company in terms of the

amount and quality of products that are accepted. For

instance, Pepsi applies stringent quality standards

prescribed in the contract in their procurement. Another

example is Nijjer Foods Ltd. (started in 1991 in Amritsar),

which started" contract farming in Punjab to process

tomatoes and chilies. While the contract is a written

agreement and signed by both parties (farmer and

processor), it is not a legally valid document .A slight

variation in this model involves contract farming facilitated

by the Punjab Agro Industries Corporation (PAIC) through

joint ventures with private processors. In this model, the

PAIC acts as a facilitator and broker in the joint venture

company through equity participation. It also procures

some of the commodities. For example, PAIC procures green

peas grown in the district of Patiala for local processors. In

this case, farmers grow the improved varieties_F2l, which

are procured by the processing unit. Pea processors do

not provide any inputs or technical advice to the farmers.

The processing unit grades the produce and rejects those

not conforming to their prescribed specifications and

standards. Prices are fixed on the basis of the market prices

that prevailed in the local markets over the last 3 to

4 years.

Contract farming in vegetables : In Punjab, some corporate

houses are establishing their presence in vegetables

through contract farming for export, processing and/or

retailing; the major companies are Mahendra Subhlabh,

Bharti, and Pepsi. Recently, one of the India's leading

corporate house (namely the Reliance Industries Ltd.),

announced a mega project on agribusiness and retailing in

Punjab and other states in India.

Existing marketing regulations :

Agricultural Marketing laws, particularly the

Agricultural Produce Market Committee (APMC) Act,

inhibit the up-scaling of innovative institutional

arrangements, such as contract farming and linking farmers

with markets and agri-business. As per the APMC Act, it is

mandatory that all notified agricultural commodities,

including horticulture products, must be marketed through

regulated markets. While Punjab has a dense market system

with purchase centres within the radius of 10 km from most

villages, the system has not adapted to the changing

demands for horticulture products. The existing markets

have been developed to handle mainly food grains and not

the fruits and vegetables in the state. In Punjab, rice and

wheat accounted for a big chunk of the market fee while

September, 2012 331

the share of fruits and vegetables hovered around only

5-6 per cent. The mandatory regulated system of marketing

has two major implications. First, the regulated marketing

system prevents producers from direct sales (except limited

sales in farmers’ markets) to market functionaries such as

processors and exporters. This obstructs the firms from

entering into contract farming and buying directly from the

farmers. Secondly, it reduces the competitiveness of

production and adds unnecessary intermediaries to the

supply chain. Such increase in intermediaries normally

results in producers receiving a smaller share of the final

sales price of the commodity. To encourage contract farming

the central government has formulated a model market Act

that provides option for farmers to sell their produce to

processors and contracted buyers at reduced market

charges. Though a few states have agreed to implement

the Act, it is yet to be operationalized. One of the major

problems of marking through markets is obligatory market

charges that add to the cost. The market fee, commission

charges and other market charges for performing various

market functions including sales tax etc accounted for about

11 per cent in Punjab. Reducing the marketing charges can

help farmers in realizing higher prices and in making the

agricultural products more export competitive.

To sum up, the markets for HVCs are thin, fragmented

and unorganized, which lead to inefficiencies in marketing.

The farmers' share in retail price is low in the existing supply

chains. However, innovative marketing arrangements are

evolving. One way is by creating farmers’ markets that

bring farmers and consumers together at one place by

eliminating middlemen. But transactions through such

markets are limited and concentrated around urban centres.

More recently, agri-business is entering in HVCs for export,

retailing and processing. Punjab is encouraging corporate

houses for promoting contract farming to replace a sizable

area under rice-wheat system that is threatening the

sustainability of farming in the state. Poor infrastructure,

absence of organized retailing and farmers' (particularly

smallholders) instinct for food security pose as serious

constraints in up-scaling the success of contract farming.

However, given the scale of operations and the pace of

growth of the organized food industry, back-end operations

will scale up rapidly inducting more and more suppliers i.e.

farmers, big or small for feeding these stores.

Agro-Economic Profile of the Study Region

The total geographical area of the state is 50.36 lakh

ha. Study district Jalandhar is located on the intensively

irrigated central plain region of state between the Beas and

Sutlej rivers. The district Ferozepur is situated in south-

western region of state along the India Pakistan border.

Each of the selected districts consists of 5 tehsils/sub-

divisions and 10 development blocks. The number of

inhabited villages in these districts was 1003 and 954,

respectively. The geographical area of Jalandhar and

Ferozepur districts is 2660 square km. and 5850 square km.

covering 5.28 per cent and 11.61 per cent of the total

geographical area of the State, respectively. The topography

of the selected districts is generally plain of alluvial

formation. However, the south-east side of Ferozepur

district which is dominated by the light soils has brackish

underground water. The climate of both districts is, on the

whole, dry and is characterized by hot summer, a short

rainy season and a bracing with winter.

The important socio-economic indicators of the

study districts as well as of Punjab state are presented in

Table 1. According to 2001 census, total population of

Jalandhar district and Ferozepur district constituted 8.06

per cent (19.63 lakh) and 7.17 per cent (17.46 lakh) of the

total state population, respectively. Relatively, Jalandhar

district was found to be densely populated and more

urbanized as compared to Ferozepur district. The overall

rural literacy was also more (78 per cent) in Jalandhar as

compared to Ferozepur district (60.70 per cent). During 2009-

10, the cropping intensity in Jalandhar and Ferozepur

districts was found to be 175 and 184 per cent, respectively.

In Jalandhar district, underground is providing assured

irrigation to 98.31 per cent of the total net area sown as

compared to that of 66.03 per cent in Ferozepur district.

The rest of the area depended on Government canals in the

respective districts. Electricity use in agriculture constituted

27.98 and 52.77 per cent of the total electricity consumption

in Jalandhar and Ferozepur districts, respectively. Use of

fertilizer, the most important agricultural input was found

out to be relatively high at 502 kg per ha in Jalandhar district

as compared to that at 410 kg per ha in Ferozepur district.

Similarly the number of tractors for every thousand hectare

of net sown area was higher in case of Jalandhar district

(146) as compared to Ferozepur district (122). Productivity

of foodgrains which accounted for 81.19 and 75.98 per cent

of the gross cropped area in Jalandhar and Ferozepur

districts, respectively was found to be much higher in

Jalandhar district (6650 kg/ha) as compared to the that in

Ferozepur district (3988 kg/ha). Regarding infrastructure it

was observed that in both of the study districts, 100 per

cent villages are electrified and linked with the roads. In

comparison to state average of 146 km the road length per

square km of area were 210 and 102 km in Jalandhar and

Ferozepur districts, respectively. Each of the study

districts consists of 11 regulated markets, whereas the

number of sub-yards was 24 and 14 in the Jalandhar and

Ferozepur district, respectively. In Jalandhar district there

were 551 bank offices and 254 primary agricultural

cooperative societies. The number of same in Ferozepur

district was 215 and 310, respectively. There were 92

veterinary clinics and 29 primary health centres in district

of Jalandhar as compared to 113 and 34 in Ferozepur

district. The total number of registered industrial units in

Jalandhar and Ferozepur district were 1982 and 704,

respectively.


Out of total 10.04 lakh operational holdings in state

the proportionate share of marginal, small, semi-medium,

medium and large farm holdings in state was 13.42, 18.22,

31.85, 29.44 and 7.06 per cent, respectively and average

size of holding in state was 3.95 ha (Table 2). In Jalandhar

district the proportion of smaller size holdings was relatively

more as compared to that in Ferozepur district with average

size of holdings in respective districts at 5.41 and 6.01 ha.

As compared to 17 per cent in district of Ferozepur, the

small and marginal holdings accounted for about 25 per

cent of the total holdings in Jalandhar district. On the other

hand large holdings constituted 9.90 and 16.02 per cent of

the total holdings in Jalandhar and Ferozepur districts,

respectively.

TABLE 1—SELECTED SOCIO-ECONOMIC INDICATORS OF SAMPLE DISTRICTS AND PUNJAB

Particulars Jalandhar Ferozepur Punjab

Population Total (thousand) 1962.7 1746.11 24358.99

(2001) Rural (thousand) 1030.72 1295.38 8262.51

Urban (thousand) 931.98 450.73 16096.49

Rural agricultural workers 52.52 74.19 66.08

(% is to total workers)

Population Density (per sq km.) 746 329 484

Female per thousand males 887 885 876

Percentage of SC Population to total 37.69 22.82 28.85

Percentage of ST Population to total — — —

Rural Literacy rate (per cent) 2001 73.9 45.3 64.7

Human Development Index (2000) NA NA 0.537

Percentage of rural families below poverty line (2002) NA NA 9.1

Per capita income at current prices at 1999-00 series in Rs. NA NA 62153

Share of agriculture sector in GDP/SDP (in 2007-2008 current NA NA 29.01

prices)

Average annual rainfall (mm), 2009-10 543.90 170.9 384.9

Average size of holdings (2000-01) 5.41 '6.02 3.95

Percentage of irrigated area to net sown area (2008-09) 100 99.80 97.40

Per cent of groundwater irrigated area to NIA (2004-05) 98.31 66.03 72.59

Electricity use in Agriculture (% to total) 2008-09 27.98 52.77 33.54

Cropping intensity (%) 2009-10 177.64 184.42 189.69

No. of fair price/ration shops per lakh population NA NA 13989

No. of banking offices per lakh population 28 12 18

No. of regulated markets per Sq. Km (2008-09) 239 482 345

Total road length per lakh population (2008-09) 241 262 256

Input use:

Fertiliser (kg/ha) (2008-09) 502 410 447

HYVs area of wheat and paddy (%), 2008-09 100 100 100

HYVs coverage as % of GCA (2008-09) 81 75 81.6

Wheeled Tractors (per 000 ha ofNSA) 2010 146 122 120

Area under major crops (per cent to GCA): 2009-10*

Total Cereals 81.00 75.47 81.90

Total Pulses 0.19 0.51 0.24

Total Foodgrains 81.19 75.98 82.14

Total Oilseeds 1.78 0.67 0.78

September, 2012 333

TABLE 1—SELECTED SOCIO-ECONOMIC INDICATORS OF SAMPLE DISTRICTS AND PUNJAB—Contd.

Particulars Jalandhar Ferozepur Punjab

Sugarcane 1.66 0.11 0.76

Cotton 0.00 14.38 6.46

Fruits and Vegetables 5.88 3.21 2.31

Productivity (kg/ha): 2009-10

Total Cereals 6663 4010 4156

Total Pulses 1000 689 784

Total Foodgrains 6650 3988 4146

Total Oilseeds 1480 1610 1345

Sugarcane 6058 6222 6167

Cotton 0 563 668

Source: GOP (2010), Statistical Abstract, Punjab.

TABLE 2—NUMBER OF OPERATIONAL HOLDINGS IN SAMPLE DISTRICTS AND PUNJAB (2000-01)

Semi- Av. Size

District Marginal Small medium Medium Large Total of

<1 ha) (1-2 ha) (2-4ha) (4-10 ha) (>10 ha) holding

(ha)

Jalandhar 3912 7041 14108 14379 4332 43772 5.41

(8.94) (16.09) (32.23) (32.85) (9.90) (100)

Ferozepur 4120 9305 22523 30286 12634 78868 6.02

(5.22) (11.80) (28.56) (38.40) (16.02) (100)

Punjab 134762 183062 319933 295749 70960 1004466 3.95

(13.42) (18.22) (31.85) (29.44) (7.06) (100)

Source: GOP (2010), Statistical Abstract, Punjab

Figures in parenthesis denotes the per cent share in total

The cropping pattern in Study districts and Punjab

state is given in Table 3. It can be observed that cropping

pattern of state as well as of the study districts is dominated

by the food grains mainly wheat and paddy which together

constituted about 80 per cent of the gross cropped area in

state. Wheat constituted 40.38 and 45.10 per cent and paddy

constituted 38.24 and 29.91 of the gross cropped in

Jalandhar and Ferozepur districts, respectively. In Jalandhar

district the maize and vegetables were the other important

crops. In Ferozepur district cotton and fruits were the other

two important crops constituting significant proportion of

gross cropped area. Potato accounted for the 4.63 per cent

of gross cropped area in Jalandhar district. Whereas kinnow

accounted for 0.49 per cent of the gross cropped area in

Ferozepur district.

TABLE 3—CROPPING PATTERN IN SAMPLE DISTRICTS AND PUNJAB, 2009-10

(Percentage to total GCA)

District Jalandhar Ferozepur Punjab

Rice 38.24 29.91 35.41

Wheat 40.38 45.10 44.51

Maize 2.38 0 1.76

Total Cereals 81.00 75.47 81.9


TABLE 3—CROPPING PATTERN IN SAMPLE DISTRICTS AND PUNJAB, 2009-10—Contd.

(Percentage to total GCA)

District Jalandhar Ferozepur Punjab

Total Pulses 0.19 0.51 0.24

Total Foodgrains 81.19 75.98 82.14

Sugar-cane 1.66 0.11 0.76

Cotton 0 14.38 6.46

Kinnow 0.06 2.23 0.49

Total Fruits 0.35 2.59 0.85

Potato 4.63 0.11 1.05

Total Vegetables 5.53 0.62 1.46

Source: GOP (2010), Statistical Abstract, Punjab

Status of selected crops

On account of its climatic conditions Punjab however,

is not a very important producer of horticultural crops in

country. National Horticulture Mission (NHM) launched

by the Government of India is being implemented in Punjab

to promote growth of the horticulture sector covering fruits

and vegetables. The area under fruits has increased from

30 thousand hectares in 1999-2000 to 67.55 thousands

hectares in 2009-10. During the same time period the area

under vegetables in state increased from 101.70 to 183.35

thousands hectares. During 200910, Punjab accounted for

1.07 and 1.91 per cent of total area under fruits and

vegetables in India, respectively. Among major potato

producing states of India, during 2009-10, Punjab ranked

4th with about 5 per cent share in total potato production

of the country. Potato is the most important vegetable crop

of state occupying 45.29 per cent of the total area under

vegetable crops with 60.10 per cent share in total vegetable

production. During 2009-10, area under potato in state was

83 thousand hectares with corresponding production at 21

lakh metric tonnes. About two third area of the total area

under potato cultivation in state fall in five districts, namely,

Jalandhar, Hoshiarpur, Kapurthala, Ludhiana and Bathinda.

During 2009-10, Jalandhar was the leading district with 25.35

per cent share in total potato production in state. Among

other major districts, Hoshiarpur accounted for 19.08 per

cent of state production of potato followed by Kapurthala

(8.88 per cent), Bathinda (7.20 per cent) and Ludhiana (6.83

per cent). Among different citrus species commonly grown

in Punjab, kinnow mandarin occupies a prominent position

with respect to acreage and production. During 2009-10 it

accounted for about 58 per cent of total area and 64.20 per

cent share in state production of fruits. Out of the total

67553 hectares under fruit cultivation in state, kinnow

farming is carried out on 38837 hectares. Though the Punjab

state is the leading state in kinnow production, area under

its cultivation is concentrated in a few districts. About 85

per cent of the total area under kinnow cultivation fall in

four districts, namely, Ferozepur, Hoshiarpur, Muktsar and

Bathinda. The study district Ferozepur alone constitutes

about half of the total area and production of kinnow in

state. Among other major districts Hoshiarpur accounted

for 17.46 per cent of state production of kinnow followed

by Mukatsar (14.56 per cent) and Bathinda (6.89 per cent).

Comparison of Benefits and Constraints for TMC and

EMC for potato

It can be seen from Table 4 that in TMC although the

farmers in the sample received Rs 373.80 per quintal of

potato, they had to incur marketing costs of Rs. 65.07 per

quintal and hence their net price after deducting marketing

costs was Rs. 308.73 per quintal. The farmers sold to

wholesalers who incurred marketing costs and margins of

Rs. 57.44 per quintal. There was also wastage of potatoes

during the time taken to transport the produce from the

regulated market to the retail outlets. The sale price of the

potato retailer was Rs. 722.53 per quintal. Finally, it can be

seen that the share of the farmer in the retailer's price under

TMC is 42.72 per cent, while marketing costs as a

percentage of retailer’s price is 24.30 and marketing margins

as percentage of retailer's price is 32.97 per cent. With

respect to sales through EMC, it can be observed that

although the sample farmers received a higher price than

the auction price in TMC. They have to incur loading and

unloading, sorting and packing and transportation cost up

to the gates of company. Hence Rs. 520.20 was the net

price received by the farmers under EMC which was about

40 per cent higher than the price received by farmers who

sold through TMC. Since there were no intermediaries in

EMC hence the price received by the farmers was much

higher than the farmers following TMC.

The Benefit Cost Ratio (BCR) for the potato crop

September, 2012 335

reduces when family labour is included in cost of

production (Table 5). The BCR is higher in EMC as

compared to TMC. This is because, the price received in

case of sales through EMC was nearly 40 per cent higher

than that through TMC.

The post harvest losses are higher in TMC as

compared to EMC. For every quintal of potato stored, a

farmer losses about 8.14 kg. under TMC while no loss in

EMC since the potato purchased by PepsiCo is handled

by the company after purchase. Due to quality

specifications, losses in transport were more in EMC than

TMC (Table 6).

TABLE 4—PRICE SPREAD AND MARKETING COSTS FOR POTATO (2009)

Rs. per quintal

Sr. No. Price Spread TMC EMC

I Price received by farmer 373.80 520.20

II Total Marketing: costs of farmer 65.07 61.50

(a) transportation 4.50 7.44

(b) loading & unloading 2.13 1.10

( c) Sorting & packing 57.7.6 52.64

(d) weighing & other related expenses 0.68 0.32

(e) commission 0 0

Net Price received by farmer 308.73 458.70

Net Profit (Net price received- Paid Out cost) 56.23 224.05

III Marketing Costs and margins of wholesaler (through commission agent) 57.44 —

( a) market fee 5.81 —

(b) RDF 5.81 —

(c) wastage during transport 0.56 —

(d) Commission 14.49 —

(d) transportation charges 8.12 —

(e) wholesaler’s margin 22.65 —

Purchase price of wholesaler plus marketing costs & margins 431.24 —

IV Marketing cost and margins of Retailer 291.29 —

(a) Hamali from point of purchase to tempo 0 —

(b) Transport to retail outlet 11.15 —

(c) Miscellaneous expenses such as cess to corporation, watchman for unsold stock 9.46 —

(d) Wastage 6.58 —

(e) Loading/Unloading 4.45 —

(t) Packing material 36.20 —

(g) Shop rent 7.88 —

(h) Retailer’s margin 215.57 —

(f) sale price of retailer 722.53 —

V Share of farmer (%) in retailer’s price 42.72 —

VI Marketing Costs as % of retailer’s price 24.30 —

VII Marketing margins as % of retailer’s price 32.97 —

VIII Modified Measure of Marketing Efficiency (MME) 0.74 —

Source: computed from field survey data


TABLE 5—BENEFIT COST RATIO FOR POTATO

Particulars TMC EMC TMC EMC

(cost of (cost of (cost of (cost of production

production production production includes family

includes only includes only includes labour)

Paid out costs) Paid out costs) family labour)

BCR for potato 1.48 2.22 1.36 2.03

Source: computed from field survey data.

TABLE 6—PER QUINTAL POST-HARVEST LOSSES

Post Harvest loss Potato

TMC EMC

Quantity SD Quantity SD

Loss during storage (kg) 8.14 0.58 0.00 0.00

Loss during transport (kg) 0.23 0.03 1.33 0.42

Loss at Retail level (kg) 1.40 0.74 0.00 0.00

NOTES: SD- Standard deviation, Quantity in quintals.

Source: Field Survey Data.

The reasons for preferring the marketing channel

indicated that in case of potato under TMC maximum

responses pertained to assured sales followed by low cost

of marketing and fair price. They were also influenced by

friends and relatives to participate in auctions and were in

the habit of selling in regulated market. In case of EMC,

assured sales, low cost of marketing, fair price, less physical

loss and superior services were the main reasons for

preferring this channel. Majority of farmers in TMC and

EMC expressed that the village roads were in good

condition. With respect to proximity to the market, it was

observed that the regulated market was not in the sample

villages and the majority of the farmers had to travel within

10 kms and even upto 25 kms to access the regulated market.

In EMC the farmers have to travel more than 50kms to fetch

the produce at the company gates. There were no cold

store and godown facilities in the market and auction

arrangements were good as reported by farmers following

TMC. Sorting, weighing, packing and banking facilities

were good in the market. However, there were no internal

phone and computer facilities as reported by the farmers

following TMC channel.

Awareness of the farmers regarding market

intermediaries showed that about 50 per cent farmers in

TMC were aware of the supply chain that existed till the

produce reached the ultimate consumer. In EMC there were

no intermediary and farmers were not aware about the

further process being followed by the company. Nearly

half of the farmers in TMC knew about the places where

potato was sold in the wholesale markets such as Calcutta,

Ahmadabad, Delhi, Jodhpur and other places. Nearly half of

the farmers knew about the price realized in the retail market.

Farmers also felt that the margin realized by the buyer of

their produce is high. In case of EMC, 88.57 per cent of

farmers in the sample indicated that they would continue to

sell in the same channel and to the same agent if given

higher price. Farmers have no option of export of potato.

There was no major constraint observed as opined

by 80 per cent of the potato farmers while only 20 per cent

reported that EMC buys only selected quality produce of

specific size, shape and colour. However, in TMC the entire

produce is sold. The farmers also explained that since only

quality produce is picked up by EMC, the balance produce

is treated as low quality and sold at a lower price. To ensure

higher prices and to reduce marketing margins of the

intermediaries, potato growers made several suggestions

such as potato should be exported when there is a glut in

the market, provide transport facilities, produce should be

purchased by the Govt. in case of bumper harvest, market

charges and intermediaries should be reduced.

Comparison of Benefits and Constraints for TMC and

EMC for kinnow

Table 7 shows that for kinnow in EMC, although the

sampled farmers received Rs. 1296 per quintal, they had to

incur marketing costs of about Rs. 265 per quintal and

hence their net price after deducting marketing costs was

about Rs. 1031 per quintal, which were incurred by the

contractor himself in TMC. But still the price received by

the farmer in EMC was about 20 per cent higher than those

September, 2012 337

received through TMC. The farmers/contractors sold the

produce to wholesalers who incurred marketing costs and

margins of about Rs. 204 per quintal for TMC and about

Rs. 195 per quintal in case of EMC. The sale price of the

kinnow retailer was about Rs. 1889 per quintal for TMC

and about Rs. 1874 per quintal in case of EMC. Finally, the

share of the kinnow grower in the retailer's price under

TMC was 33.70 per cent, while marketing costs as a

percentage of retailer’s price was 20.70 and marketing

margins as percentage of retailer’s price was 33.70 per

cent, while the corresponding figures in case of EMC was

55, 21.6 and 23.4 per cent, respectively.

It can be observed that the Benefit Cost Ratio (BCR)

for kinnow obviously reduces when family labour is

included in cost of production (Table 8). The BCR is higher

in EMC for kinnow in EMC as compared to TMC. This is

because as explained earlier, the price received in case of

TABLE 7—PRICE SPREAD AND MARKETING COSTS (2009)

(Rs. per quintal)

Sr. No. Price Spread Kinnow

TMC EMC

I Price received by farmer 860.0 1296.10

II Total Marketing costs of farmer — 265.30

(a) transport to APMC — 34.30

(b) loading & unloading — —

(c) weighing & other related expenses (packing, waxing etc.) — 231.0

(d) commission — —

Net Price received by farmer 860.0 1030.80

Net Profit (Net price received- Paid Out cost) 636.30 815.40

III Marketing Costs and margins of Pre-harvestor contractor 266.0 —

(a) market fee — —

(b) hamali — —

(c) wastage during transport 6.90 —

(d) transport to terminal market 32.30 —

(e) weighing & other related expenses(packing, waxing etc.) 212.0 —

(f) PHC’s margin 215.0 —

Purchase price of PHC plus marketing costs & margins 1326.0 —

IV Marketing Costs and margins of wholesaler 204.40 194.70

(a) market fee 11 9.40 116.70

(b) hamali — —

(c) wastage during transport — -

(d) transport to terminal market — —

(e) wholesaler's margin 85.0 78.0

Purchase price of wholesaler plus marketing costs & margins 1530.40 1490.80

V Marketing costs and margins of Retailer 358.40 382.90

(a) Hamali from point of purchase to tempo — —

(b) Transport to retail outlet 10.50 11.0

(c) Miscellaneous expenses such as cess to corporation, — —

watchman for unsold stock

(d) Wastage 10.90 11.90

(e) Retailer’s margin 337.0 360.0

(f) sale price of retailer 1888.80 1873.70

VI Share of farmer (%) in retailer’s price 33.70 55.0

VII Marketing Costs as % of retailer’s price 20.70 21.60

VIII Marketing margins as % of retailer’s price 33.70 23.40

IX Modified Measure of Marketing Efficiency (MME) 1.53 1.22



TABLE 8—BENEFIT COST RATIO FOR KINNOW

Particulars TMC EMC TMC EMC

(cost of (cost of (cost of ,( cost of production

production production production includes family labour)

includes only includes only includes

Paid out costs) Paid out costs) family labour)

BCR for kinnow 3.80 5.10 3.10 4.60


TABLE 9—PER QUINTAL POST-HARVEST LOSSES

Post Harvest Loss Kinnow

TMC EMC

Quantity SD Quantity SD

Loss during storage (kg) — — — —

Loss during transport(kg) — — 0.80 780.10

Loss at Retail level — — 0.50 237.40

NOTES: SD- Standard deviation, Quantity in Kgs

sales through EMC is 50 percent higher than that through

TMC. During transport, there is injury to the crop due to

friction, and also secondary infection of the fruit, which

leads to rotting of the fruit and the post harvest loss

reported on this count is less than one per cent as waxing

increases the shelf life of the kinnow (Table 9). At the retail

stage, the post harvest loss reported was 0.5 per cent. The

spoilt produce is often sold at 40-50 per cent of the price.

The reasons for preferring the marketing channel

indicated that in case of kinnow under TMC maximum

responses pertained to the assured sales as the farmers

did not want to sell their produce directly in the market to

overcome the price risk as well as to save time as well as

energy while selling the produce in the market. They were

also influenced by friends and relatives to sell their produce

to the contractor. In case of EMC, fair price and superior

infrastructure were the main reasons for preferring this

channel.

The farmers did have information about price

prevailing in regulated markets. In case of EMC, the

commission agent/trader was important source of price

information. Further, most often, the farmers were aware of

the price soon after harvest. None of the farmers in the

sample got information from AGMARKNET. By and large

sample farmers revealed that the price received by them

was more or less similar to that expected by them. In case

of TMC, personal information/experience was playing an

important role in determining the price of the crop. There

have however been instances when farmers are cheated

by the commission agent/contractor while selling in the

market or to the contractor. Majority of the farmers in TMC

expressed that they received the same price as was agreed

and did not have to go to' the agent to receive payment for

the produce that was sold and received payment on time.

In case of EMC, about 80 per cent of the farmers expressed

that they got a bit higher prices for their produce than their

expectation.

Majority of farmers expressed that the village roads

were average or good quality. With respect to proximity to

the market, it was observed that the APMC was not in the

same village and in a few cases the farmers in the sample

had to travel within 10 kms to access the regulated market.

In case of kinnow growers, 60 per cent of respondents

expressed that they had to travel more than 50 kms to access

the market. With respect to other facilities such as auction,

supervision of sale, loading, sorting, weighing was either

satisfactory or good. They also opined that internal

telephone facility, computer facilities and banking facilities

were average quality.

After sale of his produce, the farmers were by and

large aware of the supply chain that existed till the produce

reached the ultimate consumer. The farmers were more

concerned with the price which they received and their

sale receipts. The farmers in the sample revealed that they

were aware that their produce went to another commission

agent or trader. About 91 per cent of the sample farmers in

case of TMC and 50 per cent for EMC opined that their

produce goes through 3 to 4 channels. The sample farmers

were also aware of the other wholesale markets where their

crop is sold both within and outside the state. About 43

per cent of sample farmers in TMC and 20 per cent in EMC

September, 2012 339

were not aware of retail price. Other farmers in the sample

were however aware of the price. Farmers also felt that the

margin realized by the buyer of their produce is high. In

case of EMC, 40 percent of farmers in the sample indicated

that they would continue to sell in the same channel while

in case of TMC the percentage of farmers was 51.4 per

cent. The main constraint faced by the kinnow growers in

the market was that the commission agent in the market

preferred the traders than the farmers for auctioning their

produce. Further, some farmers felt that the wholesalers

buy only selected quality produce and also delay payment.

Farmers made several suggestions such as exports

should be promoted and encouraged especially when

global prices are ruling high, market charges and number

of intermediaries should be reduced and credit should be

easily available.

Policy Implications

1. Potato and kinnow growers faced problem

regarding the sharp decline in the prices in case

of bumper harvest. So, there is a need for

providing facilities/concessions for promoting the

export of the produce in case of glut in the market

to stop the distress sale.

2. Cold storage cost for potato crop is very high.

Sometimes in case of low prices in the retail market

in lean periods, farmers are not able to cover their

storage cost. In that case, Govt. should provide

subsidy for the storage to augment the income of

the potato growing farmers.

3. There is a need to establish more processing units

for value addition of potato to increase the

farmers’ share in consumer rupee. Kinnow growers

opined that the processing plant established in

the region was not directly purchasing kinnow

from the farmers. There is a need to persuade the

processing units to purchase the produce from

the farmers, so that they may also get the benefit

of the plant.

4 . The facilities of waxing, grading and transportation

of the fruits and vegetables to distant markets

should be subsidized so that the farmers get

remunerative price of their produce.

5. The farmers as well as traders reported the

unhygienic conditions due to improper disposal

of the waste material and problem of stray animals

in the market. So, the market committees should

be emphasized to ensure the proper cleanliness

in the market yards.

6. As the net price received by the farmers was

higher in case of EMC, therefore the farmers

should try to sell more produce through this

channel. With respect to EMC, the main constraint

was that EMC purchased limited quantity and

only superior quality produce. EMC has to

therefore increase the scale of its operations to

purchase more agricultural products so that more

farmers are benefitted by selling through this

channel.

On the whole, it has been found that farmers have

been benefitted by selling their produce through EMC both

in case of potato as well as kinnow crops mainly because

they avoid/save marketing costs. However, the marketing

operations of EMC are very limited and restricted to

purchase of superior quality produce which enables only a

few farmers to secure higher price. Thus, expansion of such

innovative/emerging marketing channels for fruits and

vegetables in an organized manner, coupled with upgraded

market infrastructure in regulated markets can go a long

way to promote horticultural base in the state, through

reducing post harvest losses, reducing intermediaries,

increasing net returns for the producers as well as for the

benefit of the consumers.

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