Towards direct marketing of produce by farmers in India: Lessons from the United States of America

Journal of International Development

J. Int. Dev. 23, 539–547 (2011)

Published online 30 June 2009 in Wiley InterScience

(www.interscience.wiley.com) DOI: 10.1002/jid.1600

TOWARDS DIRECT MARKETING OFPRODUCE BY FARMERS IN INDIA:

LESSONS FROM THE UNITEDSTATES OF AMERICAy

SUPRIYA KUMAR1*, JESSICA DUELL2, AMY SOERGEL2 and ROBBIE ALI1

1Behavioral and Community Health Sciences, Graduate School of Public Health, University of

Pittsburgh, Pittsburgh, USA2Department of Epidemiology, Graduate School of Public Health, University of Pittsburgh,

Pittsburgh, USA

Abstract: With supermarkets sourcing produce from around the world, small farmers in the

United States have learned not only to survive but to thrive by employing direct marketing

strategies aimed at consumers interested in obtaining locally-grown produce. In India today,

small and marginal farmers are burdened by global price fluctuations, mounting debt, and

unsustainable agricultural practices. Rather than give up farming, we argue that India’s farmers

could successfully adopt low-input farming methods as well as direct marketing models used

in the US, such as farmers’ markets and community-supported agriculture. With appropriate

public, private, and community support, these models could hold great promise for Indian

farmers. Copyright # 2009 John Wiley & Sons, Ltd.

Keywords: India; United States; agriculture; direct marketing; farmers’ markets; commu-

nity-supported agriculture; co-operatives; farming

1 INTRODUCTION

In the second half of the 20th century, global trade in agricultural commodities and an

increase in corporate farming in the US led to a decrease in the number of small farms

(USDA, 2002a). Small farmers in the US have learned to survive in an increasingly

globalised environment by reaching out directly to local consumers. Many US consumers

*Correspondence to: Dr Supriya Kumar, Behavioral and Community Health Sciences, Graduate School of PublicHealth, 130 DeSoto Street, Pittsburgh PA, 15261, Pittsburgh, USA. E-mail: [email protected] article was published online on 30 June 2009. Following publication, we add below a note indicating NIHfunding as follows: Supriya Kumar was supported by the Research Center of Excellence in Minority Health andHealth Disparities (NIH-NCMHD: 2P60MD000207-08; PI, Thomas). [Correction made here after initial onlinepublication.] [11 May 2010]

Copyright # 2009 John Wiley & Sons, Ltd.

540 S. Kumar et al.

have eagerly embraced the opportunity to purchase fresh, local produce from local farmers

as concerns about food-safety, the economy, the environment, and nutrition have risen. A

smaller-scale, localised food system addresses consumer concerns while providing farmers

with a loyal, conscientious clientele and a reliable source of income.

Direct marketing of farm produce by farmers, targeted to a dedicated consumer base, has

been largely unexplored in India, and could represent a viable option for co-operatives of

small farmers. We argue here that if India aims to increase the profitability of its agriculture

sector, a majority of which is comprised of small and marginal farmers, then the answer

may lie in sustainable systems of farming and direct marketing of produce. We discuss

recent trends in the Indian food system, present various models of direct marketing that are

being practiced around the world and point out their applicability to India.

2 RECENT TRENDS IN THE INDIAN FOOD SYSTEM

A majority of India’s farmers own small farms. Eighty-one per cent of all landholdings in

the country are under five acres (National Sample Survey Organization, 59th Round). Small

farmers typically sell their produce to wholesale markets controlled by the government.

Large retail chains, whose numbers are on the increase in India, source produce from

parallel supply chains rather than from the wholesale market (Reardon et al., 2003).

Whereas small stores that sell produce in urban areas have traditionally dominated the

Indian food retail system, centralisation of this food system is underway (Reardon and

Gulati, 2008). In addition to the diminished market share that this trend represents for small

farmers, the costs of farming have increased, representing a further blow to small farmers.

The national commission on farmers (NCF) in India reports that the price of fertilisers,

pesticides and seeds has increased many-fold since the government decreased subsidies on

these items (National Commission on Farmers, 2006). Furthermore, many Indian states do

not provide adequate support for extension services anymore, leading to an absence of

quality control of the seeds that farmers are buying. As a result, many farmers borrow

heavily simply in order to access necessary inputs and find themselves deep in debt at the

beginning of each farming season.

In another clue to the causes of rural and agrarian distress in India, the commission on

farmers’ welfare (CFW), set up by the government of Andhra Pradesh State, reported in 2005:

With the reduction in the fertiliser subsidy, the cost of fertilisers has increased many

times over the last decade, adding to the farmers’ woes. On an average, the fertiliser

price has been increasing by 5 to 15 per cent every year for different kinds of

fertilisers. Further, the depletion of micro-nutrients in the soils has meant that crop

yields cannot be maintained without the application of more and more fertilisers. The

absence of scientific soil health analysis cards and the application of fertilisers

without relevance to soil needs have resulted in higher costs of cultivation without

any marginal increment to the crop yield. Instead, it has only resulted in the

deterioration of soil conditions, thereby affecting land productivity (Commission on

Farmers’ Welfare, 2005).

The NCF and CFW reports make it clear that India’s small and marginal farmers are in

distress because of increases in input costs, a lack of access to credit at a low interest rate,

lack of high-quality seeds and fertilisers, and an over-reliance on fertilisers leading to a

drop in soil-quality.

Copyright # 2009 John Wiley & Sons, Ltd. J. Int. Dev. 23, 539–547 (2011)

DOI: 10.1002/jid

Direct Marketing by Farmers in India 541

There is a need for government support to farmers who want to move towards

sustainable, low-external input farming techniques as a way to increase the profitability of

farming. Furthermore, direct marketing of produce by farmers to local consumers will

result not only in fresher, more nutritious and potentially more diverse local foods for

consumers, but a larger share of profits (representing the margin traditionally made by

wholesalers) for farmers. From public health, environmental and economic standpoints,

this would represent a win-win system for farmers and consumers.

3 DIRECT MARKETING BY FARMERS IN THE US

There are various ways in which farmers in the United States have been able to successfully

market their products and gain customer loyalty and support. Among the prevalent models

of direct farmer-to-consumer marketing in the US, two stand out: farmers’ markets and

community-supported agriculture. These models may need to be adapted to suit the

specific small-farm situation in India, but they promise to provide distressed farmers with a

guaranteed market for their produce.

4 FARMERS’ MARKETS

Farmers gain access to consumers by showcasing and selling their produce directly at

farmers’ markets in many cities and towns in the US. These markets are run by farmers or

co-operatives of farmers, and typically function on designated days of the week at

designated locations. Depending on the season, vendors may either set up the market

outdoors, in a central location in the city, or indoors. Farmers thus frequently realise higher

profits by eliminating middlemen and by reducing transportation- and storage-costs while

establishing a loyal customer-base.

The United States department of agriculture (USDA) provides funding for farmers’

markets through the farmers market promotion program (FMPP), which was created as an

amendment to the farmer-to-consumer direct marketing act of 1976 (US Code, 2007). The

fund is authorised by Congress through Section 10605 of the Farm Security and Rural

Investment Act of 2002, and is administered through the USDA agricultural marketing

service (National Campaign for Sustainable Agriculture, 2007). The purpose of the FMPP

is to help farmers by assisting them with monetary support to help them improve and

expand their customer-base (Farmers Market Project, 2007).

Whereas not all markets are listed in the USDA’s directory of farmers’ markets, the

number of listings grew 82 per cent in a decade to 4385 in 2006 (USDA, 2007a).The

number of consumers that shop at farmers’ markets has increased significantly as well. In a

study conducted in 2000, the USDA found that 66 700 farmers served 2 760 000 customers

per week at farmers’ markets, up from 915 774 customers served in 1994 (Payne, 2002).

5 FARMERS’ MARKETS IN INDIA

In India, private citizens’ groups have helped set up some farmers’ markets—the Center

for Sustainable Agriculture runs an informal farmers’ market in their compound in

Hyderabad (personal communication), while a more formal ‘organic bazaar’ is run by the


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542 S. Kumar et al.

Institute for integrated rural development (IIRD), a civil society, not-for-profit organisation

in Aurangabad city, Maharashtra. IIRD’s main aim is to network organic producers and

provide a legal market for them in city centres (Daniel, 2005). IIRD also maintains a

supply-coordination team to manage the storage and transportation of produce to organic

bazaars. Though IIRD sells produce at the prevailing market price for conventional

produce, these farmers are able to earn 60–100 per cent higher than what they would get

when selling to middle-men who later sell the produce in urban markets (Daniel, 2005).

This example demonstrates the relevance and applicability of direct marketing by farmers

to consumers in India; it shows that with a little assistance from civil society organisations,

small farmers can increase their income by marketing directly to consumers.

6 FARMERS’ CO-OPERATIVES

Farmers’ markets in the US are often developed by co-operatives, which are ways for small

farmers to network, leverage their combined bargaining and borrowing power, share

resources and information, and develop effective means of direct-marketing. In the US, co-

operatives are usually incorporated as a unique business entity under state law (USDA,

1997). They enjoy support from the USDA, which provides education, research, financial-

aid and technical assistance to co-operatives (USDA, 2002b). Agricultural co-operatives

have a strong tradition in the US, dating back to the 1800s (USDA, 1997). As of 2006, 2675

farmer-owned co-operatives had approximately 2.6 million members and a net income of

$3.2 billion (USDA, 2006). Clearly, co-operatives wield enormous power and influence

and confer significant benefit to their members.

7 FORMING FARMERS’ CO-OPERATIVES IN INDIA

Co-operatives are likely to be of great importance in the Indian context of small farms;

small farmers are unlikely to be able to run a market on their own. Organic farmers’ co-

operatives have started to be set up in India—Nesara is one such co-operative that operates

an organic market in Mysore, Karnataka (personal communication). This market has a

continuous presence in Mysore city, selling pulses and grain out of a small stall; fresh

produce is sold at a weekly farmers’ market. Another example of a farmers’ co-operative in

India is a collection of mobile, organic food-centres in Hyderabad, run by women of the

Deccan development society, belonging to Medak district in Andhra Pradesh (Deccan

Development Society, 2007). The mobile stalls stock a variety of millets, grams and other

produce. The urban community in Hyderabad has been very responsive to this co-

operative, and the district collector of Medak announced his willingness to fund 500 such

mobile stalls that will be stationed in Hyderabad as well as in the major towns of Medak

district (Deccan Development Society, 2007).

8 NEED FOR SUPPORT FOR FARMERS’ MARKETSAND CO-OPERATIVES IN INDIA

Many farmers’ co-operatives could be set up with support from the government and private

trusts. The national horticulture mission of the Government of India is supporting the Jaivik


DOI: 10.1002/jid


Mall, set up by the Jaivik Krishi Society, a federation of organic farmers and farmers’

groups in Bangalore City. Located in the Lalbagh botanical gardens in Bangalore, the mall

stocks organic produce from 50 farmers’ groups (Prabhu, 2007). The national horticulture

mission is the largest single scheme of the Indian Ministry of Agriculture, allowing it to

fund structural changes in the way the agricultural and non-agricultural sectors of the

economy interact (Government of India Planning Commission, 2006). Whereas the

approach paper to the 11th five year plan stresses ‘larger private sector participation in

marketing and processing’ (Government of India Planning Commission, 2006), we believe

that the need of the hour is for smaller, community-based and farmer-run operations

managing the marketing of produce directly to consumers.

Governance of rural markets in India under the agricultural produce marketing act

(APMA) is fairly opaque to the public. Some states have amended the act to allow the entry

of co-operatives into the management of these markets (Ahluwalia, 2005). Governments

now seem to be stressing a role for large retail players to set up more efficient supply chains

and cold chains; however, sustainability could be enhanced at this stage by encouraging the

management of supply chains by farmers themselves, either individually or in co-

operatives.

There is also a need for making available low-interest loans not only to farmers looking

to make the move into sustainable agriculture, but also to farmers wishing to set up direct,

farmer-to-consumer marketing systems. Financial support will need to be augmented by

making training and support available during the transition—various non-governmental

organisations around the country have already been engaged in setting up farmers’ markets

and co-operatives (Daniel, 2005; Deccan Development Society, 2007) and in training

farmers in the science of low external input, sustainable farming, non-pesticidal

management and organic farming techniques (OFAI, 2007). There is a need for private

trusts and the government to make available these services to farmers on a much larger

scale.

9 COMMUNITY-SUPPORTED AGRICULTURE

Community-supported agriculture (CSA) in the US is a novel model that allows farmers

access to interest-free credit, as well as to a guaranteed market. Suzanne DeMuth of the

USDA describes the CSA model as a ‘community of individuals who pledge support to a

farm operation so that the farmland becomes, either legally or spiritually, the community’s

farm, with the growers and consumers providing mutual support and sharing the risks and

benefits of food production’ (DeMuth, 1993). Essentially, members become stakeholders

in the farm, also referred to as a CSA, and take on some of the risk traditionally carried

solely by the farmer. Community-supported agriculture is sometimes alternatively known

as ‘subscription farming’ however CSAs are usually more focussed on community well-

being, while subscription farms are primarily interested in the economic benefits of the

CSA model (DeMuth, 1993).

Whereas many variations of the CSAmodel operate in the US, farmers typically draw up

a budget during the winter for the farm for the upcoming year, divide the cost into a set

number of shares, then contact potential consumers and ask them to pledge monetary

support to the farm. Members’ support may be collected in full at the beginning of the

season or paid in pre-set installments. In return for the support of the community, the


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544 S. Kumar et al.

farmer periodically provides his/her clients with a portion of fresh produce throughout the

summer and fall—more during abundant years, less if crops fail. The CSA is a system that

works on trust and familiarity.

Community-supported agriculture in the US enjoys support not only from more than

1100 farms and their members, but also from the government, universities and non-profit

organisations. For example, the United States department of agriculture (USDA) maintains

the national agricultural library, which includes an alternative farming system information

centre with information for and about CSAs (USDA, 2007b). Other non-profits, such as the

biodynamic farming and gardening association and the national campaign for sustainable

agriculture (National Campaign for Sustainable Agriculture, 2007) offer education and

networking opportunities to CSA farmers. University extension services and centres give

additional support, such as the Robyn Van En Center at Wilson College, which ‘offers

outreach, and works to gain publicity about CSA farms in order to benefit community

farmers and consumers everywhere’ (Robyn Van En Center, 2008). Broad support from a

variety of sources enables community-supported agriculture to thrive in a corporate-

dominated world.

10 CSA AS A MODEL FOR INDIA

We could find no published reports of functioning CSAs in India yet. However, if farmers

form co-operatives, or if civil society organisations volunteer to co-ordinate the

administrative aspects of running a CSA, the model promises much to the credit-and

market-starved Indian small farmer.

In India, we would envisage that a farmer or farmers’ co-operative might contact

prospective clients before the summer (Kharif) and winter (Rabi) sowing seasons. Clients

would pay the co-operative a specified amount of money upfront, in return for produce

harvested during the two seasons. Forming a co-operative allows farmers to supply a

variety of produce, depending on the farmers involved. The presence of multiple co-

operatives would thus allow consumers to choose their preferred CSA based on the produce

available at each. There is a little comparison between the size of the typical farm in the US

and that in India; yet, as discussed above, Indian small farmers have been able to form co-

operatives to sell their produce at farmers’ markets. By approaching consumers directly,

such co-operatives could gain valuable access to credit as well as to a guaranteed market.

One variation on this theme, being explored in Hyderabad (personal communication from

Kiran Vissa), is the possibility of forming consumers’ co-operatives to match up with

producers’ co-operatives. This allows people who are part of a consumers’ co-operative to

have the choice they might be afforded at a typical farmers’ market, while still allowing the

farmers’ co-operative to leverage the market and credit available from a dedicated

consumer base.

The most important advantage of a CSA over a farmers’ market from the vantage point

of producers is that small farmers are buffered against the vagaries of the monsoons in India

and of fluctuations in the global market, and are assured a specific income. They also have

access to cash at the beginning of the season so that they can access inputs required such as

seeds and the requisite fertilisers. Coming from the consumers themselves, this cash

represents member clients of CSAs becoming invested in the success of the farms involved,

and hence, the strengthening of the local economy.


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11 MOVING FORWARD WITH DIRECT MARKETING IN INDIA

In the booming economy of India today, corporate generosity and the number of trusts are

on the rise. Funding for direct marketing of produce, including storage and transportation

facilities, management of an urban location for a farmers’ market and training for farmers

in the marketing of their produce will need to come from the new rich in India as well as

from the government. In the case of CSAs, funding required is likely to be less than for

farmers’ markets—CSAs do not need an urban location in order to sell produce—though

storage, transportation and marketing may still need to be supported.

Perhaps more importantly, farmers who want to make the shift from chemical-intensive

agriculture to sustainable, low-input agriculture need to be trained and supported during the

initial stages of their transition. Private funding agencies have been supporting such

ventures (The Association for India’s Development, 2007), but there is a need for the

government to provide incentives to farmers who wish to make the shift. The NCF reports

that presently, credit from state-owned banks is available only for improved technologies

like hybrid crops and crossbred cows. Their analysis shows that there is a need to de-link

the availability of credit from technology (National Commission on Farmers, 2006). Credit

should be available to farmers wishing to take up organic farming or low-input sustainable

farming practices, as well as for the upkeep of traditional breeds of cattle. The NCF has

suggested that the state-run National Bank for agricultural and rural development could

develop a suitable project for low external-input sustainable agriculture and aquaculture

(National Commission on Farmers, 2006).

The national sample survey (National Sample Survey Organization 59th Round) shows

that there has been a rise in involuntary unemployment among agricultural wage labourers

due to a decline in days of agricultural wage employment. Increased mechanisation, while

desirable when young people would rather move away from farming, is leading to distress

migration in the semi-arid rain-fed areas of India. The government of India passed the

national rural employment guarantee act (NREGA) in 2006 to reduce distress migration.

This act guarantees 100 days of employment to each household. While most persons taking

advantage of this act have been employed to build roads or bunds, the labour-intensive shift

from chemical to low-external input farming can potentially also employ many people.

There is a need to make farming-related activities such as composting explicitly eligible for

funding under the NREGA.

We have detailed the need to set up markets and supply chains that are directly managed

by farmers themselves. In order to make this reality, the government of India needs to

decentralise the marketing of produce. Markets should be set up in cities as part of an urban

development drive; city governments can subsidise the use of parks or buildings for

farmers’ markets. Daniel (2005) details the desirable attributes of a location for a farmers’

market in a city; this includes accessibility by private and public transportation, and

availability year-round (Daniel, 2005). The central government of India, as well as state

and local city governments and non-profit organisations could take up funding of farmers’

markets in urban and semi-urban regions in the country.

12 CONCLUSION

The models we have presented in this paper are not meant to be comprehensive—there are

models that involve direct marketing of produce on the internet by farmers that may be less


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546 S. Kumar et al.

applicable to India as yet, as well as regional variations on the theme of the farmers’

markets and CSAmodels. However, through the models presented and the examples given,

we have attempted to present the importance and necessity of engaging in direct marketing

in the agricultural industry. The use of farmers’ markets, CSA’s and co-operatives are just a

few examples of how US farmers are marketing their produce directly to consumers. In the

future, Indian farmers could, by adopting these models, pave the way to better

environmental and public health, and realise the benefits of an improved local economy.

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Towards direct marketing of produce by farmers in India: Lessons from the United States of America

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