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Role of APMCs in Agricultural Marketing in India- A Study

Article · June 2012

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Vilas Mohan Kadrolkar

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 AGRICULTURAL MARKETING IN INDIA
ROLE OF AGRICULTURAL PRODUCE MARKETING COMMITTEE (APMC)

Dr. Vilas M. Kadrolkar, M.A., Ph.D.

Associate Professor,
Department of Studies and Research in Economics,
Tumkur University, B. H. Road, TUMKUR - 572 103,
Karnataka State, India
M: 9449112908, E: kmvilas@[Link].

ABSTRACT

Agricultural Marketing is a vibrant subject for academics and administrators as our

culture is agriculture. Though India is gifted with a competitive market, developed banking
system and higher educational institutions, the marketers is yet to build on these strengths.
Agricultural Marketing as a process starts with a decision to produce a saleable farm
commodity and involves all aspects of market structure of a system. There are bottlenecks in
agricultural marketing system like improper warehouses, inadequate market information,
dominance of middlemen, lack of transport and communication. With faster changes in and
through technology, agrarian issues are also becoming pertinent. Indian agriculture, despite
reforms is vulnerable, not merely due to natural factors but also due to inadequate
institutional strength and resilience. Agricultural marketing in India is undoubtedly growing
and changing but neither in all places nor for all farmers. It is projected that the emerging
scenario appears to be disastrous to the country. Under these circumstances, a Second Green
Revolution is expected to clear the mess and keep the nation on right path. The government is
expected to usher in the Second Green Revolution.

In order to improve the marketing system encouraging cooperative marketing,

establishment of regulated markets, and grading, storage and warehousing are essential. In
this connection the role of Agricultural Produce Marketing Committee (APMC) is pivotal in
promoting the agricultural marketing. The study is confined to Tarikere APMC of
Chickmagalur district of Karnataka state. The main objectives of study were to identify the
arrival of total produce in to the APMC market and variations in the prices of the commodity
over the years; to find out the perceptions of the farmers about the performance of the
APMC; to identify the problems in marketing of agriculture product at the market level.

Keywords: Agriculture, Agriculture marketing, Agricultural Produce, APMC, Farmers.

1
 AGRICULTURAL MARKETING IN INDIA

ROLE OF AGRICULTURAL PRODUCE MARKETING COMMITTEE (APMC)

Introduction:

In developing countries, economic development necessarily implies improvement in

agricultural economy. Agriculture has changed worldwide dramatically and particularly in

India in recent times mainly due to technological innovation leading to farm mechanization,

extensive and widespread use of chemical fertilizers and specialization. This, being the

positive side of the development, has also resulted in reduced demand for labour, significant

increase in cost of production, besides, of course, depletion of topsoil, contamination of

ground water, decline in family farming, neglect of farm labour along with their living and

working conditions, reduced cultivable area due to growth of urbanization and

industrialization and rampant legal and illegal mining activities. It has also affected in terms

of economic and social disintegration of families in rural areas. The first and foremost

problem in India is the raising of agricultural productivity. This depends on various factors,

such as physical, material, institutional, technical, and agrarian. The role of marketing in this

sphere is more crucial. Marketing may help in reducing the charges for marketing service by

eliminating the chain of middlemen and to have the minimum difference between the buying

and the selling prices.

Marketing of agricultural produce is considered as an integral part of agriculture,

since an agriculturist is encouraged to make more investment and to increase production.

Thus, there is an increasing awareness that it is not enough to produce a crop or animal

product; it must be marketed as well. After 1960s, and particularly after Green Revolution,

the government has taken active interest in the development of infrastructure of marketing

and trade. In India, there are network of cooperatives at the local, regional, state and national

2
 levels that assist in agricultural marketing. In India, the State is now playing an important role

in agricultural marketing. Agricultural price policy, setting up of Regulated Markets, the

purchase of products directly by the government through the Food Corporation of India, etc.,

come under the subject matter of rural marketing. An efficient system of marketing is

essential for the economic development of a country. Marketing becomes an important

instrument in improving the income of the individual producers of all categories, apart from

meeting the requirements of the customers.

The policies, programmes and actions of the government in its efforts to develop and

modernize the marketing system for rural area are mainly in three directions:

 Institutionalizing of agricultural marketing by facilitating the formation of

Cooperative marketing societies;

 Regulation of markets for various agricultural products designed to minimize or

eliminate unfair trade practices; and

 Direct involvement of the State in the marketing of certain agricultural products.

In order to improve the marketing system along these three lines, certain steps have

been taken as encouraging cooperative marketing, establishment of regulated markets, and

grading, storage and warehousing. In this connection the role of Agricultural Produce

Marketing Committee (APMC) is pivotal in promoting the agricultural marketing.

Agricultural Produce Marketing Committee (APMC)

Agricultural Markets in most parts of the country are established and regulated under

the State APMC Acts. The whole geographical area in the State is divided and declared as a

market area wherein the markets are managed by the Market Committees constituted by the

State Governments. Once a particular area is declared a market area and falls under the

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 jurisdiction of a Market Committee, no person or agency is allowed freely to carry on

wholesale marketing activities. The monopoly of Government regulated wholesale markets

has prevented development of a competitive marketing system in the country. The

agricultural produce marketing committee is a marketing board established by the state

governments of India. In order to facilitate farmers, the state government to sale their produce

and get reasonable price and constituted APMC in many towns. Most of APMC have market

yard where traders and other marketing agents are provided godowns and shops for purchase

of agriculture produce from formers. Formers can sail their produce to agents or traders under

supervision of APMC.

The major functions of the APMC are: grant, renew, refuse, suspend or cancel license;

provide the necessary facilities; regulate and supervise the auctions; maintain and manage the

markets; regulate the sales, promote and organize grading and standardization of the

agricultural produce and ware housing facilities in the market area. The APMC generates

many benefits to the farmer community, they are-farmers get fair price; correct weighing for

agricultural produces; maintenance of daily list of prices of commodities for the benefits of

formers and immediate payment after disposal of the produce (within 24 hrs). As on 31-3-

2010 the markets covered under regulation is 7177 in India. In addition there are 27924 rural

periodical markets or hats, about 15 percent of these in markets have been brought under the

ambit of the regulation.

Agricultural Marketing in Karnataka:

Karnataka contributes around 7 percent of the agricultural production and 15 percent

of the horticulture production in the country. It contributes around 10 percent of the fruit and

vegetable production in India. Food processing industry in Karnataka, at present is not

commensurate with the potential; large quantities of agricultural and horticultural produce

4
 goes outside the state for value addition. Agricultural produce marketing committee yards

and act (APMC) includes the marketing of horticultural produces, presently there are 39

APMC markets in Karnataka. Karnataka occupies a prominent place in the agriculture /

horticulture map of the country. Horticultural crops occupy area of 17.25 lakh ha with a

production 130.26 lakh tones. Although the area comprises only 14.14 percent of the net

cultivated area in the state, the total income generated from the horticulture sector accounts to

over 40 percent of the total income derived from the combined agriculture sector. This

accounts for 17 percent of the GDP of the state.

Major objectives of study were:

 to identify the arrival of total produce in to the APMC market and variations in the

prices of the commodity over the years;

 to find out the perceptions of the farmers about the performance of the APMC;

 to identify the problems in marketing of agriculture product at the market level.

Methodology:

The study is based on both primary and secondary data. The primary data were

collected from the selected farmers and traders through structured interview schedule and

necessary secondary data were collected from various government reports, journals and

periodicals. The study is confined to Tarikere APMC among the 7 taluks of Chickmagalur

district of Karnataka state. The reason for this is due to the fact that it has an easy access to

various important marketing centers both within and outside the state. The purposive

stratified random sampling method is adopted. The total sample size of the study was about

100 farmers those who are the customers of Tarikere APMC.

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 Chickmagalur district is one of the twenty eight districts of Karnataka. It is rich in

natural resources; most of the area of this district is predominantly malnad region covered by

dense forest, hilly region. The district is mainly an agricultural and horticulture district. The

most important crops of the district are ragi, Paddy, coffee and Areca nut, paddy, covered the

area 45659 (38.17 percent). Tarikere Taluk is mainly an agricultural and horticultural taluk.

The total geographical area of the taluk is 1216 [Link]. Bhima River flows through the taluk

and a dam is constructed at Lakakavalli very near to the Tariker town. In the Taluk there are

6 hoblies 46 gram panchayaths, 206 habitant Villages. Taluk is covered by plantation crops,

and other crops, sugarcane, Ragi paddy, Jowar fruit crops and the major food crops,

agriculture is the main occupation. Arecanut coconut the major crops and area under these

crops is 4775 hectares and 6564 hectares respectively. Majority of the farmers are selling

their produce in the APMC.

Tarikere Agricultural Produce Marketing Committee:

The APMC in Tarikere is situated near to 206 National Highway. APMC has 25 acres

of total land area, in which built up area is 16 acres. The total numbers of shops in the APMC

are 685 and 320 warehouses. In a year around 30-35 commodities are traded in the APMC.

Areca nut, Cocunut, Paddy, Ginger, Maize, Potato, Ragi, onion, Watermelon, Cotton and

Chilly are the major crops traded in the APMC premises. The nature of trading of the

agricultural products is tender system, auction sale, direct marketing and commission agents

system. The total numbers of traders in the APMC are 860. The regulated committee consists

of a president, ten members and a secretary to perform necessary function of the APMC.

6
Data Analysis and Interpretation:

Ten major commodities trade in the APMC and their quantity during last five years is

given in table-1.

[Insert table-1 here]

Table-1 indicates that arrival of various commodities and their quantities over past

five years. The arrival of coconut quantity has increased from around 46 percent to 78 percent

during 2006-07 and 2010-11 in Tarikere APMC. But there is sharp decline in the arrival of

tender coconut from 40 percent to 16 percent in the same period. The reason for the decline in

the tender coconut is because of the awareness among the farmers and the sharp rise in the

price of coconut over the years. This shows that the Tarikere APMC is predominated by the

coconut product. Tarikere taluk has irrigation facility in the form of Bhadra dam which has

facilitated for the paddy cultivation, which ranks third in its quantity traded. The other

commodities which are traded in Tarikere APMC are Maize, Potato, Ginger, Ragi, Cotton,

Watermelon and Onion, but the quantity traded is very meager as compared to coconut. Thus

it can be concluded that the Tarikere APMC is predominated with 94 percent by the coconut

products and contribution of other commodities are meager.

[Insert chart-1 here]

Chart-1 indicates the variations in the average price of the various commodities traded

in Tarikere APMC. The maximum average price for coconut is Rs. 5,985 during 2010-11 for

coconut, followed by tender coconut of Rs. 4,568 and paddy of Rs. 3, 215 respectively during

same year. The price of the commodity has the positive link with the quantity of the

commodity traded. In case of Maize, Potato, Ginger, Ragi, Onion, Watermelon and Cotton

the fluctuation in the average price is very meager. Thus, it can be concluded that Tarikere

APMC is predominated with coconut trading and it has a positive relation with its price.

Coconut flows through different channels from the point of production till it reaches the

7
 traders operating in Tarikere market. It was observed that 66.2 percent of the coconut growers

disposed their produce though commission agents. Among the total coconut growers 32

growers were engaged in making ball copra. The marketing channel used for marketing of

ball copra was through commission agents.

The above analysis was on the basis of the secondary information collected from the

Tarikere APMC authorities. But to get the first hand information from the farmers and

traders, the field survey has been conducted and the analysis of which has been given in the

presiding discussions.

Performance of APMC

To know the performance of the Tarikere APMC, the selected farmers were asked

their perceptions about the the perfomance of the APMC. The same is depicted in chart-2.

[Insert chart-2 here]

It is clear from the chart-2 that, 84 percent of the respondents have preference for

regulated markets, followed by cooperative markets with 12 percent. Regulated markets have

many positive points as compared to other markets. Almost 80 percent of the respondents

have fair idea about the APMC act and 80 percent of them are happy with the procedure

followed in the APMC. 60 percent of the respondents are satisfied with the supervision in the

market. With regard to the payment made to the farmers, 60 percent of them say they got the

payment on the same day and 40 percent of them opined that payment varies in between 1-15

days. 80 percent of them are happy with the facilities provided in the APMC. The Tarikere

APMC uses modern weighing machines and farmers are happy with it. Farmers are getting

fair price for their produce and they are happy with the co-operation of the APMC officials.

Farmers expressed that the overall performance of APMC marketing in Tarikere is

satisfactory.

8
Problems in APMC yard:

During the last few decades, several steps have been taken to improve the efficiency

of agricultural marketing in India as well as in Karnataka, but there is a long way to go. The

problems of the Tarikere APMC are taken from farmers and traders, both of them have

different problems. The problems of Tarikere APMC are shown in chart-3.

[Insert chart-3 here]

Chart-3 depicts that majority (56 percent) of the farmers are facing the problem of

transportation of agricultural produce from their village to the APMC, because of poor road

connectivity and poor transportation system and the farmers have small quantity of

marketable surplus which leads to increase in the cost of transportation. Other problems faced

by the farmers are inadequate storage facility, costly and inefficient labour and lack of market

information. The major problem of traders is multipoint market cess because which their

margin of commission has been affected. These problems can be solved by committee

through providing facilities to the farmers and traders. The major weaknesses of the Tarikere

APMC are - Inadequate infrastructure base, shortage of power etc. Whereas the major

strengths of the APMC are - soil and climate is suitable for cultivation of agricultural and

horticultural crops, fairly good banking network, tourist destination, higher literacy rate,

adequate surface and ground water resources etc.

Conclusion:

It is said that production, processing and marketing are the three pillars of the

agricultural economy in India. In marketing policies, it is necessary to throw some light on

the peculiarities of the agricultural produce. Infrastructure facilities such as roads, transport,

storage, etc. are very much inadequate in rural areas. An efficient agricultural marketing is

essential for the development of the agriculture sector as it provides outlets and incentives for

9
increased production, the marketing system contribute greatly to the commercialization of

subsistence farmers. The State has to facilitate varying models of ownership of markets to

accelerate investment in the area and enable private investment in owning, establishing and

operating markets. Working of existing Government regulated markets also need to be

professionalized by promoting public private partnership in their management. Appropriate

legal framework is also required to promote direct marketing and contract farming

arrangements as alternative marketing mechanism. Therefore, there is a need to formulate a

new model law for agricultural market.

The performance of the Tarikere APMC is satisfactory but there is need for providing

certain facilities needed for the further improving the performance of the APMC. Proper

storage facility should be provided to the farmers, the measures has to be taken to improve

the transportation facilities, existing grading facility is inadequate further improvement is

need in the grading facility, farmers need financial support through commercial banks and

proper information should be provide to the farmers. The state government has to make

provision for imposition of single point levy of market fee on the sale of notified agricultural

commodities in any market area. It may be concluded that Tarikere APMC is working

efficiently and effectively and helping a numerous of farmers, traders, commission agents and

other market functionaries. This market is popular in neighboring states namely Andhra

Pradesh Tamil Nadu and Kerala.

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References:

Annapurna (2009) - “Marketing to the Indian Rural Consumers”, Marketing Mastermind, Vol.
9(5), May, Pp.35-39.
Bhattacharyya, Kaberi (2007) - “Rural Marketing in India: problems, Prospects and Emerging
Dimensions”, Marketing Mastermind, Vol. 7(9), September, pp.32-43.
CMIE (1996) - “Indian Agriculture Sector, Income Statistics”, Monthly Review of Indian
Economy & Indian Social Sectors. Mumbai: CMIE.
Desai, Vasant (2010) –“Rural Development in India”, Himalaya Publishing House, New Delhi,
Pp.205-221.
Dogra, Balram & Karminder Ghuman (2008) – “Rural Marketing – Concepts & Practices”,
Tata McGraw-Hill Publishing Co. Ltd., New Delhi, Pp. 1-8.
Dutta, P.K (2011)- “Agricultural Marketing in India”, Indian Journal of marketing. July 2011
Vol.: 41, No: 7, 9-17.
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Gopalswamy, T. P. (2005) – “Rural Marketing – Environment, Problems and Strategies”,
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Policy Options”, Policy Brief 35, February, National Centre for Agricultural
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[Link] /interviews/[Link] (accessed 13/11/2011).
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Marketing Mastermind, Vol. 8(4), April, pp.21-23.
Srivastva, Arpita (2008) -“Effective Product and positioning Strategies for the Rural Market: A
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Swaminathan, M.S. (2011). “Grain mountains and hungry millions – The Indian enigma”, The
Hindu Survey of Indian Agriculture 2011, pp.7-8.

*****

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Table -1: Trading of various commodities in Tarikere APMC (Quantity in Quintals)

Sl. Agricultural
2006-07 % 2007-08 % 2008-09 % 2009-10 % 2010-11 %
No Products
1 Coconut 822144 45.71 908347 48.86 1105548 65.66 2174584 58.23 3734453 78.16
2 Tender Coconut 722900 40.19 722900 38.88 345374 20.51 1319000 35.32 759235 15.89
3 Paddy 139031 7.73 86862 4.67 112356 6.67 88710 2.38 143215 3.00
4 Maize 19939 1.11 24985 1.34 28588 1.70 38505 1.03 48186 1.01
5 Potato 15390 0.86 64193 3.45 38136 2.27 40975 1.10 39954 0.84
6 Ginger 31111 1.73 19765 1.06 27040 1.61 45788 1.23 21000 0.44
7 Ragi 14577 0.81 7851 0.42 8031 0.48 9193 0.25 11795 0.25
8 Catton 10368 0.58 10155 0.55 9607 0.57 7547 0.20 8044 0.17
9 Water melon 11690 0.65 4365 0.23 5810 0.35 5510 0.15 7150 0.15
10 Onion 11461 0.64 9805 0.53 3175 0.19 4750 0.13 4825 0.10
Total 1798611 100.00 1859228 100.00 1683665 100.00 3734562 100.00 4777857 100.00

Source: Compiled from various reports of Tarikere APMC

Chart-1 Average Price per quintal for Different Commodities in Tarikere APMC

6000
5500
5000
Average Price (Per quintal)

4500
4000
3500
3000
2500
2000
1500
1000
500
0
2006-07 2007-08 2008-09 2009-10 2010-11
Coconut 5000 4285 4850 4495 5985
Tender Coconut 3100 2950 2781 3473 4568
Paddy 2500 2500 2640 2995 3215
onion 425 890 1115 1270 1090
Maize 550 650 750 920 1055
Ginger 625 635 815 880 970
Ragi 475 400 375 635 850
Water malon 400 500 650 555 850
Potato 500 600 675 800 795
Cotton 175 150 140 220 205

Source: Compiled from various reports of Tarikere APMC

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 Chart-2: Perceptions about the performance of Tarikere APMC

90 84
80
80
70 60 60 60
60
50 40 40 40
40
30 20 20 20 20 20 20
20 12
10 4
0

Dissatisfied

Dissatisfied

Dissatisfied
For traditional Market

AGMARK Act

7-15 days
Satisfied

Satisfied

Within seven days

Satisfied
Regulated market Act

Strongly Satisfied
For regulated market

For competitive market

Strongly satisfied

On the same day

Prefernces Knowledge Views about Views about Payment to the Infrastructural
about Acts Procedures Supervision Farmers Facilities

Source: Primary data (Field Survey)

Chart -3: Problems faced by farmers and traders in Tarikere APMC

120

100 96

80

60 56

40
20
20 16
8

0
High transportation Inadequate storage Lacks of market Costly and inefficient High multipoint market
costs. facilities intelligence labour cess
Problems of Farmers Problems of Traders

Source: Primary data (Field Survey)

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