Rural Profile

7/24/2019 Rural Profile

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Rural Profile / Features of Rural Market in India (Nov. 08)

1. Large and scattered market: According to 2001 census rural population is 72% of total population and it is scattered over a wide range of geographical area.

2. Diverse socio-economic background: This is different in different parts of the countryand brings diversity in rural markets.

. Changing demand pattern: !emand pattern of rural customer is fast changing due toincreasing in income and credit facilities offered by banks like "kisan credit card#.

$. Major income comes from agriculture: About 0% of the rural income is fromagriculture and hence the demand for consumer goods is high during harvesting season.

&. Saving habits: 'ural consumer is now having saving habits due to the efforts of co(operative and commercial banks.

. Traditional outlook: 'ural customer values old customs and traditions.

7. Low standard of living: 'ural consumer have low standard of living because of lowliteracy) low per capita income and social backwardness.

*. oor infrastructure facilities: +acilities like roads) warehouses) communication system)etc. are inade,uate in rural areas. -ence physical distribution becomes costly.

. Media reach: The reach of pint media is 10% followed by T/ 1%) radio 1% andcinema %.

10. Communication: As per ndian press report about lakhs villages are without telephonefacilities.

11. !lectrification: About **% of villages have been electrified and rest will soon get electricity by 3'ural lectricity 4orporation5.

Potential of Rural Market (May 04, 07, 08)

6ith urban market showing signs of saturation) companies are e cited about the potential ofrural ndia. ome ma8or companies that have focused in the rural sector are 9hilips) 9arle)9roctor : ;amble) 4olgate(9almolive) ;odre8 oap) .

+ollowing points indicate the potential of rural markets?

Scope / Attractiveness of Rural Market / Why Companies Go Rural (May 06)

1. Large opulation: According to 2001 census rural population is 72% of total populationand it is scattered over a wide range of geographical area

2. "ising "ural rosperit#: Average income level has improved due to modern farming practices) contract farming) industrialisation) migration to urban areas and remittance ofmoney by family members settled abroad.
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. $rowth in Consumption: There is a growth in purchasing power of or rural consumers.The average per capita household e penditure is 's. *2.

$. Changing Lifest#le: >ifestyle of rural consumer changed considerably.

&. Life C#cle %dvantage: The products) which have attained the maturity stage in urbanmarket) is still in growth stage in rural market. .g. popular soaps) skin cream) talcum

powder) etc.

. Market $rowth "ate &igher than 'rban: As per the survey made by @4A ' thegrowth rate of + 4; market and durables market is higher in rural areas. The ruralmarket share is more than &0% for products like body talcum powder) toilet soapscooking oil) hair oil etc.

7. "ural Marketing is not !(pensive: To promote consumer durables inside a state costs 'sone crore while in urban areas it will costs in millions.

Constraints in Rural Marketin (Nov. 06) *(May 06)

1. )astness and 'neven $rowth: ndia has about & lakhs villages) which are scattered overa wide range of geographical area) and also they are not uniform in siBe.

2. *Transport roblem: Transportation infrastructure is very poor in rural ndia. Thoughndia has the fourth largest railway system in the world) many villages remain outside the

railway network. any villages have only kaccha roads while many of rural interiors aretotally unconnected by roads.


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1. !mplo#ment ,pportunities: The income from new employment and rural developmentefforts has increased the purchasing power of rural people.

2. $reen "evolution: !ue to green revolution a technological break through has taken placein rural ndia) which results into substantial wealth generation in these areas.

. /avourable $overnment olicies: Ta e emption in backward areas) subsidy)concession) incentives and heavy investment in rural development programmes in has

brought rapid growth of rural markets.

$. Literac# $rowth: >iteracy rate is increasing in rural areas) nearly $&% of rural ndiansare literate. This brings social and cultural changes in buying behaviour of the ruralcustomers.

&. "ising Disposable 0ncome: ;ood monsoons) green revolution and Administered 9ricingechanism D9A E have raised disposable income in rural areas.

. %ttraction of &igher Standard of Living: 'ural people have been motivated to changetheir lifestyles and have higher standard of living.

7. Spread of Cable Television: The growth of satellite T/ channels has made a ma8orimpact on villages. This has led to a change in lifestyle and consumption pattern.

arket egmentation in 'ural arket

12 $eographic Segmentation: egmentation on the basis of geography is done depending onvarious factors such as

'egion? @orth) outh) ast and 6est.

/illage iBe? F &00 people) &01 G 2000 people) 2001 G &000 people) H &000 people9ro imity to the feeder town?

!ensity? The number of people per s,. km

4limate? oderate) rain fed or dry with scanty rainfall.

>evel of rrigation? 6hether good) moderate) scanty or none at all.

32 Demographic Segmentation: t is based on the population) age group) literacy level andincome of the rural consumer.

42 s#chographics 5 6ehavioral Segmentation: uch segmentation is done using variables suchas >ifestyle of the people) Dwhether rigid) traditional or changingE) Iccasion) Dwhether on aregular day or a special occasionE) oyalty to brands) Dwhether >ow) edium or -igh.E

Recent !evelopment in Rural Market (May 04)

Chan in Pattern of Rural !emand (Nov. 04, May 08)


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The position in the rural market was totally different twenty years ago. At preset there is ademand for products like T/) fans) oil engines) readymade garments) medicine) etc. @ew

products like toiletries) baby care products and consumer durables are now getting good demand.!emand pattern of rural markets are changing due to the following reasons?

1. 9roduction of food grains has increased. This enhanced the rural purchasing power.1. !ue to 2000 im policy) e port of ndian agricultural products increased.

2. 4redit facilities e tended by public sector banks by kisan credit cards helps farmers to buy agricultural and consumer goods on installments.

. 4o(operative and public sector banks are e tending loans to the rural people and creating 8ob opportunities for them.

$. 4able T/ has played important role in bringing change in lifestyle and consumptionhabits of rural people.

&. >iberalisation facilitated contract farming thus the farmer has ready market for their produce.

$ A#s of 'ural arketing

1. %vailabilit#: The first challenge is to ensure availability of products and services. ndia#s27)000 villages spread over .2 million s,. km) given the poor state roadC it is not easy

to reach 700 million rural ndians.

2. %ffordabilit#: The second challenge is to ensure affordability of the products andservices. 6ith low disposable income products need to be affordable to the ruralconsumers. ome companies consider it by introducing small unit packs) e.g. ;odre8introduced +air glow in &0 gm packs.

. %cceptabilit#: The third challenge is to gain acceptability for the products and services.Therefore there is a need to offer products that suites the rural consumer needs andcustoms. .g. >; developed a customised T/ for the rural market and promoted" ampoorna5.

$. %wareness: vents like fairs) festivals) haats etc. are to be used for brand communication.deas like putting sticker on the hand pumps) walls of the wells) tin palates on trees

surrounding the ponds etc. are some of the innovative media used by soap companies like>u ) >ifeboy) 'in and 6heel. The idea is to advertise at the time of consumption.

9ro8ect 3 product categories and availability of affordable packs.

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9'I+ > I+ '='A> 4I@ = '

9rofile of 'ural 4onsumer

1. iBe of the rural consumer

2. >ocation pattern of rural consumer . >ow literacy level of rural consumer

$. Iccupation of rural consumer

&. ncome of rural consumer

. avings of rural consumer

7. 'eference groups? 9rimary health workers) doctors) teachers) and panchayat members.

*. 4onscious customer? Though not educated) very conscious about value for money.

. ive !emonstration


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Rural Customer v/s "r#an Customer (Nov. 04)

"R$A% MAR&'( R"RA) MAR&'(

ostly concentrated 6idely spread and scattered

-igh infrastructural level >ow infrastructural level

-igh density of population per s, km >ow density of population per s, km

;ood physical connectivity and high mobility 9oor physical connectivity and low mobility

ncomes are more stable and permanent 9eople work in less certain environment

Iccupations are government employment) business) industry etc.

ostly agricultural occupation

ncome received at regular income Acute seasonality in income receipts

>arge number of interactions with persons andless fre,uent between same persons

>ess number of interactions with persons andmore fre,uent between same persons

ocial norms are less visible ocial norms influencing individuals

4ast influence indirect and less visible 4ast influence direct and strong

-igh e posure to variety of products >ow e posure to variety of products

-igh brand awareness >ow brand awareness

-igh e posure to marketing researchers andmultiple source of information

>ow e posure to marketing researchers andlimited source of information

ore convenient buying) more retail outlet per1000 population

>ess convenient buying) less retail outlet per1000 population

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PR*!C"( S(R'('G+ (Nov. 02)

,- Small "nit Packa inmall packs are preferred due to the following reasons?

1. mall packs help the rural consumer to pick the product at affordable price.

2. ndividual use products like shampooC toilet soaps) etc. are bought in smaller siBe.

. mall packs are easy to display and they increase the visual appeal.


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$. mall packs are convenient to retailer to do his business.

Example:

1. 4avin Kare introduced shampoo in $ ml sachets at 0.&0 paise.

2. 'asna is now available in sachet at 'e. 1. 9onds introduced 20 gm talcum powder

$. Tiger biscuit is available in four biscuits pack at 'e. 1

.- %e Product !esi n

The products are designed as per the rural lifestyle.

Example:

1. 9/4 shoes and chappals are designed to work in adverse conditions.

2. >; electronics launched 3 ampoorna5 T/ that can withstand power fluctuations.

. 9hilips introduced small refrigerators especially for rural consumers.

0- Sturdy Products

turdiness of a product is an important factor for rural consumers. The rural consumers believethat heavier the) higher he power and durability.

Example:

1.


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1. veryday battery with a cat symbol G rural consumers remember it as "billi wali battery#.

2. >ifebuoy soap G rural consumers remember it as "lal saboon#

. ahindra tractor#s brand "ifebuoy G >oveboy

4limik 9lus G 4linic 9lus

9arla ; G 9arle ;

/ikas G /icks

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9' 4 @; T'AT ;L

9' 4 @; T'AT ;L (Nov. 02)

,- )o Cost Products

'ural customer is price conscious manly because of low income. The price can be kept low) bylow unit packaging. This is a common strategy adopted by many companies marketing in ruralareas. ample G same as of small unit pa !s .

.- Application of 3alue 'n ineerin

The aim of value engineering is to reduce the value of the product so that a larger segment of population can afford it to buy.

Example:


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1. oya protein can be used instead of milk protein) nutrition content of both is same but thesoya protein is cheaper then milk protein.

0- Refill / Reusa#le Packa in

'efill packs benefits the rural consumers in terms of price and also the packaging materialshould be reusable in rural areas.

Example G any farmers demand for fertiliBers packed in >!9 or -!9 sacks. They feel thatthey get sacks free of cost by purchasing fertiliBers.

1- !iscounts

n order to motivate the rural retailer to sell more) a discount of &(10% is given on the '9 particularly in case of + 4 goods.

2- Promotional Schemes

'ural consumer normally buys household articles during festivals like id) !iwali) and 9ongaletc. special promotional schemes could be introduced on such occasions like e change offers)special discounts) etc.

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2. kimming pricing G 4harging high prices at initial level) .g. 9:; launched Tidedetergent at high price and then reduced it lower than other brands.

1. )alue Conscious Customers G They are of middle class and are mainly concerned withfunctional benefits and value for money

9ricing ethods?

1. 9enetration 9ricing G 4harging low prices at initial level then increasing gradually when brand name has been established. .g. aggie noodles) /icks) 'in detergent.

2. /alue 9ricing G etting the price reasonably lower than the competitor#s price.

1. rice Conscious Customers G They are climbers) aspirants and destitutes. They watch for promotional offers and purchase cheap or fake products.

9ricing ethods?

1. 9sychological 9ricing G 9sychological pricing is one that ends in an odd number e.g. 's.. &. t conveys two notions to consumer that there is a discount or bargain and it belongs to lower price category.

2. 9romotional 9ricing G t includes mini packs) price(off) special discounts) credit facilitiesetc.

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4ualities Re5uired for a Rural Sales Person (Nov. 0", May 06, 07)

1. 8nowledge of local language

2. +illingness to get located in villages

. Cultural Congruence: 'ural salesman must have proper ac,uaintance with the cultural pattern of rural life.

$. %ttitudes: 'ural salesman must have patience as their customers are traditional andconscious) it will not be possible to clinch the sales ,uickly. -e may have to spend lot oftime with customer and make several visits to gain favourable response.

&. Capacit# to handle number of products lines: 'ural salesman usually does not generate

economic value of business if he handles few products. -e is re,uired to handle muchlarge number of products lines as compared to urban salesman.

. $reater Creativit#: 'ural marketing involves greater creativity. f the product is very newin the rural conte t) -e has to introduce it using consumption pioneers and opinionleaders.

A)('R%A(I3' M'!IA F*R R"RA) C*MM"%ICA(I*% (May 04, Nov. 04, 07)
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N(May 06, 08, Nov. 0")

AO +ormal Irganised edia

1. .ewspapers and Maga9ines: >ocal language newspapers and magaBines are popularamong educated rural families. .g. !ina Thanthi in Tamilnadu) 9un8ab Kesri in @orthand >oksatta in aharashtra.

2. T): About 77% of villages receive T/ transmission and 27% of rural people actuallywatch T/. 'egional channel is very popular like =@ T/ in Tamilnadu and Asianet inKerala.

. Cinema: About 2 % of rural people watch cinema as regular lifestyle. hort feature filmswith advertisement message) Ad(films and documentaries that combine knowledge andadvertisement are useful for rural communication.

$. "adio: t is a well(established medium in rural areas. 'adio reaches large rural population at low cost.

&. * oint ,f urchase: 9oint of purchase or point of sale is popular promotional tool usedin rural market. 9I9s should be especially designed to suit rural re,uirements. 9I9s.4olors) symbols and pictures should be used more than the written words.

. ,utdoors: Iutdoors such as hoardings) wall paintings) illuminations and other displaysare also now being used for rural communication.


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12. /ocus on "eference $roups: They are the opinion leaders and are the key persons of thevillage e.g. ir 9unch) ;ram evak) Teachers) !octors etc. These people should be takeninto consideration while chalking the rural communication.

4onstraints in 'ural 4ommunication

1. Low Literac# "ate: !ue to low literacy level) the written words have limited use in ruralcommunication.

2. Low Spending Capacit#: !ue to low disposable income) they cannot buy radio : T/

. ;oint /amilies and Strong 8inship Ties: 'ural people live in 8oint families wherefemales depend on their males for information regarding various products. o it becomesdifficult to reach female consumers directly.

$. Linguistic and Socio-cultural Differences: @umber of languages and different culturaland social norms creating problems for marketers in designing the messages) as massmedia in one particular language doesn#t work for entire rural population.

&. 'ni


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2. &ired )ehicles: n this system) the salesman hire a public carrier like a ta i or a truck.The disadvantage of this system is that the salesman has to spend lot of time inorganiBing transport.

. +orking b# 0ndependent Stockist: n this system) inspite of having salesman) company

gives this 8ob to the stockist. ach stockist is asked to cover his surrounding market. t isuseful only to companies with high volume turnover.

$. Selling Through 6ullock Cart 5 Camel: This is used to market in remote villages with nomotorable roads. n this system the number of outlets covered is limited because of slowtransportation.

&. %ppointment of rimar# Dealers: -ere a big retailer in a village is appointed as a primary dealer ad is asked to purchase the goods from nearby stockist with a specialdiscount.

. 'sing 'rban +holesalers: 4ompany can ask the urban wholesaler to recommend and

sell its products through their rural retailers. n return) company gives them 1% incentiveson actual sales made.

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. Credit attern: 4redits offered to consumers by retailers is different from area to area. @ormally consumers have a running credit with a part of outstanding is paid every monthand the balance is paid during the harvest.

$. urchasing C#cle: n high turnover feeder villages) the retailers make purchases to $

times a week from urban wholesaler. n other villages they buy once a week orfortnightly.

ultiplier ffect of 'ural !emand

Ince a product gains acceptance in rural markets) the rural retailer put this item on his shoppinglist when visiting the wholesaler in the nearby town. This action by the rural retailer starts achain reaction with the urban wholesalerC once the urban wholesaler knows that for such a

product a rural demand is possible) he will start stocking this product and will recommend and push this product to other rural retailers. These rural retailers will in turn) sell to smaller retailersof smaller villages. n this way a multiplier effect create in rural demand.

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A;' 4=>T='A> A'K T @;

! + @ T I@

According to @ational 4ommission on Agriculture i ultu#al ma#!etin& is a p#o ess +i + sta#ts it+ a e ision to p#o u e a fa#m ommo ity, involves all aspe ts of ma#!et st#u tu#e anin lu es p#e an post +a#vest ope#ations li!e assem-lin&, a in&, sto#a&e, t#anspi#ation an

ist#i-ution .

4>A + 4AT I@ I+ A'K T (Nov. 06)

1O In the ocation

1. /illa&e Ma#!ets: >ocated in small villages

2. #ima#y 1+olesale Ma#!ets: -eld weekly or bi(weekly at different villages and locallycalled as " handi# or "-aat#.

. e on a#y 1+olesale Ma#!ets: >ocated at taluka or district head,uarters and towns andknown as " andi# or ";un8#

$. 3e#minal Ma#!ets: >ocated in metro cities where buyers and sellers come from differentregions or nations.

&. ea-oa# Ma#!ets: >ocated near seashore for the purpose of import and e port.

2O In the


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2. %e&ional Ma#!ets:


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A'K T @; +=@4T I@ (Nov. 06, 07)

1O 9rimary arketing +unctions

1. %ssembling ? t is the process of collecting agricultural produce from small cultivators andmarketing them in large ,uantities in wholesale markets. n assembling process numberof agents take part. They are?

+armers who bring their won produce to market

4ultivators who collect the produce of other farmers

>andlords who collect the produce of their tenants

erchants are village banias

Kachha Arhatiya in assembling market

9akka Arhatiya) wholesale merchants and manufacturers.

1. rocessing: t is a process that adds utility to a commodity. t improves the ,uality of produce like polishing of rice. n processing highly perishable products are convergedinto less perishable products.

2. Distribution: t is the process of storage and selling of processed or unprocessed products.

2O econdary arketing +unctions

1. Standardisation $rading: t facilitates marketing. t is difficult to grade agricultural products because of the wide variation from region to region and even from farm to farm.

2. ackaging: 9ackaging protects the products from physical damage and deterioration in,uality during transportation.

. Transportation: t facilitates the movement of products from farm to village market andthen to wholesale market and finally to consumers.

$. Storing: torage is essential in case of agricultural produce as production is seasonal andconsumption is continuous.

&. /inancing: The service of making credit available to meet the cost of selling products tofinal consumer is referred as finance function of marketing.

. "isk 6earing: +armers and traders are re,uired to bear risk in agricultural marketingarising out of price changes) which may be seasonal or irregular.

7. Selling: t is the main function of marketing. t includes transfer of title of goods andcollection of payment.

Private A encies Involved in A ricultural Marketin 7 (Nov. 07)


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1. 6eoparies: -e collects the agricultural produce from villages and -aats and brings it tothe wholesale market. They normally purchase when the prices are low and sell it whenthe prices are high. &atta? S#stem: n this system the Kaccha Arahtias or !alaldecides the price of products on behalf of the farmer and bidding starts. 6hen all the

buyers have finished giving offers. The name and offers price of highest bidder isannounced and sales takes place when the Arahtias twist his finger under the cover of acloth. This system has been banned by government because of the possibility of cheating.

2. *,pen %uction S#stem: n this system) the seller piles(up his produce at one place. !alalvisits each piled(up stocks) pick samples and shows it to the buyers. The agent theninvites bids and the produce is sold to the highest bidder. Three types of open auctions are

prevalent in different markets.

1. +a# ystem: Ine bid is given for all the lots in a particular shop.

2. %an om i ystem: !alal invites only few buyers) everyone is not informed

. %oste# i ystem:


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7. State Trading: ;overnment purchases huge ,uantity of food grains for distribution.

*. /orward Sale: n this system) 9rocess of purchase and sale is done but goods and moneyare e changed at some specific date

. *;alap Sale: as

10. Sale b# Sample: n this system) buyer purchases the produce before the harvest at a fi ed price. .g. !ealer of different fruits like mangoes) approach the mango growers and enterinto a verbal agreement with them by 8ust looking at the flowers setting.

9'I!=4 '# ='9>=

,- Marketa#le Surplus (Nov. 0", 04, May 06)

The ,uantity of produce which can be made available to the non(farm population of the countryis termed as marketable surplus. t is the residual left with the farmer after meeting hisre,uirements of?

G +amily 4onsumption Q 9 G 4

G +arm needs for seeds and feed for cattle 6here?

G 9ayment to labour in kind Q arketable urplus

G 9ayment to landlord in kind 9 Q Total 9roduction

G Any other payment in kind 4 Q Total 4onsumption

G ocial and religious contribution in kind

.- Marketed Surplus

The ,uantity of produce which the farmer actually sells in the market irrespective of hisre,uirements is known as marketed surplus. arketed surplus may be more) less or e,ual to themarketable surplus.

Factors Affectin Marketa#le Surplus (Nov. 0", 04, May 06)

1. Level of roduction: According to / Kapde the best predictor of per capita marketablesurplus is the per capita output of grains.

2. Consumption &abits: arketable surplus is determined by the consumption habits of the producers. .g. -aryana is a wheat consuming state hence marketable surplus of wheat inthis state is less and that of rice is less.

. Cash "e


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&. .ature of Crops: Two types of corps are produced) food crops which are retained forself(consumption and cash crops which entirely brought in market

. Mode of roduction: =nder traditional mode of production farmer use only familyowned inputs hence entire produces remains for household use. =nder capitalist mode of

production farmer purchase seeds) fertiliBers) pesticides and hire machines) thisnecessitates creation of surplus to earn profit.

Price and Marketed Surplus (Nov. 09 06, May 04, 07)

1. 0nverse "elationship: According to the athur and Bekiel) since the farmer#s cashre,uirement is nearly fi ed) at a given price level) the marketed portion of the output can

be determined. This implies that the marketed surplus is inversely related to the pricelevel.

2. ositive "elationship: According to !andekar and 'a8akrishna) farmers are priceconscious. 6ith the rise in prices of food grains farmers are tempted to sell more and

retain less and vice versa.

MAR&'( C6ARG'S A%! !'!"C(I*%S (Nov. 06)

Arhat G 4ommission

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,8 Producers


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+armers sell their surplus either at the farm itself or at weekly market village. ome big farmersassemble the produce of small farmers and sell at nearby market.

.8 Middlemen

n food grain marketing) middlemen are classified as follows?

1. Merchant Middlemen: They buy and sell on their own and en8oy the profit or bear theloss. They are of following types?

1. 1+olesale#: They buy and sell food grains in large ,uantities directly from thefarmers or from other wholesalers.

2. %etaile#s: They buy from wholesaler and sell to the consumer in small ,uantities.

. tine#ant 3#a e#s ; eopa#ies: -e collects the agricultural produce from differentvillages and -aats and brings it to the wholesale market. They normally purchasewhen the prices are low and sell it when the prices are high. They act as a financer

to poor farmers

$. Mas+a!+o#es: They are small wholesalers or big retailers) dealing in vegetablesand fruits.

2. %gent Middlemen: They act as a representative of their clients. They negotiate the purchase or sell on behalf of their clients for which they receive commission or brokerage. They are of two types?

1. * $ommission &ent ; #+tias: They are operating in unregulated wholesalemarket as a representative of a buyer or seller. There are two ArhtiasC 9akkaArhtia acts on behalf of the trader. Kaccha Arhtia act for the sellers and farmers.They charge commission or arhat for his services. n regulated market there isonly one category of commission agent under the name of "A 4lass Trader#. -ehas his own shop) godown and also rest(house facility for his clients.

2. #o!e#s: They do not take physical control of the product but they bring buyersand sellers on the same platform for negotiations. They received brokerage fortheir services.

. Speculative Middlemen: peculative middlemen take the title of the products with theintention of the earning profit. They buy at low prices during low demand period and sellit in the off(season when prices are high.

$. /acilitative Middlemen: They do not involve in buying or selling but assist only inmarketing process. They receive fees or service charges for their services.

1.


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$. u tione#: +acilitate the auction or bidding of the products.

&. 3#anspo#t &ent: +acilitate movement of goods form one market to another.

. $ommuni ation &ent: nform about the price and ,uality available in market

7. ve#tisin& &ent: nable the prospective buyer to know about the ,uality of product and make purchase decisions.

A'K T @; 4-A@@ >

According to oore lar) ma#!etin& +annel is t+e +ain of inte#me ia#ies t+#ou&+ +om t+eva#ious foo ains pass f#om p#o u e#s to onsume#s .

Marketin Channels For Paddy 9 Rice

1. 9roducer G 4ommission Agent G iller G 6holesaler G 'etailer G 4onsumer

2. 9roducer G tinerant erchant G iller G 6holesaler G 'etailer G 4onsumer

. 9roducer G 9rimary 6holesaler G iller G ec. 6holesaler G 'etailer G 4onsumer

$. 9roducer G iller G 6holesaler G 'etailer G 4onsumer

&. 9roducer G iller G 4onsumer

. 9roducer G ;ovt. iller G ;ovt. hops G 4onsumer

Marketin Channels For *ther Food Grains

1. 9roducer G 9rimary 6holesaler G +lour iller G 'etailer G 4onsumer

2. 9roducer G tinerant erchant G 6holesaler G 'etailer G 4onsumer . 9roducer G 9rimary 6holesaler G econdary 6holesaler G 'etailer G 4onsumer

$. 9roducer G /illage hopkeeper G 6holesaler G 'etailer G 4onsumer

&. 9roducer G 4onsumer

. 9roducer G ;ovt. +lour iller G ;ovt. hops G 4onsumer

I%%*3A(I3' MAR&'(I%G C6A%%')S :!IR'C( MAR&'(I%G; 7 (May 07)

1. *%pni Mandi 5 8isaan Mandi: n Apni andi there is a direct contact between the

farmer and consumer without the involvement of middlemen. The main ob8ective of Apniandi increasing the profitability of crops by minimiBing the marketing costs andmiddlemen margin. +irst Apni andi as started by 9un8ab andi


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. "#thu 6a9ar: t is located in ma8or cities of Andhra 9radesh with basic ob8ective ofeliminating middlemen and providing direct link between the farmers and consumers.

$. '9havar Shandies: t is located at selected municipal panchayats of Tamilnadu.

&. Shetkari 6a9ar: stablished in aharashtra for marketing fruits and vegetables.

. 8rushak 6a9ar: stablished in Irissa for marketing fruits and vegetables.

7. Mother Dair# 6ooth: After the notorious onion and potatoes price crisis) other !airyopened these booths in almost every colonies of !elhi to sell vegetable in retail.

*. Contract /arming: Agro processing companies enter into contract with the farmers thatthey provide the farmers with the inputs like fertiliBers) seeds) pesticides and guidelinesto grow crops and buy back the products with a rate specified in advance.

Advantage for +armers

1. They get the better price for the produce as there is no middle man2. They have assured markets for their produce

. They are assured about the ,uality of seeds and pesticides

$. They received financial support in kind

&. They obtain efficient and timely technical guidance free of cost

!rawbacks of 4ontract +arming

1. t involves mainly cash crops) which may lead to scarcity of food crops.

2. t may create the danger of imposition of undesirable seeds.

. arket making outside the country may cause breaking of country market.

$. The temptation of getting profits by cultivating variety of crops may cause permanentdamage to the land.

4-A9T '

A;' 4=>T='A> A'K T @; + @A@4

@ ! P TL9 I+ A;' 4=>T='A> 4' ! T (May 04, 08, Nov, 08)

,8 Production Credit

1. +o#t 3e#m oans: 4redit payable within a period of 1& to 1* months is short(term credit.t is re,uired to meet daily working capital re,uirement e.g. seed) fertiliBers) pesticides)

fuel etc. t is also needed for payment of wages) hire of machinery and tools) landrevenue and ta es etc.


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2. Me ium 3e#m oans: 4redit payable within a period of 1&months to & years is medium(term credit. t is re,uired to purchase capital assets e.g. purchase of agriculturalmachinery and tools) livestock) diesel engine) electric motor etc. t is also needed forrepairing of wells) development of dairy) poultry) piggery etc.

. on& 3e#m oans: 4redit payable within a period of & to 2& years is long(term credit. t isre,uired for permanent improvement or for ac,uiring new assets. t also needed formechaniBation of agricultural processes) fencing of lands) construction of farmhouse) etc.

.8 Consumption Credit

t is a part of an agricultural loan used for consumption re,uirement of farmer#s families. t isnecessary because the farmer uses his marketed surplus to pay off previous loans and retain verylittle to meet family consumption. Then he has to wait for ne t harvest. n this period he re,uirescash to meet his household re,uirements.

@ T T=T I@A> I='4 I+ 4' ! T (Nov. 09, 0", May 07)

,- Cevelopment an!s: D9age 2 of co(opsE (May 08)

.- Re ional Rural $anks D9age 2$ of co(opsE

0- %A$AR! D9age 22 of co(opsE (Nov.0', 08)

1- R$I (Nov. 07)

G '< appointed All ndia 'ural 4redit urvey 4ommittee DA '4 E to solve the problem ofrural credit by suggesting ways to improve the e isting structure.

G '< has setup following two funds on the recommendations of A '4 ?

1.@ational Agricultural 4redit D>ong(Term IperationsE +unds.

2.@ational Agricultural 4redit D tabilsationE +unds.

G '< helps co(operative sectors to provide agricultural finance.

G '< monitors the working of other financial institutions providing agricultural finance.

G '< has issued following guidelines to improve rural credit policies?

1. 9roduction loan is given against the hypothecation of the title of land.

2. hort(term loan is given into cash and kind in 0?70 ratios.

.


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< established in 1 &1 by the nationaliBation of mperial !4and purchase scheme

$. >and development scheme

&. +arm mechaniBation scheme

. Kisan credit cards=- Commercial $anks (Nov. 07)

G 4ommercial and purchase scheme

$. >and development scheme

&. +arm mechaniBation scheme

1. inor irrigation loan

roblems faced b# Commercial 6anks (May 07, Nov. 08)

1. Absence of proper records of land rights) make it difficult to ascertain total indebtness offarmers) which creates problems of over financing and recovery.

2. !ifficulty in verifying actual utilisation of loan

. !ifficulty in 8udging the creditworthiness of borrowers

$. >ack of sufficient supervision of use of loans. This encourages misuse of loans by thefarmers.


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>- A ricultural Refinance 9 !evelopment Corporation

The ndian 9arliament established A'!4 in 1 . t has following ob8ectives and functions?

1. To provide the long(term agricultural finance.

2. To guide and assist long(term finance lending institutions.. To reduce in regional imbalance of agricultural development.

$. To ensure economic upliftment of weaker section of society.

&. To diversify the lending by identification of new activities.

?- Government Finance (Nov. 07)

Takkavi is the ancient and traditional form of government assistance to the agriculturist. t has been given to relieve distress caused by droughts) floods) and other natural calamities and toenable the farmers to restart his agricultural operations in the ne t year.

>and !evelopment Act 1** and Agriculturist >oans Act 1**$ were passed to put the Takkavioperations on regular basis.

@I@( @ T T=T I@A> I='4 I+ 4' ! T

1. Mone# Lenders: There are two types of moneylender) agriculturist moneylenders whofunctions both i.e. farming and money lending and professional moneylender whose onlyoccupation of money lending.

2. Commission %gents Traders: They provide credit in the form of advance payment for purchase of produce. This source is not desirable as it e ploits the farmers by charging

heavy interests and compelling the farmers to sell at low price.

. Landlords: Tenant farmers may get loan from their landlords for consumption purpose.

$. "elatives:


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1. They combine both banking and trading business resulting introduction of trade risks intothe banking.

1. They are unorganiBed and do not have nay contact with banking world.

2. They do not distinguish between short term and long(term finance and also between the purposes of finance.

. They follow traditional methods of keeping accounts and do not give receipts.

Malpractices of %on


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1. $as+ $omponent: >oan is given in the form cash to meet the cash re,uirement of thefarmer during production.

2. ?in $omponent: >oan is given in the form of various inputs re,uired by the farmerssuch as seed) fertiliBers) pesticides) fuel etc. Advantage of kind loan is that it minimiBes

the misuse of loan by the farmers.4-A9T ' 10

' ;=>AT ! A'K T

' ;=>AT ! A'K T (Nov. 09)

!efinition

A regulated market is one) which aims at the elimination of unhealthy and unfair practices)reducing marketing charges and providing facilities to producer(seller in the market.

Ib8ectives of 'egulated arket1. To prevent e ploitation of farmers.

2. To provide ethical environment for proper trade practices by prohibiting malpractice.

. To promote orderly marketing of agricultural produce.

$. To provide incentive prices to farmers to induce them to increase production.

&. To ensure that farmers get better prices for their produce and consumer get goods atreasonable prices.

. To avoid wide fluctuations in prices for agricultural produce.

+eatures of 'egulated arkets N (Nov. 0')

1. Method of Sale: n a regular market the sale takes place either by open auction or byclosed tender. These methods of sale ensure a fair and competitive price and prevent thecheating of farmers.

2. +eighing of roduce: 6eighing of produce is done by a licensed weighman withstandard weights and scale platforms.

. $rading of roduce: The produce in regulated market is e pected to be sold aftergrading but only 1 regulated markets have grading facilities.

$. Market Charges: n regulated market) the unwanted market charges such as dharmada)muddat) dhalta and kanda were abolished.

&. a#ment of )alue: n regulated market it is obligatory to make prompt payment. Themuddat system no more e ists.


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. Licensing of Market /unctionaries: All market functionaries even -amaal is working inregulated market are have to obtain license from market committee.

7. Settlement of Disputes: !isputes arises between sellers) producers and traders are solved by sub(committee of market committee.

*. * Market Committee: arket committee consists of representatives of farmers) traders)co(operative marketing societies) banks) panchyat and government officials. ts importantfunctions are?

1. anage the market yards in the interest of farmers and traders.

2. +i market charges for various functions and services.

. 9rovide facilities for grading and standardisation.

$. Take steps for prevention of adulteration of the agricultural products.

&. ssue) renew or withdraw licenses of market functionaries.. 'ealise market fees either from the buyer or seller.

7. 4ontrol and regulate the behaviour of traders.

!efects of Re ulated Markets (May 04)

1. .ot %ccessible to %ll /armers: ost of the farmers are not aware of the benefits of theregulated markets and also not accessible to the farmers in far villages.

2. resence of Commission %gents: 9resence of commission agents and their heavycharges are unfavorable to the regulated markets.

. a#ment S#stem: +armers are not given prompt payment by tradersC due to this theycannot meet their working capital re,uirements.

$. %uction S#stem: Auction system has a number of defects for which the farmer has to bear the number of losses.

&. 0mproper of "epresentation: mall and marginal farmers are dined to serve on thecommittee and also there are lots of political interference in the committees.

. Lack of 0ncentives: ncentives provided are not sufficient also the illiterate farmers arenot ware of the available incentives and subsidies.

7. Defective Transactions: The business of regulated market is confined only to a few fi edhours. The illiterate farmers find it difficult to find out the e act dates and times oftransaction.

State (radin in India (May 04, Nov. 07)

tate trading means the direct intervention of the government in the trading of essentialagricultural commodities to ensure its regular supply.


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