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DIRECTAGRICULTURALMARKETING:RYTHUBAZARINANDHRAPRADESH,INDIA

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DOCUMENTATIONOFBESTPRACTICE

September2011

ResearchedandDocumentedby:

OneWorldFoundationIndia

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TABLEOFCONTENTS

ExecutiveSummary.............................................................................................................................3Methodology........................................................................................................................................4Background..........................................................................................................................................4AgriculturalMarketinginIndia.....................................................................................................4DirectAgriculturalMarketing........................................................................................................5RythuBazarinAndhraPradesh....................................................................................................6Objective...............................................................................................................................................6Programme/ProjectDesign.................................................................................................................6KeyStakeholders..............................................................................................................................6ProcessFlow.....................................................................................................................................7

Composition.................................................................................................................................7Location........................................................................................................................................7ProductsSold...............................................................................................................................7PriceFixing...................................................................................................................................7InfrastructuralFacilities..............................................................................................................8OtherServices...............................................................................................................................8Monitoring&Governance........................................................

..................................................9FinancialResources............................................................

..............................................................9Impact...................................................................................................................................................9BenefitsforFarmers.........................................................................................................................9BenefitsForConsumers.................................................................................................................10ChallengesinImplementation.........................................................................................................10Conclusion.........................................................................................................................................11

References..........................................................................................................................................11

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EXECUTIVESUMMARY

WhilesignificantstrideshavebeenmadeinincreasingagriculturalproductioninIndiaovertheyears,numerousproblemscontinuetocloudthesystemofagriculturalmarketinginthecountry.Asaresult,theGovernmentofIndiapassedtheAgricultureProduceMarketingCommitteeAct(APMC)toregulatethefunctioningofwholesaleagriculturalmarketsacrossthecountry.Thepurposeoftheseregulatedmarketswastopromoteorganisedmarketingofagriculturalcommoditiesinthecountryandensurethatfarmersgetareasonableshareinprofits.Itwashopedthatwithmarketregulation,agriculturaltradepracticeswouldbecomemoreefficientthatuntilnowwereplaguedwithinefficiencieslikesubjectionoffarmerstoheavymarketcharges,defectiveuseofweightsandscalesinthemarketsetc.

Althoughregulationofmarketshashelpedinreducingtheburdenonfarmersintheformoflessermarketcharges,verifiedweightsandscales,andestablishmentofmarketcommittees,thesystemstillremainslargelyinefficientandhasbeenmonopolisedbytradersandintermediaries.Inefficienciesintheseregulatedwholesalemarketscontinuetoresultinachainofintermediaries,qualitydegradationandanincreasinggapbetweenproducerandconsumerprices.

Aneffectiveanswertotheseissuesliesintheestablishmentofunmediatedlink

agesbetweenfarmersandconsumers.Directmarketingofagriculturalproducehelpsineliminatingmiddlemenandmakesthefarmerinchargeofsellinghis/herproduce.Thisensuresbetterpricesforthefarmersaswellasincreasedconsumersatisfaction.Inordertopromotethedevelopmentofdirectagriculturalmarketinginthecountry,theGovernmentofIndia(GOI)enactedtheSchemefortheDevelopmentofAgriculturalMarketingInfrastructure,GradingandStandardization.

Today,manyIndianstateshaveadoptedtheconceptofdirectagriculturalmarketing.RythuBazarinAndhraPradeshisoneofthemostsuccessfulmodelsofdirectagriculturalmarketinginthecountry.RythuBazarsprovidefacilitiestofarmersforsellingtheirproducedirectlytoconsumersunderaproperadministrativesystemandgovernmentprotection.Presently,thereare106RythuBazarsoperatinginthe23districtsofAndhraPradesh

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RythuBazarshavetransformedtheenvironmentinwhichfarmersinAndhraPradeshmarkettheirproduce.Itprotectsthemfromtheharassmentthattheywereotherwisefacingatthehandsofmiddlemen.Itgivesthemanorganizedplacetoselltheirproducedirectlytoconsumersundergovernmentprotectionandatpricesthatarebetterthantheyusedtoget.Farmersareprovidedwithinfrastructuralfacilitiesandsupportservicesliketransport,storageoptionsandsuchlike.

RythuBazarconsumerscanavailthebenefitsofgoodqualityproductsatreasonablerates.Anonlinemarketinformationsystemhelpskeepconsumersawareaboutcurrentpricesand

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protectsthemfromanyharassmentatthemarket.ItalsohelpsthemknowthekindofproductsavailableataRythuBazar.

TheRythuBazarmodelhasalotoflessonstoshareintermsofkeepingfarmersneedsinmindwhiledevelopingadirectmarketmechanism,helpingfarmerstobeawareoflocalneedsandadapttonewdemands.Italsoofferslessonsformeetingconsumersatisfactionandrunningthemarketsthroughawellformedmanagementandadministrationstructure.Itistheselessonsthatthisdocumentseekstocapture.

METHODOLOGY

WorkingwiththeobjectiveofidentifyingbestpracticesingovernanceinIndiaforthepurposeoffurtherreplication,theGovernanceKnowledgeCentre(GKC)researchteamconductsextensiveresearchtolocateinitiativesthatcontributetowardsthebe

ttermentofpublicservicedelivery.TheGKCteamconductedthoroughsecondaryresearchusingcrediblewebresourcestoestablishthesuitabilityoftheRythuBazaarmodelinAndhraPradeshasabestpractice.Thisresearchreflectedthemannerinwhichthismodeladoptsauniqueworkablestrategytoconnectfarmersdirectlytoconsumers,therebyeliminatingthemalpracticesandharassmentencouragedbymiddlemenandintermediariesandprovidingafairdealtobothfarmersandconsumersintermsofthequalityandpriceofproduce.

BACKGROUND

AGRICULTURALMARKETINGININDIA

AgriculturecontinuestobethemainstayoftheIndianeconomy.Agricultureistheprincipalmeansoflivelihoodforover58.4percentofIndia'spopulationandaccountsforapproximatelyone-fifthofthetotalgrossdomesticproduct(GDP).1Whilesignificantstrideshavebeenmadeinincreasingagriculturalproductionovertheyears,immenseproblems

continuetocloudthesystemofagriculturalmarketinginthecountry.Ironically,theburdenofinefficientmarketingproceduresaffectsthefarmersofthecountrythemost,wheninfactasproducerstheyareentitledtothebenefitsofarobustmarketingsystem.

1http://india.gov.in/sectors/agriculture/index.php.Web.3August.2011

2GokulPatnaik.Marketing,StorageandExtensionServices:StateofAgricultureinIndia'.Working

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PaperNo.9.BazaarChintan.April.2003.NewDelhi

TheagriculturalmarketingstructureinIndiaconsistsofthreetypesofmarkets2:a)ruralprimarymarketsorhaats(tribalmarketsintribalareas)thataremeanttomeetlocaldemands,b)secondarymarketsthatattractpotentialbuyersandtraderswhotakeagriculturalproduceinbulkquantityforsalesinthecitywholesalemarkets,andc)wholesalemarketsthatactascentresforgatheringlargeamountsofagriculturalproduce

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fromdifferentsources.Retailersinthecountryprocureproducefromthesewholesalemarketsandthensellittotheconsumers.

Theoperationsinruralprimarymarketsandsecondarymarketsarelargelyinformalandlackproperinfrastructuralfacilities.Aswholesalemarketshandlelargevolumesofagriculturalproduceandactasdispersalpoints,theyformaverycrucialcomponentoftheentireagriculturalmarketingsysteminthecountry.Thesemarketsrequireelaborateinfrastructuralfacilities.TheGOIisresponsiblefortheprovisionofsuchfacilitiesinthemarket.WholesalemarketsoperatewithinalegalframeworkandarecoveredundertheAgricultureProduceMarketingCommitteeAct(APMC).TheimplementationoftheAPMCisinthehandsofrespectiveStateGovernments.

AsaresultoftheAPMC,wholesalemarketsstartedfunctioningasregulatedmarkets.Thepurposeoftheseregulatedmarketswastopromoteorganisedmarketingofagricul

turalcommoditiesinthecountryandensurethatfarmersgetareasonableshareinprofits.Itwashopedthatwithmarketregulation,agriculturaltradepracticeswouldbecomemoreefficientthatuntilnowwereplaguedwithinefficiencieslikesubjectionoffarmerstoheavymarketchargesanddefectiveuseofweightsandscalesinthemarkets.

Althoughregulationofmarketshashelpedinreducingtheburdenonfarmersintheformoflessermarketcharges,verifiedweightsandscales,andestablishmentofmarketcommittees,

thesystemstillremainslargelyinefficientandhasbeenmonopolisedbytradersandintermediaries.Inreality,nopersonoragencycanoperateinthewholesalemarketareawithoutalicenseissuedbythemarketcommitteethat,inturn,areundertheinfluenceofdominanttraders.Thisdefeatstheverypurposeofmarketregulation,whichistobenefitthefarmers.Inefficienciesinthewholesalemarketsresultinachainofintermediaries,qualitydegradationandincreasethegapbetweenproducerandconsumerprices.

DIRECTAGRICULTURALMARKETING

Aneffectiveanswertotheseissuesliesintheestablishmentofdirectlinkagesbetweenfarmersandconsumers.Directmarketingofagriculturalproducehelpsineliminatingmiddlemenandmakesthefarmerdirectlyresponsibleforsellinghis/herproduce.Thishelpsinensuringfinancialreturnsforfarmersaswellasincreasedconsumersatisfaction.

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Inordertopromotethedevelopmentofdirectagriculturalmarketinginthecountry,theGOIenactedtheSchemefortheDevelopmentofAgriculturalMarketingInfrastructure,GradingandStandardization.Asacrucialcomponentofthescheme,allIndianStatesandUnionTerritoriesarerequiredtoamendtheirspecificAPMCactsinpursuanceofthedevelopmentofdirectagriculturalmarketingpractices.

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ManyIndianstatesadoptedtheconceptofdirectagriculturalmarketing.ExamplesincludeApniMandiinHaryana,UzhavarSandhaiinTamilNadu,ShetkariBazaarinMaharashtraandRythuBazarinAndhraPradesh.

RYTHUBAZARINANDHRAPRADESH

RythuBazarisoneofthemostsuccessfulmodelsofdirectagriculturalmarketinginthecountry.ThefirstRythuBazarwasestablishedin1999inHyderabad.RythuBazarsprovidefacilitiestofarmersforsellingtheirproducedirectlytoconsumersunderaproperadministrativesystemandgovernmentprotection.Presentlythereare106RythuBazarsoperatinginallthe23districtsofAndhraPradesh.

OBJECTIVE

RythuBazaraims:

.Toeliminatemiddlemeninwholesaleagriculturalmarketsandenablefarmersto

selltheirproducedirectlytoconsumers.Toensurethatfarmersgetremunerativeprices.Tocurbmarketingmalpracticeslikedefectiveweighings.Toprovidefreshproductstoconsumersatreasonablerates

PROGRAMMEDESIGN

KEYSTAKEHOLDERS

.AgriculturalMarketingDepartment,GovernmentofAndhraPradesh:Itoverseestheimplementationoftheentiredirectmarketingconcept.

.JointCollectors:JointCollectorsareresponsiblefortheeffectivefunctioningofRythuBazarsintheirrespectivedistricts.TheyareresponsibleforallappointmentsofconcernedofficialsandtoensurepropercoordinationofAgricultureOfficers,HorticultureConsultants,EstateOfficersandrelevantlocalbodiesforthesmoothfunctioningofRythuBazar..EstateOfficers:TheestateofficersareresponsiblefortheupkeepandmaintenanceofRythuBazars.Theyallotshops,fixpricesandensureitsproperday-to-dayfunctioning.HorticultureConsultants:Theyareresponsibleformotivating,

identifyingandensuringregularattendanceoffarmerssothatthelatterareabletomakeuseoftheservicesthatRythuBazarsprovide.Theyprovidepre-andpost-harvestconsultancytofarmers..AgricultureOfficers:TheAgricultureOfficerscoordinateandassistEstateOfficersandHorticultureConsultants..Farmers:TheyselltheirproduceatRythuBazars.

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.DepartmentofWomenandChildreninRuralAreass(DWCRA)SHGs:TheysellproductsasagroupintheRythuBazar.

PROCESSFLOW

COMPOSITION

RythuBazarscatertomillerswhosellpaddyandotherkharifcrops,membersoftheSHGsofDepartmentofWomenandChildreninRuralAreas(DWCRA)whodealwithcommercialvegetableslikepotatoesandonionsandfarmerswhosellothervegetables.WhilemillersandtheDWCRASHGmemberspayamonthlyrentofINR10,000andINR800foreachshoprespectively,thefarmerscanselltheirproduceattheRythuBazaarfreeofcost.TypicallyaRythuBazarcatersto10to15villagescoveringminimum250farmersalongwith10SHGsoftheDWCRA.ThesevillagesareselectedbyateamconsistingofMandalRevenueOfficers,HorticultureConsultantsandAgricultureOfficers.

EverysellerattheRythuBazarisissuedaphotoidentitycardthatincludesdetailslikename,address,productsgrown,andsizeofland.Thisidentitycardisissuedwiththeaimtoprevententryofmiddlemenintothemarket.OnlyapersonwithavalidphotoidentityisallowedtoentertheRythuBazaartosellhis/herproduce.Shopsareallocatedtothesellersdailyonafirstcomefirstservebasis.

LOCATION

RythuBazarsarelocatedongovernment

landidentifiedbytheDistrictCollectors.Thelandhastobeanacreinsizeandshouldbelocatedatanareathatisconvenientforbothfarmersandconsumers.BeinglocatedongovernmentlandgivestheBazartenuresecurityandprotectsfarmersfromharassmentofanykind.

Figure:VarietyofproducesoldatRythuBazars

Source:TheHindu

PRODUCTSSOLD

AgreatdealofvarietyisencouragedattheRythuBazars.Farmersaregivenguidancebyhorticulturaliststogrownewerandbetterqualitiesofvegetablesandfruits.Farmersareallowedtosellonlythosevegetablesthattheygrowthemselves.SHGssellthosevarietiesofvegetablesthatarenotgrownbyl

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ocalfarmersinthedistrict.ThesegroupscanalsosellcommoditiessuppliedbygovernmentagencieslikeOILFEDandMARKFED.Otheressentialcommoditieslikepulses,tamarind,drychilliesandedibleoilsarealsosoldinthesemarkets.

PRICEFIXING

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ThepriceforproductstobesoldattheRythuBazarisfixedeverymorningbythe13EstateOfficersofadistrictinconsultationwithacommitteesetupforthepurposethatalsocomprisesofthreefarmersfromeachBazar.Itworksontherulethatthepriceshouldbearound25percentmorethanthewholesalepriceand25percentlessthantheretailprice.ThelogicisthatifthepricesinRythuBazarsarehigherthanthelocalretailmarket,thereisnoincentiveforconsumerstocometotheformerand,ontheotherhand,ifthepricesarefixedlowerthanthewholesalemarketrates,thereisnoincentiveforthefarmerstoselltheirproducethere.

AnonlinemarketinformationsystemhasbeendevelopedtokeepofficialsatalltheRythuBazarsupdatedaboutcurrentpricesandtohelpconsumersmakeinformedchoices.Aconsumercanrefertothepricesonlineand,thus,preventover-chargingbythefarmers.

Figure:Screenshotoftheonlinemarketinformationsystem

Source:http://www.rythubazars.com/HomePage.aspx

INFRASTRUCTURALFACILITIES

RythuBazarshaveprovisionsfortransportation,electricityandwatersupply.T

heyalsohaveshedsandtoiletfacilitiesforfarmers,facilitiesforcleaningofagriculturalproduce,gradingandsorting,weighing,packaging,storage,parking,telephone,internetandfax.Thesefacilitiesenhancethefarmersworkenvironment.Theysavetimeintermsoftransportationaswellasprovidefarmerswithbasicfacilitiestotakecareoftheirproduce.Availabilityofstoragefacilitiesensuresthequalityofvegetablesandfruitsandpreventswastage.Provisionofcommunicationfacilitiesisimportantforsmoothcoordinationof

dailytransactionsintheBazaraswellasenablesofficialsinchargetomaintainacommunicationchannelacrossallBazarsthatisessentialforpricedetermination,monitoringandcontrol.

OTHERSERVICES

TheRythuBazarsarebeingupgradedtomeetthedemandofchangingtimes.Asaresult,

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doorstepdeliveryofvegetablesthroughmobileRythuBazarshasbeenstarted.Thisis

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beingtestedintheErragaddaRythuBazararea.Aconsumerlivingwithinaradiusof10kmfromtheErragaddaRythuBazaarcancallup56568613,9849856218,9440410817orsendanemailtomrbe_avp@rediffmail.comtoplaceanorderandthevegetablesaredeliveredattheirdoorstepwithinthreehours.TheminimumvalueofthedeliveryordermustbeINR.250.

MONITORING&GOVERNANCE

EachBazarisunderthecontrolofanEstateOfficerandaHorticultureConsultantalongwithanAgricultureOfficerwhoreportstotheJointCollector.WhiletheHorticultureConsultantandAgricultureOfficerareprimarilyresponsibleforidentifying,educatingandmotivatingfarmersabouttheconceptandadvisingthemtomakethebestuseoftheirland,theEstateOfficerisresponsibleforgeneraladministration,includingissuanceofidentitycardsandpricefixation.Theseofficersaregivenperiodictrainingfromtimet

otimetohelpthemperformtheirrolesefficiently.

FrequentimpromptuinspectionsareheldbytheJointCollectorandothermembersofbureaucracytoensurethatallofficersin-chargeareperformingtheirdutiesefficiently.TheseniorofficersinteractwithfarmersandconsumerstogettheirfeedbackandcomplaintsabouttheBazar.Basedonthisfeedback,theyissuefreshorderstotheofficialsofeachRythuBazartolookintomattersofconcern.

Theonlinemarketinformationsystemalsoactsasacheckandbalancetooltoensurethatconsumersarenotcheatedandthatallfarmersselltheirproduceatuniform,predefinedprices.ItkeepsofficersupdatedwithcurrentpricesandtheproceedingsatallRythuBazars.

FINANCIALRESOURCES

TheexpenditureofsettingupandmaintainingaRythuBazarismetfromfundsmadeavailablebytheAgriculturalProduceMarketCommitteeundertheStateAPMCactaswell

asthefundscollectedviaeleasingofRythustallstomillersandSHGgroups.

IMPACT

BENEFITSFORFARMERS

Figure:AfarmersellingvegetablesataRythuBazar

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Source:TheHindu

RythuBazaristransformingtheenvironmentinwhichfarmersinAndhraPradeshmarkettheirproduce.Itisprotectingthemfromtheharassmentthatthey

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wereotherwisesubjectedtoatthehandsofintermediaries.Ithasgiventhemanorganisedplacetoselltheirproducedirectlytoconsumersundergovernmentprotectionandatpricesbetterthanwhattheyusedtoget.Theyhavebeenprovidedwithinfrastructuralfacilitiesandsupportservicesliketransport,storageoptionsetc.

RythuBazarshavealsoencouragedfarmerstodiversifytheirproduceandgrowavarietyofvegetablesandfruits.Theprofessionaladviceofhorticulturalistshasexposedfarmerstounderstandbetterdietaryhabitsandlocalneeds,andadapttonewermarketingstrategies.

RythuBazarsoperatewithastreamlinedadministrativestructureandhaveasystemofaccountabilityandmonitoring.Thisensuresthatfarmersgrievancesarepromptlyaddressedandwrongfulactioncorrected.

BENEFITSFORCONSUMERS

RythuBazarconsumerscanavailthebenefitsofgoodqualityproductsatreasona

blerates.Theonlinemarketinformationsystemhelpskeepconsumersawareaboutthecurrentpricesandprotectsthemfromanyharassmentatthemarket.ItalsoenablesthemtoknowaboutthekindofproductsavailableatRythuBazar.Thesemarketsarenotlocatedveryfarfromresidentialareas,aloowingforeasyaccessforconsumers..Consumersalsohavetheoptionofavailingthedoorstepdeliveryalternative.

CHALLENGESINIMPLEMENTATION

RythuBazarsfaceamajorproblemintermsoflackofcoordinationamongfarmers.Conflictsdevelopamongfarmerswhilesellingtheirproduceandselectingstallsinthemorning;theseaffectsmoothfunctioningofthemarket.TheSHGsfeelthreatenedaboutbeingevictedasthemarketprimarilycaterstofarmers.ThemobileRythuBazarsarecuttingintosalesattheBazar.FarmersalsohavetomovewiththeirproducefromoneRythuBazartoanot

her,whichprovesextremelytediousforthem.Further,consumersoftencomplainaboutparkingfacilitiesandgarbagemanagementatthemarkets.

AlltheseconcernshavebeenreportedtotheofficersofrespectiveRythuBazarsandtheadministrationistakingstepstoaddresstheseissues.FarmersareconstantlyprovidedguidancethroughAgricultureOfficersandHorticultureConsultantsandtheirgri

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evancesareaddressed.MobileRythuBazarshavebeeninstructedtofunctionbeyond10kmofaRythuBazar.Parkingfacilitiesarebeingarrangedthroughprivatecontractingandinfrastructurefacilitiesbeingstrengthened.Farmersarealsosensitisedontheneedtomaintaincleanlinessanddisposegarbageproperly,theabsenceofwhichdemotivatesconsumersfromvisitingtheBazar.

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CONCLUSION

RythuBazarsshowcaseoneofthemostsuccessfulmodelsofdirectmarketingofagriculturalproduceinthecountry.Itsuniquenessliesinthekindofsupportithasreceivedfromthegovernment.WhilesomeotherIndianstatesalsohavefarmersmarkets,veryoftentheirsmoothfunctioningisjeopardisedbecauseofpoliticalcompulsionsandresultantwithdrawalofgovernmentsupport.RythuBazarshavebeenoperatingforovertwodecadesandhaveadaptedtochangingtimesintermsofupgradationoffacilities.Theyhavefoundacceptabilityamongstbothfarmersandconsumers.

Thelinkingoffarmerstomarketsisadynamicandongoingprocesswithnoonebestsolution.Thepresenceofvariousstate-specificexamplesofdirectmarketingofagriculturalproduceinthecountrypresentsthepossibilityofexchangeoflessonsandexperienceslearntsofar.RythuBazarhasrichexperiencetoshareintermsofkeepingfarmersneedsinmind,

helpingthembeawareoflocalneedsandadaptingtonewdemands.Ontheotherhand,itcanprovidelessonsintermsofmeetingconsumersatisfactionandrunningthemarketsthroughawellformedmanagementandadministrationstructure.

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ResearchwascarriedoutbytheOneWorldFoundation,GovernanceKnowledgeCentre(GKC)team.

DocumentationwascreatedbyResearchAssociate,SapnaKediaForfurtherinformat

ion,pleasecontactMr.NaimurRahman,Director,OWFI.

REFERENCES

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DirectorateofExtensionEducation.CCSHaryanaAgriculturalUniversity.Jain,Kusum,UmeshKumarSharma,R.S.Kadian,R.K.MalikandS.L.Bhella.DirectMarketing..TechnicalBulletin(27).2008.Web.29September.2011..

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Door-deliveryofvegetablesfromRythuBazar..TheHindu.8January.2004.Web.24July.2011..

GokulPatnaik.Marketing,StorageandExtensionServices:StateofAgricultureinIndia'.WorkingPaperNo.9.BazaarChintan.April.2003.NewDelhi

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IFPRI.Parthasarathy,RaoP,JoshiPK,ShravanKumarandKaveryGanguly.AgriculturalDiversificationinAndhraPradesh,India:Patterns,DeterminantsandImplications...2008.Web.1August.2011..

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