Asian Research Consortium

Asian Journal
of Research in

Asian Journal of Research in Marketing

Vol. 4, No. 1, February 2015, pp. 203-214.

Marketing

ISSN 2277-6621

www.aijsh.org

Sustainable Agri-business Development and Food

Marketing Management - Opportunities & Challenges in
India
MRK Murthy*; PM Naikwadi**
*District Agri-Business Expert & In-charge of Market Linkage Specialist,
Convergence of Agricultural Interventions in Maharashtra (CAIM),
GoM, IFAD, SRTT.
**District Agri-Business Expert,
Yavatmal.
Convergence of Agricultural Interventions in Maharashtra (CAIM),
GoM, IFAD, SRTT.

Abstract
A well-organized and efficient marketing system plays a vital role in the economic growth or a
nation. An efficiently organized marketing system not only facilitates the proper and smooth
disposal of the produce but also acts as a catalyst to stimulate increased production in terms of
incentive prices. A vast majority of the population lives in the rural areas. Rural prosperity is
largely linked with agriculture as about 56 per cent of the populations are engaged in agriculture
and about 18 per cent of the national income is generated through it. In order to usher rural
prosperity farm incomes has to be maximized by diversifying agriculture through integrated crop,
livestock, fisheries and horticultural enterprises, which pre-supposes the need for a well, organized
marketing system for these commodities.
Agri-business includes not only all the agriculture related activities but also that portion of
industrial sector which covers the sources of farm supplies i.e. farm machinery, fertilizers and
chemicals, etc., or the processors of farm products. Thus, there are five major agri-business
segments, namely, input manufactures, input suppliers, integrated agri-business, market
intermediaries, food processors and marketers. In the view of Agribusiness plays an important role
in improving the quality of products and accessibility etc. The changed economic scenario and the
global order have modified substantially the organization and management of agri-business. After
the 'Green Revolution, which ensured abundant production and food security in India, we should
gear up ourselves to have, Marketing Revolution with all its, rainbow colours so as to seize the

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Vol. 4, No.1, pp. 203-214.

opportunities provided by the liberalized international market. This would ensure a fair price to the
farmer and availability of qualitative products to the consumer at reasonable prices. The whole
gamut of agri-business is under scrutiny, since changes are swift, a serious thought on the question
of meeting the challenges sustaining of the transformation is the need of the hour.

Keywords: Agribusiness, Sustainable Agriculture, Food chains, Marketing Management.

________________________________________________________________________________

Introduction
The term Agribusiness was first used by John H. Davis of Harvard University in 1955.
Agribusiness can be broken down into economically independent sectors: input supply, farm
production and output. However, in the recent times two definitions of agribusiness have been
accepted (Downy and Erickson, 1993). The first includes a narrow and traditional definition of
agribusiness, which essentially refers to producers and manufacturers of agricultural goods
meaning only the input sector is considered. Secondly a broader view of agribusiness includes any
firm whose activities relate to any part of input, farm production, processing and distribution. In
short, agribusiness means the business and management activities concerning farm inputs, outputs,
processing, transportation, finance and marketing of finished farm products. The modern concept of
agribusiness is depicted in Fig. 1, which elucidates the various processes of inputs, farm production
and distribution (Downey and Erickson, 1993). It can serve as a useful guideline in structuring the
competencies required in farm graduates.

FARM INPUT SUPPLY SECTOR

FARM MACHINERY
FERTILIZER

FINANCE

SEED

OTHER INPUTS

M
A

FARM OUTPUT PRODUCING

SECTOR / FARM FIRMS

PROCESSING

K
E

PROCESSING UNITS

DISTRIBUTION

I
N

CONSUMERS
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Vol. 4, No.1, pp. 203-214.

Agriculture occupies the central stage of Indian economy. For ensuring growth of the agriculture
sector along with other sectors, an assured remunerative price to the farmers for their produce is
necessary, and so the role of marketing becomes important. Agricultural marketing is different from
marketing of other manufactured products, because of perishable nature of the products, seasonality
of production, bulk quantities, variation in quality, irregular supply, small size holdings and
scattered production. This indicated land is being fragmented in India, which also draws the
attention of concerned marketing authorities, especially for small and marginal farmers. Agribusiness includes not only all the agriculture related activities but also that portion of industrial
sector which covers the sources of farm supplies i.e. farm machinery, fertilizers and chemicals, etc.,
or the processors of farm products. Thus, there are five major agri-business segments, namely,
input manufactures, input suppliers, integrated agri-business, market intermediaries, food
processors and marketers.
Agribusiness and related industrial ancillary units are mostly in the private sector and to a
lesser extent in the public/cooperative sector. Their role is vital especially in the area of production
and
propagation
of
plants
and
animals;
manufacturing
of
engineering
goods/instrumentation/operation, chemical and non-chemical input products, and value-addition to
agricultural produce through storage, processing, quality control, transportation, marketing and
exports. Agricultural graduates who shall seek wage and self-employment in these enterprises need
to have comprehensive technical knowledge and skills and also need to learn basic agribusiness
management practices relevant to their area of operations (refer Mckinsey report 1993, on the
projected potential of Agribusiness). However, the concerned SAUs may undertake an in depth
study to survey the scenario as applicable regionally and accordingly plan for providing the
required skills for the farm graduates and post-graduates in the curriculum. The lead taken by Tamil
Nadu Agricultural University, Coimbatore and Tamil Nadu University of Veterinary and Animal
Science, Chennai, in this direction is indeed laudable. These Universities have introduced
commercial farm production courses and optional skill oriented courses on farm operations at UG
level. These are in addition to the Rural Agriculture Work Experience Programme (RAWE) for a
cropping season in the villages. The National Institute for Agricultural Extension Management
(MANAGE, Hyderabad), National Academy of Agricultural Research Management (NAARM,
Hyderabad) have already introduced a PG course in Agribusiness Management. There is an urgent
need for all the SAUs to adopt such innovations in the curriculum.

Objective

To improve Sustainable Agri-business development and Food Marketing system based on

experiences and evidences from the present study.

Research Method and Methodology

The study data was collected from mainly in-depth telephonic interviews with the sample size of 46
private colleges and 20 certificate course agricultural institutions in the year 2013. Secondary data
collected through literature, some existing own data.

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Fig 2. Aggregation Model for Smallholder Farmers

Farmer/Producer
Bank support
Warehouse
(Collection /storage)
Agreement with
Corporate Company

Transport
SHGs (Mahila Bachat Gat)/
Producer Groups

Processing (Cleaning,
Grading, Weighing,
Packing etc)

Operated by SHGs

Retailers
Consumers
Consumers
Source: Author

The potential for agribusiness varies as per the agro-ecological zones. Some of such competencies
can be identified as listed below.
1.

Farm Input Generation: Farm input supply sector provides opportunities for farm
graduates and necessitates to develop competencies and skills in areas such as tissue
culture, biotechnology, hybrid seed production, vermin-culture, organic & inorganic
fertilizer production, feeds and fodders, breeding stock of animals, supply and servicing of
farm machinery etc.

2.

Farm Production: Farm production sector also offers a lot of opportunities in areas such
as egg and meat products, dairy products, biotech products, fish products, fish products,
seed production and multiplication. Farm graduates can establish commercial enterprises
in the areas of floriculture, horticulture aquaculture, mushrooms, apiculture, sericulture
etc., whose products are export oriented.

3.

Post Harvest Processing and Value Addition: It involves technologies of different kinds
of storage methods, transportation systems, processing and packing, quality control,
market research and strategies. Projecting demand and selecting appropriate value
additional technologies and then creating necessary business linkages to be able to
produce and market commercially viable technologies is an important and priority
component in the professional competence of graduates and post-graduates of agricultural
science in the future economic scenario.

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4.

Business Management: Understanding of agricultural and economic policies, corporate

law and structures, banking, financial management and accounting systems, project
investment analysis, etc., are some of the important functions for agricultural professionals
to develop competencies at the graduate and post-graduate level.

5.

Projects Management: Management tools and techniques such as Programme Evaluation

and Review Technique (PERT), Critical Path Method (CPM), log-frame, activity analysis
and scheduling, work-unit structures, resources generation and personnel management are
perhaps some of the necessary professional management competencies required in future
for graduates and post-graduates.

6.

Information and Knowledge Centers: With the advent of fast changing technology in
Information dissemination and feedback the farm graduates have immense potential to
provide consultancy and other technical services using the concept of Agricultural
Technology Information Centers. The experience of MSS Research Foundation in this
regard will help in designing and developing the necessary skills and systems for farm
graduates to learn and contribute.

It was suggested in one of the recent documents (Steering Committee Report on National Livestock
Policy, 1996) that fresh veterinary graduates and those already in government departments will
have to take up private practice in their field of specialization both for earning livelihood and for
resource generation. In years to come, corporate agricultural services like in the West are likely to
emerge. In other words, privatization of agricultural profession is on the anvil, and it might assume
the proportions of medical and legal specializations. Hence, higher competency development for
graduates with the requisite personality attributes for providing service to the cause of the national
agricultural effort is to be envisioned.
There is an explosion of private sector involvement in collaboration with foreign agencies
in a variety of agribusiness sectors investing huge amount of money, which offer immense potential
of private sector employment and development of ancillary units around these corporations, which
in turn offer opportunities for self-employment.
One must give full credit to some of the State Agricultural University (SAUs) for the
dynamic initiative and leadership in this direction by developing post-graduate and vocational
programmes with such perspective I mind. However, more such initiatives are required to establish
management departments in the SAUs and the meager isolated efforts in this direction do not
suffice the purpose. In this context, an investment during the next five years to develop business
management curriculum and faculty development to handle new academic avenues should be a
priority on the agricultural front. It is also quite likely that agriculture might be accorded the status
of corporate sector as a policy in the coming years. Hence, it is all the more important to visualize
foreseeable changes that are likely to occur in such an event. It is very appropriate to suggest that
there is need for Agribusiness support system to provide professional extension services and to
create the necessary infrastructure to private sector entrepreneurs and commercial agriculture
operators as being done in Russia (Russian Initiative Self Employment, RISE, 1994).

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At present, there are about 46 private colleges and 20 certificate course institutions which
are offering degree programmes in agriculture outside the National Agricultural Research System.
These institutions of learning do not have adequate infrastructure and facilities for practical skills
and training. And it is also contingent upon us to note that these institutions are outside the purview
of accreditation of Indian Council of Agricultural Research (ICAR). Although these colleges are in
need of huge investments for infrastructure development, it is worthwhile to suggest that these
colleges and institutions can be developed for the purpose where investments for infrastructure
development can be judiciously spent without duplicating the effect of National Agricultural
Research System (NARS). Such of these private colleges can play a partnership role with ICAR
and SAUs in the area of agri-business and management so that there is a synergetic effort, and it
will also help the private colleges to play a major role in the area of social sciences and not
necessarily in the technical field of agriculture. Thus, the potential of the private institutions can
bring into the mainstream of NARS.

Agricultural Marketing System:

Salient features of the Indian Agricultural Marketing System are
1.

Farm production and marketed surplus increased manifold with the adoption of new
technologies of production. The concept of production for home shifted to 'production for the
market'. Further, specialization in production increased and as a consequence marketed surplus
on almost all size groups of farms. This increased marketed surplus enthused the farmers to
become price conscious and marketing aspects started receiving greater attention.

2.

Regulation of marketing system and establishment of regulated markets all over the country
brought changes in the farmers' marketing practices in terms of sale of their produce in
regulated markets instead of village sale or sale to the itinerant traders. The tendency of village
sale considerably went down. Presently, the farmers in regulated markets or towns/mandies sell
around 70 per cent of the marketed surplus.

3.

Regulation also helped in reducing the charges paid by the farmers while selling their produce
in the regulated market yards. The rates of various services payable by farmers have been
standardized in several markets. Sale slips are issued to the farmers showing the quantity and
the price at which sold.

4.

Farmers have been able to reduce their price risks by availing the facility of the price support
programme for 24 major agricultural crops put in place by the government. In the event of
prices falling below the support level, the farmers off-loaded their surpluses to the public
agency at the minimum support price (MSP).

5.

Farmers have increasingly organized themselves in cooperative marketing societies. Under

such an arrangement, small and marginal farmers with low quantity of produce for sale also got
the same price as realized by large farmers.

6.

Several practices, which worked against the farmer-sellers, have changed owing to the
abolition of barter system; introduction of standard weights and measures; abolition of sale by

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cover under cloth (hatha) system; discontinuance of realization of unauthorized deduction of

market charges; reduction of rates of commission; and provisions of storage facilities for
farmers at reasonable rates.
7.

The availability of staying facilities in rest houses free of cost; quicker means of transportation;
and information about prices in the market have become common features that attracted the
farmers to the regulated markets.

8.

The tendency among farmers to sell their produce immediately after harvest has not changed
much owing to the cash needs, requirement for repayment of loans, inability to bear risk of
holding the stocks and to an extent unavailability of storage and pledge-loan facilities.

Agriculture Marketing Reforms

Government of India in the Ministry of Agriculture appointed an Expert Committee on 19 th
December 2000 to review the present system of agricultural marketing in the country and to
recommend measures to make the system more efficient and competitive. The Committee in its
Report has suggested various reforms as well as the reorientation of the policies and programmes
for development and strengthening of agricultural marketing in the country.
With a view to examining the findings and recommendations of the Expert Committee and
to suggest measures to implement them, the Ministry of Agriculture constituted a Task Force on 4 th
July, 2001 under the Chairmanship of the secretary, Department of Agriculture & Cooperation. The
Task Force thereupon identified some priority areas to work out a road map for strengthening the
agricultural marketing system in the country. The important among the Identified is:

Direct marketing

Forward and future markets

Price support policy

IT in agricultural marketing

Marketing extension, training and research.

Direct Marketing
Innovative Marketing Channels
Direct marketing by farmers is being encouraged as an innovative channel. Some examples of these
channels are Apni Mandi, Hadaspar Mandi, Rythu Bazaars; and Uzhavar Sandies.
1.

Apni Mandi: In Apni Mandi, there is a direct contact between the farmers and ultimate
consumers. These mandies are called Apni Mandies as farmer producers bring the produce for
sale directly to the buyers or consumers.

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2.

Hadaspar Vegetable Market: Hadaspar vegetable market is a model market for direct
marketing of vegetables in Pune city. It belongs to the Pune Municipal Corporation and fee for
using the space in the market is collected by the Municipal Corporation from the farmers. This
is one of the ideal markets in the country for marketing of vegetables. In this market, there are
no commission agents/middlemen. The market has modern weighing machines for weighing
products. The purchasers make payment of the value of produce directly to the farmer in cash

3.

Rythu Bazaars: Rythu bazaars have been established in Andhra Pradesh with the prime
objective to provide direct link between farmers and consumers in marketing of fruits,
vegetables and essential food items. Both producers and consumers are benefited from Rythu
Bazaars as producer's share in consumers rupee is more by 15 to 40 per cent and consumers get
fresh vegetables, fruit and food items at 25-30 per cent less prices than the prevailing prices in
nearby markets.

4.

Uzhavar Santhaigal: The state Government of Tamil Nadu established Uzhavar sandies
(farmers markets) in selected municipal and panchayat areas of the state. In this market,
farmers enjoy better marketing infrastructure free of cost and receive considerable high prices
for the products than what they receive from middlemen at villages or primary markets at
towns. Farmers also get good quality seeds and other inputs in the market itself.

Forward and Future Markets

Introduction of a negotiable warehouse receipt system to facilitate increased liquidity in rural
areas, lower cost of financing, shorter and more efficient supply chains, enhance reward for grading
and quality, development of other productivity enhancing agricultural services and better price risk
management
Amendments to some of the provisions of the forward Contract (Regulation) Act, 1952 are
currently with the parliamentary standing Committee. These amendments include defining futures
trading, removal of ban on options trading, provisions of registration of brokers, strengthening of
FMC by including professionals as - time Members, enhancing the penalty provisions, etc.

Price Support Policy

Government intervention in purchase of agricultural commodities under minimum price support
programme, procurement of food grains, market intervention scheme (MIS), monopoly purchase
and open market purchases of commodities by NAFED, CCI, JCI and State Oilseed Federations
etc., have attained importance in recent years. The entry of these public and cooperative agencies
has alerted the existing channels and also their importance in terms of quantity marketed through
them. The basic objective of entry of these agencies in purchase of different commodities is to
safeguard the interest of producer - farmers alongside the protection of consumers from excessive
prices in some years.
There is a considerable variation in the structure of taxes and fee on the agricultural
produce in various states which also distorts the operation of the domestic market, gives wrong
signals to the producers and leads to considerable fallacy in the efficiency of the operation of
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private trade vis--vis farmers cooperatives and public agencies. There is a need for bringing
uniformity in the state level tax structure for agricultural commodities for improving the marketing
efficiency. To avoid blockage of funds and consequent burden on government exchequer due to
huge compulsory procurements under price support operations, alternate systems may be devised to
compensate the farmers when the prices are abnormally low.

IT in Agricultural Marketing
Strengthening of ongoing central sector scheme of establishing Market Information Network and
making it as a vehicle of market led extension, providing facility of electronic trading or ecommerce on the Market Information Network portal to enable producers to directly transact
business with the buyers. Use of information technology in agricultural marketing is becoming
increasingly indispensable. Encouragement needs to be provided to generate and host useful
portals, web sites, databases, information packages and other software, generic as well as
customized, on agricultural marketing. Info Kiosks should be promoted to be set up in the markets
and with farmers organizations, associations of traders and other functionaries for exploiting the
opportunities of information revolution, especially for on line demand of different products. The
information that is important and useful rates to product specialization's with regard to quality, pack
size and packaging material; quantity and time frame of supply; transport cost involved and the
marketing charges likely to be delivered; facilities available to the farmers in the buying market;
rules and regulations of the destination markets, if they are located outside the state at a distant
place; other specific information as may be conducive for the seller to transact the business with the
purchasers; and the legal provisions related to storage, transportation and pyto-sanitary
requirements.

Marketing Infrastructure
Regulated Markets
The benefits available to the farmers from regulated markets depend on the facilities/amenities
available rather than the number of regulated markets in the area. Both covered and open auction
platforms exist in two-thirds of the regulated markets. One-fourth of the markets have common
drying yards. Traders modules viz., shop, godown and platform in front of shop exist in 63 per cent
of the markets. The cold storage units exist in only nine per cent of the markets and grading
facilities exist in less than one- third of the markets. The basic facilities viz., internal roads,
boundary walls, electric light, loading and unloading facilities and weighing equipment are
available in more than eighty per cent of the markets. Farmer's rest house exists in more than half of
the regulated markets.
The establishment of regulated markets helped in creating orderly and transparent
marketing conditions in primary assembling markets. Further, increase in the number of regulated
market yards, from a meager 286 at the time of Independence to 7177 in 2001, helped in increasing
the access of farmers to such orderly market places. This development, coupled with construction
of approach roads network linking primary markets with secondary wholesale and terminal
markets, also improved the process of price discovery at the primary market level where most of
the small farmers dispose of their produce. Expansion of such physical infrastructure in rural areas
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has helped small and marginal farmers more by increasing their access to the markets. During
1992-93, agricultural commodities worth Rs. 62000 crores were traded in these regulated wholesale
markets, which account for about 43 per cent of the value of marketed surplus.
Grading and good packaging have also acquired a very crucial role in marketing of
products at retail level in urban and semi-urban markets and also for export markets. Indian
Institute of Packaging (IIP) working since 1966 is evolving better packaging material and
packaging techniques. The demand for packaging services is growing at a very rapid rate. However,
the situation is far from satisfactory particularly at the farmer's level.

Alternative Marketing System

Role of government in managing markets is on the decline worldwide. The only way to modernize
marketing is to set up Alternative Marketing System' that may operate parallel to, and in addition to
present Mandies. The purpose of the proposed alternate marketing structure is to establish modern
and efficient trade practice as a catalyst for changes in the market towards improved transparency
and efficiency.
Forms of Alternative Marketing: The different forms of alternative marketing could be:
i.

Direct marketing by producers

ii.

Marketing through Farmers Interest Groups

iii.

Setting up of terminal markets by the private sector

iv.

Forward markets and futures exchanges

v.

Electronic trading - e- commerce

vi.

Setting up mega markets covering all marketing functions for domestic as well as
export trade

vii.

Introduction of negotiable warehouse receipt system

Grading, Transportation & Storage

Grading of products per their quality standards before sale fetches higher price to the farmers. To
bring uniformity in grading over time and space, the Agricultural Produce (Grading and Marking)
Act, 1937 was enacted. Under this Act, grade standards for a number of agricultural commodities
have been prescribed for sale in domestic market, for export and farm level grading. Although there
has been a considerable increase in the railway route length, total road length, the length of national
highways and state highways in the country; the status of rural connectivity, which affects the
farmers most, continues to be poor. So far, only 48.4 per cent of the villages are connected by
roads.

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Cold Storage
The central government issued the Cold Storage Order in 1964 (amended in 1980) for construction
and maintenance of cold stores and storage of commodities in them in good condition. The cold
storage capacity increased from 300 thousand tonnes in 1960 to 4.0 million tonnes in 1980, 8.7
million tonnes in 1996 and further to 15.38 million tonnes by the end of March 2001. Presently, a
total of 4199 cold stores with the capacity of 15.38 million tonnes exist in the country in different
sectors.
Market Research and Development
This would be the most critical area, which is being strengthened. Through information technology,
the information on the type and nature of markets that are prevailing and based on the trends of the
production of different commodities in the national as well as international markets, the new
concepts could be developed. This would also help us for dissemination of information on various
related issues. This would also include research and development of market infrastructure.

Investment for Market Reforms

Market Infrastructure
The investment for development of market infrastructure has been projected. During the next five
years, a total investment of Rs. 40306 million has been envisaged for development of marketing
related activities such as Market Infrastructure, Grading, Standardization, Testing, Facilities,
Marketing Information Network, Market Research Surveys, etc.
Storage Infrastructure
The Government of India has also formulated a National Storage Policy aimed at harnessing the
resources of the public and private sector for augmentation of infrastructure to handle food grains,
including construction of bulk storage facilities and also conventional godowns under "Gramin
Bhandaran Yojna". The additional storage capacity of 130 lakh tonnes is likely to be created in the
country with a total investment of Rs. 34800 million, including back-ended subsidy of Rs. 5700
million from the Government of India.
Cold Storage and Cool Chain Infrastructure
In view of the expected market surplus of fruits and vegetables by 2007 and the available cold
storage capacity, it has been envisaged to create an additional capacity of 56.50 lakh tonnes during
the Tenth Plan period.

Conclusion
After the 'Green Revolution, which ensured abundant production and food security in India, we are
gearing ourselves to have Marketing Revolution. With all its rainbow colours so as to seize the
opportunities provided by the liberalized national and international market. This would not only

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Vol. 4, No.1, pp. 203-214.

ensure a fair price to the farmer but also ensure availability of quality products to the consumer at
reasonable prices.

References
Downey W. David and Erickson P. Steven, Agribusiness Management, McGraw-Hill
International Publications, Agricultural Series, 1993.

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