Agricultural Marketing and Economic Development in India
Volumn 2

Agricultural Marketing and Economic Development in India

Dr.Rosalin Mishra
Assistant Professor
Department of Economics
L.A.D and S.R.P College,Nagpur


Agricultural marketing continues to be mainstay of life for majority of the Indian population. It contributes around 25% of the GDP and employs 65% of the workforce in the country. The Government of the India under the ministry of agriculture has also set up specific commodity Boards and export promotion council for monitoring and boosting the production, consumption, marketing and export of various agriculture commodities. Some of this organization /Board are Cotton Corporation of India(CCI),Jute Corporation of India(JCI),Tea Board, Coffee Board, Spice Board, National Horticulture Board(NHB),National Agricultural Marketing Federation, Agricultural product Export Development Authority(APEDA).Most agricultural commodity markets generally operates under the normal force of demand and supply. However with a view to protect farmer’s interest and to encourage increased production, the government also fixes minimum support price(MSP) for some crops like paddy, wheat, jute etc as public policy implement. The government also promotes organized marketing of agricultural commodities in the country through a network of regulated markets. There are 7161 Wholesale Regulated Markets in the country, besides there are also 7293 wholesale markets and 27,294 rural periodic. This paper throws light on importance of agricultural marketing in India and problem of agricultural marketing in India


Agricultural marketing comprises of all the operations involved in the movement of food and raw materials from the place of production to consumption. It includes handling of production to the place of consumption .It includes handing of products at the farm , initial processing, grading and packing in order to maintain enhance the quality and avoid wastage .It is the study of all activities agencies and policies involved in the movement of agriculture produce from the farms to the consumers.

India is an agricultural country and one third population depends upon the agriculture sector directly or indirectly. Agriculture remains as the main occupation of Indian Economy since independence. Indian agriculture sector contribution to the national gross domestic product is about 25%.With food being the need of mankind emphasize has been given to commercialization of agriculture production. Agricultural commodities have special characteristics and therefore marketing of agricultural commodities is different from marketing of manufactured goods.

Agricultural marketing is mainly the buying and selling of agricultural products. In earlier days when village economy was more or less self sufficient the marketing of agricultural product did not have difficulty as the farmer sold his produce to the consumer on cash or barter basis, but recently the trends in agricultural marketing affect the farmers. The end user or consumer and public at large. Marketing efforts change both cost and benefits. There is increasing concern with cost and benefit of agricultural commodities. Good marketing of food grains play a crucial role in solving the problem of hunger and malnutrition in developing countries like India.

Marketing is an economic link between producer and consumer. The marketing triggers process of development. An efficient marketing system can arrange equitable distribution or scarce and essential commodities. A good marketing system plays a vital role to achieve price stability, equitable distribution of commodities and services and thereby achieve economic growth.

Constitution of Agriculture Marketing in India

Agriculture marketing is used in different ways to mean agro-output, marketing of food grains, marketing of food products etc. Agriculture marketing is divided into two parts in India

  1. Marketing Ins:-These are commodities that are basically purchased by villagers. The main items are agriculture input items like fertilizers, pesticides and seeds. The next category in this group is farm machinery tools and implements. Examples are tractors, pumps, tools and tackles. For power and tractors, diesel and electricity are purchased. Purchase of cattle birds, aqua feeds and poultry feeds fall in the third category. The last category is daily necessities of life of villager.
  2. Market out Items: In this category village produce is marketed outside to the consumers. Part of the produce is consumed in the village. The balance part which is sent outside again has two large markets. One within the country second exports to other countries. The items that fall under agricultural marketing outs include agricultural produce, animal products, fish, processed foods and cash crop products. This group is generally referred to agricultural marketing. The rural marketing both in and outs are influenced by eight factors include government policies, involvement of cooperative ,rural mindset, technology and finance availability.

Commodities in Agricultural Marketing

Items of agricultural marketing or rural marketing out items can be classified into seven group

  1. Horticulture produce
  2. Food grain items
  3. Oilseed produce
  4. Fibre produce
  5. Beverage items
  6. Cash items and
  7. Animal produce

The horticulture items in class (i) above are sub-classified as flowers ,spices ,vegetables and fruits.

Importance of Agricultural Marketing in Economic Development

There are basically two sides of agricultural marketing .The marketing, economic and social theories are used to analyze the situation. Analyze is also made as to how good the system is working to contribute to the public interest and serving all sections of society or stakeholders in the process .Macro marketing also views at how the agricultural systems are organized and how good it contributes to its social and economic goals and how agricultural system is adapting and changing over time.

The second side is micro marketing or commonly known as business marketing. Micro marketing consists of demand stimulation, competition, new product development, market research, pricing and distribution strategies, customer service and other marketing inputs. Micro marketing view is taken by an individual decision maker in the agriculture industry. This could be villager who produces, a business manager, a consumer who is making decision about how, when and where to buy or sell. The marketing channels develop marketing strategies to satisfy customers at a profit by using the tools and principles of marketing management. Both the macro and micro marketing views affect agricultural marketing.

The agricultural marketing helps in accelerating the pace of economic development by stimulating demand and production. Due to the green revolution, India is able to feed its large population and minimize starvation related deaths. The development of high yielding seeds, use of chemical fertilizers, use of plant protection methods and use of modern agricultural implements are reasonable in increasing food production and generate large marketable surplus. A good marketing system only can guarantee the tempo of development and good prices to farmers for their produce. With larger resources, India can leverage its plus point to make India the next economic power house. The Indian farmers have shifted from traditional agricultural methods to modern farming. The development of agricultural economy has led to increase in demands for related products. Since 1970-71, the Indian population has doubled and food grains production has matched the demands. Agricultural marketing helps in the development and specialization crops which yield large profits. A good marketing system helps in giving price signals and development of agricultural sectors in the economy. Agricultural production and marketing must develop hand in hand. They are partners in progress.

The active government participation in the development of agriculture in planned economy and policies in 4th to 9th five year plans have turned agriculture to market orientation. The plant outlays for agriculture in the 11th five year plan are high and lays emphasize on agro-sector growth. Some of the sectors where agricultural marketing plays its important role in the Indian economy

  1. Contributor to National GDP Growth
  2. Increase in agricultural produce and incomes
  3. Reduce middle men
  4. Optimizer of resources
  5. Stabilizer of prices
  6. Demand Developer
  7. Infrastructure Developer
  8. Earn Valuable foreign exchange
  9. Meeting emergency
  10. Developer of new technology

The first commission on development of agriculture in India after independence called the National Commission on Agriculture noted that ” There is an increasing awareness that is not enough to produce a crop or animal product, it must be marketed well .Increased production resulting in greater percentage increase in marketable surplus accompanied by increase in demand from urban population, calls for a rapid improvement in existing marketing system with emphasis on the importance of agricultural marketing.

Problem of Agricultural Marketing in India

In India there are number of ways by which the agriculturists may sell their surplus produce. The first and most common method is to sell the surplus produce to the village money-lender-cum-trader. The trader may purchase agricultural goods for his own need, or he may act as an agent of a big merchant or of a member of the neighboring mandi town. A large part of marketable surplus of agricultural produce is sold in the village itself to persons who have money power in every respect. Organized marketing of agricultural commodities has been promoted in the country through a network of regulated markets. Most of the State and Union Territory Governments have enacted legislations (Agriculture Produce Marketing Committee Act) to provide for regulation of agricultural produce markets. There are 7139 regulated markets in the country as on March 31, 2009.

In mandis there is broker’s i.e dalal who help the farmers to dispose of their produce. In all these cases, the farmers are not able to get fair price for their produce. The following are the important reasons for this

  1. Lack of Storage facilities
  2. Poor Capacity to withhold the stocks from Market
  3. Inadequate Transport Facilities
  4. Lack of Rest-Houses in Markets
  5. Multiplicity of intermediaries
  6. A large variety of Weights and Measures
  7. Excessive Market Changes
  8. Lack of Market Intelligence
  9. Payment of Land Revenue
  10. Increasing Debts
  11. Inferior Quality of the Product

The Government of India is fully aware of the need for improvement and it has taken various steps to improve the situation. The all India Warehousing Corporation has been set up to construct and manage a whole network of warehouses in all towns and mandis. To promote warehousing in villages, the cooperative societies are given necessary financial and other types of facilities. To improve the financial position of the farmers and save them from clutches of the village moneylenders and to enable them to secure good prices for their products, the cooperative credit societies are giving increased credit facilities to the farmers.

Further, cooperative marketing and processing societies have been started to market the agricultural produce of farmers. They will assure reasonable prices to the farmers and will remove exploitation by the intermediaries to a large extent. Rural transport has been given due importance under the five year plans and much progress has been made in this respect.


Indian system of agricultural marketing needs major technology and capital invention to modernize and unify the marketing network in different parts of the country. Such interventions will help to raise the income of the farmers, reduce the post harvest losses in the crops and will also help in moderate the prices of different commodities. Our country incurs too much wastage of its farm produce due to inefficient and antiquated marketing practices. Markets in the agricultural products are regulated under the Agriculture produce Market Committee Act enacted by state governments. There is need to unify the marketing system as different agriculture produce market committee have multiplicity of fees and taxes which had a cascading impact on prices of the commodity when it passes through the supply chain. These charges could be as high as 14.5 percent in Andhra Pradesh, excluding state value added tax and close 10 percent in Odisha and Punjab.

There are 2477 principal regulated markets based on geography called agriculture produce market committee and 4843 sub markets yards regulated by respective APMCs (Agricultural Produce Market Committee) in India. Central Government has allocated Rs.200 crore to the newly created Agro-Tech Infrastructure Fund, which would support online integration of 585 APMC marketing yards in the next three years. Further Government has cleared last year with an outlay of Rs5000 crore for next five years. Marketing system can be unified through online agri-trade in which Karnataka has done exemplary work. The state has integrated 55 mandis with trade to the tune of Rs8500 crore. The Centre’s proposed online National Agriculture Market (NAM) will adopt many of the best practices from this model but also look at similar reform initiatives in other states to incorporate the same into its design. The Central Government proposed online agro-trade platform will integrate 585 marketing yards across the country. The software would be provided free cost to states and in addition grant of up to Rs30 lakh per mandis as a one time measure for related equipment and infrastructure.


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  6. Kurukshera, Dr.HarendrabRaj Goutam,Innovation and new technologies needed to accelerate agriculture growth,September 2015
  7. Internet,Website,,,,

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