The Pursuit of King Corn: Agricultural Marketing

Dr B K Mukhopadhyay

(The author is a Professor of Management and Economics, formerly at IIBM (RBI) Guwahati. He can be contacted at m.bibhas@gmail.com)

Dr. Boidurjo Rick Mukhopadhyay

(The author, international award-winning development and management economist, formerly a Gold Medalist in Economics at Gauhati University)

A recent World Bank report indicates that 80% of the world's poor live in rural areas and depends on farming for livelihood, and under pre-COVID-19 scenario, the development in agriculture was expected to feed 9.7 billion people by 2050 in addition to providing employment opportunity to poor working adults reducing extreme poverty. Agri industry that accounted for 4% of the global GDP in 2018 and now under stress of COVID-19 pandemic shares concerns such as gap between prices for trading and delivery of agricultural commodities, disrupted supply chain and crunch of logistical resources, negative impact on farmer's health, shortage of workforce to undertake operations, and increasing operational costs for complying with precautionary norms. In addition to the above challenges, agriculture sector is under dual pressure of COVID-19 and climate change.

Looking back at the past 7 decades, the significant changes that agricultural marketing system has experienced largely owing to the enhanced marketed surplus, increased urbanisation and general income levels as well as consequent changes in the pattern of demand for marketing services, not to mention the increase in linkages with overseas markets. To meet projected demand, agriculture in 2050 will need to produce almost 50 percent more food and biofuel than it did in 2012.

Data suggests that bigger increases in agricultural production have been captured in comparable time frames. For example, between 1961 - 2011, global agricultural output more than tripled. In low-income countries, livestock production has been one of the fastest growing agricultural subsectors. A FAO report evidences that since the early 70s, per capita consumption of milk, dairy products and vegetable oils has almost doubled, while meat consumption has almost tripled. Today, however, due to climate change, increased pressure on natural resources, underinvestment in agriculture and gaps in technology, maintaining the pace of production increases may be more difficult than what was historically achieved.

Under an ably and rightly accepted environment of increased digitalisation on top of newer forms liberalisation and expansive glo¬balisation, a fresh approach to the very aspects of agricultural marketing is not only necessary but also essential, especially considering the fact that we still expect the farm sector to con¬tribute to the overall economic growth in a pronounced man¬ner.

It is good to note that the New Agricultural Policy also envisages the very need for a new demand-driven set-up which could cater to domestic and the external sectors. Needless to mention that an efficient marketing system is keenly awaited. It is also heartening to see that not only the Department of Ag¬riculture but also the CII. Chamber of Commerce, and institutes of repute like the National Institute of Agricultural Marketing, Global Agri-System, NAPED. etc. have shown renewed interest on the matter.

Research from both industry and academics have evidenced that marketing is as criti¬cal to better performance of agriculture as farming itself, and as such marketing reforms aspects ought to become an integral part of the national agricultural development policy. So, the current state of agricultural marketing system vis-a-vis effi¬ciency level is to be properly assessed along with examining the alternative marketing options and their suitability in order to promote an effective, efficient and integrated marketing system in our country.

Agricultural marketing is essentially a subset of the entire marketing system, which refers to all the activities, agencies as well as policies involved in the procurement of farm inputs by the poor but efficient: farmers encompassing the movement of agri-produce from the tilled land to the ultimate user.

Efficient marketing system ensures cost minimization as well as benefit maximisation to the entire social system, since it has the poten¬tial to provide remunerative price to the farmer, required quality of food to the millions and creation and sustenance of direct and indirect employment. This is more so in a country where a big percent of the population is still under the threat of poverty, facing burgeoning unemployment, over-urbanization and un-planned resource use — human and technological- coupled with infrastructure inadequacies and tremendous distress.

For proactively promoting agri-busines and agri-entrepreneurship, the Ministry of Agriculture plans to promote the establish¬ment of state-of-art terminal market complexes for perishables. These markets would be operated professionally in a manner that integrates domestic production with food-processing indus¬tries, retail chain and emerging global markets, offering pre¬mium price to the fanners based on quality in a competitive environment and in a transparent manner. The markets are envisaged as alternate competitive markets that would function independently of the existing government-regulated markers.

The Ministry of Agriculture has in consultation with the State governments, initially identified eight important centres in the country, wherein terminal markets for fruits, vegetables, flowers, aromatics, herbs, meat and poultry are planned to be established and operated in public-private partnership. The markets would provide the facility of electronic auction, grading, wash¬ing, and packing lines, packaging, banking, processing and ex¬ports.

Backward linkage of these markets with the farmers would be through collection centres, located conveniently in the pro¬ducing areas and forward linkage though wholesalers, distribu¬tion centre-supported retail and cash and carry stores. The modalities for the acquisition of land for the market, construc¬tion, financing of these markets in public-private partnership (PPP) mode would be worked out with the active involvement of interested entrepreneurs, State government concerned and other stakeholders. The Ministry of Agriculture would serve as a facilitator, and if needed, be a partial financier for the venture.

Opportunities abound in the arena of public-private partner¬ship for inclusive growth, In fact, the very process of agriculture marketing in our country has been passing through a phase of major transformation, as marketing reforms permit setting up of competitive agricultural markets in private and cooperative sec¬tors, promote direct marketing as well as contract farming, which, in turn, have opened the door for farmers as well as all scales of business to participate in vital areas such as setting up of private agricultural markets, marketing infrastructure, supply chain and logistics, banking, finance and other agri-marketing service.

It is very clear that the development of efficient agri-markets enables a seamless integration of production centres and con¬sumer base in order to ensure that the right quality and quantity of agri-products are available at the right place and right price so that it maximizes the income accruing to farmers. This pro¬cess through private-public partnership— needs to be accelerated at the earliest.

There are opportunities in areas like wholesale terminal markets, perishable cargo centres, rural primary mandis, grading standardization and packaging facilities, quality-testing laboratories and quality control units, agri-export zones, supply chain and logistic services, warehousing and storage infrastruc¬ture (inclusive of cold storage).

These have tremendous use if areas like accentuating the pace of agricultural marketing reforms, a through review of the exist¬ing policies and incentives, exploring the scope and opportunities in specific agri-infrastructure projects in different States, sharing new initiatives, experiences and success stories of the corporate world under a changing environment as well as international exposure on agriculture marker structures, contract farming, hin-drances in the field of direct marketing, future and forward mar¬kets, exact roles of future markets and commodity exchanges in agriculture commodity trade and issues of concern to various stake¬holders arc actively considered. True, there arc opportunities based on optimal exploration of hidden potentialities.

The question of complacency does not arise. There arc too many challenges. There must be investment for further addition to the existing infrastructure facilities. Proper maintenance and upgradation of the facilities through repair, replacement: as well as through a modernization drive is a must. Optimum utilisa¬tion of the created facilities is what is urgently needed. Private-public participation thus emerges as the crucial factor on this score. It will be difficult, on the part of the Central and State Governments alone to mobilize the huge quantum of resources that would be required on such projects and initiatives. This apart, adequate involvement of the institutional finance is so fundamentally essential.