Academic journal article IUP Journal of Marketing Management

Evaluation of Traditional Marketing Channels of Agricultural Produce: Paddy and Rice

Academic journal article IUP Journal of Marketing Management

Evaluation of Traditional Marketing Channels of Agricultural Produce: Paddy and Rice

Article excerpt

(ProQuest: ... denotes formulae omitted.)

Introduction

In Assam, rice plays a significant role in the state economy as a staple diet with an average monthly per capita consumption of 13 kg and as a major contributor to agricultural GDP. Assam occupies a special place in the rainfed rice production system in the eastern India (being a major rainfed rice-growing area) by covering about 9% of the total rice area and contributing 8% to the overall production. At the national level, the state contributes over 5% of area in paddy cultivation and 4% in paddy production (Bhowmick et al., 2014). Paddy is cultivated throughout the state by small, medium and big resourceful farmers. These farmers producing agricultural produce are scattered in remote villages while consumers are in semi-urban and urban areas.

This produce has to reach the consumers for its final use and consumption. There are different agencies and functionaries through which this produce is channelized and reaches the consumers. Conflicts of interests abound among the functionaries in the marketing channels. The farmer's interest is focused on getting the best return from his produce, which usually equates to maximum price for unlimited quantities. Miller wants least cost and best quality produce from the farmer so that he can sell it at a competitive, but profitable price. Traders and retailers aim at high quality and reliable supplies from the miller/ farmer (directly), at the most negotiable price and the final consumer seeks value for money, i.e., interested in obtaining quality product at a fair price.

Researchers, in India as well as abroad, have shown that a considerable price spread exists between the price paid by the consumer and the price received by the farmer for an equivalent quantity of farm produce. This spread consists of marketing costs and margins of the intermediaries, which ultimately determines the overall effectiveness of a marketing system. During the post-independence period, retailers and wholesalers together grabbed as much as 40 paise out of every rupee paid by the consumer (Munshi, 1957). Studies undertaken during post-liberalization period by researchers like Chauhan et al. (1994) indicated that the producer's share was very low in each channel, while the cost of marketing and middlemen's margin were high. They welcomed the idea of regulated markets to enhance the share of farmers and to promote perfect market conditions in favor of the farmers. Mohapatra et al. (1998) found that in Orissa there was a tendency on the part of the farmers to sell their produce to retailers via intermediaries (Channel 2) though they were aware that the share of the consumer's rupee was higher in Channel 1, i.e., without the intermediaries. Madhappa (2000) had examined the channels and margins in rice marketing in north western Tamil Nadu and found that all the marketing channels could bring a fair share to the rice growing farmers. The organized marketing channels, though efficient in reducing the cost of marketing and in bringing more margins to rice producers, are not efficient in reducing the intermediary margins. The question that needs to be addressed is whether the marketing costs and margins of the farmers have improved over the years with market intermediaries and government interventions.

This study concentrates on identifying price spreads and efficiency of marketing channels of paddy/rice and margins of the market participants of the existing channels operating in the Maloibari village of Kamrup district of Assam.

Literature Review

Research work on the marketing system of rice or paddy and other agricultural commodities have been done from various perspectives and a majority of available literature is related to estimating channel performance in terms of efficiency, margin and price spread. Marketing margin, for a particular commodity, is the difference between what the consumer pays for the final product and the amount the producer receives (Achike and Anzaku, 2010). …

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