The main defects from which the marketing of agricultural produce suffers in India: 1. Lack of Organisation 2. Forced Sales 3. Superfluous Middlemen 4. Multiplicity of Market Charges 5. Malpractices of Markets 6. Multiplicity of Weights and Measures 7. Adulteration 8. Inadequate Storage Facilities 9. Transportation Means 10. Absence of Grading and Standardisation of Agricultural Produce and Few Others.
Defect # 1. Lack of Organisation:
The first thing that strikes the observer is the lack of any kind of collective organisation among the producers, the buyers of agricultural produce specially in the case of money crops, usually operate on a large scale and are organised while the producers are invariably small ryots scattered over a wide area with no common organisation to guide them and to protect their interests, while purchasers of commercial crops on the other hand, are large scale operators on an organised basis. Under the circumstances, it is common to find that the producers of agricultural products as a class are being exploited by the purchasers.
Defect # 2. Forced Sales:
The farmer, in general, sells his produce at an unfavourable place and at an unfavourable time and usually he gets very unfavourable terms.
Place, time and terms, these three factors, provide us with the clue for an understanding of the existing position. Because of poverty and indebtedness, unsatisfactory nature of communication, lack of staying power and the need for finance, the produce is sold soon after the harvest when there is a glut in the market and hence the price offered is very low. There is an all-round depression in prices to the extent of 20% in the case of wheat and 25% in the case of linseed.
A cultivator, who has to borrow heavily for growing a crop, often mortgages it in advance so that the sale of produce, which is hardly more than a mere formality takes almost in his fields as soon as the crop is harvested. In all others cases where crop is not formally mortgaged it has to be disposed of almost immediately after harvest in order to pay off the debt to the Sahukar.
The nearest place where a farmer sells his produce is his own village. “It has, we think, been established that where the cultivator is in a position to dispose of his produce in a market, however limited its scope and badly organised its character be, he obtains a much better price for it even when he disposes of it in his own village.” The effective price realised by the cultivator is further reduced by malpractices which are as a rule more common in a village than in a market.
In pre-Independent India Mr. Hussain had estimated that 60 per cent of wheat, 35 per cent of cotton and 70 per cent of oil-seeds are sold in the villages or village markets in the Punjab. For U.P. the respective figures were 80 per cent wheat, 40 per cent cotton and 75 per cent oilseeds. In Bihar, Orissa and Bengal 5 per cent of oilseeds and 90 per cent of jute was sold in villages. In U.P. 30 per cent of the wheat grown was sold in the village, in Lyallpur the percentage was 52, while in Attock district (Punjab) it was as high as 98.
As for paddy 89 per cent was sold in the villages in Bihar, 72 per cent in Bengal and 89 per cent in Tamil Nadu. In the case of cotton, the village sales amounted to 79 per cent in Sind, 81.4 per cent in Khandesh, 51 per cent in Central Gujarat, 80.5 per cent in the Punjab. With regard to the sale of linseed, it was estimated that the all-India average of the percentage taken to the markets for sale by cultivators themselves was only 20 per cent as against 40 per cent sold by landlords and 35 per cent by beoparies.
It may be noted that in the village, the produce is sold to the Sahukar, bania, landlord, prosperous tenants, beoparies and agents of wholesale merchants. The Rural Credit Survey Committee found that in nearly two-third of the transactions entered into with the traders the commodity is delivered in the village itself.
Causes of Heavy Sales in the Villages:
The following are the chief causes leading to heavy sales in the villages:
(i) The most important cause for the high percentage of produce sold in the villages is, without doubt, the indebtedness of the producer. A cultivator who had to borrow heavily for growing a crop often mortgages it in advance so that, the sale of produce which is hardly more than a mere formality takes almost in his fields as soon as the crop is harvested.
In other cases where the crop is not formally pledged it has to be disposed of almost immediately after harvest in order to pay off the debts of the sahukars. The proportion of produce in the markets diminishes as cultivators are debt-ridden or carry on subsistence farming in tiny holdings. In Attock district of the Punjab 98.6 per cent of the cultivators dispose of their surplus wheat to local banias who happen to be their sahukar also.
(ii) The second important factor which is responsible for the high percentage of village sales is the unsatisfactory nature of communication with the nearest market. With bad roads transport costs tend to become heavier. At times the producer has no tattle and carts of his own by which he can transport his produce to the market-place.
In sugarcane growing areas the animals are either engaged in crushing cane just after the winter paddy harvest or in transporting cane to the mills, so that the supply of carts for the transport of other kinds of agricultural produce is very short. In irrigated tracts in the west of Uttar Pradesh, where cotton or fodder crops are sown just after the harvesting of the rabi or spring crops, the grower has practically no time to go personally to the market.
(iii) The element of time is an important factor and this for double reason. The marketing possibilities of perishable commodities depend very largely on the rapidity with which they can be transported to the market-place. Communication is, therefore, of the utmost importance in this case. As regards to non-perishable commodities, the price to be realised by the cultivator depends among other things on the time when his produce is marketed.
The majority of the Indian cultivators sell their produce within a very short period after the harvest with the result that the market is glutted and the prices go down considerably. According to the Marketing Adviser to the Government of India there is an all-round depression in prices to the extent of 20 per cent in the case of wheat and 25 per cent in the case on linseed.
(iv) Most of the cultivators are hard-pressed for cash to meet the claims of their creditors and to pay off rent and other charges. Even when they know fully well that by holding up the crop for a few months, they would be able to secure a better net return, they have usually no other alternative but to market the produce immediately in order to meet their urgent liabilities.
Cases are by no means rare where a cultivator in dire need for cash, sells his wheat or rice at the peak season when prices are very low but is compelled after six months or so to buy perhaps with borrowed money foodgrains for his own consumption and even seed for cultivation.
Defect # 3. Superfluous Middlemen:
Majority of farmers dispose of their produce in the village itself. The result is the intervention of most middlemen between the producer and the final consumers of his produce. The agencies in the chain of marketing from the producer to the manufacturer and consumer depend upon the nature of the crop.
Paddy usually passes from village merchant to the mill or to the wholesale dealer in the assembling market and from the mill rice passes on to the wholesale dealer in the consuming market and then through one or more retailers to the consumers. Between the wholesalers or miller in the producing end and the wholesalers at the consuming end, a host of intermediaries intervene and execute orders on the strength of the samples.
In the case of groundnut, the route taken comprises the grower, the village merchant, the broker, the decorticating merchant, the exporters’ agent and finally the exporter.
Similarly, in the marketing of wheat the agencies that help in the collection of wheat are:
While in the case of potato, main channels of assembling are:
(i) Wholesalers like village merchant or trader or representatives of commission agents who buy potatoes in small lots and arrange for their dispatch to the consuming centres;
(ii) Wholesalers who are engaged in retail distribution of potatoes in the consuming markets.
The agencies engaged in the task of wholesale distribution of tobacco are- growers, professional curers, village merchants and money-lenders, commission agents and wholesalers, manufacturers, co-operative societies and exporters. According to Dr. Dantwala, “All those acquainted with the ready cotton trade know that in its transit from a farmer to a ship or a spinning mill not more than three or four transactions are made.”
The cultivator of jute disposes of his produce to a beopari who received advance from mahajan or a broker on the understanding that he gets as much as he can for the latter. The mahajan in turn sells to big buyer, a baler, or another broker by whom preliminary sorting, grading and bulking is affected. Similarly, in rice the paddy is taken over from the cultivator on threshing floor either by the middlemen acting on behalf of the mills, by speculators or by local traders known as jungle brokers.
It will, thus, be noted, that there exist as many as 10 to 12 intermediaries comprising of the village bania, itinerant merchant or beopari, dalal, kaccha and pucca arhatiya, co-operative commission agents, wholesale merchants and the retailers. They function at various stages in the process of assembling and distribution of the produce.
The existence of a long chain of middlemen, reduces the share of the consumer’s price received by the actual cultivator. According to the findings of the Marketing Surveys, the share of producer in a rupee paid by the consumer ranges from 52 paise in case of rice to 57 paise in case of wheat, in case of linseed it is 62 paise, in case of potato 50 paise and in case of groundnuts 45 paise.
Price Spread in Agricultural Produce:
The term price spread implies gross margin or mark-up in the marketing of farm commodities. Price spread is measured as absolute or percentage difference in the price paid by the consumer and price received by the farmer. The price spread suggests the extent of margin added in the farm sales cost and trade margin. The smaller the extent of this margin, the more efficient the marketing system. The ratio of farm price to retail price is always less unless there are trade losses.
Following is the analysis of price spread for agricultural produce in India:
The wholesalers’ margin in the case of different commodities at different places varies to a considerable extent e.g., in rice it is 0.5 to 3.8 per cent; wheat 0.8 to 1.0 per cent; linseed 1.4 to 1.7 per cent and potato 10.4 per cent. Same is the position of the retailers. Retailer’s margin varies from 3.7 to 6.4 per cent in the case of rice, 3.8 to 4.8 per cent in the case of wheat and 10.4 per cent in the case of potato. Dr. Munshi found that in marketing the produce the cultivator gets somewhere between 42.3 to 73.7 per cent of the consumer’s price and from 26.3 to 57.7 per cent goes to the middlemen.
This may be seen from the table given below:
However, the price-spreads are not very high when we take into account the fact that the producer’s share in the consumer’s dollar in U.S.A. comes to 68 per cent for poultry and eggs, 61 per cent for meat, 59 per cent for dairy products, 34 per cent for fats and oils and 52 per cent for fruits and vegetables. But the point that deserves notice in the case of India is that the high costs of Marketing are not due as in U.S.A. to hygienic processing, packing, storage and handling of commodities and superior servicing, but due to high freights, too many points of handling and multiplicity of middlemen.
In India, the incidence of freight varies from 2.1 to 21.7 per cent in the case of wheat; 0.7 to 13.2 per cent in the case of rice; 1.2 to 15.4 per cent in the case of linseed and about 6.2 per cent in the case of potato.
Defect # 4. Multiplicity of Market Charges:
The marketing charges payable by the producers are numerous and varied in unregulated markets and they tend to reduce considerably the return to the producer from the sale of his produce. On a sale of produce worth Rs. 100, as much as 21.5 per cent of the income of the producer goes to meet the various expenses.
In the market, the cultivator has to arrange with a kaccha arhatiya for the sale of his produce and in the larger markets he has to employ a broker or dalal to get into contact with the kaccha arhatiya. For their services he has to pay some commission. In addition to the arhat paid to the arhatiya and the dalal a number of other charges have to be incurred.
Tulai has to be paid for the weighing of the produce, palledari to cover the cost of the labourers who help in unloading the cart, preparing the produce, filling the scale-pans, holding the bag open where the produce is being measured, etc. the seller has also to submit to a deduction known as garda for impurities in the produce, and dalta for possible loss of weight and dana given to sweepers, watermen and even beggars.
During the measurement and in almost all the markets deductions are made from the amount due to the seller for dharmada or charity, dispensary, gaushalas, pathshalas.
Below are given the data for sale of rice in M.P., and the price paid by the consumer in 1959-60:
It will be observed that the producer’s share in the total amount paid by the consumers comes to about 73% in the case of sale at Indore and 74% in case of sale at Bhopal (the distance between Durg to Indore is 548 miles and that between Bilaspur to Bhopal is 462 miles). The profit margin of the retailers comes to about 9% in both cases and the total marketing cost including wholesaler’s profit varies between 21 and 27%.
The items of cost in the marketing of fruits and vegetables after the produce is harvested and prepared for market which the grower has to bear, according to Marketing of Fruits and Vegetables Committee Bombay (1934) were- (i) cost of packing (including cost of packages, twines and papers), (ii) cost of hauling from farm to the market, (iii) hamali, (iv) railway freight, (v) expenses in Bombay-hamali, rent charges for weighing balance, rent charges for using the sales ground dalali; contribution to charity fund and postal charges by the commission agent for sending account of sales.
The grower receives 62 per cent of the price paid by the consumer for 100 oranges marketed through the co-operative sale society as against 53.8 per cent of the price when marketed through ordinary trade channels.
The objectionable feature about the market charges is that they are not only high but are also not clearly defined and specified. The charges vary from market to market and there is also no uniform practice as to the charges that are to be borne by the seller and those that are to be borne by the buyer. Even within the same market the kaccha arhatiyas may charge lower rates to the village beoparis who visit the market often and have regular trade connections than to the farmer who visits market only occasionally and has, therefore, only small volume of business to offer to the arhatiya.
To make things worse many of the market charges are taken in kind and in taking their shares the persons connected are liable to be generous to themselves. As the Report on the Marketing of Wheat in India points out, “not only the arhatiya and dalal but the munim (arhatiya’s clerk), the chaukidar, the sweeper, the waterman, the arhatiya’s cook and a horde of beggars of every description all regard themselves as entitled to a share of his produce.”
He is fortunate, if by the end of the day they have only taken two or three rupees, since they are just as likely in some markets to take seven—or eight rupees of his precious hundred.
Defect # 5. Malpractices of Markets:
In unregulated markets, malpractices tend to be common.
These are the following:
(1) Scales and weights are manipulated against the seller. This practice is rendered easier by the fact that till recently there had been no standardised weights and measures nor was there any provisions for regular inspection.
(2) There are all kinds of arbitrary deductions for religious and charitable purposes and for other objects. The burden falls entirely on the seller and he has no effective means of protest against such practice.
(3) Large quantities are taken away from the produce of the cultivator as bangi or sample. According to the Royal Commission on Agriculture this amounted to as much as five to eight seers per cart of cotton in Khandesh. The cultivators are not paid for them even when no sale is effected.
(4) Bargains between the agent who acts for the seller and the one who negotiates on behalf of the buyers are made secretly under a cloth so that the seller remains ignorant of what actually takes place.
(5) The broker whom the cultivator employs is more likely to favour the purchaser with whom he comes into contact almost daily than the seller whom he only sees very occasionally. This tendency becomes all the more pronounced when, as it frequently happens, the same works for both parties.
(6) When disputes arise the cultivator has no means of safeguarding his interest. The enquiries made by the Indian Central Cotton Committee showed that “greater use of the markets is not made by cultivator because of the disputes which arise after arbitrary deductions from the weight.” Some of the practices obtaining in the market amount to nothing less than common theft.
That the poor agriculturists have to face great difficulties and expenses in marketing their produce can be easily brought out by the study of the following figures given by Mr. Mukherjee.
Defect # 6. Multiplicity of Weights and Measures:
Till recently, there had been an absurd multiplicity of weights and measures in India.
The chaotic state of weights and measures in India has been more clearly brought out in all the reports published by the Central marketing staff. Weights made of sticks, stones and bits of old iron are even now a common feature in the markets and villages. A seer may range from 31 tolas to 102 tolas as in the Punjab, a panseri (which is five seers) may range from 5 to 9 seers and maunds may go up to 64 seers as in parts of Bihar and Orissa. Even in the tola normally the weight of one rupee is not always the same.
This multiplicity of weights and measures employed in India has deplorable effects in several ways. Firstly, it affords greater opportunities for cheating the ignorant cultivator and unscrupulous dealers readily avail themselves of such opportunities. Secondly, it gives rise to needless complications in practice as between one market and another which is by no means conducive to the interests of trade and commerce.
Thirdly, for the collection of data on price movements the relative level of prices in different regions, the volume of agricultural production, etc. lack of standard weights and measures is bound to be a great handicap and seriously affects the accuracy of statistical calculation.
The multiplicity of weights and measures makes supervision difficult and affords greater opportunities for cheating the producers, creates an element of uncertainty in trade and renders fraud on the part of retailers as easy as it is profitable.
The report of the Marketing Sub-Committee has rightly observed that, “Deliberate malpractices, ignorance and carelessness have all combined to make the consumer in India pay an unnecessarily high price for many goods of different qualities.”
Defect # 7. Adulteration:
Adulteration is often resorted to while marketing crops; and one of the most important reasons for such deliberate adulteration of agricultural produce is the high amount of refraction khad allowed in most markets and the non-mutual terms.
In most of the wholesale markets in the producing areas a fixed deduction is made for impurities (say 5%) and the terms are non-mutual, i.e., a producer offering cleaner produce which has only 1% of impurities receives the same price as the producer offering produce containing 5% impurities. Naturally when this is the case the seller whether he be the middleman or the farmer takes care to see that the produce is adulterated to the maximum limit allowed in the market.
Adulteration of Commercial Crops:
Various devices of adulteration are in vogue. Such as Damping of cotton is done by the middleman on the contention that “the kapas comes in so very hot that if one puts one’s hands into it, they would be blistered.” In many places, damping is encouraged not only with a view to cause little harm to the pressing machine, but due to a mistaken notion that moderate damping makes it look glossy and increases the length of the staple.
In other places unginned cotton is carried to markets on the back of buffaloes packed in strong bags and it is necessary to damp the cotton so that more can be pressed into the bags. The usual practice is not to water the cotton directly, but old gunny bags are put over it and water poured on bags. Sometimes hose pipes are also used to water the cotton directly. Recourse is also had to “false packing” by putting portions of one wet bale into the middle of a dry bale at the time of packing.
In the case of cotton, short staple is usually mixed with large staple. This admixture is done partly due to the cultivator growing and selling a mixture of different varieties of cotton by the seed mixed in the ginneries and partly because the cotton of the locality is a natural mixture.
In packing sann-hemp, small bundles of twisted, folded and tied fibres and tied heads which contain extraneous matter as “stick” leaf and dirt is usually resorted to.
The practice of adulterating wool with foreign matter is almost universal in the country starting in both the villages and the producers. Extraneous substance such as earth, dust, sand and even sheep and cattle dung are added to increase the weights not only by the primary producers but also by village and other merchants. Cases have been recorded when sand and dust were sprinkled on the wool before rolling and bundling it. Moistening of wool before sale is not an uncommon feature.
Adulteration in Food Crops:
In wheat refraction may comprise of dirt or foreign matter including oilseeds, barley and other food and non-food grains- damaged and touched grain; shriveled or immature grains; weeviled grains; and mixtures of red wheat in white. Barley and other grains are also mixed.
Rice is also adulterated with inferior rice imported from abroad, new rice is passed off as old rice and clay balls are often mixed with rice.
The survey undertaken by the National Consumer Service of the Bharat Sewak Samaj has revealed some very curious facts. The survey says that “Dhania and zeera sold in some of the country’s markets contain dried grass while curry powder in several cases has been found to be heavily adulterated with horse dung.”
“Tomato sauce is often only a mashed pumpkin with a small percentage of tomato. Vinegar in some cases has been found to be acetic acid. Small clippings of white stone have been found in rice in some localities.”
“Most of the common salt contains large quantities of white chalk, while turmeric is adulterated with lead chromate which has a deep yellow colour. In red chillies, many unscrupulous traders used lead oxide to brighten the colour and add weight.”
The admixturing and adulteration in food and non-food crops has brought bad name to the country. Instances have been common when whole consignments were returned for wrong quality goods sent.
Defect # 8. Inadequate Storage Facilities:
In most of the villages ryots store their produce in pits or receptacles variously known as kudurus kallis or thekas. In the up-country markets produce is stored in kothis or kuthalas (earthen cylinders) and khattis (pits in the ground lined with mud and straw) and in a few centres in pakka khattis made of concrete. But that there is a general inadequacy of good storage facilities both in rural and urban areas can hardly be denied. The indigenous methods of storage adopted in the villages as well as in most of the up-country markets do not adequately protect the produce from dampness, weevils and other vermins.
The losses due to inadequate storage have been estimated to range from 1.5 per cent (Foodgrains Investigation Committee) to 2 per cent to 2.5 per cent (The Prices Sub-Committee) to 5 per cent (as estimated by Dr. Baljeet Singh). A recent estimate puts the loss at from 5 to 15 percent by weight of the production and it is due to defective stage. This in turn is due to moisture absorption, excessive heat, insects, mites, rodents and birds. Even at 5 per cent the loss of cereals, millet, spices, oilseeds, jute, cotton, tobacco would come to over Rs. 4,000 million every year in India.
With the change of temperature, grains lose weight. When wheat is harvested, it contains some moisture which evaporates in summer and is regained during the monsoon month. Dampness raises the moisture content of the grain, thereby making it soft and therefore susceptible to insects. The damage is greater when the grain is stored in kaccha underground pits where the sub-soil water table ranges from 8 to 10 feet below the surface.
It is quite obvious that the foodgrain stocks held by co-operative societies, grain merchants and even by farmers are not kept in proper conditions. Therefore, the losses are substantially larger. In addition there are crops like jowar, pulses and maize which are infested by stored grain pests even before harvest. The insects form inside the kernel and are invisible until the threshed grains are put in storage. By the time the infection is detected, internal damage to grain becomes very great.
Losses due to rodents are also very great. The rats start damaging the grain right from the field to the time it is consumed. According to Dr. P.J. Deoras, there are approximately 2400 million rats in India. He has estimated that about 20 rats could consume the quantity of food sufficient for one person. On a gross estimate this would mean that rats are spoiling at least one-fifth of the grain produced.
Calculating on this basis of a tonne of grain being consumed lay 100 rats per year the total consumption by the rat population of 2,400 millions would amount to about 24 m. tons. In terms of money this would come to about Rs. 18,000 million when calculated at the rate of Rs. 750 per tonne.
The nature of damage studied by Dr. Deoras is as follows:
(i) It has been noticed that apart from damaging crops and foodgrains in storage, rats carry foodgrains to their nests in burrows. As much as 15 kg. of grain have been recovered while digging out nests from about 30 rats burrows.
(ii) The rats damage 10 times the quantity of food material they eat. They would execrate about 86 faecal pellets in 24 hours which would get mixed up with foodgrains.
(iii) Their void 1 ½ gallons of urine get mixed during the year, and further contaminate grain by shedding thousands of hair from their bodies.
(iv) In Bombay as many as 9,000 bags of foodgrains are auctioned as they are unfit for human consumption because they are damaged by rats in yards and godowns.
(v) The small mice in the paddy fields have been found to climb up to the paddy plant and eat every grain while the big field rat usually cuts the whole plant.
Besides rats “Insects, beetles and moths are prolific breeders and each couple lay anywhere between 100 to 400 eggs and their life-cycle is completed in 4 to 6 months. It has been estimated that weeviled grain in the case of wheat varies from 1 to 2 per cent or more peas 1 to 5 per cent or more and arhar upto 2 per cent.”
According to an estimate made by the Pesticides Association of India, on an average about 18 per cent of the production of crops is lost due to pest attack. In 1973-74, provisional estimate of gross national product value for agriculture was about Rs. 26,900 crores.
Therefore in terms of value the loss amounts to an alarming figure of about Rs. 5,000 crores, calculated at the existing price level. It is estimated that the maximum loss is caused due to weeds (33 per cent), followed by plant diseases (26 per cent) and insects (20 per cent), while the storage loss could be put at 6 to 8 per cent. Rats are estimated to cause about 6 per cent loss to the standing crops.
In 1973-74, nearly 12.5 million tonnes were subjected to avoidable loss due to pests and diseases, according to the Association. For rice and wheat alone Rs. 1,900 crores were lost, while in groundnut the loss was estimated to be Rs. 350 crores, other oilseeds Rs. 90 crores, cotton Rs. 90 crores, sugarcane Rs. 284 crores, potato Rs. 30 crores, tea Rs. 77 crores, coffee Rs. 10 crores, and fruits (including in storage and transit) Rs. 200 crores.
Defect # 9. Transportation Means not Well Developed:
In India with her vast distances, the existing means of transport are woefully inadequate. “Communications from the field to the village and from village to the mandi are often extremely poor and defective. Bad roads, lanes and tracts connecting village with the markets not only add to the loss of transportation and aggravate the strain on bullocks and other pack animals, but also lead to the multiplication of small dealers and intermediaries. They also restrict market by hindering cheap and rapid movement of agricultural produce.”
In the construction of the railways in India administrative and strategic considerations seem to have had more weight than the provision of marketing facilities to the ryot by linking up the producing areas with markets by a good system of feeder lines. The freight policy followed by the railways also has given rise to considerable dissatisfaction.
Railways in India do not afford the maximum possible facilities for the quick and safe transport of perishable products such as fruits, vegetable and dairy products. This naturally restricts the markets for such produces and reduces the incentive for intensive cultivation.
The road mileage position in India in relation to area or population is extremely unsatisfactory. There were only 52 miles of roads per 100 sq. miles of area as against 63 miles in Japan- 114 miles in U.S.A. 169 miles in Germany, 215 miles, in U.K. and 430 miles in France per 100 sq. miles in 1974. Per 1 lakh of population these mileages are 85, 2, 018, 314, 382 and 1630 respectively.
There is not only mileage deficiency but there is also a lack of feeder-roads connecting villages to market towns and the nearest railway stations so that produce cannot be advantageously transported to mandis. Most of the village roads are rather tracks which cut all connections with the mandis during rains.
Due to this lack of transport facilities much loss occurs. According to the Directorate of Storage Inspection, the loss of marketable surplus of food crops in transport is about 0.5 per cent of the quantities transported.
According to the Foodgrains Investigation Committee the losses are 1/2 to 3-g- per cent in mail transport; 1/4 to 1¼ per cent in road transport and 1/2 to 1 per cent in river transport.
Defect # 10. Absence of Grading and Standardisation of Agricultural Produce:
Absence of grading and standardising agricultural produce is another defect. The reputation of Indian agricultural producers in the world’s market is low. Even the Export Promotion Committee (1949) emphasised the poor quality of Indian exports. The Royal Commission on Agriculture investigated into the position of the Indian agricultural products in the world’s markets and came to the conclusion that much of the produce was marketed in an unsatisfactory condition.
In spite of the work of the Indian Central Committee, adulteration, mixing and damping, particularly the mixing of short with long staple cotton prevailed to an undesirable degree. Bad rating, bad grading and selection and excessive moisture were characteristics of much of the jute exported. The case of hemp was worse still. The position with regard to oilseeds other than groundnuts is a bit satisfactory.
There are no standard grades commonly accepted throughout India even for such important commodities as rice and wheat. In the absence of certain standard grades accepted by the whole trade as the basis for commercial transactions, attempt of individual producers merely secures the ordinary market rate. In fact the present practice of dara sales wherein heaps of both good and bad produce are sold together as one lot common in most markets, gives a premium to the inefficient producer as the good produce is made to carry along with it the poor stuff also.
The practice of selling ungraded products of mixed quality has naturally reduced the reputation of the Indian agricultural produce in the world markets. As pointed out by the Central Banking Enquiry Committee, the price paid by the consumers in Europe for these products is based very largely on reputation and this reacts unfavourably upon the price received by those cultivators who have improved their quality.
Defect # 11. Lack of Information Regarding Price:
Absence of market intelligence as to prices is another defect. The villagers have practically no contact with the outside world nor are they in touch with the trend of market prices and they mostly depend on hearsay reports received from the village bania who is not at all interested in supplying them the correct information as to prices obtaining in the wholesale market.
Even in cases where information as to prices in available prices are not comparable on account of:
(i) The lack of standard grades acceptable to the whole country;
(ii) Variation in the amount of refractions allowed and the terms of standard contracts obtaining in different markets;
(iii) Inaccuracy of information supplied by various agencies concerned;
(iv) Variation in the price quotations given by local and Central Government;
(v) The considerable variations in weights and measures used in several markets in the absence of standardisation of weights and measures.
Defect # 12. Lack of Financial Facilities at Cheaper Rates:
The cultivator is financed by the village sahukar-cum-trader who in his own turn financed by arhatiya and the indigenous banker. In the absence of warehouse and the lack of facilities for making advances against the warehouse receipts there cannot be any system of cheap finance against security of goods.
There is at present, no proper link between indigenous bankers or commercial bankers and the Reserve Bank of India. The various marketing agents borrow funds at a high rate of interest. This naturally leads to a rise in the cost of marketing with the ultimate result, that the share of the price received by the producer is correspondingly reduced.