Unveiling the Complexities of the Agricultural Marketing System in India: A Crucial Step Towards an Efficient Marketing System

In India, agriculture is directly or indirectly the primary source of livelihood for a significant portion of the Indian population. India’s agriculture is composed of many crops and staple foods. Indian farmers grow wheat, jawar, bajara, vegetables, pulses, potatoes, sugarcane and non-food items like cotton, tea, coffee, rubber and jute. Agriculture sector is facing various difficulties in marketing of its production. Farmers face challenges in getting fair prices for their produce. Government of India has taken various initiatives to address the problems. Several challenges in the agricultural ecosystem can be effectively tackled with the help of sustainable farming techniques (Gulsia, 2022).
       
Conventional agricultural marketing practices include selling within the village to traders  and money lenders in village markets, mandis, nearby towns, or through cooperative societies. Lack of awareness about scientific storage and financing leads to exploitation by intermediaries, resulting in low returns for farmers. There is a need for systemic change in agricultural marketing to support farmers’ emerging needs.
       
Farm products or services are sold directly to consumers without an intermediary in direct farm marketing. Direct marketing helps ensure higher remuneration to the farmers and improves the satisfaction level of the consumers. (Salokhe, 2016). A non-conventional marketing system needs to follow traditional practices. Examples include farmers’ markets, contract farming, branding of agricultural products and digital marketing. Developing non-conventional marketing systems can help Indian farmers receive fair rewards. Direct marketing can help farmers get fair prices for their produce and contract farming can increase farmers’ income and improve product quality and market access. Solanki and Inumula (2021) reported that 80% of the consumers are willing to pay more at the farmers market than go to the nearby retail outlet or supermarket. Salokhe (2017) and Singh (2016) reported that branding helps farmers enhance income from agricultural produce. A Farmer Producer Company refers to a legal body for farmers to improve their living standard, status, revenue and profitability (Vahoniya et al., 2022). One of the effective and efficient ways of addressing the challenges in agrarian marketing is bringing together small and marginal farmers in one group and forming a Farmer Producer Company (Salokhe, 2017).
       
Padmaja and Ojha (2023) reported possibilities for policymakers to design effective policy responses and strategies to strengthen FPOs in India. FPOs allow small farmers to participate in the market more effectively and help enhance agricultural production, productivity and profitability (Salokhe, 2016). Singh (2016) reported branding as an essential strategic tool for enhancing the farmer’s income in India. Salokhe (2017) communicated that the development of branded food would assure consumers of its freshness, healthiness, quality and traceability. There exists a tremendous potential to exploit the situation for the benefit and upliftment of farmers. Rajput et al., (2022) reported that branding helps add value to the products because consumers think branded products have good quality and more features than unbranded products.
       
The profitability of agricultural products can be improved by adding value to them. It boosts an agricultural commodity’s economic value and consumer appeal (Rajput et al., 2022). India has vast potential in agricultural exports. Indian agricultural export basket has also become diversified (Roy, 2020). There is a growing recognition of the private sectors role in achieving the sustainable agricultural development with its financial resources, innovation and responsiveness (Gautam, 2024).
       
Strengthening agricultural and food supply networks is crucial due to the challenges in processing, storing and exporting less commonly produced crops because of its structure. Public, semi-public and private funds are needed for these initiatives (Roy and Hazari, 2023). Organically grown foods are becoming more popular daily because of their health and nutritional benefits. Das et al., (2020) reported that organic farming has a greater socio-economic and environmental impact on a nation. Ray et al., (2020) reported that the government expects the corporate sector to increase rural incomes and employment through agro-processing. In this context, policymakers see contract farming/marketing as a critical avenue to ensure greater participation of the private sector in agriculture. Hoang  (2021) observed that contract farming initially impacts the intermediate factors such as cooperation, market access, knowledge and skill, product quality, technology and support. Agrawal (2018) reported that group farming can provide a viable agriculture alternative model to resource-constrained small family farms.
       
The paper of Agrawal (2018) demonstrates that group farming can provide an effective alternative, subject to specified conditions and adaptation of the model to the local context. Digital marketing helps promote the right agri products to their rightful buyers, expands the reach of the people associated with agriculture and helps reach new consumers across diverse locations (Peter and Latha, 2021). They reported the possibilities of digitalization in agriculture and agribusinesses. Research by Solanki and Enumula (2021) concluded that consumers are optimistic about farmers’ market operations near their homes. To achieve the goal of meeting the ever-growing global demand for food, governments must implement stringent policies that promote sustainable agricultural practices. The significant constraints of e-marketing identified by Paul and Somnath (2022) are the delay in payments, the exploitation of farmers by auctioning agencies and the effect of lot number in the e-auction on the prices offered. Policies and markets can also assist farmers and smallholder farmers can benefit from cheap, generally available resources (Roy and Hazari, 2023).
       
A variety of research studies have been conducted on agricultural marketing in India. However, from the literature review specific to “Nonconventional Agricultural Marketing,” no survey in India focuses on awareness and performance of various emerging non-conventional agriculture marketing models operating in the region and the challenges farmers face while using them to market their farm produce.
       
The objectives of this study have been to examine existing conventional and non-conventional marketing models for agricultural commodities, examine the challenges farmers face and suggest a new marketing model.

The present study is exploratory research using quantitative and qualitative data collection techniques. The researcher selected 1034 farmers from eleven talukas in the Pune district as the sample size. Additionally, 25 Farmer Producer Company representatives, 11 Agricultural Produce Market Committee members, 10 Farmers’ Market representatives and 2 Organized Retailers were included in the study. A structured questionnaire was used to gather data and its reliability for consumers was tested using Cronbach’s Alpha. The researcher conducted interviews and used a pretested questionnaire to gather primary data, as well as collected secondary data. Data analysis was done using SPSS 17.0. The following statistical tools were used for data analysis:
1. Frequency table with percentages.
2. Rank order.

The demographic characteristics of the respondents: Farmers selected as a sample for an opinion on various marketing models are young adults with an average age of 42. Their level of education was secondary school to graduation (49%) and illiteracy (only 15%). On average, each farmer owns a land of 5.2 acres. These farmers cultivate four high-value crops: tomato, potato, grapes and pomegranate.
 
Study of existing conventional models of agricultural marketing
 
Many farmers are selling their farm produce to the APMC market (56.9%), middlemen (35.7%) and local mandi (28.1%). Unfortunately, they are not receiving reasonable prices. Five hundred twenty-six farmers expressed dissatisfaction with the prices received (Table 1). Additionally, 871 farmers require storage facilities, but only 15.9% have access. Out of 1038 respondents, 588 farmers usually sell their produce to APMC, followed by intermediaries, local mandi and directly to consumers. The main issues farmers face include the need for market information, intermediaries taking a significant portion of the consumer price, competition, transportation, grading, institutional finance, problems with produce collection, distressed sales and issues with weight and measures.
 

 
Study of existing non-conventional models of agricultural marketing
 
APMC market
 
Challenges faced by farmers while selling through APMC markets
 
The study found 59.7% of farmers are okay with selling produce to APMC, while 40.3% need help. The main issue is APMC’s monopoly, resulting in high farmer costs. Additionally, agents in APMC form cartels and restrain from higher bidding, as well as block payments for various reasons (Table 2).
 

 
Challenges faced by APMC
 
APMC markets face challenges related to insufficient space, government control, competition with private markets and increased administration charges, affecting their ability to provide suitable facilities to farmers (Table 3). Numerous intermediaries between farmers and consumers take away a significant portion of the farmers’ profits. This issue is acknowledged by 40.8% of farmers. The major problems farmers face include intermediaries getting a significant profit share, not receiving the actual value for their produce and delayed payments. The government passed the Model Agricultural Produce and Livestock Marketing Act (APLM) (2017), but not all Agricultural Produce Market Committees (APMCs) adhere to it. Implementing and upgrading APMCs based on the APLM Act (2017) is necessary to address these issues.
 

 
Direct marketing
 
This study revealed that farmers know they will get reasonable prices if they sell farm produce directly to customers, but it is difficult to get direct customers to purchase farm produce. 743 (71.9%) farmers need to sell their farm produce directly to consumers, but only 291 (28.1%) farmers sell directly to consumers. Farmers are not selling produce directly to consumers because it is difficult to establish direct contact with them. There are more operational costs and more salespeople are required.
 
Farmers’ market
 
The farmers’ market is a retail marketplace that sells fruits, vegetables and other agricultural products directly from rural farmers to urban consumers. It is an excellent way for people living in urban areas to get fresh agricultural produce. However, farmers face challenges such as competition from other markets and supermarkets and finding suitable locations in urban areas. A recent study found that 55% of farmers are unaware of farmers’ markets, while 44.9% are aware of this marketing channel (Table 4).
 

 
Farmer Producer Company (FPC)
 
A Farmer Producer Company (FPC) is an organization that brings together small and marginal farmers to establish a business enterprise managed by professionals. FPCs assist farmers in producing various agricultural products and marketing their crops.  However, despite the benefits of the Farmer Producer Company, limited awareness among farmers has resulted in a low number of members. This lack of understanding about FPCs stems from insufficient knowledge about forming and successfully operating them and a need for more excellent working capital support. In addition, farmers face challenges related to governance and management capabilities, as well as a need for more commitment from member farmers. Out of 1034 farmers, only 91 (8.8%) are currently members of FPCs (Table 5).
 

       
In Pune district, Farmer Producer Companies (FPCs) face challenges with financial support, capacity building and suitable storage facilities. Only 2 out of 25 (8%) FPCs reported successful operations, while 23 (92%) face various challenges. Moreover, a lack of capacity building and suitable facilities for the scientific storage of commodities poses significant challenges. Only 2 out of 25 (8%) FPCs’ office bearers reported successful operations, while the majority, 23 (92%), face various challenges.
 
Contract farming
 
Contract farming is an agreement between farmers and food processing companies to supply farm produce under a forward agreement at predetermined prices. It is an effective way of coordinating and promoting agricultural production and marketing if managed well. This study revealed that most farmers need to be aware of contract farming. Few know about contract farming but want to avoid engaging in it. The main reason behind this reluctance is that farmers must fully understand and appreciate the significance of contracts (Table 6). Another important reason is that it is vulnerable to price fluctuations and the company accepts only ‘A’ grade produce, while the farmer has to try to sell ‘B’ and ‘C’ grade farm produce. Delay in farmer payments is another reason for not engaging in contract farming. 84% of farmers do not practice contract farming, while only 16% have experience. Contract farming is still in a nascent stage in India.
 

 
Export of farm produce
 
This study revealed that most farmers are not interested in exporting their farm produce. Most need to be aware of export procedures, quality norms, etc. Only a few (34%) are interested in exporting farm produce. The critical agriculture export challenges are uniformity, branding, promotion, high losses in the value chain, maximum residue limit (MRL) and government restrictions.
 
Organic farming
 
Organic farming is a crop and livestock production method that uses natural products without fertilizers, pesticides, growth hormones, antibiotics and genetically modified organisms. This study revealed that most farmers are not interested in organic farming and do not have any plans for the future. Farmers are not aware of organic farming and how to do it. 77.5% of farmers are not interested in organic farming. Only 22.5% of farmers showed interest in it. Different methods and procedures for growing organic food have gained popularity among the growers. However, there has been a growing sense of confusion regarding the package of practices for organic/natural farming (Singh et al., 2022).
 
Group farming
 
Small and marginal farmers work together in group farming to cultivate their land. The Maharashtra cabinet approved promoting group farming to boost farm production. However, many farmers are not practicing it due to a lack of understanding and appreciation of its benefits. Challenges include greed, ineffective contributions and dishonesty. Trust and unity among the members are crucial for the success of group farming.
 
e-NAM
 
e-NAM is an online trading platform for agricultural commodities in India launched by the Ministry of Agriculture. It facilitates online trading of farm produce for farmers, traders and buyers, helping farmers get better prices. However, only 8% of farmers know the portal and its functioning.
 
Digital marketing of agricultural produce
 
Digital marketing involves marketing products using digital technologies such as the Internet, mobile phones and other digital mediums. Only 50% of farmers know about the online agricultural market and only some companies sell agricultural produce through online mediums, e.g., Veg Mart, e-Choupal, Kisan Market, etc. However, all consumers need to be made aware of this. The low-income group (65%) must know about online agricultural produce shopping.
 
Organized retailing
 
Linking marginal and small farmers with modern food supermarkets is seen as a way to improve the livelihoods of small farmers. Modern organized retailing has emerged as one of the most dynamic and fast-paced industries. Farmers are getting better prices for their produce because there are no middlemen (Table 7). The main problem of these retail chains is that they deal mainly with large farmers and exclude the smaller ones. Farmers do not have scientific storage facilities, have poor post-harvest management and have no scientific transportation facilities.
 

 
Best possible combination of marketing
 
According to 75% of farmers, the best way to market agricultural commodities is to follow new and old farming and marketing ideas (Table 8). Farmers are interested in using a non-conventional marketing model to increase their farm income along with conventional methods, whatever they currently use. Therefore, combining traditional and non-conventional methods is the best option for marketing agricultural commodities.
 

 
Suggestion of a new marketing model for agricultural commodities
 
Establishing a suitable non-conventional marketing system is important to ensure fair prices for farm produce and proper returns for Indian farmers. In this system, intermediaries are not involved and support services should be enhanced for small farmers. Connecting farmers directly with agricultural produce buyers and shifting to a demand-driven system is crucial. Additionally, providing farmers with information about product prices in different markets can help maximize their crop returns. The Agriculture Department should conduct extensive extension work to help farmers understand the importance of contract farming and develop negotiation skills through training programs. The government has already formulated and released the “Model Contract Farming Act of 2018,” which is crucial to implement. Moreover, the government should establish a suitable legal framework for contract farming to address dispute settlements.
       
The success of weekly farmers’ markets in Maharashtra demonstrates the potential of direct marketing of agricultural produce. Expanding these markets to talukas and semi-urban areas is essential and the government should help by providing suitable locations and enacting the Weekly Market Act. NABARD, ATMA and the Director of Agriculture should work on developing linkages with FPC and industry to enable farmers to sell farm produce directly. To encourage farmers to export agricultural produce, training them in Good Agricultural Practices (GAP) and facilitating digital marketing of high-value farm produce is essential. There is a growing demand for high-quality, organic fruits and vegetables and consumers expect convenient home delivery of fresh produce.
       
Agricultural produce can be traded online, such as e-NAM, removing intermediaries and getting better market prices. Training and spreading awareness about this portal to farmers is essential. Linking small farmers with retailers can improve their livelihoods. Encouraging organic farming is beneficial because consumers are willing to pay more for organic food, which can also lead to export opportunities. Therefore, training farmers to produce organic crops is essential. Farmers should be trained to brand their products as customers are more likely to buy branded products and are willing to pay more. This will help increase sales and profits for farmers by differentiating their produce and adding value through methods such as Geographical Indicators, varietal branding and attractive packaging.
       
It is important to train and encourage farmers to practice organic farming to meet the export quality standards for agricultural products. The government should open specific retail outlets for farmers to sell their organic products, develop and implement the ‘Organic Agriculture Act’ in India and provide training for quality produce. Export linkages need to be developed to facilitate the export of high-quality farm produce to foreign countries. Farmers need training for group farming and value addition to increase economic benefits and consumer appeal. They also expect government support for skill development, sustainable FPC operation and adoption of new technologies from Agricultural Universities, ATMA and KVK.  
 
Non-conventional marketing model (Fig 1)
 

         
Farmers can sell their A and B-grade agricultural commodities through non-conventional marketing models and C and D-grade produce through conventional marketing models, e.g., selling farm produce to APMC, village traders, commission agents, wholesalers and retailers.
 
Practical implications
 
The present study will provide an opportunity to learn about the emerging challenges faced by Indian agriculture to achieve the vision of doubling farmers’ incomes. It will help several beneficiaries, such as academicians, policymakers and agriculture departments, get in-depth knowledge about agricultural marketing and the challenges associated with using non-conventional agricultural marketing models. It will also provide an opportunity to strengthen the existing marketing infrastructure at different levels so farmers can sell their produce at appropriate marketing channels. The study has highlighted various weaknesses of non-conventional marketing channels, which will help policymakers take appropriate action.

The key to modernizing agricultural marketing is to promote an alternative system that can operate alongside the existing one. Establishing strong connections between farmers and buyers of agricultural produce is essential to enhance support services for small-scale farmers. New agricultural marketing methods include contract farming, farmers’ markets, farmer producer organizations (FPOs), export, branding, group farming, digital marketing and direct procurement by organized retail chains. It is vital to train and motivate farmers to participate in these new arrangements, as linking farmers to non-traditional marketing methods is essential for the industrialization of agriculture. The government should assist farmers in directly marketing their agricultural produce by providing user-friendly apps for accessing market information and digitally marketing agricultural produce. Existing government initiatives, such as e-NAM, should be reinforced and promoted among farmers to modernize agricultural marketing. Farmers need help selling their farm produce using non-conventional marketing methods and integrating new technologies for farming, processing and marketing agricultural produce. The government must acknowledge and address these challenges to assist farmers in obtaining fair returns on their produce. Proper training is essential for farmers to comprehend these new marketing methods.

The author declares there is no conflict of interest.