Comparative evaluation of participants satisfaction & perception in castor trade nsel viz a viz apmc
1. COMPARATIVE EVALUATION OF PARTICIPANTS
SATISFACTION AND PERCEPTION IN CASTOR TRADE:
NSEL VIZ A VIZ APMC
PROJECT SUBMITTED TO THE
INSTITUTE OF AGRIBUSINESS MANAGEMENT
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF
THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
(AGRIBUSINESS MANAGEMENT)
2009-10
BY:
KARKAR HITESHKUMAR KALUBHAI
(04-0409-2008)
INSTITUTE OF AGRIBUSINESS MANAGEMENT
NAVSARI AGRICULTURAL UNIVERSITY
NAVSARI – 396 450
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2. DECLARATION BY STUDENT
I hereby declare that the project entitled
“COMPARATIVE EVALUATION OF PARTICIPANTS
SATISFACTION AND PERCEPTION IN CASTOR
TRADE: NSEL VIZ A VIZ APMC FOR NATIONAL SPOT
EXCHANGE LTD.” submitted for the
M.B.A.(Agribusiness) Degree is my original work and the
dissertation has not formed the basis for the award of any
degree, associate ship, fellowship or any other similar
titles.
Place: IABM, Navsari
Date: 10th June, 2010
Karkar Hiteshkumar Kalubhai
Rg. No. 04-0409-2008
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3. INSTITUTE OF AGRIBUSINESS MANAGEMENT
NAVSARI AGRICULTURAL UNIVERSITY
NAVSARI-396 450
CERTIFICATE
This is to certify that the project entitled “COMPARATIVE
EVALUATION OF PARTICIPANTS SATISFACTION AND
PERCEPTION IN CASTOR TRADE: NSEL VIZ A VIZ APMC FOR
NATIONAL SPOT EXCHANGE LTD.” is the bonafide research work
carried out by Karkar Hiteshkumar Kalubhai (04-0409-2008) student of
M.B.A.(Agribusiness) during the year 2009 -2010, in partial fulfillment of
the requirements for the award of the Degree of Master of Business
Administration(Agribusiness) under my guidance and supervision and that
the project has not formed the basis for the award previously of any degree,
diploma, associate ship, fellowship or any other similar title.
Place: Navsari
Date: 10th June, 2010
Prof. Rahul Thakkar
Asst. Professor
IABM, Navsari
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4. CERTIFICATE
This is certify that
Mr. Karkar Hiteshkumar Kalubhai,
Student of MBA (Agribusiness management)
4th semester in the
Institute Of Agribusiness Management,
Navsari Agricultural University, Navsari
has successfully completed his
PROJECT WORK
on
“COMPARATIVE EVALUATION OF PARTICIPANTS SATISFACTION
AND PERCEPTION IN CASTOR TRADE: NSEL VIZ A VIZ APMC”
in
National Spot Exchange Limited
Mumbai,
during February-April, 2010.
Anjani Sinha
MD & CEO (NSEL)
National Spot Exchange Limited
102 A, Landmark, Suren Road, Chakala, Andheri(East), Mumbai 400 093, India.
Tel:+91-22-6761 9900, Fax:+91-22-6761 9931
Email:info@nationalspotexchange.com www.nationalspotexchange.com
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5. ACKNOWLEDGEMENT
A good project work requires sound knowledge of the subject
concerned and skilled to make proper use of this knowledge. I am very
grateful to all who equipped me with the right frame of mind to make me
still more receptive to such knowledge and skill.
I am grateful to Mr. Amit Mukherjee, Asst. Manager, Business
Development, National Spot Exchange Ltd. for giving me permission to
undertake my summer project. I express my sincere thanks to Mr. Kiran
Patel, Business Development, National Spot Exchange Ltd, Palanpur who
helped me throughout my summer training period and instruct me
regarding the methodology of carrying out the training. I am also thankful
to staff of NSEL at Palanpur for their kind support during the entire period
of my training.
I am thankful to Dr. R. R. Shah, Dean, IABM, Navsari for his
guidance, continuous support and cooperation throughout my training,
without which the present work would not have been possible.
I am greatly indebted to Mr. Rahul Thakkar, my institutional
project guide for availing me of his competent guidance under which I was
able to accomplish my project work successfully. I am also Thankful to
faculty of my institute Dr. Ruchira Shukla and Dr. Alpesh Leua for their
wholehearted support for the completion of the project.
I am grateful to all the respondents (Farmers) without their kind
cooperation it would not be possible for me to complete my project work.
Also, I would like to thank to all my Friends.
And my beloved Parents
Karkar Hiteshkumar Kalubhai
(04-0409-2008)
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6. PREFACE
MBA (Agribusiness) is the stepping stone to management career. In
order to achieve practical, positive and concrete result, the classroom
learning has to be effectively supplemented to relation of the situation
existing outside the classroom for developing healthy managerial and
administrative skills in a potential manager. It is necessary that the
theoretical knowledge must be supplemented with exposure to the real
environment.
The report comprises all the important aspects of my training and all
the aspects have been presented under different headings in the
forthcoming pages. An attempt had been made to present a report covering
different aspects of my training.
This report would not have been possible in present form without the
support and guidance that I received from various people at different stages
of the project.
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7. CONTENTS
Sr. No. Particulars Page No.
Chapter 1 Industry Profile 1
Company Profile 15
Chapter 2 The Project 30
Introduction 31
Objectives of the Study 40
Literature review 42
Chapter 3 Research Methodology 43
Chapter 4 Data Processing and Analysis 47
Farmers analysis 48
Chapter 5 Findings and Recommendations 80
Findings 81
Recommendations 84
Conclusion 88
Bibliography 89
Annexure 91
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8. List of Tables
Table No. Particulars Page No.
4.1 Age group of Farmers 48
4.2 Education Level of Farmers 49
4.3 Income source of farmers 50
4.4 Farming as major Income source 51
4.5 Annual Income of the farmers 52
4.6 Distribution of Farmers as per Land holding size 53
4.7 Irrigation Pattern 54
4.8 Crops cultivated by the farmers 55
4.9 Farmers group as per cropping pattern 56
4.10 Market preference by farmers for sale of produce 57
4.11 Crop wise Market Preference by Farmers 58
4.12 Factors considered for Market Preference by farmers 59
4.13 Sources of Price Information 61
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9. 4.14 Farmers Awareness about NSEL 62
4.15 Farmers awareness for Promotional Activity by NSEL 63
4.16 Sources of Awareness about NSEL 64
4.17 Farmers ever Deal with NSEL 65
4.18 Reasons for why Farmers prefer to deal with NSEL 66
4.19 Reasons for why Farmers not deal with NSEL 67
4.20 Satisfaction Level of Farmers when dealt with NSEL 68
4.21 Farmers ready to deal with NSEL again in Future 69
4.22 Farmers who used other services of NSEL 70
4.23 Farmers Perception about NSEL 71
4.24 Impact of NSEL on the income of farmers linked with 72
NSEL
4.25 Does NSEL really follow what it said in marketing 73
campaign?
4.26 Farmer’s opinion about need for improvement in the 74
System of NSEL
4.27 Areas for Improvement in the system of NSEL 75
4.28 Effects of NSEL to Farmers 76
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10. 4.29 Business Opportunity available for NSEL as perceived 77
by farmers
4.30 Are there any competitors for NSEL 78
4.31 Competitors of NSEL 79
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11. LIST OF FIGURES
Fig. No. Particulars Page No.
2.1 World castor seed Producers 35
2.2 Castor seed production Trend in India 35
2.3 Castor seed production (India & Gujarat) 36
2.4 Estimated area under castor seed crop, India (2009-10) 37
2.5 Estimated castor seed production, India (2009-10) 37
2.6 Estimated castor seed yield, India (2009-10) 38
2.7 Estimated castor seed production, Gujarat (2009-10) 38
2.8 Estimated area under castor seed crop, Gujarat (2009-10) 39
2.9 Estimated castor seed yield, Gujarat (2009-10) 39
4.1 Age group of Farmers 48
4.2 Education Level of Farmers 49
4.3 Income source of farmers 50
4.4 Farming as major Income source 51
4.5 Annual Income of the farmers 52
4.6 Distribution of Farmers as per Land holding size 53
4.7 Irrigation Pattern 54
4.8 Crops cultivated by the farmers 55
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12. 4.9 Farmers group as per cropping pattern 56
4.10 Market preference by farmers for sale of produce 57
4.11 Crop wise Market Preference by Farmers 58
4.12 Factors considered for Market Preference by farmers 60
4.13 Sources of Price Information 61
4.14 Farmers Awareness about NSEL 62
4.15 Farmers awareness for Promotional Activity by NSEL 63
4.16 Sources of Awareness about NSEL 64
4.17 Farmers ever Deal with NSEL 65
4.18 Reasons for why Farmers prefer to deal with NSEL 66
4.19 Reasons for why Farmers not deal with NSEL 67
4.20 Satisfaction Level of Farmers when dealt with NSEL 68
4.21 Farmers ready to deal with NSEL again in Future 69
4.22 Farmers who used other services of NSEL 70
4.23 Farmers Perception about NSEL 71
4.24 Impact of NSEL on the income of farmers linked with 72
NSEL
4.25 Does NSEL really follow what it said in marketing 73
campaign?
4.26 Farmer’s opinion about need for improvement in the 74
System of NSEL
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13. 4.27 Areas for Improvement in the system of NSEL 75
4.28 Effects of NSEL to Farmers 76
4.29 Business Opportunity available for NSEL as perceived by 77
farmers
4.30 Are there any competitors for NSEL 78
4.31 Competitors of NSEL 79
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14. EXECUTIVE SUMMARY
National Spot Exchange Ltd is electronic spot market. The foundation
stone for National Spot Exchange was laid on 10th February, 2005 in New
Delhi in a function presided over by Shri Sharad Pawar, Honorable Union
Minister for Agriculture and Consumer Affairs, Food and Public
Distribution.
The project work on “A Study on the Comparative evaluation of
Participants Satisfaction and Perception in Castor trade: NSEL viz a viz
APMC” was carried out under the guidance of Project Guide Mr.Amit
Mukherjee , Asstt. Manager NSEL, Palanpur, Gujarat and Faculty Guide
Prof. Rahul Thakkar, IABM, Navsari.
The objectives of the project were to study the satisfaction and
perception of participants in castor trade and market share of NSEL in
castor trade and the effectiveness of marketing strategies of NSEL. The
Project also aimed to conduct strength, weakness, opportunity and Threats
analysis for NSEL.
A survey of 600 farmers was carried out to study the objectives stated
above. For the collection of primary data questionnaire was used. Recent
secondary data from internet, magazine, and internal record of NSEL was
collected.
The major finding which came out of my study are in Palanpur taluka
majority of the farmers is highly satisfied with NSEL and perceive it as
Government-Private partnership. Close competitor of NSEL are traders and
APMC.
Based on the above analysis NSEL should increase their promotional
activities to create mass awareness among farmers in the other villages of
Palanpur taluka. Also it should start multi-commodity trading in order to
expand its operations in the North Gujarat.
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16. INDUSTRY PROFILE
Agriculture is key sector occupying an important position in the
Indian Economy. The agriculture sector contributes almost 17% of India’s
Gross Domestic Product (GDP). The effective contribution of agriculture to
the national economy is far greater on account of its backward and forward
linkage with other sectors.
MICROSTRUCTURE OF PHYSICAL COMMODITY
MARKETS
All agricultural commodities in India trade in wholesale markets or
mandis where the price of the commodity is set. If it is a principal
commodity and the market determined price is below a threshold (MSP),
the trader has to take delivery at the MSP. In return, the trader is
compensated by the mandi which is in turn, compensated by the
government. Some of the principal crops are rice, wheat, pulses, oilseeds,
cotton and sugarcane. Today, there are approximately 25 agricultural
commodities for which the government of India still sets a “minimum
support price” (MSP).
Agricultural commodity markets in India started as areas specific to
limited geographical locations where producers and buyers collected to
trade their goods. APMC or Mandis are official markets set up at a specific
location to trade a set of agricultural commodities. They are sanctioned and
“governed” by a mandi board which can be a committee or a trust. These
are, in turn, governed by a state government state mandi board. Most
mandis trade at least one primary commodity. The physical infrastructure
of the mandi consists of a yard with platforms or open sheds where farmers
bring their crops to sell to traders.
Mandis are set up only with the permission of state governments.
Each state has a state agriculture marketing boards (SAMB). These, in turn,
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17. set up mandi boards at the level of a district. It is the mandi board that
evaluates proposals to set up new mandis and permits the creation of a
mandi.
Initially, mandis were set up only at the level of a specific district.
But their numbers have been rapidly increasing to allow trading at a more
micro-level. Today there are several mandis to a district, with around 750
mandis that facilitate the trade of 140 crops and their different varieties, all
across India. Most mandis in the same district trade a very similar set of
commodities in the same district. This makes for a very fragmented market
for any single agricultural commodities across the vast geographical reach
of India
India exports castor seed, oil and also meal. However the oil export
has the largest share as it is a value added product from castor seed. There
is a large scope for improving India’s earning from castor by converting the
castor oil in various derivatives. However, India has confined itself to
exporting only castor oil with little efforts to explore the possibilities of
producing and exporting its derivatives. But in countries like Brazil and
China, its derivatives are being produced and exported though to a limited
quantity. Lately in view of high price volatility and stagnant world output
of castor oil, its substitutes have been developed.
India is the world’s largest Castor grower country dominating the
global trade with a share of more than80%. Despite the dominance in the
global trade platform, India does not enjoy role of a price-setter, but merely
a price-taker. India has limited domestic consumption with less than 10%
production going for a value addition. The main consuming segments are
Paints (45%), Soaps (30%) and Lubricants (20%).
In India castor seed is grown mainly in Mehsana, Banaskantha and
Saurashtra-Kutch region of Gujarat and Nalgonda and Mahboobnagar
districts of Andhra Pradesh. India exports around 3 lakhs tonne of
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18. commercial castor oil mainly to USA, Europe and Japan. Though the
production of castor seed is concentrated in Gujarat and Andhra Pradesh,
its consumption is spread across the country. The major castor seed
markets in Gujarat are Rajkot, Ahmedabad, Gondal, Gadwal, Bhabar, Disa
and Kadi while in Andhra Pradesh they are Jedcheria and Yemignoor.
REGULATORY FRAMEWORK OF PHYSICAL
COMMODITY (SPOT) MARKETS
Agriculture continues to be the mainstay of life for a majority of the Indian
population even though its contribution as a percentage of the GDP has
decreased to 17%. The agricultural sector employs more than 60% of the
country's workforce. Significant strides have been made in agriculture
production since Independence. The subject of agriculture and agricultural
marketing is dealt with both by the states as well as the central government.
Starting from 1951, the different Five-Year Plans laid stress on the
development of physical markets, farm and off-farm storage structures,
facilities for standardization and grading, packaging, transportation, etc. The
development of horticulture marketing attracted attention of policy makers
during the 3rd Five-Year Plan. In 1965, Central Warehousing Corporation,
Food Corporation of India, Agricultural Prices Commission (later renamed
as Commission for Agricultural Costs and Prices) and several other
organizations came into existence. Besides, a number of organizations were
set up in the form of commodity boards, cooperative federations, and export
promotion councils for monitoring and boosting the production,
consumption, marketing, and export of various agricultural commodities.
The prominent among them included Cotton Corporation of India Ltd (CCI),
Jute Corporation of India Ltd (JCI), National Cooperative Development
Corporation Ltd (NCDC), National Agricultural Cooperative Marketing
Federation ltd (NAFED), National Tobacco Growers Federation ltd (NTGF),
Tribal Cooperative Marketing Development Federation ltd (TRIFED),
National Consumers Cooperative Federation ltd (NCCF), etc for
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19. procurement and distribution of commodities; and Tea Board, Coffee Board,
Coir Board, Rubber Board, Tobacco Board, Spices Board, Coconut Board,
Central Silk Board, National Dairy Development Board (NDDB), National
Horticulture Board (NHB), State Trading Corporation (STC), Agricultural &
Processed Foods Export Development Authority (APEDA), Marine Products
Export Development Authority (MPEDA), Indian Silk Export Promotion
Council, Cashew nuts Export Promotion Council of India (CEPC), etc. for
promotion of production and export of specific commodities.
Most agricultural commodity markets generally operate under the
normal forces of demand and supply. However, as discussed earlier, with a
view to protecting farmers' interest and to encourage them to increase
production, the government also fixes minimum support/statutory prices for
some crops and makes arrangements for their purchase on state account
whenever their price falls below the support level. The role of the
government normally is limited to protecting the interests of producers and
consumers only in respect of wage goods, mass consumption goods, and
essential goods. The role of the government is to promote organized
marketing of agricultural commodities in the country through a network of
regulated markets. To achieve an efficient system of buying and selling of
agricultural commodities, most of the state governments and union
territories have enacted legislations (Agriculture Produce Marketing
Committee Act) to provide for regulation of agricultural-produce markets.
The basic objective of setting up a network of physical markets is to ensure
a reasonable gain for the farmers by creating a favourable environment for
fair play of supply and demand forces, regulation of market practices, and
transparency in transactions. With a view to coping with the increasing
agricultural production, the number of regulated markets has also been
increasing in the country. While by the end of 1950 there were 286
regulated markets in the country, today the number stands at 7521. The
central government advised all the state governments to enact a marketing
legislation to promote competitive and transparent transactional methods to
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20. protect the interests of farmers. Barring a few, most of the states and union
territories have embarked upon a massive programme of regulation of
markets after enacting the legislation. Most of these regulated markets are
wholesale markets. Besides, the country has 27,294 rural periodical
markets, about 15% of which function under the ambit of the regulation.
The advent of regulated markets has helped mitigate e market handicaps of
producers/sellers at the wholesale assembling level. But, the rural periodic
markets in general, and the tribal markets in particular, remained out of its
developmental ambit. The area served by each market across the states
reveals large variations. The area served per regulated market varies from
74 in Punjab to 2257 in Assam. On an average, a regulated market serves
459 in the country, which is quite high. Farmers have to travel long
distances with their produce to avail the facility of regulated markets. The
National Commission on Agriculture (1976) had recommended that the
facility of a regulated market should be available to the farmers within a
radius of 5 km and if this is considered a benchmark, the command area of
a market should not exceed 80. However, in the existing scenario, except
Delhi, Punjab, Chandigarh and Pondicherry, in no state is the density of
regulated markets close to the norm. Auction platforms are needed in the
market for price settlement of the produce in a congenial atmosphere
between buyers and sellers. Both covered and open auction platforms exist
in only two-thirds of the regulated markets. When some commodities that
are brought for sale contain higher moisture than the desired level, there
should be a space for drying. Present only one-fourth of the markets have
common drying yards. Trader modules viz. shop go-down and platform in
front of shop exist in 63% of the markets. Cold storage units are needed in
the market where perishable commodities are brought for sale. They are
brought for sale only in a few markets. The cold storage units exist only in
9% of the markets and grading facilities exist in less than one-third of the
markets. The basic facilities such as internal roads, boundary walls, electric
lights, loading-unloading facilities, and weighing equipment are available
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21. in more than 80% of the markets. Farmers’ rest houses exist in more than
half of the regulated markets. All this shows that there is considerable gap
in the facilities available in the market yards.
As mentioned earlier, agricultural markets in most parts of the
country are established and regulated under the State APMC (Agriculture
Produce Marketing Committee) Act. The whole geographical area in each
state is divided and declared as a market area wherein the markets are
managed by Market Committees constituted by the state government. Once
a particular area is declared a ma _ area and falls under the jurisdiction of a
Market Committee, no person or agency is allowed to free carry on
wholesale marketing activities. The monopoly of government regulated
wholesale market has prevented the development of a competitive
marketing system in the country, providing no help to farmers in direct
marketing, organizing retailing, smooth supply of raw materials to agro-
process industries, and adoption of innovative marketing system and
technologies.
Efficient agricultural marketing is essential for the development of
the agriculture sector as it provide outlets and incentives for increased
production; the marketing system contributes significantly to the
commercialization of subsistence farmers.
Worldwide, governments have recognized the importance of
liberalized agricultural markets. Ta Force on Agricultural Marketing
Reforms, set up by the Ministry of Agriculture, has suggested promotion of
new and competitive agricultural markets in private and cooperative sectors
to encourage dire marketing and contract farming programme, facilitate
industries and large trading companies undertake procurement of
agricultural commodities directly from the farmer's fields, and establish
effective linkages between the farm production and retail chains. There is a
necessity to integrate farm production with national and international
7
22. markets to enable farmers to undertake a market-driven production plan
and adopt modern marketing practices.
If agricultural markets are to be developed in private and cooperative
sectors and provided competitive environment as compared to regulated
markets, the existing framework of the APMC will have to undergo a
change. The state has to facilitate varying models of ownership of markets
accelerate investment in the area and enable private investment in owning,
establishing, and opera markets. Working of existing government regulated
markets also needs to be professionalized promoting public-private
partnership in their management. An appropriate legal framework is a
required to promote direct marketing and contract farming arrangements as
alternative marketing mechanism. Therefore, there is a need to formulate a
new model law for the agricultural market.
THE COMMODITY MARKETS ECOSYSTEM INCLUDES
THE FOLLOWING COMPONENTS:
1. Buyers/Sellers or Consumers/Producers: Farmers, manufacturers,
wholesalers, distributors, farmers’ co-operatives, APMC mandis, traders,
state civil supplies corporations, importers, exporters, merchandisers, oil
refining companies, oil producing companies, etc.
2. Logistics Companies: Storage and transport companies/operators, quality
testing and certifying companies, valuers, etc.
3. Markets and Exchanges: Spot markets (mandis, bazaars, etc.) and
commodity exchanges (national level and regional level)
4. Support agencies: Depositories/de-materializing agencies, central and state
warehousing corporations, and private sector warehousing companies
5. Lending Agencies: Banks, financial institutions
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23. CURRENT STATUS OF AGRICULTURAL
MARKETING
Consequent upon Green Revolution, production has increased; India
has become largest producer or exporter in a number of commodities, but
still farmers were committing suicide. APMC laws were created to ensure
good prices for the farmers through open auction system, but on contrary, it
has created monopolistic scenario i.e. only Government can create APMCs,
private mandis are not allowed. Only APMC license-holders can buy from
farmers, end users cannot buy from the farmers directly. Markets were
designed to be regionalized and fragmented which is against the basics of a
structured market place. There is a need to create a national level electronic
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24. transparent spot market, which can lead to development of structured
mechanism for marketing of agriculture produce.
WHY ELECTRONIC SPOT EXCHANGE?
Economic liberalization and emphasis on Public Private Partnership
are already revolutionizing agriculture market and agriculture marketing.
India is looking forward to having a double digit growth rate which can
only be achieved if the income disparity between farmers and other sectors
of the economy is narrowed through a market centric approach. There is a
need to improve purchasing power of farmers through income from their
farm and non-farm economic activities. Currently, farmers sell their
produce through mandies (agricultural markets) which are controlled and
regulated by respective state governments. Out of 28090 rural markets
(Whole sale 6359; Rural Primary 21731) only 7557 markets (Principal
2428; Sub markets 5129) are regulated by Agriculture Produce Marketing
Regulation Acts of various states. In regulated markets, produce can only
be sold in government recognized locations and only to authorized agents.
It is a known fact that the farmer gets only a small fraction of what
ultimate consumer pays for agriculture commodities and 8-20% of their
income is consumed in servicing intermediaries in the form of commission,
interest burden, transportation and warehousing charges etc. The chain of
intermediaries in Indian agriculture market is one of the longest in the
world. A major portion of the loss in value of commodities due to
wastages, pest attack, transportation, storage, handling etc. is again borne
by the farmer. Despite efforts made by the governments these mandies are
marred by inefficiencies, dominance of commission agents etc. Therefore,
the focus of growth in rural economy has to shift from production to
processing and marketing of agriculture produce. Although, some of the
governments have given permission to agencies (e.g. ITC, Cargill etc,) to
operate as private mandies, problems related to transparency and fair price
10
25. discovery persist. Therefore, NCEL has taken up an initiative to launch a
National Spot Market. Such a national level platform would help transcend
regional and state boundaries and pave the way for participation by
concerned entities irrespective of geographical locations. The farmer would
stand empowered by virtue of the electronic platform which would extend
the reach to buyers across the length and breadth of the country.
A mandi typically serves 100 to 1000 square kilometer area. Mandi is
the delivery point where farmers bring their produce directly or through
village agents for sale to traders. Trading in mandies is conducted and
controlled by commission agents called Adatiyas who have extensive
personal network and financial influence on farmers.
ADATIYAS ARE OF TWO TYPES:
• Kachha Adatiya: They are purchasing agents who buy only on behalf of
others.
• Pakka Adatiyas: They finance trade as representatives of distant buyers
or procure crop on their own account for trading.
Farmers sell their agriculture produce in primary sale through an open
outcry auction which is fraught with the following inadequacies /
shortcomings;
• The clientele for purchase (Adatiyas) is restricted to local traders.
• Cartelization among local traders is an often observed phenomenon
working to disadvantage of farmers.
• The end users of the commodity are very often not in a position to
participate directly in the auction owing to geographical distance.
The primary sale attracts mandi tax which is paid by the buyer. Tax paid
goods can then be freely traded within the state with no further liability
11
26. towards the mandi tax. Secondary sales take place on the basis of bilateral
negotiations between known parties having an established relationship.
Although transactions in the secondary market are very often based on
informed decisions, and result in smooth delivery and settlement, extended
chain of intermediaries precludes possibility of a higher price realization
for the seller and lower acquisition price for the end users.
Another feature observed in the current system is the financial
assistance extended by commission agents. These agents also provide
storage facilities to the farmers and offer to dispose off the produce at an
appropriate time, ostensibly with the objective of realizing a better price for
the farmers’ produce. The commission agents, are by law, (as per the
respective State APMC act) entitled to charge a commission ranging from
1-2% of the sale proceeds.
Given the high cost of intermediation, there is scope for a more efficient
platform with better price dissemination capability at lower costs. The
solution lies in the establishment of an electronic exchange for spot market.
The national spot markets can be established with following objectives:
a) To empower farmers by enhancing their decision making capabilities
b) To ensure fair price realization by farmers
c) To address inefficiencies of current spot commodity markets
d) To provide an effective alternative to current delivery systems by
bringing in cutting edge technology, efficiency, transparency and
modernization benefiting larger number of market participants
Electronic spot markets can be established for standard and non-
standard products and can conduct auctions or continuous day trading with
trade to trade settlements. Spot exchanges, with the permission of the State
Governments can function as private mandies and/or provide electronic
auction platform to existing mandi participants. Buyer and sellers would
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27. participate in the spot exchanges only through members. Members in turn
may seek license from respective mandi Samities of the state or get license
through exchanges for handling agricultural produce in the state. Electronic
spot exchanges need to be accompanied with sufficient warehousing and
assaying facilities as conduct of auction and trading for standard products
would require pre-assaying and storage at accredited warehouses.
Introduction of electronic spot markets would bring transparency of
operations and price discovery in physical commodities market and would
benefit farmers who can be assured that there has been no manipulation in
the sale procedure. Market access to large number of buyers and sellers
would enhance liquidity in the market and enable participation by entities
located away from the physical markets. These entities can be assured of
the quality of produce by standardized grading, storage and handling
systems. Assurance of delivery of quality produce will also attract large
industrial players who may pass on the benefits from quality assurance to
farmers through reverse auctions. Electronic exchange can maintain
flexibility of current market systems besides complementing futures market
where farmer, traders and mill owners can benefit from arbitrage
possibilities in the futures and spot markets. Futures market will also
benefit from availability of online and accurate information on spot market
which would substitute for polling of prices required for arriving at final
settlement price. Electronic spot markets would enhance employment
opportunities for existing participants through diversification of economic
activities and value addition. While Pakka Adatiyas can become members
of the spot exchange Kachha Adatiyas can work as promotion agents of
exchanges, operate information kiosks, organize farmer clubs, bring
synergies in rural institution such as NGOs, SHGs, KVKs etc. and function
as aggregators. While exporters will be able to take deliveries over the
electronic spot exchanges, Government will benefit from better collection
of mandi taxes. Reduced number of intermediaries and intermediary
13
28. margins will benefit farmers who can use both futures and spot platform to
avoid distress sales.
Thus, commodity exchanges can bring about substantial qualitative and
positive changes in current spot markets through use of their technological
and institutional resources.
14
30. NATIONAL SPOT EXCHANGE LTD
MUMBAI
BACKGROUND
National Spot Exchange is poised to set up a delivery based e-market (a
national level institutionalized, electronic, transparent spot Exchange).
National Spot Exchange is a state-of the-art unique market place providing
customized solutions to various problems faced by the farmers, traders,
processors, exporters, importers, arbitrageurs, investors and the general
mass. The foundation stone for National Spot Exchange was laid on 10th
February, 2005 in New Delhi in a function presided over by Shri Sharad
Pawar, Honorable Union Minister for Agriculture and Consumer Affairs,
Food and Public Distribution.
NSEL provides a place, where farmers can sell at the best possible rate,
end users can buy at the most competitive rate and NSEL provides counter
party guarantee in respect of all trades. NSEL also provides services like
Quality certification, storage of goods and other customized value added
services. It also strengthens the future market by creating a delivery
platform, which can be used by the buyers-sellers to procure/dispose of
deliveries. After the launch of NSEL, the canvass of commodity trading
would be complete. India has now both spot and future market available on
electronic platform with national reach.
PROMOTORS
FTIL (Financial Technologies India Limited) is among the very few
companies globally that offers exhaustive solutions library for Exchanges,
provides technology solutions to financial markets and facilitates expansion
of stock broking terminals.
16
31. NAFED (National Agricultural Cooperative Marketing Federation of India
Limited), the leading Government agency, engages in food procurement,
distribution and storage activities.
MISSION
“To develop a pan India, institutionalized, electronic, transparent Common
Indian Market offering compulsory delivery based spot contracts in
various agricultural and non-agricultural commodities, with a view to
reduce the cost of intermediation by improving marketing efficiency and
thereby improving producers’ realization coupled with reduction in
consumer paid price.”
OBJECTIVES
To provide an effective method of spot price discovery in various
commodities, in a transparent manner from across the country.
To create a market where farmers can sell their produce and realize sale
proceeds at the best prevailing price.
To create a market where the processors, end users, exporters, corporates
(both private and government) and other upcountry traders can procure
agricultural produces at the most competitive price, without any counter
party and quality risk.
To create a transparent market where financiers, investors and
arbitrageurs can invest money in buying various commodities across the
country without going through the hassles of physical market.
To provide authentic spot price of various commodities that can be used
by the futures market as the benchmark price for settlement of their
contracts on the date of expiry.
To help the futures exchanges, Forward Markets Commission (FMC) and
the Government in achieving the target of compulsory delivery in all
agricultural produces by way of creating a structured and standardized
spot market.
17
32. To promote grading and standardization of agricultural produces and
create a market, where banks and money lending agencies can provide
warehouse receipt financing to farmers and traders.
BOARD OF DIRECTORS
Shri Shankarlal Guru – Chairman
Noted Agriculture activist.
Chairman of Guru Committee formed by Govt of India, which
drafted Model APMC Act.
Shri Jignesh Shah – Vice Chairman
Founder, CMD of Financial Technologies Group.
Over 17 years of experience in the Securities and Commodities
Exchange Industry.
Shri Anjani Sinha – Managing Director and Chief Executive Officer
Director of MCX.
18 years of experience of Stock and Commodity Exchanges.
Shri B.D Pawar – Director
Editor of CITA.
40 years’ experience in Agriculture Marketing.
Shri Joseph Massey – Director
Managing Director and Chief Executive Officer of MCX.
18 years of experience with LIC, RBI, SHCIL and Stock Exchanges.
Shri V. Hariharan – Director
Director-Technology of FTIL and Director of MCX.
25 years of experience in Business Enterprise Technology Solutions
and Strategy.
18
34. TRADING SYSTEM
National Spot Exchange is providing an online screen based trading
system, which can be accessed through VSAT, leased line or internet.
Exchange has launched daily expiry contracts for various agri-
commodities, which can be traded from 10 am to 4 pm for farmer’s
contract and 6 pm for trader contract. The positions outstanding at the end
of the day will result into compulsory delivery. But during the day, the
transactions of offsetting nature will be netted off and delivery will be
executed only with respect to the net quantity outstanding at the end of the
day. All the terms relating to quality specifications, place of delivery, date
of delivery and other conditions will be specified by the Exchange in
advance and all contracts executed on the system would be on the basis of
such terms only. The price band is 2% up or down on a daily price for a 20
kg, set by the FMC, and are said to be rarely binding.
The exchange charges Rs.500 per one lacks transaction in farmer
contract, out of which Rs.75 is brokerage that has to be paid to the trading
member at the end of the month and Rs.500 per lot (150 bags x 75kg) &Rs.
20 per lacks for transaction charge and warehouse receipts transfer in trader
contract and member charge their brokerage as per their policy.
DELIVERY, CLEARING AND SETTLEMENT
All trades executed on a day will be netted off at the end of the day
as per the weighted average price of last 30 minutes. The profit / loss
arising would be settled on the basis of MTM on the next day. The net
sellers have to give delivery by way of depositing goods in the Exchange
designated warehouses / storage tanks as specified in the Circular. The
buyer's account will be debited by the Exchange and delivery order will be
handed over to them after ensuring that payment is through and Payout will
be credited to the seller's account.
20
35. In case the seller fails to give delivery, the position will be
auctioned/closed out at the risk and cost of the seller separately. In case the
buyer fails to make payment, the buying position would be auctioned by
the Exchange at the risk and cost of the buyer.
RISK MANAGEMENT, MARGINING AND
SURVEILLANCE
The Exchange is using various tools for risk management, margining
and surveillance to ensure market integrity. All positions outstanding in the
market would be subject to margin payable by both buyers and sellers.
However, if the sellers have deposited goods in the Exchange designated
warehouses, margin will not be applicable on such positions.
SETTLEMENT GUARANTEE FUND
The Exchange will guarantee performance of all contracts executed
on the Exchange platform. For this purpose, the Exchange will maintain a
settlement guarantee fund. Notwithstanding default of any member, the
payout will be declared as per the Exchange schedule.
GOVERNANCE
The exchange is governed by a board of directors, SAMB and FMC.
The board is in charge of taking important decisions like how a bankruptcy
is to be “dealt with”.
The day to day management of the exchange operations is carried out
by the exchange staff, partner firm and members. None of the management
staff can take positions or trade themselves.
There are several trading member committees to deal with specific
problems at the exchange, such as:
1. Clearing house committee: decisions on disputes at the clearing house.
21
36. 2. Daily rates committee: decides the daily opening, high, low and close of
the day.
3. Survey committee: certify the quality of the goods transferred from
buyers to sellers.
4. Arbitrators: Every dispute is handled by two designated arbitrators, one
appointed by each of the two conflicting parties.
5. Vigilance committee: investigates any violation of the exchange bye-
laws, rules, regulations and the FCRA, 1952.
REGULATION
The Forwards Markets Commission (FMC) is the regulatory body
for commodity spot markets. Daily reports of the prices, positions and
margins of each of the trading members are passed onto the FMC at the end
of every trading day. Position limits, margin rules, fees and charges have
also to be approved by the FMC.
The FMC and SAMB or mandis both plays an important regulatory
role in the running of the electronic spot markets.
SERVICES OFFERED BY NATIONAL SPOT EXCHANGE
Common National level platform for buying selling commodities with
efficient price discovery.
Integrate the fragmented market electronically.
Electronic spot trading facility in multiple commodities with specific
delivery centres.
Grading, quality certification and standardization of commodities.
Efficient spot price discovery, price dissemination small producers and
traders get equated with large consumers or traders.
22
37. Facilitating collateral financing and borrowing against warehouse
receipts.
Customized services relating to storage, transportation, logistics handling
and shipment
Trade and payment guarantee.
Procurement and disposal of commodities through online trading system.
Market Intelligence Reports.
NSEL NETWORK PLATFORM:
23
38. THE DIFFERENCE BETWEEN OPEN OUTCRY
AUCTION AND ONLINE TRADING
OPEN-OUTCRY ONLINE TRADING
Participants congregate in a “ring” to Participants put orders on-line to discover
discover prices prices
Physical presence in exchange premises Orders routed through electronic networks
required
Price quotations/ traded prices not Quotations and traded prices available on-line
transparent
Cannot facilitate on-line real time price Real time price dissemination possible
dissemination
Monitoring of member’s positions and risk On-line monitoring of member positions
management practices cumbersome
24
39. COMPARISION OF DIFFERENT MARKETS
PARTICULARS SPOT FUTURE ELECTRONIC
MARKETS MARKET SPOT EXCHANGE
(MANDI)
OPERATES More than 9000 3 national online NSEL & NCDEX
THROUGH APMCs exchanges (MCX, Spot
NCDEX, NMCE), 24
regional exchanges
REACH Confined to Across the country Across the country
particular through online trade through online trade
market place
DELIVERY Immediate At expiry 2-8 Days
LEVERAGE No Yes Partial
RISK Less High Average
RETURNS Less High Average
TRANSPORTATION Required Required Required
TRADING Mandis/physical Electronic platform Electronic platform
THROUGH market
QUALITY Varied Standardized Standardized
REGULATION State APMC FMC FMC & State APMC
Acts Acts
WHY OF NSEL PLATFORM
Lesser dependency on commission Agents.
Negligible Brokerage/commission.
Efficient Warehousing and Logistics support.
Time saving.
Complete end to end solution.
25
40. Guaranteed trade with weighment/Quality assurance.
A new distribution channel with trade guarantee.
A complimentary market to derivative traders.
Timely disbursement of commodities and funds.
Transparency in transaction and settlement.
ADVANTAGES TO THE FARMERS
Current prices available on real time basis.
Loan against warehouse receipt.
Increase in holding and bargaining capacity.
Access to a national level market.
Counter party guarantee provided by the Exchange.
It will educate the farmers about grading at the farm level and it will help
market led production and consumers will be able to get standardized
quality produce.
It can help in realizing the better prices for harvested crop during off
season.
Since the end users would be connected to the NSEL trading system and
the highest buy price offered by lacs of buyers would be visible on the
trading screen, he will get the best possible price available at the moment.
26
41. ADVANTAGES TO TRADERS
Traders would get a bigger and liquid market, where they can sell huge
quantity.
Elimination of counter party risk, credit risk, rejection at buyer’s go-
down at the time of delivery. Once they sell on NSEL and deliver in
NSEL warehouse, they are free from all post trade risks.
Since large number of investors from all across the country would be
available at NSEL platform, they can realise better price for their
product.
Access to bank finance against warehouse receipts.
They can expand their activities to multiple commodities, because of
operational ease, availability of finance and absence of counter party risk
under NSEL system.
ADVANTAGES TO STATE GOVERNMENT & APMCs
Better price realization of cess, because all derivatives can be tracked.
National spot exchange will provide a statement of all physical deliveries
along with name of traders every month.
It promotes economic activity in the state.
Better realization for the farmers, which accelerates the pace of economic
development in the state.
It promotes industrial activity, processing and export due to assurance of
uninterrupted supply of raw materials through National Spot Exchange.
Various centres in the state emerge as important trading hubs, which
generates lot of direct and indirect employment.
27
42. All these objectives are achieved without any load on the exchequer- no
subsidy, no grant, no tax, no investment, no land allotment, no loss of
revenue, no loss of APMC cess.
SIGNIFICANT MILESTONES FOR NSEL
Feb-05 MoU signed between NAFED, Financial Technologies and MCX
May-05 Company Incorporated on 18th May, 2005
Jun-07 Gazette Notification issued by Government of India
Ministry of Agriculture, Govt. of India recommended NSEL
Project.
Oct-07 Gujarat Government issued E-Trading License.
Nov-07 Signed MoU with Govt. of Rajasthan
Signed MoU with IL % FS for common service centers being
set-up under National E-Government Project to be connected to
NSEL Project.
Jan-08 Maharashtra Government issued E-Trading License.
May-08 Karnataka Government issued license.
Jun-08 NSEL signed MoU with the Gujarat Agro-Industries
Corporation Ltd (GAIC) to create strategic alliance for
development of agri-business and, providing an electronic market
platform in the state.
NSEL starts its Membership drive.
Jul-08 Commencement of Mock operations.
Oct-08 Commencement of Live Operations on 15th October, 2008.
Dec-08 NAFED Board approves sale of cotton through NSEL and contract
was launched by NSEL as approved by NAFED Board to help
exporters, mills and merchants across the country.
Jan-09 Commenced cotton procurement in AP under PSS on behalf of
NAFED
Jul-09 CCI follows the steps of NAFED and becomes member of NSEL to
28
43. sell cotton bales on NSEL platform on the same terms.
Nov-09 Government of Orissa granted license. Commencement of
operation in Orissa.
Dec-09 Government of Rajasthan granted license.
29
45. A STUDY
ON
“COMPARATIVE EVALUTION OF
PARTICIPANTS SATISFACTION AND
PERCEPTION IN CASTOR TRADE:
NSEL viz a viz APMC”
INTRODUCTION
CASTOR SEED
Castor (Ricinuscommunis L.) is cultivated around the world because
of the commercial importance of its oil. India is the largest producer of
castor seed in the world while Gujarat is the largest castor seed producing
state in India. Because of its unlimited industrial applications, castor oil
enjoys tremendous demand world-wide. Castor is an important non-edible
oilseed crop and is grown especially in arid and semi-arid region. It is
originated in the tropical belt of both India and Africa. The Indian variety
of castor seed has 48% oil content of which 42% can be extracted. India’s
castor seed production fluctuates between 6 to 9 lakhs tonne per annum.
Castor seed is produced mainly in 3 states in India - Gujarat, Rajasthan and
Andhra Pradesh. Gujarat accounts for more than 80% of castor seed
production followed by Andhra Pradesh, Karnataka and Rajasthan. In
common trading parlance, the most commonly traded Castor varieties are
the Gujarat small seed and Andhra big seed.
31
46. Gujarat
Apart from the Southern areas, castor seed is produced in all parts of
Gujarat. During 2006-07, around 4.90 lakhs ton castor seed was produced
here which increased to 6.50 lakhs ton in 2007-08. As per latest estimates,
production is expected to remain higher than this figure (at ~ 8 lakhs tons)
as farmers are getting remunerative price for their produce. This
encouraged them to take more interest for its cultivation. Castor seed is
cultivated in July to August and arrivals start during December. However,
its arrival continues the whole year as its cycle is of nearly 8 months
period.
Rajasthan
Rajasthan is the second largest castor seed producing state in India.
During 2006-07, nearly 1.40 lakhs ton castor was produced here which
remained same during 2007-08. However, the sowing area has moved up
this year as per reports. The production this year is expected higher at 1.70
lakhs tons. Castor seed is cultivated in July to August and arrivals start
during December.
Andhra Pradesh
Andhra Pradesh is the third largest castor seed producing state in
India. During 2006-07, around 1.10 lakhs ton castor seed was produced
here which reduced to nearly 90 thousand ton in 2007-08. In 2008-09,
production figure is expected to decrease (to ~70000 tons). This is mainly
attributed to insufficient rains. Here, arrival starts in September. And the
sowing time is May – June. It is an 8 month cycle crop.
Other States
Around 30,000 tons castor seed is also produced in Maharashtra and
some other states. India is the only exporter of castor oil. However, some
32
47. other countries are also produces it but that fulfils only their domestic
demand.
Total production in India was 7.80 lakhs ton during 2006-07 which
increased to nearly 9.10 lakhs ton during 2007-08. As per sources, total
Indian production in 2008-09 is expected to touch 10.70 lakhs ton.
Moreover, export figure is also likely to remain high this year. Trading
activities are expected to increase in castor oil in the near future. The
export demand is expected to pick up.
CROP CALENDAR OF CASTOR SEED
Traditionally, castor is a kharif season crop. Sowing of castor with
onset of monsoon is found most beneficial in rained condition. Castor
grows under tropical conditions. It loves heat and humidity and does best in
regions where both are ample. India is gifted with an ideal climatic
condition for castor seed.
33
48. APPLICATIONS OF CASTOR SEED
INDUSTRIES APPLICATION
Agriculture Organic Manure
Paper Water proofing Additive
Cosmetic Emulsifier and Deodorant
Paint, Ink and Adhesive Wetting and Dispersing Additive
Food Viscosity reducing additive
Plastic & Rubber Coupling agent
Electronics & Telecommunication Capacitor fluid
Lubricant Corrosion inhibitor
Textile Pigment wetting agent
Pharmaceutical Castor oil
34
49. WORLD CASTOR SEED PRODUCERS
Fig. 2.1
World Castor seed Producer
Others
Brazil 7%
8%
China
21%
India
64%
CASTOR SEED PRODUCTION TREND IN INDIA
Fig. 2.2
Castor seed Production Trend in India
1000
910
855 880
900 850
780
800
Production (in '000 tonnes)
700 655
590
600
500
400
300
200
100
0
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06
Year
35
50. CASTOR SEED PRODUCTION (INDIA & GUJARAT)
Fig. 2.3
Castor seed Production (India & Gujarat)
1200
990.7 1011
1000
Production ('000 Tonnes)
796.7 793.4 762.3
800 680
652.7 665
541.1 563.3 533
600
465.1 Gujarat
427.5
India
400 283.1
200
0
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Year
Total area under Castor crop in India for the year 2009-10 is 7.40
lakhs hectares. It has decreased by 10% as compared to previous year.
Estimated total production of Castor Seeds in India for the year 2009-10 is
9.34 lakhs tonnes. It has decreased by 4% as compared to previous year.
Average yield for the year 2009-10 is 1261 kg/hectare as against 1180
kg/hectare during the year 2008-09. It has increased by 7% as compared to
previous year.
Total area under Castor crop in Gujarat for the year 2009-10 is 4.37
lakh hectares. It has decreased by 3% as compared to previous year. Area
under Castor crop has increased in all the major castor growing districts
except Ahmedabad, Patan, Rajkot, Surendranagar and Vadodara. Estimated
total production of Castor Seeds in Gujarat for the year 2009-10 is 7.34
lakhs tonnes, it has increased by merely 1% as compared to previous year.
However this growth is mainly in the districts such as Vadodara (28%),
Ahmedabad (24%), Rajkot (19%), Patan (16%) and Sabarkantha (8%).
36
51. Average yield for the year 2009-10 is 1679 kg/hectare as against 1608
kg/hectare during the year 2008-09.
ESTIMATED AREA UNDER CASTOR SEED CROP,
INDIA (2009-10)
Fig. 2.4
Estimated Castor seed crop Area ('000 Ha), India
500
450
Castor seed Area ('000 Ha)
400
350
300
250
200 2008-09
150 2009-10
100
50
0
Gujarat Rajasthan Andhra Pradesh Other States
States
ESTIMATED CASTOR SEED PRODUCTION, INDIA
(2009-10)
Fig. 2.5
Estimated Castor seed Production ('000
tonnes), India
800
700
Production ('000 tonnes)
600
500
400
2008-09
300
200 2009-10
100
0
Gujarat Rajasthan Andhra Pradesh Other States
States
37
52. ESTIMATED CASTOR SEED YIELD, INDIA (2009-10)
Fig. 2.6
Estimated Castor seed yield (Kg/Ha), India
1800
1600
1400
Estimated Yield (KgHa)
1200
1000
800 2008-09
600 2009-10
400
200
0
Gujarat Rajasthan Andhra Pradesh Other States
States
ESTIMATED CASTOR SEED PRODUCTION, GUJARAT
(2009-10)
Fig. 2.7
Estimated Castor seed Production (in '000
tonnes), Gujarat
200
Castor seed production ('000 tonnes)
180
160
140
120
100
80
60
40 2008-09
20
0 2009-10
District
38
53. ESTIMATED AREA UNDER CASTOR SEED CROP,
GUJARAT (2009-10)
Fig. 2.8
Estimated Castor seed crop area ('000 Ha), Gujarat
120
Area Under Crop (in '000 ha)
100
80
60
40
2008-09
20
2009-10
0
District
ESTIMATED CASTOR SEED YIELD (KG/HA), GUJARAT
(2009-10)
Fig.2.9
Estimated Yield (Kg/Ha)
2000
1800
1600
1400
Yield (Kg/Ha)
1200
1000
800
600 2008-09
400
200 2009-10
0
District
39
54. THE MAJOR FACTORS INFLUENCING CASTOR SEED
MARKETS ARE…
Variation in castor seed domestic acreage based on yield and price
realization.
Crop development based on progress of monsoon in key growing areas.
Chinese and Brazilian crop size.
Comparative price of other vegetable oils in domestic market.
Carryover stocks.
Development of new applications and substitutes of castor oil.
OBJECTIVES OF THE STUDY
To study the Perception & Satisfaction level of Participants of NSEL.
To know the market share of NSEL in castor trade.
To do the comparative evaluation of NSEL viz a viz APMC.
To assess the effectiveness of marketing strategies of NSEL in castor
trade.
To assess the opportunities, strengths, weaknesses and threats of NSEL.
PURPOSE AND SCOPE OF STUDY
This study will help to formulate the suitable strategies for more
effective penetration in the castor trade for NSEL. As the study involves
the measuring satisfaction level and perception of participants in castor
trade at NSEL as compare to APMC so it will help to study the preference
to NSEL/APMC by participants. Majority of farmers prefer to deal with
known traders and to this is affected by certain factors while decision
40
55. making by participants. This study also focus to find out such criteria of
decision making by participants so as to base on this effective action plan
can be prepared which may help to increase the customer base and also
strengthen the relationship with participants.
41
56. LITERATURE REVIEW
Vandeveer (2006) in his study “Learning outcomes- Perception”
It is the way people organize and interpret the world around them in
order to give meaning to their surroundings. People’s behaviour is based
on how they interpret reality, not reality itself. Perceptions affect awareness
of problems, analysis of problems, interpretations of data, judgment of
potential outcomes.
Susan Thomas (2003) in his report Agricultural commodity markets in
India: Policy for Growth
Every mandi becomes a monopoly to the local producers, especially
once they come to the market. Farmers typically face a short period
between the time that they harvest and the time that they can sell the crop.
In addition, the cost of transportation of commodities is typically
significant, given the lack of good transportation alternatives. If they do not
have access to reliable sources of price information, they become hostage
to the closest source, i.e. the local mandi. Farmers should have access to
prices not just at the local, but also the national level.
Patel Kirankumar K. (2009) in his report Building Up Of An Efficient
Marketing System To Obviate The Need For Better Agricultural
Market Option In Palanpur, Gujarat: A Case Of Castor Seed
In day-to-day reality of the business, Supply chain formation, value
addition and efficient market are creating equality between trade partners.
The sustainable and professional relationships between them play a vital
role. The government as well as private sectors is having two fold
responsibilities in cross border trading. On one hand a good climate in
Agri-value chain and market is required to develop and on other hand to
create better environment for small and marginal farmers by proving them
a holistic platform.
42
58. SOURCES OF INFORMATION
SOURCES OF PRIMARY DATA
Data was collected using survey method by conducting personal
interviews with Castor seed growers in the villages of Palanpur taluka of
Gujarat.
Questionnaire was used for collection of primary data for the study.
SOURCES OF SECONDARY DATA
Secondary data was collected through various sources like company
website, magazines, internet, company leaflet and other sources. Various
reports and article from the internet provides the information regarding the
Castor seed trade and data about area, production, productivity of Castor
seed in Gujarat state.
INSTRUMENT OF DATA COLLECTION
Questionnaire was used for the collection of primary data. Both open
ended question and multiple choice questions were involved in
questionnaire. In open ended questions respondents were free to answer as
per their perception and in multiple choice questions respondents were
offered various options to choose from.
SAMPLE DESIGN FOR SURVEY
LOCATION OF THE SURVEY
In Palanpur taluka, six villages namely Changwada, Tokriya, Bhagal,
Jagana, Malan and Sundha were selected for the Study.
SAMPLING METHOD
Stratified sampling method. Under this method six villages were
selected and farmers were stratified in two (1) farmers traded with NSEL
44
59. and, (2) Farmers not traded with NSEL. From these strata farmers were
selected by convenience sampling.
SAMPLE UNIT: - Castor seed growing farmers.
SR. NO. NAME OF FARMERS FARMERS TOTAL
VILLAGES TRADED NOT TRADED FARMERS
WITH NSEL WITH NSEL
1 Changwada 91 9 100
2 Tokriya 88 12 100
3 Bhagal 89 11 100
4 Jagana 84 16 100
5 Malan 90 10 100
6 Sundha 86 14 100
Total 528 72 600
DATA ANALYSIS TECHNIQUES
Simple tools of analysis were used for study. Quantitative method such as
Percentage, Averages, Weighted Average method was used to analyse data.
Scaling technique that is ranking scale was used to study attitude and
perception of respondents.
THE TECHNIQUES THAT ARE USED FOR ANALYSIS OF
DATA ARE
1. Tabulation of data.
2. Pie charts
3. Bar graphs
45
60. LIMITATIONS OF PROJECT STUDY
Following limitations may come while conducting the project.
This survey is totally dependent on response of farmers.
Limited time was available for survey.
46
64. 3. Income Source of Farmers
Table 4.3: Income sources of Farmers
Sr. No. Income Source No. of Farmers
1 Only Farming 562
2 Farming and Alternative 38
Occupation
Fig. 4.3
Income Source
600 562
500
400
Farmers
300
200
100
38
0
Only Farming Alternative occupation
Income Source
50
65. 4. Farming as major Income source (Based on 562 Farmers)
Table 4.4 Farming as Income source
Sr. No. Farming No. of Farmers
1 Only Agriculture 490
2 Agriculture + Poultry 0
3 Agriculture + Dairy 72
Fig. 4.4
Income source: Farming
600
500
400
Farmers
300
490
200
100
72
0 0
Agriculture Poultry Dairy
Income Source
51
66. 5. Annual Income of the Farmers
Table: 4.5 Annual Income
Sr. No Income Range Farmers Percentage
1 Upto 50,000 16 3
2 50,000 -100,000 90 15
3 100,000-200,000 184 31
4 200,000-500,000 240 40
5 Above 500,000 70 11
Fig. 4.5
Annual Income
Upto 50. 000
3%
Above 500, 000
11% 50, 000 - 100, 000
15%
200, 000 - 500. 000 100, 000 - 200, 000
40% 31%
52
67. 6. Distribution of Farmers as per Land Holding Size
Table No. 4.6 Distribution of farmer as per land holding size
Sr. No Particulars Farmers Percentage
1 Marginal farmer (Up to 1 ha) 80 13
2 Small farmer (1-2 ha) 323 54
3 Medium farmer (2-5 ha) 110 18
4 Large farmer (more than 5 ha) 87 15
Fig. 4.6
Land Holding Size
Large Farmers Marginal Farmer
15% 13%
Medium Farmers
18%
Small Farmers
54%
53
68. 7. Irrigation pattern
Table: 4.7 Irrigation pattern
Sr. No Land Holding (Ha.) Total area (Ha.) Percentage
Irrigated 1147.89 46
1
2 Rainfed 1342.11 54
Total Land 2490.00 100
Fig. 4.7
Irrigation pattern
Irrigated
46%
Rainfed
54%
54
69. 8. Crops Cultivated by Farmers
Table 4.8 crops cultivated by Farmers
Sr. No Crops Farmers
1 Castor seed 600
2 Bajra 287
3 Funnel 173
4 Cumin 448
5 Til 78
6 Mustard 578
7 Mung 209
Fig. 4.8
Crops cultivated by Farmers
Farmers
600 578
448
287
209
173
78
Castor seed Bajra Funnel Cumin Til Mustard Mung
55
70. 9. Cropping pattern followed by farmers
Table 4.9 Cropping pattern followed by farmers
Sr. No Crops Farmers Percentage
1 Castor seed, Mustard, Bajra 264 34
2 Castor seed & Funnel 138 66
Fig. 4.9
Cropping Pattern
Castor seed, Funnel
34% Castor
seed, Mustard, Bajra
66%
56
71. 10. Market Preference by Farmers
Table 4.10 Markets preferred by the farmers for sell of produce
Sr. No Preferred Market Farmers Percentage
1 Cooperatives 12 2
2 Wholesalers 77 13
3 Commission Agent 90 15
4 APMC 121 25
5 NSEL 290 48
6 Millers 10 2
7 Consumers 0 0
Fig. 4.10
Market Preference by Farmers
Consumers
Co-operative
Millers 0%
2%
2%
Wholesaler
13%
Commission Agent
NSEL 15%
48%
APMC
20%
57
73. 12. Factors considered for Market Preference by farmers
Table 4.12 Factors considered by farmers for Market Preference
Note: 1= Never, 2=Rarely, 3= Often, 4= Mostly, 5=Always
Note:-Max. Rating: (Maximum scale 5x600 farmer) = 3000 (Max.)
Individual scores and No. of farmers
Cumulative Mean
score score
(based on
600
Particulars Always Mostly Often Rarely Never farmers)
2962 4.93
Higher 566 30 4
Price (2830) (120) (12) -- --
Familiar 120 126 123 71 160 1775 2.95
Traders (600) (504) (369) (142) (160)
Less 2970 4.95
Quality 570 30 -- -- --
Deduction (2850) (120)
Past 70 100 11 172 137 1576 2.62
Experience (350) (400) (345) (344) (137)
Promotional 86 92 70 112 258 1400 2.33
Strategy (340) (368) (120) (224) (258)
Company 56 40 116 196 192 1372 2.28
Reputation (280) (160) (348) (392) (192)
Good 1574 2.62
Employee 80 79 120 177 144
relations (400) (316) (2360) (354) (144)
2.86
No Fear of 434 112 34 20
Cheating (2170) (448) (102) (44) -- 1716
Timely 488 112 4.81
Payment (2440) (448) -- -- -- 2888
59
74. Fig.4.12
Factors considered by Farmers for Market
preference
Mean score
4.93 4.95
4.81
2.95 2.86
2.62 2.62
2.33 2.28
Figures in parenthesis suggest individual score.
60
75. 13. Sources of Price Information for the farmers for various
commodities at different market.
Table 4.13 Sources of Price Information
Sr. No Source Farmers Percentage
1 Other Farmers 115 19
2 Discussion at Choupal 30 5
3 Sarpanch 0 0
4 Middlemen 80 14
5 Radio 80 13
6 Television 140 23
7 NEWS Paper 155 26
Fig. 4.13
Sources of Price Information
Other Farmers Discussion at Choupal
News Paper 19% 5%
26%
Sarpanch
0%
Middlemen
14%
Television
23%
Radio
13%
61
76. 14. Farmers awareness regarding NSEL
Table 4.14 Farmers Awareness about NSEL
Sr. No. Awareness Farmers Percentage
1 Yes 545 91
2 No 55 9
Fig. 4.14
Percentage of Farmers aware of NSEL
No
9%
Yes
91%
62
77. 15. Farmers awareness for Promotional Activity by NSEL
Table 4.15 Farmers awareness for Promotional Activity by
NSEL
Sr. No. Particulars No. of Farmers Percentage
1 Yes 523 87
2 No 77 13
Fig.4.15
Farmers awareness for Promotional Activity by
NSEL
No
13%
Yes
87%
63