Markets are an important transmission mechanism for converting agriculture production to meet SDG goals on poverty, income employment and infrastructure. With the emerging demand driven agriculture commodity value chains, there is a need to promote innovative institutional linkages between the small holder farmers and the end users i.e., large scale processors / super markets etc.to meet the quantity, cost and quality requirements. Several models of contract farming, bulk marketing through Farmers Associations, Farmer Producer Organizations (FPO), are being promoted. There are a number of success stories but scaling up and scaling out these initiatives is a big challenge.

1. Markets for Agriculture Transformation
Under Drylands
Parthasarathy Rao P.
Presented at the Special session on
“Resilience in Dryland Agri-food systems to achieve SDG targets for India”
26th Annual Conference of Agriculture Economics Research Association
(India) on “Agriculture and Sustainable Development Goals”
NDRI, Karnal, Haryana, 15-17 November 2018

2. 2
Agricultural growth and poverty reduction
There is a close correspondence between agricultural growth and
poverty reduction
The transmission mechanisms include:
• Higher rural incomes
• Cheaper food
• Opportunities in non-farm sector
• Shift from primary crops to allied sectors
Markets are vital for the transmission mechanisms to bring about
poverty reduction

3. c3c
Markets and agricultural productivity
• Not only does technology and inputs (fertilizer, irrigation)
increase agricultural productivity, but market density, well-
connected road networks, and related infrastructure also
contribute significantly to aggregate agricultural productivity
• Free trade across countries and regions within a country
promotes higher aggregate agricultural productivity. Eg.
elimination of Food Zones in India
• Regions/sub-regions with good market access have higher
productivity per unit of land compared to areas with poor
market access
Continued…

4. 4
• Higher productivity is due to
• Diversified cropping patterns
• Better access to key inputs
• Better informed cropping and marketing decisions
• Markets and related infrastructure contribute directly and indirectly
to SDG’s:
• 1. Poverty reduction
• 8. Economic growth
• 9 and 12 on Infrastructure and Sustainable consumption
Markets and agricultural productivity

5. Market Imperfections in rainfed regions
•Smallholder-small marketed surplus
•Segmented markets (thin markets)
•Interlocked markets (credit and output markets)
•Poor access to infrastructure, storage and processing
units
•Lack of information on market intelligence
•Lack of grading / standardization
•Policy issues related to stocking, trade etc.
•Higher marketing and transaction cost

6. 6
Changing context of markets in rainfed regions
• A move away from subsistence agriculture
• Diversification of agriculture to cash crops, horticulture,
livestock, fisheries, (demand driven)
• Alternative uses of coarse cereals (poultry feed, alcohol,
processed food products)
• Demand driven value chains i.e., plough to plate linkages (cost
and quality imperatives, SPS)
• Emergence of supermarkets
• Export markets for niche products (gherkins, grapes, HPS
groundnuts, mangoes)
• Consolidation of the processing sector

7. 7
Efficiency of coarse / nutri. cereals marketing chain
Questions
1. Does the regulated marketing system for coarse / nutri cereals
represent a constraint on increased utilization of the crop as a
food grain?
2. Could the regulated marketing system constrain utilization with
prospect of much increased demand from industry (starch, feed,
alcohol, food processing etc).
Answers
1. No evidence that food grain utilization is compromised by
regulated marketing system
2. Some capacity for expansion given existing marketing
arrangements, However, as industrial / processing demand
increases, marketing system will have to change: new institutions
linking producers will be required.

8. Apprehensions under the changing scenario
• Unequal partnership: fragmentation of farm holdings vs. consolidation
of processing industry
• Exclusion of smallholders (high transaction and collection costs, lack of
quality compliance)
• Commercialization and implications on household food security
To overcome the constraints of the present marketing system:
• Several innovative institutional arrangements have been piloted and
being implemented
• Changes in market regulation and related policy

9. 9
Emerging commodity markets
• Contract farming (several models)
• Producer Company (FPC)
• Cooperative marketing (milk, horticulture)
• Bulk marketing (farmers’ associations)
• Direct marketing (rythu bazaars, apni mandi)
• Forward markets / futures markets
• ICT enabled supply chains
• eNAM (Electronic - National Agriculture markets)
Expected to bring in increased market competition and
reduce transaction costs and improve market efficiency

10. 10
Past
Interventions
Improved Cultivars
Production
technology
Increase
in Yield
Bulk marketing
Better prices Reduced MKT
costs
Input
linkage
Output
linkage
Credit
linkage
Improved seeds and
production technology
Increase
in yield
Quality
standards
Crop and warehouse loans
Cheaper
capital
Cash need
after harvest
Plough to plate interventions

11. 11
Some recent initiatives in market reforms
• Model Marketing Act 2003
• Model Agricultural Produce and Livestock Marketing Act
(APLM), 2017
• National Agricultural Market (e-NAM)
• Agmarknet portal
• Construction of rural warehouses
• Strengthening marketing infrastructure, grading and
standardization
Facilitate increased competition among traders and freedom for
farmers to sell in the market of their choice individually or as a
group leading to free and fair price discovery.

12. • New institutional initiatives like contract farming, producer’s company, bulk
marketing through farmers association have been successful in some regions
for some crops
• There are a number of successful models and some not so successful. There
is a need to document successful case studies and reasons for their success
highlighted
• Scaling up and out of emerging market linkages should be possible if
institutional, legal, policy and regulatory environment are implemented at
the ground level
• Handholding of farmers (initially) and empowering them in business skills,
capital investment and risk management
Scaling up and scaling out

13. 13
Facilitating the change...
 Building efficient marketing networks
 Implement Model Marketing Act
 Facilitating use of eNAM
 Increasing investments in infrastructure in PPP mode
 Roads, cold storage, bulk coolers
 Foster improved linkages between rural-urban markets
 Agricultural Exports Zones
 Promoting horizontal and vertical integration through innovative
institutional linkages
 Empowering farmers
 Establish effective mechanisms for dispute settlement
 Long term and sustainable policy on prices, trade etc.

14. Thank You