Unit 4 Rural Marketing Dr.

Ajay Choudhary

UNIT 4

MARKETING OF AGRICULTURAL PRODUCE

AGRICULTURAL PRODUCTS

Introduction

‘Agro-products' embraces a broad all-inclusive category of products related to

Agriculture. It includes a comprehensive range of raw and finished goods under the
classifications of plants, animals, and other life forms. The term 'agro' has stemmed
from the Greek word 'agros' meaning 'field', which has led to its current usage
meaning anything that falls under the 'agricultural category. Agro-products are the
life force, the very source of survival for the human kind. It is not only that man
breathes with the support of food but a major chunk of the world population is also
dependent on agriculture as their source of survival. An approximate 36% of the
world's workers are engaged in agriculture with India's 65% of the population
being directly and indirectly employed in this sector.

The agro-products and food processing industry sector in India is one of the largest
in terms of production, consumption, export, and growth prospects. The
government has accorded them a high priority, with a number of fiscal relief's and
incentives, to encourage commercialization and value addition to agricultural
produce; for minimizing pre-post-harvest wastage, generating employment, and
export growth.

Important sub-sectors in agro-products and food processing industries are fruit and
vegetable processing, fish processing, milk processing, meat and poultry
processing, packaged/convenience foods, alcoholic beverages and soft drinks, and
grain processing, etc.

Agriculture and agro-products remain the most important sector of the Indian
economy. They contributes nearly one third of the GDP and accounts for 64% of
the workforce. Progress in the agriculture sector is one of the most important
achievements of India's development strategy. "Farm products" means any
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agricultural, dairy, horticultural product or any product designed or intended for

human consumption or prepared principally from an agricultural, dairy,
horticultural product.
It includes, crops, livestock, or supplies used or produced in farming livestock
(such as milk and eggs or other things in the possession of operations. In addition,
this category includes products of crops or farmer) in their unprocessed state.

Characteristic of Agricultural Products

The characteristics of Indian agricultural products are as follows:

1) Uncertainty: There is a high degree of uncertainty in Indian agricultural system
because it is largely dependent on the rainfalls. The tropical climate has a great
influence on agriculture and it is very difficult to forecast the volume and quality
of output. A cultivator can only plan the production of a certain crop but the final
output considerably depends upon weather, disease, pests, flood, storm, etc., over
which he does not possess any control. On the other hand production in the
factories can be controlled, regulated, and adjusted according to the existing or
anticipated demand.

2) Quality Variation/Heterogeneity of Produce: The quality of agricultural

products cannot be controlled as it can be done for the other products. This lack of
standardization of quality makes the task of gradation and assortment very difficult
for the marketers.

3) Perishability: Agricultural commodities are more perishable than industrial

goods. Although, some crop such as rice, wheat, gram, etc., retains their quality for
a long time but most of the farm products are perishable and causes loss and
deterioration in quality. This makes the task of a marketer very difficult because
marketer has to store the product in the best possible conditions and make it
available to the consumer at the earliest convenience.

4) Seasonality: Seasonal character of agriculture is also a problem in itself and

production cannot be adjusted to the changes in level of demand. One can neither
shut-off agricultural production nor mold it at once. Hence, maintaining smooth

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supply of agricultural products throughout the year; calls for good and large
storage space.

5) Processing: Some of the agricultural products like sugarcane, cotton, jute,

tobacco, etc., have to be processed before they are consumed. This requires
adequate processing facility.

6) Bulkiness: Agricultural products tend to be bulky and their weight and volume
are high when compared with their value. This makes their storage and
transportation difficult and costly.

7) Raw Material: The output of agriculture is largely a raw material that will be
used for further processing.

8) Small-Scale Production: Commercialization of agriculture is still a new

concept to Indian agriculturists as most of the farming is done n small-scale and
very often the production is just sufficient to cover the family needs. Thus, the
marketable surplus for an average agriculture is meagre.

9) Scattered and Specialized Production: The production of agricultural goods in

India highly depends on the nature (climate and suitability of the soil). Hence, it is
bound to be scattered over a wide area. Moreover, the peculiarities of soil and
climate bring about specialization in agricultural production.

10) Inelasticity of Demand: Since a large portion of agricultural products is

necessary, the change in price does not bring about any change in the demand. This
creates problems during the harvest season when the abundant supply pply creates
a glut in the market leading to a fall in price.

11) Consumption in Small Quantities: Unlike industrial products, the

consumption of agricultural products is regular. They are consumed almost daily,
though in small quantities.

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CATEGORIES OF AGRICULTURAL PRODUCTS

Various categories of agricultural products are as follows:

Categories of Agricultural Products
Cereals and Pulses Seeds
Spice Fruits
Vegetables Dry Fruits and Nuts
Edible Oils Essential Oils
Flowers Fertilizers
Beverages and Juices Fodder
Dairy Product Aromatic Plants
Herbal Products Agricultural Machinery and Equipment
Coconut and Coir Products Meat and Poultry Food
Processed Food & Snacks Pickles and Condiments
Marine Food Supplies Other Agro-Products

1) Cereals and Pulses: Cereals are an integral part of life, as they are the only food
products that provide instant energy, Rich in nutrients, cereals come in the form of
rice or corns. For example, barley, wheat, maize, and rice.

2) Seeds: Seeds have stored foods inside them and are confined in coverings
known as seed coats. The process of reproduction in the plant is completed after
the seeds are developed fully. For example, basil seed, cumin seed, dill seed, and
jojoba seed.

3) Spices: Spices are defined as dried seed or fruit, in whole or powder form, used
as food additives for enhancing the flavor particular food item. India produces 3.2
million tons of various spices. For example, Black pepper, Chili powder,
Cinnamon, and Cloves.

4) Fruits: Fruits are a rich source of many important nutrients like fibers, vitamins,
water, etc. The daily consumption of fruits keeps one healthy and at the same time
maintains a young look. For example, Banana, Apple, Mango, and Guava.

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5) Vegetables: Vegetables the edible part of a plant, are rich sources of several
vital nutrients, contributing immensely to the overall growth of the living being.
For example, Carrot, Lady's finger, French bean, and Potato,

6) Dry Fruits and Nuts: The need for having a healthy and tasty snack in between
regular food time can be satisfied with the consumption of dry fruits and nuts.
They fully satisfy the taste buds, and one need not worry about gaining weight. For
example, Cashew nut, Almond, Pistachio, and Apricot.

7) Edible Oils: India is the 4º largest user of edible oil. Edible oils are basic
ingredients used in the making of foods and other eatables. For example, Castor
oil, Coconut oil, Cumin seed oil, and Celery seed oil

8) Essential Oils: Essential oil, a concentrated liquid that is high on volatile

aromatic compounds, is largely used in aromatherapy. Also known as ethereal oil,
it has the aroma of distinctive scent of aromatic plant from which it is extracted.
For example, Juniper, Almond, Anise, and Sassafras oil of the

9) Flowers: Associated with emotions like love, happiness, and relationship,

flowers have helped in living nature and respecting its wonders. A flower consists
of male and female organs known as stamen and pistil. For example, Lily, Blue
vetch, Rose, and Jasmine,

10) Fertilizers: The role of fertilizers cannot be ignored in agriculture. These are
the compounds that are given to the soil to help so nurture the plant facilitating
increased yields. For example, Bio fertilizer, Chemical fertilizer, Agriculture
fertilizer, and Urea fertilizer.

11) Beverages and Juices: Stimulating beverages and juices are the most opted
"drink intake' in the stressful life that we lead today Whether it is processed leaves
or roasted seeds/powder, beverages provide instant relief to stress. For example,
Black tea, Coffee Mango juice, and Apple juice.

12) Fodder: To enable livestock to remain healthy and thereby perform their
activities, they are provided with fodder or animal feed. Fodder includes hay,
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straw, sprouted legumes, etc. For example, Alfalfa Barley, Birds foot trefoil, and
Brassica.

13) Dairy Products: These product Rich in calcium, protein, vitamin A and
vitamin B12, etc. dairy products are recommended to people right from their infant
age, as they help to build strength and immunity system. For example, Cheese
spread Condensed milk, Cheese, and Ice cream.

14) Aromatic Plants: Aromatic plants have essential or aromatic oils naturally
occurring in them. They help to heal mental ailments and other diseases. For
example, Lemongrass, Java citronella Palmorosa, and Jamrosa.

15) Herbal Products: Herbs have exotic flavor, medicinal properties, scent, etc.
They are used as medicines, facilitating curing of ailments at a faster pace. For
example, Amla powder, Brahmi Shikakai powder, and Bhring Raj.

16) Agricultural Machinery and Equipment: Agricultural equipment have

revolutionized the agricultural industry worldwide. They help in increasing and
improving the productivity content to a great extent. For example, Tractor, Tractor
spams Leveling blade, and Harrow.

17) Coconut and Coir Products: Coir is rough, coarse fiber, used in making mats,
etc. Extracted from the outer core of the coconut which is fibrous, the coir fiber is
made up of 1/3 of the coconut pulp. For example, Coconut water, Coir products,
Fresh coconut and Coconut milk.

18) Processed. Food and Snacks: Processed food or snack items available in
canned, frozen, refrigerated, form, etc., are less susceptible to early spoilage than
fresh foods. They satisfy the taste buds to a great extent. For example, Porridge,
Potato wafer, Processed chicken, and Processed seafood.

19) Pickles and Condiments: Pickles and condiments are fermented or preserved
and are added to the main dish to enhance their taste value and making them more
delicious. For example, Chilly sauce, Tomato ketchup, Soy sauce, and
Mayonnaise.
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20) Marine Food Supplies: An animal or sea weed that is served in the form of
edible food is termed as marine food or seafood. Being a rich source of protein,
marine food helps in the reduction of calories and saturated fatty acids in our body.
For example, Dry fish, Dried beche-de-mer, Fish, and Oyster,

21) Other Agro-Products: Agro-products are limitless and have an even larger
number of sab-products, and may not generally be categorized. For example,
Natural honey, Jaggery, Sugar, and Soya meals.

MARKETING OF AGRICULTURAL PRODUCE

Meaning and Definition of Agricultural Marketing

India is an economy which has a large contribution from the agricultural sector.
More than one third of the population is deriving its income from the agricultural
sector. The contribution of the agriculture sector is around 25 per cent of the
domestic product (GDP), Since there is a lot of emphasis on assuring food supply
to the ever expanding population of the globe, commercialization of agriculture
output is being ushered in, This is possible only if the production and distribution
of food is on scientific lines,

Agricultural Marketing comprises two words marketing. Agriculture means the

culmination of all efforts which are agriculture and aimed at utilizing the natural
resources for the benefit of mankind. Specifically, it refers to the utilization of
livestock and crops.

According to the National Commission on n Agriculture, "Agricultural

marketing is a process which starts with a decision to produce a saleable farm
commodity and it involves all aspects of market structure of system, both
functional and institutional, based on technical and economic considerations and
includes pre and post-harvest operations assembling, grading, storage,
transportation and distribution".

Broadly, agricultural marketing is the procurement of selling of agricultural

products in the most efficient manner. In the past, this process was very similar as
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the economy was self-sustaining and the farmer would sell his proceed to the
consumer on a cash or exchange basis.

Nature of Agricultural Marketing

There are some important characteristics of agricultural production which affect

agricultural marketing in this country. These characteristics have a direct influence
on the working of the marketing middlemen:

1) Coverage Area: Small scale, subsistence farming with small surplus dispersed
(scattered) producers over a large area and geographical concentration affect
marketing functions.

2) Annual Variability in Production: There are years of increasing, decreasing

and stable farm output. These are caused by farmer's response to prices and other
uncontrollable factors such as weather and diseases. In fact, aggregate agricultural
output could be relatively stable increasing from year to year. However, marketing
agencies do not handle all agricultural products but a few group(s) of individual,
commodities.

3) Seasonal Production: In addition to the annual production variability, much of

agricultural production is highly seasonal. Unlike industrial products, almost all
farm products are produced seasonally. Opposed 10 the periodic supply, demand
for farm products as food or individual raw materials or export items has stable
character. The basic foods and raw materials are needed in relatively equal
amounts throughout a year in stable demand for them.

4) Quality Variation: Unlike industrial production, there is lack of control over

agricultural production both quantitatively and qualitatively. Agricultural
production is beyond the control of an agriculturalist (small farmers) and the entire
production is based on natural condition such as climate (temperature and rain
fall), soil, and topography. These have enforced the localization of the production
of a given product at certain places. Marketing facilities and costs are affected by
the variability and geographic concentration of agricultural production.

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Scope of Agricultural Marketing

The various scope of agricultural marketing is as follows:

1. India is endowed with varied agro-climate, which facilitates production of
temperate, sub-tropical, and tropical agricultural commodities.
2. There is growing demand for agricultural inputs like feed and fodder,
inorganic fertilizers, e fertilizers, bio-fertilizers.
3. Biotechnology applications in agriculture have vast scope in production of
seed, bio-control agents, industrial harnessing of microbes for bakery
products.
4. Export can be harnessed as a source of economic growth. As a signatory of
World Trade Organization, India has vast potential to improve its present
position in the world trade of agricultural commodities both raw and
processed form. The products line include cereals, pulses, oilseeds and oils,
oil meal, spices and condiments, fruits and vegetables, flowers, medicinal
plants and essential oils, agricultural advisory services, agricultural tools and
implements, meat, milk and milk products, fish and fish products,
ornamental fish, forest by products, etc
5. At present processing is done at primary level only and the rising standard of
living expands opportunities for secondary and tertiary processing of
agricultural commodities.
6. The vast coastal line and internal water courses provides enormous
opportunity for production of marine and inland fish and ornamental fish
culture gaining popularity with increase in aesthetic value among the
citizens of India
7. The livestock wealth gives enormous scope for production of meat, milk and
milk products, poultry products, etc.
8. The forest resources can be utilized for production of by-products of
forestry.
9. Bee-keeping and apiary can be taken up on large scale in India.
[Link] production for domestic consumption and export can be
enhanced with improvement in the state of art of their production.

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[Link] farming has highest potential in India as the pesticide and inorganic
fertilizer application are less in India compared to industrial nations of the
world. The farmers can be encouraged and educated to switch over for
organic farming.
[Link] is wide scope for production and promotion of bio-pesticides and bio-
control agents for protection of crops.
[Link], hybrid and genetically modified crops, have the highest potential in
India in the future, since the productivity of high yielding varieties have
reached a plateau.
[Link]-irrigation systems and labor saving farm equipment have good
potential for the years to come due to declining groundwater level and labor
scarcity for agricultural operations like weeding, transplanting, and
harvesting.
[Link] of vegetables and flowers under greenhouse conditions can be
taken up to harness the export market.
[Link] human resources in agriculture and allied sciences will t on
agricultural extension system due to dwindling resources of sta finance and
downsizing the present government agriculture extension staff as consulting
services.
[Link] enhanced agricultural production throws open opportunities for
employment in marketing, transport, cold storage and warehousing facilities,
credit, insurance and logistic support services.

Objectives of Agricultural Marketing

The farmer has realized the importance of adopting new techniques of production
and is making efforts for more income and higher standards of living. As a
consequence, the cropping pattern is no longer dictated by what he needs for his
own personal consumption but what is responsive to the market in terms of prices
received by him. While the trade is well organized the farmers are not conversant
with the complexities of the marketing system which is becoming more and more
complicated. The cultivator is handicapped by several disabilities as seller. He sells
his produce at an unfavorable place, time and price.

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The objectives of an efficient marketing system arc:

1) To enable the primary producers to get the best possible returns.

2) To provide facilities for lifting all produce, the farmers, are willing, to sell at an
incentive price.
3) To reduce the price difference between the primary producer and ultimate
consumer.
4) To make available all products of farm origin to consumers a reasonable price
without impairing on the quality of the produce.

Strategies for Agricultural Marketing

There are many strategies for agricultural marketing. The main ones are as follows:

1) Contract Farming: Contract farming is a kind of arrangement between the

buyer and partner. In many ways, it can be considered the half way stage between
100% independent farm production and total corporate involvement in farming. In
this the farmers have a contract to supply an agricultural product under certain
conditions of supply like time, place, quality and amount to a certain buyer
The ingredients of contract farming are basically four- a pre-decided price which is
agreed by both parties, quality of the product, the amount that has to be delivered
and the time of contract.

Contract farming has been in vogue in many parts of the country. It can be
specially seen in produce of items like Cotton. Sugarcane, Tea, Coffee etc. After
the ushering in of reforms in the Indian economy, it has become quite popular.

The agreement is characterized by a buy-hack agreement between the farmer and

the agency, which is typically someone engaged in the trading and processing of
agricultural products. Contract farming has been successful in many parts of the
country like Potato, Tomato and Chili in Punjab, Oil Palm in Karnataka etc.

2) Direct Marketing: Direct marketing is a kind of innovation which empowers

the farmers to do the grading of the products at their doorstep only. This means
that they don't have to carry the products to the markets for selling it. In this way,
the farmers are able to save on the costs of logistics and transportation. This
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reduces the price of the product. This kind of marketing arrangement also
motivates the marketing companies to procure produce directly from the farmers.

In India also, direct marketing is being encouraged. Examples of these are Apni
Mandi, Hadaspar Manndi, Rythu Bazars and Uzhavar Sandies. These are mostly
utilised for the marketing of agricultural products like vegetables and other fresh
produce.

The movement of products from the farmer to the consumer is very quick as this
removes all unnecessary middlemen from the process. The other benefits are that
the cost to the consumer decreases and the farmer is also able to garner more
profits from his produce.

3) Market Infrastructure: Agriculture marketing is successful only if a vibrant

and efficient market infrastructure is in place. A market infrastructure is more than
just various entities performing various functions. The market infrastructure also
plays a big part in signaling price. This leads to a better channelization of effort. It
leads to better utilization of entrepreneurial talent and skills.

It is also necessary to get the necessary investment from the private sector. The
state therefore, needs to have a policy which encourages private participation. Ax a
nation, there are huge infrastructure bottlenecks i in the economy. These have to be
overcome as per the Eleventh plan period. The lack of adequate infrastructure in
the storage, sorting and grading of agricultural produce means that almost 30% of
the agriculture produce in the country is wasted before it can be brought to the
consumer. This also increases the price of the product for the final consumer as the
yield is less.

4) Forward and Future Markets: The role of forward and future markets for
agricultural commodities has been highlighted for the role they play in risk
management and price discovery. Those markets need to be extended to all kinds
of agricultural commodities. It is also necessary that the markets have proper
regulatory body in place so that the market for agricultural commodities can grow
unhindered and rapidly.

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5) Rationalization of Market Fee: The current system of levies in the case of

agricultural products is not efficient. There are multiple points of levy on the
agricultural product. This increases inefficiencies in terms of time and cost. The
need of the hour is to merge the various levies into a single levy. Also the
collection of market should be in the form of a unified service charge. The current
levy has different slabs and this makes the process complex and difficult to
administer. There is thus scope for bringing far more standardization and
uniformity in the various state levies. This will improve the efficiency of the
marketing channel and increase the value being provided to the consumer.

6) Information Technology in Marketing: Information is required by all the

stakeholders in the agricultural marketing value chain. Information removes
uncertainty and also brings about bigger efficiency in processes. It is critical
therefore, that accurate and timely information be given to all the channel
members. This leads to both operational and pricing efficiencies being realized.
Data and information also is helpful for planning, formulation and implementation
of strategies. To have greater congruence and synergy in governmental and private
efforts -"An Atlas of Agricultural Markets" needs to be created. This will be a
reservoir of information on all kinds of agricultural products, packing and storage,
laws and regulations etc. This information will then he uploaded on the state level
servers in the local language so that it can be of help to local farming communities.

Advantages of Agricultural Marketing

Agricultural marketing has the following advantages:

1) Optimization of Resource Use and Output Management: A good and

effective agricultural marketing system helps to channelize the efforts of all
the stakeholders. It leads to the most efficient utilization of resources and
maximum satisfaction of customers. It also leads to an increase the effective
production by eliminating all sources of waste and losses. A well designed
system ensures that the product is properly distributes. There are no
inefficiencies in the form of transportation, excess inventory, product returns
etc.

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2) Increase in Farm Income: An efficient agricultural marketing system an

elimination of all kinds of waste in the system. This Increases the yield of
the process. It also eliminates all unwanted intermediation; service costs and
misconducts which were not adding value in the chain. As a result, the
profits of the farmer increase. The farmers can then invest the surplus that
they have created into better forms of production and equipment. This leads
to further efficiency gains and more profits in the long run. On the other
hand, if the farmer does not have an efficient market where he can sell his
produce then there is an incentive for him to increase his output. It is
therefore, very necessary that the right amount of incentives be provide
provided to the agricultural marketing channel so that the stakeholders feel
motivated to make the necessary investments to increase their output. One of
the ways of doing this is by bolstering the agricultural marketing channel.

3) Widening of Markets: An efficient agricultural marketing system also

helps by expanding the reach and expanse of the market that is available.
The system increases the reach to all corners of the country. This increase in
distribution of the product helps in making the product available to a large
percentage of the population. It also increases the income of the producer as
his sales volume increases

4) Growth of Agro-Based Industries: The growth of an efficient agricultural

marketing system also leads to the growth of agro based industries. This
leads to the growth of the economy and creates more employment
opportunities for people. This has been a reason for growth of many
industries like cotton, sugar, processed foods and jute. These industries need
a steady supply of raw materials.

5) Price Signals: An efficient agricultural marketing system also helps in

signaling the price to the producer. The producer is able to interpret the
signals from the demand side and plan his production accordingly. He can
thus be better prepared for spikes in demand.

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6) Adoption and Spread of New Technology: The marketing system also

allows the users to migrate to new forms of better technology, in a seamless
manner. The adoption of new technology requires high investment. Farmers
will make this investment only if they are backed by an efficient market
infrastructure and efficient pricing mechanism.

7) Employment Creation: The marketing system also offers lot of new

employment opportunities in areas such as logistics warehousing, storage
and processing. There are also opportunities is people who are engaged as
commission agents, channel members like retailers and wholesalers,
packagers and also other support staff. A whole lot of opportunities have
been thrown up in the forward and reverse logistics space.

8) Addition to National Income: Marketing activities have increased the

value of the output being created by eliminating all forms of unnecessary
waste. This has increased the National Income of the economy.

9) Better Living: The agricultural marketing system has increased the profits
of the producer and also created efficiencies to consumer. This has helped to
increase the standard of living in the country for all the citizens. In fact the
larger goals of improving standard of living, removing poverty from society,
reducing inflation of commodities, increasing foreign exchange etc. is
possible only if the country has an efficient and able agricultural marketing
system.

10) Creation of Utility: Marketing is very important part of the

production effort. If Marketing were not there, production would have no
meaning as the product would not have reached the consumer. The two are
therefore interlinked. Marketing comes at a cost but it also creates utilities in
the form of place, form, time and possession.

11) Significance of Concentration: Marketing helps in concentration of

agricultural products. Agricultural products are manufactured in small lots.
Marketing helps in bringing them together and achieving some level of
aggregation of production so that it can be transported economically.
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Disadvantages/Problems in Agricultural Marketing

The main problems of the agricultural marketing are: The Indian agricultural
marketing system has certain drawbacks which bring down the efficiency of the
effort. These are as follows:

1) Improper Warehouses: The Indian agricultural ecosystem suffers from chronic

shortage of warehouses. The Indian farmer does not have adequate infrastructure to
store his products. Instead he resorts to makeshift arrangements like pits, mud-
vessels, improper storage facilities etc. This leads to lots of losses in storage and
transit brings down the yield of the country. Approximately 15% of the agricultural
production gets damaged before it reaches the end consumer. The farmers
therefore have to supply a larger produce in the market and this reduces the price
that farmers get for their produce. The Government has set up the Central
Warehousing Corporation and the State Warehousing Corporation to solve this
problem. However, we still have a lot of ground to cover.

2) Lack of Grading and Standardization: The different types of agricultural

products are not graded adequately. There is thus no standardization of output.
There is lot of variability. The practice is usually to lump all agriculture produce
and sell all qualities of output together. This is called "dara" sales. There is thus, no
incentive to the farmer neither to produce a better output nor to invest in better
quality of inputs like seeds, fertilizers etc. This is because the market is not
efficient in terms of rewarding better varieties.

3) Inadequate Transport Facilities: India also has inadequate transport

infrastructure. The road connectivity between villages and the mandis is very poor.
There are no highways and villagers had to use roads which are broken and use
mediums like bullock carts. These means of transportation imply that the farmer
has to liquidate his produce in nearby centers and thus, at a price which is not
corresponding with his efforts. In the case of perishable products, this problem is
even more glaring.

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4) Malpractices in Unregulated Markets: The level of regulation in Indian

markets is still quite poor. There are proper checks and balances. The various
middlemen like Arhatiyas and brokers take advantage of the gullibility of the
farmer and try to swindle him.

The farmers have to pay a lot of charges that are unreasonable like the arhat
(pledging charge) or the tulaii (weight charge) or the palledari (which is a kind of
unloading charge). There are also other rampant malpractices like wrong weights
and measures. This leads to the rampant fleecing of the illiterate farmer.

5) Inadequate Market Information: The farmers also don't have access to

accurate information. This creates distortions and Inefficiencies. They have to
accept whatever price is set by the middlemen. They have no way of cross
checking or verifying the prices. They also don't have access to other markets as
the time. to transport the produce to these markets is very long and the produce has
the risk of getting damaged in transit. Hence they are price takers. The middlemen
and traders take advantage of arbitrage and market imperfections. They don't relay
the price that has been set by the Government.

CO-OPERATIVES

Meaning and Definition of Co-operatives

A cooperative (also cooperative; often referred to as a coop) is a business

organization owned and operated by a group of individual for their mutual benefit.

A cooperative is a legal entity with several corporate features, a as limited liability,

an unlimited life span, an elected Board Directors, and an administrative staff,
member owners pay annual fees to the cooperative and share in the profits, which
are distributes to members in proportion to their contributions. Because they dots
retain any profits, cooperatives are not subject to taxes,

Cooperatives are autonomous business owned and democratically controlled by

their members-the people who buy their goods on their services not by investors.
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Unlike investor-owned business cooperatives are organized solely to meet the

needs of the member owners, not to accumulate capital for investors. As
democratically controlled business, many cooperatives practice the principle of
member, one vote' members with equal control over the cooperative

According to the International Labor Organization, "A cooperative

organization is an association of persons, usually of limited means, who have
voluntarily joined together to achieve a common economic through the formation
of a democratically controlled organization making equitable contributions to the
capital required, and accepting fair share of risks and benefits of the undertaking”

According to Indian Cooperative Societies Act, 1912, "A cooperative society

has its objectives, the promotion of economic interests of its members in
accordance with cooperative principles".

According to N. Barrow, "A voluntary organization of persons with unrestricted

membership and collectively own funds consisting of wage-earners and small
producers, united on democratic basis for the establishment of enterprises, under
joint management for the purpose of improving their household or business
economy".

Mutual trust, mutual supervision, self-reliance, spontaneity and equality are the
five pillars of a cooperative organization and cooperative spirit is the backbone.

Features of Co-operatives

1) Voluntary Association: A cooperative organization is totally based on

voluntary membership. There is no compulsion either to become its member.

2) Legal Entity: A cooperative society after registration acquires a corporate

personality with perpetual succession and common seal. It acquires an identity
quite distinct and independent of its members. It begins to function as an artificial
man created by law and is very much placed in a position quite similar to a joint
stock company. It is an autonomous, self-governing, and self-controlling
organization.
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3) Equal Voting Right: The organization of a cooperative society is completely

democratic as each member has only one vote irrespective of the number of shares
held by him. This ensures that nobody is allowed to dictate his terms simply
because he is rich and holds more shares.

4) Service Motive: A cooperative society is formed primarily with the object of

rendering maximum service members. Service and not profit is the main aim of a
cooperative society. However, such societies earn profits by extending their
services to non-members.

5) Disposal of Profits: Unlike a commercial concern which distributes its profits

among the owners in the ratio of their capital or in some other agreed ratio, a
cooperative society does not distribute its entire surplus in the form of dividend on
shares held by its members. Rather it gives them in the form of a bonus which need
not be in proportion to the capital contributed by the members. In case of
consumer's cooperatives, the bonus is generally paid to the members in proportion
to the purchases made by then during the year, while in case of producers'
cooperative stores; the good delivered for sale may form the basis of distributing
bonus,

6) Open Membership: There is no restriction of any kind to become member of

cooperative enterprise. This means the membership is open to all irrespective of
their caste, creed, religion and political affiliations. The membership fee or the
value of share in the capital of the cooperative society kept quite low, so that even
the ordinary persons may become its members.

7) Economic Motive: Cooperative organization is always formed with some

economic motive, for the arrangement of cheap credit facilities, distribution of
improved seeds, fertilizers, etc., providing marketing facilities, making available
land for construction houses, providing consumer goods on reasonable rate, etc.

8) Distributive Justice: In the cooperative form of organization, capital is not

given any undue preference. The rate of interest payable on the capital, contributed
by the members, is normally of restricted nature, and the profits are distributed
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equitably amongst its members to the extent of the business transacted with it by
the respective members.

9) Mutual Help and Welfare: The cooperative form of organization is based on

the principle of mutual help and welfare. "Each for all, and all for each", is the
famous slogan of cooperatives. The cooperative organization does not function
totally on the profit-making motive

Types of Co-operatives

Co-operatives may be formed practically in any walk of life. Some of them

concern themselves with the moral and social uplift of a depressed weak section of
the society, while quite a many of them combine some business activity with
service to their members. Since cooperatives are being considered here a form of
business organization, only those societies which are concerned with some
business purpose need an introduction here. The principal types of business
cooperatives are enumerated below:

1) Marketing Cooperatives: The marketing cooperatives or the cooperative sales

societies are voluntary associations of independent producers organized for the
purpose of arranging for the sale of their output. As the central sales agency for a
number of producers, a marketing cooperative quite often performs such important
functions of marketing as processing and grading of the produce delivered by the
individual producers. The sale proceeds of the produce or products are distributed
among the contributing Producers according to their contribution to the pool.
Societies of this kind are particularly useful for agriculturists, small producers, and
artisans.

2) Processing Cooperatives: These societies are generally set-up in rural areas

with the object of processing certain raw materials produced by agriculturists for
supply to industries. Cooperatives for processing sugarcane, cotton, jute, paddy,
oilseeds, etc., come under this category.

3) Consumers' Cooperative Societies: These societies are formed by ordinary

people for obtaining their day-to-day requirements of goods at cheaper prices. For
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this purpose, consumers' cooperative by such societies. These societies make their
stores are organized by purchases in bulk from wholesalers at wholesale rates and
sell the goods to members (sometimes also to non-members) at market prices. The,
difference is represented by the surplus which is distributed among the purchasing
members in the form of a bonus on purchases. This is the oldest form of
cooperative organization. In India, consumers' cooperatives have received impetus
from the government attempts to check rise in prices of consumer goods and
essential commodities.

4) Producers' Cooperatives: Also called industrial cooperatives, these societies

are voluntary associations of small producers formed with the object of eliminating
the capitalist class from the system of industrial production. Sometimes consumers'
societies may join hands with the associations of producers. In such cases, the term
'co-partnership societies' is used for societies of this type. These societies produce
goods for meeting the requirements of consumers. Sometimes their production may
be disposed of to outsiders at a profit being distributed among the producers after
earmarking agreed percentages for welfare and general purposes. There can be two
types of producers' cooperatives. In the first type, the producer-members are
required to produce individually and not as employees of the society. The society
undertakes to supply raw materials, tools and implements, etc., to the members.
The members, on their part, are expected to sell their individual output to the
society. In the second type of such societies, the member-producers are treated as
employees of the society and are paid wages for their work. The society supplies
raw materials and equipment to the producers and takes up the output for sale
and/or distribution among members or outsiders.

5) Housing Cooperatives: These are associations of persons who a interested

either in securing the ownership of a house or obtaining accommodation at fair and
reasonable rent. Such societies are formed mostly in urban areas. Mostly,
intending builders of houses join together to form cooperatives of this kind.
Through the societies, they can secure not merely financial assistance but also the
economies of purchase of building materials in bulk. The membership of such a
society may be thrown open to all those who are interested in securing housing
accommodation as well as those who are ready to deposit money with the society
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for interest. Each member has to buy at least one share and his liability is generally
limited to his capital contribution.

6) Credit Cooperatives: The cooperative credit societies are voluntary

associations of people with moderate means formed with the object of extending
short-term financial accommodation to them and developing the habit of thrift
among them. The funds of these societies consist of share capital contributed by
the members. The liability of the member is generally unlimited. This helps the
society in raising funds from outsiders and ensures that every member shows keen
interest in the working of the society. In granting loans, the society may show
consideration for the poorer people who apply for smaller loans Besides, loans may
generally be granted only for productive purposes The society may, or may not,
ask for security of immovable property while making loans. The rate of interest
charged from the borrowing members is kept as low as possible.

7) Cooperative Farming Societies: The cooperative farming societies are

basically agricultural cooperatives formed with the object of achieving the benefits
of large-scale farming and maximizing agricultural output. Such societies
advocated for those agricultural countries, like India, which suffer from excessive
fragmentation and sub-division of agricultural landholdings d farmers. Their
membership is generally confined to farmers including those owning land and
those who merely till the land.

8) Labor and Construction Cooperatives: These cooperatives art societies of

unskilled and semi-skilled workers which may be organized in rural areas for
carrying-out irrigation and other projects. The chief object of such societies is to
progressively diminish the importance of contractors.

9) Others: In recent years, principles of cooperatives have come to be applied to a

large number of activities and operations. Cooperatives are now organized even for
fisheries, dairies, supply of sugarcane, cold storage, forestry, and so forth.

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Cooperative Marketing Society

A cooperative is a distinct type of organization, collectively owned and

democratically controlled by the member of the cooperative to satisfy their
common economic, social or cultural needs. A cooperative co marketing society
must be a society of agricultural producers joining together with the object of
selling their own produce

According to the Reserve Bank of India, "A cooperative marketing society is an

association of cultivators formed primarily for the purpose of helping the members
to market their produce more profitably than possible through the private trade".

According to Margaret Digby, "Cooperative marketing is the system by which a

group of farmers market gardeners join together to carry on some or all the
processes involved in bringing goods from the producer to the consumer".

Thus, cooperative marketing may be considered marketing of producer which

enables the growers produce at better prices, followed by the intention of securing
better marketing services, and ultimately contributing to improvement in the
standard of living of members.

It is significant to note that a society consisting of a group of people simply for the
purpose of selling commodities produced by other cannot be called a cooperative
marketing society.

Importance of Cooperative Marketing Society

1) Control of Market: The marketing society will be in a position of control of a

large column of business; it will succeed in effecting real economics in services
like assembling, grading, storing, risk bearing, etc.

2) Better Prices: The marketing societies will enable the farmer to get more prices
for his produce as they will strengthen his bargaining capacity

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3) Safeguards against Price Rise: A cooperative society will not speculate and
will be a safeguard against price rise; as its object is not to increase prices but to
keep them steady

4) Credit Facilities: As a marketing cooperative society is in position to obtain

finance at lower rate of interest from central cooperative banks and other agencies,
it would be possible for it to provide credit facilities to farmer at reasonable terms.

5) Supply of Quality Goods: The consumers will also be benefited b the

marketing societies. At a fair price, they will get better quality goods which have
been properly graded and tested these societies.

6) Help in Growing Better Crops: By providing agricultural requisites like

fertilizers, seeds, pesticides, etc., a marketing society also helps its members to
grow the best crops and thus to increase its yields.

7) Division of Surplus: The profit of a marketing society becomes the property of

members and the same is divided in proportion to the contribution they have made
to the cooperatives.

8) Educative Value: Cooperative marketing has been strongly advocated because

of its highly educative influence. No influence is as important in the economic
education of farmers as their own efforts in cooperative marketing. They also serve
an important function in supplying information on many issues which affect the
economic status of status of farmers.

Cooperative Processing Society

Processing is an activity connected with the preparation of food grains and

commercial crops for the purpose of making them fit for ultimate consumption.
Practically every agricultural produce, after harvested and before it reaches the
ultimate consumer, is subjected to certain transformation in one form or the other.
For example, paddy may be threshed and winnowed by the cultivator but husked
by the millers, the trader or even the consumer. Similarly, cotton has to be ginned
and pressed, before it goes to textile mills.
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Sugarcane has to be processed into jaggery or sugar and so on. In majority of

crops, broad uniformity for processing is available in the country. Food grain
processing involves changing the form of the grain. These are processed to make
them more edible, more palatable and in some cases for preserving the grain.

Commercial crops are processed to make them directly usable, to make them
durable, look attractive and keep its original taste and characteristics, and to make
it suitable for transport to long distances in transport foreign market, where
remunerative prices could be gained for them.

The small and marginal farmer cannot afford to take up this aspect of agriculture
because of limited resources in terms of finance, technical skill, knowledge and
limited marketable surplus. Consequently, it is being undertaken by the middle
men in the private sector. For achieving maximum economy, processing units may
be set up close to the sour sources of supply.

A processing unit or society can offer a number of advantages to the rural

people:

1) It can help in the decentralization of industries.

2) It may be cheaper because of low wages of labor, low rent of building and low
cost of transportation.

3) The by-products can also be used in the rural areas.

4) It helps in reducing unemployment among the rural masses.

Processing can be done either by indigenous methods or by mechanical power. The

farmer can be of advantage only in those areas where unemployment and under
employment is rampant. But, in areas where there is shortage of manpower and
where the problem one reducing the cost, processing by mechanical power would
be economical.

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Importance of Cooperative Processing Society

Well established cooperative units can effectively undertake recover the loan paid
by the cooperative credit societies fur undertake to agricultural production, for the
development of cooperative marketing and consumer cooperatives.
There is now an increasing awareness of the importance of the role of cooperative
processing in economy development in general and cooperative development in
particular. The importance of cooperating processing relates to the following
considerations:

1) Indispensable for Marketing: Cooperative processing is indispensable part of

cooperative marketing, particularly with regard cash crops. The price spread
between the producer and the consumer is sizable in the case of commodities
which have to be processed before they reach the consumer. Consequently,
successful handling of these commodities on a cooperative basis is generally not
possible, unless their processing is also undertaken by cooperative institutions.

2) Linking Credit with Processing: Well established cooperative processing units

can effectively undertake to recover the loam provided by the cooperative credit
institutions for production of relevant agricultural commodity. This has been tried
with a large measure of success in the case of cooperative sugar factories in
Maharashtra, where they are recovering the loans advanced by the primary credit
societies for raising of sugarcane crop.

3) Help to Consumer Societies: In several parts of the country the distribution of

sugar, produced by cooperative sugar factories, has been entrusted to cooperative
supply agencies and this has been to the mutual benefit of cooperative processing
organizations and the cooperative supply institutions. It is quite obvious that the
functioning of consumer institutions will be considerably facilitated if there large-
scale development cooperative processing activity what is desirable is that the
cooperative processing units and the consumer institutions should establish suitable
points of contact.

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4) Base for Rural Industrialization: It has been that the rural economy gets
immediately transformed and immensely strengthened by taking up agricultural
processing. Larger surplus become available for further investment and larger
inputs make for technical and economy advancement in hoth agriculture sector and
industry.

5) Socio-Economic Change: Cooperative processing societies have facilitated the

introduction of technical change in agriculture-thry have created not only
economic opportunities, but have helped in building a class of entrepreneurs
amongst ordinary farmers. Besides, cooperative processing accelerates the rate of
capital formation is agriculture both at the production and processing stages.

Formation of a Cooperative Marketing and Processing Society

Any group of persons can form a cooperative society of their own if so like to act
jointly for the common benefit of each other. But that is not the legal way of
formation of the cooperative society. All societies must be formed under the
Cooperative Societies Act, 1912 or under the relevant state cooperative laws. For
formation of a cooperative society least 10 persons are required. They must have
the common objective serve each other by forming a society. They have to
contribute capital they activities in form of share capital and decide to take up any

They form a managing committee from and among the members who looks after
the management of the society and implements the decisions of the members. As
our constitution is wedded to a socialistic pattern of society, it is a part of the
government policy to promote and encourage establishment of cooperative
societies. Therefore, cooperative societies enjoy several benefits provided by the
government from time to time. But in order to avail those benefits the society must
have to register under the Cooperative Societies Act.
The procedure for registration is as follows:

Apply for registration of the association as cooperative society in a prescribed

proforma available with the Registrar of Cooperative Societies with requisite
information like:
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1) List of members, their individual addresses.

2) Name and objectives of the society for which it has been has been formed.
3) Collection of funds share capital or loan fund with their utilization process.
4) Office bearers as managing committee and their powers.
5) Admission and retirement of members.
6) Bye-law of the society.

On fulfillment of all the above requirements, the Registrar may issue a certificate
of Registration in favor of that society, which elevates the status as registered
cooperative society or corporate body.

MARKETING OF RURAL COTTAGE INDUSTRY

Introduction

Rural Cottage Industries are small-scale industrial (manufacturing), commercial

and business units that operate in rural areas and are set-up in a dwelling or on the
property where the residence is situated. Such units are primarily dependent on
local resources and raw materials and cater to regional and local markets.
Cottage industry is generally unorganized in character and falls under the category
of small-scale industry. They produce consumable products
through the use of conventional methods. These types of industries originate in the
country sides where unemployment and under employment are widespread.

In this way, cottage industries help the economy by engrossing a massive amount
of remaining workforce of the rural areas. But on the flip side cottage industry
cannot be considered as the mass producer of products. It faces major risks from
medium or large industries which demand huge amount of capital investment for
all types of high-end technologies.

Cottage industries greatly help rural development. In these cottage industries,

goods can be produced with a small investment. The workers work in the cottage

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industries are mainly from a single family. Some of these industries are run on a
cooperative basis.

Cottage industries provide livelihood to millions of people in the villages. In

villages opportunities of employment are meagre. Cottage industries help the
unemployed youth a lot.

The development of cottage industries is essential for growth with equality and
economic justice for all citizens. It is an informal sector and the products from
home-based production and cottage industries need to achieve high growth with
sound policy and institutional support

Types of Cottage Industry

A cottage industry is one which is carried on wholly or primarily with the help of
the members of the family either as a whole time or part-time occupation. There
are various types of cottage industries:

1) In the first category may be placed those cottage industries which provide
supplementary occupation to the cultivator, e.g., handloom weaving, basket
making, rope making.

2) The second category consists mostly of village crafts like blacksmith, carpentry,
oil pressing by ghanis, pottery, village tanning industry, handloom weaving by
professional village weavers.

3) The third category covers those cottage industries which in urban areas provide
whole time occupation to the workers engaged in them, e.g., wood and ivory
carving, toy making, gold and silver thread making, brass utensils and other
materials manufacture, shoe making, carpet weaving, etc.

Importance of Rural Cottage Industry

The importance of rural cottage industry can be explained in following points:

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1) Employment Oriented: The most important argument in favor of cottage

industries is that they have a potential to create large employment opportunities.
There is widespread unemployment and under-employment resulting in more than
one fourth of the population living below the poverty line. These industries
required more of labor and less of capital. Therefore, in a state where labor is
surplus and capital scarce, production should be divided into small units.

2) Equitable Distribution of National Income: Development of cottage

industries helps us distribute national income in equal manner. Large-scale
industries are under the ownership of a few industrialists, but development of
cottage industries leads to a large number of industrialists. A large number of
laborers are employed in cottage industries in comparison to large-scale industries.
It means the production of cottage industries is distributed among a large number
of people. So cottage industries help in equal distribution of national income.

3) Elimination of Regional Disparity: Large-scale industries like iron and steel

and heavy industries cannot be established throughout the country. So if large-
scale industries are opened, these are confined to a few areas and other areas are
deprived of industrialization which leads to regional disparity.
But cottage industries can be established in large quantities in different areas which
will help those areas of the country to industrialize and help to reduce regional
disparity from industrial development point of view.

4) Utilization of Locally Available Resources: It has been stated that cottage

industries can be established throughout the region. These types of industries will
help to use the locally available resources. It can also the local entrepreneurs.
These types of industries are able to keep the traditional art and culture and use the
locally available laborers and raw materials. It is suitable to use locally available
resources through small-scale industries and cottage industries.

5) Contribution to Exports: These industries play an important role in State's

export trade. Their products like gems and jewelry, readymade garments, canned
and processed fish, leather sandals and chappals, food products. hosiery, etc.

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6) Increase in Production: There is great possibility of increasing the production

in the country with the help of these industries of the total production of industrial
sector. 61 per cent is from large-scale industries and 39 per cent from cottage
industries. In 2007-08, small industries produced goods worth Rs. 6, 95,126 crore,

7) Need less Capital: These industries have special significance in an under-

developed country like India. These countries lack capital but have large labor
force. Cottage industries are labor-intensive Compared to large industries they
need less capital. With a capital investment of 13 to 4 lac, cottage industries can be
started.

8) Artistic Goods: Cottage industries alone can make the producing of artistic
goods possible. In India, these industries produce artistic goods, such as, Banarsi
Sarees, ivory work, carpets, ornaments, etc. These goods have large market abroad.
Thus, these industries help to earn good deal of foreign currency.

Problems in Marketing of Cottage Products

The major problems of rural cottage industry are:

1) Competition: There is a stiff competition between the large-scale industry

and small-scale industry and usually cottage industry suffers a loss.

2) Lack of Marketing Facility: The marketing facilities are inadequate in the

country. The cottage industries are selling their product at the low prices in
the hands of middleman. Even they cannot advertise their product on T.V.
because they have not sufficient capital for this purpose.

3) Lack of Qualified Staff: The cottage industries cannot employ the qualified
engineers and economists. It reduces the quality of product.

4) Lack of Standardization: The mixing of good and bad product creates

problems of marketing inside and outside the country. The product is not
standardized.

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5) Lack of Roads and Transport Facilities: There is a lack of roads,

transport, water supply, electricity and telephone facilities for the cottage
industry. When infrastructure will not available how those can flourish.

6) Lack of Branding: Though branding is important for every product, the

cottage industry do not have the capacity to focus in that area and should
therefore network with resellers to create the brand, and hence the demand
for the products, so they are lacking in branding and marketing their
products as per the demand.

7) Lack of Strategy: It is completely unorganized sector which do not have

that much strategy to market their product. To market the product of an
industry, there is need to be in group of organized sector. The owners of the
company are not in cluster form that is why they are unable to advertise their
product.

8) Low Quality Products: The best quality products are exported. So, the
remaining products are sold in India, which are not of so good quality.
Hence they cannot sell low quality product in higher prices, this is the reason
why they are not marketing their product.

9) Packaging: The packaging attracts customer to buy the product, but they do
not have packaging of their products. It directly impacts on the rules of
cottage industries product.

10) Lack of Support from Relevant Agencies: The unavailability of

quality products in in the market is the main reason for unbranded of the
cottage industry. The cottage industry in India still lacks the right support
from relevant agencies. The government needs to shift their focus from
providing marketing, packaging, advertising and branding support to
improving and enhancing production within the country,

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MARKETING OF RURAL ARTISAN PRODUCTS

Introduction

Rural artisans have played a very significant role in the productive activity of the
village. Since the ancient times, while agriculture has been the main stay of the
village economy, the artisans have fulfilled most of the day-to-day needs of the
people.

They have sub-served the needs of agricultural sector by producing and repairing
agricultural implements agricultural produce has been converted by them into
usable commodities like cloth, oil, etc., for local use as well as for supply to the
urban areas. The contribution of the artisans in maintaining a self-reliant economy
of the village is thus very significant.

Artisans constitute a sizeable segment of the workforce. They have inherited the
skills and have the potential to develop further. The dexterity with which they
carry-out their work is praiseworthy as well as amazing. Their products meet not
only the demands in the domestic market of a village or group of villages.

They have found markets in foreign countries too. Traditionally, village artisans
supply products and maintenance service to agricultural farmers in the village.
They also produce goods to meet local demands. This category would usually
cover carpenters, cobblers, rope-makers, blacksmiths, goldsmiths, potters, cloth,
and mat weavers, etc.

The rural products of India are unique, innovative and attractive. A wide variety of
products such as agriculture and household implements, handicraft items, food
products, embroidery and clothes are manufactured in rural areas and offered for
sale in urban markets. Among the products, the handicraft items that represent the
unique skill and art form of rural artisans have significant attraction not only for
metro buyers but, also for foreign nationals.

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They are appreciated for their "ethnic origin" and "indigenous design and
appearance". They attract a premium in the market for these two features.
Developing an appropriate marketing network and promoting rural products by
highlighting their significant features has been a challenge for the government,
NGOs and rural entrepreneurs. Today, corporations are joining them to promote
products of rural entrepreneurs and artisans.

Artisans and Products

The village small industry sector consists broadly of two different segments

1) Traditional industries (e.g., handlooms, khadi and village industries and

handicrafts, etc.).

2) Modern small-scale industries (mills, factories, power looms, etc.).

The artisans comprise blacksmiths, carpenters, weavers (carpets, durries, khesh,

sarees, etc.), potters, mudha makers, hand tool makers, tam implement makers,
metal-ware (silver, brass, copper makers, sculptors (wood, metal clay, stone),
handicraft makers, etc.

The taskforce on handicrafts for the eighth five-year plan in 1989 defined the term
handicrafts as follows "Handicrafts are items made by hand, often with the simple
tools, and are generally artistic and/or traditional in nature. They include objects of
utility and objects of decoration".

The artisans are the heirs to tradition. Most craft people have learned their skills
from their parents and grandparents tradition that is being passed on from one a
continuity of from one generation to another. They have made their regions proud
of their work. Thus, the artisans, on the one hand, are regarded as custodians of the
heritage of India, and on the ether, they play an important role in village life
through their repair and maintenance services.

Types of Rural Artisans

Different types of rural artisans are given below:

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1) Pottery-Making: It is usually the hereditary occupation of the Kumhars.

Almost all the grown-up members of the family form a working group in this
industry. The tools of a potter are very simple, such as, a wooden wheel, brick-kiln
for baking earthen pots and wooden molds of various shapes and sizes for making
earthen pots. The clay required for making pots is carefully and systematically
prepared. Red earth is at first mixed with horse-dung, and soaked in water for some
time before it is used for pots.

The mixture is then kneaded properly and trodden twice. The clay is then given the
required shape by pressing on the rotating wheel. It is an interesting sight to see the
artisan placing a lump of clay on the center of the wheel, fixing his stick or
chaknait into the slanting hole in its upper surface and making the wheel to revolve
very rapidly by giving sufficient push to it to keep it in motion for several minutes.
The potter then lays aside the stick, and with his hands molds the lump of clay into
the required shape, stopping every now and to give the wheel a fresh spin it loses
its momentum, When satisfied with the shape of his vessel, he separates it from the
lump with a piece of string and places it on a bed of ashes to prevent in sticking to
the ground.

2) Brick-Making: Like pottery, brick-making was also found as a cottage industry

at many places in the district. This industry, however, mainly met the local
demand. It was a seasonal occupation practiced usually between November and
May. The raw material required included earth and ash, and fuel comprised coal,
wood branches of trees, etc.

Generally this occupation requires abundant supply of water. The bricks are made
with the help of molds. The skill of the bricklayer lies in the arrangement of raw
bricks in the furnace before it is set on fire. The cost of making 1.000 bricks varies
between 25 and 30.

3) Black smithy: Another industry which engaged not less than 1,700 persons in
the district in 1961 was black smithy. This industry also in a hereditary occupation
of the Lohars who generally make and repair small agricultural implements. In big
towns, however, the followers of this occupation were engaged in making
agricultural implements of big size and also various other building materials.
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At big centers of trade, the materials used by a blacksmith comprised iron-sheets,

round bars, and flat bars. Old tins and scrap materials were also used for repair
works.

The Panchayat Samiti and Zila Parishad authorities impart training to the artisans
in the use of improved tools and refined methods of working at training centers
specially organized for the same. Financial assistance is also given to the trained
and deserving persons.

4) Handloom Weaving: It was one of the most important cottage industries in the
district with a very long tradition. In the beginning of the twentieth century it
included 100 looms for woolen goods and more than 800 for cotton looms. As
many as 500 cotton looms were then located in Darwta tahsil. Of these two types
of looms cotton handlooms were of great importance as they engaged a large
number of persons. However, in the subsequent years, this industry suffered
heavily due to the competition of cotton mills which could produce multi-colored
cloth at cheaper rates.

The manufactures of the handloom weavers mainly included saris, dhotis,

shirtings, towels, carpets, etc. The cloth produced was of a coarse variety and was
told in the local market. The finer products of handlooms were costly and were
hence less in demand.

Problems in Marketing of Artisans

The artisans continuing in their occupations could not market their products
successfully due to various reasons discussed here

1) Product-Side Problems: The products of artisans have becomes less

competitive. Skills of rural artisans continue to be old and the technology used is
traditional. Mass-produced factory goods are preferred because of their
standardization, modernity and low prices.

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Unit 4 Rural Marketing Dr. Ajay Choudhary

Modern technology has enabled machines to imitate even the most intricate
designs that were once the exclusive domain of the artisans, developed and
perfected over centuries and passed down from generation to generation. Though
artisans are creative, they do not risk innovations.

Further, rural artisans lack guidance in product design and development based on
understanding of the demand of the market. Due to lack of market research
facilities and urban exposure they tend to be product oriented and not customer
oriented.

2) Price-Side Problems: Artisans face price disadvantages. For example, cheap

plastic products have wiped out the market for earthenware. Artisans cannot charge
lower prices than mill-made products because of the following problems.
i) High Raw Material Costs: The infrastructure with which rural artisans produce
their handicrafts is quite inadequate in comparison to what is required to satisfy
consumer demand

For example, in the carpet industry, small producers who make producers hand-
made carpets compete for the same supplies with large factories. The large-scale
economies of buying put the large producers in an advantageous position.

ii) High Interest Rate: As more than 90 per cent of rural artisan households are
landless, they have minimal resources to mortgage or use land as collateral for a
loan. In, such situations, informal credit plays a critical role in the production and
expansion of artisan's enterprise. They forced to take loans from local middlemen
and moneylender at exorbitant rates of interest.

3) Place-Side Problems: Craftspeople who reside in small distant villages find it

difficult to access urban areas and metro cities that are now the main markets for
craft products. The middlemen exploit them as they are only interested in
maximizing their margins.

Exhibitions, fairs and handicraft stores are now prevalent in touch larger numbers
than they were earlier. Still more needs to be done

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Unit 4 Rural Marketing Dr. Ajay Choudhary

4) Promotion-Side Problems: Artisans do not have strong communication and

promotion skills. The economic status of artisans is far from satisfactory and this
makes their advertising power weak. Their education level is low and they lack
exposure information and communication technology.

Their shyness, weak communication skills and tendency to remain "small" and
"satisfied" are major barriers to personal selling. Heavy competition from modern
and large industries with heavy advertising and promotion obviously negate their
chances of promotion.

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