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VSRD-IJBMR, Vol. 2 (1), 2012, 17-24

R RE ES SE EA AR RC CH H C CO OM MM MU UN NI IC CA AT TI IO ON N

New Perspective in Rural & Agriculture Marketing

1

Hardeep Singh*, 2Manoj Kr. Goel and 3Amit Kr. Singhal

ABSTRACT
Government agencies like IRDA (Insurance Regulatory and Development Agency) and NCAER (National Council for applied Economic Research) define Rural as villages with a population <5000 with 75% male population engaged in agriculture. What is Rural Marketing? Developing of the market in the area as defined as rural. Hence it could be aptly rural said that it encompasses the activities such as developing the process to meet this objective Right product at the right price to the right people at the right time. Exchange between and Urban is a Factor. Could be Urban to Rural: Rural to Urban, Rural to Rural. Reasons for Going a Rural : (1) Size of the market (2) Largely untapped (3) Income from other than agriculture (4) Better exposure-media (5) Income flow from urban and abroad. What is Agriculture Marketing? Agricultural marketing covers the services involved in moving an agricultural product from the farm to the consumer. Numerous interconnected activities are involved in doing this, such as planning production, growing and harvesting, grading, packing, transport, storage, agro- and food processing, distribution, advertising and sale. Reasons for Going Agriculture Marketing : (1) The agricultural produce sector has been one of the most important components of the Indian economy. (2) The increasing trend of agricultural production has brought, in its wake, new challenges in terms of finding market for the marketed surplus. (3) To benefit the farming community from the new global market access opportunities, the internal agricultural marketing system in the country needs to be integrated and strengthened. This paper pertains that how we can respond to the challenges and opportunities, that the global markets offer in the liberalized trade regime, So that the farmers of India can take the benefit of this.
____________________________ 1

Assistant Professor, Department of Management Studies, SD Institute of Professional Studies, Muzaffar, Uttar Pradesh, INDIA. 2,3Research Scholar, Department of Management Studies, Singhania University, Jaipur, Rajasthan, INDIA. *Correspondence : mailtohardeepsingh@yahoo.co.in

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Keywords : Urban, Rural, Rural Marketing, Agricultural Marketing.

1. INTRODUCTION 1.1. Rural Marketing

Rural Marketing is defined as any marketing activity in which one dominant participant is from a rural area. This implies that rural marketing consists of marketing of inputs (products or services) to the rural as well as marketing of outputs from the rural markets to other geographical areas. Rural areas of the country or countryside are areas that are not urbanized, though when large areas are described country towns and smaller cities will be included. They have a low population density, and typically much of the land is devoted to agriculture.

1.2. What rural market buys?

Rural India buys small packs, as they are perceived as value for money. There is brand stickiness, where a consumer buys a brand out of habit and not really by choice. Brands rarely fight for market share; they just have to be visible in the right place. Even expensive brands, such as Close-Up, Marie biscuits and Clinic shampoo are doing well because of deep distribution, many brands are doing well without much advertising support Ghadi, a big detergent brand in North India, is an example.

1.3. Why Rural Market?

The Indian rural market has a huge demand base and offers great opportunities to marketers. Two-thirds of Indian consumers live in rural areas and almost half of the national income is generated here. The reasons for heading into the rural areas are fairly clear. The urban consumer durable market for products like colour TVs, washing machines, refrigerators and air conditioners is growing annually at between 7 per cent and 10 per cent. The rural market is zooming ahead at around 25 per cent annually. The rural market is growing faster than urban market now. Other reasons : o o o o o Size of the market Largely untapped Income from other than agriculture Better exposure-media Income flow from urban and abroad.

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2. NEW PERSPECTIVE IN RURAL MARKET

Indias growth trajectory is highly driven by the development of the rural clan. Players in various industries such as retail, fast moving consumer goods (FMCG), consumer durables, automobiles et al, are looking towards the untapped potential hinterlands possess. The Indian consumer base is highly supported by the rural population (about 70 per cent of the countrys population), which drives revenues for many major conglomerates operating in diverse markets in India. Key developments and investments pertaining to various sectors are discussed hereafter.

2.1. Retail in Rural India

For many years, rural India was not much acknowledged by the retailers. But as the bottom of the pyramid is getting empowered with education, higher purchasing power and awareness, companies are looking for opportunities in hinterlands. Aadhar, the Future Group and Godrej Agrovet's joint venture (JV) in agri-service-cum-rural retailing is undergoing a revamp, wherein the model will follow hub-n-spoke concept to drive higher profits for the company. DCM Shriram Consolidated Limited (DSCL), which operates 270 stores of Hariyali Kisaan Bazaar (one of the largest national rural retail chains of India), plans to open 20 more outlets by the end of 2011.

2.2. B-FMCG
Increasing levels of income in the hands of rural households, coupled with massive advertisements by the market players, would take rural FMCG market from current Rs 87,900 crore (US$ 19.08 billion) to a market size of over Rs 1,06300 crore (US$ 23.08 billion) by 2012, according to an analysis carried out by a leading industry body. This entails a compounded annual growth rate (CAGR) of 10 per cent in totality for rural and semi-urban areas. Meanwhile, a recent study by global information and measurement company Nielsen has revealed that over 80 per cent of FMCG categories are growing faster in rural India as against urban India. FMCG players like HUL and ITC have already established their foothold in hinterlands. ITCs Chaupal Sagar offers huge variety of FMCG products in villages while HUL expects contribution of rural markets to grow from 40 per cent to 50 per cent in next 4-5 years in its

2.3. Internet Reach in Rural Areas

According to a new research study, titled 'Internet in Rural India', by Internet and Mobile Association of India (IAMAI) and IMRB International, total number of active internet users in rural areas is projected to rise by 98 percent to touch 24 million by December 2011 from 12.1 million in December 2010.

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2.4. D-Services
Hindustan Unilever Ltd (HUL), which targets to have a million outlets in rural areas by 2011-end, has initiated a project named 'Gateway to Rural: Beyond FMCG'. In a bid to penetrate deeper into rural India in a costeffective manner, the company is in talks with telecom firms, banks and financial services companies to create a joint distribution model to cover India's 6.38 lakh villages. Pilot project initiated with India's largest bank, the State Bank of India (SBI) in Maharashtra and Karnataka, has shown amazing results with the help of HUL's Shakti Ammas. They have doubled up as customer serviceproviders and opened around 1,000 accounts for the rural clan. If this exercise proves viable, HUL would roll out the plan across the country by 2012. Similarly, the world's largest bicycle maker Hero Cycles has initiated discussions with insurance companies to provide health cover to its rural customers as a part of its poor-emancipation program. Moreover, as part of its new rural dealership scheme, State-run SAIL will appoint more than 1,000 dealers in rural India by March 2012. The initiative is aimed at deeper penetration of the companys branded products in villages.

2.5. E-Rural India - Government Initiatives

The Ministry of Rural Development is presently implementing schemes like the Pradhan Mantri Gram Sadak Yojana, Indira Awas Yojana, Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in various states with an annual outlay of around Rs 1,00,000 crore (US$ 21.71 billion). Also, the World Bank has agreed to help Indian government by approving US$ 1 billion credit for National Rural Livelihoods Project (NRLP), under newly launched National Rural Livelihoods Mission (NRLM).

3. AGRICULTURE MARKETING
Agricultural marketing covers the services involved in moving an agricultural product from the farm to the consumer. Numerous interconnected activities are involved in doing this, such as planning production, growing and harvesting, grading, packing, transport, storage, agro- and food processing, distribution, advertising and sale. Some definitions would even include the acts of buying supplies, renting equipment, (and) paying labor", arguing that marketing is everything a business does. Such activities cannot take place without the exchange of information and are often heavily dependent on the availability of suitable finance.

3.1. Agriculture Market Situation

Todays the agriculture marketing systems are dynamic; they are competitive and involve continuous change and improvement. Businesses that have lower costs, are more efficient, and can deliver quality products, are those that prosper. Those that have high costs, fail to adapt to changes in market demand and provide poorer qualities are often forced out of business. Marketing has to be customer-oriented and has to provide the farmer, transporter, trader, processor, etc. with a profit. This requires those involved in marketing chains to understand buyer requirements, both in terms of product and business conditions.

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3.2. New Perspective in Agriculture Marketing

The purpose of regulation of agricultural markets was to protect farmers from the exploitation of intermediaries and traders and also to ensure better prices and timely payment for his produce. Over a period of time these markets have, however, acquired the status of restrictive and monopolistic markets, providing no help in direct and free marketing, organized retailing, and smooth raw material supplies to agro processing, competitive trading, information exchange and adoption of innovative marketing systems and technologies. Farmer cannot sell his produce directly in bulk except on retail basis to the consumers. Farmers have to bring their produce to the Market yard. Exporters, processors and retail chain operators cannot get desired quality and quantity of produce for their business due to restrictions on direct marketing. The processor cannot buy the produce at the processing plant or at the warehouse. The produce is required to be transported from the farm to the market yard and then only it can be purchased and taken to the plant. There is thus an enormous increase in the cost of marketing and the farmer end up getting a low price for his produce.

4. MARKET DEVELOPMENT PROPOSALS 4.1. Requirement Of Market Space

Agriculture being at its zenith, to cope up with increasing marketable surplus, more and more markets is now being developed/constructed. Under the present circumstances of scarcity of land and requirement of more and more markets and increasing arrivals, it is essential to put the land to its optimal uses. Moreover, the acquisition of suitable and adequate land for markets has been one of the major constraints in market development. The optimum and economic utilization of scarce land resource is today the need of the hour. Optimization envisages making the most or the best use of available land, which will serve immediate, and future needs of all the market users in an efficient way. Decreasing availability of land adds significance to its optimal use. For Chhattisgarh State Master Plan, survey was conducted for 115 markets out of which 109 Analyzed. But for the purpose of collection of information on existing level of market area available, area under utilization, scope for future expansion, constructed area under shops, godowns, auction platforms, parking, etc. very few markets responded and that too with quite inadequate information. Therefore, the present level of market space available as well as constructed area already under utilization could not be assessed. However, it has been tried to work out the existing status of space available in each market. This information might be easily available with the state government, which can be further verified. As such, preferred market area has been calculated for each market and the norms fixed by DMI have been adopted. On the basis of past experience of NIAM and the norms developed at DMI it has been considered that 15 MT tones of produce should be provided with one square meter of trading space in the market. For this master plan also, space requirement has been calculated @ 10MT/per sq. mt. for trading space on the projected arrival at 2018. Although projected arrivals have been worked out for 2004, 2009 and 2018 for each market separately, yet space requirement for individual market has been worked out on the basis of projected arrival of 2018. Assessing space requirement on the basis of arrivals beyond 20 years is not considered desirable.

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Total space requirement calculations for the Master Plan of Chhattisgarh; have been made in respect of the following components: Trading Premises (Shops, Godowns/ Platform) Auction platform Grading Assortments Kiosks (Sundry shops) Office Building PHM Facilities Farmers Rest House Facilities and Amenities Parking Shed Circulation Internal Roads Cattle Shed Open Space Future Expansion etc.

4.2. Land Utilization Pattern In Markets

To cope up with increasing marketable surplus more and more market committees are formed but markets are not being planned properly. The pre-construction planning of physical markets is not given the consideration it calls for. It requires expertise and detailed analysis of ground facts about a specific market for deciding the scale and type of various infrastructural services and facilities to be provided. Ensuring shifting of trade to a new site also needs consideration at the pre-construction stage itself to avoid colossal waste of land, one of the vital resources. The past experience in the field brings out the fact clearly that critical knowledge about the special facts and requirements of market and their planning has been inadequate among those who have been entrusted the all-important jobs. Because of the reason, most of the important markets of advanced states like Haryana have been noticed lying idle where no trade has been shifted. This signifies that the market planning require expertise. Therefore, it is necessary to explore possibilities to propagate some guiding principles for market development in the state with reference to spatial distribution. So as to fulfill this requirement, for the first time in the country, this master plan has been provided with the attention on proposing land utilization pattern.

4.3. Modernisation And Development Of Other Agricultural Marketing Infrastructure

Need for Growth in Marketing Infrastructure : Projections of production and marketed surplus of various farm produce in the State exhibit that the commodities, which the marketing system will be required to handle in future, are quite large. The capacity to clean, grading, packing, processing and transporting would have to correspondingly expand to handle the additional marketed quantities. Strategy : Whether it is domestic or overseas trade, the agricultural produce sector has been most important

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component of State economy. A lot of progress has been made in this sector and new heights scaled in production of food grains, fruits and vegetables and other important crops like soya been, cotton, etc. The increasing trend of agricultural production has brought, in its wake, new challenges in terms of markets for handling huge marketed surplus. There is now pressure from all segments of agricultural produce economy to respond to the challenge that the global markets pose in the new liberalized trade regime. Need for Efficient Marketing System : An efficient agricultural marketing is essential for the development of the agricultural sector. In as much as it provides outlets and incentives for increased production, the marketing system contributes greatly to the commercialization of subsistence farmers. Worldwide, Governments have recognized the importance of liberalizing agricultural markets. Government policy and programmes have to effectively address issues of marketing liberalization and overcome the constraints faced by various organizations including private sector involved in agricultural marketing. The ever increasing production, spread of latest technologies, changing socio-economic environment, increasing demand for downsizing the distribution chain and reducing the margin between farmers and ultimate consumers, challenges emerging out of liberalization and globalization in the post WTO period requires a vibrant, dynamic and assimilative marketing structure and system. Reforms in Agricultural Marketing : In promoting vibrant competitive marketing systems, Government need to bring about reforms in existing policies, rules and regulations with a view to remove all legal provisions inhibiting free marketing system. Liberalization of world trade in agriculture has provided new opportunities to the farm sector to access markets of agricultural commodities worldwide. However, to actualize these market access opportunities, reforms have to be brought in agriculture sector to remove all barriers, whether legal or policy induced, which introduce inefficiencies and monopoly trends in the functioning of agricultural markets. At present, though agricultural production is largely free from controls, the same is not true of marketing and processing of agricultural commodities. The State Governments alone are empowered to initiate the process of setting up of markets for agricultural commodities in notified areas. Processing industries cannot buy directly from the farmers, except through the notified markets where intermediaries take away a sizeable share from the price of the produce. Processed foods derived from agricultural commodities suffer from multiple taxes at various stages starting from the harvest till the sale of final processed products. Multiple restrictions have not only cascading effect and the prices but also sets a barrier to free flow of materials from farm to the factory and ultimately to the consumers. All these controls are now widely recognized as going against marketing and processing efficiencies. In the present situation these restrictions are acting as a disincentive to farmers trade and industries. Emerging Role of Private Sector in Agricultural Marketing : Role of Government in managing markets is on the decline worldwide. Experience throughout the world has shown that efficient markets depend in part on growers and market functionaries having a say in the marketing of their produce. In most countries in the world, market operation is conducted by the corporate sector. In countries similar to India like South Africa and Brazil the process of government withdrawal from the markets management has already been initiated. In South Africa, agricultural marketing is changed from controlled of marketing to a free system. In Holland, to achieve a high degree of professionalism selling/ marketing process, growers co-operatives are acquiring new companies specialized in commodity exports and imports.

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So these are the some new perspective in the field of rural and agriculture marketing.

5. FUTURE SCOPE
Industry experts believe that rural India will play an active role in the countrys upcoming progress. Players in different industries like telecom, media, information technology, healthcare, banking and education are participating intensely to offer services to rural households to empower them. According to Private equity, Indian rural markets offer plethora of opportunities. Driven by changing consumption patterns and higher disposable income, the rural consumption market is expected to expand threefold from the current level of US$ 190 billion to US$ 600 billion by 2020.

6. REFERENCES
[1] www.krishiworld.com [2] http://agmarknet.nic.in/ [3] http://mandiboard.nic.in/ [4] http://delhi.gov.in/wps/wcm/connect/DoIT_AM/am/home [5] http://www.rmai.in/ [6] www.nabard.org

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