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A STUDY ON COOPERATIVE MARKETING WITH REFERENCE OF CHHATTISGARH

MARKFED LIMITED

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International Journal of Sales & Marketing Management
Research and Development (IJSMMRD)
ISSN 2249-6939
Vol. 3, Issue 1, Mar 2013, 35-44
© TJPRC Pvt. Ltd.

A STUDY ON COOPERATIVE MARKETING WITH REFERENCE OF CHHATTISGARH

MARKFED LIMITED

ANIL KUMAR SONI & DHARMENDER SINGH

Research Scholars, Govt. V.Y.T. Auto. PG College Durg, Chhattisgarh, India

ABSTRACT

Efficient and organized marketing is essential for the healthy growth of any community. It benefits the producer
as well as the consumer. Unregulated markets involve a long chain of intermediaries before the commodity reaches the
final consumer, with the result that the cost of the commodity becomes exorbitant. To eliminate the middle men from the
marketing activities and provide better price for agricultural producers the cooperative marketing societies were established
during 1912 Act. Cooperative marketing societies are organized by the farmers themselves and the profits are distributed
among the members based on the quantity of the produce marketed by them. Agricultural marketing cooperatives have
facing several problems, their performance is not up to the mark due to inadequate working capital, traditional methods of
marketing, lack of technical support, untrained personnel, and lack of support from apex marketing societies. Therefore, it
is necessary to study on cooperative marketing. This paper attempts to analyze key performance indicators of Chhattisgarh
Markfed. An analytical research design (key performance indicators) is followed in the present study. The study is based
on secondary and primary data. Empirical results show positive and satisfactory performance of Chhattisgarh Markfed.

KEYWORDS: Cooperative Marketing, Agriculture, Marketing Society, Chhattisgarh Mark fed, Economy

INTRODUCTION

The cooperatives sector has played an important role in the economy of the country and has been recommended as
an integral part of national economy. It has made significant contributions in agro-processing, distribution of inputs like
fertilizers, storage and marketing. The cooperative marketing has three distinct characteristics that separate from other
business. They are member owned; members controlled and generate member benefit. Marketing cooperatives deals with
the marketing of agricultural production such as food grains and commercial crops. Marketing cooperative are also helps to
meet the requirements of the farmers. The Cooperative marketing has conferred multifarious advantages on the farmers.
Now, instead of marketing their produce separately, they market it together through one agency. A strong marketing
cooperative have achieved, better prices for agricultural produce. Marketing Cooperatives are involved in marketing of
chemical fertilizers, pesticides, agricultural machinery and equipments and agricultural commodities.

MEANING OF COOPERATIVE MARKETING

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”.

The National Commission on Agriculture, defined agricultural marketing as “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, etc”.
36 Anil Kumar Soni & Dharmender Singh

Thus, cooperative marketing may be considered as a process of marketing of producer which enables the growers
to market their 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.

FEATURES OF COOPERATIVE MARKETING

According to the committee on cooperative marketing, there are certain special features attached to agricultural
marketing which is different from that of manufactured goods. They are explained below.

 Perish Ability of the Product – Most of the farm products are perishable in nature, the period varying from a few
hours to few months.

 Seasonable Production – Farm products are mostly seasonal and cannot be produced throughout the year.

 Bulkiness of Products – The characteristic of bulkiness of most farm products makes their transportation and
storage difficult and expensive.

 Variation in Quality of Products – There is a large variation in the quality of agricultural products which makes
their grading and standardization somewhat difficult.

 Irregular Supply – The supply of agricultural products is uncertain and irregular because of the dependence of
agricultural production on natural conditions.

 Small Size and Scattered Production – Farm products are produced throughout the country and most of the
producers are of small size.

 Processing – Most of the farm products have to be processed before their consumption by the ultimate
consumers.

STRUCTURE OF COOPERATIVE MARKETING

The Committee on Cooperative Marketing recommended that "the future pattern of organization of marketing
co-operatives should be a two tier structure, with the apex society at the state level, primary marketing society at the mandi
level and branches of apex societies at the district or regional level.

National Agricultural Cooperative Marketing Federation (NAFED)

The NAFED is a federal organization of state level apex co-operative marketing societies in India. It was
established in 1958 with its headquarters in New Delhi. It’s chief function is to coordinate the activities of state federations,
and renders advice and technical guidance to them. The federation also undertakes export and inter-state trade.

State Marketing Federation

These federations function at the state level and are intended to serve as apex institutions on behalf of the
affiliated society members. They are also expected to procure agricultural inputs and other goods required by the farmer for
distribution through co-operative agencies within the state. They are mainly engaged in wholesale or monopoly distribution
of chemical fertilizers, controlled commodities like iron and steel, and consumer goods like cement, sugar, kerosene,
wheat, rice, coffee, seeds, agricultural implements, insecticides, milk powder, etc. They also process agricultural produce,
A Study on Cooperative Marketing with Reference of Chhattisgarh Markfed Limited 37

undertake construction of go-downs, processing units, and manufacturing plants for fertilizers. They also co-ordinate the
work of cooperative marketing societies and work in close collaboration with government department concerned with
marketing of agricultural produce, agricultural inputs, civil supplies, etc.

District or Regional Marketing Societies

The central or district marketing societies are expected to coordinate the functions of primary marketing societies
both in regard to marketing of agricultural produce and distribution of agricultural requisites and consumer goods and also
undertake processing, and where necessary inter-district trade etc. In actual practice these societies are mostly engaged in
the distribution of agricultural production requisites like fertilizers and essential consumer articles.

Primary Agricultural Marketing Societies (PAMS)

The primary marketing societies are by and large located at the secondary market (mandi) or wholesale
assembling centres. However, in few states, marketing societies were organized at the headquarters of the block or taluka
with their jurisdiction extending to block or a taluka as the case may be.

NEED / IMPORTANCE OF COOPERATIVE MARKETING

Market Intelligence: Cooperatives can obtain data on market price, demand and supply and other information.
Cooperative marketing helps to reduce cost and improve service.

 Improve Marketability – It helps to improve marketability of products.

 Safeguards against Price Rice – It safeguards the interests of members against the price rising.

 Provides Credits – It provides credit to the framers and save them from selling their produce immediately after
harvesting.

 Storage Facility – Farmers can wait for better price as these societies have storage facilities.

 Growth of Agro Industries –The improved and efficient system of agricultural marketing helps in the growth of
agro-based industries and stimulates the overall development process of economy.

 Employment – A well integrated cooperative marketing system provides employment to millions of persons
engaged in various activities, such as packaging, transportation and processing.

REVIEW OF LITERATURE

Researcher has made an attempt to review the literature in respect of different committees like review committee,
reports of the working groups, study teams on cooperatives marketing.

Cooperative Planning Committee (1945) has recommended the Multipurpose Society should serve as a Centre
for general economic improvement. Apart from financing crop production, it should act as an agent for sale of produce to
the nearest cooperative marketing organization; supply farmers with their production needs.

All India Rural Credit Survey or Gorwala Committee (1954) was appointed by the Reserve Bank of India in
1951, has recommended that “Linking of Credit with Marketing”. It needs to have cooperation among other sectors of
Cooperatives (both vertical and horizontal) to undertake or develop business activities and promote economic status of
members.
38 Anil Kumar Soni & Dharmender Singh

Committee on Cooperative Credit (1960) the Committee on Cooperative Credit headed by V.L. Mehta was
appointed in September 1959 and submitted its report in May 1960. Arrangements for linking credit with marketing should
be strengthened. Cooperative Marketing Societies should be permitted to make outright purchases from the producers.

M. L. Dantwala Committee (1964) Government of India appointed a committee on cooperative marketing to

review the pattern of organization of co-operative marketing and give recommendations for ensuring sound and speedy
development of agricultural marketing on cooperative basis. The committee gave its interim report in 1966 with major
recommendations such as- for the future pattern of organization two-tire structure of marketing societies, apex societies at
state level and primary societies at mandi level. State Trading Corporation and Food Corporation of India should purchase
their requirements of agricultural production through it. Committee endorsed the recommendations for Fertilizer
Committee (Sivaraman Committee) that the chemical fertilizers should be distributed through coop marketing society.
The State Bank of India should give priority to meet the requirements of marketing societies.

Based on the recommendations of the Inter-Ministerial Task-Force on Agricultural Marketing Reforms

constituted by Ministry of Agriculture (MoA), Government of India (GoI) in its report of 2002 recommended to bring
competitiveness in the marketing of agriculture produce through allowing private entrepreneurs to establish market yards,
contract farming etc. The Ministry of Agriculture, GoI, in consultation with the State Governments formulated a Model
Act on Agricultural Marketing (MAAM).

Planning Commission (2007) report of the working group on agricultural marketing infrastructure and policy
required for internal and external trade for the XI Five Year Plan 2007-12 have suggested to develop agricultural marketing
and market related infrastructure namely rural Primary Markets / Rural Periodic Markets / Rural Haats and setting up of
new wholesale markets, Terminal Markets under PPP mode, Farmers Markets.

OBJECTIVES OF STUDY

 To understand the cooperative marketing structure in Chhattisgarh.

 To study the role of cooperative marketing in agricultural produce.

 To describe the functions and performance of Chhattisgarh Markfed.

 To identify major problems and offer suitable suggestions to overcome the problems identified.

HYPOTHESIS OF STUDY

Cooperative marketing is an important sector in Chhattisgarh as far as its role in agricultural produce and
socioeconomic development of Chhattisgarh is concerned. It has no alternative in the era of economic reforms also. The
A Study on Cooperative Marketing with Reference of Chhattisgarh Markfed Limited 39

qualitative progresses of cooperative marketing have been found to be highly impressive. The macro performance is highly
substantial.

AREA OF STUDY

The study is based on the cooperative marketing and Chhattisgarh Markfed. Therefore, study covers Chhattisgarh
State to the fulfillment of objectives of the study.

PERIOD OF STUDY

For collection of the secondary data on Chhattisgarh Markfed, two years from 2009-2010 to 2010-2011 were
taken as reference period. The data for the year 2010-2011 only up to 31 st December 2011.

RESEARCH METHEDOLOGY AND DATA COLLECTION

The present study is empirical in character based on the analytical method. The performance of the Chhattisgarh
Markfed has been analyzed with the help of key performance indicators. The present study is based on the secondary data
published by Chhattisgarh Markfed as well as primary data. The required primary data were collected from the members
and actual own experience in the field and discussion with all concerns. The required data and literature for the study
purpose were collected from the number of reference books, Journals and Internet.

FIELD SURVEY / SAMPLE DESIGN OF THE STUDY

The present study is survey based it attempts to explode the cooperative marketing and economic development of
rural sector. For the study 10 PAMS have been selected from district Kabirdham and from each PAMS 10 respondents
have been selected by adopting simple random sampling. Thus 100 respondents were selected.

SCOPE AND LIMITATIONS OF STUDY

 The study is limited to concept of cooperative and agricultural marketing.

 The information is collected from Chhattisgarh Markfed only.

 The primary data collected from 100 respondents of Kabirdham District only.

 The study is consider only financial analysis factor other factors ignored.

 The study is applicable to other Districts of Chhattisgarh.

SIGNIFICANCE OF STUDY

The research study will be useful to improve agricultural market and market related infrastructure in Chhattisgarh.
Research findings of the study would be helpful to planners, policy makers, administrators, researchers and other stake
holders who are concerned with development of agricultural markets in Chhattisgarh and the whole country in general.

CHHATTISGARH COOPERATIVE MARKFED LIMITED

The Chhattisgarh State Cooperative Marketing Federation (MARKFED) is an apex level federation of cooperative
marketing societies in the State of Chhattisgarh. Chhattisgarh Markfed, Raipur (Registration No. 216 dated 31.10.2000)
came into existence simultaneously with the creation of new Chhattisgarh State on 1st November 2000. Markfed executes
the work of paddy procurement under price support scheme and supply of chemical fertilizers and plant protection material
to the farmers of the state as per the instructions of Government. Chhattisgarh Markfed has an extensive network of
40 Anil Kumar Soni & Dharmender Singh

branches in the state (1) One Head Office (2) Sixteen District Marketing Offices (3) Membership 463 Cooperative
Marketing Societies. District offices are located at almost all the district headquarters. These offices undertake bulk of
business and are well equipped with infrastructure and are manned with experienced staff.

OBJECTIVES OF CHHATTISGARH MARKFED

 To assist and strengthen its member and other marketing societies in the state.

 To provide agricultural inputs to the farmers through member of societies to promote the production of their
agricultural produces and undertaking price support operations.

 To procure the agricultural produce from farmers in regulated procurement centres.

 To carry out welfare activities as per the state government directives.

 To construct godowns (open storage centres) to increase the storage facilities in the state.

 To acting as an agent to the govt. for procurement, supply and distribution of paddy.

 To undertaking commercial operations of agricultural produce.

ACTIVITIES OF CHHATTISGARH MARKFED

 Marketing of agricultural inputs such as pesticides and chemical fertilizers.

 Third large-scale production of paddy in international market at India’s largest farm.

 Paddy procurement kharif marketing year and Milling of procured paddy.

 Storage facilities and kisan rice mills and Cattle feed factory.

 Chemical fertilizers business and plant protection business.

 Providing incentives declared by the Central Government as well as State Government.

FUNCTIONS OF CHHATTISGARH MARKFED

Administrative Function

Figure 1: Administration of Chhattisgarh Mark fed

A Study on Cooperative Marketing with Reference of Chhattisgarh Markfed Limited 41

Fertilizer Arrangement: As per demand from cooperatives and departments, Markfed is arranging proper
distribution of fertilizers to the farmers through 1333 cooperative societies. For distribution of chemical fertilizers and
plant protection medicines, Markfed owns godowns having 325375 MT capacities.

Kisan Rice Mills Management: 29 Rice Mills of Markfed were established in 1970s, out of which 16 mills are in
running condition and Markfed’s proposal for modification of 8 mills is in process.

Cattle Feed Production: For production of cattle and poultry feeds there is a plant at Durg, in which high quality
feeds are produced, which are sold in public as well as private sector.

Storage Facilities: For storage of paddy procured under Price Support Scheme, 60 storage centres (108 godowns)
have been established in the state. Markfed has 322375 MT capacity godowns through out the state.

Price Support Operations (Paddy)

KMS- Common Grade-A

Bonus
Year Paddy Paddy
2008-09 850 880 220
2009-10 950 980 50
2010-11 1000 1030 50
Source: CG Mark fed -Annual Reports. (Figures in Rupees)

Computerization of Paddy Procurement Arrangement: Paddy procurement under Price Support Scheme in the
state is done through 1589 procurement centres of 1333 Primary Agriculture Credit Cooperative Societies. Full
computerization of paddy procurement and disposal process has been done since the year 2007 -08 and spot issue of
computerized cheque towards the value of paddy supplied by the farmers.

Procurement of Paddy: Lifting of paddy from procurement centre is done as under:

 Supply of Paddy to Millers Directly from Society – In order to save double burden of expenses towards
quick disposal and transportation of paddy procured, paddy is sent directly from procurement centres to
custom millers on the basis of Delivery Order Issued by Markfed.

 Dispatch of Paddy to Storage Centres – After supply to millers, what ever quantity left at procurement
centre is sent to Markfed Storage Centre, in order to keep space for further procurement.

 Commission – Societies are entitled for incidental expenses/administrative expenses @ Rs. 9/- per quintal
and 2.5% commission as per Price Support Scheme rates on the paddy procured by Society.

Training: Training programmes are conducted by Markfed before paddy purchase to train representatives of
Cooperative Societies so as to ensure computerization for prescribed average and better quality paddy purchase.

Fixation of Procurement Target: State Government has formed a cabinet sub-committee for paddy
procurement. Every year during the months of August-September this committee meets and on the basis of paddy
cultivation area, rain situation and anticipated production, fixes the target of paddy procurement.

Gunny Bags Arrangement: Presently the purchase of gunny bags is made through monthly requirement of
gunnies. On receipt of the required gunnies, they are being sent to the procurement centres directly.

Funds Arrangement: Equal amount to the procurement target, State Government applies for loan from the Food
Limit of Reserve Bank of India and on loan sanction from Reserve Bank of India, and on approval from Government of
42 Anil Kumar Soni & Dharmender Singh

India, Ministry of Finance, the amount is released.

Custom Milling of Paddy: Disposal of paddy procured is made by custom milling.

KEY PERFORMANCE INDICATORS OF CHHATTISGARH MARKFED

Table 1 presents key performance indicators of Chhattisgarh Markfed from year 2009-2010 to 2010-2011.

Table 1: Kay Performance Indicators

Key Performance Indicators 2009-10 2010-11

Share Capital 17.00 17.00
Funds and Reserves 2.84 2.84
Deposits 59.46 64.81
Borrowings from Banks 4102.30 2365.72
Fixed Assets 4.14 4.22
Investments 17.27 73.54
Advances 305.24 1264.98
Paddy Procurement MT 4427863 2131000
Value of Paddy Procurement 4517.41 2339.30
Fertilizer Distribution MT 522557 576077
Turnover 3799.16 4800.16
Establishment Expenses 21.54 11.38
Administrative Expenses 2.61 1.74
Interest on Working Capital 359.98 173.26
Total Income 369.27 175.24
Gross Profit 16.75 12.02
Net Profit 0.46 0.34
Source: CG Mark fed -Annual Reports. (Figures- Rs. in Crore)

OBSERVATIONS AND DISCUSSIONS

From the field survey report the following parameters / indicators conclude the observation and analysis.

Table 2: Parameters / Indicators of Analysis

Marketing Services 58 (good) 31 (average) 11 (poor) 100

Paddy Procurement 90 (timely) 10 (delay) -------------- 100
Agricultural Inputs 65 (timely) 25 (delay) 10 (very delay) 100
Price Support 70 (high rate) 20 (average) 10 (cant say) 100
Incentives / Bonus 45 (average) 35 (low) 20 (not aware) 100
Satisfaction 76 (satisfied) 10 (unsatisfied) 14 (cant say) 100
Source: Primary data collected from fieldwork (Survey Data)

RESULTS / FINDINGS

From the above data it is clear that Chhattisgarh Markfed serving in the field of agricultural marketing and rural
development. Maximum numbers of respondents are satisfied with functioning of Markfed. The level of service of
Markfed is satisfactory. Chhattisgarh Markfed is playing extraordinary role for agriculture marketing and rural
development.

In short we can say that Markfed providing rural Chhattisgarh all round assistance and proved to be an institution
where "Growth with Social Justice" exists. Chhattisgarh Markfed plays excellent role in paddy procurement; the online
computerized procurement system is noble. The major findings of key performance indicators are-

 Recorded paddy procurement 44.28 lakh MT against target of 40 lakh MT for the year 2009-2010.
A Study on Cooperative Marketing with Reference of Chhattisgarh Markfed Limited 43

 In comparison to rice sale proceeds of Rs. 523.37 crore during 2008-09, obtained Rs. 1545.45 crore during 2009-
10 by submission of bills to Civil Supplies Corporation and receipt of payment from them on line.

 In comparison to the chemical fertilizer sale of 484360 MT during 2008-2009, the sales figure was 522557 MT
during 2009-2010 which is a record sale ever.

 With a view to study the computerization of paddy procurement, disposal and accounting in the state, officers of
other states like Andhra Pradesh, Maharashtra, Orissa, Bihar, Madhya Pradesh and Gujarat have visited
Chhattisgarh.

PROBLEMS (WEAKNESSES) OF CHHATTISGARH MARKFED

 Shortage of Funds – Chhattisgarh Markfed is working with inadequate working capital, a huge amount of
income used for payment of interest. Societies are not in a position to provide trade credit to buyers because of
shortage of funds so the societies are not efficient and viable.

 Insufficient Godwons – Most of the societies do not have sufficient godowns to keep the produce. A bulk of
stock stored in open storage centre.

 Lack of Transport Facilities – A bulk of stock blocked in open storage centre due to lack of transport facilities.

 Malpractices – Most of the marketing societies suffer from a number of malpractices. Cases of favoritism in
granting pledge loans, misuse of funds, false entries of sales, etc., are the common malpractices existing in
marketing societies.

 Untrained Personnel – Most of the staff of the marketing societies is untrained, unqualified, incompetent and
inefficient. They lack requisite business experience and training.

 Lack of Coordination and Supervision – No encouragement given by Apex Society like NAFED to primary
cooperative marketing societies. No incentives to marketing societies.

 Poor Management – The management of the marketing societies in most cases does not come up to the standard
necessary for conduct of such varied functions as are assigned to them under bylaws.

SUGGESTIONS FOR IMPROVEMENT

 Financial and Technical Assistance – The activities of marketing cooperative societies should be further
diversified. For this purpose necessary financial and technical assistance should be provided to them by the state
government.

 Proper Storage Facilities – The marketing cooperative societies must have proper storage facilities in order to
spread the sales over the entire period of demand which is in the interest of both the producers and consumers.

 Supervision – The supervisory staff of cooperative department should see that the marketing societies are not
dominated by traders. The Registrars should evaluate the working and take steps to ensure that function
effectively and serve the desired purpose.

 Coordination – Proper coordination of functions between the primary marketing societies and similar
organizations at higher levels should be involved. Organization of societies should be run on democratic lines.
 44 Anil Kumar Soni & Dharmender Singh

 Effective Management – Keep the management in the hands of efficient persons having business experience.
The quality of management should be considerably improved in order to make the societies purposeful.

 Training Facilities – Existing untrained managers should be trained. There is need to setup central committee for
education and training on regional and state levels. The state government should provide training facilities to the
trainers immediately after their recruitment.

 Grading and Standardization – Marketing societies should endeavor to undertake the sale of their members'
produce after grading and processing.

CONCLUSIONS

In case the business achievements and figures of Chhattisgarh Markfed continuously since formation of the new
state are thoroughly viewed, no doubt, it can be ascertained that Markfed is continuously active in development of the
welfare and life standard of the small and medium farmers, following the instructions and rules of the state government,
and also got success in fulfilling its aims. This has enabled Markfed to obtain several awards on national level, thereby
Markfed as well as the state is much proud. Not only this, but Markfed is pledged and active in getting new techniques and
much profitable ways for betterment of its business activities.

REFERENCES

1. Annual Reports. Chhattisgarh Markfed. From 2008-2009 to 2010-2011.

2. Annual Reports. (2012). Cooperative Department, Govt. of Chhattisgarh.

3. GoI. (1954) All India Rural Credit Survey Committee Report, Vol. II, 1954.

4. GoI. (1964) Report of the Committee on Cooperative Marketing, 1964.

5. GoI. (2007). Report of Planning Commission, Government of India.

6. GoI. (2009) Report of the High Powered Committee on Cooperatives, Government of India.

7. GoI. Report on Task Force on Revitalization of Non-Credit Cooperatives.

8. Guidelines for 56th All India Cooperative Week Celebrations.

9. Guidelines for 58th All India Cooperative Week Celebrations.

10. Mathur B.S. (2001). Cooperation in India. Sahitya Bhavan, Agra.

11. Singh L. P. Cooperative Marketing in India and Abroad. Himalaya Publishing House, Mumbai.

12. Bedi R.D. Theory and Practice of Cooperation.

13. www.agmarknet.nic.in

14. www.coop.cg.gov.in

15. www.cgmarkfed.in

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