BUILDING UP OF AN EFFICIENT MARKETING SYSTEM TO

OBVIATE THE NEED FOR LARGE SCALE STATE

INTERVENTION IN BIHAR

EXECUTIVE SUMMARY

1.1 Background
The importance of an efficient marketing system was recognized way
back in 1928 by the Royal Commission on Agriculture. After
independence the NPC (National Planning Committee) and other Ad-hoc
Committee also supported the expansion of regulated market system. In
1976, the National Commission on Agriculture emphasized the increasing
importance of marketing of agricultural commodities and the need for the
adoption of measures to increase production. Since then various
legislative and administrative measures were taken by the Government.
However, the progress of regulation and market development depends on
the state government.

In course of time it was realized that market regulation was not enough to
attract the traders and farmers to take full advantage of the regulated
markets, due to lack of infrastructure. But there are conflicting views on
the role of regulated markets. Economists like Jasdanwala (1966 & 1977),
Lele (1968), Cummings (1969), Holmes (1969), Khusro (1973), Johnson
(1970), etc. favoured the expansion on the basis of the view that
regulated markets are competitive. On the other hand economists like
Von Oppen (1982, 1983a, & 1983b), Harris (1984), Urs (1987 & 1995), etc.
have gone so far to say that instead of benefiting producer-sellers, they
have been benefiting the private commercial sector. Various state level
studies like in Madhya Pradesh (Singh, 1962), Rajasthan (Krishnaswamy,
1970), Bihar (Krishna et al, 1983 & Goswami, 1984), Gujarat (Madalia,
1984) etc., have supported that the establishment of regulated markets
and regulation of trade which lowered the marketing charges, marketing
costs and incentives to producers. So there are conflicting views by these
two schools of thoughts. While one school advocates expansion and
strengthening of the market infrastructure and policies advocated are
anti-interventionist and pro-infrastructural, another school regarded as
pro-interventionist suggests the policy recommendations such as direct
intervention to bring about a more egalitarian distribution of income by
effectively implementing the policies.

Contrary to the belief and evidences on the effective role of regulated

markets, there are some observations, which differ from this. In case of
Bihar, Subbarao (1983), Pandey 1983) and Prasad et.al (1985) examined
the impact of regulation and market development programmes, which
pointed out that no tangibe benefits seem to have percolated to small
farmers, no positive effect on market arrivals and producers continued to
suffer even after regulation due to manipulative power of wholesalers
respectively. In addition to it, the restrictive legal provisions of these
markets did not allow the competitive market structure (Government of
India, 2001). Prime Minister’s EAC (Economic Advisory Council, 2001)
have also suggested improving marketing efficiency, domestic market
reforms for development of an efficient marketing system.

At present there is large-scale state intervention in food grains’ market

particularly in case of rice and wheat in surplus states. It is frequently
argued that a large amount of money which could have been used for the
purpose of agricultural development have been utilized for procurement
and buffer stock operations of these grains for providing food subsidies.
Though it was necessary for food security, price stabilization and public
distribution, a stage has reached when there is a need for reduction of
government involvement in this context. But a balance will have to be
maintained between the role of the state and the market. Thus, a healthy
marketing system will have to be built up so that the state intervention
gets reduced. Probably keeping the above considerations in mind, the

2
 present study entitled “Building up of an Efficient Marketing System
to Obviate the Need for a Large Scale State Intervention in
Bihar,” has been assigned to the Agro-Economic Research Centre for
Bihar & Jharkhand, T M Bhagalpur University, Bhagalpur by the Directorate
of Economics & Statistics, Department of Agriculture & Co-operation,
Ministry of Agriculture, Government of India.

1.2 Objectives of the Study

The study has following objectives:
i To examine the prevailing system of marketing of important
agricultural commodities in the state.
ii To examine the role of Government and Non-government agencies,
such as FCI, Food & Civil Supplies Department, Co-operatives,
NAFED, and private marketing agencies in procurement/purchase,
storage and marketing of different commodities, and to
evaluate/assess critically their financial and organizational
constraints.
iii. To examine deficiencies in factors impacting market efficiency, such
as physical infrastructure, market intelligence and trade practices
(crop/crop-group wise) in the state and suggest measures to
improve them.
iv To examine the possibility of adoption of future markets in the case
of commodities selected for the study. In case, such markets are
already operating for a commodity, then to examine their
performance in price risk management and price discovery as well
as in handling the situation of surplus and shortages through co-
ordination of storage decisions of market participants.
v. To suggest measures to improve marketing efficiency.

1.3 Methodology
Keeping in view the importance of the crops in agricultural economy of the
state, paddy and wheat crops were selected for the purpose of this study.
The state intervention also exists in marketing of these crops.

3
For the purpose of primary data collection, multistage sampling design was
followed. At the first stage of sampling, the district of ROHTAS was selected
for both the crops. In terms of area for paddy and wheat crops, the district
of Rohtas occupies first position in the state where paddy and wheat are
grown in 8.10 per cent and 10.35 per cent of the total area of the state
respectively. In the district, paddy and wheat are grown in 50.46 per cent
and 41 per cent of the gross cropped area (GCA) respectively.

At the second stage of sampling, to represent the district as a whole, two

blocks, viz., Sasaram and Kargahar were selected on the same pattern for
both the crops. Likewise,
at the next stage of sampling, the selection of villages were made in such a
way that both the selected crops were studied from the same set of sample
households.

At the bottom stage of sampling, the selection of respondents was made.

For this, first of all, from each of the selected blocks/villages, list of farm
households was prepared and thereafter the enlisted farm households were
classified into four broad categories, viz., marginal (upto 1 ha.), small (1-2
ha.), medium (2-4 ha.) and large (4 ha and above). Subsequently, 30 farm
households representing all the duly classified groups were selected from
each of the sample blocks. This way 60 farm households form the size of
sample for each of the selected crops, i.e., the same set of sample was
interviewed for the second crops (wheat) also.

Besides, a village schedule-cum-interview guide was also canvassed to

collect the information related to the subject from the selected villages and
the region as well. Discussions with the officials of Bazar Samittee, FCI,
State Food & Civil Supplies Department, District Officials, etc. were also
arranged to elicit the information on the subject.

To capture the detailed information on marketing of both the selected

commodities, the data were also collected from a few traders and paddy
processors in duly structured schedules.

4
1
1.4 Reference Period
The reference period of the primary data collection was the agricultural
year 2001-2002.

1.5 Limitations
i. Non-availability of various secondary data at the state level like
market arrivals, agro-economic and infrastructural facilities and
others limit the study to understand the trends of development in
the state.
ii. The inaccuracy partly on account of general indifferent attitude of
farm households and partly for their tendency to exaggerate or
under reporting of data, limit the scope of the study.
ii. The study has been conducted in a particular set of agro and
socio-economic situations, thus, it can be generalized in all the
situations.

1.6 Production, Marketing and Marketed Surplus in the State

and Selected District (Rohtas)
The marketing efficiency depends to a large extent on the structure and
organization of market. The evaluation study (Prasad; 1984, 1986 and
Singh & Garg; 1992) in Bihar finds increasing degree of competitiveness in
the market structure. In a comparative study (Prasad, 1984) of food grain
market structure during the pre-market yard period and post-market yard
period in Bihar, the data find that nearly 72 per cent small
wholesalers/commission agents accounted for 8.58 per cent of the total
annual turnover during the pre-market yard period. The data further
reveal that nearly 60 per cent small wholesalers/commission agents
accounted for 11.61 per cent of the total turn-over during the post-market
yard period in the market. In Sasaram, the study finds that nearly 78 per
cent of the marketed surplus of paddy was sold at the doorstep in the
hands of village traders and remaining to the wholesalers/commission
agents through the middlemen. In case of wheat the entire quantity was
sold in the hands of village traders. As regards the market integration of

5
rice, the district had advantage in early 1990s but thereafter it suffered a
lot due to change in government policies. The market information system
was also found poor.

The present market infrastructure requires a huge investment to make it

in favour of agricultural growth. The road infrastructure in Bihar has not
developed as per the growth of population or agricultural growth. The
need is not only to increase the road length to meet the demands of
growing population but also to cover relatively less or underdeveloped
regions. In regards to input marketing, Bihar State Co-operative
Marketing Union (BISCOMAUN) had played a dominant role upto late
1980s but thereafter it was superceded due to its inefficient working and
financial mismanagement. Pledge financing was available in the state for
jute crop only. On the other hand the storage capacity was 75.33 per cent
and 44.64 per cent against the capacity required for food-grains in the
state and sample district respectively. It reveals that the shortfall
accounted for 24.67 per cent and 55.36 per cent respectively. Out of total
registered vehicles trucks (5.29%) and tractors and trailers (3.68%) were
the important motor vehicles for transportation in the state whereas the
number of trucks and tractors ranged between 14.12 per cent and 41.19
per cent in the district.

As regards the market regulation, Bihar State Agricultural Produce Market

Act was passed in 1960. It has 53 sections and 134 rules covering widely
aspects like declaration of market area and yards, constitution of market
committee, power and duties of the officials and the elected office
bearers, audit, inspection, powers to make rule/bye-laws, etc. and the
rules (I to VIII) explains preliminary aspect, constitution of market
committee and selection, rules on market committee, its chairman,
officers and servants and disputes sub-committee, their functions and
powers, market fund expenditures and accounts, fees, buy and collection,
assessment, appeal, revision, sale and marketing.

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It is almost clear that the crop production in Bihar has been more or less
dominated by two crops, viz., paddy and wheat. These two crops
accounted for nearly 70 per cent and 83.62 per cent of the gross cropped
area in Bihar and Rohtas district respectively. The cropping intensity is
136.12 per cent and 194.57 per cent in Bihar and Rohtas district
respectively. Nearly 55.45 per cent and 73.31 per cent of net area sown
is irrigated in Bihar and Rohtas district respectively. During 1980-81, the
area under rice has fallen by 10.19 per cent, production increased by
19.59 per cent and yield increased by 33.20 per cent in Bihar. But in
Rohtas the area, production and yield of rice were also found stagnant but
the yield rate was found higher than the state’s average. As regards the
wheat, the area, production and yield increased by 20.80 per cent, 89.45
per cent and 56.84 per cent respectively in the state.

The market arrivals of rice and wheat were increased by 24 per cent and
65.61 per cent during the last decade in the sample district. The
procurement of these two crops in the state did not observe any definite
specific trend which reflects that the procurement policy in the state lacks
proper direction. The data on price movements indicate that farm harvest
price of paddy, wholesale prices and minimum support prices increased
by 204.84 per cent, 156.28 per cent and 249.31 per cent respectively
during the period from 1986-87 to 2000-2001. In case of wheat it rose to
84.74 per cent, 93.23 per cent and 258.02 per cent respectively.

Thus, it may be concluded that the production of wheat has done fairly
well in the state followed by maize and rice. In Rohtas district, production
under rice, peas and arhar recorded positive growth whereas wheat,
gram, masoor and rapseed recorded negative growth during the period of
1996-2000. In regard to the marketing structure, the study finds an
increasing degree of competitiveness in 1980s but it fell in 1990s and
later on period. In sample district, a large degree of imperfections was
found in the marketing of selected commodities’ market structure. At
present there are 95 market yards in the state but the concentration of
principal markets is just about 991.19 square kilometers. In overall the

7
state still lacks the modern marketing infrastructure in the principal
market yards, which can not be improved at the desired level unless and
until the functioning becomes less regulatory and more promotional.

1.7 Agro-Economic Characteristics of Sample District (Rohtas)

Rohtas is one of the western districts of Bihar and forms part of Patna
division. The headquarters of the district is located at Sasaram. The
district has three market yards viz., Sasaram, Nokha and Natwar. During
the last 5 years (1996-97 to 2000-2001), the GCA in the district has
increased by 1.08 per cent. Nearly 85 per cent of GCA occupies by main
staple food crops, i.e., rice and wheat. The area under rice and wheat has
fallen by 2.21 per cent and 2.06 per cent respectively but it has increased
under maize, arhar, peas & others by 105.92 per cent, 15.30 per cent,
39.53 per cent and 118.66 per cent respectively. About 38.19 per cent of
GCA is irrigated. Canal occupied the major source of irrigation, which
stands nearly at 90 per cent of the net irrigated area. The total storage
capacity in the district is 61264 MT, which has been largely contributing
by BISCOMAUN (55%) followed by BSWC (22.62%), CWC (18.34%),
BSFCSL (2.72%) and BSAMB (0.82%). On the other hand, the required
storage capacity and shortfall were estimated at around 1.61 lakh MT and
0.99 lakh MT. As regards the transportation, roadway was the only mode.
The GT road passes through the district headquarter, covering 41
kilometres of the district. However, the produce is mostly transported
through tractors to the terminal markets (secondary wholesale markets).
The bullock carts were also found in transporting the produce from the
extremely remote areas where motrable roads are not available. The
grand cord rail line also passes through the district but there is hardly any
transportation of agricultural commodities by the rail route.

During the last decade, the production of rice has fallen by 21.90 per cent
whereas it increased by 4.67 per cent only in case of wheat. The study
finds that it can be raised only when the yield rate is increased.

8
Sasaram Agricultural Produce Markets Committee has been constituted in
1963, which is spread over in 35 acres. At present there are 70 licensed
foodgrain traders in the market yard. But the functioning of the market
yard was not observed in accordance with the regulations. Besides, the
processing facility of paddy is available in the district. About 37 rice mills
are operating here under the S S I Units. Apart from it there are many
huller and drum system of rice milling in the district at village level
operating as household level. There was no any wheat processing unit in
the district. As regards the marketing of paddy, rice and wheat is
concerned the procurement of all the three commodities is quite
unsatisfactory. However, it has been started in recent past.

1.8 Characteristics of Sample Farmers

Of the total, 53.33 per cent of the sample farm households belonged to
other backward castes followed by 35 per cent general castes and 11.67
per cent scheduled castes. The overall average size of family was 7.18
persons with 3.88 males and 3.30 females. Only 5 per cent of the
respondents were illiterate and nearly 80 per cent of households were
having matriculation and above level of education. The average size of
per farm operated area on overall basis was 2.63 ha and across the farms
it was 0.94 ha, 1.80 ha, 2.69 ha and 8.77 ha on marginal, small, medium
and large farms respectively.

The study finds that among the sample respondents the gross cropped
area was estimated at 245.20 ha and out of it nearly 88 per cent devoted
to staple foods (paddy & wheat). In overall terms per farm gross cropped
area was calculated at 4.08 ha whereas it was 1.61 ha, 2.64, 5.33 ha and
12.06 ha on marginal, small, medium and large farms respectively. The
productivity of the staple crops was estimated at 28.17 qtl/ha for paddy
and 20.60 qtl/ha for wheat. The per farm number of milch animals and
young stocks increased with the increase of farm sizes whereas in case of
drought animals it increased with the increase of farm sizes except on
marginal farms. Big machines like tractors and trolleys were almost in
non-existence on all the farms. Use of tractors increased with the

9
increase of farm sizes. However, it was 0.18 on overall basis. Storage
capacity increased with the increase of farm sizes. But no scientific
storage facilities were observed among the sample farms. Nearly 71.67
per cent of the sample farms favoured the development of better storage
facilities. As regards the utilization pattern of the produce, it was found
that in case of paddy nearly 42.48 per cent were used for home
consumption and 42.26 per cent marketed surplus whereas in case of
wheat it was 11.24 per cent and 68.89 per cent respectively.

1.9 Marketing of Paddy in Bihar

The overall quantity of paddy sold on per farm basis was 21.61 quintals.
However, it was 4.50 quintals, 10.75 quintals, 25.50 quintals and 86
quintals on marginal, small, medium and large farms respectively (Table –
5.1). The entire quantity was purchased by the private traders/millers,
which showed ineffective implementation of procurement policy in the
state. The average selling price of paddy was found at Rs. 404.09 per
quintal on overall basis (Table – 5.2). The marketing expenses were found
varying between Rs. 10 and Rs. 12.50 per quintal. The study finds that
the incidences of distress sale were larger at 72.22 per cent on marginal
farms followed by 65.21 per cent on small farms, 63.63 per cent on
medium farms and no such incidences were found in case of large farms
(Table – 5.4). The cost of per quintal of paddy processing was estimated
at Rs. 432.25 and the net return to millers was Rs. 35.75 per quintal
(Table – 5.5).

Table No. 5.1:Quantity of Paddy Sold Per Farm in Different

Months by Size Groups (In quintals)

Other
Size Group Oct. Nov. Dec. Jan. Total
Months
0.80 3.00 0.70 4.50
Marginal - -
(17.78) (66.67) (15.55) (100.00)
2.25 4.50 1.40 2.60 10.75
Small -
(20.93) (41.86) (13.03) (24.18) (100.00)
8.40 12.25 0.70 4.15 25.50
Medium -
(32.95) (48.04) (2.75) (16.26) (100.00)
17.45 40.75 8.10 19.70 86.00
Large -
(20.30) (47.39) (9.42) (22.91) (100.00)
Overall - 4.95 10.29 1.79 4.58 21.61

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 22.91 (47.61) (8.28) (21.20) (100.00)
In parenthesis percentage figures are shown.

Table No. 5.2: Average rate of Sale of Paddy (In Rs. /qtl.)
Oct Other
Size Group Nov. Dec. Jan. Average
. Months
Marginal - 390.00 390.00 - 422.00 400.67
Small - 388.00 390.00 414.00 419.00 402.75
Medium - 403.00 400.00 405.00 427.00 408.75
Large - 395.00 395.00 415.00 432.00 409.25
Overall - 392.28 392.50 411.83 423.10 404.09

Table No. 5.4: Reasons of Distress Sale (In %)

Reasons Marginal Small Med Large Overall

Purchase of inputs 38.88 26.08 18.18 - 25.00

Family needs 27.78 17.39 18.18 - 18.33
Social obligations 5.56 8.70 - - 5.00
Police cases - 8.70 - - 3.33
Others - 4.34 27.27 - 6.67
Total 72.22 65.21 63.63 - 58.33

Table No. 5.5 : Economics of Paddy Processing by Rice Mills in

Rohtas District (In Rs./qtl.).

Particulars Amount
(In Rs.)
Purchase Price of Paddy 375.00
Cost of Processing 36.00
Cost of other materials, packaging, 1.50
weighing, loading/unloading, etc.
Maintenance & repairs 9.00
Interest on Capital 7.00
Depreciation 3.75
Total Cost 432.25
Qty. of recovered rice @ 65 Kg/qtl of paddy 65 Kg.
Value of recovered rice @ Rs. 750/qtl. 487.50
Marketing charges @ Rs. 19.50/65 Kg. of recovered rice 19.50
Net return 35.75

None of the sample farmers were found to sell their produce to public
agencies. But they preferred to sell to the public agencies. The reasons
were better price (66.66%) immediate payment (66.66%), quick disposal
(16.66%), honest weighment (15%), help in purchase of inputs (3.33%)
and others (51.56%). Besides, they felt problems like offering lower price
than government agencies (18.33%), delay in payment (13.34%) and both

11
(68.34%) in selling their produce to private agencies. The sample farmers
have identified altogether 16 problems while selling their marketed
surplus of paddy to different agencies like village traders, local market,
wholesale market and public agencies. Payments were made after selling
the produce (68.34%) and offering lower prices (43.34%) were the main
problems of village traders. While selling the paddy to local market they
faced the problems like offering lower prices (61.67%), high bargaining
power (31.67%) and faulty weight and measurement (20%). Offering
lower prices (58.34%), problems of transportation (33.34%), rigidity in
prices (25.00%), lack of safety and security in movement of commodities
(13.34%) and lack of godowns (10%) were detected at wholesale markets
whereas in public agencies problems related to purchase centres (70%),
existence of middlemen (63.34%), dominance of local heavyweights
(61.67%), high quality indices (53.34%), uncertainty in selling (38.45%),
and problems of transportation (31.67%) were found.
Nearly 86.67 per cent, 23.34 per cent and 13.13 per cent and 10 per cent
of the sample farmers expressed about lack of enough space for parking
vehicles, lack of enough space to exhibit produce, lack of godown facility
and lack of staying arrangement in the market yard. The problems of no
auction on the same day (86.67%) and untimely auction (10%), arbitrary
grading and price discrimination (88.34%), interference of middlemen
(75%) were observed regarding auction. Regarding weighment the main
problems were reduction in price due to lower quality (35%) and lack of
standard piece of weight and measurement (61.67%).

The farmers were depending on more than one source for getting price
signals for the paddy. The multi-media (55%) emerged as the major
source for all the farms. The input marketing agencies (70%) was being
used as a major source of technical information.

Thus, there is much to be done for strengthening the paddy marketing in

the state but first of all, the ‘Mandi concept’ is required to be popularized.
It means that the farmers in general and small and marginal farmers in
particularly should be encouraged to bring a higher position of their

12
produce for sale in market. They also need to be educated to become
more market oriented than family needs. And for this marketing policy be
less regulatory and more promotional.

1.10 Marketing of Wheat in Bihar

The overall quantity of wheat sold on per farm basis was 27.45 quintals.
However it was 7.70 quintals, 9.80 quintals, 41.35 quintals and 103.55
quintals on marginal, small, medium and large farms respectively (Table –
6.1). The entire quantity was purchased by the private agencies, which
showed ineffective implementation of procurement policy in the state.
The average selling price of wheat was found at Rs. 540.07 per quintal on
overall basis (Table – 6.2). The marketing expenses were found varying
between Rs. 10 and 12.50 per quintal. The study finds that the incidences
of distress sale were larger at 86.95 per cent on small farms followed by
61.11 per cent on marginal farms, 54.55 per cent on medium farms and
37.50 per cent on large farms (Table – 6.3). As regards the processing
facilities available in the sample district, there was not a single processing
unit (flour mills) in the district. It is generally made on ‘Aata chakkis’ run
either by diesel or electric or both. These chakkis do not make any
commercial purchase of wheat. They simply grind wheat of the local
people @ of Re 1 per Kg. on diesel run chakkis and 75 paise per Kg. on
electric run chakkis.

Table No. 6.1 : Quantity of Wheat Sold Per Farm in Different

Months by Size Groups
(In quintals)
Size Group April May June July In Other Total
Months
Marginal 0.40 4.20 1.75 0.25 1.10 7.70
(5.20) (54.55) (22.73) (3.25) (14.27) (100.00)
Small - 3.80 4.50 - 1.50 9.80
(38.78) (45.92) (15.30) (100.00)
Medium - 2.95 8.40 7.00 23.00 41.35
(7.14) (20.32) (16.92) (55.62) (100.00)
Large - 9.25 23.65 13.40 57.25 103.55
(8.94) (22.84) (12.94) (55.28) (100.00)
Overall 0.12 4.49 6.94 3.14 12.75 27.45
(0.43) (16.39) (25.29) (11.44) (46.45) (100.00)
The parenthesis percentage figures are shown.

Table 6.2 Average Rate of Sale of Wheat (In Rs. per quintal)

13
 Size Group April May June July In other Average
Months
Marginal 500.00 503.00 525.00 540.00 565.00 526.60
Small - 515.00 532.00 - 575.00 540.67
Medium - 521.00 540.00 547.00 582.00 547.50
Large - 525.00 551.00 568.00 590.00 558.50
Overall 500.00 513.80 533.90 548.13 575.28 540.07

Table No. 6.3: Reasons of Distress Sale (In %)

Reasons Marginal Small Medium Large Overall

Purchase of 38.88 43.48 18.18 25.00 35.00

Farm inputs
Family needs 22.23 26.08 9.09 - 18.33
Social - 17.39 - - 6.67
Obligations
Others (illness - - 27.28 12.50 6.67
Education) etc.)
Total 61.11 86.95 54.55 37.50 66.67

None of the sample farmers were found to sell their produce to public
agencies but they preferred to sell them. The reasons there of were
immediate payment (88.34%), better price (78.34%), honest weighment
(45%), help in purchase of inputs (28.34%), quick disposal (21.67%) and
others (20%). Besides, they faced problems like offering lower price than
government agencies (70%), delay in payment (45%) and both (63.33%)
in selling their wheat to private agencies. The sample farmers have
identified altogether 19 problems while selling their marketed surplus of
wheat to different agencies like village traders, local market, wholesale
market and public agencies. Pay lower prices as compared to the
wholesale prices (51.67%) and payment makes after selling of wheat
(26.67%) were the main problems from the village traders. While selling
the wheat to local market they faced the main problems like lower prices
(46.67%) and high bargaining (25%). Lack of safety and security in
movement of commodities (20%), purchase made in small quantity (20%),
rigidity in prices (15%), etc. were the main problems which arose in the
wholesale markets. Public agencies were also not found free from the
problems as the sample farmers enumerated the problems related to like
purchase centres/location, number, quota purchasing, short tenure, etc.,

14
(61.67%) dominance of local heavyweights (41.67%) etc. were the main
problems.

About problems 96.97 per cent, 91.67 per cent, 78.33 per cent and 78.33
per cent of the sample farmers stated the problems of market yard, viz.,
lack of staying arrangement, lack of godown facility, lack of enough space
to exhibit the produce and lack of enough space for parking the
vehicles/carts respectively. As the Sasaram agricultural produce market
yard is mainly secondary market of paddy and a smaller quantity of wheat
is marketed here so problem related to auction was not traced here.
Generally producer sellers used to make contact directly or indirectly with
the traders and negotiate the rate of selling prices. So the proper
functioning of the market committee particularly in case of marketing of
wheat was not at all found. But the sample farmers have stated problems
related to weighment and payment. Untimely weighment (23.33%),
arbitrary deduction (13.33%), reduction in price due to lower quality
(45.00%) and lack of standardized price of weight and measurement
(28.33%) were the prominent in weighment. In respect of payment only
35 per cent of the sample farmers received it instantly.

The sample farmers were found depending on more than one source for
getting price signals for the wheat. The multi-media (58.33%) again
emerged as the major source on all the farms. The input marketing
agencies (71.66%) were being used as a major source of technical
information.

Thus, until and unless the ‘Mandi Concept’ is popularized the regulations
can not be alone made effective in marketing of wheat in the state.

1.11 Policy Prescriptions

On the basis of the above analysis following policy prescriptions are
suggested :
 In Bihar, basically the market reform strategy has laid down more
emphasis on the development of secondary wholesale agricultural

15
 markets than in removing basic constraints which have reduced the
efficiency of the system. But in present context, the effective role
of market reform strategy should be visualized from the angle of
agricultural development. Thus a package of comprehensive
measures directed towards meeting these challenges would alone
be able to raise the efficiency of agricultural marketing system.
(Attn. Bihar State Agricultural Produce Marketing Board, Govt. of
Bihar).

 In absence of proper credit facilities for marketing and the threat of

increasing credit gap, micro financing be encouraged, which will not
only provide production credit to the farmers but will also check the
distress sale to a larger extent. (Attn. NABARD and RBI).

 Pledge as a source of marketing finance plays an important role in

an efficient marketing system, which was completely found absent
in case of this study. So a programme of financial help to the
producers particularly the small and marginal farmers should be
included in the functions and obligations of the marketing
committee, which will, in turn, increase the participation of the
farmers in the market yard. (Attn. Bihar State Agricultural Produce
Marketing Board, Govt. of Bihar and Dept. of Institutional Finance,
Govt. of Bihar).

 The storage function has the direct impact on several aspects of

marketing. The study finds that in Bihar paddy-wheat storage is
mainly owned by state, i.e., institutional sources. Besides, a
shortfall in storage capacity was also traced nearly by 55.36 per
cent and 24.67 per cent in Bihar and Rohtas district (sample district)
respectively. So there is need to promote storage of food grains at
the non-institutional levels, viz., the farms and private traders, in
order to reduce the dependence on state owned storage. (Attn.
NABARD and Dept. of Institutional Finance, Govt. of Bihar).

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 In recent times, generally the procurement of paddy-wheat has
suffered a lot in the country and particularly in Bihar. Thus, a
rational combination of procurement, stock accumulation and
depletion policy based on sound professional knowledge of
implications of dual markets should be made so as the to
dependence on government agencies in marketing of these crops
may be avoided. (Attn. Ministry of Food & Civil Supplies, Govt. of
India and Ministry of Food & Civil Supplies, Govt. of Bihar).

 There is need to popularize the “mandi concept” in the state by way

of educating the producers and traders for coming into one umbrella
for sale and purchase of their commodities so that the benefits of
competitive markets could be reaped out by them. (Attn. Bihar
State Agricultural Produce Marketing Board, Govt. of Bihar, and
Ministry of Agriculture, Govt. of Bihar).

 The basic infrastructural facilities particularly roads and transport

should be strengthened so that free movement of commodities from
farm gate to sale point could be smoothened, which will, in turn,
reduce the per unit costs of transportation. (Attn. Govt. of Bihar).

 To avoid the consequences of withdrawal of state intervention in

marketing of the selected commodities in future, the proper
knowledge and technology should be given to the farmers so that
they would be able to be aware of the international standards. It
will not only remove the problem of high quality indices prescribed
by the procurement agencies but the concept of producing more will
move towards producing better. (Attn. Ministry of Agriculture, Govt.
of India, and Ministry of Agriculture, Govt. of Bihar).

 In spite of public intervention in marketing of the selected

commodities in the state, farmers do not get minimum support
prices in lieu of sale of their commodities, so there is need to make
the procurement policy wider and transparent in the state till the

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 present system of market intervention is enforced. (Attn. Ministry of
Consumer Affairs, Food & Civil Supplies and Public Distribution,
Government of India).

 Last but not the least, a balance between the role of state and the
market is now essential particularly in the light of the emerging
implications of WTO. Thus there is need to enhance the in-built-
capacity of the market by way of exercising serious attention
towards a rational approach of overall agricultural development.
(Attn. Ministry of Agriculture, Govt. of India and Ministry of
Agriculture, Govt. of Bihar).

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