Agriculture trade: Slip between farmer & market
• As compared to the other major agricultural exporting countries, India’s transportation and marketing costs are relatively higher.
• Good transport and marketing systems would promote best possible returns to farmers, incentivise prices, increase profit margins and reduce price differences.
• Transport and Marketing Assistance Scheme (TMA) by the Government of India provides financial assistance for transport and marketing of agriculture produce to boost export of agricultural commodities in specified target markets.
• In the long term, establishment of a robust multimodal transportation system to connect India’s hinterlands will go a long way in making agri-exports competitive.
Agriculture products are essential components in domestic as well as in international market because they are sources of food for human beings. Agriculture products include raw and finished products from various plants, animals and other live forms. Cost competitiveness is very essential factor in international market. In Indian agriculture, internal as well as external transportation costs are high, which directly impact agriculture exports. They also have an impact on the profit margin of farmers and affordability to consumers.
As compared to the other major agricultural exporting countries, India’s transportation and marketing costs are higher. Distribution of agricultural produce from farm to market is critical as they are perishable commodities and situated at remote locations from the market. Therefore, a good transport system is important for agricultural marketing. Efficient transport influences the final market prices of the agricultural commodity. Good transport and marketing systems would promote the best possible returns to farmers, incentivise prices for agricultural produce, increase the profit margins and reduce price differences between the primary producer and end consumers. They will ensure availability of products at regional time and regional costs. Indian agriculture is shifting form product-based to market-based economy, where agriculture has to be a very competitive on the global platform. Hence transport and marketing issues of agriculture are catching the attention of policy makers.
Transport and Marketing of Agri Products in India: Boosting agriculture exports is a necessity for doubling farmer’s incomes. In this setting, the Modi government introduced a new scheme for agriculture exports i.e. Transport and Marketing Assistance Scheme (TMA). Under this scheme, financial assistance will be available for transport and marketing of agriculture produce to boost export of agricultural commodities in West Africa, EU, Gulf, North America, ASEAN, Russia & CIS, Far East, Oceania, China and South America. This scheme reimburses a certain portion of freight charges and it also covers freight and marketing assistance for export by air as well as by sea.
Transport and Marketing issues of Agri Products in India: Various experts have mentioned that transport costs have a serious role in recognizing the link between accessibility and agricultural development. For competent marketing of agricultural produce, it is imperative to have a good transportation system.
Transport creates a good market for agricultural produce, advances interface among geographical and economic regions and unlocks different areas to economic focus. Transportation costs are dependent on various components such as commodity type, efficiency of the transport and marketing sectors and travel distance. High transport costs also affect the working capital cycle of exporters. The present policy focus indicates the relevance of transport issues to India’s agricultural competitiveness.
Potential impact of the scheme on Farm Products: The scope for exports of agricultural products from India is very high. India is an agricultural economy and thus has abundant agro products and resources. On the other hand, countries like the US, Canada and Europe import agro products on a large scale from India and other Asian countries. Since export destinations are far away, hence transportation cost is always making an impact on product costing and ultimately on product competitiveness.
Definitely, there will be a positive impact of the Transport and Marketing Assistance Scheme (TMA) on Indian farm produce. It will help make the goods more competitive in foreign markets, reduce transportation cost of agriculture products, stimulate Indian farm exports, help meet India’s agri export potential, enable farmers to get the best possible returns, enable brand recognition of Indian products in the world market and ensure expansion of the agri trade export basket. TMA would mitigate the hindrance presented by higher costs of transportation for exports of identified agriculture products due to transhipment. In the long term, establishment of a robust multimodal transportation system to connect India’s hinterlands will go a long way in making India’s agricultural produce competitive in world markets.
Dr. Parashram Jakappa Patil is currently an Advisor/Consultant at APEDA. He has also served as the President of The Institute for Natural Resources, Kolhapur. He is an export policy consultant for the Ministry of Commerce and Industry. He has received many awards and accolades lately; some of which include Young Researcher Award and Best Citizen of India Award.