1
Summary
Economics Class 42

AGRICULTURE MARKETING (05:02 PM)

  • Advance agriculture marketing is required to supply excess production and also increase the income of farmers.
  • Approximately 33% of the output of food grains, pulses, and cash crops like cotton, oil seeds, etc. is marketed as they remain surplus after meeting the consumption needs of the farmers.
  • Increasing the efficiency of marketing would result in the distribution of products at lower prices to consumers, having a direct bearing on national income, and an improved marketing system would stimulate growth in the number of agro-based industries, mainly in the field of food processing.
  • History of agromarketing in India:
  • For a long time, a traditional marketing system existed in India.
  • It was characterised by village sales of agro-commodities, post-harvest immediate sales by farmers, etc.
  • In 1928, the Royal Commission pointed out the problems of traditional marketing, like high marketing costs, unauthorised reductions, and the prevalence of various malpractices.
  • This led to a demand for regulated markets in India.
  • Regulated Markets:
  • It aims at the elimination of unhealthy and unscrupulous practices, reducing marketing costs, and providing benefits to producers as well as sellers in the market.
  • After independence, most of the states enacted the agri-produce market Regulation Act.
  • It authorises states to set up and regulate marketing practices in wholesale markets.
  • The objective was to ensure that the farmers got a fair price for their produce.
  • However, regulated markets had the following drawbacks:
  • 1. Under this regulation, no exporter or processor could buy directly from the farmers, which discourages the processing and exporting of agricultural products.
  • 2. Under the Act, the state could only set up markets, thus preventing private players from setting up markets and investing in marketing infrastructure.
  • 3. The formation of cartels with links to caste and politics makes the system inefficient.
  • 4. An increased number of middlemen formed a virtual barrier between the farmer and the consumer.
  • 5. The licencing of commission agents in the state-regulated market has led to a monopoly of licenced traders, acting as a major entry barrier for new entrepreneurs.
  • 6. The fragmentation of the markets within the state hinders the free flow of agro-commodities from one market area to another, and multiple levels of Mandi charges end up escalating the prices for the consumers without adequate benefits for the farmers.

MODEL APMC (AGRICULTURE PRODUCE MARKETING ACT), 2003 (05:58 PM)

  • As per the Act, the state is divided into several market areas, each of which is administered by a separate APMC that imposes its own marketing regulations, including fees.
  • Producers and local authorities are permitted to apply for the establishment of new markets for agri-produce in any area.
  • Provision for contract farming and allowing direct sales of farm produce.
  • Single point levy of market fees on the sale of notified agricultural commodities in any market area.
  • Separate provision is made for notification of special markets in any market area for specified agricultural commodities.
  • It provides for the creation of marketing infrastructure from the revenue earned by the APMC.
  • Provision is made for resolving disputes in the private market.

e-NAM (06:21 PM)

  • It is an online trading platform for agricultural produce, aiming to help farmers, traders, and buyers through online trading and increasing transparency.
  • The Small Farmers' Agribusiness Consortium is the lead agency for implementing e-NAM under the Ministry of Agriculture and Farmer's Welfare.
  • Need for e-NAM:
  • Every state has its own APMC act with varied provisions, and every state is further divided into several market areas that are separately administered by respective APMCs.
  • This fragmentation of markets, even at the state level, hinders the free flow of agricultural commodities between different markets.
  • Multiple handlings of agriproducts and multiple levels of mandi charges led to higher prices for consumers without adequate benefits for farmers.
  • These challenges are addressed by e-NAM by creating a unified market for online trading platforms both at the state and national levels.
  • e-NAM mandates three changes in the agriculture marketing laws of the state:
  • 1. Providing for electronic trading
  • 2. Providing a single trading licence that is valid in all mandis.
  • 3. Providing a single window levy on transaction fees
  • Salient features:
  • 1. The e-NAM portal will enable farmers to showcase their products through their nearby Mandis and facilitate traders from anywhere to quote the price.
  • 2. e-NAM provides a single window service for all APMC-related services, including commodity arrivals, quality, prices, buy and sell offers, and e-payment settlement directly into the farmers' account.
  • Benefits:
  • 1. Transparent online trading
  • 2. Real-time price discovery
  • 3. Better price realization for the product
  • 4. Reduce transaction costs for the buyer.
  • 5. Stable price and availability for consumers
  • 6. Payment and delivery guarantee
  • 7. Error-free reporting of transactions

HOW TO MAKE NOTES (06:38 PM)

  • Reference: Toppers copy
  • Read all the PYQs and answers.

EXTERNAL SECTORS (7:11 PM)

Balance of Payment (BoP)

  • It is an accounting statement that records the economic transactions of residents of the country with the rest of the world in one financial year.
  • The economic transaction includes:
  • Visible items (BoT);
  • Unilateral transfers (one-sided transfer without returns)
  • Factor Income 
  • Services
  • Capital-related aspects.
  • BoP is a double-entry accounting system where debits and credit transactions are recorded. 
  • BoP of a country is further divided into two parts, according to the nature of transaction: Balance in Current account and Balance in Capital Account
  • In double entry system of accounting-All inflows are credited (positive), and all outflows are debited (negative) under BoP. 
  • Credit items include exports, receivable income, transfer receipts, reductions in foreign assets, and increases in foreign liabilities.
  • Debit items include imports, payable income, transfer payments, and increases in foreign assets or decrease in Foreign liabilities.

  • Debit

    Credit

    Import (Goods)

    Export (Goods)

    Unilateral transfers to abroad

    Unilateral transfers from abroad

    services received from abroad

    Services to abroad

    Factor Income to abroad

    Factor Income from abroad

TOPIC FOR THE NEXT CLASS: WILL CONTINUE WITH THE EXTERNAL SECTOR