Wyn Technology

Role of ICT in Agro marketing

Mukesh Kumar,  Swaran Singh Jaggi , Daljit Singh,   Dr Subhan Khan 

1 Department of Physics, SSNC, University of Delhi, Delhi, INDIA; e-mail: physics.ssn@gmail.com
2 WynTech, Managing Director, Delhi, INDIA; e-mail: swaran.jaggi@gmail.com
3  Department of Geography, SSNC, University of Delhi, Delhi, INDIA; e-mail: daljitchhiller@yahoo.com

Mewat Development Society, INDIA; e-mail:drsubhankhan@gmail.com

 

Abstract

In our conventional method of agro-business, the manufacturer (farmer) sells its produce to the middle men or to the agro-processing units who sells, store or process the commodity and do business at a higher margin of profit. So the objective through this paper is to open alternate method of agro-marketing to maximize farmer’s profit.  But in the presence of opportunity of the digital world, if the farmer gets information before the harvest, then he can plan his marketing strategy. He can sell his produce according to the need of the buyer and do value addition like, grading, packaging, processing and sells at the right time in the market.  Even, this paper help to improvise conventional method of agro-business by empowering farmers with appropriate information about demand and supply at various trading locations. Through this work we have devised a model for maximizing agro-farming profits and suggest some alternate ways of doing agro-business.

                              

  1. INTRODUCTION :

After independence, the focus of Indian government was on agriculture to meet the food grain requirements of the country. With revolutionary changes, the production of wheat and rice was increased manifold, and country became self-sufficient. Later on the focus was shifted to industrial and service sector. As a result agriculture was not able to keep pace with the fast technological changes and lagged behind. Production of other crops was not able to increase in same manner. As per 2011 Census, around 70% of population of India lives in rural area and for around 26.3 crore i.e. 22% of the population is dependent on agriculture as the main source of livelihood.  Further, around 58 % of the rural households are dependent on agriculture or allied activities. As per estimates by the Central Statistics Office (CSO), the share of agriculture and allied sectors (including agriculture, livestock, forestry and fishery) was 15.35 % of the Gross Value Added (GVA) during 2015-16 at 2011-12 prices. Government of India has issued national policy for farmers. The policy aimed at increasing the net income of farmers by various means including improved agricultural production and its marketing.

Traditionally farmers sell their crop products to the middlemen, located in nearby grain mandies,  at the terms and conditions of these middlemen. The middlemen keep the crop products and forced the farmers to purchase household items from their shops and adjust the amount. The sugar mills procure the sugarcane from farmers as per their requirement, but keeps on delaying the payment for number of reasons The crop product will be sold directly or after processing at much higher prices by the middlemen.  So the middlemen  always make a huge profit. Most of the agricultural products (mostly vegetables and fruits) are perishable items, if it is not sold at right time, its value may go down or it may spoil. Since farmers do not have right information about current prices in different mandies, capacity and capability to retain the products, they are often forced to sell their produce at lower prices in order to fulfil their immediate needs.

More than 58% of population of India get livelihood from agriculture. Being in farming is being in business. Farmers constitute a huge part of business in the country[1]. But still farmers are committing suicide. Farmers’ suicide cases have increase by 26% in 2014[2].

One of many reasons is that they are not getting an optimum price for their crops and are thus forced to sell their products to local brokers at low prices to fulfill their immediate needs and with this the dream of profitable farming gets a setback. Besides this, small businessmen’s, who keep stock of agricultural products and wait for rates to increase most commonly face loss because of not having exact knowledge of current market trend.

 

Recent development in internet technologies has covered every field of world. In education, business, transportation, management etc., applications of internet have benefited everyone. India is also contributing at a significant level in number of internet users in world. Data shows that from year 2000 to 2014 internet users in India have increased from 0.53% to 19.19%[3] . National Optical Fiber Network, NOFN (now Bharat Net) has a vision of connecting over 2,50,000 villages of India through broadband[4].

This growing problem can also be tackled using developing internet technologies preventing exploitation of farmers providing suitable information needed in their hand. John Bateman says even farmers today cannot survive without the internet3. Farmers also need the internet. Use of internet based platforms can advantage farmers, wholesalers, brokers, direct marketing units (e.g. hotels, cooperatives etc.), food processing units, and cold storages to establish easy contact and make their business more outputting and beneficial.

Hence, an attempt is made through this innovation project to connect farmers to nearby mandies through Digital India Mission with the world agro- strategy.  If farmers will get prior information about prices of different crops in different markets, they could plan their strategy in a better way. They may have better options to sell the products in the market, sell it online, store it for some more time or process the crop and do some value addition. In this way the farmers will be able to earn some extra money for the same crop.  The buyers will also have to pay lesser for the same crop. To help the farmers a mobile app MIS.apk and  WWW.SSNPROJECT.IN  a fully devoted website is designed to bring the mandies, farmers, buyers, other agencies related to farming on  same platform.

The major problem which farmers face is to sell their perishables items

  • In time (as fresh as possible)
  • At reasonably good price
  • By spending less transportation cost
  • To get crop price in time
  1. METHOD OF STUDY

The research was conducted to explore the potentials of digitalization of agro-markets and farmer’s perception and their willingness to utilize the facilities of Information Communication Technology to buy and sell agriculture commodities. The study was based on primary survey conducted through questionnaire consisting of questions regarding the strength, weakness, opportunities and threat if using ITC in the agro-farming.

The authors strongly disapprove conventional selling of produce. Rather advocate to add an intermediately layer of value addition and e-commerce. Our methodology is two pronged:

  1. Doing value addition at local level
  2. Selling at optimal price using ecommerce

Hence we recommend the integration of the well proved methods of value addition and electronic selling through the use of Internet technology

  • Value addition using farmer’s own efforts
  • Cooperative: cooperative accumulate produce of all agreed farmers and do value addition at their end and share the profits among the farmer members
  • On line selling: cooperative model can be extended to online selling
  • Local bulk buyer – a completely   new business where a local buyer at village/bock level do the value addition (Grading, Packaging and processing etc ) and hence sell it at higher price and share his profit with the farmer
  1. METHOD ANALYSIS

3.1  Farmer and the internet technologies:

There are many websites over internet which provide necessary input for crops (e.g. fertilizers, seeds, pesticides, herbicides, soil testing facilities) and livestock production. It is a better option to    get a deal over internet than a traditional supplier. Farmers need to know prices for their crops from their nearest mandis which is a great challenge these days. If they know the commodity rates at different mandis along with transport cost and other expenditure, they can easily do profitable selling of their production. After knowing about commodity value from various mandis the next thing that they desire to know are queries on routes, transportation, rate trend, to which sometimes they are unaware, to make their selling profitable.

 

Profitable selling = Selling value – (transportation expenditure + other expenditures)

Profit = selling value – (transportation expenditure + other expenses)

 

At this point of time if we can replace selling value by “opportunity selling value” and reduce the expenses (transportation expenditure and other expenses) met in selling, we can increase the profit

For example, In Mandi 1, selling cost is Rs 100/kg but transportation to that mandi for a farmer costs Rs 30/kg and other expenditure costs Rs 10/kg.

So, his net selling Value becomes 100-(30+10) = Rs 60/kg.

And in Mandi 2, Selling Cost is Rs 85/kg, Transportation costs Rs 10/kg and there is no other expenditures.

So, his net Selling Value becomes 85-20 = Rs 65/kg

The farmer can easily conclude that selling his product in Mandi 2 is more profitable than Mandi 1.  Along with the transportation cost, knowledge of staying points near mandis, fuel filling stations, medical facilities, banks, ATMs and other emergency facilities is also important. Having a complete knowledge of grading and packaging, which is an important task and lead to higher selling values, enhance the dream of profitable selling. Not only farmers will be benefitted by the technology, the consumers can also get information about the mandi rates and can purchase farm products at much cheaper cost as they do in present time. But, mere digitalization of agro-markets is will not be useful, rather real-time digitalization is required. The rates in the mandis should be updated instantly with inflow and outflow of farm products. The minimum support prices for the coming season should also be updated, which is based on the government’s requirement from the farmers, so that farmers can opt for crops which will be more beneficial for them, and government can maintain a balance as per supply and demand.

Online sales of products will bring transparency of price of agricultural inputs and actual price of pesticides, seeds and fertilizer delivered to a farm will be more apparent. This will force sellers of these products to determine true price because of increased competition in auction sites. It is much obvious that it’s result will be that the farmer will have to pay less price than that he used to pay in past. A farmer will also be able to decide and purchase product according to his individual need which is better than traditional system. The question here arises is that will farmers sell their products for cash directly over the Internet?, probably not in current  (immediate) future.

From over last 100 years the marketing system has been set up and efficient on handling large quantity of commodities. So what internet will provide farmers?

As we know the peculiarity of agro products is timing and criticality of items which are perishable, so the internet will provide farmers the instant facts by which he can take quick decision and the facility of advertisement.

The answer is the ability to advertise. Such advertisements over the internet offer farmers to locate best place to sell their products and processors to source products much easily without having to raise their offer price at a significant amount. For example, suppose a mill needs more soybean than it expected, it will post an advertisement over internet. If farmers are watching for best prices over the internet and go through this advertisement, the mill will get all the Soyabean it needed with a moderate upward adjustment of its offer prices. In the future, the Internet’s most important impact on farmers might be its ability to allow some farmers to move away from growing and marketing commodities to growing and marketing differentiated products[5].

 

3.2  Way for markets and business bodies:

Figure 1: Framework for digitalization of agro-markets

In recent years, agricultural has been increased at a significant level. Many factors are responsible for this which includes household income growth and growth in expansion of food processing sectors, increase in agricultural exports, reduced transaction costs and time, improved port gate management and better fiscal incentives. Growth in organic farming, private participation and use of information technologies are some key trends in Indian agricultural industry. Chemical companies need feedback of farmers about their products and current demands of farmers so that they can avail products according to present demand. This is a challenging task in traditional system as it is hard for companies to establish direct contact with farmers. Support forums and other tools using internet technologies makes this process easier. The need of soil testing and solving other farming related problems can easily be solved using these technologies.

With the increasing competition in market food processing firms needs quality cereal at as low prices as possible. For this they used to contact wholesalers, brokers or cold storages. They add their commission in the rates and thus food processing firms has to pay an extra amount. With the use of these technologies they will be able to establish contact directly to farmers, offer them their rates and this way can purchase products directly from farmers at a rate that is less than that they used to pay to brokers. And this offered rate can also be higher than what the farmers were getting from brokers, and will always will to sell their products directly to companies. This all will result in lowering the price of final products from food processing firms. Farmers will also get a way to contact to transport facility providers to take their product to sell to mandi of their choice where they are getting a profit. This will make the transport more beneficial and attract more and more investors to invest in transport business also. Besides this there are many others business that will be affected directly with the advancement of internet technologies in agriculture. These include IT service providers, cold storages, hotels, veterinary and husbandry doctors etc.

 

  1. RESULTS AND DISCUSSION

Based on the study and desperate sell by the farmer leads to conclusion that the conventional selling of the produce needs to change and farmers should look for other demand source to get better rates of their crops. To do so we require strong information portal which help farmer to decide how and where he sell his produce. The portal also open new avenues of selling his produce. We strongly recommend the use of technology in agro marketing and look for alternate sources of selling.  Rather advocate to add an intermediately layer of value addition and e-commerce. We suggest the followings to implement in agro-marketing

  • Doing value addition at local level &
  • Selling at optimal price using information portal and ecommerce
  • Engage other direct sources of selling produce like hotels and malls etc.

Hence we recommend the integration of the well proved methods of value addition and electronic selling through the use of Internet technology

  • Value addition using farmer’s own efforts
  • Cooperative: cooperative accumulate produce of all agreed farmers and do value addition at their end and share the profits among the farmer members
  • On line selling: cooperative model can be extended to online selling
  • Local bulk buyer – a completely   new business where a local buyer at village/bock level do the value addition (Grading, Packaging and processing etc ) and hence sell it at higher price and share his profit with the farmer

After the integration of technology with the local knowledge and discussion with the farmers we were encourage by the farmer’s feedback and their interest in our suggestions. Our students & faculty team members made a good contribution, which was seen in the results through our website and android application.  Farmers have reduced the worry of desperate selling to the middlemen and can take decision on their own for the crop selling. Their per acre income increases by adopting technology from the same land holding and resources.   Farmers and buyers have made a healthy relationship and Online selling of agricultural products, easy access to  Fertilizers, Seeds, Pesticides and other needs are some boons they are provided with. Farmers can now easily access to Bank Loans and Agricultural Insurance. Farmer now gets an easy access to government policies.

 

  1. ACKNOWLEDGEMENT

The Authors are thankful to University of Delhi for  financial Support to INNOVATION RESEARCH PROJECT Marketing Information System for farmers Using Geospatial Technology

 

  1. REFERENCES
  2. Zi Hua Zhao, Hardev S. Sandhu ,Feng Gao, Da-Han He, Shifts in natural enemy assemblages resulting from landscape simplification account for biocontrol loss in wheat fields, Ecological Research, 2015, Vol.30 (3),493-498.
  3. Neményi,  P.Á. Mesterházi, Zs. Pecze,  Zs. Stépán, The role of GIS and GPS in precision farming, Computers and Electronics in Agriculture, 2003 Vol. 40, (1-3), 45–55.
  4. J. Staal, I. Baltenweck, M.M. Waithaka ,T. DeWolff  and L. Njoroge, Location and uptake: integrated household and GIS analysis of technology adoption and land use, with application to smallholder dairy farms in Kenya, Agricultural Economics ,2002 , Vol. 27, 295–315.
  5. Website Resources : www.internetlivestats.com, www.extension.iastate.edu, mkisan.gov.in, www.joe.org and  ibef.org.

[1] http://www.irishtimes.com/

[2][2] Indianexpress.com

[3] www.internetlivestats.com

[4] www.track.in

[5] https://www.extension.iastate.edu

Leave a Comment

Your email address will not be published. Required fields are marked *