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Impact of Globalization: Contract Marketing

The macro level changes due to the New Economic Policy have had a direct impact in the field of agricultural marketing. So the impact of globalization has been highlighted here.

As a result of globalization substantial investments in new ventures are being made by national as well as international corporations. A number of foreign companies are slated to enter the Indian market through collaborations with the well known Indian companies like Eagle Agro-farms, Maxworth Orchards, etc. It is clear that the wholesaler in the fresh products market as well as the processor will prefer contract marketing tie-ups with the farmers for sourcing his supply requirements.

The concept of contract farming is not new to India. Several years back, contract marketing was successfully tried in respect of "Hima peas". 'MARKFED' of Punjab also operated a scheme of contract marketing for green peas, Agrecotec proposes to setup country-wide retail network of shops for fresh fruit vegetable marketing. ,Direct marketing to consumer is already being done by the Mother Dairy through its outlets in Delhi.

The successful integration of production and marketing under Apni mandi' scheme in Punjab and the marketing managements of 'FRESH' in Hyderabad are clear signs that contract marketing is going to be increasingly resorted to in the years to come. "Pepsi Foods" also an another example of contract farming of potatoes and tomatoes. Under this farming farmers will be producing specific varieties or qualities tailored to meet the requirements of the processor or the fresh produce market.

The potential benefits of the contract farming are:- producers can reduce the market risk, post harvest losses can be reduced, technology can be transferred to the producers, contract serve as a security for increased access to credit by both producers and processors, contract may create a greater sense of common interest among the producers and induce greater involvement in group activities etc.

Common problems may be volatility in market price, there is risk that the processors may manipulate the quality standards, coordination problems may be there regarding delivery of inputs or produce, processors may lack the competence or capacity to deliver the require technical assistance, producers may become tied to a contract relationship by virtue of debt, specialization, or the disappearance of other markets and may be unable to adjust their production activities to changing conditions etc.

Many of these problems of contract farming will not arise where goodwill and credibility exist between the farmers and the concerned company.

VI. Major Areas of Concern in the Rural Marketing Sector

1. Government should assume a more dynamic role in the field of agricultural marketing that of a strong buffer between global forces and local needs.

2. Emphasize value addition by giving a thrust to agro-processing industries at farm level so that the benefit of value addition is transferred to the producer.

3. There is a need for professionalizing agricultural marketing as a subject of great practical application.

4. Creation of an effective market intelligence network, right from the importer in the global market to the producer in the remote corner of the rural India.

5. Institutional linkages should be emphasized upon to integrate the markets, for easy movement of goods and also to facilitate the inter-state trade.

6. Regular surveys and analytical studies on agricultural marketing should be conducted, so that appropriate policy adjustments and refinements whenever necessary.

7. Decentralization in the marketing system.

8. To introduce social marketing for bringing about a change in the behaviour and attitude through social advertising and social communication. Some fertilizer companies and commercial banks are taking up Village Adoption Programme under the social marketing.

9. A design frame work for information technology based Agricultural Marketing Network is essential. Computer installations at State as well as district marketing boards enhances the availability of trade information.

10. Economic incentives should be offered to the farmers to encourage them during low economic conditions.

VII. Conclusion

The vital role rural marketing have to play in the economic development of a developing country, is beyond doubt at present. The most glaring deficiency in rural economy is evident, is in giving the farmers a better deal in terms of institutional and advisory services and practical training. Intensive efforts to provide these basic facilities is the need of the hour.

Indian agricultural marketing system should be made much more competitive by infusing competition within the country and preventing the external system equation from interfering with the local markets in the larger interests of the nation.

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Impact of Globalization: Contract Marketing

VI. Major Areas of Concern in the Rural Marketing Sector

VII. Conclusion

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