Research Project
Name of the Organization : University of Agricultural Sciences, Dharwad.
Name of the Topic : Grade price relations in Groundnut and Cotton in selected markets
of
Karnataka.
Name of the Principal Investigator : Dr. H. Basavaraja, Associate Professor
GRADE
PRICE RELATIONS IN GROUNDNUT AND COTTON IN SELECTED MARKETS OF KARNATAKA
SUMMARY
The quality of farm produce brought to the
market by the farmers varies considerably over space and time. It is therefore,
essential to grade the farm produce brought to the market in order to reap the
benefits of grading. Grading of farm produce is one of the important functions
of the marketing system. Recognizing the importance of grading and
standardization in the process of marketing, the Agricultural Produce (Grading
and Marking) Act was enacted in the year 1937 itself, with a view to
encouraging the production of quality farm produce in the country. Initially,
for the purpose of grading, only 19 agricultural commodities were included. It
is steadily expanded to cover more than 142 commodities. Grading of farm
produce is compulsory for exports and it is voluntary for the internal trade.
Compulsory grading at the producer’s level exists only for a few commodities,
that too in a few selected markets. The Directorate of Marketing and
Inspection, Government of India, is making efforts from time to time to
encourage and improve the grading system in the field of agricultural
marketing. However, the grading of farm produce has not made the expected
progress for number of reasons.
Therefore, there is a need to analyze the
status and identify the lacunae in the present grading system. Not much work
has been done to assess the relationship between the quality factors, the grade
and price of a given lot of commodity. A study of this kind would help in
understanding the relationship, if any, between these factors.
Karnataka ranks fifth among the oilseeds
producing states in the country. The area under groundnut in the state is 12,00,135 hectares and production is 9,45,501 tonnes during
1994-95. The regulated markets in the groundnut growing districts traded 29.04
lakh quintals of groundnut, valued at Rs.296 crores during the year 1994-95.
Karnataka is one of the nine major cotton-producing states in
This study has therefore been undertaken
choosing these two major commercial crops in
Ø
To
study the relationship, if any, between the quality and the price of the
produce,
Ø
To
examine the relationship, if any between the quality and grade of the produce,
Ø
To
examine the relationship, if any between the price and the grade of the
produce,
Ø
To
identify the constraints in popularizing the grading system and
In order to ascertain the role of the quality of agricultural commodities in influencing their price and grade at the producers’ level, two prominent, commercial crops, namely, groundnut and cotton were selected and the connection between the quality, grade and price of these crops was studied. The ascertainment of the quality-price, quality-grade and the price-grade relationships existing in respect of these two commodities, supplemented by a study of the constraints that might have existed in popularizing the grading system, were the specific objectives of the study to that end.
In the sample frame adopted for the
estimation of these relations, the basic sampling units comprised the markets,
the producer-sellers, the graders and the traders of the selected markets found
to deal in the selected commodities and the physical samples of the two
commodities. The markets studied in this connection were selected based on
their individual dominance in the total arrivals of each of the selected
commodities among the total markets of Karnataka State. Accordingly, six
markets for groundnut, namely, Challakere, Gadag, Davanagere, Raichur,
Ranebennur and Bijapur and five markets for cotton, namely, Bijapur, Raichur,
Saundatti, Bailhongal and Chitradurga were selected. From the selected markets,
official graders at the rate of five per market, licensed traders at the rate
of five per commodity per market and producer-sellers at the rate of nine per
commodity per market were selected at random for interviewing which was
conducted using pre-tested questionnaires. Similarly 1 80 samples of groundnut
(pod) and 1 50 samples of cotton ( kapas ) were
selected at random at
the rate of 3O samples per respective market. The total sampling process was fulfilled over staggered
intervals stretched over the arrival seasons of the commodities during the
study year of 1996-97.
The commodity samples collected were subject
to scientific analysis in order to ascertain the quality factor while the price
offered and grade assigned were ascertained from the market committees. The
outcome of the scientific analysis, market observations and interviews were
subjected to the statistical techniques of tabular analysis, and regression and
correlation.
The results of the study indicated that even
though all the selected markets were equipped with primary grading units,
scientific grading was not practiced in any of these markets. Instead
commercial grading, an abbreviated form of eyesight grading was practiced. Such
grading was conducted for groundnut in the three markets of the Gadag, Raichur
and Bijapur and for cotton in the Saundatti and Bijapur markets. Bailhongal,
Challakere, Chitradurga, Davanagere and Ranebennur were the five markets in
which no grading was observed in respect of groundnut and cotton. Graders were
available for interview in all except Bailhongal and Challakere markets and in
Chitradurga, Davanagere and Ranebennur markets the graders were found to be
allotted to the duties other than grading.
The groundnut produce brought to the market
was found to be highly heterogeneous in terms of foreign matter and shrivelled
kernel over the study markets and the rest of the qualities were found to be
uniform. The groundnut produce received in the southern markets of Karnataka
appeared to have higher moisture content. The correlation between the quality and
grade revealed that foreign matter; shrivelled kernel and moisture content were
grade/price-discounting factors. In terms of Co efficient of Variation of
various cotton quality parameters, Raichur market exhibited the least variance
while the maximum quality variation was noticed in Bijapur market. In the case
of cotton, quality parameter - price and quality parameter - grade correlations
were as anticipated for most of the markets studied.
From the regression analysis in the case of
groundnut, shrivelled kernels was found to be a price/grade discounting factor,
whereas shelled output and oil content were found to be price- premium factors
in most of the markets. Thus the study revealed that the extent of shelled
output, shrivelled kernels and oil percentage were the three important factors closely scrutinized by the traders
while pricing. In the case of cotton micron ire value was found to be a
price-discounting factor in Saundatti market while the same was a price premium
factor in Bijapur and Raichur markets. Ginning percentage was observed to be a
price premium factor in Chitradurga market. The analysis of the relationship
between the quality factors and the grades assigned by the regulated market
graders revealed that there was no definite relationship between the two as the
quality factors across the markets were not only inconsistent but also
insignificant. However, there existed a definite positive relationship between
the price and the grades assigned.
The responses from traders, graders and the
farmers were elicited for a wide range of quality parameters that were thought
to have a bearing on the grade/price of the produce, for both the commodities.
There was a general concurrence among the farmers, traders and graders in
assessing groundnut quality. They reported that they generally considered the
extent of foreign matter, shelled output, proportion of shrivelled kernels, oil
content and moisture content as the most important parameters. A small
proportion of the traders stated that, besides the above factors, they also
look for the factors like the size of the lot. In the case of cotton, moisture
and trash content of the kapas were agreed upon as the major factors while
assessing the quality. The opinion of traders, regarding ginned output varied
with almost half of them stating that they did not consider this as an
important factor. A small proportion of the traders looked for false packing.
Majority of the respondents were indifferent to the factors like admixtures and
colours. The graders interviewed reported that the trading community did not
take the graders assigned by them. On the contrary, the traders opined that the
graders assigned by the graders were not commensurate with the quality of the
produce and hence resorted to their own way of assessing the quality of the
produce. It was observed that some of the graders were assigned the duties
other than grading in most of the markets.
The results of the study indicated broadly
the need for the following policy prescriptions for making the grading process
more meaningful and popular in the marketing of agricultural commodities.
1) It was found that in the Bailhongal and Challakere
markets, the graders were not operating
at all. Apart from
this, in the
markets where graders were
observed to operate, the market committees assigned the
graders. Thus there was varying degrees of their involvement in the actual
process of grading the farm produce. Usually grading was found to have been
given the last preference. As regards the level of training, the graders had
varying degrees of training and even among these trained graders; the training
given was not adequate. In order to implement grading effectively, it is
essential that each of the market should have adequately trained staffs that
are quite conversant with the techniques of eyesight/scientific grading for
various agricultural commodities. The deployment of such trained staff in each
market should be adequate to match the arrivals of commodities in the peak
periods at each market. The requirement of trained grading staff should be
periodically assessed. The graders should also be exposed to periodical
training in order to keep them abreast of times and to wide variety of crops so
that their services are utilized effectively throughout the year. The market
committees should be facilitated to build a time series database on quality
parameters, grades and prices for various commodities that could serve as a
feedback/guideline to improve the process of grading and standardization.
2) The price information should be
disseminated according to variety and grades. This would pave way for
grade-based transactions.
3) In the absence of regular grading
practices in the markets, it is observed that the marketing of commodities by
grades had totally disappeared. In many markets, only the lot number was
displayed but no grades were mentioned. Unless the grading system is
reinforced, the marketing practices would continue to downplay the quality
aspect of the agricultural commodities.
4) Of the nine markets studied five markets
had no metalled (‘pucca’) surfaces for displaying the commodities for sale.
Therefore, there is an urgent need to provide raised metalled platforms with
overhead canopies in the markets.
5) Arrangement should be made to introduce
scientific grading of agricultural commodities in the markets or for a cluster
of markets.
7)
The producer-sellers should be made aware of grading and quality conscious
and periodically educate on significance and benefits of grading their produce.
They should also be imparted training on grading of farm produce.