MARKETING  INFRASTRUCTURE  &  AGRICULTURAL 
 MARKETING  REFORMS

                                                                                            
 
                       
                                                                                           
      

MODEL PROJECT ON DEVELOPMENT OF DIRECT MARKETING INFRASTRUCTURE

RYTHU BAZAR / FARMERS' MARKET

 

1.      INTRODUCTION 

Direct marketing is a long felt need of the farmers and consumers of the country as it goes a long way in ensuring higher remuneration to the farmers and meeting the satisfaction level of the consumers through direct sale of the agricultural commodity by the farmers to the consumer at affordable prices. Direct marketing of agricultural produce helps in complete elimination of middle men and commission agents who charge high level of commission fee from the agriculturists/farmers coming to the market yards for selling their produce and then artificially inflate the retail prices. The efficacy of direct agricultural marketing infrastructure facility can be increased by providing market user common facilities for  proper weighing, cleaning, grading and packaging of agricultural produce being brought to the market yard by the farmers for sale. In order to give a big boost to the development of direct agricultural marketing infrastructure facilities in the country, the Govt. Of India, Min. Of Agriculture has announced the ďScheme for Development/ Strengthening of Agricultural Marketing Infrastructure, Grading and Standardization.Ē The scheme is reform linked, i.e. Desires the states to amend their state specific APMC acts for enabling development of direct agricultural marketing infrastructure facilities, contract farming and participation of private and cooperative sector in creation of market yards. Under the scheme credit linked back ended subsidy to the tune of 25% of the total project cost (33.33% of the total project cost for projects in NE states, hilly and tribal areas, SC/ST entrepreneurs or their cooperatives) is available. The implementation period of the scheme is from 20.10.2004 to 31.3.2007.  Development of direct marketing infrastructure forms one of the component of the scheme.  

The Rythu Bazar (Farmers' Market) is one of the farmers' friendly direct marketing systems in operation in the country. In order to create awareness about development of agricultural marketing infrastructure among bankers, financial institutions, potential entrepreneurs in private and cooperative sectors, farmer groups, govt. functionaries etc. a model bankable project  for a Rythu Bazar has been developed.

 2.        CONCEPT

Rythu Bazars were introduced with a view to eliminate the middlemen and arrange facilities for the farmers to sell their produce directly to the consumers at reasonable rates fixed every day. On account of the scheme both the farmers and the consumers are benefited.  

Regulated market yards for fruits and vegetables are functioning only at a few centres. The marketing system for fruits and vegetables is now in the hands of middlemen. Middlemen exists at various levels between the farmers and the consumers and exploit through malpractice in weighment, handling and payments. Large number of small farmers are unable to effectively bargain for better price in the wholesale market. Inefficiencies in the wholesale markets results in a long chain of intermediaries, multiple handling, loss of quality and increase the gap between the producer and consumer prices. Large number of small retailers, each handling small quantities, create high overheads leading to high margin on produces.  

It is, therefore, felt necessary to evolve an alternate marketing strategy where both growers and consumers are benefited through Rythu Bazar. Rythu Bazar are thus planned for direct interface between the farmers and the consumers eliminating middlemen. Rythu Bazars, if function effectively, can act as price stabilization centers. Rythu Bazars will operate outside the purview of the Agriculture Market Committees and are to be managed by Estate Officers under the control of Revenue Department of the State Government.  

The producers/farmers are supplied properly calibrated weighing scales with weights for selling their produce. All these facilities are provided to the farmers and customers free of cost. The Estate Office is equipped with all the latest facilities like telephone, fax, computer with Internet facility etc.  

3.        OBJECTIVES

The objectives of Rythu Bazar are mainly:  
1.       To ensure remunerative prices to the farmers and provide fresh vegetables to the consumers at reasonable rates fixed every day.  

2.          Facilitate prompt realization of sale proceeds to the farmers without any deductions.   

3.       Curb malpractice in weighment  

4.          Provide direct interface between farmers and consumers- eliminating intermediaries in trade.

 

4.        FACTORS OF SUCCESS

Successful operation of direct agricultural marketing infrastructure facilities viz. Rythu Bazars depend upon location of the bazars, number of customers visiting the bazar per day, nature, type, quantity and quality of agricultural produce being brought by the farmers for sale, systematization of the retail price fixation mechanism, allotment of stalls to the farmers on farmersí group/ mandal basis, design of the stalls based on the nature, type and quantity of salable items brought by the farmers, availability of functional infrastructure facilities viz. cleaning, grading, weighing, packaging, short term storage etc., price display mechanism, loud speakers and broadcasting system, availability of utilities viz. electricity, water, garbage disposal/ cleaning facilities and last but not the least services/ facilities for the convenience of the consumers viz. parking, coin changing machines, grievance redressel mechanism etc. The facilities should, therefore, match to the requirement of the farmers and the consumers/ customers. Considering all these aspects the requirements  of a Rythu Bazar/ Farmers' Market for direct sale of agricultural commodities are elaborated in the following paragraphs.  

4.1          Location :

i)        The Rythu Bazar/ Farmers' Market for direct sale of agricultural commodities should be located at a convenient location for enabling maximum number of consumers to visit the bazar . Locations near transport head/ main road/ railway stations, bus stops/ depots/ community centers are considered ideal for establishing such bazaars. The site must be on a raised land, have facilities for safe drainage of storm water and sewage, should be safe from damage by surface or seepage water and not subject to floods or inundation.  

ii)       It should be away from the factories and other industrial establishments, dairy and poultry farms, kilns, sources of fire, garbage dumping grounds,  slaughter houses, hide  curing centers etc.. The structure shall be 150 m away from factories and other sources of fire, 300 m away from kilns, slaughter houses etc.  

iii)     Sufficient parking and maneuvering space for vehicles should be available. There should be scope for future expansion and adequate land  available in the adjacent areas.  It should also have scope to access adequate dependable source of water, electricity and the site should be free from all legal hurdles to take up proposed constructions and marketing.   

4.2    Facilities to be provided in Rythu Bazar/ Farmer's Market  

The layout of a market yard should be to facilitate easy movement of people (consumers and farmers bringing in their commodities for sale) and vehicles. The layout should be such that there is efficient use of the available space. Congestion should be avoided. Each stall should face the internal walkways for proper display of commodities and have equal opportunity for the business development. The stalls should have sloping roofs with a minimum slope of 1:4 towards the internal walk way for proper drainage of rain water. The display floor of the stall should have sufficient height from the ground level to prevent inundation. The Rythu Bazar/ Farmers' Market should have a wide approach road and adequate parking space for vehicles of consumers. Drainage arrangements for rain water, waste and sewerage water should be made by means of covered surface or underground drains according to site conditions. Provision for trash arresters may be provided for preventing clogging of drains. Minimum provision for: (a) cleaning (b) grading and sorting (c) weighing (d) packaging (e) small storage godowns for short duration storage (f) market office (g) gate check post (h) parking space (i) fire fighting arrangements will have to be made. The estimates provided should be examined to see whether they are reasonable and whether all the items of development are covered.  

4.3    Identification of farmers  

A team is to be constituted with Mandal Revenue Officer, Horticulture Officer and Agriculture Officer which should visit the villages, inspect the fields and identify the farmers.

4.4    Issue of Photo Identity Card

Based on the recommendations made by the team, identity cards are to be issued to the farmers, in which photo of the land owner and his nominee with the particulars of the village name to which the farmer belongs, survey number, extent of the land owned by him, and the vegetables grown are mentioned. The identity cards are to be renewed every six months with reference to the vegetables grown in their fields.  

4.5    Transport Facility

Transport facility for pick up and dropping down of the registered farmers to the Rythu Bazar are to be arranged by the market functionaries through tie-up with state transport department.  

4.6    Allotment of stalls

Stalls are to be allotted to the farmers on first come first serve basis daily. The farmers are not allowed to occupy the stalls permanently. No fee is to be collected from the farmers.  

4.7    Prices Fixation

The market committee will every day communicate the moderate wholesale prices of vegetables through fax between 7.30 AM and 8.00 AM . Based on the same, the prices of vegetable are fixed in consultation with the farmers committee, which may be 20% -25% higher than the whole sale price and lower than the local retail market prices in the area.  

4.8    Sale of vegetables to residential schools/hostels

The Rythu Bazar can undertake bulk supply of vegetables to the social welfare hostels, major residential areas and hostels  as per their requirements to encourage the farmers to bring more and better quality vegetables to the market.  

4.9    Public Address System

Prices of vegetables are frequently announced through public address system to create awareness of the rates of the vegetables among the consumers as well as farmers.

4.10    Providing of coins

The farmers and consumers face a lot of problem due to lack of change especially of 50 paise and one rupee coins. To avoid such problems, the market functionaries may install coin exchangers at a suitable location in Rythu Bazar through tie up with banks.  

4.11    Supply of weighing scales

When the farmers enter into a Rythu Bazar their names along with the particulars such as name of the village and the quantity of vegetables brought by them are entered in a register and they are issued a token. On the basis of the token issued to them, all the farmers are provided with weighing scales without collecting any fee. The farmers will return back the scales after completing their sales.  

5.    BRIEF CONSTRUCTION SPECIFICATIONS FOR FUNCTIONAL INFRASTRUCTURE FACILITIES IN RYTHU BAZAR / FARMERS' MARKET

  5.1     Road

The Rythu Bazar/ Farmers' Market should have wide approach road of minimum 6m width for customers to drive in and out of the bazar compound.  The roads should be hard-surfaced and should have minimum standards necessary to withstand the wear and tear due to the projected traffic. The roads should be all-weather roads permitting transportation throughout the year. If possible separate entry and exit gates may be provided for decongestion. The internal walkways should have a minimum width of 1.8m for easy movement of consumers. The surface of the internal walkways may be hard surfaced, tiled with interlocking tiles or surfaced with granite slabs for preventing seepage of rain water, minimising the cleaning and maintenance cost, avoidance of  dust in the dry seasons and accumulation of mud and water in the rainy season.  

5.2          Compound Wall

The compound wall should have a foundation depth of 1.0 m below ground level. Normally PCC of mix ratio (1: 5: 10) is put below the foundation wall. The material to be used for foundation construction may be stone masonry in cement mortar or concrete. The  superstructure of the compound wall may be made up of brick masonry in cement mortar in 1: 6 ratio mix. The compound wall should be plastered on both the faces. The height of the compound wall should be 2 m from the ground level. Over the superstructure, a barbed wire fencing upto a height of 0.9m should be provided.   

5.3     Stalls 

The total number of stalls in each Rythu Bazar / Farmers' Market will depend upon the number of stalls to be allotted by the Department of Agricultural Marketing to each Farmers Group/ Mandal, SHG , DWACRA groups, NAFED, Khadi and Village Industries Board, Dist. Coop. Marketing Societies etc. In this particular model, construction of 250 number of stalls has been considered. The floor area of each stall has been considered to be 4.66 sq.m. It has been assumed that 70% of the stalls are along the compound wall and 30% of the stalls are on independent walls. Of the total stalls, it is assumed that 200 stalls are allotted to farmer groups/ mandals and the remaining 50 stalls are allotted to SHG/ DWACRA/ BPL groups etc. for selling other commodities to the farmers and consumers so that the farmers donot have to move to far off places to buy their consumer items.  

The foundation depth of the stall should be 1 meter from the ground level. The foundation should be layered with PCC in 1:5:10 ratio. The plinth should be kept 60 cm above the finished ground level and should be filled with good and selected earth and properly consolidated in layers. The plinth should be provided with Damp Proof Course (DPC ) of well graded concrete of 40 to 50 mm thickness with water proofing compound. The floor area of each stall should be 4.66 sq.m . The flooring of the stalls should be damp proof, rigid and durable. Normally flooring provided will be 50 mm thick cement concrete 1: 2: 4 mix ratio over a base course layer. A layer of bitumen asphalt 80/100 or equivalent should be spread uniformly @ 1.67 kg/ sq.m between the two layers of concrete to make the flooring damp proof. . Where stone slabs are available at cheaper rates, the flooring may be of that material. The display floor should be sloping gently towards the internal walkways for easy cleaning and washing. The roof height of each stall should be atleast 1.8m from the floor level to the base of the truss. The roof truss should be placed atop columns made of 40 mm dia. hollow iron tubes. Hollow iron channels or angle iron may also be used as per requirement and availability. The roofing of the stalls may be made up of corrugated asbestos sheets hooked to the truss with J hooks. A slope of 1:4  may be maintained while constructing the roofing of the stalls. Nearly 70% of the stalls should be constructed in such  a manner that they are lined across the compound wall (outer stalls). The remaining 30% of the stalls (inner stalls) needs to have a back wall to make the construction cheaper.  Provision may be made for construction of iron grills and iron rolling shutters for the stalls to be allotted to the SHG/ DWACRA groups. Further modifications/ renovations of the stalls as per requirement may be left to the SHG/ DWACRA groups. Facilities for lighting of the stalls may also be provided.  

5.4          Farmers rest room cum training center

A room of size 3.6m x 6 m may be constructed to act as rest rooms for the farmers. The rooms may also be used as a training center for imparting training on nursery development/ vermicomposting/ biofertilizer preparation/ integrated pest management, nutrition management etc. 

5.5     Small Sized Godown

Provision may be made by the Market Functionaries/ Department of Agriculture Marketing for construction of a small 50/ 100 MT capacity godown for the sellers/ SHGs/DWACRA group members to store their non perishable goods and other commodities for short durations. In Rythu Bazar/ Farmers' Market where farmers sell onions, provision for construction of small sized onion godown for safe storage of onion may also be explored.  

5.6     Cold Storage

Depending on movement of perishable produce in the market yard, construction of a cold storage may be considered.  

5.7     Market User Common Facilities

Provision should be made to provide market user common facilities such as (a) cleaning     (b) grading and sorting (c) weighing and packaging of the produce being brought by the farmers for sale in the Rythu Bazar/ Farmers' Market. Suitable cleaner cum grader, mechanical and electronic weighing machines along with stitching / sealing machines with capacities commensurate to the nature, type and quantity of daily market arrivals of agricultural produce may be provided. Provision should also be made for displaying the rates of the commodities.  There should be provision for fire fighting, refuse bins, urinals, latrines, drinking water, common lighting, first aid etc.  in the market yard and the properties should be properly insured.    

5.8      Market Office

An area of 15 sq.m may be provided for the office to house the staff and equipment like computer, printer, typewriter, telephone fax machine etc.        

5.9    Watch and Ward Room

Provision may be made for construction of  a watch and ward room near the entrance gate of the Rythu Bazar/ Farmers' Market.  

6.     ELECTRICITY

Closeness of the electricity supply line to the site is advantageous.  Electricity is necessary for illumination of Rythu Bazar/ Farmers' Market, powering fans, motors, water pumps and other uses.  Adequate supply of power should be ensured from the state electric supply agency in the area. The total power requirement for various purposes such as lighting, electrical equipment, fans, pumps etc. have to be calculated. The power requirement may be in the order of 25 KVA.  

7.     WATER SUPPLY

The market yard should have a dependable source of potable water.  When the market yard is located close to a town where municipal water supply is available the same may be availed; otherwise suitable tubewell arrangements should be made for the provision of water.  An overhead storage tank which can provide water, at desired pressures in the distribution pipes should be constructed.  The pipeline should be underground to avoid damage.  

8.     SEWAGE SYSTEM/ GARBAGE DISPOSAL

Arrangements should be made for the market yard for collection of garbage and disposal of sewage.  

9.      EQUIPMENT

Efficient functioning of the Rythu Bazar/ Farmers' Market depends very much on the communication facilities in the market area.  This should include telephone and fax,  computer with printer, calculator, furniture, filing cabinets, ventilation fans, equipment necessary for primary quality assessment of the commodities, Cleaning, Drying and Grading Equipment, Weighing Scales and Electronic Weighing Machines, Plastic Crates/ Baskets and Fire Fighting Equipment.  

10.    PHASING

The construction and developmental activities should be properly phased, taking into consideration the time required for the acquisition of land, availability of technical staff, availability of construction materials like cement and steel, availability of skilled and unskilled labourers in the area etc..  The phasing should be as realistic as possible.  Arrangements should be made for supervision. Construction and implementation schedule of the scheme should be indicated in the project.  

11.        MARKET INCOME/ REVENUE TO THE MARKET

The  sources of income for ensuring self sustenance of the Rythu Bazar may be as follows:

1.          Auction of  parking space  
2.          Auction of  canteen  
3.          Auction of toilets  
4.       Other income (lease rentals of private nurseries, vermicomposting units etc.)  
5.          Rentals of stalls allotted to farmers  
6.          Rentals collected from regular shops

For ensuing viability of the market yard and for sparing the farmers from paying any fee, the scope of revenue generation  through advertisement in the market place may also be explored. However, in case of cash crunch / poor viability of the market, a nominal fee can be charged from the farmers and while fixing the price  for the commodities , the administrator should make such a provision in the unit cost.

12.    PHYSICAL AND FINANCIAL OUTLAY

With all the provisions indicated above, the average cost of a Rythu Bazar/ Farmers' Market having 250 stalls, with average total market arrivals of vegetables per day of 300 MT,  average number of consumers visiting per day of 30,000 persons and average sales transaction per day of Rs. 30 Lakh ( which is the cumulative value arrived at based on the average daily sales figure of farmers' groups, SHG/ DWACRA / KVIC etc. groups as well as retail traders) comes to about Rs 77.15 Lakh as given in Annexure -III. Accordingly, the economics of the investment have been worked out. However, the project cost and economics will change as per the site conditions and the nature of market operations.  

13.     FINANCIAL ANALYSIS

The economics of a Rythu Bazar/ Farmers' Market having 250 stalls and other parameters as given under serial 12 have been worked out and given at Annexure -IV. Respective profitability statements for 15 years and cash flow for financial viability analysis for this size of Rythu Bazar/ Farmers' Market is given in annexure V and VI respectively. The repayment schedule with and without subsidy adjustment has been worked out and are given in Annexure -VII (A) and VII (B) respectively.  

The financial indicators for the investment are as under:

Net Present Worth at 15% discounting factor

 Rs. 24.47 Lakh

Benefit Cost Ratio at 15% discounting factor

1.17 :1

Internal Rate of Return

24.00 %

Average Debt Service Coverage Ratio

(with subsidy adjustment)

2.39 : 1

Average Debt Service Coverage Ratio

(without  subsidy adjustment)

1.54 : 1

As per the repayment schedule given at Annexure VII, the term loan can be recovered in 11 years (with graded installments linked to income generation) including a grace period of two years.  

14.    INSURANCE

The physical infrastructure facilities and along with ancillary structures etc. should be insured. The traders in the market yard may also be advised to insure their commodities.  

15.    DOíS AND DONíTS

In order to safeguard the interest of bankers and borrowers, it is necessary to take certain precautionary measures. As a ready reckoner, some of the important aspects are shown in the form of Doís and Doníts in Annexure I and II respectively.

16.     ROLE OF NABARD

NABARD is the apex financial institution of the country for agriculture and rural development and plays a vital role in coordinating all financial banks,  state agencies etc. to develop the countryside. As a pro active role, it formulates broad strategies and fixes technical specifications, disseminates information and extend financial assistance to the agencies for development of agricultural marketing infrastructure facilities to tap the potential and protect the interest of the rural community in general and farming community in particular. As direct agricultural marketing infrastructure facilities like Rythu Bazars/ Farmers' Markets play an important role in the economic developmental process of the farming community, this bulletin is prepared as a reference document for bankers, farmers and other developmental agencies. NABARD provides refinance and co-finanace support to various eligible financing banks for financing development of direct agricultural marketing infrastructure under its normal refinance programme. This bulletin can be utilised in identifying the potential Rythu Bazars/ Farmers' Markets and formulating  schemes  for the development of the infrastructure with NABARD refinance support.

DOíS AND DONíTS

 

DOíS  

1.         Locate the Rythu Bazar/ Farmers' Market on a well raised drained site. 

2.         Locate it near to a transport head. 

3.         Locate it away from pollution sources such as dairy, poultry, slaughter  houses etc. 

4.         Locate it away from sources of fire such as kilns, factories etc. 

5.         Provide suitable access, approach, internal roads and maneuvering and  parking spaces for vehicles. 

6.         Take necessary permission for construction of the Rythu Bazar/ Farmers'  Market from the local bodies. 

7.         Take permission for the use of land for the nonagricultural purpose from the competent authority. 

8.         Provide ancillary structures such as office, chaukidarís quarters, water supply, sanitary  facilities, electricity etc.. 

9.         Provide sufficient plinth height for the stalls and other ancillary structures to avoid  flooding. 

10.       Provide adequate fire fighting equipment. 

11.            Maintain the buildings, roads and equipment properly. 

12.            Maintain cleanliness and arrange for waste disposal to prevent pollution. 

13.       Avoid unauthorized constructions. 

14.       Ensure proper weighing cleaning and grading facilities. 

15.       Ensure proper display of prices. 

ANNEXURE    -   II  

DOíS AND DONíTS  

DONíTS  

1.         Do not allow poor specification for constructions. 

2.         Do not allow the vegetable waste to accumulate or rot in and around the Rythu  Bazar/ Farmers' Market. 

3.         Do not allow the unauthorized persons to operate in the Rythu Bazar/ Farmers'  Market for dilution of efficacy of the direct agricultural marketing infrastructure system.