department in rural areas from which the department and the rural community would derive mutual benefit. MARKETING: SOME GENERAL CONSIDERA TIONS. Marketing 320. The agricultural departments in India have done much to improve the quality and to increase the quantity of the cultivator's outturn, but it cannot be said that they have been able to give him substantial help in securing the best possible financial return for his improved quality and his increased outturn. Except to a limited extent, where improved quality is concerned, they have regarded the problems connected with the marketing of his produce as outside their purview. The co-operative departments, again, have been too much occupied with their primary function of organising credit to be able to devote much attention to these problems nor have they been sufficiently well equipped with the special knowledge required for dealing with them. It is only in a few instances that they have been able to give the cultivator material help in disposing of his produce. His interests have, therefore, in the main, been left to the free play of economic forces and they have suffered in the process. For he is an infinitely small unit as compared with distributors and with the consumers of his produce who, in their respective fields, become every year more highly organised and more strongly consolidated. It is their interest to secure from the producer the raw material they handle or acquire at the lowest possible price. Marketing is the sole business of the distributor whereas, from the point of view of the cultivator, it is apt to be regarded as subsidiary to production. The circumstances of the average cultivator in India favour this attitude. His farming is still largely of the subsistence type. His sales of produce are intermittent. His day to day concern is with production and upon this his attention must in the main be fixed. The traditional lore and inherited experience of his craft centre round the work on his holding; they are for the most part lacking on the commercial side of his business. Until, therefore, he realises that, as a seller of produce, he must study the art of sale, either as an individual or through combination with other producers, it is inevitable that he should come off second best in his contest with the highly specialised knowledge and the vastly superior resources of those who purchase his produce. The complaint of agriculturists that they do not obtain a fair share of the value of their produce in the market is world wide; nor are the handicaps in this respect under which the cultivator in India labours peculiar to this country though some of them are felt to a more marked degree here than elsewhere. Prominent among these handicaps are heavy indebtedness, the low standard of literacy, unsatisfactory communications, the absence of properly regulated markets and the lack of combination amongst producers. The intimate relationship between communications and marketing has been brought out in the preceding part of this chapter. The problems of indebtedness and of literacy have been dealt with in other chapters. Here we are mainly concerned with the absence of properly regulated markets and with the lack of combination among producers. We wish to make clear, at the outset, the point of view from which we approach these problems. The aim of better marketing is not necessarily to displace any unit in the existing machine but to enable that machine to function to greater advantage. We have, therefore, no suggestions to offer which involve the elimination, root and branch, of the middleman. In the economic organisation of the modern world, he fulfils essential functions and neither in India nor elsewhere is it possible to dispense with him. Collection and distribution and the accommodation of supply to demand between locality and locality are everywhere complicated and delicate processes which would be impossible of performance without the skilled services of those who spend their lives in the business. In no country are these difficulties greater than in India, where communications are often extremely bad and where production is in the hands of a large number of petty cultivators who, for the most part, lack both the financial resources and the necessary storage to attempt any regulation of their selling in accordance with the state of the market and whose produce, as marketed, leaves much to be desired both as regards purity and quality. The services of the middleman must be paid for and, on the whole, it cannot be said that the remuneration the distributor receives, especially in these days of increasing competition, is an unduly heavy one. Public opinion is invariably watchful towards, and often suspicious of, the middleman. This tendency has its cause partly in the recognition of the fact that intermediaries carry none of the risks incidental to production. Crop failures or cattle plagues that may ruin the cultivator inflict no mortal hurt on the business of the middleman. Indeed, periods of agricultural depression are not uncommonly those in which distributors prosper most. In the main, distributors are tolerably secure in the enjoyment of their profit margins, merchants being, as a rule, in a position, by adjusting prices, to pass on to the consumer any rise in costs, while commission agents are concerned mainly with obtaining their commission over the largest possible turn-over. It is clear, however, that public opinion is not fully informed on the costs and the risks incidental to the business of distribution in modern conditions. We deprecate easy generalities suggesting that every ill from which the cultivator suffers is traceable to the existence of hordes of rapacious and unnecessary middlemen. Such statements disturb confidence, while distracting attention from faults in the system of marketing which are capable of being remedied or removed. That abuses exist is, however, beyond dispute. For instance, when the primary collector, who acts also as a moneylender, succeeds in getting a cultivator into his grip, he is apt to use his advantage ruthlessly. In a later paragraph of this chapter, we shall describe certain practices that obtain in the markets proper, some of which amount to nothing less than common theft. Again, it is certain that there are various services of marketing and distribution performed each by a separate intermediary which, under an ideal system, might well be rendered by a single intermediary. Bad communications and chaotic conditions of marketing encourage a superfluity of middlemen. The pressure of life, too, particularly in the more highly populated tracts of the country, tends to operate in the same direction, since it drives men to seek a living, however insufficient and insecure, wherever opportunity offers. Apart from the organisation of producers for the sale of produce, the most effective means of removing unnecessary middlemen are the provision of good roads, and the establishment of a sufficient number of well regulated markets, easy of access to the cultivator. For the framing of a sound and comprehensive policy for improvement in marketing, exact knowledge of the methods of distribution applicable to any particular class of produce, including collection, storage, transport, and, where it exists, manipulation, together with a detailed analysis of the price structure at every stage in the operation, is essential. DESCRIPTIVE. 321. Markets in India are numerous. In Bihar and Orissa, for instance, there are no less than 432 principal markets and 2,464 minor markets. In all provinces, markets vary greatly in character and importance. At one end of the scale are the elaborate modern mandis of the Punjab canal colonies which consist of a set of shops built round three or four sides of a rectangle, a wide brick pavement being provided for unloading, examining, cleaning, weighing and bagging the grain. In front of the pavement, there is a wide metalled road surrounding an open space used for parking carts. The market is as near to the railway goods platform as possible and sometimes a railway siding runs into it. In such markets, grain is the main product sold. Cotton on the way to the market is frequently intercepted by the agents of the ginneries who also, to an increasing extent, buy it before it leaves the village. Cotton brought into the market is nominally sold there before being carted to the ginneries where the real sale takes place. Adjacent to the grain market are cotton ginneries, a market for imported timber, iron and steel, and bazaars, the shops in which supply everything that the cultivator requires and which is not available in his own village. At the other end of the scale are the small village markets which are often little more than open spaces with accommodation of a very temporary character. The organisation of the different markets also varies widely. In Bihar and Orissa, all markets are privately owned and rents or tolls are levied by the landholder on whose lands they are situated or by a person who holds a lease from him. In most provinces, there are both public and private markets, the former being directly under the control of a district board or municipality and the latter being licensed by the local authority concerned. It is only in Berar that the constitution of markets is regulated by special legislation, the Berar Cotton and Grain Markets Law of 1897, and that their management is in the hands of elected committees. An Act for the regulation of cotton markets in the Bombay Presidency has recently been passed by the Legislative Council of that province, but, at the time of writing, has not yet been brought into operation. ABSENCE OF INFORMATION IN REGARD TO MARKETING CONDITIONS. 322. No systematic survey of the conditions under which agricultural produce is marketed in India has yet been made in any province. While it was clear from the outset of our enquiry that it would not be possible for us, from the angle of an all-India enquiry over the whole field of agriculture, to examine in detail the marketing and distribution of each important crop in every province, we hoped that the material forthcoming in answer to our questionnaire might provide us with a sufficient body of facts upon which to form general conclusions as to the marketing of the more important crops. Only to a limited extent has this proved to be the case. It is clear that the agricultural departments have hitherto had at their disposal neither the financial means nor the trained personnel required to carry out marketing surveys. Moreover, unofficial organisations of middlemen in a position to collect and collate information on matters of fact in connection with the business of their members are very rare in India. Some valuable investigations on the marketing of cotton are in process of being carried out by the Indian Central Cotton Committee. But much of the information essential to an exhaustive study of marketing conditions. has never yet been collected. In a subsequent paragraph, we make suggestions for the organisation of marketing surveys and for the training of the necessary personnel. A brief description of the systems under which cotton is marketed in Khandesh, jute in Bengal and rice in Burma, based on such material as is available, will enable the reasons for the proposals we shall make for the establishment of properly regulated markets to be more readily understood. 323. The investigations of the Indian Central Cotton Committee have shown that the cultivators of cotton in the COTTON IN DESH. THE MARKETING OF KHAN Khandesh districts of the Bombay Presidency are not hampered by indebtedness in selling their produce to the same extent as are cultivators in some other tracts such as north Gujarat and are comparatively free to dispose of it as they please. The commonest method of sale is, however, in the village to a visiting trader or more rarely to a resident trader. These traders are often financed by ginneries, and by brokers known as adatyas. Moneylenders seldom purchase the unginned cotton. A considerable number of cultivators sell in the larger markets, the proportion being much higher in West than in East Khandesh. In the two largest markets, the number of carts of unginned cotton brought in by actual growers represented sixty and twenty-seven per cent, respectively, of the total number of carts coming into those markets. In the smaller markets, it varied from twelve to eighty-five per cent. The system of sales adopted in the markets is everywhere much the same. The carts collect in the early morning, the brokers show samples to the merchants, bids are made secretly between them under a cloth and the seller accepts the rate fixed. These samples, consisting of as much as five to eight seers from each cart, are invariably regarded as the perquisite of the merchant, whether or not a sale is effected. No memorandum is given to the seller at this stage. The carts are then MO Y 286-25 removed to the ginning factories where weighment and often the real bargaining take place. Allowances are frequently claimed on the ground that the cotton is not up to sample, or is damp or has a low ginning percentage. Such claims are made after weighment is begun and the cultivator has usually no option but to accept the new rate. A memorandum of the weight and rate is given to the cultivator and it is on this that payment is made. The enquiries made by the Indian Central Cotton Committee elicited definite instances in which deductions were made from the rate of the day, first in the market and subsequently in the ginning factory. Sellers in almost all markets are compelled to employ a broker and cannot sell direct. In some markets, Indian firms buy direct from the seller's broker, in others, they employ brokers. Foreign firms always employ brokers. In a few markets, brokers act for both buyers and sellers. The rates are calculated by the buyers on the basis of prices telegraphed from Bombay. In the Dhulia market in West Khandesh, the practice of posting the local rate of the day for unginned cotton is now adopted. No system of posting these rates in the markets exists elsewhere and, in all cases, the cultivator is dependent on buyers or brokers for information about rates. The system adopted for paying the men employed to weigh the cotton varies greatly from market to market. In some cases, weighmen are paid by the buyer, in some by both buyer and seller. In other markets, the weigher is the employee of the broker or the gin owner. The charges levied also differ greatly from market to market. At Amalner, the biggest market in East Khandesh, they consist of a charge of two annas per cart for ground rent and Rs. 2-0-6 for brokerage and other charges. These charges are levied on unginned cotton weighing more than 432 seers and less than 792 seers. Of the total of Rs. 2-0-6, as. 8 is levied for weighing, as. 2-6 for porterage, Rs. 1-2-6 for commission and as. 3-6 for charities. A fixed allowance of 5 seers per cart is also taken by buyers, representing a loss to the seller of from one rupee to 23 rupees. The enquiries made by the Indian Central Cotton Committee showed that greater use of the markets is not made by cultivators because of the disputes which arise after weighment has commenced in regard to the rate and because of arbitrary deductions from the weight. 324. Between the cultivator of jute in Bengal and the export market on the one hand or the jute mill on the other, there may be as many as four agencies. There are the faria, bepari, aratdar or mahajan and the baler. The faria is a small dealer who buys small quantities of jute and sells it to the bepari. The bepari is financed by the mahajan or aratdar who passes on the jute to the baler. This chain of middlemen is not, however, universal. The bepari often deals direct with the cultivator and, if he is a wealthy man, dispenses with the aratdar. The aratdar is often eliminated also by the baling firms who advance money direct to the beparis whilst in eastern Bengal, the cultivator frequently deals with the baling firm direct, if it has an agency within a reasonable distance. The faria is a dealer and not a commission agent. The bepari is either a dealer or a commission agent according as he works on his own capital THE MARKETING OF JUTE IN BENGAL. |