Need of Aggregation for Improving Indian Agri-Marketing

India is an agriculture based economy. Hitherto 60% of the Indian population depends on agriculture. But output is less as compare to input. There are umpteen descrepancies in Indian agri system. Small & marginal land holding is one of them. Farmers are facing lot of difficulties due to this.

Lot of risk factors are associated with agriculture. Vagaries of climate, changing demand and supply, high fluctuation in prices etc. causes difficulty for farmers to decide about cropping patterns. Futures trading can help farmers in minimizing their risk. With its help farmers can hedge their risks. But due to small land holdings an individual farmer is unable to participate in futures trading. Because for doing trading in futures market quantity of each commodity is fixed by the exchange. Generally the quantity requirement is high which makes difficult for an individual farmer to participate.

There are large number of intermediaries in Indian agriculture. Ultimately they are the real beneficiaries in this scenario. Consumers are paying more and farmers are getting less pie in the consumer's money.

Aggregation models can be used for mitigating these problems. Farmers in groups can collect their commodities and participate in futures trading for hedging their risks. This can also be done with the help of agriculture marketing cooperatives. The co-0p can participate on behalf of the farmers and share profits among themselves. Government can help these co-operatives with the help of NAFED.