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Bairwa’s article

Agricultural Inputs and Service Delivery Systems in India: A Review

Shoji Lal Bairwa1, S. Kushwaha2, and Suresh Bairwa3


Abstract: Agriculture is the main source of economic livelihood for the majority of the India’s
population and agricultural inputs and services are the basic requirements in the agriculture.
Raising the productivity of the crops, vegetables, trees, and livestock is depends on the farm
inputs and services. Therefore, an efficient delivery system for agricultural inputs and services
can play a crucial role in the growth of farm income. The most of the farmers and input dealers
are experiencing challenges and constraints in accessing and supplying the agricultural inputs
respectively. The most notable constraint faced by farmers is access to farm inputs due mainly to
poor delivery system in country. It has also been realized that farm machinery and equipments
and agro based inputs are relatively expensive. Hence, timely and accurate availability of farm
inputs and service is the need of hours for better agricultural growth as well as development of
farming community. There is the need to critically look at how can we get the opportunities and
how can alleviate the constraints or problems faced by the farming community in the country.
The study intends to suggest intervention strategies and recommendations that can assist in
developing the efficient inputs and service delivery system for the better growth in farm income
level of all classes of farmers.
Keywords – Agricultural inputs, Input delivery system, Marketing channels and Agribusiness.
Introduction
In the developing countries, improvement of agricultural production, profitability and
sustainability depends on the farmers, to adopt change and their innovative use of technologies,
organizational approaches, management systems, institutions, and availability of resources.
Agricultural extension through advisory services and programs forges to strengthen the people’s
capacity to innovate by providing access to knowledge and information. According to the
USAID (2002) report, farmer capacity building can be achieved through (1) advising farmers on
opportunities not only in agricultural production as it is the case in developing countries, but in
marketing, conservation, and family livelihoods; (2) facilitating development of local skills,
organizations, links with other programs, and related institutions; (3) developing and transferring
new technologies to farmers; and (4), taking a wholesome approach to addressing public interest

1
Corresponding author’s email smabm.bhu@gmail.com and Contact 0969617320
2
Professor, Banaras Hindu University, Varanasi
3
Research scholar, SKRAU Bikaner,Rajasthan
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issues in rural areas such as resource conservation, health, monitoring of food security and
agricultural production, food safety, nutrition, family education, and youth development (Tladi-
Sekgwama, and Tselaesele, 2010). This study provides a synthesis on agricultural inputs and
services, through an examination of the effectiveness of their farm material and service delivery
system. After land, the provision of farm inputs such seeds, machinery and equipment, fertilizer
and agrochemicals is probably the most important factor in the productivity of farms. Highly
productive farmers require the right inputs, in the correct quantities, at the right time and at
affordable prices. The effectiveness of input supplying industries in satisfying these requirements
is largely influenced by the structure, conduct, and regulatory environment facing them. This
paper review assesses the demand, availability and accessibility of agricultural inputs and the
constraints currently being experienced by farmers across the country.
Objectives and Methodology
The general objective of the study is to evaluate the agricultural inputs and service
delivery systems in country and to assess the structure of the existing agricultural inputs and
service system in case of marketing channels. Later, the study also highlights the
constraints/challenges faced by farmers as well as input dealer in the farm inputs and service
sector. This study is based the information and data collected with help of various websites from
Internet. Another knowledge source for this study collected from different research articles,
studies and documents etc. for to make this study more useful and relevant.
Concepts and Definitions used in paper
In this study, there are key words which were used and that required for concise
definitions and clear explanations to help the reader catch the same idea and meaning as intend in
this work. Those key words are:
• Delivery - The action of setting free or the act of giving or surrendering. (Oxford
dictionary 1980).
• System - A set or assemblage of things connected or associated. (Oxford Learneers’
Dictionary 1990, 165)
• Agricultural Inputs - Action of putting something in agricultural production. The
resources that are used in farm production, such as chemicals, equipment, feed, seed, and
energy.
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• Service - Intangible activities that can be exchanged for value to satisfy consumers’ needs
and wants (Lascu 2004, 604).
• Evaluation - Appraisal or assessment. (Oxford dictionary 1980, 55)
• Efficiency - The use of minimal resources to provide a desired volume of output. Oxford
Learneers’Dictionary 1990, 46)
The structure of the existing marketing channels for farm inputs and service
The marketing channels are a set of interdependent organizations. It is not just one
organization making its best, but several firms involved in many activities in a certain channel
structure. Each marketing channel member depends on others to develop its function efficiently
marketing channels are defined as “a set of interdependent organizations involved in the process
of making available a product or service for use or consumption” (Coughlan, 2002). Among
suppliers, retailers, wholesalers, and the farmers, several activities are performed in order to
make available the product at the right time, place, condition, a competitive price. For
understanding these activities, the simple marketing system and the networks for delivering
value are good theoretical models
The structures of farm inputs and services market are imperfect competition i.e.
monopolistic in nature in the country. Marketing channels includes a set of activities which are
necessary to transfer the ownership of goods and to move goods from the production place to
consumption and these consists of all the agencies and all the marketing process. The problem of
poor communications, inadequate transport systems and lack of competition among traders
generally result in high costs and delivery problems for farm inputs such as seeds, fertilizers, and
agro chemicals, and support services such as animal health care and extension advice. In the past
these services were providing through the Ministry of Agriculture but, quality and standard of
the services provided has always been open to criticism and subject to policy constraints
(Kimana, 2009). An efficient agri input marketing channels includes the chain of agents such as
suppliers, retailers, wholesalers, and farmers in order to make available the agri inputs and
service at the right time, place, condition, at a competitive price. The agricultural inputs and
service requires a marketing channel for distribution so as to reach the consumer. Different
marketing channels are used for different farm inputs such as seed, fertilizer distribution
channels mostly used in India are given below:
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Domestic seed production firms

National Seed Private Seed Company


Corporation through Distributer

State Seed Corporation Whole sale dealer

Village level Society Retailer

Farmers
Domestic Production and imports of fertilizers
Figure 1 - The marketing channels used for seed distribution

Apex level Cooperative Agro Industries Bulk marketer Pvt. Trade


Federation Corporation

District level society District level Centres Whole sale dealer


Company
own agro
service
centers

Village level Society Agro service Private Retailer


centers trade

Farmers

Figure 2 - The marketing channels used for fertilizers (Chander, 2010)


The major constraints in farm inputs and service delivery
Agricultural development depends to large an extent on the efficient use of modern farm
inputs such as chemical fertilizers, improved seeds, pesticides, machinery, and veterinary
services. Farmers in developing countries like India are often denied access to modern inputs due
to poor infrastructure and the presence of various constraints arising from restrictive policies and
the presence of powerful parastatal organizations. The limited use of modern inputs is also due to
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lack of finance, inadequate information, and unfavorable input and output prices (Goletti and
govindan, 1995). The constraints in the accessibility of farm inputs and services to farmers
usually arises from political, managerial, financial and legal factors. Managerial factors include
strong pool of talented personnel for priority setting, monitoring, evaluation, financial
management, and impact assessment and the reluctance of the implementing entities to seek
advice from experienced agencies.
Major constraints faced by inputs dealer
The farm input dealers generally faced some major business constraints including high
transport cost due to poor infrastructure, lack of market information, lack of storage facilities,
and limited business skill and knowledge (Jonas et al., 2008). The poor domestic infrastructure
and limited access to agricultural credit (including seasonal credit) also undermine the effect and
equitable participation in agricultural inputs trade (Sanchez, 2005).
Major constraints faced by Farming community
There is still not to be ensured the adequate supply of quality seeds, pesticides, farm
implements and other services at right time and reasonable prices by Agricultural Department
and other extension agencies of State Government.
There is lack of adequate and timely credit to farmers and there are undue delays in
dispensation of Credit. There is also lack of support and guidance from agriculture
department on agri inputs and their prices.
Lack of publicity of Governmental Subsidy schemes related to farm inputs among rural poor,
particularly illiterate famers.
There is lack of sufficient number of Agriclinic and Agribusiness centres in the country
thereby farmers cannot access farm input timely and at reasonable prices.
Farmers are doubtful about price of inputs because of most agricultural inputs and pesticides
dealers did not display rate lists of agricultural inputs.
Farmers are not getting inputs like bio-fertilizer, improved seeds, etc., in time mostly because
of lack of awareness.
There is inefficient and unreliable delivery of farm inputs and agri services at higher prices.
Inadequate transportation facilities and high transportation costs to farmers. Other problems
are price variation of farm inputs and lack of storage facilities and problem of security of
farm inputs.
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Strategies for accelerated growth in farm inputs and service sector


The strategies for accelerated growth in agricultural inputs and service sector should
directly a related to the harmonization of agricultural input policies, access to crucial agricultural
inputs such as fertilizer, seeds, agro chemicals, irrigation, and clear description of functions and
responsibilities of the various sectors in the agricultural input delivery system. Fertilizers and
High yielding varieties are good examples of inputs that were played crucial role in Green
revolution, but now days their use is not so much profitable to farmers due to lack or improper
supply, absence of subsidies, poor infrastructure, lack of farm credit, weak marketing institutions
for selling final products and poor delivery systems etc. These are the areas of government sector
to make adequate investments in basic infrastructure in rural areas, and credit and input supply
systems for small farmers.
The Growth and development of agricultural input sector depends on the implementation
of a strategy that embraces the modernization of the sector and enhances the private sector’s
capacity and public private partnership (PPP) to engage where it can perform. The central as well
as state governments need to work with private companies along with local and international
NGOs, foundations, agricultural research organizations to scale up and expand public-private
alliances in agri input business which helps in making the input delivery system more efficient. It
is crucial to link farmers with improved private sector distribution, improve market structures,
expand financial services, strong transportation and facilitate the free flow of inputs from surplus
to deficit areas. Both the public and private sectors also need to develop alliances that mobilize
the capacities and resources to support agricultural scientists, policy makers, and business leaders
as well as farming community (Kargbo, 2010). We need to learn important lessons from the
Zimbabwe era of the 1940s and 1950s and the brief period of 1990s, when there was phenomenal
growth in the Zimbabwean agricultural input supply system bolstered by conducive government
policies which laid the foundation for profitable private sector participation. In order to map the
way forward for the development of efficient and sustainable input supply strategies, it is
important to first outline the long term strategy proposal for the growth of a vibrant private sector
and then suggest roles for important stakeholders such as the government, private sector and
NGOs( Govere et al., 2009). the major roles suggested for different stakeholders are following:
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The role of the government sector


• Government should facilitate private sector involvement in input supply through enabling
policies. Enhance capacity and profitability of the private sector to invest in marginal
input markets (which have high capital requirements and low profit margins) e.g.
deliberate subsidies on the provision of inputs in risky marginal areas (and for minor
crops) such as tax breaks for setting up input distribution networks in remote and new
farming areas.
• Enhance farmers’ effective demand for purchased inputs through policies that promote
producer viability. In areas where off-farm income activities have a comparative
advantage in generating income, these can also be used to create an effective demand for
agricultural inputs.
• The government should identify investments and institutions that reduce the real costs
and risks of extending input credit to marginal production environments and poorer
farmers.
• The government should ffacilitate collaboration between farmer associations, NGOs, and
private firms to reduce marketing, extension and credit costs.
The role of the private sector
The private sector should take the leading role in the provision of inputs to farmers. The
private sector should be innovative in order to reduce the costs and risks associated with the
challenges of providing inputs to many smallholder farmers who are spread over wide
geographical areas. The success of the credit schemes lies in a viable input-product marketing
chain, which rides on long term relationships based on trust and repayment of the loans. The
private firms should create goodwill among other stakeholders through good business practices
that are based on innovation and good ethics even under the prevailing difficult macroeconomic
environments. A less confrontational all-inclusive consultative approach would benefit the
agricultural industry as a whole .
Role of cooperative sector and NGOs
• The cooperative sector have an important role to play in facilitating the coordination
between the public sector, private sector and farmers in order to promote the sharing of
risks and costs among all stakeholders.
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• To provide agricultural services such as improved agronomical practices to farmers with


farm inputs which help to them in crop production.
• Enable farmers to receive inputs in a transparent and corruption-free market environment
and mminimizes administrative costs of delivery of farm inputs.
• NGOs have a social obligation to supply quality assured agricultural inputs to farmers at
right time at reasonable price.
Conclusion
It is clear from the above study that the existing input and service delivery system is not
appropriate and efficient system for proper supply of agri inputs and dissemination of extension
services to the needy farmers at reasonable prices at right time. Considering the above issues and
challenges, government support is necessary for the development of marketing of agricultural
inputs and service. The government may adjust suitable budget allocations to rural infrastructure
plans, and proper supervision for effective plan implementation. The core areas like transport,
communication, roads, credit institutions, crop insurance for better utilization of land and water
resources at appropriate level. MANAGE an extension management institution may provide
extension services to rural people on crop information, price information, insurance and credit
information by using various media. MANAGE may be advice to central and state governments
on suitable infrastructure development, current problems in rural markets and problem solving
techniques. In present situation, it realized that the public-private partnership should be take
place in policy formation of the agricultural inputs and service sector.
Suggestions for Sound Agricultural inputs and service delivery system
The government should remove of barriers in the entry of various types of individual farmers
and companies to engage in agri inputs and extension services which results improve farmer
income levels and agriculture input growth.
There is need of suitable structure of support prices for various farm inputs and extension
services adjusted from time to time.
The efficient agri input marketing is predominantly influenced by efficient distribution
system it means products such ultimate consumer in the quickest time possible at minimum
cost at speedy dissemination.
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There is need for conducting training programmes and communication activities (extension
services) about existing and emerging scheme, subsidies related to farm inputs and extension
services at right time in the regional language and dialects.
State or central government should seek medium to long term policies to ensure vitality,
growth and stability in the domestic agri inputs market.
Timely and adequate supply of quality seeds, pesticides, farm implements and other services
should be ensured by Agricultural Department and other extension agencies of State
Government.
Government should facilitate access to credit and subsidies on the agricultural inputs so that
many traders can enter into the business and should encourage micro-finance institutions to
offer credit facilities to traders so that they can expand their business.
Government should allow companies to manage input quality and farmers to decide on the
value of quality and quality differentials, enforcing truth-in-labeling to ensure that markets
transmit accurate information (except when negative externalities are an issue, such as for
pesticides that could have dangerous impurities or livestock vaccines that could introduce or
spread communicable livestock disease).
Government should make timely inspections for ensuring the quality of farm inputs and
control the malpractices, black marketing of the agri inputs so that farmers can access the
agricultural inputs at right time at reasonable prices.
Finally, the government should consider lowering taxes on farm input, to make agricultural
inputs cheaper for farmers.
References
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Ignatius Govere, Richard Foti, Edward Mutandwa, Arnold B. Mashingaidze and Evison Bhebhe(2009)
Policy perspectives on the role of government in the distribution of agricultural inputs to farmers:
Lessons from Zimbabwe, International NGO Journal 4 (10), 470-479.
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Jonas N. Chianu, Franklin Mairura, Isaac Ekise and Justina N. Chianu (2008) Farm input marketing in
western Kenya: Challenges and opportunities, African Journal of Agricultural Research. 3 (3),
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Lascu, Dana-Nicoleta (2004) Marketing frontiers. Ohio: Atomic dog publishing Company, 604.
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Tladi-Sekgwama, F. M. and Tselaesele, N.M. (2010) Agricultural Extension in Botswana: Growing a
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