18. Agricultural Marketing Imperfections and Farm Business in Gujarat: An Empirical Analysis

The economic feasibility of farming is a crucial factor in the sustainable development of agriculture and its related sectors. Input costs, the effectiveness of the institutional framework, and the nature and implementation of government policies largely influence it. Together, these factors determine the profitability, risk management, and long-term viability of agricultural activities. Numerous studies have highlighted the unstable nature of farm income, which fluctuates due to various factors. However, a notable gap in the existing research studies is the lack of studies focusing on agricultural market imperfections and their impact on farm income in India. To address this gap, the current study was undertaken, aiming to provide insights that can inform effective policy formulation and contribute to the goal of doubling farmers' income. The study was conducted in the state of Gujarat, covering a sample of 800 households across 16 villages, representing eight distinct agro-climatic zones. The findings reveal that farmers tend to sell nearly their entire produce immediately after harvest, primarily due to their need for credit to finance the next crop. This practice creates significant challenges for procurement agencies, particularly in the handling and storage of rice and wheat. Furthermore, over 98% of the surveyed households expressed dissatisfaction with the sale of their crops, citing issues such as lower-thanmarket rates, delayed payments, loan deductions, and discrepancies in weighing and grading. The study found that awareness of the Minimum Support Price (MSP) was limited across landholding groups, with only about one-fourth of marginal farmers being aware of it, compared to more than half of the large farmers. A very small proportion of households reported selling their produce through government-nominated agencies. Nearly 99% of households stated that the income generated from farming is insufficient to meet their needs. The main reasons for inadequate income were identified as pest and disease problems, damage from animals, insufficient irrigation, non-remunerative prices, and labour shortages. For marginal farmers, the small size of landholdings is a critical issue, often rendering farming uneconomical. These findings highlight the urgent need for an efficient marketing system, better access to institutional credit, improved storage facilities at the village level, and greater dissemination of information and innovations related to production technologies.