Q.Why is state intervention become necessary to regulate the activities of private traders in the rural agricultural sector? Suggest any two steps taken by the government to improve agricultural marketing system.
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Start your 14-day free trial to unlock the full solution →Because unregulated private trading in rural agricultural markets exposed farmers to exploitative practices by middlemen, state intervention became necessary to protect farmer interests, with regulated markets and assured-price procurement as key government measures; alternatively, common rural unemployment is mostly disguised and seasonal, addressed through employment-guarantee schemes and non-farm diversification.
Why state intervention became necessary:
In the traditional rural agricultural market system, farmers -- especially small and marginal ones with limited information, storage facilities and bargaining power -- were heavily dependent on private traders and village moneylenders-cum-traders to sell their produce immediately after harvest. These intermediaries frequently exploited farmers through practices such as under-weighing produce using faulty weights, offering artificially low prices by colluding among themselves, delaying payments, and charging high commissions, leaving farmers with only a small share of the final consumer price. Lacking storage facilities, farmers were often forced into distress sales right after harvest when prices were lowest. This systematic exploitation made it necessary for the state to intervene and regulate agricultural marketing to safeguard farmers' interests and ensure they received fair and remunerative prices for their produce.
Two government steps to improve agricultural marketing:
- Regulated markets: The government established regulated markets (mandis) under Agricultural Produce Market Committees (APMCs), with standardised weighing, transparent auction-based price discovery, and licensing of traders, to curb malpractices and ensure farmers get fair prices.
- Cooperative marketing and MSP-based procurement: Cooperative marketing societies were promoted to allow farmers to collectively sell their produce and bypass exploitative middlemen, and the government introduced a Minimum Support Price (MSP) system with assured procurement (through agencies like the FCI) for key crops, guaranteeing farmers a minimum remunerative price and protecting them from distress sales. OR -- Rural unemployment types and measures: Two types of unemployment commonly found in rural India are:
(i) Disguised unemployment -- where more people are engaged in a farm activity (typically family farming) than are actually needed, so that the marginal productivity of some workers is zero or near zero even though they appear employed. …
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