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Concept Note

Concept NOTE for Marketing of NLUP Produce
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Introduction:
The present Government of Mizoram (GOM), soon after coming to power, initiated a land-base Flagship Programme fondly named as New Land Use Policy for the up-liftment of poor people of Mizoram and overall economic development of the State. The Flagship programme is the earlier NLUP in its revised, enlarged and improved form.  A comprehensive project proposal was submitted to the Planning Commission in June, 2009.  After a year-long study of the proposal at the highest level including Prime Minister Office (PMO), the Government of India (GOI) gave its approval to the Flagship Programme on 15th July, 2010.

            The Flagship Programme covers mostly Agriculture & Allied Sectors (Agriculture, Horticulture, Sericulture, Fisheries, AH & Vety, Soil and Forest), Handloom and Industries sector.  Those families who cannot undertake land-base programme will be covered in Handloom and Industry sector.  The programme will cover at least 120000 families of Mizoram during the next 5 years (2010-15).

Importance/Necessity of Efficient Agricultural Marketing System
An efficient Agricultural Marketing System is essential for the development of Agriculture & Allied Sectors and for the success of NLUP.  Seventy percent of the work forces in Mizoram are engaged in Agriculture & Allied Sectors.  But the contribution of this sector to the Gross State Domestic Product (GSDP) is only 15 percent.  In spite of availability of adequate land for every farming family and existence of suitable agro-climatic conditions for cultivation of almost all types of crops, the annual income of farming families is low and meager.   This is mainly due to non-availability of efficient Agricultural Marketing System in Mizoram. The contribution of Industry sector, which engaged much less percentage of the work force, to the GSDP of Mizoram is 18 %, 3 % higher than the contribution of Agriculture & Allied Sectors.

            To make this point clearer, consider cultivation of ginger, the most popular commercial crop in Mizoram.  Incidently, Mizoram is the fourth largest producer of ginger in India after Kerela, Meghalaya and Arunachal Pradesh.   The crop duration is only one year.  The average yield in Mizoram is 8 to 10 times of seeds sown in the soil.  Had there been a reliable and efficient marketing system for marketing of ginger, many ginger growers in Mizoram would not have remain poor.

             Similarly, cultivation of turmeric is still more profitable if there is a processing unit.  The average yield rate is 10-12 times of seeds sown.  Demand for dry turmeric is also quite high.  A turmeric curcumin costs more than Rs. 10,000/- per kg in the   International Market.  Had there been drying facilities and curcumin extraction plants in the State cultivation of turmeric will be very profitable.

            The ginger and turmeric have been produced in large quantity. But farmers are not able to sale them at remunerative cost every year. This is mentioned as example to emphasize the necessity and importance of having efficient Agricultural Marketing System in Mizoram.

It is essential to develop efficient marketing system for the success of the Flagship programme.  About 90 percent of the total produce under NLUP will come from the land-base sectors.  Therefore, the marketing policy to be adopted will be Agricultural Marketing Policy.  At the same time, it will also be applicable in principle to those products in Industry sector and Handloom sector.

            Approved DPR has therefore incorporated a chapter (Chapter-14) which focused on a holistic approach addressul the whole gamut of issues critical to introducing successful marketing system as would take care  if increased production through value addition, to increasing shelf-life of crops by setting up cold chain, warehouseable and acuss to remunerative markets both within the country and abroad. Aparts such organisation and institutional back up, the DPR also envisage resorting of Market Intervention Schemes(MIS) and Minimum Support Price (MSP) with the help of Central Government and Organisations like NAFED, NERAMAC etc.

Guidelines for Development of Efficient Agricultural Marketing System
Importance of Marketing stressed in DPR apart, Government of Mizoram drawing on lessons from past when 1st NLUP in 1980s’faltered for ignoring marketing aspects as pointed by MS. Swaminathan Foundation has given utmost importance for a comprehensive marketing strategy for NLUP Project. In this context Government has taken note of recommendations of an Expert Committee constituted by Government of India is December, 2000 for formulating a marketing policy touching upon critical areas of organizational back up, institutional finance, statutory protection, market intelligence, value addition, etc. focused on protecting farmers’ interest. The Terms of Reference for the Expert Committee was as follows:-

            In December 2000, the GOI constituted Expert Committee to :

  1. review the existing system of Agricultural marketing in the country;
  2. examine the organizational set up and functioning of the different State

Agricultural Marketing Boards and Agricultural Produce Market Committees and measures to make them more effective instruments for providing better infrastructure and services to the farmers, traders and consumers;

  1. make recommendation for pledge finance, direct marketing and alternative marketing systems;
  2. study the requirements of additional investments in infrastructure, supply chain management from farm to the consumer and other facilities for the marketing system for the next 10 years and to make recommendations for encouraging public, private and cooperative sectors to make such investments;
  3. examine the requirements of market intelligence for the farmers, exporters, traders and consumers and to make recommendation in this regard;
  4. examine requirement of market extension, research and training for the Agricultural Marketing System and to make recommendation in this regard;
  5. recommend measures for effectively utilizing information technology tools with special reference to E-Commerce, E-Business, etc for the development of a modern marketing system.

The Expert Committee prepared a comprehensive report for developing and strengthening of Agricultural Marketing in the country. The report, approved by the GOI in June, 2001 is currently implemented. The Expert Committee Report contains comprehensive guidelines for development of efficient Agricultural Marketing System.

            In 2008, the State Government of Mizoram enacted a legislation known as The Mizoram State Agricultural Produce Marketing Act, 2008.  The provisions of this Act and the guidelines contained in the Expert Committee Report are conveniently used for planning development of efficient Agricultural Marketing System under NLUP.

NLUP Marketing Plan
A Marketing Plan has been made by the Marketing Cell for marketing of items/commodities produced under the Flagship Programme. The NLUP Marketing Plan is written in Chapter X of NLUP Manual 2009. The Manual has been approved by The Government of Mizoram vide letter No. G.28014/21/2009-AGR of 14th September, 2009. The main features of NLUP Marketing Plan are described in the following paragraphs.

1.         Selection of Crops for NLUP/Production Planning
Crops selection is applicable to Agriculture, Horticulture, Sericulture, Soil & Water Conservation and Forest Departments.  Planning what to produce, where to produce and how much to produce is very important. The past practice of growing crops and search for market after production should be avoided.  Market oriented crops having assured and reliable market should be selected.  It should be suitable for cultivation in Mizoram agro-climatic conditions.  Traditional crops and non-traditional crops can be considered for selection.  Non-traditional crops may include Plantations crops, Medicinal and Aromatic crops.  Minor forest plants may also be considered.

The following points should be borne in mind while making selection of crops for NLUP:

  1. Adaptability in Mizoram agro-climatic condition for non-traditional crops.
  2. Economic life span of the crop.
  3. Whether it is fast yielding, low volume and high value crop or not.
  4. Shelf life/keeping quality of the product.
  5. Its proneness and tolerance to plant diseases/pest/drought/cyclone/hail storm.
  6. Prospect of marketing.

2.         Marketing Infrastructure – Physical
            In this context it is worth mentioning that the agricultural crops like ginger, turmeric, chilli, passion fruits, oranges, pineapple, tung oil medicinal, herbs, forest produces like Bamboo, broom cane etc. are the greatest agricultural strengths of Mizoram. Dry chilli is one of the specialities of the state of Mizoram. It is not only greatly in demand within the country but also in great demand in Middle East Countries. There are many exporters in the southern region and especially Hyderabad who are always in search for good quality Dry Chilli for export purpose. Even within the state the price of chilli flucturates greatly during the season and off season times. The price of chilli increase from Rs. 60 kgs to around Rs. 120 kgs in the off season time in the state. The bird’s eye chilli a rare species grown only in the hills of Mizoram has great demand and sold at a premium price in international markets.
An efficient agricultural marketing system cannot be developed without developing physical marketing infrastructure first.  The physical marketing infrastructures needed to be developed are:

  1. Farm House: A producer/farmer should have a farm house or shed for carrying out initial processing operation which includes cleaning, sorting/grading, weighing, packing and marking.  Such place will also serve as temporary storing place and resting place.
  2. Collection Centre:  Collection centre at convenient location in the vicinity of farm areas where the farmers can sell their produce is necessary. This will solve the usual transportation problems faced by the farmers. It should have a place for sorting/grading, packing and weighing facilities.
  3. Road connectivity:  There should be a good road connectivity linking farm areas and markets.  This will facilitate transportation of not only farm produce but also production inputs such as fertilizers, pesticides, agricultural chemicals, farm machinery, tools, equipment etc.
  4. Storage facility:  There should be storage facilities such as godowns/ware houses and cold storages for storing raw and finished products. The capacity of storage facilities should be planned according to production.  A cold chain is required for fresh commodities and those items having short shelf life.  A chain of godown/warehouse is equally important in the supply chain.  The total storage capacity of 4 cold storages existing in Mizoram is 5500 MT.  Additonal cold storages will be required.  There are 2 medium size godowns at Vairengte, which need renovation.
  5. Processing Plants:  Processing units are inescapable necessity in Mizoram for the success of NLUP. The State is landlocked and surrounded by Myanmar in the East and South and Bangladesh in the West. It can have free outlets/inlets only in the North. The cost of transportation and time taken for transportation to National markets are grossly escalated. This problem can be overcome or reduced with the help of processing units. Processing downsized and lightened the product to an extent that it can be transported even by air.  Also, processing increase the value and shelf life of the product much longer.

We should have primary and central processing units. Juice concentration plants, aseptic packaging units and canning plants are part and parcel of processing units.  It is convenient to have all these facilities under one roof. The investment required for creation of these processing units may be quite huge.  Technical expertise backed up with experience will also be required.  Therefore, it is advisable to invite reliable companies /private parties having adequate experience to set up processing units under joint venture. Such processing units under joint venture should be State-of-Art processing units of world –class.

There are many attractive incentives provided for setting up processing plants under the North East Industrial and Investment Promotion Policy (NEIIPP), 2007 and Industrial Policy of Mizoram 2000. These incentives can reduce financial burden and running costs for the investors    

  1. Modern Pack House:  A well equipped modern pack house is also required. Use of New Technologies such as Nitrogen filled packaging, vacuum packaging, etc for preserving the products should be encouraged.  Machinery/equipment required for such packaging are available in the market.
  2. Markets:  Market areas, market yards, Wholesale market, Rural periodic market, special market  and market office should  be developed as explained below  :

i)  Market Area:  A geographical area of one district will form one market area.  There will be 8 market areas in Mizoram.
ii) Market yard:  It is a specified place within a market area where retail sale will take place.  It includes buildings, enclosures or locality.  At least 6 market yards should be planned for each market area and will be notified.
iii) Wholesale market:  It is a market where agricultural produces arrive in bulk, stored and sold in bulk.  No retail sale should be allowed in wholesale market.  It may be a Regulated wholesale market or non-Regulated wholesale market.  Every wholesale market should have all types of storage facilities (godowns/ware house/cold storage, etc), loading/unloading platforms, parking areas, etc.  At least one wholesale market should be planned for each market area.

Note: It may be mentioned that Mizoram urgently requires wholesale market at our main entry/exit point namely Vairengte.  The following storage facilities are already existing at Vairengte: 3500 MT capacity multi chamber cold storage and two medium size godowns.  These godowns require renovation.
iv) Market Office:  Every wholesale market yard should have a market office to accomodate officials posted to look after   administration of the market.  The market office should be well equipped with landline and IT connectivity to facilitate market information service.
v) Rural periodic market:   It is a selected market yard for retail marketing periodically. As already mentioned in ii) above every district should have six periodic markets. Each working day of the week will be assigned to one market yard on permanent basis. All the six market yards will be assigned one day each for marketing in rotation. Under this arrangement farmers will have opportunity to market their farm produce throughout the week and year. Potential buyers from Mizoram and outside Mizoram can come to purchase from these centres.

3.         Institutional Marketing Infrastructure
Institutional marketing infrastructures are marketing organizations, market extension agencies, market intelligence networks, Banking/Financial institutions and cooperative societies.  Institutional marketing infrastructures in Mizoram are Trade & Commerce Department, MAMCO, MAHCO, ZOHANDCO, MIZOFED, NLUP Marketing Cell, Banks and Cooperative Societies.  There are provisions in the Mizoram State Agricultural Produce Marketing (Development and Regulation) Act, 2008 for constituting institutional marketing infrastructure such as Market Committees, State Agricultural Marketing Board, etc.  The Government of Mizoram can take decision to implement the provisions of the Act in due course of time.
Marketing Extension Service is almost nil in Mizoram.  Marketing extension service to assist farmers in marketing of their produce, to obtain market information, to impart improved marketing practices including grading and packing will be provided by NLUP Marketing Cell.

Market intelligence is provided through IT Connectivity.  Agricultural Produce Marketing requires connectivity between the market and the growers/traders/exporters through Wide Area Network (WAN) of National and International linkages in order to provide day-to-day information with regard to commodity arrivals and prevailing rates, to provide links for online International Market Information, to provide export related documentation, to inform about the latest progress/development in Agricultural Marketing/Packaging/Storage and to provide connectivity with World Trade Centre, APEDA, NIAM, NHB, State Agricultural Marketing Boarders and wholesale Regulated Markets in the country.  IT connectivity will be established for this purpose.

4.         Incentives/Support to Marketing
The Marketing organizations, Central and State Governments provides incentives and supports for marketing of agricultural produce in various forms.  These incentives/supports are described below:

a.         Minimum Support Price (MSP): The MSP is applicable to selected 23 agricultural commodities.  These are 7 cereals, 4 pulses, 8 oilseeds, copra, raw cotton, raw jute and VFC tobacco.  The MSP applicable to these commodities for a particular season is announced by the Central Government in advance.   
b          Market Intervention Scheme (MIS)  :   In order to protect the producers/farmers when the market price falls below production cost, MIS  will be used for those crops which are not covered by MSP scheme.   
c.         Export Promotion Support From Export Development Fund:   The Central Government announced Guidelines for Inland Transport Assistance for notified Horticultural Products from the NE Region in July, 2002 to promote export of products from the NE region.  Three different rates were prescribed initially.  The rates were revised in January 2003 as given below:

  1. Rupee 1 per kg if transported by road from NE States upto the Indian customs point (LCS) in the NE Region at the border with the adjoining countries.
  2. Rs. 2 per kg if transported by road from NE Region to West Bengal for processing for exports.  This assistance will be available to notified units (notified processing units) for purchase of notified fruits for processing on the basis of predetermined input – output norms by APEDA.
  3. 90% of the air freight charged by airlines from an airport in the NE States and Baghdogra airport to Guwahati or Kolkata for exports.  At present air cargo freight charge from Lengpui to Kolkata is rupees 42 per kg.  Availing this subsidy scheme it reduces to Rs.  4.20 per kg.

The notified Horticulture products include Banana, Guava, Lemon, Orange, Pears, Pineapple, Plum, Cut-flowers, Ginger, Passion fruits, Kiwi, Apple, Bamboo and Cane.   

d)        Market Access Iniatiative (MAI):   MAI is export promotion Scheme and has been operating since November, 2002.  Under this scheme financial support can be availed for the following:
i)      Marketing studies abroad.
ii)     For setting up show rooms for display of consumer items at identified centres on the basis of marketing studies.
iii)    For setting up ware housing facilities on the same pattern as of show rooms.
iv)    Participation in International Departmental Stores.
v)     Publicity campaigns.
vi)    Participation in International Trade Fairs, Seminars, Buyers-Sellers Meets.

  1. Research & Product Development Scheme for selected exporters/Export Promotion Councils/Trade Promotion Organization.
  2. Brand promotion along with marketing of branded products.

ix)    Export Potential Surveys of the States to identify products for export.

5.         Development of Mizoram Trade Brand/Trade Mark 
            Development of Trade Brand/Trade Mark is a very important aspect in marketing. Our broom sticks, ginger and birds’ eye chillies have already captured Indian markets. But only few people in the country knew that they are produced in Mizoram. They are always referred as Assam produce. We have to take corrective step. We should promote development of Mizoram Trade Brand/Trade Mark  to popularize our products.

6.         Development of Export/Import and Border Trade
Mizoram is a land locked State. It can conveniently have Export/Import Trade and Border Trade with its two foreign neighbours along the International Border.  Export/Import and Border Trade constitute useful and convenient means of marketing agricultural and forest produce.

            In an attempt to promote Border Trade, the Government of India and Government of Myanmar signed Border Trade Agreement on 21.1.1994.  Two Trade Routes were selected along Indo Myanmar Border.  The selected trade routes were Moreh (India) – Tammu (Myanmar) in Manipur sector and Champhai (India) – Rih (Myanmar) in Mizoram sector.  Border trading was allowed to be carried out using – 1) Barter mechanism, 2) Local currency (Indian rupees and Myanmarese Kyats) and 3) freely convertible currency.  Twenty two (22) items consisting of Agricultural produce and minor forest produce were selected for trading.  This was later increased to 40.  Development of Trade routes and Trade centres along the border using ASIDE fund has been going on for the last 15 years.  The Border Trade route in Manipur has already been operationalised.  It is yet to be operationalised in Mizoram sector.

            It is convenient for Mizoram to have not only Border Trade but also Export/Import trade with Bangladesh and Myanmar.  Bangladesh with 145 million people has a huge requirement of vegetables and fruits.  Myanmar has huge requirement of consumer goods.  These commodities can be exported in large quantity to Bangladesh and Myanmar.

To facilitate Export/Import trade two Land Customs Station (LCS) were notified by the Government of India in November, 1994.  The LCS were Demagri (Tlabung) and Champhai.  Two export/import trade routes were also notified at the same time.  The notified trade route in Bangladesh sector is Karnaphuli river route starting from Demagiri to Thegamukh in Bangladesh.  In Myanmar sector the notified trade route is Champhai – Tiau (now Zokhawthar) – Rih.  Export/Import Trading is allowed with hard currency only.  Export/Import trading is yet to start on both sectors.  There is a good scope for export of agricultural produce and minor forest produce to Bangladesh and Consumer items to Myanmar.

            It is very important to operationalise the Land Customs Station at Tlabung and Karnaphulli river route for the purpose of export/import trade and movement of passenger traffic. Operationalising of Karnaphulli river route will promote international trades and travels to Bangladesh for the people of Mizoram in general and in particular for the people of southern region of the State. Journey via this route to Kolkata/Shillong/Agartalla/Siliguri from Mizoram will be cheaper and its duration will be shorter.

Certain formalities are required to be fulfilled to carry out export/import trades.  The formalities are  :

  1. Import Export Code (IEC) should be obtained.
  2. Contract agreement between Exporter and Importer or Proforma Invoice should be executed.
  3. Exporter should procure hard currency Letter of Credit (LC) from the importer and the LC should be advised by appropriate Bank.
  4. Certificate of Origin should be obtained from designated agencies.    Certificate of Origin for agricultural produced will be issued by Agriculture Department.
  5. Pre-shipment Inspection Certificate is to be obtained from designated agency.
  6. Bill of Export should be submitted to designated Banks for collecting export proceeds.

Note  :   A few people from Mizoram had already obtained IEC from the office
of the Directorate General of Foreign Trade (DGFT). The IEC can be obtained from the DGFT, Shillong.

7.         Inland Container Depot at Lengpui Airport
Inland container depot can be opened at Lengpui for providing container service for air cargo.  Lengpui airport can be notified as Export-Import Terminal.  Land Customs Station is already existing at Aizawl.  Aizawl LCS can provide all Customs formalities for export and import trades through Lengpui Airport.  

 

Role of NLUP Marketing Cell
The terms of reference were laid down by the Government of Mizoram when the Marketing Cell was constituted in 27th March, 2009.  The laid down terms of reference may be supplemented with the following roles:

  1. To advise NLUP Boards in development of agricultural produce marketing system, innovative practices and selection of crops.
  2. To plan development of marketing infrastructure physical and institutional and formulate policy for the management of the marketing infrastructure.
  3. To carry out market surveys in domestic areas and abroad using the most economic and reliable methods.
  4. To monitor market trend and commodity prices in the National and International markets and disseminate the information to the public.
  5. To develop policy of constructive cooperation with other marketing organizations.
  6. To provide advice to marketing organizations/traders and individuals in Export/Import matters.

Conclusion
During the last 25 years the Government of Mizoram took a number of initiatives to promote agricultural produce marketing. The initiatives in chronological order include the following :

  1. The Department of Trade and Commerce was created on 20.2.1987.
  2. MIFCO (Mizoram Food and Allied Industries Corporation Ltd) was created on 19.12.1989.
  3. In 1990-1991 a comprehensive Agricultural Marketing Plan was prepared.  Rs. 5 crores was received from Planning Commission for implementing the plan.
  4. MAMCO (Mizoram Agricultural Marketing Corporation) was created on 26.2.1993.
  5. In November, 1996 the Mizoram State Agricultural Produce Marketing Act, 1996 and the Rules made thereof came into existence.  This was repealed in 2008.
  6. In 1997 a Master Plan for establishment of Wholesale and Periodic Markets for marketing of agricultural produce was made.
  7. In 1999, The Mizoram Agricultural Produce Marketing (Prohibition of Movement) (Amendment) Order, 1999 was issued.
  8. In 2001, Guidelines for Mizoram Intodelhna Project was prepared and approved by the Government of Mizoram.  Included in the Guidelines was Agricultural Produce Marketing Plan.
  9. In 2008, The Mizoram State Agricultural Produce Marketing (Development and Regulation) Act, 2008 was enacted.

 

In spite of all these efforts, agricultural marketing in Mizoram remains backward.  There is no efficient agricultural marketing system in the State till today.  There used to be control, monopolistic and restrictive practices in agricultural marketing.  Free and competitive trading were not encouraged.  To a very great extent, the absence of efficient agricultural marketing system in the State and the control, monopolistic and restrictive trade practices prevented development and progress of Agriculture & Allied sectors.

            The present Government of Mizoram led by Shri Lal Thanhawla, soon after coming to power on 12th December, 2009 decided to encourage free and competitive trading in agricultural produce.  Control, monopolistic and restrictive practices were discontinued.  Even the practice of mahal of minor forest produce (bamboo, broomstick, etc.) was discontinued.  Government Corporations play the role of facilitator.

            Lastly, it is very important that development of efficient agricultural produce marketing system receives adequate attention of the Government.  Even some major policy change may have to be affected or new policy be introduced.  For example, the Department of Trade and Commerce was created to promote trade in general and agricultural produce marketing in particular.  As a matter of practice, it may be appropriate to place this Department under the charge of Minister of Agriculture & Allied Sector.  When coming to the post harvest processing of Agricultural produce it has to be dealt by Minister in-charge of Industries.  File movement to and fro different departments may take time. A single window clearance system may be introduced to facilitate quick decision making.

 
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