VI.

SUMMARY AND POLICY IMPLICATION

The technological breakthrough in Indian agriculture has brought about rapid increase
in the productivity levels of crops. This has generated new problems in marketing for which
adequate attention have not been paid even though it has been recognised that the solution
for these problems is a requisite condition for agricultural prosperity. For the farmers, disposal
of his produce have become as important as the adoption of new agricultural technology for
improving his income from agriculture. Unless marketing system is improved, no incentive to
increase production will attract the cultivators. It is often complained that the farmers do not
get remunerative prices for their produce while the consumers have to pay higher prices.
Further, as a result of the break through in the agricultural production, there has been
a spectacular increase in the marketable surplus, which has exposed the inadequacies in
handling, transportation, storage, grading and standardization of the produce. This in turn has
adverse effects on the farmers. This calls for the development of a sound marketing system
on the more scientific lines to enable the farmers to get more remunerative prices for their
produce. Grading of vegetable produce is one of the crucial factors in fetching remunerative
prices to the producer-sellers.
The quality of vegetable produce brought to the market by the farmers varies
considerably from lot to lot. The variation in quality is due mainly to the differences in
varieties, insect and pest damages, methods and time of harvesting and agro-climatic factors.
It is therefore, highly essential to grade the produce brought to the market on scientific lines in
order to get remunerative prices. Scientific grading should be based on important test factors
so that the sellers would be able to describe the quality that they are offering and the buyers
should understand what is being offered.
It is needless to emphasise the importance of grading function. Promotion of grading
and standardisation has become as important as that of adoption of improved technology for
stepping up vegetable production. Grading scores as a means to describe the quality of the
commodity and makes pricing mechanism more precise and meaningful. Grading and
standardisation protect the farmers to some extent from exploitation by improving his
bargaining power.
In view of the above stated facts, serious efforts have been made to organise the
marketing system on scientific lines by the enactment of the Agricultural Produce (Grading
and marking) Act, 1937, which empowers the central government to prescribe grade
standards for agricultural commodities and livestock products and to stipulate conditions
governing the use of standards and laying down the procedure for marking and packing. In
this view several grading and marking rules for different crops were passed including onion,
potato, tomato and brinjal. Onion Grading and Marking Rules 1964, Potato Grading and
Marking Rules 1950, Tomato Grading and Marking Rules 1965, Brinjal Grading and Marking
rules 1965 are in operation in India.
Many studies have been conducted in the recent past to evaluate the existing grading
system and to determine the relationship between grade, price and quality. However, not
much effort has been made to estimate the relationship between grade and quality factors of
the commodities and also to compare eye-sight grading with scientific grading.

In view of the very limited number of studies conducted in the whole country, the
present investigation was undertaken to develop grade standards for onion, potato, tomato
and brinjal and to study the quality, grading and prices in important vegetable markets in
Karnataka. It aims at finding out the relationship between grades and quality factors of onion,
potato, tomato and brinjal, and also comparing eye-sight grading with scientific grading and
thereby evaluating their efficiency.
Importance of vegetables in Indian economy:
India is the second largest producer of vegetables next to China in the world. The
total annual production of over 98.50 million tonnes in 2002-03 with the share in world
production of vegetables being 11.4 per cent. It has slightly come down from the previous
year (93.84 million tonnes in 2002-03) because of the severe drought in several parts of the
country. Presently India is the second largest producer of vegetables. Other important

vegetables producing countries are China, US and Turkey with the production share of 46.1,
4.7 and 3.1 per cent respectively. India is the highest okra and vegetable pea producing
country in the world, while in production of cabbage, cauliflower and onion it ranks second.
The major vegetables grown in India are onions, potatoes, tomatoes, brinjal,
cucumber etc. India is world largest producer of cauliflower and second largest producer of
onion, among the first 10 procedures of cabbage, green peas, potatoes, tomatoes, brinjal etc.
India leads the world in the production of cauliflower, second in the production of
onion is 47 lakh tonnes and third in cabbage production. With a production of 222 lakh
tonnes, the potato is the leading vegetable followed by brinjal and tomato with a production of
88 and 84 lakh tonnes, respectively (Vikash singh 2004).
Karnataka has 10 agro-climatic zones suitable for growing vegetables crops. The
area under vegetable crops increased from 2.61 lakh hectare in 1993-94 to 3.77 lakh hectare
in 2002-03. The major districts growing vegetable crops in the state are Dharwad, Belgaum,
Bijapur, Haveri, Hassan, Chitradurga, Kolar and Bangalore rural. The major crops grown in
these districts are onion, potato, tomato, brinjal and cole crops.
Vegetables constitute 8 to 10 per cent of the total food, whose consumption is
distressingly low. Even in countries like USA, where animal proteins and milk products are in
abundance, the annual consumption of vegetables per capita is almost five times that of an
average Indian. However most of the research studies in India demonstrated that there is a
sizeable gap between per head per day vegetable requirements of 285 gm and its actual
availability of nearly 135 gm.
Importance of onion in the economy:
About 27.98 million tonnes of onion is produced in the world from 1.88 million
hectares of area. India ranks first in area under onion and ranks second in world production
next only to China. In India, among onion growing states, Karnataka, Maharastra, Tamil
Nadu, Andhra Pradesh are the leading states.
In Karnataka, major growing districts are Dharwad which stands in first position with
the production of 7,02,500 tonnes and area of 35,129 hectares followed by Belgaum with the
production of 45,840 tonnes with the area of 2837 ha and Bijapur district with the production
of 2,80,480 tonnes with the area of 14,024 hectares (2002-03).
Importance of potato in the economy:
India is the fourth largest potato producing country with a production of 25 million
tonnes from an area of 1.40 million ha. In India potato is grown mainly in the states of
Karnataka, Punjab, Haryana, Uttar Pradesh, Bihar, West Bengal and the Union Territory of
Delhi.
In Karnataka, major growing districts :Belgaum stands third position with a production
of 99,621 tonnes over an area of 8,075 hectares followed by Dharwad which stands fourth
position over the production of 92,695 tonnes with an area of 4,638 hectares (2002-03).
Importance of tomato in the economy:
Tomato is an important vegetable crop. Tomato is one of the major vegetable and its
production ranks fourth among all vegetables. FAO estimates a world production of 78.28
million tonnes of tomatoes from an area of 2.8 million hectares. In India, tomato occupies an
area of 540 thousand hectares with a production of 84 lakh tonnes (Anon., 2002-03).
In Karnataka, major growing districts: Belgaum stands fourth position with production
of 1,78,608 tonnes with the area of 4,933 hectares followed by Dharwad with a production of
16,059 and over an with the area of 665 hectare and Bijapur district with production of 30,835
with the area of 963 hectares (2002-03).
Importance of brinjal in the economy:
India stands in the second position with the production of 6.4 lakh metric tonnes next
to China with the production of 12.28 lakh metric tonnes in 2002-03. The production of brinjal
in India has doubled in the past seven years from 46.12 lakh tonnes in 1993-94 to 88 lakh
tonnes in 2002-03, mainly because of increase in the area under it from 3.01 lakh hectares to
5.10 lakh hectors. This yield of brinjal in the country rose around 2002-03. Earlier the yield
has fallen from 15,300 kg in 1993-94 to 14,200 kg per ha 1996-97. Karnataka brinjal grown in

the state accounted for 17,074 hectors area and production was 3,82,832 tonnes (2002-03).
In Karnataka major growing districts are Belgaum stands first position with 59,806 tonnes with
the area of 2,295 ha followed by Dharwad with 7,925 tonnes with the area of 408 ha and
Bijapur district with 18,400 tonnes with the area of 736 hectares (2002-03).
More precisely the present study proposes to examine the following specific
objectives in the vegetable markets in Karnataka. The specific objectives of the study are as
follows.
1. To study the spatial and temporal variations in prices of important vegetable crops.
2. To determine the price, quality relationship as reflected through grades and other
quality characteristics of important vegetable crops
3. To develop grade standards for important vegetable crops
4. To assess the influence of non-quality factors on price received by vegetable
producers
5. To determine the degree of deviation between eye-sight grading and scientific
grading of important vegetable crops
6. To document the problems and prospects of developing grade standards in domestic
marketing of vegetable crops.
Data and sampling procedure:
Both primary and secondary information were collected and used in the study. They
are (i) secondary data (time series data) on onion and potato prices were collected from the
records maintained by the APMCs of Hubli, Belgaum and Bijapur market. The period covered
from Hubli market was 1991-92 to 2004-05, from Belgaum market 1991-92 to 2004-05, and
from Bijapur 2001 to 2005 (ii) primary data were collected through personal interviews from
the farmers, eye-sight graders and from commissions agents with the help of well structured
and pretested schedule on onion, potato, tomato and brinjal. Further, the onion, potato,
tomato and brinjal samples were drawn from the available lots during the crop year 2004-05
from Hubli, Belgaum and Bijapur markets and got analysed in the laboratory and this was
treated as the scientific information on onion, potato, tomato and brinjal quality characters.
The sampling procedure adopted in the study is discussed in the following section.
Hubli, Belgaum and Bijapur vegetable markets were purposively selected for the
study. These three markets are the terminal markets for onion, potato, tomato and brinjal in
the Karnataka state and bulk of the vegetables are produced in these three important
markets. As much as 60 to 70 per cent of the total vegetables produced in the state arrives to
these markets. The Hubli and Belgaum markets are is situated in the western part of
vegetables tract, Bijapur market is in the norther part of vegetables tract thus, representing
the geophysical and climatic conditions of vegetables tract.
A total of 330 samples were collected at random during the peak season of
(September to January) from these three markets. Hubli 120 samples out of which onion 30
samples, potato 30 samples, tomato 30 samples and brinjal 30 samples, Belgaum 120
samples of which 30 onion, 30 potato, 30 tomato and 30 brinjal samples and from Bijapur 90
samples out of which 30 onion, 30 tomato and 30 brinjal samples were collected at random
from these three markets. In Bijapur market potato is not grown. Hence there are no samples
of potato from Bijapur. Thus, making a total sample size of 330.
On the day of auction, 5-10 samples were collected for each crop weighing a
maximum of 250-500 grams at 8.30 to 11.30 am from each of the markets selected. In this
way the samples were collected twice in a week until the end of season. The following quality
characters were analysed in the laboratory by instrument measurement and by observation.
The qualitative characteristics which were analysed by instruments are: (i) pungency, (ii)
reducing sugar, (iii) total sugar, (iv) total soluble solid, (v) moisture percentage, (vi) weight of
samples, (vii) circumference of samples, (viii) length of samples, (ix) starch of potato, (xi)
Ascorbic acid, (xii) Number of seeds, (xiii) Thickness of tomato pulp, (xiv) number of wrinkles
of tomato and (xv) phenol.
Onion markets in the study area
The variation in mode prices in Hubli and Belgaum Markets between months is found
to be highly significant at 1 percent level. This is clear from the value of F which is 5.81 and

3.33 respectively. This price variation might be due to variation in quality of onion brought to
these markets during different months. . However, the price variation between years was
found to be non- significant. The Bijapur market shows no appreciable variation in prices both
between months and also years. The mode prices were studied with a view to asses the
overall price behaviaur in the market, as these are the prices received by the majority of the
producers.
5.2 Potato market in the study area
The potato mode prices in belguam market throughout the study period 1990-91 to 2004-
05, were studied with a view to asses the overall price behaviour in the market as these are
the prices received by the majority of the producers.
The F value which is between the months in Belgaum market is highest 4.27. This
shows potato prices between the months have clear variation in the Belgaum market. When
these mode prices were studied against year, the variation between the years was 1.25. This
means that the overall price in all the potato markets do not considerably differ so far as mode
prices are concerned. The coefficient of variation in Hubli market was higher which means
prices of potato in Hubli market is not temporally integrated.
5.3 Spatial and temporal price variation
The spatial and temporal price variations in onion and potato were analysed by
employing the technique of time series analysis using the monthly data on mode prices
collected from three markets of Hubli, Belgaum and Bijapur for different time periods from
1990-91 to 2004-05. The results of analysis are presented in the subsequent pages.
Time series analysis:
The various time series analysed in this study are discussed in the chapter 3. In the
analysis of economic time series (t=1,2,3N), the data are recorded at discrete equally
spaced time intervals. The general model for a time series is:
O = TxCxSxI
Where, O is the observation at time t; T is the trend element, C is the cyclical component, S is
the seasonal and I is the irregular fluctuations. Besides, short-term fluctuations, which are of
day-to-day or week-to-week type, other long-term changes also occur as a result of temporary
changes in supply and demand. These are believed to have relatively little effect upon the
prices in the short-run.
The trend commonly referred to as the secular trend is a characteristic of most of the
economic time series. It is an indication of the general growth in the economy. The pure
growth in population undoubtedly sufficient to ensure growing economy, and the aim of
increasing their standard of living and scientific knowledge result in large gains which further
accelerate growth.
The seasonal, are periodic movements, which recur with some degree of regulatarity
with a definite period. The seasonal are most common in agricultural commodities and the
periodicity is within a year. Although, nature is primarily responsible for most of the seasonal
variation, there are other factors too. For example, the practice of giving gift during festivals
causes a market peak in retail sales (especially department stores). It is generally believed in
underdeveloped countries that because of the acute poverty of the farmers they are forced to
sell the produce soon after the harvest causing a glut in the market.
To determine the seasonal factor(s) the seasonal index numbers were worked out by
using the ratio to moving average method. The original monthly data were divided by the
corresponding seasonal index numbers, which will give the deseasonalised data or adjusted
for seasonal variation data.
Trend in prices were estimated by the method of power function (ordinary least
squares). The following trend equations were obtained for all the markets. They are:
Trend equation for onion in Hubli market
P=At


The above equation was transformed into log linear form for estimation by ordinary
least squares (OLS) methods. The transformed model was specified as.

Log P = log A + log t
Putting log A = , the above model can be re specified as
Log P = + log t
Log P = 170.69 + 0.39log t
Original April 1991-92, t unit 1 month ( was significant at 1 per cent level t value was
21.68 and R
2
value was 0.47).
Trend equation for onion in Belgaum market
P=At


The above equation was transformed into log linear form for estimation by ordinary
least squares (OLS) methods the model was
Log P = log A + log t
Putting log A = , the above model can be re specified as
Log P = + log t
Log P = 200.12 + 0.30log t
Original April 1990-91, t unit 1 month ( was significant at 5 per cent level t value
was 24.95 and R
2
value was 0.39).
Trend equation for onion in Bijapur market
P=At


The above equation was transformed into log linear form for estimation by ordinary
least squares (OLS) methods the model was
Log P = log A + log t
Putting log A = , the above model can be re specified as
Log P = + log t
Log P = 272.62 + 0.13 log t
Original April 2001-2004, t unit1 month ( was not significant t value 52.20 and R
2

value was 0.39)

Trend equation for Potato in Hubli market
P=At


The above equation was transformed into log linear form for estimation by ordinary
least squares (OLS) methods the model was
Log P = log A + log t
Putting log A = , the above model can be re specified as
Log P = + log t
Log P = 214.79 + 0.3274 log t
Original April 1991-92, t unit 1 month ( was significant at 1 per cent level t value was
30.21 and R
2
value was 0.52).
Trend equation for Potato in Belgaum market
P=At


The above equation was transformed into log linear form for estimation by ordinary
least squares (OLS) methods the model was
Log P = log A + log t
Putting log A = , the above model can be re specified as
Log P = + log t
Log P = 243.27 + 0.2962 log t
Original April 1990-91, t unit1 month ( was not significant t value 32.26 and R
2
value
was 0.48)


The trend value was estimated by using the above trend equations. The results are
presented in Table 4.3, 4.4, and 4.5 for onion Hubli, Belgaum and Bijapur markets
respectively. (Fig 1, 2 and 3) depict the trend line for Hubli, Belgaum and Bijapur markets
respectively. From the figures, it is clear that the prices are showing an increasing trend in all
the onion markets. Further it can be seen from the trend line that the intercept for Bijapur
market is higher (at Rs. 278.78) than the other markets Belgaum (at Rs. 254.94) and Hubli
market (236.92).
In case of potato trend value was estimated by using the above trend equations. The
results are presented in Table 4.6 and 4.7 for Hubli and Belgaum markets respectively. It may
be seen that Belgaum market had the highest annual increase in price (at Rs.296.59) but
Belgaum market was significant.

Stepwise multiple regression analysis to study the eye-sight grades and price,
and non-quality factors determining the onion, potato, tomato and brinjal
prices
This section is devoted to present the results of those factors that were found to be
instrumental in price and grade determination. Both qualitative and non-qualitative factors
were included in this analysis.
The basic model specified in methodology chapter was used in the analysis. Three
models based on stepwise multiple regression equations were used. In first model, the price
as dependent variable and qualitative factors as independent variables, second model, price
as dependent variable and non-qualitative variables (dummy) as independent variables, third
model, eyesight grade as dependent variable and qualitative variables as independent
variables.
In order to include non-qualitative variables such as variety planted, uniformity of
vegetables in the lots, types of soils etc. it was necessary to assign specific sub- classes to
these variables. Through assigning of sub-classes, it was possible to take into account the
fact that various lot sizes, types of buyers etc., may have separate deterministic effects on the
response. The variables of this type are usually called dummy variables. The dummy
variables were included in Model II. The mathematical model developed for the study was
discussed in chapter 3.
Data obtained from Hubli, Belgaum and Bijapur markets were pooled and an
aggregate database was prepared. This was done to study the influence of aggregation on
prices and grades for obtaining a general picture of onion, potato, tomato and brinjal quality,
grading and prices in vegetables marketing in the state of Karnataka.

Stepwise multiple regression functions were separately run for each selected market.
The direction of their association with the dependent variable price and qualitative variables
as independent variable in conformity with the hypothesis can be seen from different tables.
Development of grade standards for different lots of onion, potato tomato and
brinjal in the study:
The samples collected from each market were brought to the laboratory and were
analysed for their actual qualitative characteristics generally considered for scientific grading.
The results of the analysis are presented in Table 4.32. Traditionally, eyesight grade for onion
have been developed by DMI as A
1
, A
2
, A
3
, B
1
, B
2
, B
3
and C
1
, C
2
, C
3
. In order to overcome
the short- comings of eye-sight grades, the instrumental measurement of all the qualitative
characteristics were used in this study. It was necessary to give appropriate weightage to
each one of these qualitative variables required for the development of grade standards for
onion.
In the well equiped laboratory of Department of Agricultural Marketing, Cooperation
and Agribusiness Management, Soil sciences and biochemistry laboratory were used for the
study of actual quality characteristics generally considering for scientific grading. The results
of the analysis as presented in Table 4.32. The onion samples getting 29.27 to 26.99 and
above scoring were classified as I and 26.99 to 24.71 scoring were classified as II and so on.
Potato sample qualitative characteristics getting 40.15 to 37.78 and above scoring were

classified I and 37.78 to 35.42 scoring were classified and II and so on. Tomato variables
getting 67.51 to 59.08 and above ranks were classified as I and 59.84 to 50.66 ranking were
classified as II and so on. Brinjal samples getting 31.94 to 28.66 and above scoring were
classified as I and 28.66 to 25.38 scoring were classified as II and so on.
Determination of the degree of deviation between the eye-sight grades and
scientific grades of onion, potato, tomato and brinjal
Traditionally, eyesight grades are determined on the spot by APMC graders on the
basis of length of onion, uniformity, day of sale and lacteritic soil dummy were highly scientific.
It was hypothesized that eyesight grades deviate from scientific grades quite significantly and
that they do not reflect actual quality of the onion, potato, tomato and brinjal. . In order to test
this hypothesis it was necessary to determine scientific grades. This was accomplished on the
basis of the instrument measurements for all quality variables used in this study.
The large number of variables were highly significant in determining scientific grades,
whereas, very few variables were significant in the case of eye-sight grades in that they take
majority of the factors into consideration while eye-sight grades either do not take several
factors into account or they have the sign unexpected.
Further, it can be seen from the table that total sugar and weight of onion were the
only factors which have highly significant relation with eye-sight grades, in other words,
pungency percentage, total sugar and weight of onion seems to have been measured less
objectively in determining the eye-sight grades.
It is evident from this study that scientific grading is superior compared to eye-sight
grading. It is also evident that the graders have failed to properly judge the quality of the
produce. If this kind of anomalous grading system is followed, the farmers might lose
confidence in the present grading system. Hence, it is strongly suggested that eye-sight
grading must be replaced by scientific grading method. Scientific grading can be encouraged
by giving price commensurate with the scientific grading as and when such a grading system
is made available to the agricultural marketing system in the country.
The R value of eye-sight grade was 0.33. It indicated that 33 per cent of the total
variation in eye-sight grade was explained by the independent variables considered. In case
of scientific grades the R value 0.75 indicating 75 per cent variation in scientific grade was
explained by the independent variables considered in tomato study.
The comparison of R value of eye-sight grade was 0.61. It indicated that 61 per cent
of the total variation in eye-sight grade was explained by the independent variables. The R
values of scientific grade were 0.83 indicating 83 per cent variation in scientific grade was
explained by the independent variables considered. Scientific grades is superior compared to
eye-sight grade based on higher the R value in brinjal study.
Suggestions:
1. All the markets showed positive sign of the slope of the equation and also
significant so far as price of onion, potato, tomato and brinjal are concerned. The
area and production of onion, potato, tomato and brinjal also showed an
increasing trend due to the use of high yielding varieties by farmers in the study area.
2. The seasonal indices of prices in onion and potato showed seasonality in prices of
onion and potato in all markets. It clearly shows that onion and potato farmers
rushed their produce for sale immediately after harvest without adopting storage
practices. In the case of prices, it could be seen that prices decreased immediately in
the post harvest period. This clearly indicated that the prices of onion and potato were
mainly influenced by their arrivals in these markets in accordance with the law of
demand and supply.
3. The farmers opined that the major lacuna in APMCs was absence of temporary
storage facilities and lack of grading and physical facilities in all the markets. In all the
selected markets, farmers were satisfied with the transaction facilities although a
small percentage of them reported facility of weighing, unreasonable commission
charges and prolonged payment of cash for produce.
4. Farmers sold their produce through commission agents as they received immediate
cash payments, better prices, due to smaller quantity of produce, low marketing costs

and receipt of information on market situation. A few farmers who had social ties with
the intermediary were getting advance loan for production, in addition to storage and
transportation facilities.
5. A large number of variables were found to be in significant in determining the prices
paid to the producers in respect of eye-sight grades. This suggested that prices were
not paid to the producers according to the scientific evaluation of onion, potato,
tomato and brinjal qualitative characteristics so as to determine the prices paid to the
producers in accordance with qualitative of onion, potato, tomato and brinjal by the
buyers in the markets.
6. It is also evident from this study that eye-sight grading system be replaced by
scientific grading can be down.
7. It has been observed in the present study that graders have failed in almost all the
markets to identify one or the other important characteristics of the commodities,
which could influence the grades. Hence, the government and the market committee
should pay attention to thoroughly train the graders.
8. The major problems expressed by onion, potato, tomato and brinjal farmers in the
production of vegetables were pest and disease incidence, storage of inadequate
equipment, shortage of skilled workers and lack of technical guidance and in the
marketing of vegetable fluctuation in prices, unremunerative prices, absence of
quality based pricing. These problems can be overcome by strengthening extension
system to provide technical guidance to the producers and also to train buyers in
quality estimation.
9. Sophisticated instruments required for determining precisely the qualitative
characteristics of Agricultural commodities must be provided to all the regulated
markets. Along with the instruments, technically skilled staff must be provided to
operate these instruments.
10. A uniform set of grade specifications must be followed for the commodities in all the
markets, so as to inject confidence among the producers of the commodities of
specified grade and get the premium prices. This would go a long way in making the
agricultural marketing more perfect.
Policy implication:
1. The study revealed that the price of onion and potato in major markets showed an
increasing trend due to ever increasing price of onion and potato for a mass
consumption, commodity like onion and potato the availability for common man is
going to be affected. Hence, Govt. may initiate programmes for increasing onion and
potato production by adopting in innovative schemes like breeding for high yielding
varieties etc.
2. The farmers may be advised through extension agencies to plan their cropping
pattern in such way, that they are able to reap the benefit of high prices during the
months of August and September in onion and June and July for potato.
3. The eye-sight grading is less accurate, as a result of which pricing is arbitrary. This
can be corrected only by following scientific grading method.
4. The farmers must be encouraged to bring graded produce to the markets based on
the physical qualitative characteristics like size, shape, colour etc. The graded
materials in the markets will fetch the remunerative premiums and discounts.
5. A satisfactory grading systems is possible only by providing a grading center at each
APMCs premise where quick correct scientific grading can be done.
6. The farmers at present are unable to store the commodity to get a better price in the
markets. The Govt. may frame policies to great scientific storage facilities on large
scale. This would go a long way in fetching a remunerative prices to the farmers and
avoiding high fluctuation in prices. Thus protecting the interest of both producer and
consumers.