Chapter - III

Role and Significance of Regulated

Market
 CHAPTER - III
ROLE AND SIGNIFICANCE OF REGULATED MARKET

3.1. SCENARIO OF REGULATED MARKETS IN INDIA

Our rural economy mainly revolves around agriculture, animal

husbandry, small trade, and cottage industries. Among these,
agriculture is described as the most important multiplier of economic
growth and development. This stems out of the fact that India is an
agricultural economy and it contributes to a large share of more than
forty per cent of the national income.

Now, nearly seventy percent of our people earn their livelihood

through agricultural and allied activities. The rapid development in
agricultural research and technology has led to a substantial increase
in the production of agricultural products. Today, the main challenges
faced by the Indian farmers are marketing their produce. "Our farmers
are price-takers than price-makers". In general, middleman, rather than
farmers control the agricultural marketing. Hence, an assurance of
remunerative price to the farmers is a prerequisite, and it can be given
to the farmers by offering them an efficient marketing system. The only
way available to the farmers' is forming an association of some sort to
act on their behalf. The common problems before the farmers are,
"where and when to sell and how to gain fair price" for their produce.
The Indian agricultural marketing system has many defects such as
lack of organization among farmers, forced sales, chain of middlemen
between farmers and ultimate consumers, malpractices in the market,
inadequate facilities for storing, grading and standardization,
unsatisfactory conveyance system, multiple charges, lack of market
information, and other similar things. In the case of small and
marginal farmers, these problems form the main bottleneck due to their
poor withholding capacity.

70
 The Government of India has made various organizational set up
for agricultural marketing such as Office of the Agricultural Marketing
Advisor, to the Government of India, Directorate of Marketing and
Inspections, State and Central Warehousing Corporations, and
regulated markets etc. for the protection of farmers from the hands of
traders and need for the provision of better marketing facilities, basic
infrastructure and the like.

The first attempt towards the establishment of regulated market

in India took place in the year 1897. During that year textile mills at
Manchester were badly in need of pure cotton at reasonable price. But
regular supply of cotton was affected by dumping and smuggling. In
order to make sufficient supply of cotton, the Hyderabad Government
passed the "Bearer cotton and Grain Marketing Law in 1897", for the
Hyderabad assigned districts. This is considered to be the first step
towards establishing regulated market in India.

The Law provided for the notification of markets and their control
by representative committees. Under the provision of this Act,
(1) Standard weights alone were permitted to be used, 2) Deduction of
unlawful allowances were prohibited, (3) Penalties and fines were
imposed on erring traders, (4) Brokers and weigh man were to be
licensed.

In spite of a few major defects, this Act proved very helpful to the
cowers of cotton. In short the Bearer markets speeded the idea of
-egulated markets throughout the country.

Then in 1917, the "Indian Cotton Committee" appointed by the

aovernment of India, recommended the regulation of cotton markets on
:he lines of Bearer markets.

The second attempt towards the establishment of regulated

market took place in the year 1927. The Government of Bombay

71
replaced the Bearer Act by passing "Bombay cotton Markets Act", 1927,
in pursuance of the recommendation made by market committee. This
Act was definitely an improvement over the Bearer Law. A real progress
in the direction of the establishment of regulated market was, however,
noticed after the publication of the "Report of Royal commission on
Agriculture 1928". After that most of the Government passed legislation
almost on similar lines for the organization of regulated markets.

During the third and Fourth Five Year Plans periods, legislations
for establishment of Regulated Market was a force in all state, viz.,
Assam, Kerala, Jammu and Kashmir etc., also enacted the legislation.
Thus the number of Regulated market increased rapidly.

To cope up with the need to handle increases in agricultural

production a number of Regulated Markets have been established all
over the country. A mere 286 Regulated Markets in 1950 had increased
to 7521in 2004-2005.

3.2 CHARACTERISTICS AND BENEFITS OF REGULATED MARKETS

Regulated markets have certain unique characteristics and benefits.

They are:

• No underhand dealing.
• Regulated "Marketing Committee".
• Settlement of dispute through "Arbitration Committee".
• License holders only can enter into trade within market yard.
• Ensures fair prices to the farmers.
• Choice of good quality.
• Facilities to buy required quantities.
• Eliminates intermediaries, brokers, and commission agents.
• Facilities for grading and storage.
• Readily available market information.
• Free services to farmers.

72
 In India, shandies, chuna, hat, painth, bazaar, mandi, gungs,
fairs, regulated markets, co-operative marketing, uzhavar sandhai, and
state trading are the existing facilities to the farmers to market their
produces. However, such system of marketing lack efficiency and are
inelastic to the hard luck of farmers who are exploited by the
middlemen. Hence, in order to reduce marketing charges, ensure fair
prices to farmers and to do away with exploitative marketing practices
the regulated markets were setup.

The regulated market refers to a market where the activities are

to take place under a set of rules and regulations. It aims at the
development of marketing structure to ensure fair price to the farmers,
narrow down the price spread between producer and consumer and
reduce non-functional margins of the middlemen.

3.3. FUNCTIONAL PROCEDURES OF REGULATED MARKETS

The regulated markets function as the direct meeting ground for

the farmers and traders to sell and buy under the supervision of the
market committee. The agricultural produce brought by the farmers is
graded by qualified graders, weighed by licensed weighmen and lot
numbers are allotted. The produce is exhibited for the traders to see for
themselves and quote their prices through closed/open bids. If the
prices quoted by the traders are acceptable to the farmers, the traders
would be allowed to take the stock on payment; otherwise, the farmers
are free either to take back their produce to store in the go-downs of
the regulated market. The services rendered to the farmers in the
regulated markets are totally free of charges.

73
3.4. ROLE OF REGULATED MARKETS IN AGRICULTURE

DEVELOPMENT

Regulated markets are the controlling centers of agricultural

marketing, and have an important role not only in stimulating
production and consumption, but also to accelerate the face of
economic development. Modern economic development involves a high-
degree of functional and vocational specialization and therefore
requires an efficient marketing system of agricultural products that has
been provided through regulation and establishment of regulated
markets. Though regulated markets are set up to ensure fairer market
practices in purchase and sale of agricultural produce and to provide
physical prerequisites for efficient and orderly marketing, yet these
markets act as controlling centers of economic activity. Apart from the
facilities of credit, marketing, storage, etc., a number of agricultural
input supply establishments and agro-processing industries are also
coming up in these focal points. These regulated markets are also
becoming important centers of business and points for distribution of
consumer goods and farm inputs. Therefore, regulated markets also
provide vast employment opportunities, both directly and indirectly.

Regulated markets are an integral part of the economic structure

not only of a city/town but also of its surrounding regions. They,
provide spatial linkages between town and its surrounding region by
procuring not only trade and commerce service but other services and
necessary goods including farm inputs. These centers are also
indicators of agricultural development of the region. So far, we have
discuss the various organizational and functional aspects of the
regulated markets in India, but their role in development has not been
discussed and therefore, the present chapter has been designed to
explain their role in development.

74
3.5. ROLE IN DEVELOPMENT

The main objective of introducing regulation in agricultural

marketing in India was not only to safeguard the economic interest of
the producer-sellers but also to develop systematic agricultural
markets as well as to help in rural development. During the last 25
years, the State Agricultural Marketing Board, Directorate of
Agricultural Marketing and Regulated Markets have done considerable
work in this direction. The role of regulated markets in the state can be
explained under the following headings:

i) Development of market yards,

ii) Development of rural markets,
iii) Development of rural go-downs,
iv) Construction of rural link roads,
v) Quality control, grading, and standardization.
vi) Rural welfare schemes, and
vii) Regional development.

3.5.1 Development of Market Yards

One of the most important works done by regulated market

committee or by State Marketing Board is the development of planned
and systematic market yards for the marketing of agricultural
products.

In brief, regulated markets with market yards have all

agricultural marketing facilities at one place. Since all basic
infrastructures like auction and display platforms, shops, go-downs,
office, drinking water, cattle shed, canteen, etc. are available at one
place, these provide proper marketing environment both to traders and
producer-sellers, and their management has also become systematic.

75
3.5.2. Development of rural markets

Towards the end of the seventies, it was realized that the

development of regulated wholesale markets was not enough to help
the small and marginal farmers. These farmers used to bring their
produce to the nearest rural markets like huts (weekly markets).

3.5.3. Development of rural go-downs

Proper storage facility is a pre-requisite for the smooth marketing

of agricultural products. Storage facilities are more important in rural
areas because farmers are not in a position to store their produce even
for a few weeks. With this objective in mind a scheme for the
establishment of 'National Grid of Rural Go-downs' was formulated for
creating a network of rural go-downs in rural areas to avoid distress in
sale and to eliminate losses in storage, immediately after the harvest,
when the prices are low. In these go-downs a farmer can hold his stock
and can sell his produce as and when prices are high and he can even
take loans by placing his produce in such go-downs.

3.5.4. Construction of rural link roads

The construction of rural link roads is also an important

development work done by Marketing Board / Mandi Committees in the
state. These roads have been constructed in order to provide
transportation facilities to the farmers of potential villages, so that they
are able to bring their produce to the market. Their maintenance is also
done by the concerned market.

3.5.5. Quality control, grading and standardization

The promotion of grading and standardization and exercising

quality control on agricultural commodities has been one of the
principal functions of the market regulation. Its primary aim is to
protect the producer from exploitation. By knowing the quality and
grade of his produce he is in a better bargaining position against the
76
trader. This also protects the consumer by ensuring the quality of
products he purchases.

The grading of agricultural produce is carried out under the

provisions of the Agricultural Produce (Grading and Marketing) Act,
1 937 and rules framed there under, although it is voluntary under the
Let. FOr export items, compulsory grading is necessary but for internal
msumption voluntary grading practice is carried out on two levels,
at producer's level and at trader's level.

5.6. Rural Welfare

Though the regulation of agricultural produce marketing has

en done primarily to safeguard the economic interest of the producer-
llers as well as that of the consumers, the regulated markets also
iy a vital role in rural welfare. In fact, whatever developments done
or through regulated markets and / or Marketing Board in the state
e directed towards rural development. It can be said that the
tablishment of regulated markets itself is a welfare activity for
:-mers and establishment of rural primary markets is a further step in
is direction. Similarly, construction of rural go-downs, link roads, etc
; also for the benefit of rural people.

Apart from this, some specific programmes have also been

aunched in India (Rajasthan) for farmers' welfare such as (i) loan
Igainst agricultural produce, (ii) pay-back of mandi fee to small
farmers, (iii) free transportation facility, and iv) assistance for 'mini
kits'.

(a) Loan to farmers against pledging agriculture produce

The loans will be given to actual producers by the concerned

regulated market. The advance will be to the extent of 60 Per cent of
the value of the produce pledged with maximum limit of Rs.15, 000/-
as concessional rate of interest of 9 per cent for the first 60 days and

77
12 per cent for the next 90 days. The scheme is a new beginning and
its success can be judged after a few years.

b) Pay-back of mandi fee to small farmers

The major portion of agricultural produce of small farmers find

its way into the hands of village money-lenders and whatever remains
in the farmer's hand is sold at a low price to petty traders, who collect
the produce from various such farmers and brings the same to the
mandi for sale on his own behalf. Therefore, for small and marginal
farmers, who bring their produce to the Mandi for direct sale, a scheme
of 'Hundred Per cent Pay-back' has been introduced. Under this
scheme, market fee collected from such farmers will be paid back to the
farmer in the form of rebate on purchases of agricultural inputs like
fertilizers, seed, pesticides, etc.

c) Free transportation facility

The small and marginal farmers, at the most having a bullock or

camel cart, are not able to bring their produce to the market yard either
because of lack of transport facility or because of higher costs. They
dispose of their produce to the local trader at a lower price. With a view
to overcome this difficulty, regulated markets have been directed to
start' collection centres' at appropriate places in their notified areas.
From these centers the concerned mandi committee will transport the
farmer's produce free of cost to the main yard for open auction. The
auction of the produce is then done in the presence of the concerned
farmer.

d) Assistance for 'Mini-kits'

In general, the agricultural marketing Board and regulated

markets are doing a good job for rural welfare. But still, there is a long
way to go because the benefits of above mentioned schemes have not

78
yet reached the proper persons. The efforts are good enough, but there
is a need to intensify them.

3.5.7. Role of Regulated Markets in Regional Development

Regulated markets are the collecting centers of agricultural

produce and reflect the regional development in general and
agricultural development in particular. These places or `Mandies' are
contact points of rural people with the urban or economically developed
places, where they sell their produce in the mandi and made purchases
either of agricultural inputs or other items of daily necessities. Thus,
they support a wide range of retail shops in the town. In fact, these
narkets are the symbol of regional or spatial unity.

In fact, modern regional development requires a high degree of

'unctional, organizational and vocational specialization and, therefore,
n need of a wide-spread network of regulated markets, so that proper
ntegration in regional development can be achieved.

3.6. PRODUCTION PERFORMANCE OF AGRICULTURE SECTOR

IN INDIA

Agriculture is the backbone of Indian economy and it is the way

)f life to the rural mass. It contributes 18.5 per cent in GDP.
Manufacturing units depend upon agricultural sector since agriculture
provides raw materials to them. In 2007-08, India achieved a record of
food grain production of 227 million tones posting a growth of 10 to 12
million. The average growth rate of agriculture and allied sector during
the last 2 years i.e., 2006-07 and 2007-08 has been more than 4 per
cent as compared to average annual growth of 2.5 per cent during the
10th plan. The increased trend in production has brought in its wake
new challenges to handle in terms of huge marketable surplus.

The contribution of production by regulated markets is

lppreciable after the globalization of Indian economy. It has opened
79
fascinating avenues for farmers for wide scope of innovation in
technology and development in agriculture. Production performance of
agricultural in India is depicted in table 3.1.

Table 3.1

PRODUCTION PERFORMANCE OF AGRICULTURE SECTOR IN

INDIA
(Rs. in crores)

Production at current Production at constant

Year
prices prices

1998-99 1,22,210 (23.7) 1,09,116 (10.4)

1999-00 1,48,290 (21.3) 1,21,649 (11.5)

2000-01 1,68,413 (13.6) 1,35,380 (11.3)

2001-02 1,89,178 (12.3) 1,47,824 (9.2)

2002-03 2,12,901 (12.5) 1,59,407 (7.8)

2003-04 2,34,255 (10.0) 1,70,709 (7.1)

2004-05 2,61,289 (11.5) 1,84,428 (8.0)

2005-06 2,82,270 (8.0) 1,95,613 (6.1)

2006-07 3,11,993 (10.5) 2,10,636 (7.7)

2007-08 3,48,059 (11.6) 2,26,392 (7.5)

Source: Various publications of TNAGM including Agriculture in India,

2007-08

The value of production at current prices by the agriculturists

also increased by 11.6 per cent In particular it is increased from to
Rs.3,48,059 crores from Rs.3,11,993 crores during 2007-08 and
accounted for about 40 per cent of the gross value of the output in the

80
production. The sector is estimated to have grown at the rate of 7.5 per
cent at constant prices over the previous year.

3.6.1. Regression Analysis

The regression analysis is applied on the variables, year, and

production at constant rate.

Table 3.2

REGRESSION OF AGRICULTURE SECTOR AND YEARS

Independent Dependent R-square F-value Sig

Year Production 0.998 5306.99 0.000

The trend line equation is given by

Y=-3.E+07 +12731.3X

The trend analysis revealed that the growth rate is 51.80 and the
trend of production is rapidly increasing in agriculture production. In
the span of 10 years the agriculturists increased their production
capacity and contributed significantly to Indian economy.

81
 Graph - 3.a

Production performance of agriculture sector in India (in

crores)

25 -

20 -

—0— Production
15 - at current
prices

—a-- Production
at constant
10 - prices

o
1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007-
99 00 01 02 03 04 05 06 07 08

3.7. EXPORT PERFORMANCE OF AGRICULTURE SECTOR

The immense potential of the agriculture sector in improving

upon the country's share in the world trade and making it a dominant
economic player in the next century can be assessed from its past
performance as exporting sector of the economy. Exports from the
agriculture sector have been growing at an annual rate of over 20 per
cent per annum at current prices in rupee terms since 1991-92. It is
realized that the growth of export of agriculture sector since 1971-72,

82
possess the great potential of this sector in boosting the over-all
exports.

In a span of three decades, i.e. 1974-75 to 2007-08, the total

exports from the country increased by 100 times, while that from the
agriculture sector increased by 292 times. During the last 10 years,
while the total exports increased by 3.6 times, agriculture exports
increased by 3.4 times. The export performance of agriculture sector in
India is furnished in table 3.3.
Table 3.3
EXPORT PERFORMANCE OF AGRICULTURE SECTOR IN INDIA

Share of Agriculture
Agriculture
Year All India in All India
Sector
(in per cent)

1996-97 44041 13883 31.5

1997-98 53688 17784 33.1

1998-99 69751 25307 36.4

1999-00 82674 29068 35.2

2000-01 106465 36470 34.3

2001-02 117524 39248 33.4

2002-03 126286 44442 35.2

2003-04 141604 48979 34.6

2004-05 159161 54200 34.0

2005-06 202510 69797 34.4

2006-07 252790 86012 34.0

2007-08 288799 99412 34.4

Source: Various publications of DCSSI including Agriculture in

India, 2007-08

83
 It shows that export growth of agriculture sector has increased
from 31.5 per cent to 34.4 per cent from 1997-2008. The correlation
analysis is applied on the variables all India export and agriculture
contribution. The Karl Pearson's co-efficient of correlation is r=0.999
and it shows that the contribution of agriculture production to export
performance is highly significant in the years from 1997-2008.
Graph 3.b

Export by agriculture Sectors

350000

300000 -

250000 -4- All India

--a— Agriculture
Sector
200000 -

150000

100000

50000

1 T -

A CS cb 0 ft, C3 Co
0 0 0 0 0 0 0 0 0A 0
cb
c§cr
N`b N`b
cY5 cbc5 'g
Nc5
\' 0q; 0°5 01)(
ri5) ri,̀)
36
(19'
e,

84
3.8. EMPLOYMENT POTENTIAL
Employment generation has always been one of the main
objectives of the policies aimed at economic development and growth of
the nation. A rise in economic growth has always led to increased
employment opportunities and similarly enhanced employment
generation has always contributed significantly towards economic
growth. However, identifying and creating employment opportunities
has always been a challenging task in our country, the reasons for
which are plenty and well known. More disturbing in this contest is
the realization that there has not been commensurate growth in
employment vis-a-vis economic growth as demonstrated by the GDP
indicators over the past decade. The general impression that the
acceleration in growth experienced during mid-90s would create
sufficient employment capable of absorbing increased labour force and
reduce the backlog of employment has not proved fully correct.

From the NSS survey results in 2000 it emerges that during the
six year period between 1993-94 and 1999-2000, the rate of growth of
employment was just above 1 per cent in rural agricultural areas; this
is less than half of what could have occurred, has the earlier targeted
elasticity of employment of 0.4 would have fructified. The NSS data
indicated a significant lowering of labour force participation rates
mainly among younger age groups and rural women. During the Tenth
Five Year Plan, the agriculture sector has been assigned a target of
creating 4.4 million additional jobs. During the Ninth Plan, the sector
achieved the target. However, during the Tenth Plan some disturbing
factors have been noticed. These are decline in labour intensity of rural
agriculture and decline in flow of credit as percentage of net bank credit
from 17.5 per cent in 1998 to 11 per cent in 2008.

The role of Central and State Governments through regulated

markets is primarily to act as facilitators to promote agriculture,
technology in agriculture, marketing, to remove hurdles in the way of
85
agriculture sector. The target of employment generation in the
agriculture marketing sector by the terminal year of the Ninth Five Year
Plan was 185 lakhs persons in 2001-02, giving an additional of 25
lakhs persons from the base year i.e. 2001-02.
Graph 3.c

Employment potential of Agriculture sector in India

fl

0 Employment
in lakhs

1998- 1999- 2000- 2001- 2002- 2003- 2004 2005- 2006- 2007-
99 00 01 02 03 04 05 06 07 08

The estimates of additional employment generated in the

agriculture sector during Ninth Plan were that of about 32 lakhs
persons. This is much higher than the target of additional employment
fixed for the Ninth Five Year Plan. The employment opportunities

87
through agriculture marketing increases significantly. It is observed
that the increase ranges from 3.4 per cent to 4.9 per cent. Employment
is estimated to have increased to 273.97 lakhs persons in 2007-08
from 261.38 lakhs persons in the year 2006-2007.

3.8.1. Regression analysis

The regression analysis is applied on the independent variable
year and the dependent variable employment potential. The results are
explained in the table in 3.5.

Table 3.5

REGRESSION ANALYSIS

Independent Dependent R-square F-value Sig

Year Employment potential 0.988 669.28 0.000

The equation of regression is given by

Y=-17825 +9.0289X

So, it is inferred that the employment potential of agriculture

sector shows a continuously increasing trend in the span of 10 years
from 1998-2008. It has raised more opportunities for wide-range of
entrepreneurial development.

3.9. CONTRIBUTION OF AGRICULTURE TO GDP

Agricultural marketing in India contributes about 40 per cent of

industrial production, 35 per cent of national exports, and contributes
6.75 percent of GDP. The recent budget highlights the significance of
agricultural marketing in shaping the economy of the nation. The
impact of growth of agriculture sector on national GDP by Salem is
shown in table 3.6.

88
 Table 3.6

IMPACT OF GROWTH OF AGRICULTURE SECTOR ON NATIONAL

GDP

Year GDP growth per annum Agriculture sector growth per

annum

1998-99 5.7 10(5.68)

1999-00 5.82 7.5 (4.99)

2000-01 5.86 8.2 (5.02)

2001-02 6.02 8.5 (5.08)

2002-03 6.11 8.94 (5.10)

2003-04 5.89 9.54 (5.54)

2004-05 6.08 10.23 (5.76)

2005-06 7.2 10.80 (5.98)

2006-07 7.11 11.02 (6.41)

2007-08 7.95 12.45 (6.75)

Source: Report of ministry of finance 2007-08. Entries in the bracket

represents the percentage of contribution to GDP.

It is observed that the growth of agriculture marketing in India is

increasing significantly in every year except the decline in the year
2000-01. In the span of 10 years from 1998-2008 the growth rate
increased from 10 per cent to 12.45 per cent. The contribution to GDP
was 5.68 per cent and it is increased significantly to 6.75 per cent
significantly in the year 2008.

89
 Graph 3.d

Impact of growth of agriculture sector on national GDP

6
GDP growth
5- per annum
4-
-4:
3- Agriculture
sector growth
3- per annum

2-

0
Cb
C3 QPN C9/ (t) C§)
c) t■i
b
P\°
cbc3 #6) 0
(V
(3 C9
10 tie ge
OC
tie
6) CP
fie le

The correlation analysis is applied on the variables GDP of India

and growth of farmers during the years 1998-2008. The correlation co-
efficient between the variables is r=0.834, so it is inferred that the
contribution of agriculture marketing to GDP of India is highly
significant.

3.10. AGRICUTURAL MARKETING IN TAMILNADU

Agricultural Marketing systems in India is a open system
comprising of several sub-systems spread over the four layers of the
system namely the inner layer, the intermediary layer, the external
layer and the outer layer. The first layer consists of the fanner —
producers and the second layer consists of organized setup and semi

90
organized and unorganized setup. Besides, the third layer consisting of
sub-systems namely legal and administration frame works, finance and
credit policies and the institutions, warehousing in private and public
sector and transport agencies from the external layer of the agricultural
marketing systems. The outer layer comprises of the consumers at
large. The sub-systems of the agricultural marketing system are
capable of bringing in significant influence upon the functions and
operations of other sub-systems and thereby in the entire system itself.
The agricultural marketing system is built around farmer - producers,
the inner layer enveloped by other sub-systems in the other layers.

P.K. Mishra in his article "Marketing Co-operatives in Agriculture

- Gearing up for Emerging Challenges" has described the features of
Indian agricultural marketing system. As per his observations, the
establishment of Regulated Markets all over the country has brought in
changes in marketing practices in terms of sale of the produce in
regulated markets instead of villagers selling directly or selling to the
itinerant traders. The rates payable for various services have been
standardized. The Price support programme for 24 major agricultural
crops had reduced the price risk to the farmers. Co-operative marketing
societies have been organized by small and marginal farmers and they
enabled the farmers to get reasonable prices for their products as
obtained by large farmers. Provision of rest houses, quicker means of
transportation and information about prices are the major attractions
to the small and marginal farmers to whom the above were either not
available or very costly prior to the organization of regulated markets.

3.11. REGULATED MARKETS IN TAMILNADU

Agricultural marketing plays an important role not only stimulate

production and consumption, but to accelerate the pace of economic
development, maintaining price level, earning more foreign exchange
eliminating economic wastes, therefore attract special attention for the
91
development of an efficient marketing especially for food agriculture
products. Its dynamic function is of primary importance in promoting
economic development, for these reasons, it has been described as the
most important multiplier agricultural development.

The Royal Commission, which was set up in 1928 recommended

improving the economic conditions of the farmers and protecting them
from the clutches of traders by providing better selling facilities, basic
infrastructure etc. In pursuance of the Royal Commission's
recommendations the Government of Madras enacted the "Madras
Commercial Crops Market Act" in 1933, which heralded the beginning
of regulated markets in Tamil Nadu. Later, in 1959, the 1933 Act was
modified as "Tamil Nadu Agricultural Produce Market Act 1959". This
Act envisaged the formation of Market Committees at district head-
quarters with functions of identifying agricultural produce, notifying
them under the Act, and establishing regulated markets in important
assembling centres.

Subsequently, the 1959 Act was revised as "The Tamil Nadu

Agricultural Marketing (Regulation) Act 1987" and was brought into
force from 1.2.1991. Forty important agricultural commodities have
been notified so far under the Act (Fruit and Vegetables) cattle, poultry,
sheep, pisciculture and apiculture products have not been notified.

In Tamilnadu there are 273 Regulated Markets with 15 sub

markets to handle farm produces of Tamilnadu. Those Regulated
Markets and Submarkets were under the control of 20 Market
Committees located in different district headquarters.

3.11.1. Facilities offered by Regulated Markets

In order to grade the agricultural commodities brought to the

regulated markets by the farmers, according to the specifications, 96
commercial grading centres, 11 kapas grading centres, one tobacco -

92
grading centre are functioning in the State. Further rest rooms, toilets,
canteens, cattle shed, vehicle parks, cash counter were also provided in
the markets to make it comfortable to all the farmers and traders to
carry out their marketing activities smoothly. However, all the facilities
are not available in all the regulated markets.

3.12. ROLE OF REGULATED MARKETS IN AGRICULTURAL

MARKETING IN TAMILNADU

In a broader sense, Agricultural marketing may be viewed as a

process encompassing all the steps involved from the producer to the
consumer including pre and post harvest operations such as
assembling, grading, storage, transportation and distribution. By
performing these operations, it adds value to the produce in terms of
time, place and farm utilities. Storage facilities are also essential in
marketing infrastructure.

3.12.1. Registered farmers in Tamilnadu Regulated Markets

The farmers in this agriculture marketing sector are also

registered with the regulated markets and Directorate of agriculture
and data for this category gets collected from time to time on a census
or sample basis. The details of registered farmers in regulated markets
are given in table 3.7,

93
 Table 3.7

REGISTERED FARMERS IN REGULATED MARKETS IN TAMILNADU

Year Registered Farmers

1998-99 214568

1999-00 247890

2000-01 269874

2001-02 295004

2002-03 324627

2003-04 354939

2004-05 387597

2005-06 419524

2006-07 448905

2007-08 474699

Source: RBI hand book 2007-08

Between 1999-00 and 2007-08, The State has recorded an

annual growth rate of 10.69 per cent in number of registered farmers in
Regulated markets. 13.10 per cent in investment deployed, 16.34 per
cent in output and 9.38 per cent in employment. The state accounts
for 12.6 per cent of registered farmers in the country, 12.1 per cent of
output and 15.7 per cent of employment during 2006-07. The table
shows the comparison of some of the parameters between Tamil Nadu
and the country as a whole. The total number of registered farmers in
the state has increased from 4.49 lakhs in 2006-07 to 4.75 lakhs in
2007-08 thus recording a growth of 5.7 per cent.

94
 Graph 3.e

Registered farmers in RMs in Tamil nadu

500000 -

450000 -

400000 -

350000

300000 -

250000 D Registered]

200000 -

150000 -

100000 -

50000

1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007-
99 00 01 02 03 04 05 06 07 08

3.13. INVESTMENTS OF FARMER

The purpose of investments in agriculture is to generate capital

in the form of infrastructure improvement in quality of natural
resources and assets and creation of productive asset for promoting
long run growth and improving efficiency in production and marketing.
The investment of farmers in Tamilnadu is shown in the table 3.8.

95
 Table 3.8

INVESTMENTS OF FARMERS IN TAMILNADU

Year Investments (in crores)

1998-99 3954.12

1999-00 4954.00

2000-01 6574.11

2001-02 7966.00

2002-03 9350.00

2003-04 10623.00

2004-05 11567.22

2005-06 12166.19

2006-07 12569.34

2007-08 13291.50

Source: Report of Finance Ministry of Tamil Nadu, 2007-08

The investment made in the sector increased from Rs.12,569.34

crores in 2006-07 to 13,291.50 crores in 2007-08 resulting in a growth
of 5.7 per cent. Consequently the output from farmers has also
increased from Rs.89,781 crores in 2006-07 to Rs.94,939.80 crores in
2007-08 registering a growth of 5.75 per cent.

96
 Graph 3.f

Investment of farmers in Tamil nadu

14000

12000

10000

8000 -

0 Investments]

6000

4000

2000

0
1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007-
99 00 01 02 03 04 05 06 07 08

3.14. EMPLOYMENT POTENTIAL

Agriculture marketing has assumed increased importance after

launching of the new economic policy and consequent opening up of
India's market to foreign suppliers and buyers and access by Indian to
world market.

The state governments have mounted a special drive for creation

of employment opportunities during 2003-04 to 2006-07. It has
accorded very high priority on generation of self-employment

97
opportunities to reduce unemployment problem in the state. The
employment of farmers in Tamil Nadu for the period of 10 years given
in table 3.9.

Table 3.9

EMPLOYMENT OF FARMERS IN TAMILNADU

Year Employment (No.)

1998-99 1745896

1999-00 1875946

2000-01 2014789

2001-02 2250900

2002-03 2451000

2003-04 2667200

2004-05 2902122

2005-06 3142335

2006-07 3142335

2007-08 3417832

- irce: Publication of Tamilnadu Statistical Department - 2007-08

98
 Graph 3.g

Employment of farmers in Tamil nadu

4000000 ,

3500000 -

3000000 -

2500000

2000000 -
0 Employment

1500000 -

1000000

500000 -

0-
1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007-
99 00 01 02 03 04 05 06 07 08

The employment provided by this agriculture marketing sector

has increased from 31.42 lakhs in 2006-07 to 34.18 in 2007-08 with a
growth of 8.78 percent. The continuous increase in the employment
potential of regulated markets and farmers is also noticed in the span
of lOyears from 1998 to 2008.

3.15. PRODUCTION PERFORMANCE

Indian economy is fully dependent on agriculture as per 2001
census report. Indian population has crossed 100 crores and stood at

99
58.20 per cent of them are engaged in agriculture i.e., they are directly
involved in agriculture production. It provides employment indirectly to
many people. In Tarnilnadu also more than 50 per cent of people
engaged in agricultural and they are directly involved in agricultural
production. The details of production of agriculture produces in
Tamilnadu are shown in the table 3.10.

Table 3.10

PRODUCTION OF AGRICULTURE PRODUCES IN TAMILNADU

Year Production (in crores)

1998-99 22368.00

1999-00 30541.01

2000-01 39688.57

2001-02 48675.00

2002-03 58432.00

2003-04 70987.00

2004-05 78261.66

2005-06 83904.80

2006-07 89781.00

2007-08 94939.80

Source: Department of Agriculture Marketing in Tamil Nadu, 2007-08

100
 Graph 3.h

Production of Agricultural products in Tamil nadu

100000 1

90000 -

80000 -

70000

60000

50000 O Production
(in crores)

40000

30000

20000

10000

0
1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007-
99 00 01 02 03 04 05 06 07 08

The production of agricultural units in Tamil Nadu is increased by

76.44 per cent in ten years. In the year 2003-04 a maximum increase
of 16.69 per cent in production was noticed. In general it is found that
there is an increasing trend in the production of agricultural marketing
sector in Tamil Nadu.

3.16. EXPORT PERFORMANCE

Agriculture sector has crossed self-sufficiency level and moved on

to export surpluses. Export of the agricultural produces such as sugar,

101
Chillies, Cashew nut, Tealeaf, Coffee, Silk, and Cotton textiles, Spices
like Cardamom, Cinnamon, Pepper and the recent addition of
Horticulture produces and Herbs are the array of agricultural produces
having better export potential.

The agricultural marketing in Tamilnadu is contributing their

production to export in all India level significantly. In the last ten years,
the farmers in Tamilnadu contributed to export commodities in
appreciable scale. The export performance of agricultural production in
Tamilnadu is furnished in table 3.11.

Table 3.11

EXPORT PERFORMANCE OF AGRICULTURE SECTOR IN

TAMILNADU

Year Export (in lakhs)

1998-99 149872
1999-00 151478
2000-01 169999
2001-02 184718
2002-03 198745
2003-04 201447
2004-05 222330
2005-06 231561
2006-07 247891
2007-08 256487
Source: Department of Tamilnadu Agricultural Marketing - 2007-08

102
 Graph 3.i

Export of Agricultural products in Tamil nadu

300000

250000 -

200000 -

150000 El Export (in

lakhs)

100000 -

50000 -

0
1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007-
99 00 01 02 03 04 05 06 07 08

During 1998-2008 the export performance of agriculture

produces shows an increase of 55.95 percent, especially the export was
increased from Rs.1,49,872 lakhs in 1998-99 to Rs. 2,56,487 lakhs in
2007-08. This shows that the agriculture sector in Tamil Nadu are
highly successful in export performance. The maximum of 12.22 per
cent increase in the export performance was noticed in the year 2001-
02 and a minimum of 1.07 per cent was observed in the year 2000-01.
The average percentage of increase in the production of agriculture
sector in Tamilnadu is 5.56 per cent. The correlation analysis is applied

103
on the years and export performance for 10 years and it is found that
r=0.994, this shows that the export through agricultural marketing in
Tamilnadu is significantly contributing to all India performance.

The Government of Tamilnadu is formulating a new policy for

agriculture. The salient features of this Policy are:

1. Focus on industries in the State, where it has comparative

advantage in terms of availability of seeds, fertilizers, process
capability, large demand or local development capability with a
view to putting them on a 'fast track' and achieving radical
growth.
2. Give priority to knowledge-based agriculture with innovative
technology.
3. Focus on thrust areas, viz., and impact of globalization, credit,
consortia agriculture marketing, technology, infrastructure,
regulatory regime, cluster development and informatics along
with delayed payments and farmers development.
4. Provide support for common facilities such as training,
technological upgradation, infrastructure development, and
market promotion.
5. Promote Industry-Academic-Government collaboration for
Research and Development and innovations in the agriculture
sector and diffusion of technology.

3.17. REGULATED MARKETS IN SALEM DISTRICT

Regulated Markets are located in different places of Salem district
mostly taluk headquarters or at semi urban towns. Even after the
trifurcation of Salem district; Salem Market Committee exercises
controls over the regulated markets, situated in the newly separated
districts also. There are 19 regulated markets under the control of
Salem Market Committee of which 13 regulated markets fall with in the
Jurisdiction of Salem district. Out of 13 regulated markets in the Salem

104
district six are operating from their own buildings, rests of them
function in rental buildings.

3.17.1. Establishment of Regulated Markets in Salem

District
S. No. Name of the Regulated Market Date of establishment

1 Att-ur 01.08.1979

2 Salem 02.08.1979

3 Konganapuram 06.08.1979

4 Kolathur 10.09.1979

5 Thalaivasal 11.01.1980

6 Thammampatty 01.09.1980

7 Metchari 03.09.1980

8 Valapadi 01.11.1980

9 Omalur 01.04.1983

10 Kadayampatty 30.04.1983

11 Gangavalli 15.07.1983

12 Karumanthurai 30.08.1986

13 Solakkadu 01.04.1988

Source: Annual Report of Salem Market Committee 2007-08

3.17.2. Market Committee

The Salem Market Committee is composed of a Chairman elected

from among the farmer-members, a Secretary nominated by the

105
Department of Agriculture, Government of Tamil Nadu in the cadre of
Assistant Director of Agriculture, alternatively from the Department of
Agriculture and from the Directorate of Agricultural Marketing and Agri
business, so as to maintain 1:1 between the two. The terms of office of
the secretary are three years. Four official members, not below the rank
of Assistant Director from the Departments of Fisheries, Horticulture,
Agriculture, Sericulture and Co-operation are nominated by the
Government of Tamil Nadu. Four members from among the traders,
who are holding licence, are nominated by the Market Committee. Eight
members from among the farmers are elected at the rate of three from
marginal farmers, three from small farmers and 2 from other farmers in
order to have representation for different types of farmers. The elected
body is entrusted with the task of framing policies and implementing.
Programmes are subject to Government direction. In the absence of
elected body, a Special Officer takes charge of all affairs. Nomination to
the post of secretary to the Market Committee is done on a rotation
basis, alternatively for one term the secretary is nominated from the
Department of Agriculture and for the next term, such nomination is
from the Directorate of Agriculture Marketing and Agriculture
Business. The Market Committee has to meet atleast once in three
months to discuss, deliberate, and decide affairs of the Regulated
Markets (exhibit in the following Chart).

106
 Organizational Chart

Constituents of Market Committee

Govt. Nominee 4 Farmer Representative 8 Trader Representatives

The Market Committee approves such of those activities of the

Regulated Markets, which require the approval of the Market
Committee as per law. The Chairman has the discretion to spend up to
Rs. 3000 on any item of expenditure without the sanction of the
committee and such discretions for expenditure for the secretary is
limited to Rs. 500.

107
3.17.3. Staff Structure of Market Committee

The headquarters of the Market Committee is equipped with as

many as 20 personnel, including the secretary. The details of personnel
structure of Salem market committee is depicted in the following chart.

PERSONNEL STRUCTURE OF MARKET COMMITTEE

Chairman 1

Secretary 1

Superintendent

Supervisor 1

Senior Assistants

Junior Assistants 5

Typist 1

Record Clerk 1

Drivers 2

Office Assistants 3

Watchmen 2

108
 There is an Inspector of License (premises) who scrutinizes the
premises of the applicants and their books of accounts and endorses
them by putting his signature if the turnover is between Rs. 10 lakhs to
Rs. 25 lakhs and recommends for endorsement by the secretary if the
turnover is over Rs. 25 lakhs. Such scrutiny enables them to verify the
renewal status of licence and instruct renewal for un-renewed ones and
report to the secretary. In a Market Committee, which accords licence
to traders; one superintendent who takes care of publicity and
propaganda and also supervision over the others regulated markets
under the control of Market Committee, a Supervisor, two Senior
Assistants, five Junior Assistants, one Typist, one Record Clerk, two
Drivers, three Office Assistants and two Watchmen are on the staff roll
of the Market Committee.

3.17.4. Notified Crops in Salem Market Committee

As many as 17 produces are listed for being traded in the market.

But some of the unlisted products are also being dealt in Salem
Regulated Market and sc:,,e of the listed produce never arrives at the
market. The details of notified crops are given in the following table.

109
 Listed Farm Produces that arrived at Salem Regulated Markets

S.No Produce Listed Arrived Un-arrived

1 Paddy V V --

2 Sorgham V V --

3 Millet V V --

4 Ragi V V --

5 Jaggery i V --

6 Cotton V V --

7 Groundnut V V --

8 Gingelly seed V V --

9 Caster seed I -- V

10 Tamarind V V --

11 Chilly V V --

12 Topioca V V --

13 Turmeric V V --

14 Coconut V V --

15 Red gram I -- V

16 Black gram V V --

17 Green gram V V --

Sources: The Annual Report of the Salem Market Committee,

2007 - 08

110
3.18. ROLE OF REGULATED MARKET IN AGRICULTURE
MARKETING
The growth of agriculture sectors in the span of 10 years in
Salem districts has seen remarkable changes and profound
developments. The state government has employed many strategies to
revive the developmental approaches as noticed in 1980s. The existing
scenario in the district is encouraging and noticed a milestone in the
year 2004-05. This chapter explores the growth of Salem districts in
terms of number of units, investment, production, and employment
potential and exports performance and it also analyses the contribution
of performance farmers and regulated markets in Salem district on
Tamilnadu level.

3.18.1. Registered farmers in Salem district

The Third Census of regulated markets has found the number of

registered and unregistered farmers in Salem district is 80,000 in
2006-07. Number of farmers registered in and regulated markets of
Salem District are shown in table 3.12.

111
 Table 3.12
REGISTERED FARMERS IN SALEM DISTRICT
Year Registered Farmers (units)

1998-99 24508

1999-00 27821

2000-01 30494

2001-02 32846

2002-03 35090

2003-04 38168

2004-05 40094

2005-06 43664

2006-07 47102

2007-08 49568

Source: Tamil Nadu Statistical Department Hand Book 2007-08

112
 Graph 3.j

Registered farmers in Salem District

60000

50000

40000

30000 o Registered
Farmersunit

20000 ■

10000

1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007-
99 00 01 02 03 04 05 06 07 08

It is estimated that during 2007-08, the number of registered

fanners in regulated markets in Salem district has increased from
47,102 to 49,568. There is an appreciable increase of 73.50 per cent in
the number of registered farmers in Salem district in the span of 10
years. In the year1999-00 a maximum of 13.51 per cent was noticed in
the increase of registered farmers and a minimum increase of 5.05 per
cent was found in the year 2004-05. The percentage analysis further
revealed that on the average, there is a 7.35 per cent of cumulative
growth rate observed in the number of registered farmers from 1994-
2004. The over all results of census and correlation coefficient between
years and number of units r=0.998 revealed the rapid growth of
number of registered farmers.

113
 The linear regression is employed to establish the relationship
between time and number of farmers in Salem district with the
equation

Y= (-5.E+06)+ 2734.42X

The sign of coefficient in the equation indicate that there has

been a growth in the number of units in Salem district at five per cent
level of significance. The estimated growth is 102.73 per cent.

3.19. FARMERS' INVESTMENT IN AGRICULTURE

The investment made by the farmers in Salem district for their

agricultural development is depicted in table 3.13.

Table 3.13

INVESTMENTS OF FARMERS IN SALEM DISTRICTS

Year Registered Investments Per capita

Farmers (in Lakhs) Investment

1998-99 24508 49651 2.03

1999-00 27821 70642 2.54

2000-01 30494 83812 2.75

2001-02 32846 94474 2.88

2002-03 35090 104279 2.97

2003-04 38168 116223 3.05

2004-05 40094 119480 2.98

2005-06 43664 126626 2.90

2006-07 47102 128596 2.73

2007-08 49568 135847 2.74

Source: Directorate of Commerce and Industry - 2008

114
 Graph 3.k

Investments of farmers in Salem districts

160000

140000 -

120000 -

100000

80000 -
Registered
Farmers
60000 - -AB-- Investments (in
Lakhs)
Per capita
40000 - Investment

20000 -

c§b cib iz.) oct) cck 5)93

Nepee e QC N cv tx're <0'e co' A

The investment made in the agriculture of Salem district increased

from Rs.49,651 lakhs in 1998-99 to 1,35,847 lakhs in 2007-08
resulting in a growth of 111.45 per cent of growth in 10 years. The
maximum of 42.28 per cent increase in the investment was noticed in
the year 1998-99 and a minimum of 1.55 per cent was observed in the
year 2006-07. Consequently the increase of cumulative growth rate of
investment worked out to 11.15 per cent. The correlation analysis
revealed that the positive correlation r=0.970 exists between years and
investment growth. This implies that in the span of 10 years the
investment of agriculture in the Salem district increased significantly.

115
 The per capita investment of Salem revealed that the maximum
investment is found in the agricultural sector in the year 1999-2000,
which worked out to 3.05 lakhs and unenthusiastic investment is
found in the year 1998-99 with 2.03 lakhs. But in the span of ten years
the investment amount increased by 1.02 lakhs.

In order to determine the growth of investment linear regression

model is used and the equation is given by

Y=(-2.E+07) + 8984.69 X

The sign of coefficient in the equation indicates that there has

been a growth in the investment of agriculture in Salem district at five
per cent level of significance. The estimated growth is 98.05 per cent.

3.20. EMPLOYMENT POTENTIAL

Employment opportunities provided by the agricultural sector in

Salem district for the period of 10 years from 1998-99 to 2007-08 is
given in the following table.

116
 Table 3.14

EMPLOYMENT THROUGH AGRICULTURE IN SALEM DISTRICT

No. of Employment Per capita Rate of

Year units Labour per
Number employment
unit

1998-99 24508 489032 19.95 0.05

1999-00 27821 498521 17.92 0.06

2000-01 30494 514289 16.87 0.06

2001-02 32846 521469 15.88 0.06

2002-03 35090 547871 15.61 0.06

2003-04 38168 554231 14.52 0.06

2004-05 40094 568766 14.19 0.07

2005-06 43664 574832 13.16 0.08

2006-07 47102 589754 12.52 0.08

2007-08 49568 601255 12.13 0.08

Source: Tamil Nadu Statistical Department Hand Book, 2007-08

117
 Graph 3.1

Employment of agriculture in Salem district

700000

600000 -

500000 -

400000 Rate of Labour per unit

Per capita employment
Employment number
300000 - No of units

200000 -

100000 -

0 1

c) 5)0 0
cb 0 5)cb o 5) o
Ne 1 (0,,e

The Employment potential in the agriculture sector of Salem

district increased from 4,890,32 in 1998-99 to 6,01,255 in 2007-08
and shows a positive growth of 20.96 per cent of growth in 10 years.
The maximum of 5.06 per cent increase in the employment potential
was noticed in the year 2002-03 and a minimum of 1.06 per cent was
observed in the year 2005-06. In average there is a 2.09 per cent of
employment opportunities are created by agriculture sectors in Salem
district. The correlation analysis is applied on the years and
employment potential for 10 years and it is found that r=0.995, it

118
implies that the employment opportunities through agriculture in
Salem district is significantly increasing.

The above table also reveals that the per capita employment of
agriculture in Salem district is showing the declining trend from 1998-
2008 continuously. This shows the heavy competition in agriculture in
Salem district. The rate at which the labour gets into a unit slightly
increased from 0.5 to 0.7. This implies the urgent requirement of
labours for the agriculture.

The trend of employment of agriculture sector in Salem district is

obtained through the linear regression equation.

Y= (-2.E+07) + 12724.9 X

The sign of coefficient in the equation indicates that there has

been a growth in the employment of agriculture sector in Salem district
at five per cent level of significance. The estimated growth is 101.06 per
cent.

3.21. AGRICULTURE PRODUCTION

In Tamilnadu several agricultural products are cultivated and
they are classified by the Department of Economics and Statistics as
cereals, pulses, oilseeds and other crops. The importance of produces
may be ascertained from their share of cultivation, production, and
productivity.

In Salem district agricultural produces are cultivated and

marketed through the regulated markets. The details of agricultural
production in Salem district are shown in table 3.15.

119
 Table 3.15

AGRICULTURE PRODUCTION IN SALEM DISTRICT

No of Production Per capita

Year
units fin Lakhs) production

1998-99 24508 498756 20.35

1999-00 27821 548792 19.73

2000-01 30494 598746 19.63

2001-02 32846 654897 19.94

2002-03 35090 701459 19.99

2003-04 38168 778945 20.41

2004-05 40094 801880 20.00

2005-06 43664 873280 20.00

2006-07 47102 942040 20.00

2007-08 49568 995648 20.00

Source: RBI report on priority sector, 2007-08.

The production of the agriculture sector of Salem district is

showing an increasing trend in the span of 10 years. It is ascertained
through percentage analysis that the production of agriculture in
Salem district has increased from Rs. 4,98,756 lakhs to 9,95,648 lakhs
during the years 1998-2008. It is observed that in the span of ten years
the percentage of increase worked out to 72.08 percent. The maximum
of 11.05 per cent increase in the production was noticed in the year
1999-2000 and a minimum of 2.94 per cent was observed in the year
2004-05. The overall average percentage of increase in the production
of agriculture sector in Salem district is 7.21 percent. The correlation

120
 analysis is applied on the years and production for 10 years and it is
found that r =0.998. This shows that the production through
agriculture in Salem district is significantly increasing.

The minimum of 19.63 lakhs per capita production of Salem

district is noticed in the year 2004-05 and a maximum of 20.41 lakhs
per capita production was achieved in the year 2001-2002. In the four
years from 2004-08 the per capita production remains constant.

In order to determine the growth of production linear regression

model is used and the equation is given by

Y= (-1.E+08) + 55247.7

The sign of coefficient in the equation indicates that there has

been a growth in the production of agriculture sector in Salem district
at five percent level of significance. The estimated growth is 102.43
percent.

3.22. EXPORT PERFORMANCE OF AGRICULTURE

The agriculture sector in Salem district is producing the goods
•suitable for export. In the last ten years the agriculture sector in Salem
district contributed to export of commodities in a wide scale. The
details of export performance of agriculture sector in Salem district is
depicted in table 3.16.

121
 Table 3.16
EXPORT VALUES OF AGRICULTURE SECTOR IN SALEM DISTRICT

Year Export (in Lakhs)

1998-99 35468.28

1999-00 40128.23

2000-01 45897.21

2001-02 48975.32

2002-03 52147.08

2003-04 55487.25

2004-05 59648.69

2005-06 64417.74

2006-07 68458.10

2007-08 71489.21

Source: Report of Ministry of Commerce, 2007-08

In ten years the export performance of agriculture doubled,

especially the export was increased from Rs.35468.28 lakhs in 1998-99
to Rs.71,489.21 lakhs in 2007-08.

This shows that the agriculture sector is highly successful in

export performance. The maximum of 14.38 percent increase in the
export performance was noticed in the year 2000-01 and a minimum of
4.43 per cent was observed in the year 2007-08. The average
percentage of increase in the production of agriculture sector in Salem
district is 7.73 per cent. The correlation analysis is applied on the years
and export performance for 10 years and it is found that r=0.997, this

122
gshows that the export performance through agriculture in Salem
district is significantly increasing.
Graph 3.m

Export values of agriculture sector in Salem

districts

1200000

1000000

800000

No of units
600000 -
Production (in
Lakhs)
Per capita
production
400000

200000 -

0
C5 N rb (0 co A ct)
cb Q,
Ob
'\ \c' (19 (15) r1.9 (19 (19 r19 c19 r19

The linear regression model determines the growth of export

performance and the equation is given by

Y= (-8.E+06)+3942.18 X

The sign of coefficient in the equation indicates that there has

been a growth in the export performance of agriculture sector in Salem

123
district at five percent level of significance. The estimated growth is
86.89 percent.

3.23. CORRELATION ANALYSIS FOR PERFORMANCE FACTORS OF

AGRICULTURE IN SALEM DISTRICT

In this section the performance variables of agriculture sector

namely, number of farmers, investments, production, employment, and
export are considered for correlation analysis. The following table
establishes the Karl Pearson's co-efficient of correlation among the
performance and growth variables of agriculture in Salem district.

Table 3.17
CORRELATIONS

Invest Employ Pro duc

ment units ment tion Export

Investment Pearson
1 0.964(**) 0.972(**) 0.962(**) 0.973(**)
Correlation

Sig. (2-
. 0.000 0.000 0.000 0.000
tailed)

N 10 10 10 10 10

Units Pearson
0.964(**) 1 0.990(**) 0.999(**) 0.998(**)
Correlation

Sig. (2-
0.000 . 0.000 0.000 0.000
tailed)

N 10 10 10 10 10

Employment Pearson
0.972(**) 0.990(**) 1 0.991(**) 0.991(**)
Correlation

Sig. (2-
0.000 0.000 . 0.000 0.000
tailed)

N 10 10 10 10 10

Production Pearson
0.962(**) 0.999(**) 0.991(**) 1 0.996(**)
Correlation

124
 Sig. (2-
0.000 0.000 0.000 . 0.000
tailed)

N 10 10 10 10 10
Export Pearson
0.973(**) 0.998(**) 0.991(**) 0.996(**) 1
Correlation

Sig. (2-
0.000 0.000 0.000 0.000 -
tailed)

N 10 10 10 10 10

** Correlation is significant at the 0.01 level (2-tailed).

From the above correlation matrix of performance and growth

variables, it is ascertained that all the variables, number of farmers,
investment, production, and export are significantly correlated to each
other. This implies that the performance of agriculture is entirely
depending on investment and production.

3.24. FACTORS AFFECTING THE PRODUCTION OF AGRICULTURE

SECTOR IN SALEM DISTRICT

The production of agriculture depends upon the volume of units

involved in the process of production, investment growth, employment
in the form of workers involved in the production. So, the production of
agriculture is considered as dependent variable and numbers of units,
investments, number of workers are considered as independent
variables. The linear multiple regression analysis is applied on these
variables and the following results are obtained for the Salem district.

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 Table 3.18

MODEL SUMMARY

R Adjusted R Std. Error of the

Model R Square Square Estimate

1 0.999(a) 0.998 0.997 8575.41838

a) Predictors: Constant), investment, units, employment

Table 3.19

ANOVA
Sum of Squares

Mean Square
Model

4. 44
mi
CO

1 Regression 252280941107.78 3 84093647035.927 1143.543 .000(a)

Residual 441226802.320 6 73537800.387 -- --

Total 252722167910.10 9 -- -- --

a) Predictors: (Constant), investment, units, employment

b) Dependent Variable: production

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 Table 3.20

COEFFICIENTS
Standardized
Model Unstandardized Coefficients t Sig.
Coefficients

B Std. Error Beta

1 (Constant) -196919.767 225577.737 -- -.873 0.416

Units 18.537 2.436 0.917 7.611 0.000

Employment 0.499 0.590 0.115 0.845 0.431

Investment -0.201 0.433 -0.034 -0.464 0.659

a. Dependent Variable: production

From the above table it is found that the independent variables,

number of farmers, investments, number of workers explain the
production significantly with total variance 99.8 per cent. The
regression fit is significant and the co-efficient table revealed the
individual contribution of independent variables on dependent
variables. It shows that in Salem district the number of farmers
influences the production more significantly than Investment and
employment.

Er.X.032001

127