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Production Know How
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Marketing channels

Marketing channels:
The following are the important marketing channels existing in the marketing of paddy/rice.

(i) Private:
        The major marketing channels identified in the private sector are:
1) Producer  Miller  Wholesaler  Retailer  Consumer
2) Producer  Commission Agent  Miller  Wholesaler  Retailer  Consumer
3) Producer  Itinerant Merchant  Miller  Wholesaler  Retailer Consumer
4) Producer  Wholesaler (Paddy)  Miller  Wholesaler(Rice)  Retailer Consumer
5) Producer  Miller  Retailer  Consumer
6) Producer  Miller  Consumer.

 (ii) Institutional:
1.It covers the public and co-operative sector agencies.
2. It plays a very significant role in the procurement and distribution of paddy/rice.
3. Food Corporation of India is the main agency for procurement, buffer stock operations and distribution of rice. The main institutional marketing channel for rice is as under;
Producer  Procuring Agency (FCI/State Govt./Co-operatives)  Miller (FCI/Co-operatives/Private)  Distributing Agency (State Govt.)  Fair price/Ration shop  Consumer.


Marketing constraints

1. Unstable price: Generally, the price of paddy/rice goes down in the post harvest period ( 3-4 months immediately after harvest) due to heavy arrivals in the market and later shoots up, which results in unstable prices.

2. Spurt in production and heavy arrivals: After the introduction of high yielding varieties of rice, the production has increased manifolds, increasing the arrivals in the markets, which results in distress sale after harvest.

3. Lack of marketing information: Due to lack of market information regarding prevailing prices, arrivals etc., most of the producers market the paddy/rice in the village itself, which deprives them of getting remunerative returns.

4. Adoption of grading: Grading of paddy/rice at producers’ level ensures better prices to producers and better quality to consumers. However, most of the markets are lagging behind in providing grading service at producers’ level.

5. Inadequate storage facilities in rural areas: To avoid the distress sale, storage facilities in villages are found to be inadequate. Due to lack of storage facilities at rural stage, substantial quantity is lost. Transportation facilities at producers’ level: Due to inadequate facilities of transportation at village level, in most of the states, producers are forced to sell paddy/rice in the village itself to itinerant merchants or traders directly at low prices.

6. Training of producer: The farmers are not trained in marketing system. Training shall improve their skill for better marketing of their produce.


Export procedures

For export of paddy/rice from India, exporter can take the help of following laid down procedure.

1. Registration with RBI and obtain RBI code number.

2. Importer – Exporter code (IEC) number to be obtained from Director General of Foreign Trade (DGFT).

3. Register with Agricultural and Processed Food Products Export Development Authority (APEDA) to obtain registration cum membership certificate.

4. For RCAC, exporter will be required to submit the export details and contract along with fee. RCAC is valid for 3 months, after that revalidation is required. RCAC is a statutory document and no duplicates can be issued after the misplacement of the original one. Exporter then procures their export orders.

5. Quality of the produce is to be assessed by the inspecting agency and a certificate is issued to this effect. Produce is then shifted to port.

6. Obtain marine insurance cover from any insurance company.

7. Contact clearing and forwarding (C. & F.) agent for sorting the produce in godowns and to get the shipping bill for allowing shipment by the Custom Authority.

8. Shipping bill is submitted by C. & F. Agent to custom house for verification and verified shipping bill is given to the shed superintendent to obtain carting order for export.

9. The C. & F. Agent presents shipping bill to preventive officer for loading into ship.

10. After loading into ship, a mate’s receipt is issued by captain of ship to the superintendent of the port, who calculates port charges and collects the same from the C. & F. Agent.

11. After the payment, C. & F. Agent takes mate’s receipt and requests port authority to prepare bill of lading to the respective exporter.


Export and import


1.Up to 1972, India was one of the major rice importing countries.

2. However, India now exports rice to a large number of countries in the World. India’s total exports of rice were 2208560 tonnes in 2001-2002 valued at Rs. 3174 crore.

3. The share of Basmati rice was 667070 tonnes valued at Rs. 1842 crore and non-Basmati rice was 1541490 tonnes valued at Rs. 1331 crore.


1.In earlier decades, India was a major paddy/rice importing country.

2.After green revolution and introduction of high yielding varieties, the country became self-sufficient in production of paddy / rice.


Inter-state movements

1. In case of paddy, during the year 2000-2001, Tamil Nadu despatched 1805554 quintals to Assam, Bihar, Gujarat, Kerala, Pondicherry and Orissa.

2. Uttar Pradesh despatched 304540 quintals paddy to Assam, Bihar, Delhi, Maharashtra and West Bengal.

3. During the year 2000-2001, 35945250 quintals of rice from Andhra Pradesh were marketed for the inter-state movement mainly to Karnataka, Kerala, Tamil Nadu, Maharashtra, Madhya Pradesh and Gujarat.

4. The state of Punjab and Haryana marketed 33513610 quintals and 6859140 quintals rice respectively to Assam, Bihar, Delhi, Uttar Pradesh, Madhya Pradesh, Maharashtra, Orissa, West Bengal and Southern States.



1. Assembling and distribution system of marketing are closely related.

2. The producer makes the movement of paddy from the farm to the assembling centers, while a number of market functionaries can be involved in the distribution dealing with its subsequent movement to the final consumer.

3. In the Survey of Marketable Surplus and Post-Harvest Losses of Paddy (2002), it has been estimated that the producer retained 44.54 percent of production for their farm-family requirement.

4. The marketable surplus was estimated to be about 55.46 percent of the total production.

5. The total marketable surplus of paddy/rice is distributed through different ways i.e. wholesale distribution, retail distribution, direct marketing to miller, contract farming etc.



1. Paddy and rice is mostly despatched to the markets within the same state or to the markets of adjoining states.

2. It has been noticed that in the states like Punjab, Haryana, Andhra Pradesh and West Bengal, paddy/rice was despatched to the markets at longer distances.

3. The paddy/rice from 47 markets of Andhra Pradesh was mostly despatched to the markets of Karnataka, Kerala, Tamil Nadu, West Bengal and Gujarat.

4. Punjab and Haryana despatched mainly to Bihar, Delhi, Madhya Pradesh, Maharashtra and Uttar Pradesh. West Bengal despatched paddy/rice to Bihar, Uttar Pradesh, Orissa and North Eastern states.



The various agencies engaged in the assembling of paddy / rice may belong to one of the following categories:

i) Producers

ii) Village merchants

iii) Itinerant merchants

iv) Government organisations (FCI, State Government, etc.)

v) Wholesale merchants and commission agents

vi) Rice mill agents

vii) Co-operative organisations


Service costs in a budget

1. Service costs are all the costs of the project other than labor and materials. These are costs that cannot be assigned as costs directly to activity within the project.

2. For capital items, depreciation is a way of allocating part of the cost of the item to a particular project. Depreciation is used in projects to allocate a reasonable part of the cost of the item to the project.


Material costs in a budget

1. Cost of materials includes the costs of supplies, equipment and tools actually used during the activity. These materials are usually divided into two categories:

Expendables – those materials that are totally consumed during the activity.

Non-expendables – those materials that have a life beyond the activity; they will still have a useful life after the activity.

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