COLLEGE SADHANA – Journal for Bloomers of Research, Vol. 2, No.

2, FEBRUARY 2010

An Emprical Analysis of Marketing of Oilseeds in Erode District

of Tamilnadu State
P.Komarasamy
Department of Management Studies, Nandha Arts and Science College , Erode

Abstract - Edible oilseeds mainly comprise groundnut,
mustard, sesame, safflower, soyabean, and sunflower.
Oilseeds contribution to GDP stands only next to cereals
and milk. Edible oil accounts for about 5.5 per cent of the
family budget occupying the third place, next to cereals and
milk. Among the edible oil seeds, groundnut is the most
important one accounting for about 46 per cent of the total
area under oil seed, about 67 per cent of the total oil seeds
production and about 59 per cent of the total edible oil
production in India. In oil seeds marketing various
intermediaries are involved and they transfer the oilseeds
from producers to ultimate consumers. So the farmer
should identify right time and right place to market their
produce. Processing and marketing of oil seeds are some of
the major factors responsible for the stagnation in the oil
seed economy.
1. INTRODUCTION
India has the second largest area under oilseeds
cultivation, next only to USA. However, it falls
behind to the fourth place in terms of production
due to comparatively low yields. Yields remain
lower largely on account of dependence on dry
land farming. During the early seventies
shortages of edible oils led to substantial increase
in the prices. Severe intra-year and intra-
seasonal fluctuations in the prices are a common
feature of the oilseed economy. Edible oil prices
have significantly contributed to the national
inflation levels during the recent years. Price
movement in edible oils and oilseeds was
perceived as a consequence of demand-supply
gaps. Addressing these issue several policy
options have been adopted in the last one and a
half decade. Despite, the production remained
stagnant until 1987-88. Only, since then a
resurgence has taken place.
Edible oilseeds mainly comprise groundnut,
mustard, sesame, safflower, soyabean, and
sunflower. Oilseeds contribution to GDP stands
only next to cereals and milk. Edible oil accounts
for about 5.5 per cent of the family budget
occupying the third place, next to cereals and
milk. India, a net exporter of oilseeds and oilseed
products for long, turned into a net importer
during 1976-77 to 1987-88 consequent to edible
oil imports worth about Rs.800 crores per annum.
The main features of recent developments in the
sector are:
i) Contribution of South comprising Andhra
Pradesh, Tamil Nadu, and Karnataka to the
groundnut production has been quite high.
ii) Imports of edible oils have been slashed
on account of foreign exchange crunch.
iii) Price fluctuations have been substantially
reduced.
iv) Difference between sowing and harvest
time prices has been considerably reduced.
Among the four major oil seed crops of
India, groundnut ranks first. India ranked first
both in acreage and in production in the world
[10]. Among the edible oil seeds, groundnut is the
most important one accounting for about 46 per
cent of the total area under oil seed, about 67 per
cent of the total oil seeds production and about 59
per cent of the total edible oil production in India.
It is about seven million hectares yielding six
million tones of production.
Tamilnadu state is one of the important oil
seed producing state in India. Oil seed on an
average, accounted for about 15.4 percent of the
gross cropped area in the state. The major oil seed
crops grown in the order of importance in the
state are groundnut, sunflower and castor.

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 P.Komarasamy - An Emprical Analysis of Marketing of Oilseeds in Erode District of Tamilnadu State
2. IMPORTANCE OF THE STUDY
The farmers those who are interested in
cultivating the oilseeds find difficult to sellout
their product with good profit as many farmers
depend the middlemen to market the product, and
for the financial help they depend on private
moneylenders, Some farmers who obtain
financial assistance from moneylenders are
unable to repay promptly and at one stage they
are mortgaging or selling out their land due to the
financial crises. At this stage the poor farmer
should be given good awareness through the
agriculture department about the latest
technology of oilseeds cultivation and provided
with the adequate information regarding various
source of funding public sector banks and co-
operative banks.
In oil seeds marketing various
intermediaries are involved and they transfer the
oilseeds from producers to ultimate consumers.
So the farmer should identify right time and right
place to market their produce. Inspite of these
difficulties, farmers prefer to grow this crop
because of its short duration, fair returns and
ready cash income it fetches, suitable for rainfed
conditions, besides fitting well in the crop
sequence as a commercial crop.
The study of various marketing practices
in oil seed marketing is useful to understand
about the various intermediaries involved in
marketing of oil seeds. It is used to find out the
various intermediaries share in the consumers
rupee. It will be helpful to suggest the farmers
how to get more share in the consumers rupee.
3. STATEMENT OF THE PROBLEM
Erode District is very famous for
agricultural cultivation comparing to other
Districts. The people living in Erode district are
hard working by nature and introducing novel
techniques to get high yield. The land lords are big
farmers slash the market price of oilseeds in general
which indirectly affects the small farmers and
marginal farmers. The government department is
also not considering the small and marginal farmers
and whenever approaching these officials, they
never respond properly and fail to convey the latest
technique of oilseeds cultivation. Similarly the
bank officials also practice unwanted delay in
sanctioning the agriculture loan whenever the
farmers approach the bank for finance crises. Even
if sanctioned loan stringent actions are initiated
against the defaulters or delay in payment. Whereas
the big farmers could be able to avail a sizable
amount of loan very easily and not at all repay the
loan. All on a sudden the government announces
waiving policy (loan right off), where the big
farmers are enjoying these facilities in lakhs and
lakhs of rupees.
Due to poor literacy, they are very weak in
marketing their products. Some farmers having
little awareness hire the trucks and lorries and
bring their products to neighbouring town and
earns good money through proper selling. But,
majority of oilseeds growers depend only on
intermediaries to sell out their products. These
intermediaries swallow a lion share of profit.
Even in the regulated market these
intermediaries confuse the farmers by using
various tricks at the time of bidding. Some of the
leading oil refineries indulge with a contract at
the time of sowing through a fixed financial
commitment. The representatives of a private
vendor and oil refineries always quote a very low
price and adopt some mal activities during the
weighing of oilseeds. The other burning issues
are with the laborers. With these drawbacks, the
farmers are try to produce and market the oilseeds
with stiff competitions.
Based on the above issues the following
questions are probed
1. What kind of marketing problems faced by
them after producing the oilseeds?
2. To what extent the oilseed growers are
suffering due to lack of knowledge
4. OBJECTIVES
l To ascertain the sales performance of Oil
seeds
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COLLEGE SADHANA – Journal for Bloomers of Research,
l To identify the pattern of marketing of Oil
seeds by the farmers and to the extent of
utilization of the regulated markets
l To study the common problems faced by
the farmers in marketing of Oil seeds
5. METHODOLOGY
For the present study Erode district was
purposively selected due to their aggressive
involvement in agricultural activities. There are
seven taluks in Erode district and among them all
taluks are selected based on the productivity of
oilseeds. And also the refineries were more when
compared to all other districts of Tamilnadu.
Farmers are selected by using stratified random
sampling method from the selected taluks
Table 1. Geographical representation of sample
respondents
S. Name of the Taluk No.of
No. Respondents
1 Bhavani 150
2 Gobichettipalayam 150
3 Perundurai 140
4 Erode 140
5 Kangayam 140
6 Tarapuram 140
7 Sathy 140
Total 1000
Data Collection
The validity of any research is based on
the systematic method of data collection and
analysis. In the present study both primary and
secondary data is used. A set of questionnaires
were prepared, for enquiry at the level of
marketing.
The primary data was collected from the
farmers who were are all cultivating and
marketing the oilseeds in all taluks of Erode
District. The informations were gathered
through personal interview method. From the
selected farmers, method of marketing, loss in
transportation, agencies involved in marketing
process, prices, cost incurred in marketing at
various stages, places of disposal and problems
in marketing were collected.
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Vol. 2, No. 2, FEBRUARY 2010
Further, particulars regarding the cost of
transport, cost of packing, preparation to market,
commission paid and other expenses incurred in
the market were collected from the farmers to
assess the cost of marketing of their product. The
details on the mode of operation, the method of
pricing, method of grading, the terms and
conditions of trade were collected.
The primary data were supplemented by a
spate of secondary sources of data. The
secondary data pertaining to the study was
gathered from the records published by the office
of the Joint Directorate of Agriculture, Erode,
marketing committee of Erode. Latest
information was gathered from well equipped
libraries in Bangalore, Chennai and Tamilnadu
Agriculture University Coimbatore and from
Internet web resources. Further, the secondary
data were also collected from various leading
journals. A number of standard text books were
studied to obtain pertinent literature on
production and marketing of oilseeds.
6. TOOLS OF DATA COLLECTION
By virtue of a mass of data obtained from
research survey, as well as data from secondary
sources collected and presented in the present
report, descriptive and analytical research was
considered most appropriate for the study. The
research problems and the questionnaire were all
framed accordingly. The researcher used closed-
ended and open-ended questions in the
questionnaire to collect primary data.
7.CONSTRUCTION OF QUESTIONNAIRE
The key aspect of the present research was
identified through the preliminary interviews
(Pilot study) with some selected farmers. The
questionnaire so drafted was circulated among
some research experts, Joint Director of
Agriculture, Erode, Secretary of marketing
committee, Erode and Research Scholars for a
critical view with regard to wording, format,
sequence and the like. The questionnaire was re-
drafted in light of their comments.
 P.Komarasamy - An Emprical Analysis of Marketing of Oilseeds in Erode District of Tamilnadu State
8. APPROACH TO THE EXTENT OF
MARKETING OF OILSEEDS
The difference in the extent of production
and marketing of oilseeds between the different
types of respondents based on their Age, Gender,
Marital Status, Experience in cultivation of
oilseeds, Income Level, Family Size, Nature of
the Family and Wealth Positions of the farmers
was studied.
9. SCOPE OF THE STUDY
This study would be of practical utility to
provide guide-lines to the oilseed growers, in
maximizing their profit. This could help in
formulating suitable production strategies to
identifying the proper channel, which will
increase the share of the producer in utilizing the
Regulated market effectively. This study would
help to identifying the major problems faced in
by the farmers oilseed production and marketing
and provide suggestions to solve these problems.
10. RESULTS AND DISCUSSIONS
10.1 Sources of information about oilseed
market
The farmers, who are cultivating oilseeds
having good knowledge in production, but they
are very much lack in the knowledge of
marketing these oilseeds. An attempt was made
to identify the sources of knowledge acquired
was studied by selecting four major
classifications namely through “newspapers”,
“commission mundis”, “through broker” and
“neighbours” Henry Garrett ranking method was
employed to arrive the results accurately and the
details are shown in the following table.
Table 2. Sources of information about oil seed market
Sl. Informations Total Mean Rank
No Score Score
1 News paper 2736 2.7360 II
2 Commission Mundis 2188 2.1880 IV
3 Through Brokers 2753 2.7530 I as “delay in payment” and “storage cost” were
4 Neighbours 2323 2.3230 III
It was learned from the above table that
“brokers are playing the major role to provide
information” about oilseed market, which was
ranked first with a Garrett score of 2753 points. It
is followed by the “news paper source” with a
Garrett score of 2736 points. The other sources
such as “neighbour” and “commission mundis”
are placed in the third and fourth ranking with
the Garrett score of 2323 and 2188 points
respectively. From the analysis, it is concluded
that “brokers” and “newspapers” are the major
sources providing information about oilseed
market
10.2 Problems with regulated market
T h e g o v e r n m e n t o f Ta m i l N a d u
introduced regulated market in every District to
make ease to market their oilseeds. Even though
the Government directly intervened, still the
agriculturist suffering with various types of
problems in different angles. The common
problem faced by the farmers with regulated
market are studied by selecting the four major
issues such as “waste of time”, “trick among the
buyers to fix the price through mutual
understanding”, “storage cost” and “delay in
payment”. These problems were studied with the
help of Henry Garrett ranking method and the
details are shown in the following table.
Table 3. Problems with regulated market
Sl. Problems Total Mean Rank
No Score Score
1 Waste of time 3032 3.0320 I
2 Trick among buyers 2728 2.7280 II
3 Storage cost 2108 2.1080 IV
4 Delay in payment 2132 2.1320 III
It was learned from the above table that
officials in the regulated market taking more time
unnecessarily at the time of marketing their
oilseeds, which was ranked first with a Garrett
score of 3032 points. It is followed by the “tactics
played by the buyers in fixing the price through
the mutual understanding” was represented with
a Garrett score of 2728 points. The problems such
ranked in the third and fourth positions with the
Garrett score of 2132 and 2108 points
respectively.
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10.3 Multiple regression analysis phenomenon through multiple regression

A regression is a statistical tool used to analysis, if the levels of independent variables
find out the relationship between two or more are given.
variables. One variable is caused by the behavior The following analysis shows the
of another one. The former variable is defined as relationship between quantity of oilseeds production,
independent and the latter variable is defined as marketing and eleven independent variables that
dependent. When there are two or more were studied. It was found that, these eleven variable,
six variables were closely associated with the
independent variables, the analysis that
quantity of oilseeds produced by the agriculturalist.
describes the relation between the two is called
In order to measure the inter dependence of
multiple regression analysis. The main objective independent factor and their total contribution to the
of using this technique is to predict the variability volume of oilseeds produced and marketed in the
of the dependent variable based on its co- study area, the results of the analysis were put into
variance with all independent variables. It is multiple regression analysis, and detailed results are
useful to predict the level of dependent shown in the following table.
Table 4. Multiple regression analysis
Un standardized Un standardized Standardized
Model Coefficients - B Coefficients - Std Coefficients t Sig
Error Beta
(Constant) .797 .251 3.174 .002
GENDER -5.283E-02 .135 -.009 -.392 .695
AGE -2.822E-02 .034 -.023 -.839 .402
EDU -2.270E-02 .026 -.023 -.889 .374
MARRIED -2.142E-03 .058 -.001 -.037 .970
F_SIZE -1.874E-02 .040 -.014 -.464 .643
F_CULTI 2.089E-03 .036 .002 .058 .954
EXP -5.741E-03 .027 -.006 -.214 .831
IN_AGRI -5.024E-02 .028 -.049 -1.772 .077
LAND_ALLOCATED 1.042 .041 .700 25.460 .000
TECH_EMP 2.259E-03 .033 .002 .069 .945
SOURCE 3.340E-02 .019 .042 1.736 .083
Dependent Variable : quantity of oilseeds produced

R-Value R2-Value Degree of Degree of F Value Significance

freedom-V1 freedom-V2
.0943 0.889 9 990 42.352 1%Level

The multiple linear regression component is sources of information's are positively

found statistically a good fit as R2 value is 0.8464.
It shows that six independent variables
contribute about eighty five percent on the
variations in the quantity of oilseeds produced
are statistically significant at 1% level and 5%
level respectively
The table indicates that the co-efficient
of number of member engaged in cultivation,
technology employed in oilseeds cultivation and
associated with the quantity of oilseeds produced
and marketed. Further it indicates that these
variables that contribute to the quantity of
oilseeds marketing are statistically significant
implying that their influence is stronger than the
other variables.
The rate of in the quantity of oilseeds
produced shows better results of the independent
variables such as the unit change in number of

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 P.Komarasamy - An Emprical Analysis of Marketing of Oilseeds in Erode District of Tamilnadu State
family members involved in cultivation of
oilseeds with 0.058, with 25.460 units change in
area of land allocated for oilseeds, with 0.069
units change in technology employed and with
1.736 units change in sources of information
gathered by the respondents on cultivation of
oilseeds.
The factors such as sex of the respondents
(-.390), Age (-.839), Education(-.889), Marital
status (-.037),Family size(-.464), Experience
(-.214), and income earned from agriculture
(-1.772), are negatively associated with the
oilseeds marketing.
Thus from the above analysis, the
following observation could be made. The
quantity of oilseeds produced by the selected
sample respondents in the study area are
positively associated with the factors like
number of members in the family involved in
cultivation income, area of land allocated for
oilseeds cultivation, technology employed and
sources of information.
10.4 Methods of selling oilseeds
The farmers cultivating oilseeds are find
difficulty to sell their agriculture produced. In
this study an attempt was made to identify the
methods of selling the oilseeds. The common
methods are pre-harvest contract, using
regulated market, selling through commission
agents and direct sales to oilmills. The details are
analyzed with the help of percentage analysis and
furnished in the following table.
Table 5. Method of selling oilseeds by the respondents
Sl. Methods No. of % Total
No. Respondents
1. Pre harvest contractors 121 12.1
2. Regulated market 326 32.6
3. Commission agents 281 28.1
4. Direct sales to oil mills 272 27.2
Total 1000 100
It is examined from the above table that
32.6% of the respondents using “regulated
market” to sell their oilseeds. 28% of the
respondents are using “commission agents” to
sell their agricultural produce. 27.2% of the
respondents directly selling the oilseeds to oil
mills. On the other hand, 12.1% of the
respondents underwent “pre- harvest contract”
with the private brokers.
10.5 Methods practiced to sell oilseeds during
volatility market
The oilseed market often fluctuates and
the farmers find difficult when they are finding
no standardized market. In this study an attempt
was made to identify the various methods
practiced by the sellers to sell the oilseeds during
volatility in the market. The details are furnished
in the following table
It could be seen from the above table that 42.8%
of the respondents using aggressive method of
selling the oilseeds during peak market 19.1% of
the respondents storing the oilseeds in their
godowns during inflation period and 38.1% of
the respondents selling the oilseeds immediately
after harvesting. From the analysis, it is found
that aggressive marketing strategy is followed
during peak market.
Table 6. Methods practiced to sell the oilseeds when
market is volatile
Sl. Demand No. of %
No. Respondents
1. Aggressive selling during
peak market 428 42.8
2. Store the oil seeds in the
godowns during inflation 191 19.1
3. Selling the oilseeds
immediately after harvesting 381 38.1
1000 100
10.6 Methods of pricing the oilseeds
Normally pricing methods are studied as
penetrating pricing strategy, skimming pricing
strategy market based pricing and auctions. In this
study, the style of pricing practiced by the oilseed
growers was studied with the help of percentage
analysis and the details are shown in the following
table.
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Table 7. Pricing method of oilseeds practiced by the respondents market practiced
Sl.No. Pricing Method
1. Auction price made in the Regulated market
2. Selling of oilseeds according to market price
3. Penetrating pricing Strategies
4. Skimming pricing Strategies
It could be observed from the above table that
38.6% of the respondent using auction price
made in the regulated marked 58.0% of the
respondents selling their oilseeds according to
the market prices, 2.1% of the respondents using
penetrating pricing strategies, 1.3% of the
respondents using skimming pricing strategies.
From the analysis, it is inferred that most of the
respondents selling the oilseeds according to the
prevailing price in the market.
10.7 Respondents opinion on grading on
oilseeds
In the era of competitive business,
customers preferred a good standard of products
in general, and in particular, to oilseeds. The
respondent's opinion on grading the oilseeds in
the market were gathered and analysed with the
help of percentage method. The detailed opinions
are furnished in the following table.
Table 8. Respondents opinion on oilseeds grading in
the market
Sl. Opinion on No. of %
No. Grading Respondents
1. Assessed based on size 212 21.2
2. Assessed based on weight 267 26.7
3. Measuring Oil content level
with the help of equipments 521 52.1
Total 1000 100
It is witnessed from the above table that
52.1% of the respondents measuring oil content
level in each seed with a help of specially
designed equipment. 26.7% of them assessed
based on weight. On the other hand 21.2% of the
respondents opined that they were assessed
based on the size. From the analysis, it is found
that 52.1% of them measuring the seeds graded
them based on the oil content level
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Vol. 2, No. 2, FEBRUARY 2010
No. of Respondents Percentage
386 38.6
580 58
21 2.1
13 1.3
11 . S U M M A R Y O F F I N D I N G A N D
SUGGESTIONS
The study is aimed at measuring the
benefits enjoyed by the farmers and the problems
faced by them during production and marketing
of oilseeds in the study area. Field survey
technique was employed to collect the first hand
information from the sample respondents.
Interview schedule was the main tool employed
to collect the pertinent data. The data thus
collected were arranged in simple tabular forms
and appropriate statistical tools were used for
data analysis. Based on this analysis,
Interpretations were made systematically. An
attempt was made to recapitulate the key findings
and conclusion. Based on these findings, a few
suggestions have also been made.
11.1 Findings
l The production, consumption and exports
of major oilseeds have witnessed a significant
transformation in the last 14 years. During this 14
years period, in absolute terms, world oilseed
production increased by 79% consumption by
72% and world trade by an impressive 131.4%.
l The consumption of vegetable oils
worldwide has gone up by 3.6% in the last seven
years (2000-07). It has shown an upward trend
with variable rates - from a minimum of 3% in
2001-02 to as high as 7.5% in 2004-05. In the last
two years (2005-06 and 2006-07), the growth
percentage has declined (year on year), and has
stood at 6.7% and 5% respectively
l The multiple regression analysis results
shows that out of eleven variables selected for the
analysis shows only six variables are closely
associated with the quantity of oilseeds produced
by the agriculturist. The multiple linear
 P.Komarasamy - An Emprical Analysis of Marketing of Oilseeds in Erode District of Tamilnadu State
component is found statistically a good fit as R2 is
0.8464. It shows that six independent variables
contribute about 85% on the variation in the
quantity of oilseeds produced are statistically
significant at 1% level and 5% level respectively
l Sources of information about oilseed
market was studied and found that brokers and
news papers are the main sources providing
about information about oilseed market.
l Problems with regulated market was
studied and it was learned that the officials in the
regulated market taking more time unnecessarily
at the time of marketing the oilseeds. It is
followed by the tactics played the buyers in
fixing the price through mutual understanding.
l Methods of selling oilseeds was studied
and found that regulated market and commission
agents are the main modes of selling oilseeds.
During volatility the farmers using aggressive
selling strategies when the market is peak
positions. Some farmers store the oilseeds in the
godowns during the inflation
l while analyzing the pricing methods
practiced in the oilseeds market, it is noted that
majority (58%) of the respondents selling
oilseeds according to the market price and 38.6%
of the respondents using auction price made in
the regulated market.
11.2 Suggesstions
Among the selected oilseeds, castor seed
crops showing high yield in the tribal area and
forest areas. The tribal people are producing
good yield of castor seeds but finds difficult to
sell out in the market. Hence, it is suggested that
the Government of India should support the tribal
people financially by opening National Tribal
Co-operative Federation in Anthiur Hils and
Thalavadi Hill areas with the support of
NABARD.
From the study it is divulged that the
farmers producing oilseeds have collected latest
information only from the fellow farmers.
Hence, it is suggested that more number of seed
officers may be appointed and these seed officers
and agricultural officers should approach the
farmers in the early morning hours and provide
the latest informations and suggestions to
i m p r o v e t h e o i l s e e d s p r o d u c t i v i t y.
Simultaneously they should provide adequate
information through specialized Journals in
agriculture
The regulated market staff should be trained
psychologically to take the farmers issue
amicably. Necessary training is very much
essential to make them to work efficiently
without making unnecessary time delay
The following suggestions are recommended for
strengthening the marketing of oilseeds:
(i) Better enforcement of regulated markets, so
that more farmers feel attracted to use them (at
present less than half), getting the benefit of
higher prices and for correct quality and quantity.
(ii) Strengthening cooperative marketing
institutions and introduction of forward
marketing and contract farming, which will also
help the farmer to get a better price for his
produce.
(iii) Promoting market integration, which will
also get a better price for the farmers.
(iv) Price incentives for edible oil storage in the
lean season.
(v) Reducing the cost of storage by introducing
bulk storage facilities.
(vi) Alleviating the over-regulation of markets
and introduction of future markets and
hedging practices. Rewarding better quality
produce with better price.
(vii) Streamlining the six statutory regulations
regarding quality.
(viii) Enhancing earnings from oilcakes and oil
meals through removal of restrictions on
livestock industry, improving the transport
system for animal feed and improving the quality
of de-oiled cakes.
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12. CONCLUSIONS
Oils and oilseeds played an important role in
the Indian economy for a long time India produces a
large variety of oilseeds including groundnut,
gingelly, sunflower and castor seeds that earn the
country a huge share of foreign exchange while
analyzing the world level oilseed productivity, India
occupies the second place for groundnut productivity
and in sunflower seeds though Russian federations
are in top, India tries to fulfill the domestic demand.
The production, consumption and exports of these
selected oilseeds have witnessed a significant
transformation in the last 14 years. Further it is
advised that the farmers are suffering more due to lack
of adequate working capital. A separate Co-operative
marketing society exclusively for oilseed growers
may be established and it should help the farmers who
are in that need of adequate working capital.
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