Marketing channels, costs and price spread of soybean among FPO member and non-member farmers in Latur district

Introduction

Agriculture continues to be an important source of livelihood for a large section of the rural population in India. However, the economic benefits received by farmers depend not only on the quantity produced but also on how efficiently the produce is marketed. Farmers, particularly those operating on a small scale, often face difficulties related to transportation, storage, market information, bargaining power and access to remunerative markets. These constraints can increase marketing expenses and reduce the share of the final consumer price received by producers. Collective approaches such as Farmer Producer Organisations (FPOs) have emerged as one mechanism through which farmers can improve their access to markets and strengthen their position in the agricultural value chain. Soybean (Glycine max L.) is an important oilseed and commercial crop cultivated extensively in India. Besides being an important source of edible oil and protein, soybean provides an important source of farm income in many agricultural regions. The economic returns from soybean, however, are influenced not only by productivity and production costs but also by the price realized by farmers and the expenses incurred in moving the produce from the farm to the market. Thus, an efficient marketing system is important for ensuring better price realization and improving the overall economic position of soybean growers. Maharashtra is one of the major soybean-producing states of the country, and the crop occupies an important place in the cropping system of the Marathwada region. Latur district is an important agricultural district of Marathwada where soybean is widely cultivated. After harvesting, farmers sell their produce through different marketing arrangements depending on factors such as the availability of buyers, quantity produced, prevailing market prices, transportation facilities and access to organized markets. The choice of marketing channel can therefore influence the marketing cost, margins received by intermediaries and the final price received by farmers. The marketing of agricultural commodities generally involves several activities such as assembling, grading, weighing, loading, transportation, cleaning and other handling operations. Each of these activities may in volve additional expenditure. When more intermediaries participate in the movement of produce, the marketing process may involve additional costs and margins. Consequently, the difference between the price received by the producer and the price paid by the final buyer becomes an important indicator for understanding the performance of the marketing system. Analysis of marketing cost and price spread therefore helps in identifying the expenses involved in different channels and the extent to which the producer participates in the final value of the commodity. Farmer Producer Organisations provide an institutional platform through which individual farmers can undertake collective economic activities. By aggregating members' produce, FPOs can facilitate larger-volume transactions and establish linkages with buyers and processors. Such collective arrangements may also reduce the need for farmers to depend entirely on traditional intermediaries. In soybean marketing, the FPO can act as a link between producers and larger buyers, processors or other market participants. The nature and effectiveness of these arrangements can influence the marketing cost incurred by farmers and the price ultimately realized by them. The marketing performance of FPO member and non-member farmers may differ because the two groups can have different access to buyers, marketing arrangements and collective services. FPO members may have an opportunity to market aggregated produce through organized channels, while non-member farmers may sell individually through village-level traders, wholesalers or processors. Comparing these arrangements provides an opportunity to understand differences in marketing costs, margins, price spread and the efficiency of alternative marketing channels. Marketing efficiency is an important measure for assessing how effectively a commodity moves through the marketing system. A marketing channel involving lower marketing costs and a smaller price spread, while providing a higher net price to the producer, may indicate a more efficient movement of produce. The Shepherd's method provides a useful approach for measuring marketing efficiency by relating the value of the product to the marketing cost involved. Examining marketing efficiency across different soybean marketing channels can therefore provide useful information about the relative performance of alternative marketing arrangements. In Latur district, the marketing of soybean takes place through different channels involving FPOs, village merchants, wholesalers and processors. The present study therefore focuses on the marketing channels, marketing costs, market margins, price spread and marketing efficiency of soybean among FPO member and non-member farmers. The study is based on primary data collected from 120 farmers, comprising 60 FPO members and 60 non-members, and examines the marketable surplus and movement of soybean through the identified marketing channels. The analysis is intended to provide a clearer understanding of the marketing structure and the economic implications of different channels for soybean producers. The findings of the study are expected to be useful to soybean farmers, FPOs, market intermediaries, agricultural development agencies and policymakers in understanding the existing marketing system. The study may also provide useful insights for strengthening collective marketing, reducing avoidable marketing expenses, improving farmers' price realization and developing more efficient market linkages for soybean in Latur district.

Objectives

To study the marketing efficiency of selected crop of FPO member and non-member farmers.

Materials and Methods

The study was conducted in Latur district of the Marathwada region of Maharashtra, which is an important agricultural area where soybean is widely cultivated as a Kharif crop. Soybean has a significant place in the farming system of the district and serves as an important commercial crop for farm households. The district also has established Farmer Producer Organisations and various market arrangements through which farmers dispose of their soybean produce. The presence of different marketing channels, including FPO-based and conventional marketing arrangements, makes Latur an appropriate location for analysing the marketing channels, marketing costs, price spread and marketing efficiency of soybean among FPO member and non-member farmers. A multistage sampling procedure was followed for the selection of soybean growers for the present study in Latur district of Maharashtra. Latur district was purposively selected considering the importance of soybean cultivation and the presence of Farmer Producer Organisations involved in agricultural and marketing activities. FPOs that had completed five years of establishment were considered eligible for selection, and the required FPOs were selected randomly from the eligible organisations. Since soybean was the major crop undertaken by the selected FPOs, it was selected for the present study. From the selected talukas, 60 FPO member farmers and 60 non-member farmers were selected randomly from the same areas to maintain comparability in terms of agro-climatic and farming conditions. Thus, a total sample of 120 soybean farmers, comprising 60 FPO members and 60 non-members, was selected for analysing the marketing performance of soybean.

Estimation of marketing costs, margins, price spread and marketing efficiency

The marketing performance of soybean was analysed to understand the movement of produce from farmers to the final buyer and to assess the costs and returns associated with different marketing channels. The analysis was carried out on a per-quintal basis. The major indicators considered were marketable surplus, marketing cost, marketing margin, price spread and marketing efficiency. Three major marketing channels identified in the study area were Producer-FPO (Channel I), Producer-Village Merchant-Wholesaler-Processor (Channel II), and Producer-Processor (Channel III).

1) Marketable surplus

Marketable surplus refers to the quantity of soybean available with the farmer for sale after meeting the requirements retained for seed, cattle feed and other farm purposes. It was estimated as:

Marketable Surplus (q) = Total Quantity Produced -Total Farm Consumption Where, Total Farm Consumption = Seed Requirement + Cattle Feed Requirement + Other Farm Requirements etc.

The marketable surplus was estimated separately for the identified soybean marketing channels to determine the quantity available for disposal in the market.

2) Total marketing cost

The total marketing cost represents the expenses incurred in transferring soybean from the producer to the final buyer through the respective marketing channel. It includes the marketing expenses incurred by the producer as well as those incurred by different intermediaries involved in the marketing process. The total marketing cost was calculated using the following formula:

Where, C = Total marketing cost of the commodity Cf = Marketing cost incurred by the producer from the time the produce leaves the farm until it is sold Cm 1 , Cm 2 , … Cmn = Marketing costs incurred by the first, second and subsequent intermediaries involved in the marketing process The marketing costs included expenses related to activities such as labour, transportation, weighing and cleaning, commission, market fees and other marketing charges, depending upon the marketing function performed by each participant.

3) Marketing margin

Marketing margin represents the difference between the value at which a marketing intermediary sells the commodity and the value at which it purchases the commodity, after accounting for the quantity handled. The total marketing margin was estimated using the following expression:

𝑀𝑇 = ∑ [ ( 𝑆 𝑖 -𝑃 𝑖 ) 𝑄 𝑖 ] 𝑄

Where, MT = Total marketing margin Si = Sale value of the product received by the ith marketing firm Pi = Purchase value of the product paid by the ith marketing firm Qi = Quantity of soybean handled by the ith marketing firm Q = Total quantity of soybean marketed The marketing margin was estimated for the intermediaries involved in each marketing channel. In the case of a channel without an intermediary, no separate intermediary marketing margin was considered.

4) Price spread

Price spread indicates the difference between the price paid by the final buyer and the net price received by the farmer. It provides an indication of the amount retained within the marketing system in the form of marketing costs and margins.

The price spread was calculated as:

Price Spread = Price Paid by Consumer -Net Price Received by Farmer or,

𝑃 𝑠 = 𝑃 𝑐 -𝑃 𝑓

Where, Ps = Price spread (₹/q) Pc = Price paid by the consumer/final buyer (₹/q) Pf = Net price received by the farmer (₹/q) The price spread was calculated separately for each identified soybean marketing channel.

5) Marketing efficiency -Shepherd's method

Marketing efficiency was estimated using the Shepherd's method to assess the relative efficiency of the different soybean marketing channels. The method relates the value of the commodity marketed to the total marketing cost involved in moving the produce through the respective channel.

The marketing efficiency was calculated as:

Marketing Efficiency (ME) = 𝑉 𝐶 -1

Where, ME = Marketing efficiency V = Value of the commodity sold or price paid by the final buyer (₹/q) C = Total marketing cost (₹/q) The Shepherd's method was applied separately to each identified marketing channel. A higher value of the marketing efficiency measure indicates a greater value of the commodity marketed in relation to the marketing cost incurred.

Assessment of marketing performance

The above measures were used collectively to assess the marketing performance of soybean in Latur district. The analysis considered the quantity available for sale, expenses incurred during marketing, margins retained by intermediaries, the difference between the producer's net price and the final buyer's price, and the efficiency of alternative marketing channels. This approach enabled comparison of the Producer-FPO, Producer-Village Merchant-Wholesaler-Processor and Producer-Processor channels in terms of their marketing costs, margins, price spread and marketing efficiency.

Result and Discussion

Marketing channels identified in soybean marketing

Table 1 presents the major marketing channels followed by soybean farmers in the study area. Three channels were identified: Producer-FPO (Channel I), Producer-Village Merchant-Wholesaler-Processor (Channel II), and Producer-Processor (Channel III).

Table 1. Marketing channels identified in Soybean marketing

Channel No.

Producer-Village Merchant-Wholesaler-Processer 3

Producer-Processer Channel I, i.e., Producer-FPO, represents the direct marketing of soybean by farmers to the Farmer Producer Organization. This channel provides an opportunity for farmers to aggregate their produce and market it collectively. The involvement of the FPO may help farmers strengthen their bargaining position and improve access to organized markets.

Channel II, i.e., Producer-Village Merchant-Wholesaler-Processor, involves three intermediaries between the producer and processor. Under this channel, farmers sell their soybean to village merchants, who subsequently supply the produce to wholesalers, and the wholesalers then market it to processors. The presence of multiple intermediaries may increase the marketing costs and margins and may reduce the producer's share in the final value of soybean. Channel III, i.e., Producer-Processor, is the most direct conventional marketing route identified in the study. In this channel, farmers sell soybean directly to processors without the involvement of village merchants and wholesalers. The shorter nature of this channel can reduce intermediary involvement and may provide better opportunities for farmers to obtain improved price realization.

Production and marketable surplus of soybean in member and non-member farmers

Table 2 presented the marketable surplus of soybean through different marketing channels. The results indicate that a major portion of soybean production was available for sale, highlighting its importance as a commercial crop in the study area. The total production was 24.34 q in Channel I and 22.56 q each in Channels II and III. The quantity retained for farm requirements was relatively small. Seed requirements were 0.39, 0.38 and 0.30 q, while total consumption was 1.65, 1.55 and 1.49 q in Channels I, II and III, respectively. After meeting these requirements, the marketable surplus was 22.69 q in Channel I, 21.01 q in Channel II and 21.07 q in Channel III.

Overall, the findings show that most of the soybean produced was marketed, while only a small quantity was retained for seed, cattle feed and other farm requirements. The differences in marketable surplus across the three channels were relatively small.

Marketing cost of soybean incurred by different intermediaries (Rs./q)

Table 3 presents the item-wise marketing expenses incurred by producers and intermediaries in the three soybean marketing channels. The total marketing cost differed considerably across the channels, being ₹108.07/q in Channel I, ₹347.66/q in Channel II and ₹118.66/q in Channel III. The higher cost in Channel II was mainly due to the involvement of a village merchant and wholesaler in addition to the producer.

At the producer level, the marketing cost was ₹108.07/q in Channel I, ₹66.66/q in Channel II and ₹118.66/q in Channel III. In Channel I, transportation was the major expense at ₹59.41/q, followed by loading and unloading ₹20.00/q, packaging ₹16.66/q and weighing and cleaning ₹12.00/q. In Channel III, transportation was again the largest component at ₹70.00/q, while loading and unloading, packaging, and weighing and cleaning accounted for ₹20.00, ₹16.66 and ₹12.00/q, respectively.

In Channel II, the producer incurred ₹66.66/q, consisting of ₹16.66/q for packaging, ₹20.00/q for loading and unloading, ₹20.00/q for trans-portation and ₹10.00/q for weighing and cleaning. Although the producer's expenditure was lower in this channel, further costs were incurred by the intermediaries. The village merchant incurred ₹127.00/q, including ₹20.00 labour, ₹30.00 transportation, ₹8.00

weighing and cleaning and ₹69.00 commission. The wholesaler incurred ₹154.00/q, comprising ₹22.00 labour, ₹25.00 transportation, ₹10.00 weighing and cleaning, ₹80.00 commission, ₹2.00 market fees and ₹15.00 other charges. Thus, the village merchant and wholesaler together incurred ₹281.00/q, which constituted a major part of the total marketing cost in Channel II. Among the individual expenses, transportation was prominent at the producer level, whereas commission was the major expense among intermediaries. Overall, Channel II recorded the highest marketing cost, while Channels I and III had comparatively lower costs due to fewer intermediary stages. The results indicate that reducing intermediary involvement and strengthening collective or direct marketing arrangements could help in controlling soybean marketing expenses. Top of Form Bottom of Form tively. The results indicate substantial differences in the relationship between commodity value and marketing costs across the channels. The Producer-FPO channel involved direct collective marketing with limited intermediary participation, while the Producer-Processor channel also provided a relatively direct route for disposal of soybean. In contrast, the involvement of village merchants and wholesalers in Channel II was associated with higher marketing costs, intermediary margins and price spread. Overall, the findings demonstrate that the structure of the marketing channel has an important bearing on marketing costs, price spread and price realization of soybean farmers. The results highlight the potential of collective marketing through FPOs to facilitate direct market linkages, reduce intermediary involvement and control avoidable marketing expenses. Strengthening FPOs through better aggregation, transportation, market information, storage and linkages with processors and bulk buyers may further improve the marketing performance and price realization of soybean producers in the study area.

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11. How to cite this article: Tundare S, Perke D, Shelke R, Kamble S, Jadhav EP, Bansode H. Marketing channels, costs and price spread of soybean among FPO member and non-member farmers in Latur district. International Journal of Research in Agronomy. 2026;SP-9(9):572-577. doi: https://www.doi.org/10.33545/26180 60X.2026.v9.i9Sg.6691