The fruit marketing in Punjab is not efficient due to the high trading costs and profit of the middleman. Small farmers usually sell their produce in the local markets because of their small trade surpluses and weak financial position.

It is difficult for them to store farm produce for better prices. Small farmers have weak bargaining power and thus their share in the final retail price is not only low but also changes according to the commodity, its perishability and degree of co-operation among marketing intermediaries. The surplus sold to the market varies from crop to crop and from region to region.

Citrus is a prized fruit and holds number one position among all fruits both in production and export. Citrus faces extreme price fluctuation due to seasonality and perishability. Being perishable in nature, citrus has to be sold and consumed in a relatively short period of time. During surplus period , producers receive lower prices and during shortage, consumers suffer from high prices.

Seasonal production fluctuations and frequent changes in government policies, particularly sudden export ban in period of shortages, have severely affected the pace of development of these crops and frustrated exporters in their efforts to develop foreign markets for them.

The export volume of citrus is very low as compared to other exporting countries. There are several constraints, which affect the performance of citrus exporters including, fluctuation in annual production, post-harvest losses, insufficient freight space and un-favourable bureaucratic behaviour towards exporters.

Marketing in the private sector varies from commodity to commodity and is characterized by the presence of numerous intermediaries operating at various distribution stages, thus adding to marketing costs and directly affecting the price received by the farmers and paid by the consumer.

A typical marketing chain may involve some form of contract buyers (including harvesting contractors in the case of fruits), commission agents, wholesalers and retailers. Marketing of fruits is carried out exclusively by private organizations and individuals.

Producers always complain that the major portion of consumer price goes to the market intermediaries. On the other hand, the middlemen claim that they charge the right amount for their services.

A large majority of the producers (90 pert cent) sell harvesting rights of their orchards at the flowering stage to contractors. Only 10 percent market their produce directly, mainly with the hope of getting better prices. The contractor performs a key role in the marketing of fruits.

He can be described as merchant middleman buying the citrus produce from farmers and selling in the market. The contractor is a local man who belongs to the farming community and possesses enough knowledge about the market conditions.

During contracting of an orchard the contractor estimates its yield and considers expected costs to be incurred for supervision, labour, transportation and marketing. He retains about five per cent of total production for home consumption and supply to producers.

The contractors have about 85 per cent of the produce available for sale in the market.

Each contractor usually maintains close contact with the commission agent in the wholesale or terminal markets. Survey results show that more than 95 per cent of contractors obtained advances from a commission agent to pay the initial instalment to producers and as well as an advance for labour and packing material.

The remaining five per cent of contractors manage these expenses by getting advances from citrus grading factories. Once a advance has been extended, the contractor is obliged to supply citrus to that commission agent. This is enforced by co-operation amongst commission agents who refuse to accept produce from contractors who are indebted to another agent.

Contractors and commission agent have a very strong relationship. A majority of contractors do not bring the citrus consignment to the market themselves but send the truck and inform the commission agent by telephone. The contractor normally remains in the orchard during the harvest season to supervise the labour and arrange the transport and packing material. When commission agent receives the produce in the market he has the sole authority to sell the produce and keep an account for the contractor.

If, due to natural hazards, the contractor does not harvest sufficient produce to cover the contract amount and other management and marketing expenses, then the debt will be carried over to the next season without any interest charges on that amount. In that season, the commission agent will again provide advances to the contractor in the expectation of an improved supply. Through these arrangements contractors tend to become tied to the same commission agent for a number of years. A contractor, who has no outstanding advance and can supply a large quantity of produce by contracting many orchards, will be in a position to bargain on the commission rate. In contrast a contractor in debt and without alternative sources of credit will accept a higher commission rate.

Commission agents maintain contacts with inter-regional wholesale markets and possess comprehensive and accurate information. The commission agent is the principal agency around which all marketing activities rotate. He performs their activities on a commission basis, and does not accept any goods, while simply selling the produce brought by producers or contractors.

They have establishments in the markets, equipped with telephone and other communication facilities. Typically, the commission agents shop measures 10 to 12 meters square and consists of a table, a few chairs and a register showing the daily transactions record according to a customary producer.

All of the commission agents were found to extend short-term loans to contractors with the condition that they will bring their produce to them. Mostly they distribute advances among contractors during August and September, when the crop is at the flowering stage. The commission agents invest their capital for only 3-4 months. As soon as harvest of citrus starts the contractors bring their produce for sale to the same commission agent.

During marketing of produce the contractor cannot obtain the sales revenue from the commission agent, because he has already obtained the advance. The commission agent provides the contractor with only further necessary expenses including second and third instalments for orchard owners and payment for labour and packing material. At the end of the season, the contractor visits the market and settles the whole season's account with the commission agent.

The commission agent maintains the whole season's accounts and prepares a statement for the contractor for the whole season's arrival and its revenue, minus out standing advances, market expenses and commission. Differences with the contractor's own accounts or estimates are reconciled but the contractor will often be in a weak-negotiating position if he requires credit for the next season. Commission charges range between 4-5 per cent of the sale revenue. The commission varies from contractor to contractor and from contractor to producer.

Commission agents usually try to sell citrus in the morning. If some quantity is not sold in the morning, it is stored inside the shade built by the commission agents and sold the next morning. Usually, commission agents inform the prevailing market prices to their clients but it was observed that commission agents exercise close control over market information, which they, sometimes, refuse to disseminate.

The commission agents have the power to control the citrus supply through contractors. In the early season, they encourage the contractors to bring their citrus in the market as they can earn higher prices. Whereas in mid- season they encourage the contractor to delay the harvest as they can get a better price in late season. Due to delay in harvest during mid season, a large portion of the mature fruit tends to be spoiled, but these losses accrue to the contractors.

Wholesalers (Pharia) buy and sell large quantities of farm products. Usually they perform their business in wholesale and terminal markets. They deal in several commodities such as fruits; vegetables and other agricultural produce within inter-regional markets and also supply produce to processing industries and retailers according to their demand.

They maintain contacts with commission agents in wholesale markets and retailers in the local area. The wholesaler usually purchases fruit from the commission agents in open auction and sell in smaller quantities to the retailers and consumers. They mostly buy from the commission agents on a credit basis and about one week after selling that quantity, they pay the commission agents.

All market activities come to an end with the retailers who buy fruit from the wholesalers on a credit basis. They repay that amount to the wholesaler the next day, after selling that quantity.