UNIT FIVE Markets Teacher’s note These two chapters focus on aspects of life and commercial cycles associated with markets. While some of these processes may be visible and, therefore, easily observable, there are also others that are relatively unfamiliar. Chapter 8 discusses ‘Markets Around Us’. At one level, we study different market sites: a weekly market, neighbourhood shops, a shopping complex, etc. At another level, we explore the intricate question, ‘how do goods reach these markets?’ We examine how a chain of markets operates and the role of wholesale markets within this, through the case study of a wholesale vegetable market. We usually associate ‘market’ with marketplaces, but buying and selling takes place in diverse ways and the chapter discusses how all of this falls within a larger understanding of markets. Chapter 9 looks at how markets offer people different opportunities. This is done through the ‘story of a shirt’, and the chain of markets involved in the process. Together with understanding each step of the manufacture and circulation of a shirt, we realise that some people stand to gain in the market transaction whereas others do not gain as much, or none at all. The opportunities are highly unequal. Ways do exist, such as those of cooperative marketing, which can provide a better return to the producers. However, we need to find many more viable avenues for equitable distribution. These chapters offer an opportunity of bringing in the experience of local markets for discussion in the classroom. A visit to a wholesale market would be of interest, and would allow the learner to find out the profit margins and details of daily earnings so that those inequalities can be directly examined. The experiences of markets are varied and also quite rich. Hence, one should allocate time for some questions, not addressed in the text, which students may wish to discuss. Why do people go to a weeklymarket? Give three reasons. Who are the sellers in a weeklymarket? Why don’t we find bigbusiness persons in thesemarkets? Why are things cheap in theweekly market? Explain with an example howpeople bargain in the market. Canyou think of a situation where thebargain would be unfair? Weekly market A weekly market is so called because it is held on a specific day of the week. Weekly markets do not have permanent shops. Traders set up shops for the day and then close them up in the evening. Then they may set up at a different place the next day. There are thousands of such markets in India. People come here for their everyday requirements. Many things in weekly markets are available at cheaper rates. This is because when shops are in permanent buildings, they incur a lot of expenditure – they have to pay rent, electricity, fees to the government. They also have to pay wages to their workers. In weekly markets, these shop owners store the things they sell at home. Most of them are helped by their family members and, hence, do not need to hire workers. Weekly markets also have a large number of shops selling the same goods which means there is competition among them. If some trader were to charge a high price, people would move to another shop where the same thing may be available more cheaply or where the buyer can bargain and bring the price down. One of the advantages of weekly markets is that most things you need are available at one place. Whether you want vegetables, groceries or cloth items, utensils – all of them can be found here. You do not have to go to different areas to buy different things. People also prefer going to a market where they have a choice and a variety of goods. Shops in the neighbourhood We have seen that the weekly markets offer a variety of goods. However, we also buy things from other kinds of markets. There are many shops that sell goods and services in our neighbourhoods. We may buy milk from the dairy, groceries from departmental stores, stationery, eatables or medicines from other Sujata and Kavita were sent to buy groceries from their neighbourhood shop.This was the shop they usually went to. It was crowded today.The shop owner managed the shop herself with two helpers.When they managed to get into the shop,Sujata dictated a list to her. She in turn began asking her helpers to weigh and pack the items. Meanwhile Kavita looked around… On the top left shelf there were different brands of detergent cakes. Another shelf had toothpastes, talcum powder, shampoo, hair oil. The different brands and different colours looked so attractive. On the floor lay a few sacks. It took almost 20 minutes to weigh and pack all the groceries. Then Sujata showed her “notebook.” The woman noted the amount of Rs.1550 in the notebook and gave it back. She also noted the amount in her big register. Then Sujata took the heavy bags out of the shop. Her family will pay for the purchases in the first week of next month. Why did Sujata carry a notebook?shops. Many of these are permanent shops, while Do you think this system isothers are roadside stalls such as that of the useful? Can there be problems?vegetable hawker, the fruit vendor, the mechanic, etc. What are the different kinds of shops that you find in yourShops in the neighbourhood are useful in many neighbourhood? What do youways. They are near our home and we can go there purchase from them?on any day of the week. Usually, the buyer and seller know each other and these shops also provide goods Why are goods sold in permanenton credit. This means that you can pay for the shops costlier than those sold inpurchases later, as we saw in Sujata’s case, for the weekly markets or by roadsideexample. hawkers? You might have noticed that there are different kinds of sellers even in the neighbourhood markets. Some of them have permanent shops and others sell their goods on the roadside. Anzal Mall is a five-floor shopping complex. Kavita and Sujata were enjoying going up and down in the lift. It seemed as if it was made of glass and they were able to see outside as they went up. It was fascinating to see so many different kinds of shops such as the ice-cream, burger, pizza and other food shops; shops full of home appliances; footwear and leather items as well as bookshops. While wandering about on the third floor they entered a shop that was selling branded ready-made clothes.The security guard looked at them as if he wanted to stop them but he did not say anything. They looked at some dresses and then looked at the price tag. None of them was less than Rs 2,000, almost five times the weekly market price! Sujata whispered to Kavita,“I’ll take you to another shop which has good quality ready-made clothes at more reasonable prices”. Why do you think the guardwanted to stop Kavita and Sujatafrom entering the shop? Whatwould you say if someone stopsyou from entering a shop in amarket? Shopping complexes and malls So far we have seen two kinds of marketplaces – weekly markets and markets in our neighbourhood. There are other markets in the urban area that have many shops, popularly called shopping complexes. These days, in many urban areas, you also have large multi-storeyed air-conditioned buildings with shops on different floors, known as malls. In these urban markets, you get both branded and non-branded goods. As you have read in the chapter on advertising, branded goods are expensive, often promoted by advertising and claims of better quality. The companies producing these products sell them through shops in large urban markets and, at times, through special showrooms. As compared to non-branded goods, fewer people can afford to buy branded ones. Chain of markets In the previous sections, you have read about different markets from where we buy goods. From where do you think shop-owners procure their goods? Goods are produced in factories, on farms and in homes. However, we don’t buy directly from the factory or from the farm. Nor would the producers be interested in selling us small quantities such as one kilo of vegetables or one plastic mug. The people in between the producer and the final consumer are the traders. The wholesale trader first buys goods in large quantities. For example, the vegetable wholesale trader will not buy a few kilos of vegetables, but will buy in large lots of 25 to 100 kilos. These will then be sold to other traders. In these markets, buying and selling takes place between traders. It is through these links of traders that goods reach faraway places. The trader who finally sells this to the consumer, is the retailer. This could be a trader in a weekly market, a hawker in the neighbourhood or a shop in a shopping complex. We can understand this with the help of the following examples – Every city has areas for wholesale markets. This is where goods first reach and are then supplied to other traders. The roadside hawker whom you read about earlier would have purchased a large quantity of plastic items from a wholesale trader in the town. He, in turn, might have bought these from another, even bigger wholesale trader in the city. The city Why do people not bargain inshops located in malls whereasthey bargain in weekly markets? How do you think yourneighbourhood shop gets itsgoods? Find out and explain withsome examples. Why is a wholesale tradernecessary? wholesale trader would have bought a large quantity of plastic items from the factory and stored them in a godown. In this way, a chain of markets is set up. When we purchase, we may not be aware of the chain of markets through which these goods travel before they reach us. Aftab –The wholesaler in the city Aftab is one of the wholesale traders who purchases in bulk. His business starts around 2 o’clock in the morning when vegetables reach the market. This is the time when the vegetable market or mandi starts buzzing with activity. The vegetables come in trucks, matadors, tractor trolleys from farms both near and far. Soon the process of auctions begins. Aftab participates in this auction and decides what he will buy. Today,for example,he bought 5 quintals of cauliflower,10 quintals of onions.He has a shop in the market where he stores the vegetables that he has bought. From here he sells to hawkers and shopkeepers who start coming to the market around six in the morning.They have to organise their purchases so that they can start their shop for the day around ten in the morning. Markets everywhere So far we have seen different marketplaces where people buy and sell a variety of goods and services. All these markets are in a specific locality and work in a particular manner and time. However, it is not always necessary that one has to go to the market to purchase goods. You can place orders for a variety of things through the phone and these days through the Internet, and the goods are delivered at your home. In clinics and nursing homes, you may have noticed sales representatives waiting for doctors. Such persons are also engaged in the selling of goods. Thus, buying and selling takes place in different ways, not necessarily through shops in the market. The markets that we looked at above are the ones that we recognise easily. However, there are markets that we may not be so aware of. This is because a People in urban areas can enter markets without stepping out of their homes via the Internet. They use their credit cards to make ‘online purchases’. large number of goods are bought and sold that we don’t use directly. For example, a farmer uses fertilisers to grow crops that he purchases from special shops in the city and they, in turn get them from factories. A car factory purchases engine, gears, petrol tanks, axles, wheels, etc. from various other factories. We don’t usually see all the buying and selling, but only the final product – the car in the showroom. The story is similar for any other good. Markets and equality In this chapter, we have looked at shop owners in a weekly market and those in a shopping complex. They are very different people. One is a small trader with little money to run the shop whereas the other A car being put together in a factory.is able to spend a lot of money to set up the shop. They also earn unequal amounts. The weekly market trader earns little compared to the profit of a regular shop owner in a shopping complex. Similarly, buyers are differently placed. There are many who are not able to afford the cheapest of goods while others are busy shopping in malls. Thus, whether we can be buyers or sellers in these different markets depends, among other things, on the money that we have. We have also examined the chain of markets that is formed before goods can reach us. It is through Malls, like the one above, sell expensive and branded goods. this chain that what is produced in one place reaches people everywhere. When things are sold, it encourages production and new opportunities are created for people to earn. However, do they offer equal opportunities? We will try to understand this through the story of a shirt in the next chapter. 1. In what ways is a hawker different from a shop owner? 2. Compare and contrast a weekly market and a shopping complex on the following: 3. Explain how a chain of markets is formed. What purpose does it serve? 4. ‘All persons have equal rights to visit any shop in a marketplace.’ Do you think this is true of shops with expensive products? Explain with examples. 5. ‘Buying and selling can take place without going to a marketplace.’ Explain this statement with the help of examples. Market Kind of goods sold Prices of goods Sellers Buyers Weekly market Shopping complex Glossary Weekly market: These markets are not daily markets but are to be found at a particular place on one or maybe two days of the week. These markets most often sell everything that a household needs ranging from vegetables to clothes to utensils. Mall: This is an enclosed shopping space. This is usually a large building with many floors that has shops, restaurants and, at times, even a cinema theatre. These shops most often sell branded products. Wholesale: This refers to buying and selling in large quantities. Most products, including vegetables, fruits and flowers have special wholesale markets. Chain of markets: A series of markets that are connected like links in a chain because products pass from one market to another.

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CHAPTER-8

A Shirt in the Market

This chapter tells us the story of a shirt ! It begins with the production of cotton and ends with the sale of the shirt. We shall see that a chain of markets links the producer of cotton to the buyer of the shirt in the supermarket. Buying and selling takes place at every step in the chain. Does everyone benefit equally from this? Or do some people benefit more than others? We shall find out.

A cotton farmer in Kurnool

Swapna, a small farmer in Kurnool (Andhra Pradesh) grows cotton on her small piece of land. The bolls of the cotton plant are ripe and some have already burst, so Swapna is busy picking cotton. The bolls, which carry the cotton in them, do not burst open all at once so it takes several days to harvest the cotton.

Did Swapna get a fair price on the cotton?

Why did the trader pay Swapna a low price?

Where do you think large farmers would sell their cotton? How is their situation different from Swapna?

Once the cotton is collected, instead of selling it at Kurnool cotton market, Swapna and her husband take the harvest to the local trader. At the beginning of the cropping season, Swapna had borrowed Rs 2,500 from the trader at a very high interest rate to buy seeds, fertilisers, pesticides for cultivation. At that time, the local trader made Swapna agree to another condition. He made her promise to sell all her cotton to him.

Cultivation of cotton requires high levels of inputs such as fertilisers and pesticides and the farmers have to incur heavy expenses on account of these. Most often, the small farmers need to borrow money to meet these expenses.

At the trader’s yard, two of his men weigh the bags of cotton. At a price of ₹ 1,500 per quintal, the cotton fetches ₹ 6,000. The trader deducts ₹ 3,000 for repayment of loan and interest and pays Swapna ₹ 3,000.

Swapna: ₹ 3,000 only!

Trader: Cotton is selling cheap. There is a lot of cotton in the market.

Swapna: I have toiled so hard for four months to grow this cotton. You can see how fine and clean the cotton is this time. I had hoped to get a much better price.

Trader: Amma, I am giving you a good price. Other traders are not even paying this much. You can check at the Kurnool market, if you do not believe me.

Swapna: Don’t be angry. How can I doubt you? I had only hoped that we would earn enough from the cotton crop to last us a few months.

Though Swapna knows that cotton will sell for at least ₹ 1,800 per quintal, she doesn’t argue further. The trader is a powerful man in the village and the farmers have to depend on him for loans not only for cultivation, but also to meet other exigencies such as illnesses, children’s school fees. Also, there are times in the year when there is no work and no income for the farmers, so borrowing money is the only means of survival.

Swapna’s earning from cotton cultivation is barely more than what she might have earned as a wage labourer.

The cloth market of Erode

Erode’s bi-weekly cloth market in Tamil Nadu is one of the largest cloth markets in the world. A large variety of cloth is sold in this market. Cloth that is made by weavers in the villages around is also brought here for sale. Around the market are offices of cloth merchants who buy this cloth. Other traders from many south Indian towns also come and purchase cloth in this market.

A shop in Erode.

On market days, you would also find weavers bringing cloth that has been made on order from the merchant. These merchants supply cloth on order to garment manufacturers and exporters around the country. They purchase the yarn and give instructions to the weavers about the kind of cloth that is to be made. In the following example, we can see how this is done.

1.This is a merchant’s shop in the bazaar. Over the years, these traders have developed extensive contacts with garment firms around the country from whom they get orders. These traders purchase the yarn (thread) from others.

2. The weavers live in villages around and take the yarn supplied by these traders to their homes where the looms are located in sheds adjacent to their houses. This photograph shows a powerloom in one such home. The weavers and their families spend long hours working on these looms. Most weaving units have about 2–8 powerlooms on which the yarn is woven into cloth. A variety of sarees, towels, shirting, ladies dress material and bedsheets are produced in these looms.

3. They then bring back the finished cloth to the traders. Here, they can be seen getting ready to go to the merchant in the town. The trader keeps an account of the yarn given and pays them money for weaving this into cloth.

What are the following people doing at the Erode cloth market– merchants, weavers, exporters?

In what ways are weavers dependent on cloth merchants?

If the weavers were to buy yarn on their own and sell cloth, they would probably earn three times more. Do you think this is possible? How? Discuss.

Do you find similar ‘putting-out’ arrangements in making papads, masalas, beedis? Find out about this in your area and discuss in class.

You might have heard of cooperatives in your area. It could be in milk, provisions, paddy, etc. Find out for whose benefit they were set up?

Putting-out system– weavers producing cloth at home

The merchant distributes work among the weavers based on the orders he has received for cloth. The weavers get the yarn from the merchant and supply him the cloth. For the weavers, this arrangement seemingly has two advantages. The weavers do not have to spend their money on purchase of yarn. Also, the problem of selling the finished cloth is taken care of. Weavers know from the outset what cloth they should make and how much of it is to be woven.

However, this dependence on the merchants both for raw materials and markets means that the merchants have a lot of power. They give orders for what is to be made and they pay a very low price for making the cloth. The weavers have no way of knowing who they are making the cloth for or at what price it will be sold. At the cloth market, the merchants sell the cloth to the garment factories. In this way, the market works more in favour of the merchants.

Weavers invest all their savings or borrow money at high interest rates to buy looms. Each loom costs ₹ 20,000, so a small weaver with two looms has to invest ₹ 40,000. The work on these looms cannot be done alone. The weaver and another adult member of his family work upto 12 hours a day to produce cloth. For all this work, they earn about ₹ 3,500 per month.

The arrangement between the merchant and the weavers is an example of putting-out system, whereby the merchant supplies the raw material and receives the finished product. It is prevalent in the weaving industry in most regions of India.

Weaver’s cooperative

We have seen that the weavers are paid very little by the merchant under the putting out system. Weaver’s cooperatives are one way to reduce the dependence on the merchant and to earn a higher income for the weavers. In a cooperative, people with common interests come together and work for their mutual benefit. In a weaver’s cooperative, the weavers form a group and take up certain activities collectively. They procure yarn from the yarn dealer and distribute it among the weavers. The cooperative also does the marketing. So, the role of the merchant is reduced, and weavers get a fair price on the cloth.


At times, the government helps the cooperatives by buying cloth from them at a reasonable price. For instance, the Tamil Nadu government runs a Free School Uniform programme in the state. The government procures the cloth for this programme from the powerloom weaver’s cooperatives. Similarly, the government buys cloth from the handloom weaver’s cooperatives and sells it through stores known as Co-optex. You might have come across one of these stores in your town.

Women workers sewing buttons in a garment factory.

The garment exporting factory near Delhi

The Erode merchant supplies the cotton cloth produced by the weavers to a garment exporting factory near Delhi. The garment exporting factory will use the cloth to make shirts. The shirts will be exported to foreign buyers. Among the foreign buyers are businesspersons from the US and Europe who run a chain of stores. These large stores do business strictly on their own terms. They demand the lowest prices from the supplier. In addition, they set high standards for quality of production and timely delivery. Any defects or delay in delivery is dealt with strictly. So, the exporter tries his best to meet the conditions set by these powerful buyers.

Faced with such pressures from the buyers, the garment exporting factories, in turn, try to cut costs. They get the maximum work out of the workers at the lowest possible wages. This way they can maximise their own profits and also supply the garments to foreign buyers at a cheap price.

What are the demands foreign buyers make on the garment exporters? Why do the garment exporters agree to these demands?

How do the garment exporters meet the conditions set by the foreign buyers?

Why do you think more women are employed in the Impex garment factory? Discuss.

Write a letter to the Minister asking for what you think would be proper payment to the workers.

The shirt below shows the profit made by the businessperson, and the various costs that he had to pay. Find out from the diagram below, what the cost price includes.

The Impex garment factory has 70 workers. Most of them are women. Most of these workers are employed on a temporary basis. This means that whenever the employer feels that a worker is not needed, the worker can be asked to leave. Workers’ wages are fixed according to their skills. The highest paid among the workers are the tailors who get about ₹ 3,000 per month. Women are employed as helpers for thread cutting, buttoning, ironing and packaging. These jobs have the lowest wages.

Payment to workers (per month)

Tailoring ₹ 3,000

Ironing ₹ 1.50 (per piece)

Checking ₹ 2,000

Thread cutting

and buttoning ₹ 1,500


The shirt in the United States

A number of shirts are on display at a large clothes shop in the United States, and are priced at $26. That is, each shirt sells for $26 or around ₹ 1,800.

Use the diagram shown in the margin to fill in the blanks below.

The businessperson purchased the shirts from the garment exporter in Delhi for ₹ _______ per shirt. He then spent ₹ _______ for advertising in the media, and another ₹ _______ per shirt on storage, display and all other charges. Thus, the cost to this person is ₹ 900 while he sells the shirt for ₹ 1,800. ₹ __________ is his profit on one shirt! If he is able to sell a large number of shirts, his profit will be higher.

The garment exporter sold the shirt at ₹ 300 per piece. The cloth and other raw materials cost him ₹ 100 per shirt. The workers’ wages cost another ₹ 25 per shirt. The cost of running his office came to ₹ 25 per shirt. Can you calculate the profit per shirt for the garment exporter?

Who are the gainers in the market?

A chain of markets links the producer of cotton to the buyer at the supermarket. Buying and selling takes place at every step in the chain. Let us recall who were the people who were involved in this process of buying and selling. Did they all gain as much? There were people who made profits in the market and there were some who did not gain as much from this buying and selling. Despite their having toiled very hard, they earned little. Can you place them in the table shown here?

Market and equality

The foreign businessperson made huge profits in the market. Compared to this, the garment exporter made only moderate profits. On the other hand, the earnings of the workers at the garment export factory are barely enough to cover their day-to-day needs. Similarly, we saw the small cotton farmer and the weaver at Erode put in long hours of hard work. But they did not get a fair price in the market for what they produced. The merchants or traders are somewhere in between. Compared to the weavers, they have earned more but it is still much less than the exporter. Thus, not everyone gains equally in the market. Democracy is also about getting a fair wage in the market. Whether it is Kanta or Swapna, if families don’t earn enough how would they think of themselves as equal to others?

On one hand, the market offers people opportunities for work and to be able to sell things that they grow or produce. It could be the farmer selling cotton or the weaver producing cloth. On the other hand, it is usually the rich and the powerful that get the maximum earnings from the market. These are the people who have money and own the factories, the large shops, large land holdings, etc. The poor have to depend on the rich and the powerful for various things. They have to depend for loans (as in the case of Swapna, the small farmer), for raw materials and marketing of their goods (weavers in the putting out system), and most often for employment (workers at the garment factory). Because of this dependence, the poor are exploited in the market. There are ways to overcome these such as forming cooperatives of producers and ensuring that laws are followed strictly. In the last chapter, we will read about how one such fish-workers’ cooperative was started on the Tawa river.

Did you know that the readymade clothes that you buy require the work of so many different persons?

Sustainable Development Goal (SDG) www.in.undp.org

Compare the earnings per shirt of the worker in the garment factory, the garment exporter and the businessperson in the market abroad. What do you find?

What are the reasons that the businessperson is able to make a huge profit in the market?

You have read the chapter on advertising. Why does the businessperson spend Rs 300 per shirt on advertising? Discuss.

People who gained in the market

1. ________________________

2. ________________________

3. ________________________

People who didn’t gain 

as much in the market

1. ________________________

2. ________________________

3. ________________________

EXERCISES

1. What made Swapna sell the cotton to the trader instead of selling at the Kurnool cotton market?

2. Describe the conditions of employment as well as the wages of workers in the garment exporting factory. Do you think the workers get a fair deal?

3. Think of something common that we use. It could be sugar, tea, milk, pen, paper, pencil, etc. Discuss through what chain of markets this reaches you. Can you think of the people that help in the production or trade?

4. Arrange the statements given alongside in the correct order and then fill in the numbers in the cotton bolls accordingly. The first two have already been done for you.

1. Swapna sells the cotton to the trader.

2. Customers buy these shirts in a supermarket.

3. Trader sells cotton to the Ginning Mill.

4. Garment exporters buy the cloth from merchants for making shirts.

5. Yarn dealers or merchants give the yarn to the weavers.

6. The exporter sells shirts to the businessperson from the USA.

7.Spinning mill buys the cotton and sells yarn to the yarn dealers.

8.Weavers return with the cloth.

9. Ginning mill cleans the cotton and makes it into bales.

Glossary

Ginning mill: A factory where seeds are removed from cotton bolls. The cotton is pressed into bales to be sent for spinning into thread.

Exporter: A person who sells goods abroad.

Profit: The amount that is left or gained from earnings after deducting all the costs. If the costs are more than the earnings, it would lead to a loss.


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