Module – II Quality Assurance Quality Assurance, Concepts of Quality in Commodities, Methods of Quality Assurance GRanding and Standardization: Meaning of grading and Standardization, purpose of grading, advantages of grading, inspection and quality control, Indian standards.

1. Module - II
Module – II Quality Assurance
Quality Assurance, Concepts of Quality in Commodities,
Methods of Quality Assurance Grading and Standardization:
Meaning of grading and Standardization, purpose of grading,
advantages of grading, inspection and quality control, Indian
standards.
Mr. Swaminath S, M.Com, PGDFM, PGDBA, PGDMM, NET & JRF, K-SET, (MBA), (Ph.D)
Research Scholar, Department of Commerce, Bangalore University, Bangalore - 560001

2. INTRODUCTION:
Commodity derivatives demand good standards and quality assurance/
certification procedures. A good grading system allows commodities to
be traded by specification.
Trading in commodity derivatives also requires quality assurance and
certifications from specialized agencies. In India, for example, the
Bureau of Indian Standards (BIS) under the Department of Consumer
Affairs specifies standards for processed agricultural commodities.
AGMARK, another certifying body under the Department of Agriculture
and Cooperation, specifies standards for basic agricultural
commodities.

3. Meaning & Definition of Quality Assurance in Commodities:
QA refers to a program for the systematic monitoring and evaluation of
the various aspects of a project, service or facility to ensure that
standards of quality are being met.
American National Standards Institute defines quality as: “The totality of
features and characteristics of a product or service that bears on its
ability to satisfy given needs.”
“QA for short refers to planned and systematic production processes
that provide confidence in a product’s suitability for its intended
purpose”
For Suppliers: Quality Assurance means consistent production and
delivery of a product or service.
For Customers: QA nurtures confidence in consistently receiving a
product or service that meets their specifications.

4. Two Principles of QA:
1) Fit for Purpose: The product should be fit for the intended
purpose.
2) Right First Time: Mistakes should be eliminated.
Commodity Procurement: The procurement of commodities
involves various steps, including quantification, sourcing, pricing and
ensuring timely delivery to the central store. The five strategic
objectives are as follows:
• Selection of reliable suppliers of high-quality products;
• Procurement of the most cost-effective products in the right
quantities;
• Ensuring timely delivery;
• Ensuring transparency in sourcing, pricing and the management
of supplies;
• Providing an early warning system for users about potential or
actual problems in the supply chain which will affect the short-term or
long-term availability of individual commodities.

5. Role of Quality Assurance: PDCA (plan–do–check–act or plan–
do–check–adjust) is an iterative four-step management method
used in business for the control and continuous improvement of
processes and products. It is also known as the Deming
circle/cycle/wheel, Shewhart cycle, control circle/cycle, or plan–
do–study–act (PDSA). Another version of this PDCA cycle is
OPDCA. The added "O" stands for observation or as some versions
say "Grasp” the current condition.

6. Methods of Quality Assurance:
1. High Quality Goods
2. Mass Production
3. Quality Control Software
4. Auctions and other Clearing Mechanisms
5. Bargaining
6. Crossing network and Derivative Pricing
7. Quality Awareness
8. Statistical Control
Quality Assurance: It is a set of activities intended to ensure that
products (goods or services) satisfy customer requirements in s
systematic, reliable fashion. QA cannot absolutely guarantee the
production of quality products, unfortunately, but makes this
livelier.QA includes regulation of the quality of the raw materials
assemblies, products and components, services related to production
and management, production and inspection processes.

7. Steps for QA Process:
• Test previous articles.
• Plan to improve.
• Design to include improvements and requirements.
Quality Assurance V/s Quality Control: Quality control emphasizes
testing of products to uncover defects and reporting to management
who make a decision to allow or deny the release. Whereas quality
assurance attempts to improve and stabilize production and associated
processes to avoid or at least minimize issues that lead to defects in
the first place.
Concepts of Quality in Commodities:
1. A History of Quality:
2. Continuous Improvement
3. Cost of Quality

8. 4. Customer Satisfaction
5. Glossary: A handy guide to the unique terminology of quality.
6. Problem Solving
7. Process View of Work
8. Quality Assurance and Quality Control
9. Root Cause Analysis
10. Supplier Quality
Grading and Standardization in Commodities:
Grading and standardization is well understood and practiced at all
India level for engineering and consumer goods. It is yet to become
popular for rural producer. Efforts are made by standard organization
to popularize the standards. Agmark is one of the important steps in
popularizing quality moment by gradation. There are many
advantages of grading. The important one is to obtain fair price to
producer and justice to the consumer.
Agmark “grades give full specifications of products for various
commodities”

9. Standardization: Standardization is the process of fixing certain
norms for the product. These norms are established by customs or
tradition or by certain authority. It involves determination of basic
characteristic of a product on the basis of which the product can be
divided into various groups. It also means determining the standard of
product to be produced with regard to size, color, form, weight, shape
and quality. Standards are model products which form the basis of
comparison.
Basis of Standardization: Agricultural goods are standardized on the
basis of different factors, based on which they are classified into
different grades. The following are some of the factors on the basis of
which standards are set:
1) On the basis of quantity, weight and measures.
2) On the basis of size and shape.
3) On the basis of color such as apples.
4) On the basis of quality such as food grains and cotton.

10. PROCESS OF STANDARDIZATION:
1) Prepare the list of all the items use to make the final product.
2) Classify the items according to their performance and dimensional
characteristics.
3) Group the items with similar functional characteristics and then
subgroup according to major dimensional values.
4) For a group of items with similar functional characteristics, study
the dimensional features..
5) If performance is acceptable, the items have been standardized
according to the National or International standards. If the
performance is not satisfactory, organization will adapt a local
standard, the dimensions being of the representative value.

11. 1. Uniformity in Quality
2. Differential Pricing
3. Increased in Demand
4. Elimination of Risk
5. Expanding the Market
6. Availability of Finance
7. No need for Inspection
8. Standardization
ADVANTAGES OF STANDARDIZATION:
Grading is categorizing the produce
into different lots, each containing
similar characteristics. The
characteristics could be one or more of
the following type:
Size – Big, medium, small, long, short, roundish, oblong etc.
Flavor – This in turn speaks of taste or class
Ripeness – raw, semi-ripe, ripe in case of fruits, oilseeds, pulses and
cereals.
Length of Staple – in case of cotton and jute.
Location Oriented – like Goa Alfanso, Bydagi chillies, Baiganpalli
mango, and Nagpur orange
Nasik Grapes – having specific tastes, shape, colour etc.

12. Purpose of Grading:
1. It is a means to describe the quality of produce for sale/purchase
activity.
2. It protects consumers from unfair trade practices by traders or farmers
and also enables farmers to get price as per quality and grade.
3. It works as a basis for fixing price and premium price as per quality.
Advantages & Importance of Grading:
1. Production of Large Scale
2. Increase in Sales, Quality Certainty
3. Helpful in Financial Management, Helpful in Future Contracts
4. It makes price more reasonable to grades and there will be
difference in price as per quality.
5. Simplification of storage and marketing of different grades.
6. Loans can be given based on stored goods as per the grade and’
7. Easier to understand quality available for each grade in case of bulk
sale.
8. Based on grades, quality and quantity, it is easy to estimate value for
loans against stock.

13. TYPES OF GRADING:
1. Fixed or Mandatory Grading: Under this the goods are sorted out
according to the size, quality and other characteristics which are of
fixed standards. These do not vary over time and space. It is
mandatory for a person to follow these grade standards if he intends
to sell graded products. The Agriculture Marketing Advisor
Government of India has fixed grade standards for a number of
agricultural commodities and it is compulsory to grade the produce
according to these grade specifications.
2. Permissive or Variable Grading: Under this the goods are graded
according to the standards which vary over a period of time. The
grading specifications are fixed in over time and space in this case but
changed every year according to the quality of the produce in that
particular year. In India grading by this method is not permissible.

14. 3. Centralized / Decentralized Grading: Under the centralized
grading system an authorized packer either sets up for his own
laboratory manned by qualified chemists or seeks access to an
approved grading laboratory set up for the purpose by state authorities
or co-operative association or private agencies. Grading in respect of
commodities such as ghee, butter and vegetable oil where elaborate
testing facilities are required for checking the purity as assessing the
quality has been placed under the centralized system.
4. Grading at Producers Level: Under this programme, free grading
services are provided to the farmers for sorting the produce before
offering for sale. This enables them to realize prices commensurate
with the quality of produce. Several regulated markets and
warehouses are manned with grading personnel with the central
assistance. Farmers on their own also do grading, which is actually
categorizing as per their own thinking.

15. Problems in Standardization & Grading: The techniques of standardization
and grading have not been developed fully in India. There are various problems
in their way. Some are as follows:
1. Lack of Standards & Grades: One difficulty in the development of
standardization and grading is that for many products standards have not been
developed.
2. Misuse of Standards & Grades: It is seen that many producers use
standards and grades in an authorized manner. There is lack of feeling of
responsibility and national character among our producers and it is a big
hindrance in the development of standardization and grading
3. Lack of Public Consciousness: Lack of public consciousness is the problem
in the way of development of standardization and grading in our country. The
reasons for lack of public consciousness are (i) low standard of living, (ii)
Illiteracy, (iii) Dominance of rural population.
4. Lack of Testing Facilities: This is also a great problem in development of
standardization and grading. Manufacturers feel the difficulty in getting these
standards and grades to be tested.
5. Lack of Facilities: There is lack of proper facilities for standardization and
grading. Many industrial enterprises and manufacturers do not like to indulge
themselves because of this reason.

16. AGMARK: AGMARK is the acronym for agricultural marketing. It
is a quality certification mark under central agricultural produced
(Grading & Marketing) ACT, 1937. AGMARK is done for
commodities of internal consumption like ghee, vegetable oil butter,
etc. The AGMARK label indicates the products meet certain
standards of purity and quality. Labels of different colors are used to
indicate the grade of the products. Strict procedures are followed and
rules are laid down to ensure conformity to the standards set as per
the grade given.
Indian Standard Institute (ISI): ISI came into existence in 1940 as
the consequence of industrial conference held at that time. In January
1947 government of India established Indian Standards Institute under
industrial development plan. Institutional head office is in Delhi.

17. Structure of the Organization: ISI is managed by the Board. The ex-
officio chairmen is the Industrial Development Minister of Union of India,
central government, state government, education and research institution
testing laboratories different industries and developmental boards are its
representatives. There are five departments of ISI: Engineering,
Construction, Economics, Weaving and Agriculture.
Functions of ISI:
1. Giving suggestions in respect of the product
2. Conducting necessary researches and experiments in field of
standardization
3. Determining standards of different products at National and
International Level
4. Suggesting in request of products
5. Making the standards popular
6. Checking new products and determining the standard mark for
them
7. Developing a feeling of competition for the purpose of promoting
the production of high quality goods.
8. Collecting necessary data.

18. Indian Standards Institution Act, 1952: ISI ACT was passed in1952.
This ACT gave power to the institute to the test the quality and
characteristics of agriculture product and marks them with “AGMARK”.
It also gave power to the producers of quality product to use mark ‘959’.
Grading of Commodities:
Agricultural Commodities: The agriculture produces grading and
making act 1937. This act provides for grading and marking of agriculture
commodities. The act authorizes the central government to frame rules
relating to fixing of grades standards and the procedure to be adopted for
grading the agriculture commodities included in the schedule. This act was
amended in 1986.
For Manufactured Commodities: The Indian Standards Institutions
(Certification Marks) Act, 1952: Manufacture products are graded in
accordance with the standards laid down by the Indian Standards
Institutions established under the act and graded products bear the ISI
label. The name of the Indian Standards Institution has been changed to
Bureau of Indian Standards (BIS) under the Bureau of Indian Standards
Act 1986.

19. Recommendations of National Commission on Agriculture: The NCA
had the made the following suggestion to make grading and standardization
popular in the country:
1) Grading and Standardization should be made compulsory for
transactions in agriculture commodities at all levels for local Interstate and
export trade.
2) Grading and standardization must cover all type of agricultural
commodities viz, livestock and livestock products, crops including
horticulture and plantation, fish and fish products, and minor forest
products.
3) The grading system should be made efficient and full proof. For this
trained and well qualified grades should be appointed.
4) Samples of graded commodities should be displayed in all the
markets for verification by the graders and participating consumers.
5) Duplication and overlapping of functions linked with the
formulation of grades standards of agricultural commodities should be
abolished.
6) In order to avoid duplication the work should be distributed among
the central and state government.

20. Other Provisions of Grade Standards and Quality Specification:
Apart from the agriculture product (Grading and Marketing) act,
1973, there are few other legal provisions which lay down standards
for food products. Some of the important acts are:
The Bureau of Indian Standards (BIS). Under Indian
Standards Institutions (Certification Mark) Act,1952
The Prevention of Food Adulteration Act, 1954
The Fruit Products Order, 1956
Solvent extracted oil, de-oiled meal and edible oil
(control) order 1967
The Meat food products order 1973
Vegetable oil products (standard of quality) order 1975.

21. Quality Control & Inspection – Indian Standards: The Quality
Control, Grades and Inspection Methodology is different from
Commodity to Commodity and for further information please login to
(MCX, NCDEX, NMCE, NBOT, ACE, ICE) websites and tap
commodity profile to look into the above details (Contract
Specifications):- Example: Gold Contract Specification of 2016 for
details such as Grade, Standardization, Quality and Inspection as per
Multi Commodity Exchange – Indian Standards.
URL: https://www.mcxindia.com/products/bullion/gold
C:UsersSAMDownloadsgold-february-2018-contract-onwards.pdf