Overview Of Rural Markets And Rural Marketing

4MBA03M4 Rural And Agricultural Marketing Semester IV Vivek Rajapadmanabhan

Vivek Raja Padmanabhan

Agri-Business and Food Processing 28 Years RPG Enterprises, Ballarpur Industries, Reitzel India (Swiss FDI) Two start-ups Director in 3 companies MSc (Agriculture), AMP-ISB Hyderabad, AIM IIMA

The Forces That Shape Rural India

India And World Agriculture The Opportunity And The Challenge Largest producer of Milk, Pulses & Jute 2nd largest producer Rice, Wheat, F&V, SCane, Tea 2nd largest arable land (next to USA) 2nd largest irrigated area (next to China) 2nd largest no. of tractors (next to USA) 2nd largest population (next to China)
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Global Agri Markets are not perfectly competitive

Dominance of few MNCs / State Trading Enterprises 6 agro-chemical cos. control 75% of market (Bayer, Syngenta, DuPont, BASF, Dow) 4 seed companies control 50% of proprietary seed market (Monsanto, DuPont, Syngenta & Bayer)

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Global Output Markets

ADM, Bunge, Cargill control 71% of soya bean crushing Cargill, ADM, ConAgra control 60% of Flour Milling 5 companies control 50% of Food Retailing Market

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Global Agri Markets are thin markets

16 18% or wheat production is traded 6 7 % of rice 7 8 % of dairy products

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World Market Structure - Wheat

Major Producers MMT EU China India USA Russia Pakisthan Canada World 119.4 109.2 75.8 55.8 49.4 23.3 20.1 610.2 Major Exporters MMT USA 34.5 Canada 16.6 EU 12.2 Russia 12.2 Argentina 12.2 (Top 5 importers 29%) World 115.5 18.7 % of product traded

67%

74%

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Drivers Of The Rural Market Space

Framework for Studying the Market Environment of Agricultural Inputs

Output Demand

Agronomic Potential

Output Price Input Price Agro economic Potential Information

Entreprunership

Infrastrct Services Rights Scale

Effective Demand Agg. Suply Distribution Actual Consumption

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What is Agronomic Potential? Cultivated Area expansion, change Crops - New Crops Variety - New Varieties Research Increase in Cultivation Intensity Irrigation, Better Water Management New Pests Increase in Susceptibility Change in Natural Environment
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What is Agro-Economic Potential?

Is it Profitable? Input Prices Input Price Policy Output Prices/Demand Output Price Policy Markets Subsidies / Taxes Substitute Prices / Cost Time value
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From A-E Potential to Effective Demand

Entrepreneurship Information / Communication Extension Infrastructure Transportation Credit Literacy Training Management
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What Determines Aggregate Supply?

Investment Production Imports Government Policy Technology Patents Licensing

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Finally: Distribution

Need Reach Small Farmers Channels Stocking Outlets Agents / Dealers Margins / Incentives Costs Management
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What defines markets: rural markets?

The 7 Os Who constitutes the Market?:OCCUPANTS What does the market buy? OBJECTS Why does the market buy? OBJECTIVES Who participates in the buying? ORGANIZATIONS How does the market buy? OPERATION When does the market buy? OCCASION Where does the market buy? OUTLETS
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Occupants 1

Farmers: Small/Large Farmers: With/ Without Irrigation Agricultural Labourers: Poor Agri Input Distributors / Dealers / Retailers Craftsmen Petty Traders Service-men

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Occupants 2

Physical Isolation Awareness/ Education Low Small Resource Base/ Poor Biological Production Process Traditions/ Beliefs Interdependence Leadership: Opinion Social Groups/ Castes Religion/ Superstitions
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Objects

Seeds Fertilizers Pesticides Farm tools, machinery and equipment Animal Feeds and Medicines Consumer non-durables Consumer Durables Services
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Objectives Agricultural Production Agronomic Potential Agro-economic Potential Effective Demand Aggregate Supply Distribution Household needs - Necessities and more Building and repair needs Transport Information and entertainment
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Organizations - Involved

Farmers Households Government Cooperatives Informal Groups Relatives - educated

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Operation: How?

Household Decision-making Men and Women Opinion Leaders Consultation Traditions/ Beliefs Experience/ Utility Risk-Aversion Credit Arrangements Tied-Market Arrangements
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Outlets: Where?

Huge number of small farmers/ buyers Scattered over a huge area Distribution extremely important Village outlets Cooperatives, Govt., Private Taluka Towns, District Towns Stocking, Logistics - Seasonality Credit, Advise, Tie-up Promotion/ Information
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Trends

Better Infrastructure Better Services More Incomes Better informed and educated - awareness High output prices - Demand Good growth Globalization More competition
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Rural Communication
Communication is about Education Consumers buy benefits, so communicate benefits Rural Marketing issues are to be addressed by (1) Awareness (2) Availability (3) Affordability (4) Acceptance/ Adaptability / Appeal Most effective are (1) Demonstrations (2) One-on-one communication (3) Audio Visuals

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Rural Advertising A Hybrid System

Non-conventional media wall paintings, VOW, calendars Language, dialect Puns, Metaphors, Sounds, Symbols Oral (Katha, Epics) Devotional literature Folk media (street theatre, puppets) TV Serials Hindi songs Bollywood films Conventional & New Media (TV, Radio, Print, Internet)

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Trends

Better Infrastructure Better Services More Incomes Better informed and educated - awareness High output prices - Demand Good growth Globalization More competition
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Rural Economy Size And Nature

4MBA03M4 Rural And Agricultural Marketing Semister IV Vivek Rajapadmanabhan

Rural Economy Some Important Indicators

Indian GDP ~ Rs 62 L Cr Agri GDP ~ Rs 12 L Cr (19%) Indian Rural Retail Industry~$ 113 Billion (40% of ~$ 280 Billion) Rural Health Care ~$ 9 Billion (2015) Rural population ~ 700 Million (> 70%) No. of Villages ~ 6 Lakh

Startling Facts Rural India

200 million mobile users (more than Brazil) 14/20 million DTH connections 87 million Kisan Credit Cards (more than debit + credit cards) Growth in durables 25%, urban 10% Growth in FMCG 18%, urban 12%

Nature Of Rural Economy

Large, diverse, scattered Major income from agriculture Rising standard of living, disposable income Traditional outlook Rising literacy Diverse socio-economic background Infrastructure facilities

Assignment 1
Explore the Size and Nature of the Rural Economy, assess pros and cons and conclude whether it is a good sector to work in.
Submit by Monday, Feb 13th forenoon.