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Marketing of Agricultural Inputs

Marketing of Agricultural Inputs

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Published by: ahmadksath on May 14, 2010
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09/17/2010

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MARKETING OF AGRICULTURAL INPUTS

India is number one in terms of irrigated land area BUT productivity is too low. There is need to modernize the agricultural inputs and mechanization in order to compete with other countries.

What are agricultural inputs?
CONSUMABLES Seeds Oil and lubricants Fertilizers Agrochemicals DURABLES Tractors Harvesters Thrashers Tools : levers , cultivators etc

How agricultural inputs are

INDIAN TRACTOR INDUSTRY
10 tractors / 1000 hectares (INDIA) compared to 60 tractors /1000 hectares. Growth of 30% in 04-05 due to ensured availability of economic finance by the govt.

PENETRATION LEVELS
• Penetration is significantly higher in states like Haryana and Punjab i.e 90/1000 hectare. • • BUT the average average tractor density is 10/1000 hec in INDIA. • • Huge potential for increase in sales.

CLASSIFICATION OF TRACTOR INDUSTRY
SMALL

Less than 30 hp Between 31-40hp (51-55%) More than 40hp

MEDIUM

LARGE

POST LIBERLIZATION SCENARIO
1991-97 Growth by 14% per annum 1988-02 Fall by 10%

REASONS FOR THE FALL ARE THE •Farmer’s income badly hit by monsoons. FOLOWING: •Increase in cost of petroleum. •Govt. not making sufficient purchases. •Less arable land. •Increase in installed capacity. •Cyclic nature of the industry.

2003 Onwards •Tractor industry grew by 43% in 2004 REASONS: Easy availability of finance. •Good cash flow to the farmers. •Good inventory of tractors.

MARKET SHARE ANALYSIS

COMPANY M$M JOHN DEERE EICHER ESCORTS PUNJAB TRACTORS

SHARE(appro x.) 30% 24% 24% 14% 11%

CHALLENGES OF INDIAN TRACTOR INDUSTRY

Low levels of mechanization. Lack of infrastructure. Lack of access to easy credit. Low productivity

Fragmented nature of land holdings.

Cautious and Price sensitive buying behaviour of farmers •Low literacy level

Good food stock position with government.

FACTORS SUGGESTING BETTER FUTURE PROSPECTS FOR TRACTOR INDUSTRY Increase in corporate farming •Increase in literacy level •Low level of farm mechanization •Government thrust on increasing irrigation •Emphasis on agriculture financing •Emphasis on rural infrastructure development •Clearing of piled up inventory

MARKETING STRATEGIES
(a)For domestic tractor industry INORGANIC STRATEGY
Eg:

Joint venture of John Deere and L$ T. Yanmar (Japan) – 12% stake in Sonalika. TAFE acquired the tractor business of Eicher group.

(b) Exporting • Due to low cost of manufacturing India is being used as export base. • Accounting approx. 25% of profit. (c ) Manufacturing in alignment with demand Phenomenon of overstock has to be controlled •

(d) Other strategies
Addition of new features •Setting up satellite plants

FERTILIZER INDUSTRY IN INDIA
• • • • • Transformed agriculture sector. Green revolution gave positive boost (60’s). Third largest producer in world. 57 large plants in the country.

MARKETING FOR FERTILIZER INDUSTRY
qConstitutes the backbone of Indian agriculture industry. qMajor and active role of government. qMarketing mix for fertilizers is determined by government not by organization especially for Urea.

q

CLASSIFICATION OF FERTILIZER INDUSTRY

VARIATIONS IN CONSUMPTION
• Variation across states. • Variation across districts. • Variation across product categories.

POLICIES FOR MARKETING OF FERTILIZERS
Introduced in 1997 , to keep the prices low. •Cost plus subsidy paid to urea manufacturers to compensate. •Earlier only determined by Government but now there Distribution Policy are many private selling points also. •There are 2,72,000 fertilizers sales point presently. Import policy • Import of fertilizer i.e UREA which is used at very large scale is on restricted list. •Prices are fixed in such a way that there is no difference in price of fertilizers either imported or bought from Referencedomestic market Balram Dogra, Karminder , Tata Mc Graw05/14/10 : RURAL MARKETING - BY Hill 18
Retention Pricing scheme

CHALLENGES FOR MARKETING FERTILIZERS

19

Reference : RURAL MARKETING - BY Balram Dogra, Karminder , Tata Mc Graw05/14/10 Hill

MARKETING STRATEGIES OF FERTILIZER INDUSTRY
Area wise constraint analysis •Development marketing •Tie –ups with cooperatives •Organize direct contact programs •Macro environment management (critics) •Developing optimum product mix •Distribution channel management •Preparation for decontrolled scenario

20

Reference : RURAL MARKETING - BY Balram Dogra, Karminder , Tata Mc Graw05/14/10 Hill

MARKETING STRATEGIES OF FERTILIZER INDUSTRY

Promoting balanced and efficient use of fertilizers •Demonstration •Below line promotion activities (exhibitions, •Training programs for dealers fair,competitions etc) •Provision of value added services •Use of information technology networks (kisan call centres)

INDIAN AGROCHEMICAL INDUSTRY
• Constitutes those chemical compounds that prevent crops from attack of pests , weeds , fungus , insects and other related diseases. • • Classification is on the basis of the purpose for which it is used i.e insecticides , fungicides etc • • India is second largest producer of agrochemicals in world after Japan.

22

Reference : RURAL MARKETING - BY Balram Dogra, Karminder , Tata Mc Graw05/14/10 Hill

MARKETING ENVIRONMENT FOR AGROCHEMICALS IN INDIA
CROPPING PATTERNS GOVERNMENT POLICIES AND REGULATIONS Farmersdependent monsoons , Economic liberalization had limits possibilities of high major impact. investment on agrochemicals. Reduction in import tariffs. Agrochemical market is different for different crops and Delicensing in pesticide industry. different states . Eg: for cotton in south 12-15 Opportunity for exports

FACTORS EFFECTING AGROCHEMICAL'S MARKET GROWTH
Farmers incomes are rising •Aggressive promotion •Backward integration •Usage of agrochemicals is increasing •New and effective products are reaching •Irrigated area is rising because of corporate Indian markets irrigation

24

Reference : RURAL MARKETING - BY Balram Dogra, Karminder , Tata Mc Graw05/14/10 Hill

CHALLENGES FACED BY INDIAN AGROCHEMICAL INDUSTRY
Low capacity utilization : less land is used due to less facilities •Seasonality of demand •Expensive finance for industries •High inventory cost •Price cutting ( when season is about to off, dealers rush to clear •Huge working capital required stock) •Lack of indigenous research and development •Undisciplined marketing (requirement is not properly estimated)

25

Reference : RURAL MARKETING - BY Balram Dogra, Karminder , Tata Mc Graw05/14/10 Hill

CHALLENGES FACED BY INDIAN AGROCHEMICAL INDUSTRY
Low profit margins •Crop imbalance ( optimum consumption is difficult to realize , crops need less or more chemicals) •Regional imbalance •Low selling price of agricultural products •Natural calamities •Environmental pressures (critics)

26

Reference : RURAL MARKETING - BY Balram Dogra, Karminder , Tata Mc Graw05/14/10 Hill

MARKETING STRATEGIES FOR AGROCHEMICALS
PRODUCT STRATEGY Backward integration (low cost, improve quality, better margins) profitability) Branding (more Cost effective manufacturing process PLACE STRATEGY Aggressive distribution strategy by dealing directly with retailer.
27 Reference : RURAL MARKETING - BY Balram Dogra, Karminder , Tata Mc Graw05/14/10 Hill

PRICE STRATEGY High MRP and low selling price Good working capital management (limited credit) PROMOTION STRATEGY Promotional efforts to change attitude (exhibitions , melas) Farmer education
28 Reference : RURAL MARKETING - BY Balram Dogra, Karminder , Tata Mc Graw05/14/10 Hill

EXPORT STRATEGY In order to safegaurd industry from unpredictable losses from domestic market Indian firms should consider whole world as its market.(already considering too)

Thanks…
30 Reference : RURAL MARKETING - BY Balram Dogra, Karminder , Tata Mc Graw05/14/10 Hill

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