C.

Ruiz
Agri 61

COURSE CODE: AGRI 61

COURSE TITLE: Introduction to Agricultural Commodity and Enterprise Development
CREDIT UNITS: 3 units
COURSE DESCRIPTION: Application of the principles in agricultural entrepreneurship, marketing,
and financial management in the development of enterprise for the different agricultural
commodities in the country.

CHAPTER II
AGRICULTURAL MARKETING:
A. Marketing of Agricultural Products
B. Marketing Channels
C. Market Globalization

At the end of the unit, the students must:

1. Understand the marketing of agricultural products
2. Familiarized with the different marketing channels
3. Understand market globalization

Values Infused/ Competencies

 Responsible resources stewardship
 Critical thinking
 Social Awareness
 Prudence

MARKETING OF AGRICULTURAL PRODUCTS

AGRICULTURAL MARKETING
According to Business Management Ideas (n.d.) Is a process which starts with a decision to
produce a saleable farm commodity, and it involves all the aspects of market structure or system,
both functional and institutional, based on technical and economic considerations which also
includes pre and post-harvest operations such as assembling, grading, storage, transport and
distribution.
EXAMPLES:
1. Food Grain
2. Commercial Crops
3. Plantation Crops
4. Horticultural Produce
5. Semi-Processed Products.

1
C. Ruiz
Agri 61

AGRICULTURAL MARKETING DEFINITIONS

According to Thomsen M. (n.d.)

The study of agricultural marketing comprises all the operations, and the agencies
conducting them, involved in the movement of farm produced foods, raw materials, and their
derivatives, such as textiles, from the farms to the final consumers, and the effects of such
operations on farmers, middlemen, and consumers.

According to National Commission on Agriculture

Agricultural Marketing is a process which starts with a decision to produce a saleable farm
commodity, and it involves all the aspects of market structure or system, both functional and
institutional, based on technical and economic considerations, and include pre- and post-harvest
operations viz., assembling, grading, storage, transportation, and distribution.

AGRICULTURAL MARKETING CHARACTERISTICS

The peculiar characteristics of agricultural produce, result in a very complicated marketing
system. Its specific peculiar characteristics are:
a. Bulkiness
b. Perishability
c. Wide varietal differences
d. Seasonality
e. Dispersed production
f. Processing needs for consumption
These characteristics make the agricultural marketing a complicated system. Generally, the
farmers sell their agricultural produce immediately after harvest in raw form without any processing.
Since, only raw produce is marketed there arises a need for many intermediaries to operate between
the producer and consumer.
The path that goods take from producer to final consumer is called the marketing channel.
The type and complexity of the marketing channel varies with different commodities. The roadside
market is a very simple marketing channel, from producer/farmer directly to consumer. However,
most products undergo further processing at different levels of the marketing channel and pass
through many firms before they reach the ultimate consumer.

AGRICULTURAL MARKETING CLASSIFICATIONS

Economists have divided market in different manners based on the frequency with which
they are held, the type of products traded, the scale of transaction and the kind of marketing
functions performed. Specifically, based on location agricultural markets may be classified into:
a. Local market/Village market
b. Primary markets
c. Secondary market
d. Terminal markets

2
C. Ruiz
Agri 61

A. Local Markets
This market is confined to a particular village, where producers and intermediaries or
consumers meet for the purchase and sale of farm products. The products produced in that village
are brought for sale in these markets. The local market is also known as growers’ market and is
available in the vicinity of rural areas. They are generally located in small towns and at their
convenient places, where rural producers bring their produce and sell to the buyers.

Functions of Local Markets:

a. Assembling of Products – The primary function of local market is to assemble the farm produce at
a single place.
b. Availability of convenient place – As the producers and buyers meet at a nearby place, this type
of market act as a convenient place for producers as well as buyers. This helps the producers and
relieves them from the headaches of transportation and save other costs of carrying it to the towns.
c. Immediate Cash Payment – In these types of markets the village producers get immediate
payment after the sale of their produce.

B. Primary Markets
These markets are situated in the producing areas, commodities produced in the nearby
surrounding areas are brought and sold in these markets. The agricultural produce is purchased by
intermediaries, which later they sell it into wholesale markets.

Functions of Primary Markets:

The main function of these markets is to serve as assembling centers for the local produce,
but they also function as distributive centers for local consumption.

C. Secondary Markets
These are regular wholesale markets and provide a permanent place for daily transaction.
The quantum of commodities transacted is in bulk. Large quantities of commodities arrive from
other markets into these markets. Therefore, there are middlemen, market agents, weighmen and
commission agents are involved in the marketing system. These markets also have grading, packing,
warehousing, loading, transportation, telephone, and banking facilities. These facilities available in
‘Central Markets’ make it possible to handle business at large scale.

D. Terminal Markets:
A terminal market is a market where the produce is either finally disposed of to the
consumer or to the processor or assembled for export. In these markets, merchants are well
organized and use modern methods of marketing. In this market the price locating activities operate
and buyers and sellers represent the different regions or nations sometimes meet to adjust the
supply and demand.

BASIC FACILITIES NEEDED FOR AGRICULTURAL MARKETING

To have the best advantage in marketing of agricultural produce, a farmer should enjoy
certain basic facilities:

3
C. Ruiz
Agri 61

1. The farmer should have proper information about the future demand of a particular
commodity in the market, so that he can plan earlier to sow the seeds of those crops which can get
him a fair return.
2. A proper rural network with all-weather roads are necessary to develop the farmers/rural
areas.
3. Small village farmers are dependent on other small towns for sale and purchase of outputs
or inputs. An efficient road transport system is necessary for all types of rural farmers.
4. The farmer should have proper storage facilities for storing his agricultural produce.
5. The farmer should also have holding capacity, in the sense that he should be able to wait
for times, when he could get better prices for his produce and not dispose of his stocks immediately
after the harvest when the prices are very low.
6. He should have clear information regarding the market conditions as well as about the
ruling prices; otherwise, he may get cheated.
7. There should be more organized and regulated markets, where the farmers will not be
cheated by the middlemen or intermediaries.
8. The number of intermediaries should be less so that the middlemen’s profits are reduced.
Which as a result, will increase profits to the farmer.
9. The farmer can easily get institutional credit facilities for agriculture and allied activities.
10. In the event of failure of crops, due to drought or other natural calamities, he should get
financial security and crop insurance for his crops.

PRE-REQUISITES FOR EFFECTIVE AGRICULTURAL MARKETING

1. STORAGE
Farmer should have adequate storage facilities. Development of warehousing is essential.
2. FINANCE
Farmer should have sufficient holding power, i.e., he should be able to wait for favorable
prices and he should not be forced to sell his stocks immediately in the village to the trader-cum-
money lender even at low prices.
3. INFORMATION
Farmer should have up to date market information regarding supply, demand, and prices.
4. CO-OPERATIVES
There should be reasonable number of middlemen between the farmer and the consumer.
5. TRANSPORT
Marketing depends upon transport. We must have efficient and economical network of road-
rail transport for home trade. Adequate and cheaper transport can widen agricultural markets and
offer remunerative prices also.

STEPS TAKEN FOR IMPROVISING AGRICULTURAL MARKETING

1. Creation of planned network of warehouses at all markets.

2. Development of rural transport.
3. Linking co-operative credit with farming, marketing, and processing.
4. Adequate publicity to market information.
5. Stabilization of food grain prices.

4
C. Ruiz
Agri 61

6. Marketing Surveys of various agricultural products were undertaken, and these were duly
published. These surveys revealed the various problems encountered in agricultural marketing and
pointed out remedies to solve those problems.
7. Command of better prices as well as establishment of more laboratories to test the quality and
purity of produce
8. Establishment and betterment of warehousing facilities.
9. Active Government participation in regulating the agricultural market
10. Competent cooperatives through trained and efficient salaried personnel with the provision of
professional management.

AGRICULTURAL MARKETING DEFECTS

1. Lack of Organization - There is lack of organization among producers. Producers are small and
scattered. They have no collective organization of their own to protect their interests.
2. Forced Sales – The farmers are forced to sell their products due to:
a. Poverty and prior indebtedness
b. Lack of storage facilities
c. Time factor, particularly regarding perishable goods.
3. Existence of Large Number of Middlemen - There are many intermediaries or middlemen
between the producers and the consumers. These middlemen sell the produce to the consumers at a
higher price and give lower returns to the producers. According to some data, approximately 50% of
the price paid by the consumer goes to middlemen.
4. Multiplicity of Market Charges - The producers pay numerous and various marketing charges.
Sometimes producers pay more than 20% of the income they produce. They also pay market charges
at different levels such as commissions and labor apart from the deduction for impurities in the
produce by the wholesaler.
5. Multiplicity of Weighs and Measures - There is lack of standard weights and measures. The
multiplicity of weights and measures employed has many defects:
a. It makes supervision very difficult
b. It gives opportunity to cheat the producers

6. Inadequate Storage Facility - Storage facility is far below the requirements in rural and urban
areas.
7. Lack of Transport Facility - There are bad roads which lead to loss during transportation and cause
strain to the animals. There is a lack of quick and safe transport of perishable products.
8. Lack of Market Information - Most of the farmers are illiterates and they are ignorant of the
accurate prices ruling in the market. They depend upon inaccurate information.
9. Lack of Financial Facility – Most of the financial needs of the farmers are met by moneylenders.
The existence of Loan Sharks also causes a problem for most of the farmers and sellers due to high
interest rates which causes their debt to multiply in a short period of time.

MEASURES FOR CORRECTING THE DEFECTS IN AGRICULTURAL MARKETING

The defects of agricultural marketing can be removed by the following measures:
1. Establishment of regulated market - Many defects of agricultural marketing and malpractices of
middlemen can be removed by the establishment of regulated markets.

5
C. Ruiz
Agri 61

2. Use of standard weights and measures - Cultivators and purchasers are safeguarded against
cheating by false or underweight using standard weights and measures.
3. Storage and warehousing facilities - Increase in storage and warehousing facilities is necessary to
remove the defects in agricultural marketing. Warehousing is the protector of national wealth.
4. Improvement in transport facilities - For proper marketing of agricultural goods, adequate and
appropriate transport facilities are very important.
5. Provision of marketing information - The important providers of market information are: private
arrangements for traders, newspapers, government publications, regulated markets, radio and TV
and cooperative societies.
6. Development of cooperative marketing – The defects of agricultural marketing are removed by
the development of cooperative marketing.
Cooperative Marketing - Cooperative marketing essentially involves understanding or an
agreement between two companies aiming to promote or sell the other companies' products. They
also sell their products. The companies within the agreement do this to complement each other's
services. This provides mutual benefits. Cooperative marketing results because of the combined or
joint efforts of two or even more companies. Typically, they bundle and group the products and
services in the hope of reaching a common target audience. In cooperative marketing, products can
complement or even supplement each other. In some cases, it can cater to different seasonal cycles.

TECHNIQUES FOR MARKETING AGRICULTURAL PRODUCTS

In marketing your agricultural product, you must build strategies and smartly device your
plans to enhance your agri-business. Agricultural marketing is very complex as it involves a lot of
people, such as the producers, middlemen, wholesalers, retailers and many more. Therefore, there is
a need to identify some realistic techniques on marketing for agricultural products, with a study of
every aspect of the products as well as the production process.

Principle of Distinction
Buyers are more inclined to buy something they find interesting and different. If you try to
market your product in a different way, you might be able to catch their attention before anybody
else. Once you have achieved your target of grasping attention of the potential buyers, it’s time to
impress them by providing quality and assurance. Give away as much information as you can about
your product through branding and labeling. Try to out-stand others in the market by applying the
principle of distinction to enhance your agri-business.

Sell in Regular Markets

When you are dealing with agricultural products, reach out to the markets that usually run
on the weekend than on regular days. This is the most effective tool for marketing agricultural
products because customer base is set. You just need to find the tactics to attract them to come for
your products. You will be able to increase the sales and enhance your agri-business.

Join Government Associations

This is the most viable plan to enhance your agri-business sales as government associations
membership is a cost-efficient way to hold a big market share for product. These associations are
generally beneficial to small farmers, as government association takes over the responsibility of
marketing an agri-business. From advertising to buying, they handle all the work. Moreover, they sell

6
C. Ruiz
Agri 61

farmers’ products by increasing the price up, which eventually increases the profits of a farmer. It is
advisable to get registered to these associations as this is one of the effective marketing strategies for
agri-business, which should be followed to increase the sales.

MARKETING STRATEGIES FOR AGRICULTURAL EQUIPMENT

As agricultural equipment are quite expensive, farmers find it very difficult to afford them.
The government has taken steps to increase the involvements of participants in the marketing
process by providing incentives to small farmers using numerous marketing strategies for agri-
business. Here are some of them:
a. Training and re-training of farmers
b. Distribution of fertilizers and pesticides
c. Provision for improving seed quality
These steps increase the participation of farmers to market their agricultural products and result in
enhanced agri-business sales.

COLLABORATION WITH GOVERNMENT

Collaboration with the government is one of the best marketing strategies for agri-business.
It helps the traders, farmers and middlemen as the government takes up responsibilities and comes
up with programs beneficial for them. This provides the farmers with an opportunity to indulge in
new techniques and strategies to market their agricultural products.

SET APPROPRIATE PRICING

When dealing with agricultural equipment, try to make your customers feel that you are here
for everybody and not for a certain class of people. Don’t be the seller who only caters to those who
have big pockets and set the pricing appropriately. Try to be as approachable as you can to develop
trust and reputation among people. The more you try to form a specific customer base, the more
people will feel distanced from you, ultimately affecting your sales and marketing strategies for agri-
business of yours.

REFERENCES:

https://www.businessmanagementideas.com/agricultural-business/agricultural-marketing-
definition-characteristics-types-functions-and-measures/19934

https://blog.unisquareconcepts.com/marketing/marketing-for-agricultural-products-4-essential-
techniques-you-must-know-about/