Marketing Losses and Their Impact

on Marketing Margins: A Case Study

of Banana in Karnataka
Introduction

 Post harvest losses due to Handling, Transport, Storage and

distribution in F&V.
 Decrease in per capita availability, money loss, increase in
transport and marketing cost.
 These losses are generally included in marketing margins of
intermediaries and retailers or in farmers net price.
 Thus this study is important to find the impact of these
losses on marketing margins and marketing efficiency.
Objective of Study

 To develop & validate the Methodology to measure losses

at different stages of marketing.
 To examine the impact of such estimation procedure on
farmer’s net price, marketing costs, margins and efficiency
Methodology
Estimation of Post Harvest Losses at 3 stages
 Field level
 Transit & Wholesale level
 Retail Level

Calculations in simple average and percentage

Parameters which are estimated
 Farmer’s net price
 Marketing Margins of intermediaries
 Marketing Cost
 Marketing Losses
 Marketing Efficiency

Comparison of Wholesale Marketing channel and Co-operative

marketing channel is done
Estimation Procedure
 Farmer’s Net Price/ margin
NPf= Gross Price (farmer)- [Marketing cost farmer+ (wastage x gross
price)]
 Marketing Intermediaries Margin

 MMw = Gross Price wholesaler(Sales price) – Gross pricefarmer – Marketing

Costwholesaler – [Wastage x Gross priceWholesaler]
 MMR = Gross PriceRetailer – Gross priceWholesaler – Marketing
CostRetailer–[Wastage x Gross priceRetailer]
 MM = MMw + MMR
 Marketing Cost

MC= MCfarmer + MCwholesaler + MCRetailer

 Marketing Losses

ML = MLfarmer + ML Wholesaler + ML Retailer

 Marketing Efficiency
Usual methods were:
 Output /Input Method
 Shepherd’s Ratio- Value of marketed goods/ Cost of
marketing
 Acharya’s modified marketing method

To estimate efficiency by calculating loss as separate

component
ME= NPf / [MM + MC + ML]
Data collection
 Product Name – Banana, var. Ney Poovan
 Sampling Technique – Multi stage Random Sampling
Stages of Selection of sample
Stage I
State Level Karnataka

Stage II Bangalore
District level

Stage III Channapatna Ramanagaram Kanakapura

Taluka Level

32 Farmers

3 bunches from
each field
 For wholesale Level Losses estimation
 15 Commission agents
 5 main HOPCOMS
 For Retail level Losses estimation
 15 retail outlets
 HOPCOMS also act as outlet
Marketing Channels

 Wholesale Channel

Farmer Wholesaler Retailer Consumer

60-70% Banana marketed through this channel

 Co-operative Channels
Farmer Farmer’s Co-operative Society Consumer
 Pre Harvest Contractor Channel

Pre- Harvest
Farmer Wholesaler Retailer Consumer
Contractors
Post Harvest Losses at Different Stages of
Marketing of Banana

SL Stages of Marketing Wholesale Channel Co-operative Channel

.N
o Post Harvest % of total Post Harvest % of total
Losses (%) losses Losses (%) losses

1 Field and Assembly 5.53 19.17 7.82 42.71

level
2 Wholesale Level 6.65 23.06 1.77 9.67

3 Retail Level 16.66 57.77 8.72 47.62

4 Total 28.84 100 18.31 100

Marketing Cost

SL.N Particulars Wholesale Co-operative

o Channel (Rs/Kg) Channel (Rs/Kg)
1 Farmers 3.64 0.57

2 Wholesalers 0.21 0.73

3 Retailers 0.51 0

4 Sub-total 4.36 1.30

5 Share in consumers price (%) 27.53 10.0

Marketing Losses

SL.N Particulars Wholesale Co-operative

o Channel (Rs/Kg) Channel (Rs/Kg)
1 Farmers 0.66 0.72

2 Wholesalers 0.93 1.30

3 Retailers 2.64 0

4 Sub-total 4.23 2.02

5 Share in consumers price (%) 26.70 15.54

Impact of Marketing Losses on Farmer’s net Price,
Margin, Efficiency Index and price- spread

SL Stages of Marketing Before Separating Losses After Separating Losses

.N
o Wholesale Co-operative Wholesale Co-operative
Channel Channel Channel Channel

1 Farmer’s net price 8.36 8.68 7.70 7.96

2 Wholesaler’s margin 1.79 3.22 0.86 1.92

3 Retailer’s margin 1.33 - -1.31 -

4 Marketing efficiency 1.12 2.01 0.95 1.58

5 Price –spread (Rs/kg) 7.48 4.32 8.14 5.04

6 Consumer’s price (Rs/ 15.84 13 15.84 13

kg)
 Farmers net price
 Farmers net price reduced by 8.75% (61.23 %) in
wholesale and 9.05% (48.61%) in Co-operative channels.
 Losses were Rs 0.66/ Kg and 0.72/ kg respectively.
 Value of rejects were not accounted.
 Wholesaler’s and Retailer’s margin
 Wholesaler’s Margins of both wholesaler channel and co-
operative channel decreased.
 Retailer’s margin become –ve (Loss) due to heavy loss
(16.67%)
 Highly perishable product variety.
 Price- Spread
 Increase in price spread due to
I. Decrease in producer’s share and margins of intermediaries
II. Inclusion of marketing loss as component of cost
 Wholesale channel- 53% P.H. loss in price spread and Co-
operative- 40% P.H. loss component in its Price spread.
 Efficiency Index
 Co-operative channel-higher price realization, Operational
efficiency due to low marketing cost and less post harvest
losses
 Co-operative channel was found most efficient with lowest
consumer price of Rs 13 compared to Rs 15.84 /kg in
wholesale channel
 Conclusion

 Co-operative Channel is more efficient

 Low Post Harvest loss- 18%
 High pricing efficiency-low price spread
 Increased producer share and low consumer price
 Limited procurement and second grade material marketing
should also be considered as area of improvement.
 After removing losses Producer’s and wholesaler’s margin
reduced substantially.
 Retailer’s margin was found in loss.
 Marketing efficiency α 1/ Post Harvest Losses