Agriculture Marketing

• Agricultural Marketing is an integrated process of moving

agricultural products from farms to consumers.
• Numerous interconnected activities are involved in doing this, such
as planning production, growing and harvesting, grading, packing,
transport, storage, agro- and food processing, distribution, and sale.
Such activities cannot take place without the exchange of information
and are often heavily dependent on the availability of suitable finance.
• Agricultural Markets perform an enormous role in responding to the
world population’s daily demand for food products.
 Agriculture Market
•Marketing systems are dynamic; they are competitive and involve
continuous change and improvement. Businesses that have lower costs, are
more efficient, and can deliver quality products, are those that prosper.
Those that have high costs, fail to adapt to changes in market demand and
provide poorer qualities are often forced out of business.
• Marketing has to be customer-oriented and has to provide the farmer,
transporter, trader, processor, etc. with a profit. This requires those
involved in marketing chains to understand buyer requirements, both in
terms of product and business conditions
 Agriculture Market in Pakistan
• Prime most interest of the farmer is to get a fair return of his produce in the
market. At present the farmers who are spread all over the country make the
sales of their surplus produce to the village shopkeepers. Some portion of the
output is also sold direct to the market or through market agents. The farmers
generally do not get a fair price of agricultural produce is one of the major
problems of the farming community in Pakistan.
• For example the agricultural goods are generally perishable and cannot be
stored for a longer period of time. There are great variations in the quality of
produce. The farmer is therefore, generally handicapped and has to sell his
produce at an unfavorable place on unfavorable terms.
• Agriculture is the major sector of our economy. It not only provides food
security to the entire population but also supplements the foreign exchange
resources through export of farm produce.
 Problem/Defects of Agriculture Marketing In
Pakistan Economy
Major problems in marketing system of Pakistan are as under:
1. Low quality of produce
2. Costly transport facilities
3. Lack of market knowledge
4. Chain of Middlemen/Commission Agents
5. Multiplicity of charges
6. Lack of storage and warehousing facilities
7. Lack of Credit Facilities
8. Problems of Produce Collection
9. Weight and Measures
10. Lack of Grading
• Low Quality of Produce
• Our produce does not enjoy good reputation in the foreign as well as in the local markets due
to the presence of impurities in it and its admixture. Within the sphere of producer, the low
quality of produce is due to bad seeds, damage by natural calamities, defective picking,
harvesting, threshing, lack of storage and grading facilities
• Lack of Transport Facilities
• The transport system which consists of roads network, railways, air ports and shipping
services is not only inadequate but also very costly for the transportation of bulky
agricultural goods from one place to another. Marketing cost take a too high share of the final
price. Lack of proper farm to market roads and inadequate transport facilities deprives
farmer to get optimum price of the produce.
• Specially, vegetables reflect high transport cost. Being perishables their quality is also
affected during transportation. The ideal transportation in Asia is referred as Jakarta in
Indonesia where the farm to market roads are so developed that the farmers sell their
produce the same day and go back. It is generally said that in Jakarta 20 million take lunch
and 10 million take dinner
• Lack of Market Knowledge
• The farmers mostly being illiterate do not have detailed market knowledge as to when,
how and where the goods are to be sold. They therefore do not get a fair return of their
produce. Marketing intelligence is the need of the time. It is the facility which helps
farmer in getting better prices of his produce. Advance knowledge of the information
which commodity is required in which market improves efficiency in supplies and
prevents prices to fall at un-remunerative levels. A Karachi agriculture commodity
market which also stimulates exports seems to be on modern lines as they direct
supply of transportation of commodities when they fear price crash.
• Chain of Middlemen/Commission Agents
• There is a long chain of middlemen or marketing intermediaries who are engaged in
handling of the farm produce from the grower onto the consumer. Each of these
intermediaries take their own margin and tax the return of the grower. Different
commodities have different marketing channels. Analysis of paddy returns to farmers
from each channel. Although middlemen are service providers but their unnecessary
interventions mitigate farmer’s income
• Multiplicity of Chargers
• There are a number of unjustified charges which the farmer has to pay in the
market. These charges like commissions, payments to collie, masjid fund, flood
fund etc. are a burden on the farmer/seller. The other charges like octopi duties
and taxes are also paid by the farmer while transporting goods to the market.
There should be check and balance and farmer should not be unnecessarily
charged with payments which are not related to marketing produce.
• Lack of Storage and warehouses Facilities
• There is no or inadequate storage facilities at the farm level or in the houses of
the farmers to store the surplus produce. They therefore have to sell the produce
immediately after the harvest and thus get low prices for their produce. The
warehousing facilities in the markets are also insufficient and expensive.
Village go downs may be established for the facilitation of farmers to protect
him from distress sales.
• Problems of Produce Collection
• The collection of produce from small farmers is very expensive and a difficult
process. It is a great problem for the efficient marketing.
• Weights and Measures
• In various parts of weight and measures are not same. So a farmer suffers a loss
at the time of buying selling of his product.
• Lack of Grading
• In case of agricultural commodities the mixing of good and bad products is very
common in developing countries like India and Pakistan. There is no proper
method of grading these crops. It creates a problem of marketing inside and
outside the country.
• Lack of Credit Facilities
• The credit facilities are not adequate to meet the farmer's requirement. Poor
farmer is borrows the money from private money lenders at tied conditions
Measures for the Improvement of Agriculture
Marketing
Measures Taken by the Government of Pakistan for the Improvement of Agricultural
Marketing:
1. Farm to market roads
2. Provision of information
3. Establishing standard and grades
4. Regulation regarding weights
5. Construction of warehouses and rural godowns
6. Setting up market organizations
7. Regularized markets
8. Future Challenges
9. Increase in the Credit Facilities
10. Grading of Product
• Farm to Market Roads
• The government of Pakistan is allocating huge amount of money each year in the
annual budget for the construction of farm to market roads. The construction of
roads not only reduces marketing costs but also makes it easy for the farmers to
sell their surplus in the regularized markets. Different road network parameters
available in Pakistan are mentioned. There are 7 km roads for 50 km area.
• Provision of Information's
• The Government is also providing through television, newspapers, radio
information of current market prices of agricultural goods, crops prospects, factor
influencing demand etc. The timely information provided by the Government
helps the farmers in receiving fair return of their produce. Metrology Department
also provides projected temperature and rain fall in agriculture region of the
country to selected farmers through mobile phone network.
• Establishing Standard and Grades
• The Government through different Medias and market organizations stresses on the
farmers to maintain standards and grades of agricultural produce. The establishment of
grades of their agricultural goods brings good returns on their investment, simulates
export and helps the Government in earning foreign exchange. Grades provide value to
the produce of the farmer. Properly graded produce fetches right price for the farmer.
• Regulations regarding weights
• The Government has set up marketing organization for implementing regulations
regarding measuring weights, health and safety measures and checking unauthorized
deductions by the purchasers.
• Construction of warehouses and godowns
• The government is also constructing warehouses and rural godowns through PASSCO.
The construction of godowns makes it easy to store the goods and supply them when
these are needed in the market. The storage facility helps in the stabilization of prices
of agricultural goods.
• Setting up Market Organizations
• There are various agencies both at the Federal and Provincial levels which are entrusted
with the grading of agricultural products, marketing research, survey etc. The Agriculture
Policy Institute (API) consider a number of criteria including cost of production, domestic
and world prices etc in recommending support/intervention prices. It also revises prices
of important crops including wheat, cotton, sugarcane and rice paddy every year.
• Regularized Markets
• There are a number of regularized markets mainly in the urban areas of the country.
However, to safeguard the small growers the federal and provincial governments are
presently encouraging the establishment of regularized markets in the rural areas too.
• Future Challenges
• Under the WTO regime, there is an urgent need to educate growers. They shall now have
to concentrate on improving the quality of products by proper grading, standardization
and storage. The Government both at the Federal and Provincial level shall have to
develop efficient and strong marketing infrastructures for timely availability of the goods
at the right place, at the right time, at the right price and in the suitable form needed in the
domestic and international markets.
• Price Support Policy
• The Price support policy is a programme for the commodities where process are at
their worst will have a welcome effect upon the production and welfare of the farmers.
It is an incentive for the producers to grow more a certain commodity to the next
period. This will stabilize the income of the farmers. The government of Pakistan has
determined the support price of wheat Rs. 1450/per 40KG to decrease the food
shortage.
• Research on Agricultural Marketing
• It is appreciated that Directorate of Agriculture Marketing has been established. It
should embark upon a research programme covering each and every aspect of the
marketing of agriculture produce. The research on agriculture market would help in
building up a socio-legal infrastructure for the development of agriculture marketing.
• Increase in credit Facilities
• The government should increase the credit facilities to the small farmers. No doubt all
the commercial banks are providing this facility to the farmers but still it is not
sufficient.
 Agriculture Price Policy
“All in all, Pakistan’s agriculture shows more positive response to market
influences than superficial inferences drawn from its subsistence nature
would lead the observer to expect.”
(Cummings, J.T.)
“Agriculture price policy refers to determine the prices of agricultural
inputs and outputs so that an incentive to produce certain goods in desired
quantities”.
• Government’s intervene to stabilize prices of agricultural goods to ensure a
reasonable price to the consumer and producers
• Support Price? Procurement Price?
• Motivations: to safeguard the interests of both producer and
consumer and moderate the impact of excessive fluctuations
in output.

• Agricultural price policy encompasses both outputs as well

as inputs, because these two tiers are interdependent

• Agricultural price policy: ‘a policy of the government

whereby it acts to influence or determine the prices of
agricultural outputs and inputs.’
 Objectives/Importance/Role of Agri. Price Policy
1. To remove uncertainty
2. To increase agricultural
production
3. Keynesian arguments
4. Lag between agricultural prices
and other prices
5. Lack of storage facilities
6. Stabilize the tempo of economic
growth
7. Income disparities
8. To increase the standard of
living
9. Import Substitution
10. Balanced Cropping Pattern
11. To Use of Better Inputs
12. Better Use of Resources
• To Remove Uncertainty: By Fixing the agri. Prices at some reasonable rate,
may help for agriculturists to earn reasonable profits which may be
sufficient to remove the seasonal fluctuations and uncertainties.
• To increase Production: Agri. Price policies are also needed because the
provide incentive for the farmers to increase agri. Production
• Keynesian Arguments: Dr. Keynes linked the agri. Price with the general
price of the economy. The stable agri. Prices may enhance the economic
activities. So to avoid depression particularly in LDC’s the agriculturists
should be assured for reasonable prices.
• Lag Between agri. Price and other prices: if there Is an increase in agri.
Prices the supply may increase after half a year, so the income of the
farmers cannot be increased accordingly as the economic conditions
change with time so because of this lag period. Therefore a sound price
policy is needed.
• Lack of storage facilities: Agriculture is a seasonal industry and
farmers have to supply the whole of its produce to the market due to
lack of storage facilities which cause price policy especially in LDCs.
• For Economic Growth: Stable agri. Prices mean stable wages and
stable incomes so it would help to stabilize the tempo of eco. Growth.
• Income disparities: To reduce income disparities between
agriculture and industrial sector. Agriculture price policies are
needed.
• To increase standard of Living: To Increase standard of living of
people who are engaged with agri. Sector. Agri. Price policies are
necessary.
• Balance Cropping Pattern
• A balanced cropping pattern is necessary for the development
of agri. Sector. Therefore, an effective price policy is need to
encourage a balance cropping pattern and increase the
production of agriculture Goods.
• Better use of Recourses: The better use of resources may
cause higher production and output levels, and there will be low
cost of production. Thus, the agri. Production can be stimulated
by an appropriate price policy.
 Problem of Agricultural Price Policy
• Climates
• The climatic position of Pakistan changes with the variation of seasons. Some
times, the climate badly affects the production of some agri. Goods and the
price policy cannot affect the production.
• Plant diseases
• The production of agri. Goods decreases up to 15% to 20% due to pest and
plant diseases. If this loss may not be saved by the use of chemicals the price
policy becomes inoperative.
• Water logging and Salinity
• It is a main cause which decreasing the cultivable area of land and it is a cause
of low productivity. It is also an obstacle in the way of effective price policy.
• Defective Planning
• The statistical data, survey reports and information's are false due to
defective planning system in Pakistan. Thus, the price polices announced
in different plans could not be successful.
• Market Functionaries
• There are several persons engaged in assisting the sale and purchase of
agri. Produce. These market functionaries are commission agents, brokers,
weigh men, waterman, etc. These Functionaries exploit the situation and
the farmers cannot get the real prices of their produce.
• Political Instability
• Due to unstable political System, the economic policies are also unstable.
Therefore, due to rapid changes in government also bring about changes
in agricultural price policies.
 Price Support Policy
• Govt. intervenes in a market by setting a price level of a commodity below
which the good can not be sold. A price floor becomes effective only when
it is higher than the equilibrium price. It is called the support price .
• Such price floor is usually adopted for agricultural goods because govt. is
desirous in giving incentive to the farmers to increase production of a
particular commodity.
• The government’s price policy in agriculture sector comprises upward
revision of minimum support prices for selected crops like wheat rice
sugarcane etc.
 Settlement of Price Support Policy
• The Agriculture price Commission has been set up by the Federal
Government of Pakistan. The agricultural price commission has been
entrusted the task of formulating support price proposals regarding various
crops for government final decision about the level of support prices is
however taken by the cabinet.
• The following standards for determination of support prices have been
adopted by the Agricultural price commission in Pakistan.
• i) To observe the prices of the concerned goods in previous years.
• ii) To observe changes in the prices of inputs and estimate the cost of
production.
• iii) To analyze the pattern of production
 Settlement of Price Support Policy
• iv) To observe the demand and supply conditions of that commodities
• v) To observe the inflation rate in the country
• vi) To observe the term of trade
• vii) To follow the government directions and carefully observe
government targets.
• Therefore, on the recommendations of the agricultural price commission,
Government of Pakistan has increase support prices of many crops like
wheat rice sugarcane, oil seeds, cotton etc.
 Support Price Implementing Agency
S# COMMODITY SUPPORT PRICE IMPLIMENTING AGENCY

i Wheat PASSCO and Provincial Food Department

ii Cotton Cotton Export Corporation

iii Rice (Paddy) PASSCO

Iv Rice (Cleaned) Rice Export Corporation of Pakistan

v Potatoes and Onions PASSCO

vi Sunflower, Soya bean and Canola PASSCO

vii Sugarcane Sugar Mills.

viii Gram PASSCO

 Incentives of Price Support Policy
• Compensation of Cost of Production
• The prices of various input like seeds, chemicals, fertilizers, diesel oil, electric
power, labor wages and canal water rates have increased by varying proportions.
The rise in input prices has raised the cost of production of crops. To offset the
impact of above developments and maintain producer’s incentives, the
government has revised the support prices of the crops.
• Protection During Harvesting
• The open market price tends to fall during the post harvest season. The support
prices act as minimum guaranteed prices for growers and safeguard their interests.
• Improvement in Farm Income
• The growers cannot get their due share of their produce due to ignorance. Thus,
the Support prices of agricultural commodities play a vital role in resource
allocation and improving the farm income.
• Elimination of Middle Man
• The govt. of Pakistan has designated the implementation of the support
price programme for the various crops to some agencies like PASSCO,
Provincial Food Department etc. These agencies purchase various crops
from the farmers directly. There is no role of middlemen. In this way, the
exploitation of middleman has been removed.
• Food Self-Sufficiency
• The support prices programme is an incentive for the grower to increase in
productivity of particular crops. For example support Price of wheat has
solved the food shortage Problem to some extent.
• To Save Foreign Exchange
• When the Productivity of a certain crops increase, the imports expenditure
decreases due to the increased production. In this way, we can save the
foreign exchange
• Guidance of Experts
• The small formers are ignorant of prices in various markets of the country. The
experts of Agriculture Department have started tour and visits in rural areas and
providing the guidance regarding prices of different crops.
• Elimination of Uncertainties.
• There are many uncertainties of weather conditions like rains, storms etc. at the
time of harvesting. The PASSCO and Agriculture Department purchases directly
and immediately after the crops are harvesting. These agencies have sufficient
store and godwons throughout the country. Therefore the uncertainty of weather
conditions are eliminated.
• Economic Development
• The price support programme encourages the growers to increase the
productivity of various crops. They allocate the inputs in best proportion and get
their due share by selling directly to different government owned agencies.
• The income of farmers increases. This progress adds to Gross National Product
and the economy goes to the path of economic development.