Agricultural Marketing, Trade & Prices

Topic: Marketing Channels

By: Prof. Vikesh Rami

Introduction

Marketing channels are routes through which agricultural Products

move from producer to consumers, the length of the channel varies
from commodity to commodity, depending on the quantity to be moved,
the form of consumer demand and degree of regional specialization in
production and country to country.

Channels of distribution:
Generally following channels of distribution are follows
1) Producer- consumer
2) Producer -Retailer- Consumer
3) Producer-wholesaler-Retailer- Consumer
4) Producer- Agent- Retailer-Consumer
5) Producer- Agent-Wholesaler- Retailer-Consumer
Factors affecting the choice of marketing channels
1. Perishable nature: Choice of channels depends upon the
durability of commodity. Commodities like vegetables and fruits are
perishable and must be distributed through shorter channels
otherwise quality of the produce will be deteriorated before it
reaches to consumers.

2. Bulk and weight: When product is bulky and heavy

transportation cost becomes significant one has to reduce this cost
and for that selection of channel should be such that transportation
cost is minimized.

3. Financial position: Financially sound organization grant credit

for long period while financially weak organization have to take
help of other middlemen and thus distributing channel is affected.
Cont….

4. Marketing cost: the particular channel is better it per unit

marketing cost is lower than other channel.

5. Degree for control channels: If the producers or co- operatives

society of consumer has strong desire to control the existing
channel they can do so by avoiding some of the middleman.

6. Storage facilities. If producer do not have good storage facilities

then, they take help of some middleman who posses storage
facilities.
Cont…

7. Terms of payment of price: If a particular channel offered

easy terms of payment price of a commodity producer prefer
that channel than other which does not give any concessions
in paying the price of that commodity.

8. Number of consumer: If the numbers of consumer are

more than producers have to employ some middlemen if
consumers are less in number than normal sell will do the
job.
Cont…

In the marketing of agricultural commodities, the following

agencies are involved

1. Producer: Most of farmers perform one or more marketing

function. They sell the surplus either in the village or in the market.
Some big farmers assemble the produce of small farmers, transport
it to the nearby market, to markets a constant touch with market
functionaries, they have a fair knowledge of market practices.

2. Middlemen: Middlemen are those individuals or business

concerns which specialize in performing the various marketing
functions. They can be classified as……….
Cont…

a) Merchant Middlemen: Merchant middlemen are those who take

title of the goods they handle they buy and sell on their own gain or
lose, depending on the difference in the sale and purchase prices.
Merchant middlemen are of two types:

1) Wholesalers: who buy and sell commodities from farmers

and other wholesalers in large quantities. They sale to retailers,
other wholesalers and processors either in the same market or in
other markets.

2) Retailers: Retailers buy goods from wholesalers and sale

them to the consumers in small lots. They are producer’s
personal representatives to consumers. Retailers are the closest
to the consumer in the marketing channels.
Cont…

b) Agent Middlemen: Agent middlemen act as representative for

their clients. They do not take title to the produce. They merely
negotiate the purchase and /or sale. They sell services and not the
goods or commodities. They receive income in the form of
commission or brokerage. Agent middlemen are of two types.

1) Commission agents or arhatias: A commission agent

normally takes over the physical handling of the produce.
Arranges for its sale, collects the price from the buyer, deducts
his expenses and commission, and remits the balance to the
seller. All these facilities are extended to buyers as well, it asked
for.
Cont…
Commission agents or arhatias in unregulated markets are of
two types: Kuchha arhatias and pacca arhatias.

i. Kuccha Arhatias: They act primarily for the sellers including

farmers. They sometimes advance to farmers and itinerant
traders on condition that the produce will be disposed off
though them. They charge arhat or commission in addition to
the normal rate of interest on the money they advance.

ii. Pucca arhatias: They act on behalf of the traders in the

consuming market. The processors and big wholesalers in the
consuming market employ pacca arhatias at their agents for
the purchase of a specified quantity of goods within a given
price range. In regulated markets, only one category of
commission agent exists under the name of ‘A’ class trader.
Cont…

2) Brokers: Brokers render personal services to their clients in the

market. But unlike the commission agents, they do not have the
physical control of the product. The main function of the broker is
to bring together buyers and sellers on the same platform for
negotiations. Their charge is called brokerage. They may take
brokerage from the buyer, the seller or both. Brokers have no
establishment in the market. They simply wander about in the
market and render services to clients.
Cont…

c) Speculative middlemen: Those middlemen who take title

to the product with a view to making profit on it are called
speculative middlemen. They are not regular buyers or sellers
of produce. They are specialized in risk-taking. They buy at
low prices when arrival are substantial and sell in the off
season when price are high.
Cont…
d) Facilitative middlemen: These middlemen assist in the
marketing process. Marketing can take place even if they are
not active, but the efficiency of the system increases when
they are present. These middlemen receive their income in
the form of fees from those who used services. They are;

A. Hamals or laborers: They do unloading from and loading

on to bullock carts or truck. They assist in weighing, clearing,
sieving and refilling and stitch the bag of commission agent.

B. Weigh men: They facilitate the correct weighment of the

produce. Generally the scale- beam balance used. They get
payment for their services through the commission agent.
Cont…
C. Graders: Those middlemen sort out the product into different
graders, based on some defined characteristics, and arrange them for
sale.

D. Transport agency: This agency assists in the movement of the

produce from one market to another. The main transport means are
railways, trucks, bullock carts, camel carts, or tractors.

E. Communication Agency: It helps in the communication of the

information about the prices prevailing, and quantity available in the
market. The post and telegraph, telephone, newspaper, radio and
informal links are the main communication channels in agricultural
marketing.

F. Advertising Agency: It enables prospective buyers to know the

quality of the product and decide about the purchase of commodities.
THANK YOU