Agriclutural Marketing Lec 1.

8/6/2019 Agriclutural Marketing Lec 1.

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Agricultural Marketing, Agricultural Marketing,



India¶s Economy has grown by more India¶s Economy has grown by more

than 9% for three years running, and hasthan 9% for three years running, and has

seen a decade of 7%+ growth. This hasseen a decade of 7%+ growth. This has

reduced poverty by 10%, but with 60% of reduced poverty by 10%, but with 60% of

India¶s 1.1 billion population living off India¶s 1.1 billion population living off

agriculture and with droughts and floodsagriculture and with droughts and floodsincreasing, poverty alleviation is still aincreasing, poverty alleviation is still a

major challenge.major challenge.



72% of the population is still 72% of the population is still dependent on agriculture for their dependent on agriculture for their livelihood.livelihood.

Agricultural sector contributes Agricultural sector contributes

26% to Indias GDP.26% to Indias GDP.



POSITIVE ASPECTS POSITIVE ASPECTS

Global agreements on AgricultureGlobal agreements on Agriculture(WTO)(WTO)

Subsidy rationalisation Subsidy rationalisation

Government assistanceGovernment assistance

Budget allocations Budget allocations

Finance facilities Finance facilities



N egative AspectsN egative Aspects

Declining levels of agricultural Declining levels of agricultural researchresearch

Environmental Degradation Environmental Degradation

Unorganised storageUnorganised storage

Inefficient PDS Inefficient PDS

Presence of middlemen Presence of middlemen



Stag es of gr ow th of Indian Stag es of gr ow th of Indian

Agricultur e: Agricultur e: AGR ICULTU RA L M ARK ETIN G IN AGR ICULTU RA L M ARK ETIN G IN

THE B R ITISH PE R IOD.THE B R ITISH PE R IOD.

AGR ICULTU RA L M ARK ETIN G POST AGR ICULTU RA L M ARK ETIN G POST-- INDEPENDENCE INDEPENDENCE

AGR ICULTU RA L M ARK ETIN G IN AGR ICULTU RA L M ARK ETIN G IN THE NEW MILLENNIUM.THE NEW MILLENNIUM.





FA CTS .FA CTS .

India is the largest producer of milk, India is the largest producer of milk,

fruits, cashew nuts, coconuts and tea. fruits, cashew nuts, coconuts and tea.

India is the second largest producer of India is the second largest producer of

wheat , vegetables, sugar and fish.wheat , vegetables, sugar and fish.

India is the third largest producer of India is the third largest producer of

tobacco and rice.tobacco and rice.



production of fruit and vegetables production of fruit and vegetables by India: 14% of world wideby India: 14% of world wide

production [BBC Sep 04]production [BBC Sep 04]

India's export of fruit and India's export of fruit and

vegetables: 1 % of world's vegetables: 1 % of world's fruit/veg exports [BBC Sep 04]fruit/veg exports [BBC Sep 04]





daily tea production in Assam in daily tea production in Assam in high picking season: 2 million kghigh picking season: 2 million kg

[BBC Sep 04][BBC Sep 04]



people who are farmers: almost people who are farmers: almost 550 million 550 million

number of agricultural labourers:number of agricultural labourers:about 200 million about 200 million (many with daily (many with daily

wages wages below Rs. 10 per day)below Rs. 10 per day)



government spending for thegovernment spending for theagricultural sector: 8 percent of agricultural sector: 8 percent of

the annual budget the annual budget

total of arable land which is not total of arable land which is not

irrigated: nearly 63 percent irrigated: nearly 63 percent



GDP from agriculture: 24 % of total GDP from agriculture: 24 % of total gross domestic product [BBC Jul 04]gross domestic product [BBC Jul 04]

bank credit allocated for agriculture:bank credit allocated for agriculture:12% of total bank credit in India12% of total bank credit in India

money allocated for various irrigation money allocated for various irrigation policies by the government: Rs.policies by the government: Rs. 620620million in 2003 million in 2003--20042004



GR EE N R EVOLUTIO N GR EE N R EVOLUTIO N Term coined by Dr. William G aud of theTerm coined by Dr. William G aud of the

US Department of A griculture in 1968.US Department of A griculture in 1968.

It is associated with higher production through It is associated with higher production through

enhanced productivity but also with negative enhanced productivity but also with negative

ecological and social consequences.ecological and social consequences.



A gricultural Mark eting i s a p r o c ess A gricultural Mark eting i s a p r o c ess w hich s tart s w ith a d eci s i o n t o p r o duc ew hich s tart s w ith a d eci s i o n t o p r o duc e

a s al eabl e f arm p r o duct and in vo l ves a s al eabl e f arm p r o duct and in vo l ves all a spect s of mark et s tructur e o r all a spect s of mark et s tructur e o r sys t em ba sed o n t echnical and sys t em ba sed o n t echnical and

ec o n o mic c o n s id erati o n and includ eec o n o mic c o n s id erati o n and includ ep r e and pos t har ves t operati o n s. N C p r e and pos t har ves t operati o n s. N C o n A gri .o n A gri .



Central Government is aided and Central Government is aided and advised by two organizations advised by two organizations

Directorate of Marketing and Directorate of Marketing and Inspection (DMI)Inspection (DMI)

National Institute of Agricultural National Institute of Agricultural Marketing (NIAM)Marketing (NIAM)



Importance Of Agricultural MarketingImportance Of Agricultural Marketing

Optimum use of resources and output Optimum use of resources and output management management

Creation of employment Creation of employment

Better livingBetter living

Adoption and spread of new technology Adoption and spread of new technology

Adds to national income Adds to national income Growth of Agro based industries Growth of Agro based industries

Increase in income of the farmIncrease in income of the farm



Activities involved in Activities involved in

Agricultural Marketing: Agricultural Marketing: Making an assessment of the disposable Making an assessment of the disposable

surpluses of agricultural production.surpluses of agricultural production.

Finding the markets to dispose off theseFinding the markets to dispose off these

surplusessurpluses

Collection of produce from farmers.Collection of produce from farmers.

Transportation to the nearest assembling Transportation to the nearest assembling

centre.centre.



Cleaning, grading and standardisation.Cleaning, grading and standardisation.

processing if needed processing if needed Packaging Packaging

Warehousing and storageWarehousing and storage

Transportation to the consumption centre.Transportation to the consumption centre. Negotiations Negotiations

Exchange of goods. Exchange of goods.





V ariation in demand V ariation in demand characteristics.characteristics.

Constant support , guidance and Constant support , guidance and extension activities for theextension activities for the

farmers.farmers.

Dependence on middlemen.Dependence on middlemen.



AGRI. MARKTG

INPUT MARKETING . OUTPUT MARKETING





OUTPUT MARKETING OUTPUT MARKETING

It includes the marketing of It includes the marketing of foodgrains, vegetables, milk etc.foodgrains, vegetables, milk etc.

High degree of fragmentation of High degree of fragmentation of holdings makes the produce less holdings makes the produce less

remunerativeremunerative

Minimum support priceMinimum support price



Government support..Government support..

Agricultural input marketing: Agricultural input marketing:subsidies subsidies

Agricultural output marketing: Agricultural output marketing:PricePrice

Support Support



A GR ICULTU R A L A CTIVITIES A GR ICULTU R A L A CTIVITIES

PRE PRE-- HARV EST OPERATIONS HARV EST OPERATIONS

HARV ESTING OERATIONS HARV ESTING OERATIONS

POST HARV EST OPERATIONS.POST HARV EST OPERATIONS.



Classification of Markets Classification of Markets

Location Location

Area Of Coverage Area Of Coverage

Time Span Time Span V olume Of Transaction V olume Of Transaction

Nature Of Transaction Nature Of Transaction

Number Of Commodities Number Of Commodities

Degree Of Competition Degree Of Competition

Nature Of Commodities Nature Of Commodities

Stage Of MarketingStage Of Marketing

Extent Of Public Intervention Extent Of Public Intervention



V illage Markets V illage Markets

Located in small villages Located in small villages Transaction between buyers and Transaction between buyers and sellers of the villagesellers of the village

Location Location



Primary Whole Sale Market Primary Whole Sale Market

Located in big towns near Located in big towns near centers of production of centers of production of agricultural commodities.agricultural commodities.

Transactions take placeTransactions take place

between the farmers and between the farmers and traders.traders.



Secondary Whole Sale Markets Secondary Whole Sale Markets

Located in the district Located in the district headquarters or important tradeheadquarters or important tradecenters.centers.

Transactions take place between Transactions take place between the village traders and thethe village traders and thewholesalers.wholesalers.



Terminal Markets Terminal Markets

Produce is finally disposed off Produce is finally disposed off

directly to the consumer or thedirectly to the consumer or theprocessor.processor.

Seaboard Markets Seaboard Markets Located near the sea shore, meant Located near the sea shore, meant

for export or import of goods.for export or import of goods.



Area Of Coverage Area Of Coverage

Local V illage Markets Local V illage Markets

E.g.: V egetables, perishable commodities E.g.: V egetables, perishable commodities

etc.etc.

Regional Markets Regional Markets

E.g.: Food grains E.g.: Food grains

National Market National Market E.g.: Jute and teaE.g.: Jute and tea

World Market World Market

E.g.: Coffee, cotton etc.E.g.: Coffee, cotton etc.



Time Span Time Span

Short Period Market Short Period Market

Few hours Few hours fish, milk etc.fish, milk etc.

Long Period Market Long Period Market

Less perishableLess perishable food grains food grains

Secular Markets Secular Markets

Permanent Permanent manufacturing goods,manufacturing goods,timber etc.timber etc.



V olume Of Transaction V olume Of Transaction

Wholesale Markets Wholesale Markets

Retail Markets Retail Markets



Nature Of Transaction Nature Of Transaction

Spot Or Cash Market Spot Or Cash Market

Forward Market Forward Market



Number Of Commodities Number Of Commodities

General Market General Market

Specialized Market Specialized Market



Degree Of Competition Degree Of Competition

Perfect Market Perfect Market

Imperfect Market Imperfect Market

Monopoly Monopoly

Duopoly Duopoly

Oligopoly Oligopoly



Nature Of Commodities Nature Of Commodities

Service Market Service Market

Capital Market Capital Market

Commodity Market Commodity Market



Stage Of MarketingStage Of Marketing

Producing Market Producing Market

Consuming Markets Consuming Markets



Extent Of Public Extent Of Public

Intervention Intervention Regulated Market Regulated Market

oo 71617161 of of 73107310 WholesaleWholesale Markets Markets Covered Covered Under Under Regulation Regulation..

oo Of Of 27 27,,294294 Rural Rural Markets Markets,, 15 15%%Under Under Regulation Regulation

Unregulated Market Unregulated Market



Marketing Functions Marketing Functions

Primary Marketing Functions Primary Marketing Functions

Assembling Assembling

ProcessingProcessing

Distribution Distribution



Secondary Marketing Functions Secondary Marketing Functions

Standardization and GradingStandardization and Grading

PackagingPackaging

Transportation Transportation

StoringStoring

FinancingFinancing Risk BearingRisk Bearing

SellingSelling



Increasi ng Farmers IncomeIncreasing Farmers Income

90% of eff ort is P roduct ion oriented 90% of eff ort is P roduct ion oriented

O nly 10% on Market ing /P ost harvest O nly 10% on Market ing /P ost harvest

phasesphases S ingle intervent ion that can enhanceS ingle intervent ion that can enhanceincome by 20income by 20--30%30%

P riv ate Sect or Invest ment P riv ate Sect or Invest ment



Producers Surplus Producers Surplus

Marketable Surplus Marketable Surplus

MS = P MS = P C C

P = Total production P = Total production C = Total requirements (family consumption,C = Total requirements (family consumption,farm needs, payment to labor, artisans,farm needs, payment to labor, artisans,landlord and payment for social and landlord and payment for social and religious work)religious work)

Marketed Surplus Marketed Surplus







Factors Affecting MarketableFactors Affecting Marketable

S urplusSurplus Size Of H olding:Size Of H olding:

There is a positive relationship between the size of holding There is a positive relationship between the size of holding and marketable surplus.and marketable surplus.

Level O f P roduction:Level O f P roduction: Positive relationshipPositive relationship

Price of C ommunication:Price of C ommunication: It has positive or negative relationship depending upon It has positive or negative relationship depending upon

weather one considers long or short runs, or micro or weather one considers long or short runs, or micro or

macro levels.macro levels. Size O f Family:Size O f Family:

The larger family, the smaller surplus from the farm.The larger family, the smaller surplus from the farm.

Requirement O f Seeds And Farm:Requirement O f Seeds And Farm: Higher the requirement smaller the marketed surplusHigher the requirement smaller the marketed surplus



Consumption Habits:Consumption Habits: In south India, Andhra Pradesh ,Karnataka areIn south India, Andhra Pradesh ,Karnataka are

predominantly rice consuming states, and wheat enters predominantly rice consuming states, and wheat enters the market .the market .

Cash Requirements:Cash Requirements: If fixed, marketable surplus will vary inversely with If fixed, marketable surplus will vary inversely with

price changes. If variable ,marketable surplus will price changes. If variable ,marketable surplus will increase in response to increase in price.increase in response to increase in price.

Nature O f Crops:Nature O f Crops:

Farmers produce two types of crops; food crops and Farmers produce two types of crops; food crops and cash crops food crops are retained while cash crops arecash crops food crops are retained while cash crops areretained in the market retained in the market

Mode O f Production:Mode O f Production: If the Farm uses traditional methods there is less If the Farm uses traditional methods there is less

marketable surplus and if it uses new technologies, HYV marketable surplus and if it uses new technologies, HYV

seeds and chemical fertilizers etc, there is moreseeds and chemical fertilizers etc, there is moremarketable surplus.marketable surplus.



Characteristics of Agricultural Characteristics of Agricultural

ProductionProduction Seasonal in natureSeasonal in nature

U ncertainty in productionUncertainty in production

Lack of uniform qualityLack of uniform quality

PerishabilityPerishability

InelasticityInelasticity

Bulky in natureBulky in nature



Some FactsSome Facts



Investment RequirementInvestment Requirement (Rs. in (Rs. in

crores)crores)

ItemsItems Physical Physical (Nos)(Nos)

1010thth

PlanPlan1111thth PlanPlan TotalTotal

Wholesale marketsWholesale markets 32133213 24102410 40164016 64266426

Modernization of Modernization of marketsmarkets

72937293 22602260 37663766 60266026

Rural Periodic MarketsRural Periodic Markets 2729427294 10241024 17061706 27302730

Grading CentersGrading Centers 57865786 400400 750750 11501150

Modernizing LabsModernizing Labs 100100 1010 1010 2020

Agribusiness Centres Agribusiness Centres 15001500 5050 100100 150150

Warehousing Warehousing (lakhTonne)(lakhTonne) 518518 59655965 62006200 1216512165

TotalTotal 1211912119 1654816548 2866728667



Structure In Market for D ifferent Structure In Market for D ifferent

GroupsGroups Primary marketsPrimary markets

Serves people within the vicinity of around 16 kms.Serves people within the vicinity of around 16 kms. Location is as per the convenience of the people.Location is as per the convenience of the people.

Secondary marketsSecondary markets Ex ists in small town and citiesEx ists in small town and cities Wholesale as well as retail trade takes placeWholesale as well as retail trade takes place Wholesaler performs the functions of marketing Wholesaler performs the functions of marketing

and distributionand distribution

Terminal marketsTerminal markets Generally located near ports for import or ex port of Generally located near ports for import or ex port of

goodsgoods Sale takes place on small scale, but throughout theSale takes place on small scale, but throughout the

yearyear Dominated by large number of middle menDominated by large number of middle men



Methods O f SaleMethods O f Sale

Undercover O F a Cloth (Hatha System)Undercover O F a Cloth (Hatha System) Private NegotiationsPrivate Negotiations Quotations on sample, taken by theQuotations on sample, taken by the

commission agentcommission agent Dara Sale MethodDara Sale Method Moghum Sale MethodMoghum Sale Method Open Auction method Open Auction method

Phar System of open auctionPhar System of open auction

Random bid system of open auctionRandom bid system of open auction Rostev bid system of open auctionRostev bid system of open auction

Closed Tender SystemClosed Tender System Forward SaleForward Sale Jalap Sale Jalap Sale

Sale by SampleSale by Sample



Standardization and GradingStandardization and Grading



Meaning of StandardizationMeaning of Standardization::

The determination of basic limits orThe determination of basic limits or

grades in the form of specifications togrades in the form of specifications towhich manufactured goods must conformwhich manufactured goods must conform

and a class into which the products of and a class into which the products of

agriculture and the extra active industriesagriculture and the extra active industries

may be sorted is known as standardisation.may be sorted is known as standardisation.



Advantages of Standardization Advantages of Standardization

Uniformity in qualityUniformity in quality

Sale by samplesSale by samples

Differential pricingDifferential pricing

Increase in demandIncrease in demand

Convenience in sellingConvenience in selling

Advantages for manufacturers / Advantages for manufacturers /producersproducers

Elimination of riskElimination of risk



International organizations forInternational organizations for

standardizationstandardization International Standards for International Standards for

Organisation (ISO)andOrganisation (ISO)and

The Codex Alimentarious The Codex Alimentarious Commission (C AC).Commission (C AC).





Types of GradingTypes of Grading

Fixed gradingFixed grading

Variable grading Variable grading

Centralised / Decentralised Centralised / Decentralised GradingGrading



Inspection and qualit y ControlInspection and qualit y Control

Inv olves the testing of graded goods inInv olves the testing of graded goods inorder o determine whether they conform t o order o determine whether they conform t o the prescrib ed standards.the prescrib ed standards.

Samples are tested and inspected in theSamples are tested and inspected in thelab orat ory.lab orat ory.

At present there are: At present there are: 111 sate111 sate owned grading lab orat oriesowned grading lab orat ories

549 lab orat ories of licensees (Private Packers)549 lab orat ories of licensees (Private Packers) 9 lab orat ories in cooperative sect or9 lab orat ories in cooperative sect or 49 private and commercial lab orat ories49 private and commercial lab orat ories



Advantages / Importance Of Grading Advantages / Importance Of Grading

Production of large scaleProduction of large scale

PricingPricing

Opening up of new marketsOpening up of new markets

Eliminating risk and speculationEliminating risk and speculation

Encouragement o improve qualityEncouragement o improve quality

Helpful in Financial ManagementHelpful in Financial Management



Prob lems In standardization andProb lems In standardization and

GradingGrading Lack of standards and gradesLack of standards and grades

Misuse of standards and gradesMisuse of standards and grades

Lack of public conciousnessLack of public conciousness

Lack of testing facilitiesLack of testing facilities



AGMARK AGMARK

INDIAN STANDARD NSTITUTEINDIAN STANDARD NSTITUTE(ISI(ISI))



Functions Of ISI:Functions Of ISI:

Giving suggestions in respect of the product.Giving suggestions in respect of the product. Conducting necessary researches and Conducting necessary researches and

ex periments in field of standardization.ex periments in field of standardization.

Determining standards of different at national Determining standards of different at national and international level.and international level. suggesting in respect of products.suggesting in respect of products. Making the standard popular.Making the standard popular. Checking new products and a standard a standard Checking new products and a standard a standard

mark for them.mark for them. Developing a feeling of competition for theDeveloping a feeling of competition for thepurpose of promoting purpose of promoting

Collecting necessary data.Collecting necessary data.

Agriclutural Marketing Lec 1.

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