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Marketing Losses and Their Impact
on Marketing Margins: A Case Study
of Banana in Karnataka
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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.
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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
farmers net price, marketing costs, margins and efficiency
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Estimation Procedure
` Farmers Net Price/ margin
NPf= Gross Price (farmer)- [Marketing cost farmer+(wastage x gross price)]
` Marketing Intermediaries Margin
MMw = Gross Price wholesaler(Sales price) Gross pricefarmerMarketing Costwholesaler [Wastage x Gross priceWholesaler]
MMR = Gross PriceRetailer Gross priceWholesaler MarketingCostRetailer[Wastage x Gross priceRetailer]
MM = MMw + MMR
` Marketing CostMC= MCfarmer + MCwholesaler + MCRetailer
` Marketing Losses
ML = MLfarmer + ML Wholesaler + ML Retailer
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` Marketing EfficiencyUsual methods were:
Output /Input Method
Shepherds Ratio-Value of marketed goods/ Cost of
marketing
Acharyas modified marketing method
To estimate efficiency by calculating loss as separate
component
ME= NPf/ [MM + MC + ML]
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Data collection` Product Name Banana, var.Ney Poovan
` Sampling Technique Multi stage Random Sampling
Stages of Selection of sample
Karnataka
Bangalore
RamanagaramChannapatna Kanakapura
32 Farmers
3 bunches from
each field
Stage I
State Level
Stage II
District level
Stage III
Taluka Level
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` For wholesale Level Losses estimation
15 Commission agents
5 main HOPCOMS
`
For Retail level Losses estimation 15 retail outlets
HOPCOMS also act as outlet
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Marketing Channels
` Wholesale Channel
60-70% Banana marketed through this channel
` Co-operative Channels
` Pre Harvest Contractor Channel
Farmer Wholesaler Retailer Consumer
Farmer Farmers Co-operative Society Consumer
Farmer Wholesaler Retailer ConsumerPre- Harvest
Contractors
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Post Harvest Losses at Different Stages of
Marketing of Banana
SL
.N
o
Stages of
Marketing
Wholesale Channel Co-operative Channel
Post
Harvest
Losses (%)
% of total
losses
Post
Harvest
Losses (%)
% of total
losses
1 Field and Assembly
level
5.53 19.17 7.82 42.71
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
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Marketing Cost
SL.N
oParticulars Wholesale
Channel (Rs/Kg)
Co-operative
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
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Marketing Losses
SL.N
oParticulars Wholesale
Channel (Rs/Kg)
Co-operative
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
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Impact of Marketing Losses on Farmers net Price,
Margin, Efficiency Index and price- spread
SL
.N
o
Stages of
Marketing
Before Separating
Losses
After Separating Losses
Wholesale
Channel
Co-operative
Channel
Wholesale
Channel
Co-operative
Channel
1 Farmers net price 8.36 8.68 7.70 7.96
2 Wholesalers margin 1.79 3.22 0.86 1.92
3 Retailers 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 Consumers price (Rs/
kg)
15.84 13 15.84 13
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` 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.
` Wholesalers and Retailers margin
Wholesalers Margins of both wholesaler channel and co-
operative channel decreased.
Retailers margin become ve (Loss) due to heavy loss
(16.67%)
Highly perishable product variety.
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` Price- Spread Increase in price spread due to
I. Decrease in producers 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, Operationalefficiency 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 inwholesale channel
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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 Producers and wholesalers margin
reduced substantially.` Retailers margin was found in loss.
` Marketing efficiency 1/ Post Harvest Losses
