Marketing of Agricultural Products

Chapter 5
Marketing of Agricultural
Products
Abdul Ghafoor, Hammad Badar and Asif Maqbool*
Abstract
Agricultural marketing includes all activities which add value to agricultural
products as they move from areas of agricultural production to ultimate consumption
points. An effective and efficient marketing system is required in order to ensure fair
returns to stakeholders but unfortunately little attention was paid to this sector in
Pakistan. This resulted in welfare risk to stakeholders as price variation and value are
common phenomena in the country. Public and private sectors jointly run agricultural
marketing system in the country, as public sector is responsible for framing and
implementing rules and regulation whereas private sector operates the system.
Agricultural markets are governed under the Agricultural Produce Markets
Ordinance 1978 which needs to be updated. Due to poor post-harvest management
practices, almost 25-40% produce is wasted which caused considerable value losses.
In this chapter, an effort has been made to describe theoretical foundation of
agricultural marketing along with highlighting the marketing system of major and
minor agricultural commodities in Pakistan and the role of various institutions and
regulations. Marketing efficiency is often understood in terms of marketing margins,
physical losses and state of market competition. These indicators are also discussed
in this chapter. Further, a section is devoted to identify major agricultural marketing
problems with their possible solutions.
Keywords: Agricultural marketing, Market efficiency, Marketing margins, Post-
harvest losses, Risk
*
Abdul Ghafoor#, Hammad Badar and Asif Maqbool
Institute of Business Management Sciences, University of Agriculture, Faisalabad, Pakistan.
#
Corresponding author’s e-mail: [email protected]
Managing editors: Iqrar Ahmad Khan and Muhammad Farooq

Editor: Abdul Ghafoor
University of Agricutlure, Faisalabdad, Pakistan.
113
114 A. Ghafoor, H. Badar and A. Maqbool
5.1. Introduction
Agriculture sector in Pakistan is considered a major contributor to economic growth
and development. This sector not only meets food demands of population but also
provides raw material for industry besides providing surplus for exports. Although
this sector has witnessed many ups and downs in the recent past, overall growth has
remained satisfactory. This sector has great potential to support the national economy
in future if due attention is given to solve emerging issues. Sustainable agriculture
growth and development depend on how concerns of various stakeholders
particularly farmers who are facing several risks in production and marketing of their
produce, are adequately addressed. Often, growers have to bear value reduction in
their produce due to poor infrastructure and post-harvest practices. Moreover,
frequent food surpluses and shortages have highlighted the need to modernize
marketing system so that such situations can be handled.
5.2. Market
Market can be defined and understood in different ways but commonly it is
recognized as a place or areas where buyers and sellers gather and interact for buying
and selling goods and services. In a more solemn language of management sciences,
market is referred as an exchange process of goods and services accompanied by
price making mechanism.
Agricultural markets perform a central role of assembling agricultural commodities
from scattered and vast production areas and distribute these commodities further to
consumers and other stakeholders in urban and peri-urban areas. In terms of scope,
these markets are generally of seven different types, which are discussed below;
i. Assembly Markets: In these are rural markets, farmers and small village
assemblers sell their agricultural products to larger traders and agro-
processors. These markets mainly function to assemble agriculture products
which are produced in distant and dispersed farms and enable buyers to buy
in significant volumes at one place. These markets may be temporary or
permanent. In case of temporary markets, farmers and buyers in certain
hours during the peak marketing season gather for accomplishing the
exchange process. Permanent assembly markets function once or twice a
week.
ii. Wholesale Markets: These markets operate in towns and cities. Their
major functions include assembling of agriculture produce brought by
farmers, contractors and other marketing agents from different production
areas and their subsequent distribution to urban areas or channelize
agricultural produce for export. In the wholesale markets, a wide range of
retailers such as shop keepers, street vendors and roadside sellers purchase
their supplies for onward sale to consumers. Wholesale markets may also
supply agricultural produce to agro-processors, wholesalers from other
areas and exporters.
5 Marketing of Agricultural Products 115
iii. Retail Markets: Retail markets operate everywhere in cities, town and
villages to serve needs of consumers. They may supply wide range of
products such as fruits, vegetables, meat, pulses and other processed food
items. Although they mostly operate on permanent basis, some retail
markets may function on certain days of the week. In Pakistan, retail
markets are operating in several formats such as permanent shops, roadside
vendors and street hawkers. More recently, supermarkets and modern stores
are increasingly becoming important retail outlets in Pakistan.
iv. Weekly Markets: These markets are often organized to facilitate
consumers to purchase food and agricultural commodities in bulk at cheaper
prices in vicinity of their homes. In some areas these markets are organized
on Sunday (Itwar bazars) and in some areas on Friday (Jumma Bazars).
Normally food retailers from the nearby areas and farmers come to these
markets to sell their produce.
v. Occasional Markets: These markets are organized on special occasions
such as Eid-al-Adha. Local governments make arrangements for such
markets and market committees regulate various market functions in these
markets. Generally, these markets are organized at some specific places
around the outer borders of city areas.
vi. Consumer Convenience Markets: Recently in Pakistan, an initiative has
been taken to establish consumer convenience markets on regular basis. In
these markets, basic infrastructure and facilities are provided so that sellers
can sell their produce in a comfortable environment. Similar facilities are
also provided to consumers. These markets are now common in big cities
such as Lahore, Islamabad, and Faisalabad.
vii. Farmers’ Markets: It is often understood that farmers are generally
exploited by market intermediaries. It is therefore required to establish
farmers’ markets to provide them opportunities to sale their produce directly
to consumers. This may enable them to earn their legitimate share by
avoiding money which otherwise could have gone in the pockets of
middlemen. These markets are generally established on public-private joint
partnership and operated by the elective committee of farmers. Such
initiative has been announced by the Govt. of Punjab for vegetable in the
form of trading platforms for vegetables in different clusters of vegetable
production.
5.3. Marketing
The term marketing may be defined in many ways. According to American
Marketing Association, marketing can be defined as “performance of business
activities that direct the flow of goods and services from producer to consumer, so as
to reach the consumer at the time, place and in the form he desires and at a price he
is willing to pay.” As such, marketing performs all those tasks which ensure that
products are available for consumption:
• at the convenient place,
• in the form desired by consumers,
• in the required quantity and quality,

• at the desired time and
• at fair prices
Agricultural marketing encompasses activities which may include
picking/harvesting, drying, cleaning, sorting, grading, processing, packaging,
labeling, transporting, storage, promotion and sale of agricultural products. All these
activities contribute in adding value to agricultural products as these products flow
from producers to consumers. While some of these activities are performed on farm,
the other are carried out off-farm by other market intermediaries such as traders and
agro-processors.
According to another definition, “marketing consists of identifying customer needs
and satisfying such needs in a profitable manner.” According to this definition
marketing is a customer-oriented and profit-driven process which is based on long-
term and mutually beneficial relationships between sellers and customers. Hence, the
scope of marketing cannot be confined to just producing products and then making
efforts to sell it. Rather, the focus is on producing only those products that can be
sold at remunerative prices. This implies that consumer needs and wants should guide
on what to produce, how to produce and how, where and when to sell. In case of
agricultural marketing, farmers and agro-enterprises need to analyze the market for
determining consumer needs and then develop products or services. Only in this way,
they can satisfy the needs of consumers and generate a profit.
Agricultural products differ from industrial products due to their perishable nature
and special requirements during various farm and marketing operations. But, this
does not imply that the field of agricultural marketing is something entirely different
from marketing of industrial and other products. It is simply application of principles
of marketing in agriculture sector.
Agricultural marketing covers several activities and services which are performed
when agricultural products move from farm areas to consumers. Some of these
activities include production planning and production activities, harvesting, clean,
sorting, grading, packing, transport, storage, processing, distribution, product
promotion and sale. Successful performance of these activities cannot take place
without adequate and timely availability of information and are finance. Since
customer orientation and profit is the key focus of marketing, all those who are
involved in marketing chains must have an in-depth understanding of customer
requirements in terms of desired product attributes so that these can be met at
minimum marketing costs. Given this, agricultural marketing includes all business
activities designed to plan, price, promote and distribute want satisfying goods and
services to household consumers and industrial users.
5.4. Agricultural Marketing System in Pakistan

Pakistan’s agricultural marketing is characterized with numerous market players who
perform different functions in transferring farm produce to consumer. It is observed
that an agricultural commodity changes seven to eight different hands before
reaching ultimate consumer (Mohy ud Din, 1998). Functions performed by various

market functionaries (especially the middlemen in the market chain) remain one of
the most controversial issues in Pakistan’s agricultural economy. It is argued that
middlemen exploit marginal farmers and hamper their legitimate share.
Infrastructure plays vital role in facilitating and ensuring smooth functioning of
agricultural marketing system (Aftab, 2007). Wholesale markets for instance, act as
a cardinal link between producers and consumers and are operated by public and
private sectors. Most of the wholesale markets in the country however give a poor
look and lack basic infrastructure (efficient logistics, storage and other marketing
facilities), putting farmers at a disadvantageous situation while selling their produce.
Currently in Punjab, there are 152 wholesale grain markets, 95 fruits and vegetable
markets, 81 feeder markets and 11 markets are working in private sector.
There is limited storage capacity (6-7% of total agricultural production) in the public
domain and that too is limited to few commodities. Existing cold storage facilities
are not evenly distributed among the province. Punjab dominates with 512 units and
Sindh has 25 units, KPK 16 Units and Baluchistan has only 2 units. Most of these
facilities are not compartmentalized which causes transfer of odor transfer various
commodities placed in cold stores. Another unfortunate fact about existing status is
limited processing (3 percent of fruits, vegetables and milk) in the country. There are
121 known pack houses in the country for horticulture crops. Department of
Agricultural and Livestock Marketing and Grading (DALPMG) has made grades and
standards for 42 agricultural commodities but there still exists a need for framing
grades for other commodities besides updating the existing ones. Post-harvest losses
are huge which amount to 35-40% of total fruit and vegetable production in the
country. The present length of farm to market roads (60,000 km) is crucially less than
potential requirements.
Functions performed by middlemen in the wholesale markets of Pakistan are widely
debated. It is generally argued that middlemen exploit marginal farmers and deny
them their legitimate share. This allegation may not be ignored as many commission
agents, bypassing the provisions of Agricultural Produce Market Acts, have been
found charging higher commission rates than prescribed. Pre-harvest contractors
dominate the marketing system of fruits in Pakistan. They are often allegedly labeled
to over utilize their power. However, despite all these allegations, importance and
role performed by middlemen cannot be underestimated.
The performance of agricultural marketing system is generally judged by market
margin approach which shows relative share of different stakeholders involved in the
supply chain of agricultural commodities. It has been observed that share of farmer
in consumer rupee is relatively low in case of perishable commodities as compared
to non-perishables. In the case of fruits, pre-harvest contractors and retailers get more
profit as compared to other stakeholders (Khushk and Sheikh, 2004). Vegetables and
other agricultural commodities are no exception to above mentioned observation.
The share of different stakeholders in the marketing of fruits and vegetables is
presented in Tables 5.1 and 5.2
Table 5.1 Marketing Margins and Producer’s Share in Consumer Rupee for Various
Fruits in Punjab (%)
Market Agency Mango Citrus Date (Fresh) Guava
Producer 20 20 37 15
Pre-Harvest Contractor 39 26 20 33
Commission Agent 6 2 6 5
Wholesaler 9 8 13 5
Retailer 26 44 24 42
Source: Khushk and Sheikh (2004)
Table 5.2 Marketing Margins and Producer’s Share in Consumer Rupee for Various
Vegetables in Punjab (Percent)
Market Agency Potato Onion Tomato Peas Carrot Brinjal
Lodhi UCL Kokab Kokab Lodhi UCL Siddique Lodhi UCL UCL
& A B
Smith
Grower 56.0 62.1 63.7 49.1 55.0 57.0 55.5 54.9 25.0 56.9 60.6
Commission Agent - 8.5 11.3 1.5 1.7 7.8 3.4 - 9.0 6.9 -
Wholesaler (Pharia) - 11.5 2.1 21.0 14.8 - 10.0 16.4 - 12.8 12.4
Retailer - 17.9 22.9 23.4 28.5 - 26.7 25.3 - 21.3 20.1
Marketing margin 44.0 37.9 36.3 50.9 45.0 43.0 44.5 45.1 75.0 43.1 39.4
Note: A: winter onion and B: Stored winter onion
Source: Chaudury and Ahmad, (2000)
Pakistan is a developing country and overtime agriculture has proved its central
importance in uplifting and supporting the economy of the country but still its real
potential needs to be realized. After independence, various governments took several
measures to improve agriculture sector. However, the focus of these measures was
on productivity enhancement and agricultural marketing remained a neglected area
because marketing infrastructure development and post-harvest management of
agricultural commodities did not receive adequate attention of policy makers.
Agricultural marketing infrastructure plays a key role in facilitating and ensuring
smooth functioning of agricultural marketing system. An efficient logistic system is
a pre-requisite for optimal performance of the marketing system. For example,
infrequent, expensive and poor quality transport services will put farmers in a
disadvantageous position in selling their crops because an expensive service will
result in low farm gate prices. Similarly, poor quality roads, coupled with poor
storage cause enormous losses of agricultural products, The perishables products
such as milk, fresh vegetables and fruits in particular incur major losses because they
of their shorter shelf life. As such, all weather roads play crucial role in enhancing
market surplus for many of the agricultural products.
Food security and safety have emerged as prominent important concerns particularly
in the scenario of recent trade liberalization reforms under WTO. Compliance to
national and international standards has become one of the most important
requirements for achieving food safety and security. At present, the situation is not
satisfactory in Pakistan as many processors and manufacturers lack requisite capacity
and know-how to ensure food safety. Businesses lack adequate awareness of modern
hygiene and production management practices and requirements and are unable to
obtain various food safety certifications such as Hazard Analysis and Critical Control
Points (HACCP). As a result, they fail to capture opportunities available in high value
markets of Europe, USA and other developed countries.
The food crisis in the past and occasional surpluses and shortages of agricultural
commodities underline the need of taking measures by the government to improve
the working of agricultural marketing system. Some of the major challenges which
need urgent attention of the government include poor farm to market roads, price
volatility, inadequate storage capacity, poor value addition, inefficiencies in factor
and product markets, poor implementation of grades and standards.
5.5. Evolution of Agricultural Marketing in Pakistan

After independence of Pakistan, government laid emphasis on food production
whereas distribution and marketing were generally assigned low priority. As such,
development of agricultural marketing took place at a slower pace. The first five-
year plan (1955-60) identified many weaknesses in agricultural marketing system.
Amongst others, inefficiencies in the methods of buying and selling, assembling and
processing, transportation of farm produce and utilization of market resources were
the key factors affecting development of agricultural marketing system in the
country. In order to cope with various challenges, some policy measures (proper
implementation of grades and standards for agricultural commodities, grant of
agricultural loans by Agricultural Development Bank (ADB) of Pakistan to farmers
for the purchase of fertilizers, High Yielding Variety Seeds (HYV), farm implements
and pesticides, training of stakeholders in post-harvest management and grant of
subsidy for construction of cold storages in different production areas etc.) were
undertaken to ensure reasonable price to the stakeholders and improve efficiency of
the agricultural marketing system in the country. Although government focused its
attention in strengthening agricultural marketing system by bringing improvements
in marketing infrastructure and post-harvest management, noteworthy progress was
not achieved in the implementation of proposed measures.
The second (1960-65) and third (1965-70) five year plans underlined the need for
removing various weaknesses (such as malpractices of middlemen, inefficient
handling of produce during marketing, inadequate storage space, improper
processing, non-compliance to standardization and grading, inadequate supply of
packing material etc.) in the agricultural marketing system. Government adopted
some measures to enhance efficiency of agricultural marketing on the
recommendations given in the second and third five year plans. Some of the measures
undertaken by the government for the rehabilitation of agricultural marketing in the
country included promulgation of Weights and Measures Act in major areas of
Pakistan, implementation of grades and standards for major exportable agricultural
commodities and up-gradation and improvement of existing markets and
development of new regulated agricultural markets under the provisions of
Agricultural Produce Markets Act of 1939.
The plans identified hoarding, price manipulations by the middlemen and insufficient
supply of agricultural loans as some of the major impediments in the development of
agricultural marketing system. High priority was assigned to overcome various
obstacles in the system. Incentives were provided through grant of subsidies and by
fixing floor prices of agricultural products and by strengthening the institutional
framework for agricultural markets. Along with these measures, government
approved Agricultural Produce Marketing Regulation Bill to envisage the newly
emerged regulated markets. Despite these measures, lack of cold
storages/warehouses for perishable commodities, improper grading and
standardization, poor infrastructure (farm to market roads) continued to be the major
obstacles in the smooth working of the agricultural marketing system in the country.
The policy measures of the government in 1970s’ remained primarily focused on the
evolution and implementation of support price mechanism and making necessary
arrangements for export of agricultural products keeping in view the trends and
requirements of international markets. Support price programs for food grains
(wheat) were successfully implemented. Adequate machinery for procurement
operations was provided and storage capacity for agricultural commodities,
especially for food grains was enhanced. In order to improve terms of trade,
government increased export quotas and reduced import tariffs. The policy was
further expanded to secure sanitary safeguards against the import of pesticides
through provisions of Pesticides Act.
The fifth five-year plan (1978-83) emphasized the need for strengthening market
infrastructure. Based upon recommendations outlined in the plan, government
undertook measures to develop market infrastructure and ensure timely availability
of agricultural inputs (chemical fertilizers, pesticides and farm machinery) at
reasonable prices and supplement imports when necessary. Pakistan Agricultural
Storage and Services Corporation (PASSCO) was established in 1973 to ensure
better returns to producers as well as reasonable prices to consumers. In addition,
improved marketing and processing technology was adopted through collaboration
between local entrepreneurs and reputed firms in the international markets.
Marketing institutions (market committees, trading/export houses, commodity
stabilization funds, support price cover, grading/quality standards through various
institutional mechanisms) were established.
Some progress was witnessed in improving infrastructural facilities (such as grain
silos, warehouses, cold storages, product quality testing laboratories, grading and
primary processing plants, transportation systems for handling and speedy clearance
of perishable agricultural commodities etc.) Air-freight arrangements for promoting
export of perishable products were improved. The development of food processing
industry (through availability of cheap packing material and chemicals supported
with other incentives such as packaging, tax concessions, import of machinery for
modernization etc.) remained an important component of government policy. In
short, agricultural marketing system received boost as a result of establishment of
new processing plants, better procurement measures and improved transportation and
distribution systems. Notwithstanding achievements, little progress was made in the
construction of new storage facilities for major food grains and for perishable
commodities and in improving management skills of the stock holders /market

functionaries.
The last decade of the century was characterized with government’s focus in
promoting and diversifying exports and ensuring price stability. This era witnessed
the emergence of WTO and globalization of international trade. These developments
changed dynamics and requirements of agriculture. Pakistan, like many other
developing countries, had to undertake structural and institutional reforms to cope
with the changing environment. As a result, government assigned priority to establish
and develop various institutions for boosting exports of high value crops. Pakistan
Horticulture Development and Export Board was created to develop the horticulture
sector and boost exports of various horticultural commodities (e.g., mango, kinnow,
apples, dates etc.) and cope with the emerging challenges encountered in
international trade due to implementation of various WTO agreements (e.g. AoA,
SPS, TRIPS etc.). Export targets for various agricultural crops were not achieved due
to poor compliance to the requirements of various developed countries.
The Medium Term Development Framework (MTDF) (2005-2010) advocated the
policy of privatization, deregulation and market orientation for the domestic
economy. The plan MTDF emphasized development, expansion and diversification
of market base. Efforts were made to encourage public and private investments
through tax reforms and financial liberalization in order to improve efficiency of the
agricultural marketing system. Vision 2025 of Pakistan also envisages to promote a
food secure Pakistan and strengthening infrastructure facilities. The Government of
Punjab has taken initiative to promote rural urban linkages by renovating or
establishing roads in remote and village areas so that farmers can be connected with
markets in urban areas.
Eleventh Five Year Plan (2013-2018) sensitizing the prevalent gaps and
inefficiencies in the marketing system, has focused on strengthening agricultural
marketing, infrastructure and trade. In this plan, special emphasize is laid on
enhancing returns of the farmers through market reforms and it is planned to start a
move to make Pakistan a net exporter of agricultural commodities. In this respect
accredited labs and value chain system is planned to start. It is estimated that Pakistan
produces 35 million tonnes of food grains and 13 million tonnes of horticultural
products but storage capacity is limited up to only 4.5 million tonnes. Post-harvest
losses are other area of attention. Currently the value of post-harvest losses in food
grains amounts Rs. 12-25 billion whereas in horticultural products is Rs 24-38
billion. It is a priority area in agricultural marketing to promote storage and scientific
handling of commodities to avoid losses and add value.
Although measures have been undertaken to improve the performance of agricultural
marketing system, insufficient availability of institutional credit especially marketing
credit, high post-harvest losses due to poor adoption of post-harvest management
practices, poor implementation and adoption of standards and grades, lesser
compliance to global requirements of various WTO agreements continued to affect
the working of agricultural marketing system in the country. Establishment of new
regulated markets, provisions of agricultural inputs to stakeholders at reasonable
prices, compliance to grades and standards by stakeholders are however priority
areas of the government policy. Existing marketing infrastructure is incapable to

cope with the emerging challenges of globalization and to meet the growing demand
of food grains, fruits, vegetables, livestock, poultry and their products both in the
domestic as well as international markets. Recent food crisis in Pakistan has
highlighted various inadequacies and inefficiencies in the agricultural marketing
system. There is a strong need for chalking out a comprehensive policy for marketing
infrastructure and post-harvest management to face the emerging challenges to
agriculture and meet growing and diversified food needs of population.
5.6. Legal and Institutional Arrangements for

Agricultural Marketing in Pakistan
Agriculture is a provincial subject and provincial governments are mainly
responsible for enacting legal and institutional arrangements in Pakistan. However,
both the federal and provincial governments frame policies for the development of
agricultural marketing system and for various institutions supporting the system at
federal and provincial levels.
The legal framework for agricultural marketing system in Pakistan has developed
over time. The Agriculture Produce Markets Act, 1939 was promulgated on the
recommendations of Royal Commission on Agriculture, constituted by the British
India Government during 1927 with the objective to regulate agribusiness and to do
away the evils and problems inherent in the agricultural marketing system. The
Market Committees were established under the provisions of above act which were
assigned noble pursuit of safeguarding interests of growers. After independence, the
same act was implemented in Pakistan.
The Act of 1939 was replaced by the Punjab Agricultural Produce Markets
Ordinance, 1978. The rules to regulate working of wholesale markets were however
framed during 1979. All agricultural marketing activities (especially the working of
wholesale markets) in the province of Punjab are legally controlled under this
ordinance. It may be mentioned that 244 agricultural markets in Punjab exist for
handling food grains, fruits and vegetables. Besides these markets, there are 81 feeder
markets to feed the produce to main agriculture produce markets. Grading and quality
certification in the domestic markets is legally controlled under Punjab Agricultural
Produce Grading and Marking Act 1972 (Govt. of Punjab, 2006). Other related legal
documents in the Punjab include Punjab Pure Food Rules 2011 to look after the
quality of food products, Punjab Local Government Act 2013.
The West Pakistan Municipal Committee (Cattle Market) Rules of 1969 is the only
livestock market legislation that has empowered the local authorities to establish,
maintain and administer livestock markets. The Agricultural Produce Markets
Ordinance of 1978 includes livestock in the list of commodities but its coverage
under this act is not properly executed. Punjab Livestock Breeding Act 2014 has been
announced by the Government of Punjab to regulate the livestock breeding services
and to build modern cattle markets. In this connection, livestock/cattle markets are
in transition stage from traditional marketing methods to modern and value oriented
cattle markets to offer farmers and traders a secure and healthy environment. The
Cattle Market Management Company (CMMC) has been structured in 2014 to

establish, manage, reorganize, operate and upgrade the existing markets in the major
metropolitan cities. This initiative may lead to eliminate and discourage extortion,
corruption, role of middleman, commission mafia from the cattle markets.
In other provinces of Pakistan, different legal documents are available which look
after the affairs of agricultural marketing in respective provinces. These include The
Baluchistan Agricultural Produce Market Act 1991, The NWFP Agricultural and
Livestock Produce Market Act 2007, and The Sindh Wholesale Agricultural Produce
Market (Development and Regulation) Act 2010.
Government established various institutions for streamlining working of agricultural
marketing system in the country. Institutions supporting agricultural marketing
system in Pakistan operate both at federal as well as provincial levels. At federal
level, Agricultural Policy Institute (API), previously known as Agricultural Prices
Commission (APCOM), chalks out domestic and international sectoral/commodity-
specific policies and examines and evaluates production, processing, storage, and
marketing costs of agricultural and livestock commodities. The main task of
Agricultural Policy Institute is to formulate agricultural policies including those on
agricultural prices, marketing and export competitiveness of agricultural Products.
The mandate for ensuring quality and grading assurance in the domestic market is
entrusted with the Department of Agricultural and Livestock Products Marketing and
Grading (DALPMG), working under the Ministry of National Food Security and
Research. This department (DALPMG) advises the federal government on all matters
relating to setting/implementation of grades and standards of agricultural and
livestock products for both the domestic and export markets. It also provides
guidance to the provinces on various aspects of marketing (especially grading and
standardization of agricultural commodities) and coordinates provincial activities at
the national level.
Pakistan Horticulture Development & Export Board, renamed as Pakistan
Horticulture Development and Export Company (PHDEC) was established by the
federal government under Ministry of Commerce to tackle domestic and export
marketing issues in the field of horticulture in Pakistan. PHDEC is managed by a
Board of Management from the public and private sectors. Pakistan Horticulture
Development and Export Company was established for tapping enormous potential
of Pakistan’s horticulture products in the international high-value markets. Since a
single ministry or institution with the responsibility of developing horticultural value
chain at various levels was lacking, it was considered essential to establish PHDEB.
The Board has played pivotal role in boosting exports of various horticultural
products (mango, kinnow, apples, dates etc.) and important vegetables in export
markets of many developed countries.
Agribusiness Development and Diversification Project was established by the
Government of Pakistan to promote and develop various agribusinesses and to add
value to various agricultural products, diversify the cropping pattern and impart
training to stakeholders on skill development, management and entrepreneurship.
The project works in collaboration with the Ministry of Food and Agriculture
(MINFA) of government of Pakistan and the Asian Development Bank. The main
objective of this project is to use the agribusiness sector to support economic growth
and employment generation. This is being achieved by making agriculture sector
more competitive and dynamic. To make this sector more active agribusiness project
aims to help solve the constraints that obstruct development of agriculture sector.
The project also helps the stakeholders in discovering and making use of domestic
and export opportunities. An Agribusiness Support Fund has been created and is an
integral component of Agribusiness Development and Diversification Project.
Agribusiness Support Fund (ASF) is a ‘not-for-profit company’ established by
Ministry of Food and Agriculture (MINFA) with the support of the Asian
Development Bank (ADB). ASF provides non-returnable matching grant for
business development to individuals and firms engaged in various agribusinesses.
The purpose is to enable agribusiness entrepreneurs employ modern techniques and
practices, develop business skills, know-how, expertise, understand market
requirements and improve their productivity, creditworthiness, profitability and
competitiveness.
Given the importance of livestock sector in the economy, Government of Pakistan
has also established Livestock and Dairy Development Board (LDDB). Livestock
and Dairy Development Board (LDDB) is organized as a private sector led not-for-
profit company which mainly operates in the area of livestock and dairy development
in Pakistan. Major initiatives undertaken by the Board include milk collection and
dairy development programs, livestock and meat production, food security and
productivity enhancement of small farmers.
The provincial governments have also entrusted the task of developing agricultural
marketing system to various organizations/institutions. In Punjab for instance,
agricultural marketing is managed by the Directorate of Economics and Marketing,
working under the Department of Agriculture. The similar arrangement are provided
for other provinces where a system of market committees are working to ensure
agricultural marketing functions. These market committees are formed to protect the
interests of all stakeholders working in the marketing of agricultural produce. These
committees have also assumed other functions like looking after the affairs of special
markets like ‘Ramzan Bazars’. At the same time these committees are meant for
controlling quality and prices of agricultural produce in the wholesale markets. The
Food Department is another organization which procures many agricultural
commodities (especially staple food stuff mainly wheat) from farmers at prices
announced by the federal government.
Punjab Agriculture and Meat Company (PAMCO) has also been established by the
Government of Punjab under the Public-Private initiative to energize agribusiness
and marketing in Punjab. The major areas of interest of this organization include
development of integrated cold storage chains, enhancing and improving processing
and marketing of agricultural commodities. PAMCO works in the field of fruits and
vegetables, poultry, livestock, dairy, fisheries, floriculture and facilitates the
stakeholders in seeking certificates (e.g. Euro GAP, Global GAP etc.) for the export
of agricultural commodities. Punjab Institute of Agricultural Marketing (PIAM) was
established in 2006 with the mandate to impart training to stakeholders and
suggesting policy recommendations for improving agricultural marketing system in

the Punjab.
5.7. Approaches to Understand Agricultural

Marketing System
Agricultural marketing is a process of facilitating stakeholders that include suppliers,
farmers, market agents, processors, retailers and consumers. These marketing
practices are performed in different ways in Pakistan and in order to understand these
market practices, a complete exploration of processes involved is necessary. To this
end, following section describes various approaches which can be used to understand
marketing system of agricultural products in Pakistan. This system can be studied by
observing different functions performed or by analyzing the role of various agencies/
institutions involved in the agricultural marketing process or taking a commodity as
case study.
5.7.1. Functional Approach

Under the functional approach, various activities performed in the marketing system
are broken down into separate functions. A marketing function is a major specialized
activity performed in accomplishing the marketing process. The activities involved
in agricultural and food marketing processes are generally classified in three set of
functions as under;
i. Exchange functions
ii. Physical functions
iii. Facilitative functions.
Exchange Functions
This set of functions refers to those marketing activities which are related to transfer
of ownership of goods and are mainly related to price determination process in the
marketing chain. The exchange function has two sub-functions i.e. buying and
selling. The primary objective of both buying and selling functions is the negotiations
of favorable terms of exchange.
Physical Functions
Physical functions are those activities that involve handling, movement and physical
change of the actual commodity itself. They are involved in solving the problem of
when, what and where in marketing. It is composed of storage, transportation and
processing.
• Storage Function
It is concerned with making goods available at the desired time. This function many
involve various activities such as holding of large quantities of raw materials in
elevators for further processing and storing finished goods products as inventories
by processors, wholesalers or retailers.
• Transportation Function
Making goods available at the proper place is classified as transportation function
and includes various activities related to preparation of for shipment such as crating
and loading and unloading. Adequate performance of this function also requires
weighing alternative routes and vehicle types as they might affect transportation
costs.
• Processing Function
Most of the agricultural products cannot be consumed in raw form and need
conversation. Hence, processing functions are performed to convert raw agricultural
products into forms in which consumers can consume products. For instance,
converting live animals into meat, meat into flour and bread and fresh peas into
canned or frozen peas.
Facilitating Functions
These functions facilitate the smooth performance of exchange and physical
functions and neither directly involved in the exchange of title nor the physical
handling of products. Without facilitating functions, efficient functioning of modern
marketing system is not possible. That is why, they are sometimes called the grease
that makes the wheels of the marketing machinery move ahead. In facilitating
functions, standardization, financing, risk bearing and market intelligence functions
are included.
a. Standardization Function
It facilitates buying and selling by establishing and maintaining uniform quality and
quantity measurements. Effective standardization is critical for efficient pricing
process. Standardization also simplifies the concentration process, because it permits
the grouping of similar lots of commodities early in movement from producing
points. Monitoring of standards is crucial for ensuring quality control in processing
plants and subsequent distribution of products across the marketing chain.
b. Financing Function
Advancing money to carry out various exchange and physical activities is termed
financing functions. In case of storage or delay in the distribution of goods, someone
must finance the holding of goods. The holding period may be for one year or more,
as in operations of the canning industries, or a relatively short time, as in the
marketing of perishables. Financing may take the form of credit from various lending
agencies or tying up the owner’s capital resources.
c. Risk Bearing Function
Accepting the possibility of loss in the marketing of a product is called risk bearing
function. Risks in the markets are classified as physical risks and market risks.
Physical risks include destruction or deterioration of products because of fire,
accident, wind, earthquakes, cold, and heat. Market risks arise because of the changes
in value of products as they flow across the value chain. There are various ways of
risk bearing and may be the use of insurance companies for covering physical risks
and the utilization of futures exchanges for bearing price risks. The entrepreneur
himself may bear the risk without the aid of these specialized agencies. The function
of risk bearing is often confused with the function of financing. Whereas, the need
of financing arises due to the time lag between the purchase and sale of products, risk
bearing is associated with the possibility of loss during the holding period.
d. Market Intelligence Function
Marketing intelligence refers to collection, analysis, interpretation and dissemination
of data and information required for the smooth performance of various marketing
functions. Evaluation of alternate marketing channels, the different ways of
performing various functions, and the marking potential of new products are also
often considered as the broader function of market intelligence. This function has
assumed greater importance in the modern day marking because marketing functions
cannot be efficiently performed in an information vacuum. Well informed buyers and
sellers are essential for an effective pricing mechanism. Important decisions such as
how much to pay for commodities and pricing policy require in-depth understanding
of market knowledge. In addition, adequate storage and standardization programs
and efficient transportation services depend on good information. Although experts
perform the market intelligence function using specialized techniques, all those who
buys and sells products in the markets also perform this function for optimizing their
market gains.
5.7.2. Institutional Approach

The institutional approach for market analysis refers to the study of various
institutions and agencies which perform various marketing functions. Whereas the
functional approach helps to answer the “what” in the question “who does what,” the
institutional approach focuses on the “who”. Marketing institutions and agencies are
the wide variety of business organizations that operate the marketing machinery. The
institutional approach focus on human element by investigating the nature and
characteristics of various middlemen and related agencies and how they are related
and organized to operate marketing machinery.
Middlemen includes all individuals or businesses who specialize in performing
various marketing functions along the agricultural value chains from producers to
consumers. For doing business, these middlemen may organize themselves in various
forms such as sole proprietors, partnerships, or cooperative or non-cooperative
corporations. The middlemen of particular interest in agricultural marketing can be
of following types:
i. Merchant middlemen (retailers and wholesalers )
ii. Agent middlemen (commission agents and brokers)
iii. Processors and manufacturers
iv. Speculative middlemen
v. Facilitative organizations
Merchant Middlemen
Merchant middlemen take title of the products they handle. They buy and sell for
their own gain and earn their income from the margins generating from the sales (i.e.
difference between their purchase and sale price). Unlike other classes of middlemen,
they are not risk takers and hold uncertainty to a minimum i.e. know likely purchase
and sale price. Merchant middlemen include wholesalers and retailers.
a. Wholesalers
Wholesalers buy agricultural produce in bulk and sell to other small wholesalers,
retailers or industrial users in smaller lots. They do not sell their produce to ultimate
consumers. In terms of business size and characteristics, they are highly
heterogeneous group and may be small or large wholesalers.
b. Retailers
This type of merchant middlemen buys goods / services mainly from wholesalers for
resale directly to ultimate consumers. They represent numerous types of agencies
involved in the marketing process such as street vendors, roadside sellers, temporary
and permanent shop-holders and modern retailers including supermarkets. In terms
of undertaking marketing functions their role is no easier compared to wholesalers.
In fact a retailer may have to do all the functions of marketing i.e. his job is complex.
Retailers are also producers’ representatives to consumers.
Agent Middlemen
The agent middlemen own the goods and derive their income from the fees or
commission paid by their clients for the service they rendered. They do not sell
physical goods to customers. Agent middlemen include commission agents and
brokers. Their main stock in trade is their knowledge of market in which they
participate. They use the knowledge in bringing together potential sellers and buyers.
Their services will be retained either by buyers or the seller who feels that he/she
does not have knowledge or opportunity to bargain effectively for him/herself.
a. Commission Agents
The difference between brokers and commissions agents is one of degree to which
they are given power to handle the product that is being sold i.e. discretionary powers
to assist their principals in ensuring that marketing process is accomplished.
Commission agents are given more discretionary powers over physical handling of
the product, arrangement for terms of sale/purchase, collection of revenue from sale.
They are allowed to deduct their commission before remitting the difference to their
principals.
Brokers
They are not given any physical control over the product. They ordinarily follow
directions from their principals as they have little power over terms of sale or revenue
collection. They bring seller and potential buyer together for which they are paid
fees.
Speculative Middlemen
They are the middlemen in the market who take title to goods / products with the
objective of earning profit from price movements. They are specialized risk takers
and take uncertainty as given. They are also called traders, scalpers and spreaders.
Speculative middlemen are interested in short term price fluctuations because they
derive their income from short term fluctuations in the prices of goods they handle.
They emerge in the marketing system because often merchant middlemen are not
willing to take risk involved in purchasing and storing of goods for longer period of
time. Speculative middlemen play important role in marketing process in ensuring
that commodities are available from time to time.
Processors and Manufacturers
Processors and manufacturers perform the function of changing the basic form of
agricultural products. Form changing is basically a marketing service because many
of agricultural products cannot be consumed in raw form. Manufacturers and
processors may take active role in other institutional aspects of marketing such as
acting as their own buying agents in the producing areas, wholesaling of finished
products and product promotion. In some cases, processing and manufacturing may
be only part of activities they get involved in.
Facilitative Organizations
Main function of these organizations is to facilitate the activities of other middlemen
of marketing and to ensure that the functions they perform take place in smooth
manner. They do not directly participate in the marketing process either as merchants
or agent middlemen rather they establish the rules that the other stakeholders have to
follow. Some facilitative organizations may perform other functions such as
establishing the terms of sale, frames grades and making arrangements of payment
for the transactions. Some of these organizations also provide physical facilities for
the handling of the product.
5.7.3. Commodity Approach

This approach focuses on specific agricultural commodities as they move from
producers to consumers. Agricultural commodity under investigation is monitored
across the marketing channel in terms of various functions performed and institutions
involved. It helps in understanding various costs incurred and value added on
different stages of marketing channel. This approach involves simultaneous
application of both functional and institutional approaches on a particular agricultural
commodity because different commodities have different problems and hence need
different solutions as well.
5.8. Marketing of Agricultural Crops in Pakistan

Pakistan’ agricultural marketing system is fairly diversified because of the
involvement of both private and public sectors. Private sector agricultural businesses
acrross the marketing channels freely trade agricultural commodities. In the markets,
agricultrual commodities brought either by farmers or other intermediaries are freely

trade and prices are determined on the basis of demand and supply. Sometimes, the
public sector manages and controls marketing of some food grains and cash crops
such as wheat, rice, maize, sugarcane and cotton. Government intervenes in the
marketing system through support prices, procurement quotas and prices, export
quotas, regulation and control of markets etc. In the following, how various
agricultural commodities are marketing have been explained.
5.8.1. Marketing of Wheat

In Pakistan, both the public and private sector plays an important role in the
marekting of wheat. Private sector purchases wheat from farmers at the market price
which is mostly less than the support price announced by the government. Farmers
have the option to sell their wheat at the public procurement centers. Farmers may
sell their wheat to their nearby village shopkeepers and brokers (Beoparis) who
further sell wheat to the public procurement centers or to other private traders in the
food grain markets. Farmers and middlemen sell their wheat in the food grain
markets through commission agents (Arthis), who are registered in the market
committee. The producer’s share in the sale price of wheat varies from 90 to 95
percent (Government of Punjab, 2006).
Farmer
PASSCO, Commission Village

Govt. Food Agent Merchants
Department
Flour Mill s Wholesalers
Utility Stores Retailers
Consumer
Fig. 5.1 Marketing Channel of Wheat

Occasional surpluses and shortages and subsequently inadequate marketing

infrastructure particularly storage facilities are the key policy issues that need
immediate policy attention. Since wheat market is influenced by government
intervention, procurement centers are far less than the requirement. On consumer
side, adequate availability of good quality wheat at affordable prices is a major
problem.
5.8.2. Marketing of Rice

Rice is the second staple food and a major export commodities of Pakistan. The
export of Basmati rice remained a public monopoly until 1987/88 and the Rice
Export Corporation of Pakistan (RECP) was the major insitution responsible for the
procurment of cleaned rice from private rice millers and middlemen at the support
price fixed by the federal government. Since 1987/88, deregulation has resulted in
substanital increase in rice exports. The federal government announces the support
price for paddy and PASSCO and Trading Corporation of Pakistan (TCP) are
responsible insitutions for stablizing the paddy prices.
The rice growers may sell their rice to village dealers, agents of rice millers or
through commission agents (Arhtis) to interested buyers The arhtis’ role is as
important in this trade as is in the wheat marketing. Domestically sharp fluctuations
in rice price and inadequate storage facilities are the main issues. Due to
unavailability of drying and storage facilities at the farm level, the head rice yield in
Pakistan is about 30 to 40 percent compared to around 55 percent in South-East Asian
countries.
Farmer
PASSCO/ TCP Commission Village

Agent Traders
Rice Mills Wholesalers Export
Utility Stores Retailer s
Consumer
Fig. 5.2 Marketing Channel of Rice

Rice exports from Pakistan are generally affected due to improper branding, poor
packaging and non-compliance to SPS measures. Absence of accredited labs for
testing and certification hampers export of rice from Pakistan to many developed
countries.
5.8.3. Marketing of Cotton

Cotton is marketed through three principal operators in Pakistan: growers, village
dealers or commission agents and cotton ginners. Cotton is sold by growers to village
dealers and commission agents who then sell it to cotton ginners. A small number of
growers having larger landholdings sell directly to the cotton ginners. The
commission agent, who assembles quantities of cotton sells directly to factories. On
the other hand, village dealer is a less significant operator in terms of volume of trade.
Cotton ginning factories are located throughout the main production zone. These
factories process cotton into cotton lint and cotton seed. The brokers purchase cotton
lint from ginners. Either ginners sell lint to spinners located in large urban areas such
as Multan, Faisalabad, Karachi, or sell it to exporters. Brokers act as bridge between
ginners and oilseed factories for marketing of cotton seed that produce cotton seed
oil and seed cake. A small percentage of seed is sometimes sold to large growers for
planting.
Fluctuating domestic and interntional cotton prices are the major problems. Besides
prices, cotton contamination and quality related problems are the main issues in its
marketing. Despite substantial increase in cotton production over the years,
numerous issues such as unsuitable picking methods, mixed seed and mixed grades
and adulteration of seed cotton with water and foreign matter have reduced the
quality of seed cotton. Inappropriate ginning techniques further downgrade the lint
quality. Absence of a recognized and scientifically devised standardization system
causes substantial losses to the country’s cotton industry. Because of these issues, it
is estimated the country is losing considerable commercial value of its cotton.
Grower
Commission Village
Agent Ginners Dealers
Cotton Lint Cotton Seed
Textile Mills Exporters Oilseed Traders Growers

Mills
Fig. 5.3 Marketing Channel of Cotton

5.8.4. Marketing of Sugarcane

Sugarcane is an important cash crop and a major input to the sugar industry in
Pakistan. Because of substantial expansion in sugar industry, the area under
sugarcane has also considerably expanded. While marketing their sugarcane, farmers
either sell it to the village dealers and commission agents or at purchase centers
established by the sugar mills in their surrounding areas. After processing in the
mills, sugar is marketed to consumer through wholesalers, retailers and utility stores.
In addition to sugar, several other by-products such as molasses and bagasse.
The marketing of sugarcane in Pakistan is also beset with several problems.
Underweighting at purchase centers, delays in payment, undue deductions by mills,
obtaining an indent and the payment of premium are the common complaints of
farmers. Sugar mills use various tactics to exploit farmers. While growers demand
higher price for their sugarcane, sugarcane millers complain about their higher
production cost and expensive import of machinery. Late start of sugarcane crushing
seasons results in dissatisfaction and financial losses to both farmers and millers.
Stagnant cane yields, non-payment of dues to growers by mills, low import parity
prices. inadequate agricultural infrastructure and vague government sugar policy
along with unfair trade practices are some of other problems that futehr aggravate the
problems faced by the sugarcane growers, sugarmills and consumers/end users.
/
Farmer
Sugar Mill Village

Desi Sugar & Purchase Centre Dealers
Gur Formation
Wholesalers or Sugar Mill

Retailers
Consumer Sugar Sugarcane

By-products
Wholesalers/ Consumer Paper Mills/ Confectioners Chemical

Retailers Wood Industries Industry
(Ethanol)
Fig. 5.4 Marketing Channel of Sugarcane

5.8.5. Marketing of Horticultural Crops

Pre-harvest contractor is one of the important market functionaries for horticultural
products. Fruits marketing starts with the involvement of pre-harvest contractor who
buys entire orchards at blossom. Harvesting, grading, packing, and then
transportation, to the wholesale markets are some of the main services performed
by the pre-harvest contearctor. He also performs major part of production activity
such as spraying, orchard management, picking and assembling of the produce. The
pre-harvest contractor is considered as the kingpin in the physical movement of fruits
from orchards to wholesale markets.
Village merchants (Beoparis) collect produce from a large number of dispersed small
holders, bulk it and transport it to wholesale markets. Commission agents (Arthis)
are other important market fuctionaries of fruits and vegetable marketing system of
Pakistan. They have permanent place of business in the wholesale fruits and
vegetable markets, act on behalf of sellers and arranage auction for fruit selling. The
commissions rate/fee charged by the commission agents range from 6 to 10 percent
for various products. Wholesalers (Pharias) purchase produce through the
commission agents normally in auction and sell to retailers i.e. shopkeepers and
carriers. They also grade and repack the produce sometimes. The last intermediary
in the marketing channel are the retailers. Generally, there are three types of retailers
i.e. shopkeepers, carriers (Pushcart/Street Hawkers) and small pharias operating is
the market.
Fig. 5.5 Marketing Channel of Fruits
Producer Commission Agent Phariawala Retailer Consumer
Fig. 5.6 Marketing Channel of Vegetables
5.8.5.1. Marketing of Citrus

The private sector performs most of the citrus marketing activities. The public sector
plays a facilitating role by providing physical infrastructure in the wholesale markets,
market intelligence, market promotion and framing regulatory measures for smooth
business operations. In the marketing of citrus fruit, pre-harvest contractor plays an
important role. With growers, he enters into a contract of an orchard on annual basis
after estimating the possible returns from the orchard.
Commission agent who works in the market has close ties with contractors and
producers and plays a dominating role. Often, commission agents are blamed for
exploiting producers and consumers by charging a fixed and high margin on their
investment. In the citrus marketing and its export, an important link is processor.
Facilities for the export of citrus are quite developed. The major impeding factor at
the export level is however the costly import of material used in the processing of
citrus fruit which if subsidized can boost its export.
Washing
Picking Processing Waxing Exporter Importer/ Retailer
Sorting Plant Grading Wholesaler
Packing Packing
Transportation Cooling/
Storage
Transportation
Consumer
Pre-harvest Commission
Orchard contractor agent
Picking
Grading Wholesaler Phariawala Retailer
Packing
Transportation
Fig. 5.7 Marketing Channel of Citrus
5.8.5.2. Marketing of Mango

Marketing of mangoes in Pakistan is in private hands and the public sector is
responsible for ensuring an enabling environment for market promotion. Domestic
mango supply chains are fragmented and involve numerous stakeholders. Pre-harvest
contractors are the starting point in the marketing of mango but often their
contribution to value addition is low because their operations are guided and financed
by commission agents. Pre-harvest contractors do not have power to voluntarily
change their harvesting and marketing practices. Commission agents control most of
the marketing activities such as flow of fruit from contractors to the wholesale
market.
Processors are found working as a dumping ground for lowest quality fruit where in
fact they require sound and fully mature mangoes. This cannot be done with training
growers and suppliers about processors’ needs. Retailers are representative of
growers and the last stage in the marketing of mango. They work as stall holders,
vendors in urban areas and sometimes road side sellers in production areas. Pakistani
mangoes are also exported and are source of foreign earnings for Pakistan. Although
the mango exports have increased overtime, less than 5 percent of total production is
exported because of quality and other production and marketing related issues.
In short, Pakistani fruits and vegetables are of good quality but many marketing
imperfections and peculiarities hamper full realization of their market potential.
Their perishability, seasonal nature, unsophisticated handling, improper
transportation, nominal grading, fluctuating prices and high post harvest losses
(almost 20-40%) are some of the factors which reduces their returns thus increasing
risks in their marketing practices. A great export potential of fruits and vegetable
exists in Pakistan but stringint application of international standards such as the
Sanitary and Phyto-sanitary measures under the WTO regime hampers realisation of
this potential. In general terms Pakistan exports raw vegetables as value addition for
export purposes virtually is missing. The exporters of fruits and vegetables lack
awareness of modern marketing techniques to win customers in the international
market.
Washing
Picking Processin g Grading Exporter Importer/ Retailer
Sorting Plant Packing Wholesaler
Transportation Cooling/
Storage
Transportation
Consumer
Pre-harvest
Orchard Commission agent
contractor
Picking
Grading
Packing Wholesaler Phariawala Retailer
Transportation
Fig. 5.8 Marketing Channel of Mango
5.8.5.3. Marketing of Apple

Prior to harvesting, the apple growers often sell their crops usually at flowering stage
to contractors. When the product is sold, all marketing costs (transportation, handling
and storage costs) are deducted and net price is paid to grower. A typical social and
economic relationship (provision of credit for production and consumption purposes
and marketing advice) exists between growers and commission agents. Majority of
the apple growers in the country sell their produce to pre-harvest contractors. Few of
the growers themselves market their mangoes and earn higher income. Apple
produced in Baluchistan and the KPK is generally transported to Punjab and Sindh
by traditional mode of transportation (Khan et al., 2007).
In the apple production areas, the required infrastructural facilities are lacking. Apple
growers and contractors harvest and pack their crop and transport it in un-refrigerated
trucks to wholesale markets where either they have to sell at the prevailing market
price or pay for storage in the hope for getting higher price later. Considering
geographical spread of Pakistan, storage requirements to maintain quality of the fruit
till it reaches consumers are very important aspects in the marketing of apple. Poor
communication system and infrastructure (inappropriate roads and storage facilities)
results in higher post-harvest losses. As such, a substantial quantity of the produce is
wasted at various levels of its marketing due to injuries, cuts, overheating and
dehydration (Shah and Farooq, 2006).
Grading
Picking Pre-harvest Packing Commission Wholesaler Retailer
Sorting Contractor Cooling/ Agent
Transportation Storage
Transportation
Consumer
Orchard
Picking
Grading
Packing Commission Wholesaler Phariawal Retailer
Transportation Agent
Fig. 5.9 Marketing Channel of Apple
5.8.5.4. Marketing of Dates

Like other horticultural crops, trade of dates mainly rests with the private sector.
Marketing of dates starts with pre harvest contractor who brings the produce in fresh
condition from orchards to wholesale markets. Commission agents have strong ties
with farmers and pre harvest contractors. Grading and standardization practices are
not strictly followed especially in its export. Many problems are encountered in the
marketing of dates both in the domestic as well as international markets. The fruit
comes from areas which are relatively less developed in the country. As such,
marketable surplus coming into the markets lacks consistency in quality and quantity.
Farm to market access is almost non-existent, wasting much fruit which either does
not enter in the marketing chain or is converted into low value products (PHDEB,
2008).
Pre-harvest Processing Washing
Contractor Plant (Dry / Grading
Packing Exporter Importer/ Retailer
(Picking, Sorting, Fresh)
Cooling/ Wholesaler
Transportation)
Storage
Transportation
Consumer
Orchard
Picking
Grading
Packing Commission Wholesaler Phariawala Retailer
Transportation Agent
Fig. 5.10 Marketing Channel of Dates

5.9. Marketing of Livestock and its Products in

Pakistan
Livestock is the leading sector regarding its contribution in agricultural GDP. Major
livestock products are milk and meat which are obtained from buffalo, cow, goat,
sheep, etc. while, minor products include hides, skins, wool, hair, blood, guts,
casings, horns and hooves, bones, fats, dung, urine, head etc. Currently, 8.0 million
rural families are directly or indirectly involved in rearing of livestock and their
livelihood is closely associated with the development of this sector. This sector
contributes 56.3 percent in the agricultural value added products and 11.8% to the
Gross Domestic Product (Govt. of Pakistan, 2015).
5.9.1. Marketing of Livestock

In Pakistan, livestock marketing is operated at regular and weekly rural markets.
Marketing operations are regulated by the local government. In Baluchistan
province, there is no regulated market. Management and collection of marketing fees
are vested with private contractors through tender process. Marketing operations of
animals are held until sold at daily basis, but in urban areas, marketing may continue
for several days. While, in weekly markets, unsold animals are returned to the village
or moved to the next market of region. Commission agents mostly provide the
marketing services and price is determined through weight of live animals along with
other factors including size, breed, colour, physical fitness and ongoing wholesale
market prices.
Traditional private sector is deeply involved in the marketing of live animals that are
specifically sold for slaughtering purpose. Village collectors (Beoparis), small and
medium traders and commission agents are the main stakeholders in this marketing
activity. Village collectors and traders purchase the livestock directly from producer
and sell them in the local market or transport to the regional markets.
5.9.2. Marketing of Meat

Major sources of meat in Pakistan are cattle, buffaloes, goat, sheep and poultry. Total
meat production contributed by beef, mutton and poultry meat was recorded 3696
thousand tones in 2014-15 with 17 kg per capita availability of meat (Govt. of
Pakistan, 2015). Meat is mostly consumed in the small pieces or in minced form.
Two major intermediaries such as wholesaler and retailer (mainly butchers) are the
main actors in marketing. Animal are mostly slaughtered in notified municipal
slaughterhouses, private slaughter houses, armed forces slaughter houses and back
yards. Then, wholesaling of meat is mostly done at slaughterhouses on regular basis.
The slaughtered meat in pieces is transported to the retail outlets by unhygienic
means of transportation. In small towns, retailers/butchers purchase their own
animals, while, in large metropolitan cities, wholesalers provide meat to the retailers
and butchers. Retailers sell beef and mutton in fresh form. Retailers mostly adjust
their supplies according to the daily demand of consumers. Refrigeration facility is
mostly available in the summer season, but this is expensive. In metropolitan cities
such as Karachi, Islamabad, Lahore, Faisalabad and Peshawar, few modern meat
retail outlets have been established that provided value added products of meat in
attractive packing and refrigerated form. Some meat processing companies provide
their frozen meat products in their own display cabinets in big stores and
supermarkets.
Farmers/Owners of Collectors from

Animals in Villages Village
Village Market/Investor Local Cattle Market

(Commission Agent)
Mini Slaughterhouses Slaughter Houses
Slaughtered Animal/ wholesale
Butchers Shops
Retail Stores Hotels/Bakery/Others
Consumers
Fig. 5.11 Marketing Channel of Livestock and Meat
5.9.3. Marketing of Milk and Dairy Products

Milk and dairy products make up an important component of livestock sector. In
Pakistan, buffalo, cows, camels, goats are the main sources of raw milk. After
cereals, milk occupies the second position in terms of per capita consumption. Total
gross production of milk was 52632 thousand tones with 42454 thousand tons of total
consumption per annum (Govt. of Pakistan, 2015). In Pakistan, raw and fresh milk
is primarily marketed that is mainly influenced by consumer taste and preferences
and price fluctuations. Therefore, it is clear that almost 95 percent of total milk is
transported to the ultimate consumers through extensive and traditional stakeholders.
Less than 5 percent of milk production is moved to the processing plants through
some formal and informal milk chains (Mohy-ud-Din and Badar, 2011).
Katcha Dodhi is the main stakeholder who purchases the milk directly from dairy
farmers and sells it directly to the consumers and the retail shops in urban areas. He
generally collects 75 to 100 liters per day. Pakka Dodhi always purchases milk from
the various milk collectors in large quantity and sells up to 2000 liters per day. In
large urban centers, milk collectors handle more than 70000 liters per day and also
sells to the milk processing units. They do not have their own chilling plants so add
ice and water in the milk to keep it cool (Mohy-ud-Din and Badar, 2011).
Currently, milk processing industries have established their own milk collection
centers in the production areas in order to secure quality and in time supply of milk.
These collection points are centrally equipped with chilling plants and controlled
atmosphere containers are utilized for milk transportation. Rural milk collectors and
dairy cooperatives sale milk in bulk quantity at these collection points. Peri-urban
producers sell milk directly to the traders on the contract basis in order to avoid any
delay in payments and malpractices of middlemen.
Farmers: includes Village Based & Peri Urban Farmers
Dodhis/Gawallas Processor’s Village Milk Collectors Big Contractors
Processors
Milk Wholesale Shops (Rural & Urban)
Distributors Milk Shops, Tea Shops, Hotels, Private Outlets

Bakeries, Khoya Makers
Consumers
Fig. 5.12 Marketing Channel of Milk and Dairy Products
Although less than 5 percent of total milk is processed in processing industries, but,
there is annual increase of 20 percent in consumption of processed milk. Pasteurized
and Ultra High Temperature (UHT) treated milk in tetra pack are the main products.
Besides this, powdered milk, yogurt, cream and lassi, etc. are minor dairy products.
The marketing chain of processed milk starts from processing units to the
wholesalers/distributors and ends up in the hands of retailers who display the dairy
products. Processed milk is mainly sold in packaging of 200 ml, 250 ml, 500 ml, 1.0
liter and 1.5 liter and consumed in urban and peri-urban areas. Processing companies
market their dairy products such as yogurt (plain and flavoured), flavoured milk,
cheese and ice cream (Mohy-ud-Din and Badar, 2011).
In Pakistan, supply of powdered milk is not sufficient as per domestic demand.
Therefore, powdered milk is imported from various countries. The imported milk is
marketed through milk marketing companies with the same marketing actors of
processed milk. Traditionally, dairy product like yogurt is marketed at slightly high
price as compared to price of fresh milk. Producers and traders at village level
produce desi ghee for their own consumption but they also sell in urban areas. Dairy
shops in urban areas produce milk cream and butter and sell in small packets at retail
outlets.
5.9.4. Marketing of Hides and Skins

Hides and skins are by-products of livestock obtained during slaughtering. Cattle,
buffalo and camels are the main source of hides with annual production of 15368
thousand numbers. Skins such as sheep, goat and fancy skins have annual production
of around 53060 thousand numbers (Govt. of Pakistan, 2015).
Formal grading system does not exist for hides and skins. That is why; these are
classified on the basis of size, type and quality. Exportable hides are officially graded
according to international standards. Around 300 tanneries are operating in Pakistan
that have installed modern chrome tanning technology. These tanneries contribute
around 80 percent of leather goods produced in finished form. Domestic demand of
leather goods is mostly covered by semi-mechanized tanneries that are utilizing
vegetable tanning technology. Instead of huge production capacity, 461 leather
garments making units with annual production of 5 million pieces, 524 footwear units
with production of 100 million pairs per annum, 348 leather gloves units with
production of 5 million pairs annually are working. It indicates that capacity of this
sector is underutilized (SCCI, 2015).
Traditionally, in slaughter houses, quality of hide is badly damaged due to poor
facilities. Hides become soaked with blood that damages its quality. Similarly,
pointed knives lead to the cut damage during flaying. There are no proper facilities
for handling and preservation of hides and skins in slaughter houses. Generally salt
is used to preserve the hides and skins from infestation with bacteria and fungus. In
large urban areas, butchers mainly sell the hides and skins to the wholesalers that
supply the produce directly to the tanners or through commission agents. Whereas in
rural areas, collector usually purchases hides and skins on the behalf of
wholesaler/commission agent.
Individual Households Slaughter Houses

Homestead Slaughter
Primary Trader Local

Collector/Broker Wholesaler/
Commission Agent
Tanneries Export
Fig. 5.13 Marketing Channel of Hides and Skins
5.9.5. Marketing of Wool

Wool as fleece wool or slipe (pulled) wool is obtained from the skin tanneries.
Present population of sheep in Sindh is around 23.5 million with production capacity
of 6.12 million kg of wool. Tharparkar district in Sindh is the most suitable region
for sheep and wool development that estimates around 40 percent of the total wool
production (Junejo, 2002). Kooka, Kachhi and Pak-Awasi are the famous breeds for
quality wool production. Pak-Awasi and Kooka breeds have more than 60 percent
pure wool fibers. Kachhi and Pak-Awasi have good staple length of more than 7.0
cm. Sheep are shorn twice a year. During spring season, shearing produces white
wool. Whereas autumn yield is yellowish with comparatively less value. Poor
shearing often yield poor quality and short staple length and strength. Local wools
comprises of coarse fiber that is mainly used in the manufacturing of rugs and carpets
(Junejo, 2002). In addition, Kashmir is also a good source of wool and wool products
like pashmina shawls which are famous world over for their softness and warmth.
These shawls are hand woven and sold at premium prices in big markets.
Farmer Shearing:
Shearing of Sheep
Farmer: Shears Contract Shearing
himself, use own
Labour and Capital
Farmer: Baling of
Wool
Wool Merchants
Farmer or Contract
Buy Wool at
Transporter
Shearing Shed
Commission Agent
Buyers/Processor for Buyers for Export
Domestic Use
Fig. 5.14 Marketing Channel of Wool
Fleece wool is directly sold by producer to the contractor or wool merchants

operating in local urban areas. Wholesale trader transport wool to the commission
agents who operate on behalf of wool processor or exporter in Lahore, Multan and
Karachi. Export wool is sorted, washed, baled and graded in export centers in
accordance with grades and standards defined by Wool Test House in Karachi.
Whereas processors mainly purchase slipe wool from skin tanneries and export it at
highly competitive prices.
5.9.6. Marketing of Livestock By-Products

The by-products obtained from slaughtering of animals generate a valuable source
of income for the trader. Potential share of this source is around 20 percent of the
total sales. Unfortunately, value of the by-products and level of recovery is
influenced by poor handling methods. Offal obtained is usually used for resale
purpose and human consumption and the remaining material is left unhandled that is
the main cause of unhygienic condition. During summer season, diseases and
wastages lead to reduce the sale volume. Almost less than 10 percent animal casings
and bladders are normally processed and exported sometimes in dried form. This
processing industry is small as compared to the volume of production. Blood is
collected in barrels, but, inefficient scraping from the floor reduces wastage (Mohy-
ud-Din and Badar, 2011).
Wholesaling of meat and offal to the retailers is mostly accomplished in the
slaughterhouses or on consignment basis. Karachi is the only major metropolitan city
where centralized marketing facility is available. Now at Lahore another scientific
abattoir has been established. Offal is sold mostly at butcher shops and stalls scattered
around the towns and cities.
5.10. Marketing of Poultry Meat and Egg

Poultry is the well organized and vibrant sector that contributes significantly in the
economy of Pakistan. It provides employment to 1.5 million people. Recently, this
sector has shown 8 to 10 percent growth rate per annum due to rising demand of
poultry meat. Its contribution in GDP, agriculture and livestock value added was 1.3
percent, 6.3 percent and 11.2 percent respectively. Poultry meat contributes around
28 percent of the total meat production in Pakistan (Govt. of Pakistan, 2015). It is
readily available in form of broilers (live or processed), layer and village birds.
In Village, poultry meat and eggs are mostly produced for self-consumption of farm
families. But the surplus is always sold to the collectors and marketed through traders
and wholesalers in urban areas. Wholesalers are directly involved in the marketing
of commercial poultry. Producers sometimes sell directly to the retailers in live form.
Retailers slaughter and dress the fresh poultry meat as per demand of consumer and
charge against services they render. Many super markets in major cities of Pakistan
have installed refrigerated cabinets for storing and selling poultry meat to consumers.
Poultry eggs are mostly collected through village traders and sold through
wholesalers and retailers in urban areas to the ultimate consumers. Effective grading
system for poultry eggs is missing and there are no price differentials for different
quality and sizes of eggs.
Forests, Farmlands, Wild Lands
Timber, Fuel Wood Non Timber Forest Products
FDC, AKLASC, Dargai, Chilas Local Collector
Timber Merchants Wholesaler
Export of
Furniture Industry Retailer
NTFPs
Consumers
Fig. 5.15 Marketing Channel of PoultryMeat and Eggs

5.11. Marketing of Fish

Fish is a valuable cheap source of animal protein. It is the main source of livelihood
for inhabitants of coastal areas. Though share of fisheries in GDP is little, but, its
export contributes substantially to the national income. Seafood is mainly exported
to China, Thailand, UAE, Korea, Malaysia, Sri Lanka, Japan, Indonesia, Hong Kong
and Middle East. Total production of inland and marine fish was estimated as 499000
metric tonnes. Out of which 365000 metric tonnes came from marine production
(Govt. of Pakistan, 2015).
Marine and inland fish is marketed almost in the same pattern as other agricultural
commodities. Seafood is sold to the wholesaler in the market who further resales it
to the retailers and ultimate consumers purchases it directly from the retailers. Farm
fish in ice-packing is mostly sold either at the farm gate or through the contractors
working on the behalf of commission agents. Inadequate facilities, lack of storage
facilities, poor hygienic conditions and inappropriate communication links are the
major factors behind poor fish marketing. Consumers mostly prefer inland and farm
fish over the marine fish due to taste and freshness. This preference is seen in terms
of high prices at wholesale and retail markets of inland fish.
Contractor of Public Fisherman Private Fish Farmer

Water Areas
Commission Agent
Wholesaler
Processor Contract Supplier
Retailer
Shopping Mall s/
Supermarkets
Export Consumer
Fig. 5.16 Marketing Channel of Fish
5.12. Marketing of Forest Products (Timber & Non-

Timber)
The most important utility of forest plants is the timber which is mainly used for
construction and furniture purposes. Pakistan has severe shortage of timber and fuel
wood resources. Instead of desired level of 25% for sustainable economic

development, forest resource cover only 4.4% of the total land area in the country
that is insufficient to meet the domestic demand of timber and fuel wood.
There are three main sources of wood i.e. state owned forests, communal forests and
private owned forests. Total wood consumption as timber and fuel wood in country
is around 47.73 m3. Out of which, per capita consumption of fuel wood is
approximately 0.205 m3 per annum. Whereas, fuel wood consumption in brick
industry, tobacco curing units, charcoal kilns, etc. is around 3.3% of total fuel wood
consumption. Construction industry consumes 20% of the total timber consumption.
Fuel wood is basically consumed in three main sector i.e. domestic sector, rural and
commercial industrial sector (Zaman and Ahmad, 2011).
Marketing of timber and fuel wood is very complex. All territorial forests have their
own sale depots that supply timber and fuel wood. The forest department maintains
record of forest area, growing stock, harvesting and auction. Two main public timber
markets i.e. Forest Developing Corporation (FDC) and Azad Kashmir Logging &
Saw-Mills Corporation (AKLASC) are directly involved in sale of major portion of
timber. Whereas, in private sector, two markets i.e. Dargai in Khyber Pakhtunkhwa
and Chilas in Gilgit Baltistan supply the timber to timber merchants throughout the
country. Furniture industry purchases the timber directly from these timber
merchants or wholesalers in their regions.
Marketing of wood is different in rural and urban areas. In rural areas, main sources
are farmlands and wild lands. While in urban centers, wholesaler and retailers supply
the main source. Increasing demand of timber is usually met through imports and
illegal cutting of forest trees. Afghanistan, Malaysia, Singapore, China, Sweden,
USA, France, Italy, Spain are the main countries that supply wood and wood products
to Pakistan.
Non timber forest products (NTFPs) are materials that also come from the forests. In
Pakistan, important NTFPs are morels, honey, fruits, nuts, condiments, mazri palm,
silk cocoon, gums, vegetable tanning, etc. About 34 percent of local people have
indigenous knowledge about collection, processing, drying, packing, and marketing
of NTFPs and are mainly dependent for income generation (Latif and Shinwari,
2005). Some of the NTFPs such as chalghoza, morels, walnuts, etc. are exported.
Forests, Farmlands, Wild Lands
Timber, Fuel Wood Non Timber Forest Products
FDC, AKL ASC, Dargai, Chilas Local Collector
Timber Merchants Wholesaler
Export of
Furniture Industry Retailer
NTFPs
Consumer
Fig. 5.17 Marketing Channel of Timber & Non Timber Forest Products
5.13. Major Agricultural Marketing Problems

Agriculture sector in Paksitan is beset with infrastructural and post-harvest related
problems. Existing agricultural marketing infrastucture is neither adequate nor
capable to meet current needs of the country. Some problems in the domain of
agricultual marketing are summerized.
5.13.1. Lack of Proper and Modern Wholesale Markets

Wholesale markets act as a cardinal link in the marketing chain of agricultural
commodities. These markets absorb bulk of the marketed surplus and are main source
of supplies to retailers in the big cities and their surroundings. Wholesale markets are
increasingly playing an important role not only as major centers of price formation
where coordination between production and marketing takes place, but also as an
important place for introducing innovations in the marketing practices. Most of the
agricultural produce pass through wholesale markets for onward distribution in the
consumption areas and to meet export demand.
At present there are reported over 700 fruit and vegetable wholesale markets in
Pakistan. The province of Punjab occupies the largest share followed by Sindh, KPK
and Balochistan respectively. In Balochistan there are two central wholesale markets
for fruits and vegetables, one at Quetta and second at Dera Murad Jamali.
Many wholesale markets were built years ago and are unable to cope efficiently with
increased transactions. Serious traffic congestion, insufficient space for efficient
movement of products in and out, inadequate storage and improper management are
some of the major factors for increased marketing costs and physical losses of farm
products. Hygene conditions particularly in case of fruits, vegetables and livestock
are quite dismal.
Although market committees have been constituted under the provincial statutory
laws and are responsible for smooth administration, operations, management and
development of these markets in respective provinces, their activities are much

influenced by political interests. Most market committees are unable to discharge
obligations. The sole concern of market committees is to regulate marekts.
Unfortunately, enforcement of regulations is mostly defective and is to the
disadvantage of entire marketing system.
5.13.2. Lack of Farm to Market Roads and Poor Transporation

Facilities
Poor farm-to-market roads is a common feature of agricutlural marketing system.
These roads are often unusable during rainy months and in some cases during chilly
winter. Current length and status of farm to market roads is not satisfactory. The
present length of farm to market roads (60,000 km) is crucially less than potential
requirements (Government of Pakistan, 2009). There is an immediate need to
increase farm to market roads length for improving farmer’s access to markets. The
establishment of all-weather farms to market roads particularly in the remote rural
areas should be assigned priority in the upcoming policy reforms.
High freight is charged by transporters due to poor condition of roads, which
ultimately increases marketing costs, largely shared by the consumers and farmers.
Non-existence of good roads limit the use of economical mode of transporation (e.g.,
trucks). As such, farmers and traders have to rely upon relatively less efficient mode
of transportation (eg carloads, small vans etc.). Poor condition of farm to market
roads is also stumbling block in introducing innovations and new teachnology some
time (replacement of wooden crates with fiberboard boxes in spite of their positive
impact on net returns to farmers).
5.13.3. Inadequate Storage Facilities

Inappropriate storage facilities both in the public and private sector register highest
losses during handling operations. The perishable farm produce (fruits and
vegetables), due to their specific nature and characterstics, require variable storage
conditions. In most cases, produce (especially the perishable products) is stored in
shallow pits covered with farm wastes without ventilation, without proper sanitation
and preventive measures for insect and disease control. These conditions usually
exist in on-farm storage houses.
This becomes more important in the light of recent food crisis (for commodities like
wheat, sugar, milk, maize and meat). As stated earlier public storage facilities are not
sufficient for maintaining stable supply of agricultural commodities to the
stakeholders. The investment by the private sector is nominal and can be enhanced
by offering special incentives (subsidy in the construction of storages). Additional
storage facilities can be established at farm level and also at market levels to avoid
shortages (and handle surpluses) of food stuff.
Table 5.3 Government Storage Capacity ('000' Tonnes)

Agency 2006 2009 2012
1.WHEAT 4339 4339 4339
Provincial 3780 3780 3780
Punjab 2483 2483 2483
Sindh 709 709 709
KPK 365 365 365
Baluchistan 223 223 223
Federal 559 559 559
Food Directorate - - -
AK&NA. 64 64 64
Def. Division 54 54 54
PASSCO 441 441 441
2. RICE 826 826 826
3. Cotton (In 000 Tonnes) 77 77 77
Total Capacity 5242 5242 5242
Source: Govt. of Pakistan (2013)
5.13.4. Lack of Modern Cool Chain Infrastructure

Modern cool chain infrastructure is a prerequisite for an efficient agricultural
marketing system which is lacking in Pakistan. This is an important contributing in
post-harvest losses and quality deterioration which results not only in price
stabilization and loss of foreign exchange earnings. Even the existing cold storage
facilities are unevenly distributed among various provinces. These facilities lack
blast freezers that bring down temperature of the produce to a level that can be
maintained within the cold store. As a result, the produce is taken directly into the
cold store where it loses heat and deteriorates the temperature of the commodities
already present in the store. In addition to cold storage facilities, storage mechanism
and structure for other agricultural commodities also needs to be evaluated.
5.13.5. Lack of Post-Harvest Technology and Management

Post-harvest losses still remain as one of the most pressing problems particularly for
persihables. Despite advances in research, enormous quantitative and qualitative
losses still occur. The extent of loss depends on how the commodity is handled from
farm to the market. Studies reveal that post-harvest losses are greater than production
losses. These losses are not due to a single contributory factor but associated with
different factors in post-harvest operations. Lack of farmers awareness about
scientific handling of farm produce especially the perishables, aggravates this
situation. High post harvest losses if avoided can contribute in marketed surplus thus
increasing returns to farmers and adding to supply, bridging gap for any shortages.
5.13.6. Processing and Value Addition

Processing of agricultural commodities is performed to add value and prolong life.
This is another good option to make existing supply of agricultural commodities
more sustainable. An unfortunate fact about existing status is that only a nominal
amount of total production is processed (3 percent of fruits, vegetables and milk) in
the country. Some fruits are processed into products like jams, jellies, squashes,
juices and pulp. Even many vegetables are processed by extracting moisture/water to
prolong their shelf life (e.g. dry vegetables, cutlets and essence etc).
There exists enourmous potential of adding value to various agricutlural
commodities especiallly perishables in the country which can be exploited by
inculcating entrepreneurial skills among stakholders by offering special incentives
by the government to the agribusiness entrepreneurs. In addition role and working of
food processing firms (sugar and flour mills) needs to be reviewed and regulated to
avoid food crisis.
5.13.7. Poor Physical Handling of Perishable Products

The typical farm products change hands from four to ten times. Initial handling is
done in the field during harvest where the product is subject to various handling
operations viz picking, piling, sorting and packaging. During this process significant
loss of produce occurs. Careless loading and unloading of perishable farm produce
also causes heavy losses. As such, while analysing marketing costs, significant part
of total marketing costs is comprised of produce handling cost.
5.13.8. Inappropriate Packing and Packaging

The types of containers used for transporting and storing products (eg fruits and
vegetables) vary from place to place. The most popular containers for fruits packing
are wooden crates. Irrespective of the structure and properties of the farm products,
a common practice is to use whatever container is available. As a result, produce is
pressed hard in the crates or carried in oversized containers causing huge loss.
Packaging in prescribed containers (corrogated card board boxes) is an international
trade norm/international requirement. Currently, the private sector enjoys an
exclusive monopoly in the packaging material industry in Pakistan. There is strong
need for offering special incentives to new entrants in this industry.
It may be mentioned that at present, there are 121 known pack houses in the country
for horticulture crops. The facilities offered by most pack houses do not come up to
international standards except in the case of very few Pack houses which have
requisite facilities and technology (table 5.4).
Table 5.4 Existing Pack House Facilities

Commodity No Status
Citrus 92 90 in Sargodha - 85 Active
1 in Khanewal – Active
1 in Peshawar – Inactive
Mostly Indigenous
Mango 4 All in Karachi
3 Certified for HWT by Iran and China
9 Plants include 5 Large and 4 Small
Date 9 all in Khairpur
Indigenous Low-Tech
Apple 1 1 in Quetta
Recently Activated by PHDEC
Onion, Potato 15 All in Karachi, 2 Equipped with Mechanical
Grading
Source: (Govt. of Pakistan, 2009a) PC -1 Cool Chain System; only known number of facilities is provided
in the table above
5.13.9. Non Implementation of Grades and Standards

By its very nature agricultural produce is characterized by variation in its quality.
The specifications for classifying various fruits and vegetables vary and depends
upon the nature of the product and requirements of the marketing system. Department
of Agricultural and Livestock Products Marketing and Grading (DAPLMG) and
Pakistan Standards and Quality Control Authority (PSQCA) are entrusted with the
task of setting of grades and standards and their enforcement. Pakistan Horticultural
Development and Export Company (PHDEC) has recently taken up the
responsibility of setting grades and standards for various horticultural products.
Although grades and standards for the exportable fruits, such as, mango, apple and
kinnow have been established but not enforced in true letter and spirit. Not only the
existing grading system covers few fruits but also their enforcement is poor.
5.13.10. Lack of Agricultural Marketing Information

System (AMIS)
Availability of accurate and timely marketing information plays an important role in
fascilitating the process of transactions. In addition this infromation helps in
negoticating and establishing prices for the stakeholders. Farmers are handicapped
by lack of reliable information on prices and market conditions. Many farmers take
the price dictated by traders or their informal financiers. Even the traders who operate
in rural areas are not well informed about the prevailing prices in the wholesale
markets. Even If the information is available, it is either too late or inaccurate.
Information on daily prices and market arrivals are vital for farmers and village
traders in planning shipment of their produce and in negotiating prices.
5.14. Measures for Improving Agricultural Marketing

System
The importance of wholesale markets in the agricultural marketing system of
Pakistan needs no emphasis. These markets confront many problems in the sphere of
their operations, management and control. There is strong need to address various
problems hindering, proper functioning and development of these markets. As stated
most of the wholesale markets in the country were established long ago to cater to
needs of population of that time, over years these markets have lost their utility due
to their location and many other inherent problems (size, design etc.). As such, there
is need to establish new model markets fully equipped with requisite facilities. In this
context role of market committees needs to be redefined and various implementation
of clauses of Agricultural Produce Markets Acts ensured. Private sector successfully
operates the wholesale markets for poultry and its products. This model may be
carefully reviewed and adopted for other commodities with the involvement of
private sector. In addition, Marine fisheries markets are required to be upgraded at
Gwadar and Karachi to realize full benefits of this sector.
Frequent fluctuations in food commodities (wheat flour, sugar, maize, rice and milk)
have highlighted weaknesses in two areas i.e. storage and market information system.
Available capacity and condition of various storage houses in the country is not
satisfactory and consequently results into higher losses of the produce. An effective
policy for creating new storage capacity is the need of time. As such, new storage
facilities at farm and market levels should be created. Besides, measures should be
adopted to establish cold storage facilities on scientific footings. The private sector
should be encouraged to invest in this area by offering special incentives (e.g. zero
rated imported equipment and tax exemptions). Government should further chalk out
a comprehensive plan for establishing cool chain network for perishables. Punjab
Agricultural Marketing Company (PAMCO) has already established one cold storage
house at Lahore airport. More facilities on this pattern may be offered after carefully
reviewing the merits and limitations of this experiment. Cool chain network for other
perishable commodities (e.g. milk, meat, fruits and vegetables) and a plan in this
respect be clearly chalked out. This situation has underlined the need for preparing a
comprehensive plan to cope with the surplus and shortages cycle manipulated by the
stakeholders or created due to disequilibrium in the supply and demand equations.
Amongst others, lack of market information available to stakeholders makes them
dependent on market players who exploit them under one or the other contexts. An
effective Agricultural Market Information System (AMIS) should be established by
linking wholesale markets with the major producing areas through internet and other
electronic media.
Proper infrastructural facilities are the backbone of an efficient agricultural
marketing system. Current farm to market road network is not in a good condition.
As such full coverage of rural areas of the country is not ensured. The Government
of Punjab’s initiative to improve rural urban linkages through farm to market roads
is good initiative but need of the time is to look critically at its implementation as
these roads should be built on need assessment of the area. This programme needs
further expansion as well.
The bulk of agricultural commodities in Pakistan are traded in its fresh/raw form.
There is a need to change the mindset of stakeholders. New agribusinesses should be
promoted for adding value to various commodities through processing at farmers
door steps. In this context, the Punjab Agriculture and Meat Company (PAMCO) and
PHDEC may be assigned the task to accomplish this objective.
The present status of human capital especially in the agriculture sector is not
satisfactory. Farmers and other stakeholders in the supply chain are not fully
equipped with technical know-how and skills required for performing various
marketing functions efficiently. New agricultural marketing and post-harvest
management institutions should be established with the mandate to impart technical
training to the stakeholders on various aspects of agricultural marketing and post-
harvest management. The role of Technical and Vocational Training Authority
(TEVTA) needs to be redefined in this regard. Special training programs in the area
of agricultural marketing and post-harvest management should be entrusted to
TEVTA with a supervisory role assigned to the agriculture universities of the country
in this regard.
In addition, Department of Agricultural Extension in all provinces be reorganized
and new mandate assigned keeping in view the emerging challenges in the field of
agriculture and international trade of agricultural commodities.
Commodity boards were established for various agricultural commodities in the past
but were dissolved due to mismanagement and malfunctioning. Commodity Boards
for major agricultural commodities may be re-established with the participation and
involvement of private sector. Keeping in mind that the past weaknesses in the
conduct and operations of such Boards may be overcome and the new institutions
run on sound business footings for the welfare of farming community and other
stakeholders.
Farmer’s cooperatives were established in various spheres of economic activity but
experience with their working in agriculture sector did not yield good results.
Nevertheless the idea still holds its validity in many countries having almost similar
socio-economic and cultural traits. It is suggested that farmers’ cooperatives may be
organized avoiding past mistakes. In this respect, models adopted by Nestle in
Pakistan and Amul in India can be a good starting point.
There is a need to analyze various impediments coming in the way of various supply
chains of agricultural commodities. Research may be undertaken at various
agricultural universities to develop appropriate feasible supply chain models for
agricultural commodities which will enhance interaction among stakeholders and
improve their working efficiency.
There is lack of effective coordination between various institutions entrusted with
role of strengthening and operation of agricultural marketing and post-harvest
management systems in the country. For instance, three institutions (DALPMG,
PSQCA and PHDEC) have the mandate of establishing grades and standards for
agricultural commodities. Policy measures be adopted to enhance coordination
between these institutions and to avoid any duplication and overlapping of tasks
assigned to each organization.
The Planning Commission, Government of Pakistan seeks to establish Agro
Processing Centers, for supplying farm inputs to stakeholders and to undertake the
task of marketing of their produce. It is sound proposal. 200 Agro processing centers
as proposed should be established across the country. PAMCO along with PHDEC
may be assigned task of establishing these centers in collaboration with private
sector. In this regard, Pilot projects can be started at district level after reviewing
potential requirements of stakeholders in the production areas.
There is dire need to introduce market-oriented agricultural practices. This
necessitates for inculcation of entrepreneurial skills among stakeholders.
Furthermore, Agribusiness Incubators be established at different agribusiness
clusters to provide farming community and stakeholders with required information
and new business ideas. The incubators should offer necessary technical advice
managerial know-how, information and training in marketing management,
advertising and sales promotions, branding and labeling etc. to enable the
stakeholders to earn more profit.
There is strong need for undertaking research on current and emerging problems in
the field of agricultural marketing infrastructure and post-harvest management.
Agricultural universities in the country may be entrusted with this task. Private sector
should be involved to make research efforts undertaken at universities result oriented
and close to reality. Private sector should also be motivated to invest in research on
these areas.
Diversification of agriculture is inevitable given the emerging trends, challenges, and
requirements of international trade in the context of WTO. New agriculture ventures
(floriculture, agriculture along with new avenues for value addition of agricultural
and livestock products etc.) may be identified and priorities assigned in National
Plans in this regard.
The livestock sector has huge potential which may be exploited if proper investment
is directed towards this sector. Policy measures should be introduced to strengthen
dairy industry in the country. Punjab Dairy Development Company is already
performing a good task by establishing Model Dairy farms in the province. There is
a need to extend this initiative in other provinces too. In this regard, import of
machinery and breeds should be declared zero rated in the upcoming Tenth Five Year
Plan. There is also a need to reorganize wholesale cattle and buffalo markets keeping
in view the emerging market requirements. The hygienic conditions of various
Abattoirs need improvement. There is a need for establishing Abattoirs on scientific
footings.
A great export potential of agro-based products, particularly fruits, vegetables and
livestock products exists in Pakistan, but stringent application of international
standards hamper realisation of their real potential. In particular, Pakistan’
agricultural exports suffer due to the application of SPS measures. In certain
circumstances, SPS requirements are incompatible with prevailing systems of
production and marketing in Pakistan because the needed resources, expertise,
knowledge and infrastructure for SPS compliance is lacking. There is a need to

impart training to stakeholders and prepare them to comply with SPS measures in the
production and export of agricultural products.
Conclusion
Agricultural marketing plays a key role in moving agricultural commodities from
distant production areas so that they are available for consumption in urban and peri-
urban areas. In doing so, a number of value adding activities and processes such as
production planning, harvesting, cleaning, sorting, grading, processing, packaging,
transportation, storage and advertising are performed. Although some characteristics
such as perishability and seasonality makes agricultural products different from other
products, same principles of marketing are applicable in case of agricultural products.
Efficient and effective agricultural marketing is essential for ensuring optimal returns
to all stakeholders such as growers, traders and consumers. Various approaches
available for analyzing agricultural marketing system include the functional,
institutional and commodity approach.
The agricultural marketing system in Pakistan operates with the involvement of both
the public and private sectors. The public sector facilitates the private sector
enterprises in freely trading agricultural commodities. Since agriculture is a
provincial subject in Pakistan, provincial governments are mainly responsible for
enacting legal and institutional arrangements. However, both the federal and
provincial governments frame policies for the development of agricultural marketing
system. The present agricultural marketing system in Pakistan is characterized with
numerous market actors who perform different functions while transferring
agricultural commodities from growers to consumers.
Although a wide range of products move from growers to consumer, Pakistan’s
agricultural marketing is believed to be inefficient because of a number of constraints
such as poor infrastructure, high market margins, lack of farm to market road, poor
post-harvest management and non-implementation of grades and standards. In view
of future food requirements of the country, there is dire need to modernize and
upgrade existing agricultural marketing system by removing these constraints,
adopting market-oriented practices across the value chain and inculcating
entrepreneurship among all stakeholders in the agricultural marketing system.
Discussion Questions
How will you differentiate between agricultural marketing and agricultural
markets? Support your answer with some examples.
How the agricultural marketing system in Pakistan has developed over
time? Explain your answer in the context of past five years plans?
What are the institutional and legal arrangements for agricultural marketing
in Pakistan?
What do you understand by the term marketing margins? Explain with

examples?
Draw marketing channels for different agricultural commodities in
Pakistan.
What are the prevalent problems in the marketing system of agricultural
commodities in Pakistan and what are their potential solutions?
References
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What is the main topic discussed in the passage?

What is the main topic discussed in the passage?

What are some of the major agricultural commodities mentioned in Pakistan?

What are some of the major agricultural commodities mentioned in Pakistan?

Chapter 5

Abdul Ghafoor, Hammad Badar and Asif Maqbool*

Managing editors: Iqrar Ahmad Khan and Muhammad Farooq

• in the required quantity and quality,

5.4. Agricultural Marketing System in Pakistan

reaching ultimate consumer (Mohy ud Din, 1998). Functions performed by various

5.5. Evolution of Agricultural Marketing in Pakistan

commodities and in improving management skills of the stock holders /market

areas of the government policy. Existing marketing infrastructure is incapable to

5.6. Legal and Institutional Arrangements for

Cattle Market Management Company (CMMC) has been structured in 2014 to

suggesting policy recommendations for improving agricultural marketing system in

5.7. Approaches to Understand Agricultural

5.7.1. Functional Approach

5.7.2. Institutional Approach

5.7.3. Commodity Approach

5.8. Marketing of Agricultural Crops in Pakistan

agricultrual commodities brought either by farmers or other intermediaries are freely

5.8.1. Marketing of Wheat

PASSCO, Commission Village

Flour Mill s Wholesalers

Utility Stores Retailers

Fig. 5.1 Marketing Channel of Wheat

Occasional surpluses and shortages and subsequently inadequate marketing

5.8.2. Marketing of Rice

PASSCO/ TCP Commission Village

Rice Mills Wholesalers Export

Utility Stores Retailer s

Fig. 5.2 Marketing Channel of Rice

5.8.3. Marketing of Cotton

Cotton Lint Cotton Seed

Textile Mills Exporters Oilseed Traders Growers

Fig. 5.3 Marketing Channel of Cotton

5.8.4. Marketing of Sugarcane

Sugar Mill Village

Wholesalers or Sugar Mill

Consumer Sugar Sugarcane

Wholesalers/ Consumer Paper Mills/ Confectioners Chemical

Fig. 5.4 Marketing Channel of Sugarcane

5.8.5. Marketing of Horticultural Crops

Fig. 5.5 Marketing Channel of Fruits

Producer Commission Agent Phariawala Retailer Consumer

Fig. 5.6 Marketing Channel of Vegetables

5.8.5.1. Marketing of Citrus

Fig. 5.7 Marketing Channel of Citrus

5.8.5.2. Marketing of Mango

Fig. 5.8 Marketing Channel of Mango

5.8.5.3. Marketing of Apple

Fig. 5.9 Marketing Channel of Apple

5.8.5.4. Marketing of Dates

Fig. 5.10 Marketing Channel of Dates

5.9. Marketing of Livestock and its Products in

5.9.1. Marketing of Livestock

5.9.2. Marketing of Meat

Farmers/Owners of Collectors from