AGRICULTURAL MARKETING

Concept and Definition:

The term agricultural marketing is composed of two words-agriculture and marketing.

Agriculture, in the broadest sense, means activities aimed at the use of natural resources for
human welfare, i.e., it includes all the primary activities of production. But, generally, it is used
to mean growing and/or raising crops and livestock.

Marketing connotes a series of activities involved in moving the goods from the point of
production to the point of consumption. It includes all the activities involved in the creation of
time, place, form and possession utility.

According to Thomsen, the study of agricultural marketing comprises all the operations, and the
agencies conducting them, involved in the movement of farm-produced foods, raw materials and
their derivatives from the farms to the final consumers, and the effects of such operations on
farmers, middlemen and consumers.

Thus, Agricultural marketing is the study of all the activities, agencies and policies involved in
the procurement of farm inputs by the farmers and the movement of agricultural products from
the farms to the consumers.

Scope and Subject Matter of Agricultural Marketing:

Agricultural marketing in a broader sense is concerned with:
 The marketing of farm products produced by farmers
 The marketing of farm inputs required by farmers in the production of farm products

Objectives of the Study of Agricultural Marketing:

A study of the agricultural marketing system is necessary to an understanding of the

complexities involved and the identification of bottlenecks with a view to providing efficient
marketing system in the transfer of farm products and inputs from producers to consumers. An
efficient marketing system minimizes costs, and benefits all the sections of the society. The
expectations from the system vary from group to group; and, generally, the objectives are in
conflict. The efficiency and success of the system depends on how best these conflicting
objectives are reconciled.

Producers:
Producer-farmers want the marketing system to purchase their produce without loss of time and
provide the maximum share in the consumer’s taka. They want the maximum possible price for
their surplus produce from the system. Similarly, they want the system to supply them the inputs
at the lowest possible price.

Consumers:
The consumers of agricultural products are interested in a marketing system that can provide
food and other items in the quantity and of the quality required by them at the lowest possible
price. However, this objective of marketing for consumers is contrary to the objective of
marketing for the farmer – producers.

Market Middlemen and Traders:

Market middlemen and traders are interested in a marketing system which provides them a
steady and increasing income from the purchase and sale of agricultural commodities.

This objective of market middlemen may be achieved by purchasing the agricultural products
from the farmers at low prices and selling them to consumers at high prices.

Government:
The objectives and expectations of all the three groups of society-producers, consumers and
market middlemen – conflict with one another. All the three groups are indispensable to society.
The government has to act as a watch-dog to safeguard the interests of all the groups associated
in marketing. It tries to provide the maximum share to the producer in the consumer’s taka, food
of the required quality to consumers at the lowest possible price; and enough margins to market
middlemen so that they may remain in the trade and not think of going out of trade and
jeopardizes the whole marketing mechanism. Thus, the government wants that the marketing
system should be such as may bring about the overall welfare to all the segments of society.
Difference in Marketing of Agricultural and Manufactured Goods:

The marketing of agricultural commodities is different from the marketing of manufactured

commodities because of the special characteristics. The special characteristics which the
agricultural sector possesses, and which are different from those of the manufactured sector, are:

1. Perishability of the Product:

Most farm products are perishable in nature; but the period of their perishability varies from a
few hours to a few months. The extent of perishability of farm products may be reduced by the
processing function; but they cannot be made non-perishable like manufactured products.

2. Seasonality of Production:
Farm products are produced in a particular season; they cannot be produced throughout the year.
In the harvest season, prices fall. But the supply of manufactured products can be adjusted or
made uniform throughout the year. Their prices therefore remain almost the same throughout the
year.

3. Bulkiness of Products:
The characteristic of bulkiness of most farm products makes their transportation and storage
difficult and expensive. This fact also restricts the location of production to somewhere near the
place of consumption or processing. The price spread in bulky products is higher because of the
higher costs of transportation and storage.

4. Variation in Quality of Products:

There is a large variation in the quality of agricultural products, which makes their grading and
standardization somewhat difficult. There is no such problem in manufactured goods, for they
are products of uniform quality.

5. Irregular Supply of Agricultural Products:

The supply of agricultural products is uncertain and irregular because of the dependence of
agricultural production on natural conditions. With the varying supply, the demand remaining
almost constant, the prices of agricultural products fluctuate substantially.

6. Small Size of Holdings and Scattered Production:

Farm products are produced throughout the length and breadth of the country and most of the
producers are of small size. This makes the estimation of supply difficult and creates problems in
marketing.

IMPORTANCE OF AGRICULTURAL MARKETING

Agricultural marketing plays an important role not only in stimulating production and
consumption, but in accelerating the pace of economic development. Its dynamic functions are of
primary importance in promoting economic development. For this reason, it has been described
as the most important multiplier of agricultural development.

The importance of agricultural marketing in economic development has been indicated in the
paragraphs that follow.

1. Optimization of Resource use and Output Management:

An efficient agricultural marketing system leads to the optimization of resource use and output
management. An efficient marketing system can also contribute to an increase in the marketable
surplus by scaling down the losses arising out of inefficient processing, storage and
transportation.

2. Increase in Farm Income:

An efficient marketing system ensures higher levels of income for the farmers by reducing the
number of middlemen or by restricting the commission on marketing services and the
malpractices adopted by them in the marketing of farm products. An efficient system guarantees
the farmers better prices for farm products and induces them to invest their surpluses in the
purchase of modern inputs so that productivity and production may increase.
 3. Widening of Markets:
A well-set marketing system widens the market for the products by taking them to remote
corners both within and outside the country, i.e., to areas far away from the production points.
The widening of the market helps in increasing the demand on a continuous basis, and thereby
guarantees a higher income to the producer.

4. Growth of Agro-based Industries:

An improved and efficient system of agricultural marketing helps in the growth of agro-base
industries and stimulates the overall development process of the economy. Many industries
depend on agriculture for the supply of raw materials.

5. Adoption and Spread of New Technology:

The marketing system helps the farmers in the adoption of new scientific and technical
knowledge. New technology requires higher investment and farmers would invest only if they
are assured of market clearance.

6. Employment:
The marketing system provides employment to millions of persons engaged in various activities,
such as packaging, transportation, storage and processing. Persons like commission agents,
brokers, traders, retailers, weighmen, packagers and regulating staff are directly employed in the
marketing system.
7. Addition to National Income:
Marketing activities add value to the product thereby increasing the nation’s gross national
product and net national product.

8. Better Living:
The marketing system is essential for the success of the development programs which are
designed to uplift the population as a whole. Any plan of economic development that aims at
diminishing the poverty of the agricultural population, reducing consumer food prices, earning
more foreign exchange or eliminating economic waste has, therefore, to pay special attention to
the development of an efficient marketing for food and agricultural products.
 9. Creation of Utility:
Marketing adds cost to the product; but, at the same time, it adds utilities to the product. The
following four types of utilities of the product are created by marketing:

(a) Form Utility: The processing function adds form utility to the product by changing the raw
material into a finished form. With this change, the product becomes more useful than it is in the
form in which it is produced by the farmer. For example, through processing, oilseeds are
converted into oil, sugarcane into sugar, cotton into cloth and wheat into flour and bread. The
processed forms are more useful than the original raw materials.

(b) Place Utility: The transportation function adds place utility to products by shifting them to a
place of need from the place of plenty. Products command higher prices at the place of need than
at the place of production because of the increased utility of the product.

(c) Time Utility: The storage function adds time utility to the products by making them available
at the time when they are needed.

(d) Possession Utility: The marketing function of buying and selling helps in the transfer of
ownership from one person to another. Products are transferred through marketing to persons
having a higher utility from persons having a low utility.

REFERRENCE:
Acharya S. S. and N. L. Agarwal. 1999: Agricultural Marketing in India, 3rd Edition, Oxford and
IBH Publishing Co. Pvt. Ltd. New Delhi 1100 001.