Agricultural Marketing

Agricultural marketing is the study of all the

activities, agencies and policies involved in the
procurement farm inputs by the farmer and
the movement of agricultural products from
the farmer to the consumers. It includes
organization of agricultural raw materials
supply to processing industries, the assessment
of demand for farm inputs and raw materials.

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Marketing Functions
Approaches to the Study of Marketing
Marketing is a subject, which bristles with wide
and varied problems. It includes the services and
functions of different specialized institutions and
middlemen. Different commodities have special
marketing problems therefore the results of the
study of one commodity may not be applicable to
other commodity.
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Functional Approach
A marketing function is an act, operation on service by
which the original producer and the final consumer are
linked producer and the final consumer are linked together.
Marketing consists of many operations and an operation
may be performed several times in the marketing process.
The functional approach splits down the field of marketing
into a few functions. This method analyses in detail the
specific functions of marketing such as buying, selling,
transportation, storage, standardization, grading, financing,
risk taking and marketing research.
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The advantages of the functional approach in the
study of agricultural marketing problems are:
1. We can make inter functional comparison of the
marketing costs.
2. Inter agency comparison of the cost of performing
a marketing function can be made.
3. Inter commodity comparison of cost of
performing the various functions can also be
made.

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The defects of this approach are
1. An undue emphasis on functions of
marketing does not permit one to know how
these functions are applied to specific
business operations.
2. The marketing functions are so numerous
that it is difficult to eliminate the
unnecessary from the necessary functions

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I nstitutional Approach
The institutional approach to study of
marketing problems implies a study of
agencies and institutions, which perform
various functions in the marketing process.
The nature and character of various
middlemen and other related agencies
involved in the movement of the product are
studied.
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These agencies vary widely in size and
ownership. They get their reward in the
form of marketing margins.
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Commodity Approach
Under this approach, the commodity is the
pivot around which all institutional and
functional details are studied. The problems
of marketing differ from commodity to
commodity mainly because of the
seasonality of production, the variations in
its handling, storage, processing and the
number of middlemen involved in them.
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For example potatoes are stored in cold
storage, while wheat is stored in godowns.
Paddy, pulses and oil seeds are processed at
miller's level. The main advantage of this
approach is that it is concrete since all work
relates to a specific product but it is a time
consuming 'process and often results in
excessive repetitions
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Behavioural System Approach
This approach refers to the study of behaviour of
firms, institutions and organizations, which exist
in the marketing system for different commodities.
The marketing process is continually changing in
its organization and functional combinations. An
understanding of the behaviour of the individuals
is essential if changes in the behaviour and
functioning of the system are to be predicted.
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Marketing Functions
Under the approaches to study of marketing we have seen
the marketing functions marketing functions can be
broadly classified as:
1. Functions of exchange which includes selling and buying.
2. Functions of physical supply, which consist of
transportation, storage and warehousing.
3. Facilitating functions, which comprise of financing, risk
taking, standardization and market information.

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Functions of Exchange
The process of passing goods into the consumer's
hands is called function of exchange. It includes
buying, assembling and selling.
Buying and Assembling
Buying is the first step in the process of
marketing. Buying involves careful planning and
needs setting up of policies and procedures.
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The following points are considered before a particular
product is bought.
What to buy (Product)?
1. When and how much to buy? (Time and
quantity)
2. From whom and where to buy? (Source)
3. On what terms and conditions and prices?
(Price)

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Selling
The function of marketing is to ensure that the right
product is made available at the right place, in the right
quantity, at the right price, at the right time and under the
right impressions to the consumer. All these righteousness
is made possible by performing the sales function.
Through selling function desires are created hence it is
called as creative function. Selling is also often referred
to as distribution function because distribution makes
good move from the place of production to the place of
consumption. This is achieved through selling function.
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Functions of Physical Supply
Functions of physical supply/distribution includes
determining warehouse locations '{establishing a
material handling system, maintaining an
inventory control system, establishing procedures
for processing orders) and selecting mode of
transportation. Transportation and storage account
for the major share in the total distribution cost.
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Transportation
It is a necessary function of marketing
because the most of the markets are
geographically separated from the areas of
production. It enhances the economic
value through .creation of place utility.
The important function of transport is
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1. It helps in the growth of industries whose products require quick
marketing e.g. vegetables, flowers, milk and fish.
2. It increases the demand for goods through widening of market
3. It creates place utility. As such transportation bridges the gap between
production and consumption centres.
4. By virtue of improvement in the speed of transport it offers time utility
to products.

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5. It helps in stabilization of prices by moving commodities
from surplus area to deficit area.
6. Ensures even flow of goods Into the hands of consumers.
7. It enables to consumers to enjoy the benefits of many
goods not produced locally.
8. Transport intensifies competition, which, in turn, reduces
prices. Prices are also reduced because of the facilities
offered by transport for large-scale production.

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Classification of transport
Road Transport
Merits : It is cheap, safe and flexible.
Demerits :It has got limited carrying capacity, slow speed, and unstable
rates.
Rail Transport
Merits : Most suitable for heavy and bulky commodities. Long distance is
quickly covered, cheap, all weather friend transport,
Demerits :Inflexibility, non suitable for local transport and lesser
accessibility.
Water Transport
Merits : Cheapest means of transport, high carrying capacity, creator of
international trade and especially suitable for certain areas (forest
products).
Demerits : Low speed, seasonal difficulties, longer journey required,
international and political problems and limited area of operation. 21
Air transport
Merits : Rapid speed, no barriers and boon to perishable commodities.
Demerits :High rate, low carrying capacity, dependence on climatic
conditions and high rate of accidents.
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Problems in Transportation of Agricultural Commodities


1. The means of transport used are slow moving.
2. There are more losses/damages in transportation because the use of
poor packaging material, over loading of the produce, and poor
handling, especially, of fruits and vegetables at the time of loading
and unloading.
3. There is lack of co-ordination between different means of transport
e.g. railways and truck companies.
4. Non- availability of wagons at the time of harvest.

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Suggestions for I mprovement
Some of the suggestions for effecting improvement in the transport function
and reducing the transport costs are
1. Full utilization of the transportation facility in terms of load. This will
reduce the per quintal cost of transportation.
2. Standardization of transport cost per quintal for different means.
3. Reduction in spoilage, damage, breakage and pilferage by better handling,
packing and the use of proper types of wagons.

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4. Removal of barrier in the transport of agricultural
produce between states or regions.
5. The bulky agricultural produce can be converted into
value added products near production centres so there will
be reduction in cost.
6. The speed and capacity of the vehicles used in
transportation should be increased.
7. Unification of railway gauge system, extension of roads
and vehicles to every Village

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Storage and Warehousing
Storage is an important marketing
function, which involves holding and
preserving goods from the time they are
produced until they are needed for
consumption.
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The storage of agricultural produce/inputs is
necessary for the following reasons
1. Agricultural products are seasonally produced but are required for consumption
throughout the year.
2. Some goods are produced throughout the year but their demand is only seasonal
e.g. umbrella, fans, woolen clothes, agricultural inputs.
3. The quality of certain products increases by storing e.g. whisky, wine, tamarind,
rice, and pickles.
4. Storage of some farm commodities is necessary for ripening e.g. banana,
mango.
5. Storage protects the quality of perishable and semi-perishable products from
detoriation.
6. It helps in stabilization of price.
7. Storage is necessary for some periods for the performance of other marketing
functions.

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Utilization of Warehouses by
Farmers
The storage capacity available under
different warehouses is furnished in Table
2.1. Only 29 percent of Central Ware
housing Corporation and six percent of the
State Ware "housing Corporations are used
by farmers or their co-operatives.
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The main reasons for the very poor utilization of
warehouses by farmers are :
1. Lack of knowledge about available facilities to the farmers.
2. Location disadvantages.
3. Complicated and time-consuming procedure of depositing and
withdrawing the produce from the warehouses.
4. Non-availability of Nationalized banks at the villages to advance loans
against warehouse receipt.
5. Small quantity of surplus produce available with most farmers and the
pressing need for finance.

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Facilitating Functions
Apart from function of exchange and function of physical
supply there is a third group of functions whose
involvement in the process of marketing is rather indirect
and remains as an undertone. Their importance and
necessity cannot be ignored because they are helpful in
minimizing various lags between production and
consumption created by time, place, quantity and quality
elements. These facilitating functions are financing, risk -
bearing standardization and marketing information.
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Financing
Between production and consumption
ownership of commodities shifts many
times, middlemen need finance not only for
the purchase of stocks but for performance
of various marketing functions such as
processing, storage, packaging, transport
and grading. The process of arranging
necessary finance for marketing is termed
as "Marketing Finance".
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Risk bearing / Taking
Risk in marketing may be defined as
uncertainty in regard to cost, loss, or
damage. The risks associated with the
marketing process are of three basic types.
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Physical Risk
This includes a loss in the quantity and quality of the product during
marketing process. It may be due to fire, flood, earthquake, insects,
pests, fungus, excessive moisture or temperature, careless handling
unscientific storage, improper packing, looting and arson.
2. Price Risk
Prices change not only year to year, but also during month-to-month,
day-to-day or even on the same day.
3. Institutional Risk
These include risks arising out of changes in government's budget
policy, in tariffs and tax laws, in the movement restriction, statutory
price controls, and the imposition of levies.
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Processing
The term processing may be defined a
deliberate activity which changes the form
of a commodity. It converts farm products
into a more usable form.
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Advantages of processing

1. It changes raw food into edible and palatable form
2. By processing, the value addition to farm products is increased Sugarcane -
Sugar, gur
Wheat -Flour
Mango -Squash, Pulp, Past~ and Pickles
3. Processing function makes it possible for us to store perishable and semi-
perishable agricultural commodities for later use.
4 . It generates employment
5. It widens market
6. Processing serves as adjunct to other marketing functions such as transportation,
storage and merchandising.

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Standardization
It means the determination of the standards
to be established for different commodities
Standards are fixed on the basis of certain
characteristics such as weight, size, colour
appearance, texture, moisture content,
amount of foreign matter present etc.
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Grading
Sorting of the unlike lots of the produce into
different lots according to the quality
specifications laid down. Grading follows
standardization. It is a sub-function of
standardization.
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Advantages of grading
1. Grading before sale enable farmers to get a higher
price for their produce.
2. Grading facilitates marketing
3. Grading widens market, without inspection the
sale can be effected over phone at distant places.
4. Grading helps consumers to get standard quality
products at fair price shops.
5. Grading contributes to market competition and
pricing efficiencies

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