• Save
Agricultural marketing
Upcoming SlideShare
Loading in...5
×
 

Agricultural marketing

on

  • 12,325 views

final question collection for UiTM Student who takes Agricultural Marketing.

final question collection for UiTM Student who takes Agricultural Marketing.

Statistics

Views

Total Views
12,325
Views on SlideShare
12,321
Embed Views
4

Actions

Likes
8
Downloads
0
Comments
3

1 Embed 4

https://twitter.com 4

Accessibility

Upload Details

Uploaded via as Microsoft Word

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Agricultural marketing Agricultural marketing Document Transcript

  • Marzuqi Salleh, UiTM Perlis FINAL QUESTION AND ANSWER (COLLECTION) AGRICULTURAL MARKETINGAGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlis PREPARED BY: MARZUQI BIN MOHD SALLHIn order to maximize benefit, market news and information must meet a number of criteria. Explain four(4) important criteria in market information. (4 marks) • Information must be complete and comprehensive. A reasonably complete description of a food market includes prices, price trends, production, supply movements, stocks, and demand conditions at each level of market. • Information also must be relevant and in usable form. Much market information goes unused because it is not in usable, easily accessible form. • Confidentiality. Market prices and supply reports are amassed to provide a general picture of the market without revealing any single information. • Market information also must be timely, in the sense of being relevant to current decisions, and must be speedily transmitted to users. • It is desirable to have a balance of market information at all levels of the food industry.Describe cyclical and seasonal farm price variations. (2 marks) • Cyclical price variations are caused by the tendency of farmers to base future production plans on current prices and profits, rather than on future price • Seasonal price variations are the more or less regular patterns of price change occurring within a crop or marketing year.The lnternational Market is deeply influenced by the market environments. Explain the four (4) commonenvironmental factors in lnternational Marketing (6 marks) • Demographic is the statistical study of human population and its distribution characteristics. For example are birth rate, age, sex, occupation, religion, family, education and other statistics. • Natural. It consists of natural resources required by business as inputs to produce goods demanded by customers. The forces of nature have several impacts on the overall decision of the marketer. Example of natural environments are shortages of certain raw materials (oil, coal, rubber, timber, etc), increased cost of energy (marketers may resort to use solar, wind and water as sources of energy as the oil/fuel price increase dramatically), increased levels of pollution, thus more money need to be spent to clean the environment. • Technological is the knowledge of how to accomplish tasks and goals and often this knowledge comes from scientific research.AGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlis • Social-cultural. The socio-cultural consists of the demographic characteristics, customs and values of the population within which the marketing firms are operating.Food marketing firms incur a number of costs when performing marketing functions. Elaborate on three(3) components of these marketing costs. (3 marks) • Labor cost • Transportation cost • Packaging cost • Hire purchase machinery • DepreciationMarketing channels help to distribute the products and services from farm to the consumers. Lists four(4) factors to be considered in selecting market channels (4 marks) • Distance between the producer and the consumer. Distance between the producer and the consumer will enhance the high cost of marketing channels. To reduce such cost the needs of middlemen to market the products from the producer to the consumer. • Nature of products. Most of the agricultural products are perishable in nature. To reduce such perishable, the marketing channel must be shorten or the introduction of new packaging and fast transportation is needed to reduce such cost and so that the consumer will get the products at a faster time. • Production skill. If a producer produces the products at a larger scale, this will reduce the marketing cost of the productionAgricultural products are highly perishable and have close substitutes as compared to non agriculturalproduct. If this is the case, then what are the methods imposed by the government to protect the pricestability of agricultural products? (4 marks)Price pegging • Price pegging is the process of fixing the price of products that is agricultural products usually primary products regardless of its demand and supply in the market. Price pegging consists of minimum or floor prices that is above equilibrium and maximum or ceiling prices which is below equilibrium prices.Subsidies • Subsidy is a price guarantee to raise the farm prices and to protect the farmer income.a) Why are middlemen necessary in delivering of agricultural products? (5 marks) • Middlemen provide greater efficiency in making goods available on a wide scale to target markets. • Middlemen reduce the number of channel transactions.AGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlis • Middlemen play an important role in matching supply with demand i.e. by making the goods available at the right place, time and quantity. • Many producers lack the financial resources to carry out direct marketing. If they are to distribute the goods direct to customers, it would require them to have many shops or outlets and sales representatives. • Some producers lack the marketing experience and thus rely on experienced middlemen and their management ability. • Producers have more time to increase their investment on Research and Development in their business and earn a greater return. Name the types of hedging. (2 marks) • Hedging means avoidance or reduction of the risks of loss • Type of the hedging, the selling and buying hedgingThere are various approaches in determining the price of products in the market. What are the types ofprice determination based on competition? (5 marks) • Perfect competition • Monopoly • Oligopoly • Imperfect competitionName the government agencies that regulate agricultural marketing such as vegetables and fruits, rice,tobacco, and latex. (4 marks) • FAMA-(Federal Agricultural Marketing Authority) • BERNAS-Padiberas Nasional Berhad (BERNAS) • MARDEC • LTN-Lembaga Tembakau NegaraExplain the differences between horizontal and vertical integration. (4 marks)Horizontal integration • Occur when a firm gains control over firms performing similar activities at the same level in the marketing sequence. Its potential impact on competition the anti-trust laws limit horizontal integration in the food industryVertical integration • When a firm combines activities unlike those it currently performs but that are related to them in the sequence of marketing activities. Happens when one firm enters at two or more levels in the marketing channel by either buying a firm or through contractual agreementExplain briefly the following terms: (10 marks)AGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlisi) Hedging and the types of hedging, • Hedging means avoidance or reduction of the risks of loss • Type of the hedging, the selling and buying hedgingii) Transferring agricultural risks • Insurance. Insurance is an arrangement with a company which the organizations pay regular amount of money and the insurance company agree to pay the costs • Contract. A contract is an understanding of agreement between the producer and the future consumer at a price determined earlier and assurance in delivering quantities of the products. This way will help organizations in reducing the risk in marketing of the products. • Hedging. Buying or selling of agricultural commodities in the future markets. Future market is the purchase of products or agricultural commodities for future delivery.Briefly explain several approaches in determining the price of product. (10 marks)Demand • As price increase, quantities demanded will decrease.Non-price orientation • The firms will maximize profit through various means such as; i. Advertising. ii. Sales promotion. iii. Changes in packaging. iv. Location of production. v. Festive seasons.Cost • Average. An additional price will be added to the cost per unit on every production for the purposes of price determination. • Examples; Giat Sdn. Bhd. produces tomato pastes. The total costs involves is RM250.00, and the fixed cost is RM100.00. The management forecast 250 units sold. If the management forecast a profit 15% of the sales, what will be the selling price of the tomato paste?AGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM PerlisReturn on investment. • Example; Awang manufacturer Sdn. Bhd. Forecast sales of 5000 bottles of juices for the periods of six months. Fixed cost is RM5000 and variable cost is RM1.20 per bottle. Total investment is RM15000. Return on investment is 20% of the total investment. How much will be its price?Mark-up • Mark-up is an addition to the total cost for production based upon percentages of the selling price.Producer • Farm level where products are produced.Processor • People who process the agricultural goods from raw to finished or unfinished, to change the physical appearance of the raw products.Middlemen • Middlemen is an organization or individuals who specializes certain marketing channels such as storing, financing or transportation.Retailer • Retailer is a marketing middlemen that sells goods to consumer.QUESTION 1Mr. Jamal is a middleman and owns a Storage and Transportation Company at Jengka. He has boughtlarge quantities of palm oil from various processors and he plans to store and transport the products tovarious local and international retailers. The risk is high when transporting the products and he want toimplement a systems of price discovery when dealing with his clients.a) What are the suitable types of storage and transportation if he plans to sell to the Middle East? • Cold / hot storage for perishable product such meat, vegetables, etc • Open storage to store palm oil bunches and some type of vegetables, etcAGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlis • Roadways (truck, lorry, container, tanker, van, car, low-loader, etc • Railways (train, electric train, etc)b) What types of packaging materials if he plan to sell the products 2 kg and 20 kg palm oil in Jengkatown.(2 marks) • Protection-to protect the product during the process of transportation, storage, display and sales until the product is ready for use. • Plastic-use high quality of plastic so that the product can be protected from any visionc) What should he do if he try to increase the efficiency of storage facilities. List four methods. (5 marks) • Labor efficiency versus mechanism. Use paddy harvester instead of human being during harvesting time. • Proper ventilation and insulation. The intention is to reduce odor, maintain freshness of products, and minimize moisture. • Improved management technique. This can be done through maintaining a proper and improved work scheduling in the operational situation. For example, the work schedule of manure, harvesting, and pest and disease control in the agricultural sectors.d) What should he do if he try to reduce the product deterioration when transporting the palm oil toMiddle East? List four methods. (5 marks) • The type of container use will prevent the product from deteriorate • The density and bulk of products • The degree and efficiency of loading • Bracing methods use for certain products • Change the physical products attributee) What are the possible approaches that be used to transfer the risk so that the Jamal Corporation willnot face a total loss in the process of marketing the products? (3 marks) • Insurance • Contract • HedgingStandards and grades are important during the marketing of agricultural products. List three (3)contributions of standards and grades in the handling of agricultural products. (3 marks) • Involves the development of uniform descriptions of commodities and products. It means that buyers do not have to physically inspect each shipment of product before they purchase it. AAGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlis buyer can be assured that when he orders a certain quantity of a Grade A product over the telephone, he knows exactly the physical specifications of the product he will receive.Most firms are planning to market their agricultural products in the foreign markets. List three (3) stepsin making decision to enter into International Market. (6 marks) • Define its international marketing objectives and policies • Decide what volume of foreign sales it wants • Choose in how many countries it wants to market • Decides on the types of countries to enterList three (3) factors that influence the supply of farm products. (3 marks) • In the short run period there may be a change in the various factors that would induce sellers to offer their available stock of goods at a different schedule of prices. • In the intermediate and long-run periods, there may be a change in the costs of production of the commodity. • This may be caused by changes in costs of needed inputs or in the technology of the production of the commodity itself. • It may also be caused by changes in the costs of producing other commodities that compete for the same resources. • For example, a technological change that increased the feed conversion rate for poultry and lowered their costs of production would increase the supply of poultry.Discuss the major issues and problems of farmers marketing which justify government intervention orinvolvement in agriculture. (6 marks) • Farm prices and income problems • Food security • Market and price are not able to allocate resources properly • Conflicting outcome of farm policies • Protecting consumers of lower income groupFirms must strive to achieve higher market efficiency. List three (3) criteria for an effective marketingefficiency. (3 marks) • Technology • Organization • Pricing • Price discovery • Product innovation • Stable growthAGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlis • Market coordinationExplain the importance of marketing. (5 marks) • Advance in technology due to development in handling the product • Improvement in the facilities that contribute or involve in the market system such as transportation, telecommunication, packaging etc. • Attract more individual or firm to involve in agricultural business due to improvement in technology that create comfortable and easier in marketing system and management • Improvement in the work procedure in order to increase productivity and reduce waste • Help farm to plan their production, period for pest and disease control and determinate time of harvesting to fulfill demand in market • Quality assurances in production to protect the consumerWhat is the importance of marketing channels in the marketing of agricultural products? (5 marks) • In buying product, intermediaries sometimes pay as items are received; other time, they accept items on consignment and do not pay until after sales are made • Manufacturers and service firms often take care of national (international) ads in assigning promotion roles • Customer services include delivery, credit, in-office and in-home purchases, training, warranties and return privileges • Distribution intermediaries can contribute to product planning in several ways. • Wholesales and retailers often have strong input into pricing decisiona) Why is it that price tagging must be clearly shown on the products? (5 marks) • Perform several functions such as identifying, describing or even promoting the product. • Do not make confuse to the costumer • Make costumer easy to compare the price • Make government easy to control the price • May not lie to the costumerb) What are the types of packaging materials used for toxic products? (5 marks) • Protection-to protect the product during the process of transportation, storage, display and sales until the product is ready for use. • Plastic-use high quality of plastic so that the toxic product can be protected • Tens-use high quality of tens so that the toxic product can be protectedExplain any five (5) contributions of the agricultural sector towards national economy. (6 marks) • Lack of storage facilities • Existence of legal contract • Need of standard of grading • Differing methods of payments • Need of market informationAGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlis • To guarantee the contractWhy do plantation companies open new lands in Indonesia, Sabah and Sarawak? (5 marks)International trade • Is a way nation can specialize, increase the productivity of their resources and realize a large total output than otherwiseInternational marketing • Involve marketing goods and service outside firm’s country whether in one or several marketGlobal marketing • Is an advance of international marketing when fir deal with global customer and competition- practice by both multinational and global firmPART Aa) Agricultural Marketing • The marketing of agricultural products to the first handler. It includes all the activities associated with agricultural production and with food, feed, and fiber assembly, processing, and distribution to final consumers, including analyses of consumer’s needs, motivations, and purchasing and consumption behavior.b) Marketing Efficiency • Efficiency in the food industry is the most frequently used measure of market performance. Improved efficiency is a common goal of farmers, food marketing firms, consumers, and society.c) Joint Venture • Entering international market through ownership of assets in host countries. A firm may first enter the foreign market through exporting, licensing or franchising.d) Opponent Gain • Bargaining power is concerned with the influence of a buyer or seller in a negotiation gained through the ability to threaten or make opponents worse off. Most people associate bargaining power with this forme) Floor Pricing • The minimum price legally set above the equilibrium price or a legally imposed price below which market price cannot falla) Futures Price • Todays price of the commodities to be delivered in the future market.b) Cartel • A combination of independent business organizations founds to regular production pricing and marketing of goal by the member cartel.e) Marketing Bill • (the costs in the marketing sector) costs much more to market most agricultural products than it costs farmers to produce thema) Marketing marginAGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlis • The portion of the consumer’s food money that goes to food marketing firms. This is the difference between what the consumer pays for food and what the farmer receives.b) Possession utility • Making the exchange of goods and services between the buyers and sellersc) Monopolistic competition • The number of firms in the market is large • There is freedom of entry and exit in the market • Profit maximization among firms enable them to produce at MR=MCd) Operational efficiency • Operational efficiency refers to the situation where the costs of marketing are reduced without necessarily affecting the output side of the efficiency ratio. An example would be a new labor- saving machine that reduces the cost of processing oranges into juice.b) Marketing cost • The cost involved in the marketing and will directly influence the profit or losses suffered by sellers. Most marketing costs are influenced by general economic forces outside of the food economy, especially labor, transportation, packaging, and energy costs.e) Equalization • The transformation of raw products to processed form. For example, the collected rubber latex or scrap to be processed in the factory in the form of semi-processed.a) Food Marketing • Food marketing may be thought of as the connecting link-the bridge-between specialized food producers and consumers.b) Facilitating Function • Those that make possible the smooth performance of the exchange and physical functions. These activities are not directly involved in either the exchange of title or the physical handling of products.d) Sales Promotion • Short-term incentives to encourage the purchase or sale of a product or service. • This includes coupons, premium, sampling, contest and sweepstake, loyalty marketing program, and point of purchase displayse) Market Intelligence • The job of collecting, interpreting and disseminating the large variety of data necessary to the smooth operation of the marketing processes. Efficient marketing cannot operate in an information vacuum.b) Marketing utility • Utility will refers to the value of marketing which adds to goods and services.c) Production concept • The production concept as a philosophy that holds consumers who will favor those products that are available and highly affordable and therefore management should concentrate on improving production and distribution efficiency.AGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlisd) Societal marketing concept • That the societal marketing concept holds that the organization’s task is to determine the needs, wants, and interest of target markets and to deliver the desired satisfaction more effectively and efficiently than competitors in a way that preserves or enhances the consumer’s and society’s well-being. PARTBAGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM PerlisQUESTION 1International marketing is becoming more important as a means to penetrate the global market place.What are the circumstances supporting international market development? (6 marks) • Reduction in a foreign nation’s internal production • Expanding demand within the foreign market • Reduced supplies from other foreign supplies • Shifts in price advances that favor imports from other producer • Changes in exchange rates that favor imports from foreign exporter • Technological advances in foreign products • Shifting consumer preferences induced by cultural changes from outside • Promoting of Malaysian products within the country.QUESTION 2Explain five (5) systems of price discovery for farm product. (5 marks)Individual, decentralized negotiation • In this system, each farmer bargains individually with buyers of farm products until a price is established. “Private treaty” negotiations are quite common in agriculture. The resulting fairness of prices depends upon the information, trading skills, and relative bargaining power of buyers and sellers. Consequently, prices discovered in this way tend to vary widely for different transactionsOrganized, central markets shift the locus of price discovery from the farm gate to a centralmarketplace. • All buyers and sellers and their supplies and demands are represented in the central market. Terminal markets and auctions are examples.Formula pricing systems • Formula pricing systems evolved in attempts to secure the benefits of central market price discovery without physically routing all produce through central markets. Prices are adjusted, again by formula, for transport costs and quality differences. Formula pricing can reduce transaction and bargaining costs.Bargained pricesAGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlis • Bargained prices are common in fruits, vegetables, nuts, and milk. Bargaining implies collective pricing on the part of farmers. The collective bargaining process used in labor is frequently cited as the process model for farmers to follow in order to discover farm prices.Administered pricing systems • Administered pricing systems are those in which the government becomes a third party in the price discovery process. Price supports, price ceilings, and supply control programs are the techniques of administered pricing.QUESTION 3Marketing firms are becoming an important link between producers and consumers. What are theobjectives of marketing firms? (6 marks) • Identification and recognition of the firm • Expansion of business volume • Development of adequate financing • Identification of market demand • Identification of market segments • Information about market demand and supply • Pricing for volume and profit • Market innovationQUESTION 4Explain the objectives of promotion at the different stages of the product life cycle. (6 marks)Introductory stage • The introductory stage is the first stage of the product life cycle in which the full-scale launch of a new product into the marketplace occurs.Growth stage • The second stage of the product life cycle when sales typically grow at an increasing rate, many competitors enter the market, large companies may start acquiring small pioneering firms, and profits are healthy.Maturity stage • The third stage of the product life cycle during which sales increase at a decreasing rate.Decline stage • The fourth stage of the product life cycle, characterized by a long-run drop in sales.QUESTION 5Describe three (3) main types of promotion? (3 marks)AGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM PerlisAdvertising • Any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor.Sales promotion • Short-term incentives to encourage the purchase or sale of a product or service. This includes coupons, premium, sampling, contest and sweepstake, loyalty marketing program, and point of purchase displays.Public relations • Building good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events.Personal selling • Personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships.QUESTION 6What are the strategies adopted by the Third National Agricultural Policy (NAP3)? (7 marks) • Optimizing the resources uses • Human resources development • Enhancement of research & development, and technological diffusion • Greater role of the private sectors • Reformed marketing strategies • Expanded food productionAgro-forestry approached • Agriculture and forestry are mutually compatible and complementary for joint development. This approached will addressed the increasing scare resources and raw material availability.Product based approach • Product based approach address on key products and market identified based on demand and supply, preferences, and potential consumers.QUESTION 1List three (3) main problems faced by agricultural producers. (3 marks)AGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlis • Farmers do not have any control over the output of their production activities. Supply of output is greater than demand. Need of comprehensive information about products demand in market. • Farmers face in improving their prices through independent or group activities. Farmers are, for the most part, price takers-they cannot, individually, influence the price of their products through their output decisions. • The cost-price squeeze is another component of the farm marketing problem. The competitive conditions of agriculture tend to keep farm prices close to the cost of production. Falling farm prices would not be so critical if they were accompanied by falling farm costs, or if the farmer could adjust input costs as prices fell. • The superior bargaining powers of buyers. Bargaining power such as opponent pain and opponent gains differs at levels of the marketing channels. The buyers consider themselves as king hence their bargaining power is more on opponent gains. • Increasing gulf between the farmers sectors and food marketing sectors.QUESTION 2Name three (3) sources that contribute to the development of market power. (3 marks) • Sizes, number, and market concentration • Supply control • Product diversification • Controlling strategic resources and decisions • Financial strength • Unequal informationQUESTION 3Managing risks in agricultural business is the most difficult task that farmers have to face.Mention three (3) methods of reducing risks in marketing of agricultural products. (3 marks) • Marketing information • Horizontal integration • Contract productionQUESTION 4AGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM PerlisMiddlemen play an important role in facilitating the marketing process of farmers and consumers.Explain the role of middlemen. @ Why needed middlemen? (6 marks) • Lack of capital by producer • Additional product • Business expansion • Specialization area • Change in market information • Contract and change in ownershipQUESTION 5 (repeat)Explain the objectives of promotion at the different stages of product life cycle. (6 marks)Introductory stage • The introductory stage is the first stage of the product life cycle in which the full-scale launch of a new product into the marketplace occurs.Growth stage • The second stage of the product life cycle when sales typically grow at an increasing rate, many competitors enter the market, large companies may start acquiring small pioneering firms, and profits are healthy.Maturity stage • The third stage of the product life cycle during which sales increase at a decreasing rate.Decline stage • The fourth stage of the product life cycle, characterized by a long-run drop in sales.QUESTION 6Give three (3) factors in determining marketing channel. (3 marks) • Distance between the producer and the consumer • Nature of products • Production skillQUESTION 7Describe four (4) marketing programs in order to enter International Market. (4 marks)ProductSeveral strategies can be considers such; i. Straight product extension. Marketing a product in a foreign market without any change. ii. Product adaption. Adapting a product to meet local conditions or wants in foreign marketsAGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlis iii. Product invention. Creating new products or services for foreign markets.Promotion • Companies can either adopt the same communication strategy they used in the home market or change it for each local market.Price • It could set a uniform price all around the world, but this amount would be too high a price in poor countries and not high enough in rich ones.Distribution channels / place • Companies must design international channels that take into account all the necessary links in distributing the seller’s products to final buyers, including the seller’s headquarters organization, channels among nations, and channels within nations.QUESTION 8 (repeat)Mention three (3) strategies of National Agriculture Policy 3 (NAP3). (3 marks) • Optimizing the resources uses • Human resources development • Enhancement of research & development, and technological diffusion • Greater role of the private sectors • Reformed marketing strategies • Expanded food productionQUESTION 9Describe three (3) methods of price fixing in agricultural products. (3 marks) • Perfect competition • Monopoly • Oligopoly • Imperfect competitionAGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlis (1 mark for one answer)QUESTION 10Explain three (3) characteristics of products and three (3) characteristics of production that should beconsidered in the marketing of agricultural products. (6 marks)Characteristics of the products:A raw material • The output of agriculture is largely a raw material that will be used for further processing. • The product sold by the farmer soon loses its identity as a farm product becomes simply food.Bulky and perishable productsCompared to most other products, agricultural products are both bulkier and more perishable.Bulk affects the marketing functions concerned with physical handling.Quality variation • The general quality as well as the total production of agricultural commodities varies from year to year and from season to season.Characteristics of production:Total output • The long run trend in food production is upward. The rising food supply per capita has been a mixed blessing for farmers.Annual variability in production • There are years where the situation of increasing, decreasing, and stable farm output. These are caused by farmer responses to prices and other uncontrollable factors such as weather and disease.Seasonal variability in production • In addition to the annual production variability, much of agricultural production is highly seasonal. Livestock receipts may vary substantially throughout the year.Geographic concentration of production • Although a variety of farm products is produced in all states, there is increasing geographic specialization of farm production.Varying costs of production • There is no single cost of production for all farmers. Farmers cost of production are affected by climate, technology, farm size, and individual managerial skills.The farm supply industry • The farm supply industry provides such agricultural inputs as chemicals, seeds, machinery, feeds, capital, labor, land, and so on.AGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlis (Choose any 3 points and explain)QUESTION 1 (repeat)Why are middlemen needed in markerting? (5 marks) • Lack of capital by producer • Additional product • Business expansion • Specialization area • Change in market information • Contract and change in ownershipQUESTION 2 (repeat)List five systems of price discovery. (5 marks) • Individual, decentralized negotiation • Organized, central markets shift the locus of price discovery from the farm gate to a central marketplace. • Formula pricing systems • Bargained prices • Administered pricing systemsQUESTION 3 (repeat) (5 marks)Explain the approaches used in reducing the risk in the marketing of agricultural products. • Marketing information • Horizontal integration • Contract production • Technology • Import and export controls (With explanation)QUESTION 4AGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM PerlisList and explain three objectives of the Third National Agricultural Policy. (5 marks) • Enhance food security. • Increase productivity and competitiveness of the agricultural sector. • Linkages with other sectors. • Create new sources of growth for the sector. • Conserve and utilized natural resources on a sustainable basis. • To achieved a balanced development between agriculture and other sectors • To achieve a higher level of expansion and development of the food industry sectors. • To ensure a sustainable development in agricultureQUESTION 5 (4 marks)Briefly describe how to overcome product and production characteristics in agriculture.Individual management • By managing the good practice in management such as planning, organizing, directing and controlling resources can be use to reduce such occurrence of risk in marketing of agricultural products.Government involvement • Price policies set up by the government so that the producers are unable to manipulate price fixing.Complete and accurate market information • Comprehensive and accurate market information will help to reduce the risk in price stabilities. The use of media such as internet, website, and other relevant sources of information will reduce the risk in marketing between the producer and theQUESTION 6Explain three characteristics of direct selling. (3 marks) • Known as personal selling • First of the technical promotion • Where by seller influence the buyer • Can in team or individualQUESTION 7 (repeat)AGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM PerlisWhat are the purposes of promotions? (3 marks) • To pressure the buyer to buy the product • To promotion new product • To inform to buyer about their productQUESTION 2Why is radio can be used to advertise new products in the market? (5 marks) • Take the lower cost • Easy to listener • Information spread speedy • Feedback from the listener is faster • Clear given informationQUESTION 3 (repeat)List and explain three strategies for achieving the National Agricultural Policy 3. (5 marks) • Optimizing the resources uses • Human resources development • Enhancement of research & development, and technological diffusion • Greater role of the private sectors • Reformed marketing strategies • Expanded food productionQUESTION 4 (10 marks)What is agricultural commodity? How this commodity plays an important role in Malaysian EconomyAgricultural commodities are homogeneous products. For example, palm oil of the same type and gradewhether it is produced in the different location is used to make cooking oil. Manufacturers regard priceas the main determinant of their palm oil purchases. Commodities are produced on a large number offarms, each accounting for a small part of total output. No individual farmer can influence prices bylimiting supplies to the market. Because of these characteristics, individual producers cannot influencemarket forces. Prices can be low and quite variable, depending on the level of output. Higher productionusually translates into lower price for most commodities. At such times, incomes of most farmers arebolstered by commodity programs designed to even out the large swings in prices. • The government plays an important role in making the legislation especially when consumer needs and preferences are needed. Few areas have been explored for the benefits of the manufacturer and the consumer such as by placing the date of manufactured goods, halal, price, ingredients and geographical concern of the targeted consumer. Market is expandableAGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlis • Product exported either locally or internationally is for the purposes of large scale production and to gain profit maximization. The commodities traded in the market is demanded by abroad countries. Government control • Governnment control is a preconditions in order to monitored the efficiency of the trading of commodity either directly or indirectly. Government will set-up the policy, contract and law, and regulation of trading commodities. Commodities can be graded • Grading of commodities will enhance the differing in prices. Once the grading is applied, quality control can be improved. Grading will influenced any buyers to freely choose their own products. Involvement of traders • Involvements of processors, speculators and middlemen or buyers will influenced the presence of exchange commodities in the market. Whatever it is, it will abide on the policies, principles and regulations.QUESTION 1 (repeat)Explain three (3) characteristics of agricultural products. (6 marks) i. A raw material • The output of agriculture is largely a raw material that will be used for further processing. • The product sold by the farmer soon loses its identity as a farm product becomes simply food. ii. Bulky and perishable products iii. Quality variation The general quality as well as the total production of agricultural commodities varies from year to year and from season to season.QUESTION 2Marketing is the process of satisfying needs and wants of consumers by bridging the gap between theproducers and consumers. Briefly explain the elements of marketing process. (6 marks)Assembling • Collection of agricultural products in small quantities by the marketing middlemen from scattered and small farms.Equalization • Activities of transforming the perishable, voluminous and bulky agricultural products into a form that satisfy the wants and desire of the consumers.Distribution processAGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlis • Distribution of agricultural products from where it is produced, processed and packed to the points where it is most wanted by the consumers.QUESTION 3Marketers bridged the gap between producers and consumers and lead to creation of several utilities.List and briefly describe three (3) types of utility created by marketers. (6 marks)Form utility • To change the raw materials to a finished product. For example, palm oil bunch to edible cooking oil.Time utility • Making the products be available during the convenient hours.Place utility • Making the products and services available in convenience location and place.Possession utility • Making the exchange of goods and services between the buyers and sellersInformation utility • To inform the buyers that the products exist, how to use it, the price and other related information of the products availability. (Choose any 3 points and explain)QUESTION 4Differentiate between brokers and middlemen in distribution of agricultural products. (6 marks)Brokers:Brokers do not have physical control or ownership of the product. They follow the directions of buyersand sellers and have less influence in price negotiations than commission men.Middlemen:Middlemen will store the product that has been collected from the processor. Short period of time forstorage is necessary and later will be sent at the retailer for further storage.QUESTION 5 (6 marks)AGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM PerlisWhy is international agricultural marketing important to producers and the government? • Increase in the exports of these primary commodities and its market expansion can raise price • The government benefited from the extension of international trade through foreign exchange earning, corporate taxes and source of employment for rural population, impetus and catalyst for growth and development of the whole nation • Participation of Malaysian exporters in world market has provide incentives for farmers, small holders and estate land schemes and estate to increase farm productivity and national output in agriculture • Such steps have markedly improved the production of such crops, and better handled and marketed such products on international market (Choose any 3 key points and explain)QUESTION 2Distinguish between farm sector and marketing sector. (5 marks)Farm sector • Where livestock, poultry, fruits, vegetables, cotton, tobacco, flax, corn, wheat, other grains, and specialty crops are producedMarketing sector • Involving many marketing functions, such as transportation, processing, and storage, which are more expensive than the production costs in the farm sectorQUESTION 3 (5 marks)Explain the differences between the risk taking function and market information function.The risk taking function: • Involves assuming the risk of loss between the time of purchase and sale. • Various forms of insurance are available to guard against adverse changes in price as well as physical losses arising from such things as fire, flood, theft, and spoilage. • The efficiency of the marketing system is also greatly enhanced if there is wide dissemination of information on prices, inventory levels, embargoes, or anything else that could influence the buying and selling of products.AGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM PerlisThe market information function: • Involves the development of any means to disseminate this type of information.QUESTION 4Explain two (2) common problems in the marketing of farms product. (5 marks)Farmers do not have any control over the output of their production activities. • Supply of output is greater than demand. • This might cause major problems to the producer. • Need of comprehensive information about products demand in market.The cost-price squeeze is another component of the farm marketing problem. • The competitive conditions of agriculture tend to keep farm prices close to the cost of production. • Falling farm prices would not be so critical if they were accompanied by falling farm costs, or if the farmer could adjust input costs as prices fell.The superior bargaining powers of buyers • Bargaining power such as opponent pain and opponent gains differs at levels of the marketing channels. • The buyers consider themselves as king hence their bargaining power is more on opponent gains. (Choose any 2 key points and explain)QUESTION 5Explain how the changes in demand and changes in supply affect the farm products. (5 marks)Changes in demand: • A change in number of buyers (providing per capita purchasing power and other factors remain unchanged). Such changes may occur from either population growth or the extension of the market served by the product. • A change in the incomes or purchasing power of people. We have seen from our previous discussion of consumers’ buying pattern that income changes may be either positively or negatively related to demand changes, depending upon the particular product.Change in supply;AGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlis • In the short run period there may be a change in the various factors that would induce sellers to offer their available stock of goods at a different schedule of prices. These would include such factors as costs of storage, the sellers’ need for cash, and the general expectations as to the future situation, and changes in cost (land, labor, machinery, etc.)QUESTION 6List four (4) types of storage used in the farm and food commodity. (5 marks) • Cold / hot storage for perishable product such meat, vegetables, etc. • Open storage to store palm oil bunches and some type of vegetables, etc. • Closed storage for finished products or canned foods. • Wet storage for stuff such rubber scraps or latex received from farm before processing. • Dry storage for rubber scraps (bales) after processing, etc. PARTDAGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM PerlisQUESTION 1Briefly explain the market impacts of standardization. (10 marks) • The standardization function is the establishment and maintenance of uniform measurements. These may be measurements of both quality and quantity. • This function simplifies buying and selling, because it makes the sale by sample and description possible. • Effective standardization is basic to an efficient pricing process. Such activities as quality control in processing plants and inspections to maintain the standards in the marketing channel can be considered part of this function. (Choose any 3 key points and explain)QUESTION 2Briefly explain the factors affecting the rise in food marketing cost. (10 marks) • As a result of population growth, the physical quantity of food that is marketed has increased, raising the total expenses of marketing food. • The costs of most food marketing inputs, especially labor and energy, have added to the rising cost of marketing food. • Consumers desires for additional food marketing services, such as represented by convenience foods, have further increased the food marketing bill.AGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM PerlisIn order to maximize benefit, market news and information must meet a number of criteria. Explain four(4) important criteria in market information. (4 marks) • Information must be complete and comprehensive. A reasonably complete description of a food market includes prices, price trends, production, supply movements, stocks, and demand conditions at each level of market. • Information also must be relevant and in usable form. Much market information goes unused because it is not in usable, easily accessible form. • Confidentiality. Market prices and supply reports are amassed to provide a general picture of the market without revealing any single information. • Market information also must be timely, in the sense of being relevant to current decisions, and must be speedily transmitted to users. • It is desirable to have a balance of market information at all levels of the food industry.Describe cyclical and seasonal farm price variations. (2 marks) • Cyclical price variations are caused by the tendency of farmers to base future production plans on current prices and profits, rather than on future price • Seasonal price variations are the more or less regular patterns of price change occurring within a crop or marketing year.QUESTION 1 (10 marks)Categorize the functional approaches towards marketing of agricultural products with emphasison:a) Exchange Function • The exchange functions are those activities involved in the transfer of title to goods. They represent the point at which the study of price determination enters into the study of marketing. • Both the buying and selling functions have as their primary objective the negotiation of favorable terms of exchange.b) Physical Function • The physical functions are those activities that involve handling, movement, and physical change of the actual commodity itself. They are involved in solving the problems of when, what, and where in marketing. It includes; i. The storage function is primarily concerned with making goods available at the desired time. ii. The transportation function is primarily concerned with making goods available at the proper place. iii. The processing function is often not included in a list of marketing functions because it is essentially a form-changing activity.AGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlisc) Facilitating Function • The facilitating functions are those that make possible the smooth performance of the exchange and physical functions. These activities are not directly involved in either the exchange of title or the physical handling of products. However, without them the modern marketing system would not be possible. • They might be called the grease that makes the wheels of the marketing machine go around. In comprise of; i. The standardization function is the establishment and maintenance of uniform measurements. ii. The financing function is the advancing of money to carry on the various aspects of marketing. iii. The risk-bearing function is the accepting of the possibility of loss in the marketing of a product. iv. The market intelligence function is the job of collecting, interpreting and disseminating the large variety of data necessary to the smooth operation of the marketing processes. (Choose any 2 points and explain)QUESTION 2 (10 marks)a) Discuss three (3) reasons for government intervention in the marketing of agriculturalproducts • Legislation and law • Marketing ethics • Economy factor • Life cycle of industryb) One of the forms of government intervention in Agricultural Marketing is price controlthrough Floor Pricing and Ceiling Pricing. Explain this statement graphically.Price (RM) Surplus Equilibrium Eq ShortageAGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlis QuantityPrice floor • Price floor is a legalized price imposed above the equilibrium.Price ceiling • Price ceiling is legally set price below the equilibrium price. It is a maximum price where sellers cannot set the price above the equilibrium.c) Give two (2) reasons for the imposition of ceiling and floor pricing.Price floor • It is sometimes used to support farm prices and income of farmers. • Price floor can cause significant resource allocation problems in the long run because it can increase productive capacity and output in the long run. • Price floor can be seen as buyers market because the long effects of production such as dumping, auction, cheap sales, and deflation.Price ceiling • It is a maximum price where sellers cannot set the price above the equilibrium. • It is the seller market and in the long run production may cause unfavorable to the market and lead to black market, rationing, and inflation.QUESTION 1Explain briefly the methods used to price a new product in competition. (10 marks)Below market price: i. Price penetration. • Selling price is cheaper so that it will penetrate in the market and for the customer attention. • Consumer is sensitive to price change. • Many consumers willing to purchase products if the price is low. • Cost per unit of production will decline when total sales increase.AGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlis • There is a possibility of competition in the market. ii. Price blockage or barrier. • To stop the competitors from competing the market. • Willing to tag the price below the production cost. • The firm has a strong financial status. • Is not willing to share technologies if the technologies are cheap and accessible. • High risk if there is other competitor that has the overhead cost is low.Above the market price:i. Skimming strategy. • Product is differentiated from other competitors • Purpose is to maximized profits • Maximized profit is focus on introduction stages of the product life cycle • Focused on high income level of consumers • Most products are quality and very exclusiveii. Premium strategy. • Firm’s targeted their products are of high quality • High price • Better quality and branded • High image product (1 mark with explanation)QUESTION 1AGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlisa) Explain with examples the two (2) types of risks discussed by Kohl and Uhls. (10 marks)Product risks • Products to deteriorate and decay and be subjected to pest infestation and diseases are very high, hence contributing to the lost of economic value and product priceCasualty risks • Due to unforeseen circumstances such as accident, lost of crop as result flood, fire especially during a long drought and dry season, high moisture stress because of drought, outbreak of pest and diseases.Personnel risks • Due to accident of one of the principals in the firm that can severely affect the business.b) Risk bearing function is the accepting of the possibility of loss in the marketing of a product.Suggest five (5) methods of reducing the above risks that farmers can take. (10 marks)Marketing information • Helps guide the farmers to plan the future production schedule of their farms as to what, where how much to produce and how to market their productsContract production • A contract is an understanding of agreement between the producer and the future consumer at a price determined earlier and assurance in delivering quantities of the products.Crop insurance • Insurance is an arrangement with a company which the organizations pay regular amount of money and the insurance company agree to pay the costsHorizontal integrationFarming techniqueTechnologyImport and exportAGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlis (Choose any 5 points and explain)QUESTION 2a) Farmers have to understand various types of markets and their characteristics such as purecompetition, monopoly, oligopoly and imperfect competition before they can determine theprice of their products. Discuss thoroughly two (2) of the above markets that they have toconsider. (10 marks) Characteristics Perfect Monopoly Oligopoly competition Consumer Many Many Many Sellers Many One More than one Entry Easy Difficult Difficult Exist Easy Easy Easy Product Homogeneous Heterogeneous Homogeneous (substitutes) (no substitutes) (substitutes) Price Price taker Price Depend on each discrimination Promotion Present Very few PresentMonopoly • A market structure where there is a single seller, no close substitutes for the commodity it produces and there are barriers to entry to the marketOligopoly • It is a type of market the control of production of product is substantially in the hand of a few very large firmsImperfect competition • The imperfect market lies between perfect competition and oligopolyAGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlisb) The government intervene the market through controlling the prices of certain goods andservices by implementing floor pricing and ceiling pricing. Discuss in detail the floor and ceilingprice. Provide examples where possible. (10 marks)Price (RM) Surplus Equilibrium Eq Shortage QuantityPrice floor • Price floor is a legalized price imposed above the equilibrium. • It is sometimes used to support farm prices and income of farmers. • Price floor can cause significant resource allocation problems in the long run because it can increase productive capacity and output in the long run. • Price floor can be seen as buyers market because the long effects of production such as dumping, auction, cheap sales, and deflation.Price ceiling • Price ceiling is legally set price below the equilibrium price. • It is a maximum price where sellers cannot set the price above the equilibrium. It is a maximum price where sellers cannot set the price above the equilibrium.AGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlis • It is the seller market and in the long run production may cause unfavorable to the market and lead to black market, rationing, and inflation.PART C:QUESTION 1 (repeat)a) Define farms marketing. (2 marks) • Activities related to the marketing and production of agricultural products produced by an organization or individual farmer. Such activities in the process of farm’s marketing include packaging, selection of brands name, promotional strategies, price policies, marketing channels and other policies.b) Explain two (2) characteristics of agricultural production. (8 marks)Total output • The long run trend in food production is upward. The rising food supply per capita has been a mixed blessing for farmers.Annual variability in production • There are years where the situation of increasing, decreasing, and stable farm output. These are caused by farmer responses to prices and other uncontrollable factors such as weather and disease.c) Describe three (3) problem faced by agriculture. (6 marks) • Farmers do not have any control over the output of their production activities. Supply of output is greater than demand. Need of comprehensive information about products demand in market. • Farmers face in improving their prices through independent or group activities. Farmers are, for the most part, price takers-they cannot, individually, influence the price of their products through their output decisions. • The cost-price squeeze is another component of the farm marketing problem. The competitive conditions of agriculture tend to keep farm prices close to the cost of production. Falling farm prices would not be so critical if they were accompanied by falling farm costs, or if the farmer could adjust input costs as prices fell.AGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlis • The superior bargaining powers of buyers. Bargaining power such as opponent pain and opponent gains differs at levels of the marketing channels. The buyers consider themselves as king hence their bargaining power is more on opponent gains. • Changing food market pricing efficiencies. Different processors are willing to price their products at varying price. The changing of food marketing from one food market to another food market will allow a gap in pricing. The pricing will depend on location, customers, • Increasing gulf between the farmers sectors and food marketing sectors.d) Elaborate the National Agricultural Policy. (4 marks) • In 1984, NAP introduced by Malaysian government because of recession, but agriculture still plays an important role in the GNP growth of the country even-though it has decline in its production due to industrialization and urbanization. • To achieved a balanced development between agriculture and other sectors such hunting & forestry, fishing, mining & quarrying, electricity, gas & water supply, construction, wholesale & retail trade, hotel and restaurants, transport, communication, education, financial, public administration, health and social work in the country. • To enhance the economics sectors and structural integration in particular with the manufacturing sectors.QUESTION 2a) Explain four (4) possible categories of storage cost that must be considered in determiningthe cost of holding commodities. (8 marks)The cost necessary to provide and maintain the physical facilities for storage • These costs would include such items as repairs, depreciation, and insurance against lost.The interest on the financial investment in the product while it is in storage • Whether the money is actually borrowed or not, this a cost that should be assessed at the rate of interest that would have to be paid if money were borrowed during the storage period.The cost of quality deterioration and shrinkage during storage • Many commodities either deteriorate in quality or shrink in volume-or both-while in storage. In a few cases, some commodities, such as corn, may increase in quality while shrinking in volume.The loss that may result from poor consumer acceptance of the stored as against the fresh product • Packing companies maintain that frozen meat will be accepted by consumers only at a price discount, even though its quality as measured by the grading system has not deteriorated.The risk that the price of the product might unexpectedly decline • Under these circumstances the product might have to be sold at less than its value at the time it was placed in storage.AGRICULTURAL MARKETING CONFIDENTIAL
  • Marzuqi Salleh, UiTM Perlisb) Elaborate four (4) methods could be considered in order to reduce/minimize the cost ofstorage. (12 marks)Increase the efficiency of storage • There are ways to improve food storage efficiency; i. Labor efficiency versus mechanism. Use paddy harvester instead of human being during harvesting time. ii. Proper ventilation and insulation. The intention is to reduce odor, maintain freshness of products, and minimize moisture. iii. Improved management technique. This can be done through maintaining a proper and improved work scheduling in the operational situation. For example, the work schedule of manure, harvesting, and pest and disease control in the agricultural sectors.Reducing product deterioration • Different crops need a set range of temperature control. For example vegetables need a minimum temperature to keep it from deteriorating and to maintain the standard grade.Proper use of insecticides and fungicides• This is important in order to avoid the harvested crop from contamination of fungicides. Proper spraying must be avoided at least 10 days before harvesting is done.Proper packaging either plastics or canned • Packaging must be appeal and presentable to the eyes of the consumer. Proper packaging will enhance buyers to purchase the product.Storage financing and risk bearing • The future market can assist in managing the financing and risk-bearing operations associated with food storage. -The end-AGRICULTURAL MARKETING CONFIDENTIAL