Agricultural
Marketing

Reasons for learning food marketing system
 There are a number of reasons for one to learn about the
food marketing system:
 First, You may be preparing for a career in food
marketing, and your success will depend on the
knowledge of the field.
 Second, you may plan to be a food producer who
will need to understand the changing nature of the
marketing system which will influence your sales,
price and income.
 Third, you will most certainly be a food consumer
whose food supply and prices will depend upon the
food production and marketing system.
 Finally, you will be a citizen with responsibilities to
shape and regulate the food industry in ways that
serve the public interest.

Agricultural Marketing
 Agricultural marketing can best be defined as
series of services involved in moving a
product from the point of production to the
point of consumption.
 Thus agricultural marketing is a series of inter-
connected activities involving:
-planning production,
-growing and harvesting,
-grading,
-packing,
-transport,
-storage,
-agro- and food processing,
-distribution and sale.

Agricultural Marketing
 Marketing systems are dynamic. They are competitive
and involve continuous change and improvement.
 Businesses that have lower costs, are more efficient
and can deliver quality products are those that
prosper.
 Those who have high costs, do not adapt to changes
in market demand and provide poorer quality are
often forced out of business.
 Marketing has to be customer oriented and has to
provide the farmer, transporter, trader, processor, etc.
with a profit. This requires those involved in marketing
chains to understand buyer requirements, both in terms
of product and business conditions.

Food marketing
Food marketing has many faces. The food marketing
system encompasses two major type of activities.
-One is concerned with
*physical handling,
*storing,
*processing,
*transfer of raw and finished goods as they move
from product to consumer.
The other is concerned with
*the exchange and price-setting process in the
market system.
(figure 1-1: Flow of food from sources to destination)

Marketing is complex and costly
 The food and fiber sector is one of the largest in
the united states has a marketing system larger
than any other industry. The food marketing
system makes a substantial contribution to the
national economy (in US 25 million jobs and
15.6% in GNP in 1998).
 Farm products are not only perishable but they
vary in quality.
 Production is highly seasonal and
geographically concentrated in areas that are
often located some distance from consumers.
 Farm commodities must be collected, sorted
swiftly moved to market or stored for later
use.
 These production and commodity
characteristics give rise to basic marketing
activities, such as
storage, transportation, processing and the like.
 Some farms produce small amounts of a great
many commodities.

Marketing defined
 Food marketing means different things to different
people (consumer, farmer, middlemen etc.)
 We will define food marketing as the
performance of all business activities
involved in the flow of products and service
from the point of initial agriculture
production until they are in the hands of
customers.
-Several key points of this definition should be
noted
1.Marketing begins with production decisions
on the firm.
2.Suggests a mutual interdependence between
farmers and food marketing middlemen.

Marketing defined
3.The essence of marketing is management
decision making.
4.The farm supply industries (feed, fertilizer, farm
machinery and seed) must be considered a
vital part of the food industry.
5.The food industry is shaped by and serves
three key players:
*food producers,
*food marketing firms, and
*food consumers.
6. Consumer secured the highest food value at
the lowest possible price.

Marketing defined
7.Farmers want the highest possible
returns from the sale of their products.
8.Food marketing middlemen seek to earn
the greatest profit possible.
9.One of the primary task of the food
marketing system is to reconcile these
sometimes conflicting demands. It is not
always easy or fully appreciated task.

A market may be defined
 We will define a market as an arena for organizing
and facilitating business activities and for
answering the basic economic questions:
*what to produce,
*how much to produce,
*how to produce, and
*how to distribute the production.
 A market may be defined by:
1. A location ( for example New market)
2. A product (For example the grain market)
3. A time ( For example May soybean market)
4. An institutional level ( For example the retail food
market).
Functions that market play in the food economy
1. exchange of product and money
2. create value
3. Contribute to efficiency
4. Efficient allocation of resources

Marketing as a value added process
 We will define production as the creation of
utility-the process of making useful goods
and services
 The utilities are further classified
1. Form utility (bread from wheat and flour)
2. Place utility (railroad and trucker adds place
utility)
3. Time utility (storage and freezing)
4. Possession utility (consumer in acquiring &
taking the title of food)
-The value adding productive processes in the
food industry are illustrated in figure 1-2

Marketing as a value added process
The food industry is divided in to three
components
1. The input sector( provides
machinery, fertilizer, seeds etc)
2. The farm sector
3. The product market sector
 Thus, food production can be viewed as
a sequential and value adding
process, having its origin in purchased
and farm-supplied resources and ending
with the meal on the table.

Food marketing career opportunities
 Largest sector, numerous jobs and career
opportunities are available
 Sectors:
-Farming, food processing & manufacturing
-Wholesaling & retailing
-Eating places
-Supporting activities
-Farm management (farm and business
services): which requires
marketing, leadership and communication
skills.

Food marketing career opportunities
 Positions include:
 market analyst,
 merchandiser,
 advertising /communications manager,market
economist,
 food store manager,
 food service manager,
 food or commodity broker,
 sales management,
 purchasing agent,new product development manager,
 logistics or transportation manager,
 product or brand manager and
 marketing researchers etc

The marketing process
 Two essential characteristics of the
marketing process:
 First,is the movements; it is series of action and
events
 2nd, Some form of the coordination of this series of
events and activities is necessary if goods and
services are to move in some orderly fashion from
the hands to producers to consumers. (see figure 1-3)
 Starting with Farmer. The nature and way in which
this production is initially offered to the marketing
system has a major influence on the organization and
operation of the system.

The marketing process
 At the same , the dynamics of the marketing process
may have a direct influence on agricultural
production.(Dairy industry example: Large cooling
tanks(storage) combined with bulk tank trucks
(improved assembly method). So the marketing
technology that encouraged the reorganization of dairy
farms into larger, more specialized units.
 At the other extreme of the sequence, is the consumer.
Certainly consumer preferences dictate to a major
extent the activities of the marketing process. Similarly.
Marketing firms expend a great deal of effort in trying
to influence and change consumer behavior.

The marketing process
 Between these two forces- the agricultural producer
and consumer- is the marketing system.
 This complex system is composed of business firms
engaged in physical, technological and economic
activities and run by managers to make necessary
decisions.
 Another part of the food marketing system is made up of
firms and organizations whose activities contribute to
the pricing of food products and to establish the
various arrangements, contacts and procedures that will
ensure an orderly and purposeful flow of goods and
services.

The marketing process
Farm product
Laws and Domestic and
government policies global economy
Customs and The food marketing system
values 1. Firms, organization
2. Product flows, distribution Science and
channel technology
3. Management and
marketing activates
4. Pricing and exchange
Competition
Customer taste
and preference
Infrastructure
Food product

Alternative aspect of food marketing
1. One perspective gives the big picture of food
marketing some times called Macromarketing. It
looks at
*how the food system is organized,
*how well it performs its economic and social tasks,
*how the food system is changing over time.
2. Another perspective is Micromarketing, or business
management, view of marketing, in contrast, is that
taken by an individual decision maker in the food
industry. This could be a food producer, a business
manager or a food consumer who is making
choices and decision about
*how,
*when,
*where and
*what to buy or sell.