Agricultural Marketing

1. Fazlul Hoque
MBA (DU), M. Econ (Thailand & Germany)
Asst. Professor
Dept. of Agribusiness & Marketing
Sher-e-Bangla Agricultural University, Bangladesh.

2. Market
• A market is one of a composition of systems, institutions, procedures,
social relations or infrastructures whereby parties engage in exchange.
• Features:
• Place
• Market participants
• Exchange relationship
• Negotiated price

3. Classification of the Market
Market is categorized based on following conditions
Nature of Competition
Location
Regulation
Users
Products Traded
Coverage

4. Nature of Competition
• Perfect Market
• Large number of buyers and sellers
• Homogeneous products
• No constraint on entry or exit
• Producer as price taker
• Imperfect Market
• An imperfect market is a market where one or more conditions of perfect competition are
Lacking.
Ex. Monopoly, Oligopoly etc.

5. Location
Primary Markets
These are markets at primary level such as a village market, roadside market and small
town market.
Secondary or Wholesale Markets
Secondary or wholesale markets carry out the function of assembling agricultural produce
and disposing off it to consumers
Retail Markets
The small shopkeepers and street vendors who purchase agricultural produce from primary
and secondary markets in bulk and sell it in small quantities to the consumers.
Terminal Markets
A market, which is mainly involved in the export of commodities, is called terminal
market. These are generally situated in large urban centres.

6. REGULATION
Free Market
Free market is a market where demand and supply forces operate and
interact freely without any restriction on price setting mechanism and as
result perfect competition prevails in the markets. Ex. Local market
Regulated Market
A market managed by an elected committee or local authorities is known
as a regulated market. Ex. City corporation administered market.

7. END USERS
Consumer markets
These markets consist of individuals and households who buy products
for their direct/ultimate consumption. Ex. SAU Minibazar, Dhaka.
Industrial/Business Markets
Industries and institutions that buy products for further processing form
industrial markets. Ex. Kawran Bazar, Jatrabari, Showarighat Fish
market.

8. PRODUCTS TRADED
Factor (Input) Markets
These are the markets where factors (inputs) used for agricultural production are
bought and sold. Pesticide, fertiliser, seed, farm machinery and labour markets are
examples of factor markets.
Product (Output) Market
In product markets, agricultural produce is traded. For example grain markets, fruit
markets, vegetable markets etc.

9. COVERAGE
Domestic Markets
Domestic markets provide goods and services to the domestic consumers
only. Only those items are traded which are in consonance with the domestic
socio-cultural and economic requirements. Domestic markets include local,
regional, and national markets.
International Markets
International markets serve the foreign consumers and are characterized by
intense competition in terms of price and quality. Producers market their
products considering the requirements of foreign buyers. Ex. Border Market.

10. The peculiar characteristics of fish Market.
Perishability
Wide varietal differences
Seasonality
Processing needs for consumption

11. Agricultural Marketing
According to Thomson, “the study of agricultural marketing comprises
all the operations and the agencies conducting these, involved in the
movements of farm produced foods, raw materials and their derivatives
such as textiles, from the farm to the final consumers, and the effects of
such operations on farmers, middlemen and consumers”.
Acharya and Agarwal defined agricultural marketing as “comprising of
all activities involved in supply of farm inputs to the farmers and
movements of agricultural products from the farms to the consumers”.

12. Agricultural Marketing
A comprehensive definition of agricultural marketing may be as under;
“Agricultural marketing embraces all business activities involved in
production planning, transformation, grading, storing, transportation and
distribution of goods and services related to agriculture as desired by
agricultural producers (farmers) and ultimate consumers”.

13. Economic Development & Agricultural Marketing
1. Traditional Subsistence Economy
Production & Income low
Little marketable surplus
Limited varieties of crop
Technology adoption low or totally absent
Less developed market
Absence or little access to ICT
Ex. Tribal Community, remote area –island etc.

14. Transitional Economies
• Productivity of agriculture is high
• More marketable surplus
• Wide varieties of crop
• Income is high
• Public & Private support
• Developed market and marketing function
• Better Access to ICT
• Medium size to Large farmholdings
• Ex. District or Upazilla Market

15. Market Oriented Agriculture
• Large commercial farm
• Adoption of Modern farming techniques
• More Agri-food processing industries
• Government having special patronization to agriculture
• Specialized crop selection based consumer preferences.

16. STAKEHOLDERS IN AGRICULTURAL MARKETING SYSTEM
• Producers( Farmer, Fishermen)
• Traders(Commission men, brokers, wholesalers and retailers)
• Trade supporter( local authority, Bank, DAM, Govt)
• Trade planer ( Committee)
• Consumers

20. Marketing System Productivity
Marketing system productivity is usually measured by the amount of usefulness
often referred to as “utility” that the system adds to the agricultural products.
The marketing process add utility and hence value and desirability to a product
for the satisfaction of customer needs and wants.
Form Utility
Place Utility
Time Utility
Possession Utility

21. 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.

22. In case of agriculture, production is not spread evenly throughout the year
rather skewed in specific seasons and considerable time lag exists between
production and consumption. The storage function adds time utility to the
products by making them available at the time when they are needed.

23. 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

24. Possession utility is created by the process of
transferring ownership of the product from sellers to
buyers at the right time.
Man holds up a four-kilo Hilsa fish which sold
for a whopping Rs 22,000
A fisherman has caught a big Hilsa weighing more than
3.5 kilograms and Price 12200 BDT, Bhola.

25. Marketing Function
a) affect costs and value to consumers
b) cannot be eliminated and
c) can be performed by anyone in the system.
1. Exchange Function ( Buying & Selling)
2. Physical Function (Storage, Transportation, Processing)
3. Facilitating Functions ( Standardization& Grading,
Financing, Risk bearing, Marketing Intelligence)

26. The exchange functions refers to those marketing activities which are related
to transfer of ownership of goods and are mainly related to price
determination process in the marketing chain.
Buying
Needs of the customer
Production is purposely planned to meet
specific demands or market
opportunities.
It is mainly concerned with finding out
the sources of supply, assembling of
products and the activities associated
with purchase.
Business buyer or Consumer
Price & Quality
Selling
Decisions concerning proper unit of
sale,
proper packages,
The best marketing channel,
The right time and place to approach
potential buyers constitute the selling
function
advertising and other promotional tools
used to influence or generate demands

27. Storage
The storage function adds the time utility to products. Production of agriculture is
based on seasonality and fluctuating but demand is relatively stable. Thus, it
necessary that large quantities of farm produce should be held for a considerable
period of time.
1. To ensures a continuous flow of goods in the market.
2. To protects the quality of perishable and semi – perishable products from
deterioration;
3. To stabilize of prices by adjusting demand and supply;
4. The storage of some farm commodities is necessary either for their ripening (e.g.banana,
mango, etc.) or for improvement in their quality (e.g., rice, pickles, cheese, , etc.);
5. To Generate employment and income through price advantages
Risk: Quality degradation, Price risk and Quantity loss.

28. Processing
The processing activity involves a change in the form of the commodity.
Processing converts the raw material and brings the products nearer to human
consumption.
Advantages:
1. It changes raw food and other farm products into edible, usable and palatable forms.
2. The processing function makes it possible for us to store perishable and semi –
perishable agricultural commodities
3. The processing activity generates employment..
4. Processing satisfies the needs of consumers at a lower cost.
5. Processing serves as an adjunct to other marketing functions, such as transportation,
storage and merchandising.
6. Processing widens the market.

29. Packaging
Packing means, the wrapping and crating of goods before they are transported.
Goods have to be packed either to preserve them or for delivery to buyers.
Packaging is a part of packing, which means placing the goods in small packages
like bags, boxes, bottles or parcels for sale to the ultimate consumers.

30. Benefits of Packaging
1. It protects the goods against breakage, spoilage, leakage
2. The packaging of some commodities involves compression, which reduces the
bulk like cotton, jute and wool.
3. It facilitates the handling of the commodity, specially such fruits as apple,
mango,etc., during storage and transportation.
4. It helps in quality-identification, product differentiation, branding and
advertisement of the product, e.g., Radhuni Masala.
5. It helps in checking adulteration.
6. Packaging with labeling acts better than salesman which reduces the
marketing cost.

32. Transportation
The Transportation Function refers to all those activities that ensure availability
of goods at proper place. Agricultural commodities are generally produced in
rural areas whereas these are consumed mostly in the areas which are located at
distant places.
Advantages:
1. Widening of the Market
2. Narrowing Price Difference Over Space
3. Creation of Employment
4. Facilitation of Specialized Farming
5. Transformation of the Economy
6. Mobility of the Factors of Production

33. The cost of transportation
1. Distance
2. Quantity of the Product
3. Mode of Transportation
4. Condition of Road
5. Nature of Products
a) Perishability (e.g., Vegetables, fish);
b) Bulkinesss (e.g., straw);
c) Fragility (e.g. tomatoes,fish);
d) Inflammability (e.g., Petrol);
e) Requirement of a special type of facility (i.e, for livestock and milk).
6. Availability of Return Journey consignment
7. Risk Associated: Problems in Transportation of Agricultural Commodities
8. Illegal fees & commission of the musclemen

34. Problems
1. The means of transportation used are slow moving;
2. There are more losses/damages in transportation because of the use of poor
packaging material.
3. The transportation cost of the farm produce is higher than that for other
goods.
4. There is lack of co-ordination between different transportation agencies, e.g.,
the railways and truck companies

36. Grading and standardization
Standardization means making the quality specifications of the
grades uniform among buyers and sellers over space and over time.
Standards are established on the basis of certain characteristics-such
as weight, size, color, appearance, texture, moisture content, staple
length, amount of foreign matter, ripeness, sweetness, taste, chemical
content, etc.
These characteristics, on the basis of which products are categorized
are termed grade standards.

37. Grading means the sorting of the unlike lots of the produce into
different lots according to the quality specifications laid down.
Each lot has substantially the same characteristics in so far as quality
is concerned.
It is a method of dividing products into certain groups or lots in
accordance with predetermined standards. Grading follows
standardization.

40. Advantages of Grading
• To get a higher price for their produce
• To facilitate marketing, for the size, color, qualities
• To widen the market for the product
• To reduce the cost of marketing
• To get standard quality products at fair prices
• To ensure market competition and pricing efficiency.

41. Species Basis Specification
Rohu Weight Large: 2.5 kg above, Medium: 1.0 kg to 2.5 kg, Small: Less than 1 kg
Catla Weight Large: 3.0 kg above, Medium: 1.5 kg to 3 kg, Small: Less than 1.5 kg
Tilapia Weight Large: 300 gm above, Medium: 150 gm to 300 gm, Small: Less than 150 gm
Pangas Weight Large: 1.5 kg above, Medium: 1 kg to 1.5 kg, Small: Less than 1 kg
Shrimp Weight Golda: U-5, 6/8, 8/12, 13/15, 16/20, 21/25, 26/30
Bagda: 8/12, 13/15, 16/20, 21/25, 26/30, 31/40, 41/50
Hilsha Weight
Location
Large: Above 1 kg, Medium: 800gm to 1000 gm, Small: Less than 800 gm
Catching from river, Catching from sea
Source: Field survey, 2010.

42. Financing
Financing is the advancing of money to execute various marketing processes and functions.
Generally, there is a time gap between the purchasing of raw products and selling of
finished goods to the ultimate consumer in case of agribusiness products.
Capital Requirements
(i) Nature and Volume of Business
(ii) Necessity of Carrying Large Stocks
(iii) Continuity of Business during Various Seasons
(iv) Time Required between Production and Sale
(v) Terms of Payment for Purchase and Sale
(vi) Fluctuations in Prices
(vii) Risk-taking Capacity
(viii) General Conditions in the Economy

43. Market Information
Market information is a facilitative function required for efficiently operating marketing
system. Accurate, adequate and timely availability of market information facilitates
decision about when and where to market products.
a) Market Intelligence: This includes information relating to such facts as the prices that
prevailed in the past and market arrivals over time. These are essentially a record of what
has happened in the past. Market intelligence is therefore, of historical nature.
b) Market News: This term refers to current information about prices, arrivals and changes
in market conditions. This information helps the farmer in taking decisions about when and
where to sell his produce. The availability of market news in time and with speed is of the
utmost value

44. Good Market Information
a) Comprehensive
b) Accuracy
c) Relevance
d) Confidentiality
e) Trustworthiness
f) Equal and Easy Accessibility
g) Timeliness

45. The Risk-Bearing Function
It is an acceptance of possibility of losses in the marketing of a product.
The physical risks may occur due to destruction or deterioration of the
product itself by fire, accident, wind, earthquakes, cold and heat.
Market risks may arise due to changes in value of a product as it is marketed.
An unfavorable movement in prices might result in high inventory losses.
Changes in consumer taste, competitors’ strategies.
Insurance is used to avoid the physical risk.

46. Assignment on the marketing functions performed at the fish market in your area.

47. FARMER’S ASSOCIATIONS / COOPERATIVES
A farmer association or cooperative is a collective organization owned by
people who benefit from its services. The members elect a governing body to
administer the affairs of the cooperative.
Shares of the cooperative are divided equally among its members. Each member
has only one vote for the election of governing body and other major financial
decision as outlined in the charter.
Failure: poor performance, mismanagement, corruption in the use of financial
assets and funds and use of cooperatives for political goals.

48. Types of Cooperatives
Marketing cooperative
voluntary business organization established by its members to market farm produce or to purchase farm supplies
collectively for their direct benefit.
To assemble, store and sell a number of commodities like food grains, horticultural and livestock products, fisheries
items.
The higher marketing efficiency due to economies of scale in availing transport, storage and other services. Power of
farmers in sales transactions.
Purchasing cooperative
Purchasing cooperatives are established to supply farm supplies to its members. These cooperatives purchase farm
supplies form the source in volume and then sell in small quantities to their patrons.
Service cooperative
Service cooperatives can be used to provide financial (credit or insurance) or technical service for its members. These
can be used as a business organization for owning electrical power, telephone, irrigation or other facilities for the
benefit of members.
Processing cooperative
Processing cooperatives are organized to carry out the processing and packaging of farm products. For example,
a processing cooperative can on a fee basis to the patron provide livestock slaughter and packaging, grain milling
or vegetable canning.

49. Business
The term "business" also refers to the organized efforts and activities of individuals
to produce and sell goods and services for profit.
Sole (single) proprietorship is simplest form of business organization. It may be
termed as one man show wherein all the business operations are carried out mostly
by a single person. Street vender, small hotel& restaurant, retail fish selling, haircut
centre etc.
Private enterprises may be established under partnership arrangements wherein
two or more persons may join together to earn profit from business venture.
Partners pool their resources and expertise for their business venture.
A company is a legal entity formed by a group of individuals to engage in and
operate a business—commercial or industrial—enterprise. A company may be
organized in various ways for tax and financial liability purposes depending on the
corporate law of its jurisdiction. Krishibid group, Thermex group etc.