Basic Principles and Applications

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what is agricultural marketing,activities in agricultural marketing,guiding principles of
agricultural marketing,Some problems affecting agricultural marketing e.t.c

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Basic Principles and Applications

  1. 1. AGRICULTURAL MARKETING: Basic Principles and Applications AGRICULTURAL MARKETINGMelba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira
  2. 2. AGRICULTURAL MARKETING: Basic Principles and Applications WHAT IS AGRICULTURAL MARKETING ≠ SELLING ≠ PROMOTION Chairman of a Cooperative: “Involves finding out what your customers want and supplying it to them at a profit” = CUSTOMER-ORIENTED = it is a commercial process that it has to provide profit for it to become sustainableMelba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira
  3. 3. AGRICULTURAL MARKETING: Basic Principles and Applications A more detailed definition: It is the PROCESS of finding out what customers will buy, and producing and performing all the activities involved in getting agricultural products from the farm where they are produced to the final consumers, at the right place, time and form desired by the consumer, and at a price the customer is willing and able to pay for the product.Melba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira
  4. 4. AGRICULTURAL MARKETING: Basic Principles and Applications Activities in Agricultural Marketing 1. RESEARCH AND ANALYSIS 2. Assembly 3. Buying and selling 4. Storage 5. TransportingMelba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira
  5. 5. AGRICULTURAL MARKETING: Basic Principles and Applications 6. Packaging 7. Processing 8. Standardization and grading 9. Financing 10. Marketing information and dissemination 11. Risk bearing (associated with the vagaries or unpredictable changes in weather, incidence of pests and diseases, and seasonal patterns of harvests, demands, prices, etc.)Melba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira
  6. 6. AGRICULTURAL MARKETING: Basic Principles and Applications Remember PDCA Cycle: RESEARCH AND ANALYZE ACT PLAN CHECK DOMelba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira
  7. 7. AGRICULTURAL MARKETING: Basic Principles and Applications WHAT TO RESEARCH THE PRODUCTION AREA  problems (constraints) and opportunities (primary selling points) of the area  must cover crop production to product consumption (if possible)Melba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira
  8. 8. AGRICULTURAL MARKETING: Basic Principles and Applications THE MARKET  customers needs and wants  the suppliers  the competitors  etc.Melba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira
  9. 9. AGRICULTURAL MARKETING: Basic Principles and Applications THE MARKETING SYSTEM  how the market works  relationships of the different participants in the marketing chainMelba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira
  10. 10. AGRICULTURAL MARKETING: Basic Principles and Applications What Else to Know to Better Understand the Agricultural Marketing Process and System Government policies and programs affecting food production, pricing behavior, and distribution system. Examples are the Department of Agriculture’s various production programs; government’s price regulation policies and changes; Import and export policies. Large members, spatial distribution and conflicting objectives of the different marketing participants, buyers and sellers, distance from each other, and the varying interests of the marketing participants affect the marketing of a commodity.Melba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira
  11. 11. AGRICULTURAL MARKETING: Basic Principles and Applications Motivations, strategies, reactions, and survival tactics of marketing participants in response to changes in infrastructure, organization, institution, management, and technology. COMPETITION is the engine of markets. However, it should always be taken as a challenge for product or service improvement. A good business competitor is one that stays in the field for a long period of time. Geographic dispersion of production. Demand areas are usually located afar from producing areas. Problems and constraints of those marketing participants actually involved in producing, processing, distributing and consuming.Melba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira
  12. 12. AGRICULTURAL MARKETING: Basic Principles and Applications GUIDING PRINCIPLES OF AGRICULTURAL MARKETING 1. Know who the customers are. Could be identified as hotels, restaurants, wholesalers, exporters, retailers, cooperatives, processors. 2. Know the customers needs/wants before planning to make it. Commodity, form, frequency of need, price, volume required per unit of time, etcMelba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira
  13. 13. AGRICULTURAL MARKETING: Basic Principles and Applications 3. Determine how much to produce. Based on principle no. 2, determine the extent of product volume that should be provided given the existing resources 4. Produce the product(s) that the customer wants to buy, not products which the producer finds convenient to produce. 5. Organize a distribution system. The delivery or distribution system should match the customers’ habits, rather than just correspond to any convenient time that the producer can offer.Melba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira
  14. 14. AGRICULTURAL MARKETING: Basic Principles and Applications 6. Feedback mechanism. Make production (or collection) and distribution (or dissemination) decision based on feedback from customers. Timely, adequate and appropriate feedback system can be attained through maintenance of records, regular monitoring, and surveillance/spot checking. The feedbacks will tell the producer whether changes that need to be introduced.Melba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira
  15. 15. AGRICULTURAL MARKETING: Basic Principles and Applications SOME PROBLEMS AFFECTING AGRICULTURAL MARKETING 1. Characteristics of the product a) Perishability Delayed disposal of agricultural products would mean quality deterioration, weight loss, and eventually reduced price. The role of marketing system then is to get products to the consumers before the above actions take place. b) Seasonality When product is in season, price is low, and vice versa. Thus consumers usually pay high prices during scarcity of supply and low prices when the product is in season. Marketing certainly becomes simpler if desired products are available in the market centers with the right volume, quality, form and time.Melba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira
  16. 16. AGRICULTURAL MARKETING: Basic Principles and Applications c) Bulkiness Small farmers usually have no choice but to sell their produce to, and accept whatever price is dictated by, traditional or village traders. This is generally true due to small volume of production. In marketing, the greater the volume of produce, the stronger the bargaining power of a farmer/producer. d) Non-homogeneity When farmers sell a number of different products at small volumes, it will take time for the assemblers/traders before they can collect enough to transport. Also, they may require different marketing procedures like different buyers/outlets, different packaging, different transport requirements, different pricing procedures, and different services. These factors surely add up to their costs, which eventually cause them to lower their prices.Melba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira
  17. 17. AGRICULTURAL MARKETING: Basic Principles and Applications 2. Number of Producers. Large and scattered number of producers create problem for assemblers/traders to efficiently collect, store and transport agricultural products. 3. Characteristics of consumers. It is difficult to move with the changing demands of consumers. They usually differ in demand due to differences in income, age, taste/preferences, occupation, place of residence, religion, weather, habit because of cultural influence, change in price of substitutes, and the like.Melba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira
  18. 18. AGRICULTURAL MARKETING: Basic Principles and Applications Related Problems ON, and OF, FARMERS: 1. Production-oriented 2. Dependence on traditional traders due to small marketable surplus 3. Limited credit availability 4. Ineffective rural assembly 5. Lack of credit-marketing tie-up 6. Lack of marketing informationMelba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira
  19. 19. AGRICULTURAL MARKETING: Basic Principles and Applications 7. Inefficient marketing and postharvest practices 8. Lack of specialization 9. Lack of group action due to lack of trust and unity 10. Lack of knowledge and expertise on marketingMelba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira
  20. 20. AGRICULTURAL MARKETING: Basic Principles and Applications CONSIDERATIONS IN SELECTING PRIORITY PRODUCTS (NEW OR FOR EXPANSION) 1) Is there a demand? - whose demand and where - excess of local demand vs. supply - products brought in from outside; import substitution - suitability to local and neighboring markets - financially viable - answers needs/preferences of consumers 2) Agro-climatic condition 3) Soil/geology 4) SlopeMelba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira
  21. 21. AGRICULTURAL MARKETING: Basic Principles and Applications 5) Other physical factors: - flooding hazard; drainage; land capability; present vegetation 6) Elevation 7) Economic benefits 8) Availability of production technology 9) Availability of postharvest technology and other support facilities (if necessary) 10) Socio-cultural acceptability 11) Comparative advantageMelba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira
  22. 22. AGRICULTURAL MARKETING: Basic Principles and Applications 12) Knowledge, skills, experience, and production equipment of local producers. 13) Availability and sufficiency of planting materials and raw materials 14) Availability of technical support to assist production 15) Potential farmers’ organizations and cooperatives 16) Synergy with existing products and ecological requirements 17) Adequacy of transport facilities for product distribution 18) Operational or proposed community development plans to intensify activities and provide supportMelba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira
  23. 23. AGRICULTURAL MARKETING: Basic Principles and ApplicationsMelba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira

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