Classification and characteristics of agriculture markets

1. Agricultural Marketing, Trade and Prices
Ag.Econ 4.3 (2+1)
College Of Agriculture
Anand Agricultureal University
Jabugam - 391155
Submitted to :
Dr. M T Khorajiya Sir.
Submitted By :
Bhoya Jainil
3010320004
Classification and Characteristics of Agriculture markets

2. MARKET CLASSIFICATION
MARKET : A market is the areas within which the forces of demand
and supply converge to establish a single price.
The term market means not a particular market place in which things
are bought and sold but the whole of any region in which buyers and
sellers are in such a free intercourse with one another that the prices of
the same goods tend to equality, easily and quickly.

3. Classification of Markets
1. Location or place of operation
2. Area or coverage
3. Time span
4. Volume of transactions
5. Nature of transations
6. Number of commodities
7. Degree of competition
8. Nature of commodities
9. Stage of marketing
10.Extent of public intervention
11.Types of population served
12.Market functionaries and accrual of marketing margins

4. 1. On the basis of location or Place of Operation
A. Village Markets:
A village market is a market located in a small hamlet where large transactions take place
between the village’s buyers and sellers.
B. Primary wholesale Markets:
These markets are located in large cities near agricultural commodity production centers.
The producer-farmers themselves bring a large portion of the product to these markets for
sale. Farmers and dealers are the most common participants in these markets.
C. Secondary wholesale Markets:
These markets are usually found around railway crossroads, district offices, or key trading
centers. The main commodity transactions take place between local traders and
wholesalers. Other markets account for the majority of the arrivals in these markets.

5. D. Terminal Markets:
A terminal market is one where the product is either sold to customers or processed for
export, or it is assembled for export. Merchants are well-organized and employ
sophisticated marketing techniques. These markets have commodity exchanges that provide
opportunities for forwarding trading in certain commodities. Markets like these can be
found in either metropolitan centers or seaports, such as Bombay, Madras, Calcutta, and
Delhi.
E. Seaboard Markets:
Seaboard markets are those that are located near the seashore and are mostly used for the
import and/or export of commodities. Bombay, Madras, and Calcutta are examples of these
markets in India.

6. Markets can be grouped into four categories based on the area from where buyers
and sellers often come for transactions
A. Local or Village Markets:
A market where purchasing and selling activities are restricted to buyers and sellers
from the same village or surrounding communities. Village markets are mostly for
perishable goods in small quantities, such as local milk or vegetables.
B. Regional Markets:
A market for a commodity that draws buyers and sellers from a wider area than local
marketplaces. Food grains are mainly sold in regional markets in Bangladesh.
2. On the Basis of Area/Coverage

7. C. National Markets:
A market where buyers and sellers are based on a nationwide scale. Durable
commodities such as jute and tea have national markets.
D. World Market:
A market where buyers and sellers come from all over the world. From a geographical
standpoint, these are the most important markets. These markets exist in commodities
with global demand and/or supply, such as coffee, machinery, gold, silver, and other
precious metals. Many countries have been moving toward a regime of open
international commerce in agricultural products such as raw cotton, sugar, rice, and
wheat in recent years.

8. Markets can be classified into the following categories based on their time span.
A. Short-period Markets:
Short-period markets are those that last only a few hours. These marketplaces trade in very
perishable items like seafood, fresh vegetables, and liquid milk.
B. Long-period Markets:
Unlike short-term markets, these markets are held for a longer period of time. Foodgrains and
oilseeds are among the commodities sold in these marketplaces since they are less perishable
and may be stored for a long time.
C. Secular Markets:
These are markets that are always open. The commodities exchanged in these markets are
long-lasting and can be kept for a long time. Markets for machinery and manufactured goods
are two examples.
3. On the Basis of Time Span

9. There are two types of markets on the basis of volume of transactions at a time.
A. Wholesale Markets:
Commodities are bought and sold in huge lots or in bulk on a wholesale market. The
majority of transactions in these markets are between dealers.
B. Retail Markets:
A retail market is one where people buy and sell goods based on their needs. In these
markets, transactions take happen between retailers and consumers. Retailers buy in bulk
from wholesalers and sell to customers in small batches. These markets are in close
proximity to the customers.
4. On the Basis of Volumes of Transactions

10. The markets which are based on the types of transactions in which people are engaged are
of two types:
A. Spot or Cash Markets:
The spot or cash market is a market where goods are traded for money immediately after
the transaction.
B. Forward Markets:
A market in which the purchase and sale of a commodity occur at a time ‘t,’ but the
exchange of the commodity occurs at a future date, i.e., time t + 1. It is possible that the
commodity will not be exchanged even on the given date in the future(t+1).
5. On the Basis of Nature of Transactions

11. A market may be general or specialized on the basis of the number of commodities in which
transactions are completed:
A. General Markets:
The general market is a market where all types of commodities are bought and sold, such as
food grains, oilseeds, fiber crops, gur, and so on. These markets deal in a wide range of
products.
B. Specialized Markets:
A specialized market is one in which transactions are limited to only one or two goods.
There are distinct markets for each type of commodity. Food grain markets, vegetable
markets, wool markets, and cotton markets are all examples
6. On the Basis of Number of Commodities in which
Transaction Takes Place

12. Each market can be categorized on a continuous scale ranging from perfectly competitive
and imperfect competitive market :
A. Perfect Market:
The presence of a large number of enterprises and homogeneous and similar products are
two fundamental aspects of perfect competition. Because of this, the customer has no
reason to demonstrate a preference for one company over another. There is no restriction on
entering or exiting the sector or market. Finally, both buyers and producers have complete
market knowledge.
B. Imperfect Markets:
Imperfect markets are defined as those in which perfect competition does not exist. The
following scenarios can be defined, each based on the degree of imperfection:
7. On the Basis of Degree of Competition

13. 1. Monopoly Market:
A market arrangement in which there is only one vendor of a commodity is known as a
monopoly. He has complete control over the commodity’s quantity and pricing. The price
of a commodity in this market is often higher than in other markets. When it comes to
purchasing power for irrigation, Indian farmers are in a monopoly market. A monopsony
market is one in which there is just one buyer of a product.
2. Duopoly Market:
A duopoly market is one in which there are only two commodity sellers. They may jointly
agree to charge a common price that is higher than the hypothetical market price. The
duopsony market refers to a situation in which there are only two buyers of a commodity.

14. 3. Oligopoly Market:
An oligopoly market is one in which there are more than two but still a few sellers of a
commodity. Oligopsony market is a market with a few (more than two) buyers.
4. Monopolistic competition:
Monopolistic competition occurs when a large number of vendors trade in a heterogeneous
and differentiated form of a commodity. Different trade markings on the product draw
attention to the difference. For the same basic product, different prices are prevalent. Input
markets are a good example of monopolistic competition that farmers confront. They must,
for example, pick between several brands of insecticides, pump sets, fertilizers, and
equipment.

15. On the basis of the type of goods dealt in, market may be classified into the following :
A. Commodity Markets:
Commodity markets trade goods and raw materials such as wheat, barley, cotton,
fertilizer, seed, and other agricultural products.
B. Capital Markets:
Capital markets, such as money markets and stock markets, are markets where bonds,
shares, and securities are purchased and sold.
8. On the Basis of Nature of Commodities

16. On the basis of the stage of marketing, markets may be classified into two categories:
A. Producing Markets:
Producing markets are those that primarily assemble the commodity for subsequent sale to
other markets. These markets are found in areas where goods are produced.
B. Consuming Markets:
Consumer markets are markets that collect produce for final distribution to the general
public. These markets are typically found in areas when production is insufficient or in
densely populated urban areas.
9. On the Basis of Stage of Marketing

17. Based on the extent of public intervention, markets may be placed in any one of the
following two classes:
A. Regulated Markets:
Markets in which transactions are conducted in accordance with the rules and regulations
set forth by a statutory market organization representing various market segments. In such
marketplaces, marketing expenditures are standardized, and practices are regulated.
B. Unregulated Markets:
These are the markets where there are no fixed rules or restrictions for doing business.
Traders set the rules for how the company is conducted and runs the market. There are
numerous flaws in these markets, ranging from unstandardized costs for marketing tasks.
10. On the Basis of Stage of Marketing

18. On the basis of population served by a market, it can be classified as either urban or rural
market.
A. Urban Market:
An urban market is a market that caters mostly to those who live in urban areas. The
nature and volume of agricultural product demand generated by the urban population are
referred to as the urban market for farm products.
B. Rural Market:
The term “rural market” usually refers to the demand generated by people living in rural
areas. The form of embedded services required with a farm product differs significantly
between urban and rural demands.
11. On the Basis of Type of Population Served

19. Markets can also be segmented based on who receives the marketing margins.
There has been a significant increase in the number of producers or consumers co-
operatives or other organizations that handle product marketing over the years.
Though private commerce still handles the majority of farm product trade, co-
operative marketing has grown in its proportion of some agricultural commodities
such as milk, fertilizers, sugarcane, and sugar.
Marketing margins are either negligible or divided among members of producer or
consumer cooperatives when they engage in marketing activities.
12. On the Basis of Market Functionaries and
Accrual of Marketing Margins

20. CHARACTERISTICS OF AGRICULTURAL MARKET
1. Seasonality of Agricultural production: Over the length and breadth of the country
agricultural production is subjected to change based on rainfall distribution and
availability of irrigation facilities.
2. Perishability of the product: Most of the farm products are perishable in nature; but the
period of their Perishability varies from a few hours to a few months. Their Perishability
makes it almost impossible for producers to fix the reserve price for their farm products.
The supply of agricultural products is irregular; the prices of the crop therefore fluctuate
both during the year and from year to year.
3. Bulkiness of Agricultural Products: It adds to the transportation, storage and labour
costs. The price spread is very high when the products are bulky in nature.

21. 4. Quality of Products: There is a large variation in the quality of agricultural products
such as size, color, freshness, maturity, appearance, smell etc. which makes their grading
and standardization somewhat difficult.
5. Irregular Supply of Agricultural Commodities: Due to seasonality of Agricultural
products, supply is subject to fluctuations over space and time.
6. Small Size of Holding and Scattered Production: Most of the producers are small in size
which makes the estimation of supply difficult and creates problems in marketing.
7. Processing: Most of the farm products have to be processed before their consumption
by the consumers. This processing function increases the price spread of agricultural
commodities.