This document discusses risk and uncertainty in agricultural marketing. It identifies different types of risk farmers face, such as physical risk from accidents, pests or improper packing, as well as price risk from fluctuations in market prices. Methods to manage these risks include insurance, contract farming, forward/future contracts, and speculation or hedging. Contract farming in particular involves agreements where companies provide inputs and farmers deliver outputs. Proper management of these risks is important for the agricultural industry.

1. RISK AND UNCERTAINTY
AGRICULTURAL
MARKETING
Presented by
L. U. YAAMINI PRIYA
ID No. 2015018159
III B. Sc., Agriculture

3. (Inputmarket)(outputmarket)
AGRICULTURAL MARKETING

4. RISK AND UNCERTAINTY
UNCERTAINTY
RISK
Unknown
known

5. UNCERTAINTY

6. RISK

7. Types of Risk in Agricultural Marketing
Risk
Institutional Risk

8. Loss in the quantity and quality of the product
a) Loss due to fire accident:
i. Physical Risk

9. b) Loss due to rodents, pest and disease attack:

10. c) Loss due to improper packing:

11. 2. Price Risk
• Due to the fluctuation in the price of agricultural
products.
• The changes may be upward or downward.

12. season 1 season 2 season 3 season 4
4.2
2.5
5.5
2.8
3
3.2
1.8
4
DEMAND AND SUPPLY OF AGRICULTURAL PRODUCCTS
Demand Supply
• Due to the change in the Demand and Supply
Cond….

13. • Due to the change in the Government budget
policy.
• Due to the changes in the government rules.
3. Institutional Risk
• Due to the change in the export and import policy.

14. • Indian rupee value increases export
• Indian rupee value decreases Import
Effect of value of rupee on export and import

15. HOW TO MANAGE THIS RISK

16. 1.Physical Risk:
• Use fire proof materials in the storage structures.

17. • Use proper packing material.
• Transfer the physical losses to
insurance companies.
• Give necessary pre-storage
treatments.
Cond….

18. 2. Price Risk:
“The Farmer is the price taker; not the price
maker”
• Fixation of minimum and maximum price by the
government.
• Practice contract farming.
• Adopt forward and future contract marketing
methods.
• Follow the method of Speculation and Hedging.

19. • Agreement between the producer and processor or
buyer.
• The inputs for the production is supplied by the
buyer.
• It increases the private sector investment in
agriculture.
• Generates steady source of income.
Contract Farming:

20. • Sunguna poultry farm, Coimbatore.
• Appachi cotton company, Coimbatore.
• Pepsi foods, Gurgaon.
• United breweries, Bangalore.
Some of the private companies involved in
contract farming:
(Inputs supplied
by company)
(Farmer’s
role of rearing)
(Farmer (delivery of
the output to the
company by the farmer)

21. Forward and future contract
Forward market
• Private agreement
• Not standardized
• High chance for default
• Risk is higher
Future market
• Binding contract of
official exchange
• Standardized
• No default
• Risk is lower than the
forward market

22. IMP Speculation and Hedging
Speculation:
• Buying the product at
lower price and selling at
higher price.
• It aims at profit making.
• Long term storage
process.
Hedging:
• Buying the product in the
lower price market and
selling it in the higher
price market.
• It avoids the loss
• Short term storage
process.

23. Conclusion

24. Thank You
For Your
Active and Attentive listening