1. Agricultural Marketing
Agriculture (use of natural resources for human
welfare i.e. cultivation and rearing of animals)
Marketing connotes a series of activities involved in
moving the goods from point of production to point of
consumption.
Two types of marketing i.e. Input marketing(seeds,
manure, fertilizers, agricultural implements etc.) &
Product marketing (By products and/or value added
products sell in market.)
2. DEFINATION & OBJECTIVES
“Philip Kotler, has defined marketing as a human
activity directed at satisfying the needs and wants
through exchange process”.
NEED OF UNDERSTANDING BETWEEN
PRODUCER(remunerative price)
CONSUMER(reasonable price)
MIDDLE MAN & TRADERS (income)
GOVERNMENT (safe link )
3. IMPORTANCE OF AGRIL.MKT.
Optimization of resource use and output management
Increase in farm income
Widening of markets
Growth of agro based industries
Price signals
Adoption and spread of new technology
Employment creation
Addition to national income
Better living
Creation of utility
4. Differences in marketing
agricultural and manufactured
products
Perish ability of product
Seasonality of production
Bulkiness of Products
Variation in Quality of Products
Irregular Supply of Agricultural products
Small Size of Holdings and scattered Production.
Processing
5. Scope & Subject Matter
Input marketing (new subject)
Output marketing(old civilized)
Input marketing was negligible
Agricultural Technology input responsive
Scope of marketing must include both product and
input marketing.
Subject matter (market structure, system, functions,
agencies,
Channels, efficiency & costs , price spread, market
integration, producer surplus………………..
6. MARKET AND MARKET STRUCTRE
The word MARKET comes from
Latin word “marcatus” which means merchandise,
trade, or a place where business is conducted .
“Market means a social institution which performs
activities and provide facilities for exchanging
commodities between buyers and sellers.”
7. COMPONENTS OF MARKET
COMMODITY/GOOD (existence not necessary)
BUYERS AND SELLERS (existence necessary)
BUISNESS RELATIONSHIP/INTERCOURSE
AREA
(EXISTENCE OF PERFECT COMPETITION AND
UNIFORM PRICE NOT NECESSARY)
8. DIMENSIONS OF MARKET
Location of place of operation
Area of coverage
Time span
Volume of transactions
Nature of transactions
Number of commodities
Degree of competition
Nature of commodities
Stage of marketing
Extent of public intervention
Type of population served
Accrual of marketing margins
9. Classification of Markets
On the basis of LOCATION or PLACE OF
OPERATION
Village market
Primary market
Secondary wholesale market
Terminal markets
Sea board markets
10. On the basis of AREA / COVERAGE
Local and village market
Regional market
National market
World and international markets
12. Classification of Markets
On the basis of NATURE OF TRANSACTIONS
SPOT MARKET/CASH MARKET
FORARD MARKET
13. Classification of Markets
ON THE BASIS OF NO. OF COMMODITIES IN
WHICH TRANSCATIONS TAKE PLACE
GENERAL MARKETS
SPECALISIED MARKETS
14. ON THE BASIS OF DEGREE OF COMPETITION
Perfect market
Imperfect market
MONOPOLY MARKET (one seller) e.g. purchasing
electricity for irrigation
Monopsony market (one buyer)
DUPOLY MARKET (two sellers)
Duopsony market (two buyers)
OLIGOPOLY MARKET (more than two but few
sellers)
MONOPOLISTIC COMPETITION(Large no. of sellers
deal with heterogeneous and differentiated products)
e.g. insecticides, pump sets, fertilizers, and
equipments
15. Classification of Markets
ON THE BASIS OF NATURE OF COMMODITIES
COMMODITY MARKETS
CAPITAL MARKETS (money and share markets)
16. Classification of Markets
ON THE BASIS OF EXTENT OF PUBLIC
INTERVENTION
REGULATED MARKET
UNREGULATED MARKET
19. Classification of Markets
ON THE BASIS OF MARKET FUNCTIONARIES AND
ACCURAL OF MARKETING MARGINS
FARMERS MARKETS
COOPERATIVE MARKETS
GENERAL MARKETS
20. Classification of Markets
ON THE BASIS OF TIME SPAN
SHORT PERIOD MARKET
PERIODIC MARKETS
LONG PERIODIC MARKETS
SECULAR MARKETS
21. CLASSIFICATION OF MARKETS:
Markets may be classified on the basis of each of the twelve
dimensions mentioned below.
1. On the basis of Location:
On the basis of the place of location or operation, markets
are of the following types:
a) Village Markets: A market which is located in a small
village, where major transactions take place among the
buyers and sellers of a village is called a village market.
b) Primary wholesale Markets: These markets are
located in big towns near the centers of production of
agricultural commodities. In these markets, a major part of
the produce is brought for sale by the producer-farmers
themselves. Transactions in these markets usually take place
between the farmers and traders.
22. c) Secondary wholesale Markets: These
markets are located generally in district
headquarters or important trade centers or near
railway junctions. The major transactions in
commodities take place between the village traders
and wholesalers. The bulk of the arrivals in these
markets is from other markets. The produce in these
markets is handled in large quantities. There are,
therefore, specialized marketing agencies
performing different marketing functions, such as
those of commission agents, brokers, weigh men, etc.
23. Terminal Markets: A terminal market is one where
the produce is either finally disposed of to the
consumers or processors, or assembled for export.
Merchants are well organized and use modern
methods of marketing. Commodity exchanges exist
in these markets, which provide facilities, for forward
trading in specific commodities. Such markets are
located either in metropolitan cities or in sea-ports –
in Bombay, Madras, Calcutta and Delhi.
e) Seaboard Markets:Markets which are located
near the seashore and are meant mainly for the
import and/or export of goods are known as seaboard
markets. Examples of these markets in India are
Bombay, Madras, Calcutta.
24. 2. On the Basis of Area/Coverage:
On the basis of the area from which buyers and sellers
usually come for transactions, markets may be classified
into the following four classes:
a) Local or Village Markets: A market in which the
buying and selling activities are confined among the buyers
and sellers drawn from the same village or nearby villages.
The village markets exist mostly for perishable commodities
in small lots, e.g., local milk market or vegetable market.
b) Regional Markets: A market in which buyers and sellers
for a commodity are drawn from a larger area than the local
markets. Regional markets in India usually exist for food
grains.
c) National Markets: A market in which buyers and sellers
are at the national level. National markets are found for
durable goods like jute and tea.
25. d) World Market: A market in which the buyers and sellers
are drawn from the whole world. These are the biggest
markets from the area point of view. These markets exist in
the commodities which have a world-wide demand and/or
supply, such as coffee, machinery, gold, silver, etc. In recent
years many countries are moving towards a regime of liberal
international trade in agricultural products like raw cotton,
sugar, rice and wheat.
26. 3. On the Basis of Time Span:
On this basis, markets are of the following types:
a) Short-period Markets: The markets which are held only
for a few hours are called short-period markets. The
products dealt within these markets are of highly perishable
nature, such as fish, fresh vegetables, and liquid milk. In
these markets, the prices of commodities are governed
mainly by the extent of demand for, rather than by the supply
of, the commodity.
b) Long-period Markets: These markets are held for a
long period than the short-period markets. The
commodities traded in these markets are less perishable
and can be stored for some time; these are food grains and
oilseeds. The prices are governed both by the supply and
demand forces.
27. c) Secular Markets: These are markets of permanent
nature. The commodities traded in these markets are
durable in nature and can be stored for many years.
Examples are markets for machinery and
manufactured goods.
28. 4. On the Basis of Volume of Transactions:
There are two types of markets on the basis of volume of
transactions at a time.
a) Wholesale Markets: A wholesale market is one in which
commodities are bought and sold in large lots or in bulk.
Transactions in these markets take place mainly between
traders.
b) Retail Markets: A retail market is one in which
commodities are bought by and sold to the consumers as per
their requirements. Transactions in these markets take
place between retailers and consumers. The retailers
purchase in wholesale market and sell in small lots to the
consumers. These markets are very near to the consumers.
29. 5. On the Basis of Nature of Transactions:
The markets which are based on the types of transactions in
which people are engaged are of two types:
a) Spot or Cash Markets: A market in which goods are
exchanged for money immediately after the sale is called the
spot or cash market.
b) Forward Markets: A market in which the purchase and
sale of a commodity takes place at time „t‟ but the exchange
of the commodity takes place on some specified date in
future i.e., time t + 1. Sometimes even on the specified date
in the future(t+1), there may not be any exchange of the
commodity. Instead, the differences in the purchase and sale
prices are paid or taken.
30. 6. On the Basis of Number of Commodities in which
Transaction Takes place:
A market may be general or specialized on the basis of
the number of commodities in which transactions are
completed:
a) General Markets: A market in which all types of
commodities, such as food grains, oilseeds, fiber crops, gur,
etc., are bought and sold is known as general market. These
markets deal in a large number of commodities.
b) Specialized Markets: A market in which transactions
take place only in one or two commodities is known as a
specialized market. For every group of commodities,
separate markets exist. The examples are food grain markets,
vegetable markets, wool market and cotton market.
31. 7.On the Basis of Degree of Competition:
Each market can be placed on a continuous scale, starting from a
perfectly competitive point to a pure monopoly or monopsony
situation. Extreme forms are almost non-existent.
Perfect Markets: A perfect market is one in which the following
conditions hold good:
a) There is a large number of buyers and sellers;
b) All the buyers and sellers in the market have perfect knowledge of
demand, supply and prices;
c) Prices at any one time are uniform over a geographical area, plus or
minus the cost of getting supplies from surplus to deficit areas;
d) The prices are uniform at any one place over periods of time, plus or
minus the cost of storage from one period to another;
e) The prices of different forms of a product are uniform, plus or minus
the cost of converting the product from one form to another.
32. Imperfect Markets: The markets in which the conditions of
perfect competition are lacking are characterized as imperfect
markets. The following situations, each based on the degree of
imperfection, may be identified:
a) Monopoly Market: Monopoly is a market situation in which
there is only one seller of a commodity. He exercises sole control
over the quantity or price of the commodity. In this market, the
price of commodity is generally higher than in other markets.
Indian farmers operate in a monopoly market when purchasing
electricity for irrigation. When there is only one buyer of a
product the market is termed as a monopsony market.
b) Duopoly Market: A duopoly market is one which has only
two sellers of a commodity. They may mutually agree to charge a
common price which is higher than the hypothetical price in a
common market. The market situation in which there are only
two buyers of a commodity is known as the duopsony market.
33. c) Oligopoly Market: A market in which there are more
than two but still a few sellers of a commodity is termed as an
oligopoly market. A market having a few (more than two)
buyers is known as oligopsony market.
d) Monopolistic competition: When a large number
of sellers deal in heterogeneous and differentiated form of a
commodity, the situation is called monopolistic competition.
The difference is made conspicuous by different trade marks
on the product. Different prices prevail for the same
basic product.
Examples of monopolistic competition faced by farmers may
be drawn from the input markets. For example, they have to
choose between various makes of insecticides, pumpsets,
fertilizers and equipments
34. 8. On the Basis of Nature of Commodities:
On the basis of the type of goods dealt in, markets may be
classified into the following categories:
a) Commodity Markets: A market which deals in goods
and raw materials, such as wheat, barley, cotton, fertilizer,
seed, etc., are termed as commodity markets.
b) Capital Markets: The market in which bonds, shares
and securities are bought and sold are called capital markets;
for example, money markets and share markets.
35. 9. On the Basis of Stage of Marketing:
On the basis of the stage of marketing, markets may be
classified into two categories:
a) Producing Markets: Those markets which mainly
assemble the commodity for further distribution to other
markets are termed as producing markets. Such markets are
located in producing areas.
b) Consuming Markets: Markets which collect the
produce for final disposal to the consuming population are
called consumer markets. Such markets are generally located
in areas where production is inadequate, or in thickly
populated urban centres.
36. 10. On the Basis of Extent of Public Intervention:
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 business is done
in accordance with the rules and regulations framed by
the statutory market organization representing different
sections involved in markets. The marketing costs in such
markets are standardized and practices are regulated.
b) Unregulated Markets: These are the markets in which
business is conducted without any set rules and regulations.
Traders frame the rules for the conduct of the business and
run the market. These markets suffer from many ills,
ranging from unstandardised charges for marketing
functions to imperfections in the determination of prices.
37. 11. On the Basis of Type of Population Served:
On the basis of population served by a market, it can be
classified as either urban or rural market:
a) Urban Market: A market which serves mainly the
population residing in an urban area is called an urban
market. The nature and quantum of demand for
agricultural products arising from the urban population is
characterized as urban market for farm products.
b) Rural Market: The word rural market usually
refers to the demand originating from the rural
population. There is considerable difference in the nature
of embedded services required with a farm product
between urban and rural demands.
38. 12. On the Basis of Accrual of Marketing Margins:
Markets can also be classified on the basis of as to whom the
marketing margins accrue. Over the years, there has been a
considerable increase in the producers or consumers co-
operatives or other organizations handling marketing of
various products. Though private trade still handles bulk of
the trade in farm products, the co-operative marketing has
increased its share in the trade of some agricultural
commodities like milk, fertilizers, sugarcane and sugar. In
the case of marketing activities undertaken by producers or
consumers co-operatives, the marketing margins are either
negligible or shared amongst their members.
39. MARKET STRUCTURE
Size and design of market
Market operation
“market structure is the formal organization of the
functional activity of a market institution”
Traders behavior and their performance
Understanding and market knowledge
40. COMPONENTS OF MARKET ST.
Concentration of market power
Degree of product differentiation
Conditions for entry of firms in the market
Flow of market information
Degree of integration
41. DYNAMICS OF MARKET ST.
CONDUCT & PERFORMANCE
Market conduct includes (market sharing &price setting
policies ; policies aimed at coercing rivals & policies
towards setting the quality of products)
Market structure should keep pace the following changes
PRODUCTION PATTERN
DEMAND PATTERN
COSTS AND PATTERNS OF MARKETING FUNCTIONS
TECHNOLOGICAL CHANGE IN INDUSTRY
42. PRODUCER SURPLUS
The producer’s surplus is the quantity of produce
which is, or can be, made available by the farmers to
the non-farm population.
Two types:
Marketable surplus & marketed surplus
importance 1.framing sound price policies
2.development proper procurement and purchase
strategies 3.checking undue price fluctuations
4.advance estimate of the surpluses 5.development of
transport and storage systems
43. Marketable Surplus : it is that quantity of the produce
which is made available to non-farm population by a
farmer after fulfilling is requirements (family
consumption, farm needs( seeds, fertilizers , feed ,
payment to labourers etc.)
MS=P – C (MS= Marketable surplus, P= Total
production , C= total requirements)
Marketed surplus : “ it is that quantity of produce
which is the farmer actually sells in the market”.
44. Relationship between
Marketable S. & Marketed S.
Marketed surplus > marketable surplus, when farmer
retains smaller quantity of the crop than is actual
requirements (small & marginal
farmers)….forced/distress sale
Marketed surplus < marketable surplus, when farmer
retains some of the surplus produce
(large farmers…higher price , livestock feed)
Marketed surplus = marketable surplus, when farmer
neither retains more nor less than his requirement
(perishable commodities)
45. Factor affecting Marketable Surplus
Size of holding
Production
Size of family
Requirement of seed and feed
Nature of commodity
Consumption of habits
Price of commodity
46. Marketing functions
“Any single activity performed in carrying a product from
point of its production to point of ultimate consumer.”
Packaging
Transportation
Grading and Standardization
Storage and warehousing
Processing and value addition
Buying and selling
Price discovery and price determination
Market information
47. lassification of market functions
Thomnsen classified into three broad categories
Primary functions : assembling or procurement
Processing, dispersion or distribution
Secondary functions : packaging or packing,
transportation, grading, standardization, and quality
control, storage and warehousing, determination or
discovery of prices, risk taking, financing, buying and
selling, demand creation, dissemination of market
information.
48. Tertiary functions : banking, insurance,
communication (posts, telecommunication), supply of
energy – electricity.
Kohl’s and Uhl classification : (2nd type)
Physical functions : storage and warehousing, grading,
processing, transportation.
Exchange functions : buying and selling
Facilitative functions: standardization of grades,
financing, risk taking, dissemination of market
information.
49. Huegy and Mitchell classification (3rd type)
Physical movement classification : storage, packaging,
transportation, grading, distribution.
Ownership movement functions : determining need,
creating need, finding buyers and sellers, negotiation
of price, rendering advice, transferring the title to
goods.
Market management functions : formulating policies,
financing, providing organization, supervision,
accounting, securing information.
50. PACKAGING
Packing means , the wrapping and caring of goods
before they are transported (preserve and delivery).
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.
60. ADVANTAGES
Quality and quantity maintenance.
Protection (spoilage, breakage, leakage)
Compression (cotton, jute and wool)
Facilitation of handling(fruits)
Quality identification, product differentiation, branding,
and advertisement.(amul ghee, butter)
Reducing cost (marketing, retailing, handling)
Adulteration
Composition of product.
61. PACKAGING MATERIAL
Tin containers, glass containers, polythene, aluminum
foils, polyaminate pouches.
CFB (Corrugated fibre board)
Jute bags, corrugated craft paper cartons, plastics.
PVC TRAYS.
62. TRANSPORTATION
Transportation (means movement of products
between places) is one of the most important
marketing function at every stage.
It adds place utility to goods.
Trade and transport go side by side due to
urbanization.
Transport is a sine qua non (beware the consumer)
68. ADVANTAGES
Widening of the Market.
Narrowing price difference over space
Creation of employment
Facilitation of specialized farming
Transformation of the economy
Mobility of the factors of production
70. Transportation cost
The transportation costs accounts for about 50 percent
of the total cost of marketing.
Factor affecting cost of transportation
Distance,
quality of product,
mode of transportation,
condition of road
72. Problems in transportation of agril.
products
Mean of transportation (slow moving)
Poor packaging, overloading
Transportation cost (price on the basis of volume and
not its value)
Lack of coordination
Multiguage system of railways (uniguage mostly
preferred)
73. Suggestions for improvement
Full utilization of capacity of transport facility
Reduction per quintal cost of production
Packaging to prevent spoilage, damage, breakage, and
use of good wagons.
Reduction in barriers
Processing
Speed and capacity of transport.
74. GRADING AND STANDARDIZATION
Facilitates the movement of produce.
Standardization means the determination of the basic limits
on grades or the establishment of model processors and
methods of producing , handling, and selling goods and
services.
(Size, colour, appearance, texture, moisture content, staple
length, amount foreign matter, ripeness, sweetness, taste and
chemical content)
80. Inspection and quality control
Inspection involves the testing of the graded goods
with a view of determining whether they conform to
the prescribed standards.
Labelling is carried out after inspection.
This is mainly done by AGMARK
AGMARK means (Agricultural
Marketing)
Grading and marketing act, 1937.
81. Central AGMARK laboratory is suitated in
Nagpur.
Commodity specific laboratory
Spices- Mumbai
Wool- Jamnagar
Cotton- Surat, Abohar, Khandwa, Raichur
Tobacco- Guntur,
Meat- Nagpur, Mumbai,Newdelhi, Karnataka
82. Advantages of Grading
Higher price to produce.
Facilitates marketing.
Widens the market
Reduces the cost marketing.
Future trading.
Contribute market competition & pricing efficiency.
83. PRODUCER’S DIFFUCILITIES IN
GRADING
Sensory taste
Deterioration in quality
Difficult for fixing grade standards
Standards as per department
Not of uniform quality
Poor incentive
84. Grading and standardization
Food corporation of India- cereals.
NAFED- Pulses & Oilseeds.
Cotton corporation of India- Raw cotton.
Jute corporation of India- for raw jute.
(quality standards maintain by above nodal agencies.)
INTERNATIONAL ORGANIZATION FOR
STANDARDIZATION
International organization for standardization (ISO)
Codex Alimentarious Commission (CAC)
85. International organization for
standardization (ISO)
Establishment 25th February , 1947
Founder INDIA
Objective facilitate international exchange for goods
and services
ISO- 9000 series (manufacture & service industry)
86. Codex Alimentarious Commission
(CAC)
Establishment 1936
Founder FOOD AND AGRICULTURAL
ORGANIZATION(FAO) & WORLD HEALTH
ORGANIZATION(WHO)
OBJECTIVE
Consumer protection
World trade
144 members countries.
87. Storage and Warehousing
Storage is an exercise of human foresight by means of
which commodities are protected from deterioration,
and surplus supplies in times of plenty are carried over
to season of scarcity.
Storage function adds time utility.
88. Need of storage
Continuous flow of goods
Protect the quality
Fulfillment of seasonal demand
Stabilization of price
Performance of other marketing function
Improvement in quality
Price advantage
89. RISK IN STORAGE
QUANTITY LOSS
QUALITY DETERIORATION
PRICE RISK
90. STORAGE PRACTICES IN INDIA
GUNNY BAGS
EARTHEN CONTAINER
BAMBOO CONTAINER
MASONARY STUCTURE
UNDER GROUND STRUCTURE
91. Storage structures
Underground storage structure:
Dug-out structures similar to well with sides plastered
with cowdung.; lined with sand and cement.
Rajasthan (khai) foodgrains are stored.
Free from seasonal variations, temperature and
humidity.
Theft, wind, rain.
Factor of gravity.
92. Surface Storage structure:
Maintenance hygienically, convenient for inspection.
Heating up less as compare to other str.
Eg: Vertical silos, Bag storage, bulk or loose storage structure,
Kothi or mud pots, kuthla,
Thekka, gunny bags, metal drums,
93. Improved grain storage structure
For small scale structure :
PAU Bin, Pusa bin, Hapur tekka
Large storage structure :
CAP Storage (cover and plinth)
Warehouse
Silos
94. Important storage institutes
Grain storage research and training institute Hapur
(1958)
Indian grain and storage institute (IGSI)
Hyderabad, Jabalpur, Jhorat, Udaipur (1981)
Indian grain storage management research institute.
(IGMRI).
95. WAREHOUSES
Warehouses are scientific storage structures especially
constructed for the protection of the quality and quantity of
stored products.
WARESHOUSING may be defined as the assumption of
responsibility for the storage of goods . “it is called protector
of national wealth”
97. TYPES OF WAREHOUSES
On the basis of Ownership:
Private warehouses
Public warehouses
Bonded warehouses
Entrepot trade (re-export of imported trade)
98. On the basis of types of commodities stored
General warehouses
Special commodity warehouses
Refrigerated warehouses
99. Warehousing in India
(1928) Royal commission on agriculture
(1931) Central banking enquiry committee
(1944) R.B.I
(1951) All India Rural Credit Survey Committee
(1956) Agricultural produce (development and warehousing )
corporation act,
(1956) National Cooperative development and Warehousing
board.
100. Warehousing boards
National cooperative development and Warehousing
board (1st Sept. 1956)
Central warehousing corporation (CWC)
(March 18, 1963)
State Warehousing corporation
Bihar (1956)
F.C.I
COOPERATIVE SECTOR
101. CENTRAL WAREHOUSING
CORPORATION
Establish in New Delhi. (2nd of march 1963)
Seven warehouses and 7000 tonnes capacity
458 warehouses in all over country, storage capacity 78.87
tonnes
Storage facilities to 120 agricultural commodities
Food grains, sugar and fertilizers occupy 78% of total
storage capacity.
22% used by cement, chemicals, and fertilizers.
Air conditioned go downs in Kolkata, Mumbai, New Delhi.
cold storage facilities in HYDERABAD (Preserve the
hygroscopic and fragile commodities)
Jaggery preservence in hot and rainy seasons.
102. CENTRAL WAREHOUSING
CORPORATION
TECHNIQUES developed for storage and preservence
of spices and condiments.
Custom bonded warehouses (import and export)
(AHMADABAD, BARODA, BHOPAL, COCHIN,
DELHI, ERNAKULUM, KANDLA, KOLKATA,
LUDHIANA, AND MUMBAI) storage, handling and
import cargo at international airport at palam.(N.D.)
OTHER FACILITIES LIKE………..
Transport, insurance, standardization,
documentation, inspection and clearance.
103. State warehousing corporation
First state warehouse set up in BIHAR 1956.
1440 WAREHOUSES with total capacity of 131.38
tonnes .
Control under CWC
CONSTRUCTION of go downs in district places .
Funded by state government.
104. Warehousing in India
(1957) Central Warehousing board
(1958) State Warehousing board
(1962) breakage of act
National cooperative development corporation act
Warehousing corporation act
18th march 1962 Warehousing corporation act came
into existence.
105. Working of warehouses
Acts :
Eligibility:
Warehouse receipt(warrant) :
Use of chemicals:
Financing:
Delivery of produce:
106. UTILIZATION OF WAREHOUSING
CAPACITY
Main reasons of low utilization:
Lack of knowledge
Locational disadvantages
Complicated and time consuming procedure
Non-existence of nationalized banks
Small quantity of surplus produce
107. Slow progress of warehouses in
India
Small land owners
Monsoon dependent (lack of regular business)
Perishable products
Heterogeneous products; grading required which is
not present in all markets.
Location in urban centres
Cost of warehousing
108. Suggestions
Network of rural storage structures
Management by panchayats, cooperatives
Storage capacity (100- 250) tonnes
Cost of construction (50% subsidy,(35% C.G. & 15%
S.G.) 50% bank loan)
Technical guidance, supervision, and assistance.
Scheme of rural storage structure.
109. Rural godowns & Cold storage
structures
National grid of rural godowns (1979)
Marginal farmers facility
Prevention of distress sale
Reduction in quantity and quality losses
Reduction of pressure on transport system
Creation of employment opportunities
110. Cold storage structures
Perishable commodities
-1.1°C to 10°C(30° to 50° F)
Widening the market
Price stabilization
Comfort
First cold storage in Kolkata (1952)
OBJECTIVES :
Ensure hygienic and proper refrigeration conditions
Regulate growth of cold storage industry
Technical guidance, and safeguard interests of farmers
111. Processing and Value Addition
7% is actually value addition done in India as compare
to 23% in U.S.A
PROCESSING means to change the basic form of
product into value added one.
Food processing & Agro-related processing.
112. Advantages
Changes raw food into edible form
Convenience for transport
Generates employment
Widens the market
Processing mostly in commercial crops than in food
grains
Serve commodity in every season e.g. Mango pulp,
juice, squash etc.
113. BUYING AND SELLING
Possession utility
The buying activity involves the purchase of right
goods at the right time, at right place, at right
quantities, at right price.
Subsidiary functions in Buying
Planning and purchase of goods
Contractual functions
Negotiation of price and terms and conditions of
buying
Final agreement and transfer of goods.
114. SELLING ACTIVITY
The selling activity involves personal or impersonal
assistance to or persuasion of a prospective buyer to
buy a commodity.
Subsidiary functions of selling activity
Product planning and development
Contractual functions
Demand creation
Negotiating the prices and selling the terms and
conditions of sale with the buyers.
115. Methods of buying and selling
Under cover of a cloth (Hatha System)
Private negotiations
Quotations on samples taken by commission agents
Dara sale method
Moghum sale method
OPEN AUCTION METHOD
Phar system of auction method
Random system of auction method
Roster bid system of auction method
116. DEMAND CREATION
Sub function of the selling function in marketing of
product
Special efforts that are made to stimulate the desire
goods to sale at profit.
Personal Solicitation by salesman
Advertisement
Display of goods in stores
Arrangement of trade fairs
Distribution of free samples
Facilities (discount, sale, …)
117. PRICE DISCOVERY AND PRICE
DETERMINATION
“Evaluating demand and supply condition regarding
general level of prices”
“The price of specific lot of the commodity relative to
the general price level”
CHARACTERISTICS OF PRICE DISCOVERED
Distribution of product
Incentive of producer
Ensure in business
120. Market information function
Market information may be defined as communication
of knowledge or intelligence.
Market information on price, supplies, demand, and
other market conditions.
Lifeblood of market.
IMPORTANCE
Farmer/producer
Market Middleman
General economy
Government
121. Types of market information
Market intelligence
Market news
Criteria for good market information
Complete comprehensive
Accuracy
Relevance
Confidentially
Trustworthiness
Timelines
Easy accessibility
122. Suggestions for improvement in
market information
System of quoting prices
Price announcement
Display of price on notice board
Trained staff
Remove rumours
Fresh news
Correct interpretation
Proper coordination
Price range
Educational programmes
123. MARKET INTELLIGENCE IN INDIA
Government organizations (plan and policies)
137 agricultural commodities and 1300 markets
Farmer requires (for adjustment of cropping pattern)
Trader ……………(competitive sale and purchases)
Consumer ……….(understand market force to purchase
produce)
Researcher ……….(to asses the efficiency of the
marketing system)
124. FINANCING FUNCTION
Acquisition and utilization of fund for performing
Various marketing activities is known as financing function.
FACTORS AFFECTING CAPITAL REQUIREMENT FOR
MARKETING
Nature of business
Large stock
Continuity of business
Time span between production and sale
Terms of payment
Risk taking capacity
General conditions in economy.
125. Types of marketing finance
Working capital
Fixed capital
ROLE OF NABARD IN AGRIL. MKTNG. FINANCE
Marketing of produce
Construction of godowns
Construction of market yards
Mean of transportation
Far processing units
126. RISK TAKING FUNCTION
Risk in marketing may be defined as uncertainty in
regard to cost, loss, or damage.
Marketing risk may defined as the danger of loss from
unforeseeable circumstances in future.
risk in theft, fire, destruction, deterioration of quality,
loss in storage and transportation.
Fluctuations in prices , personal disibalilities ( illness
& injury).
127. Types of risks in marketing
PHYSICAL RISK
PRICE RISK
Minimization of risks
Reduction in physical loss
Transfer of risks to insurance companies
Minimization of price risk
Operation of speculation and hedging
Future trading
128. Marketing costs, margin, and price
policy.
The sum of costs incurred by producer as well as all
intermediaries in a particular channel is known as marketing
cost.
Factors affecting the cost of marketing
Volume of the product
Bulkiness of product
Extent of grading
Extent of packaging
Necessity of storage
Demand creation
Extent of loss in storage and transportation
Perishability of product
Extent of risk
Facilities by dealer to consumer
129. Marketing margin
The sum of the profits earned by the intermediaries or
middleman to remain in the trade after meeting the cost of
marketing is known as marketing margin.
Concurrent margin refers to the difference between the
farmer’s selling price and retail price on a specific date.
Lagged margin refers to the difference between the price
received by a seller at a particular stage of marketing and
the price paid by him at the preceding stage of marketing
during an earlier period.
130. Lagged margin takes into account the time that elapse
between the purchase and sale by a party.
Price spread : it is the difference between price paid by
consumer and the net price received by the producer.
It is the sum of marketing cost and marketing margin.
Smaller the price spread, the greater the efficiency of
marketing system.
131. MARKET INTEGRATION
KOLHS AND UHL’S define marketing integration as a
process which refers to the expansion of firms by
consolidating additional marketing function and
activities under a single management.
TYPES OF MARKETING INTEGRATION
Horizontal integration : this type of integration is
among marketing agencies in order to perform similar
marketing function eg; dairy, poultry.
Vertical integration : when the firm performs more
than one activity in the sequence of the marketing
process. Eg; dairy and dairy by products.
132. Conglomeration : a combination of agencies or activities
or activities which are not directly related to each other
may be termed a conglomeration.
Eg; agribusiness has food grain trade, fruit processing
fruit unit, cloth mill, and manufacture of vanaspati.
MEASUREMENT OF INTEGRATION
Integration among firms of a market.
Integration among specially separated markets.
133. MARKETING FUNCTION
It is the ratio market output satisfaction to marketing
input (cost of resource)
Movement of produce from producer to consumer at
lowest cost with provision of desired services by the
consumer may be termed as efficient marketing.
ASSESSMENT OF MARKETING EFFICIENCY
Conventional method : the efficiency of any activity is
defined as the ratio of output to input.
E = O/I * 100
134. ASSESSMENT OF MARKETING
EFFICIENCY
Shepherd’s method : marketing efficiency is the ratio
of the total value of a commodity marketed to the
marketing cost.
Acharya’s method :
MME = FP/ (MC + MM)
MME : measure of marketing efficiency
FP : net price received by the farmer.
MC : Marketing cost.
MM : Marketing margin.
136. GENERAL AGREEMENT ON TRADE
AND TRAIFF (GATT)
Multinational treaty to liberalize world trade.
117 members – Uruguay round, negotiations-
Marrakesh, Morocco (15th April, 1994).
GATT Administrative structure lead to formation of
WTO (World trade organization)
International trade rules (agriculture, textiles, and
clothing)
Trade related investment measures (TRIM’S) & Trade
related intellectual property rights (TRIPS).
137. World trade organization (WTO)
INTERNATIONAL BODY to supervise and encourage
international trade.
Functioning from 1st January 1995.
Agreement on agricultural (AOA) under WTO
Market Access Commitment.
Reduction Commitment for Aggregate Measure of
Support (AMS)
Sanitary and Phyto-Sanitary Measures(SPS)
Trade Related Intellectual Property Rights (TRIPS)
138. TERMS RELATED TO
INTERNATIONAL TRADE
TRAIFF : Tariff is a duty in the form of tax on
imports.
Quantitative restriction (QR) : LIMIT on the quantity
to import and export.
Quota: trade barrier
Dumping : selling of goods at less than the long run
average cost of production plus transportation cost.
Anti-dumping : measure to rectify the station arising
of the dumping of good and its trade distortive effect.
139. Amber box policies : are related to trade distorting and
are covered under reduction commitment of WTO.
Blue box policies : refer to direct payments to producers
like decoupled income supports, payments not linked to
production. This relate to safety to income and not to
either the level of production or to prices.
Green box policies : are domestic support policies that
are not subject to reduction commitments under the
agreement on agriculture (AOA) under WTO.
TRIPS Agreement : seven categories of intellectual
properties (copy rights and related right trade marks,
geographical indications, industrial design, integrated
circuits, trade secrets and patents).
140. COOPERATIVE MARKETING
Marketing cooperatives may collect products of their
members for sale, grade, package and perform other
function.
Producer’s milk association is the example of
cooperative acting as marketing agent.
A cooperative sales association is a voluntary business
organization established by its member patrons to
market farm products collectively for their direct
benefit.
Objective : provide savings for the farmer on
purchases.
141. Functions of coop. marketing.
Selling of agricultural products
Minimization of marketing cost
Credit facilities
Storage facilities
Grading facilities
Better bargaining power
Procurement of food grains
Export of agricultural producers
Transporting of agricultural produces
Input supply to farmers
142. Types of cooperative marketing
Single commodity cooperative marketing
Sugarcane /oilseed cooperative processing mill
Multi-commodity cooperative marketing
Food grains, oilseeds, and cotton.
Multi-purpose cooperative marketing
PDS, Fertilizer/seed/agricultural. implements with
Fulfillment of farm credit and essential inputs.
143. Structure of cooperative marketing
Local association: PACS, Dairy cooperative.
Regional association: district level
Multi commodity exchange
Primary marketing cooperative society.(4398)
State level association: state level
27 state level marketing federation
199 regional cooperative marketing associations
NAFED (National agricultural cooperative marketing
federation of india)
144. NAFED(National agricultural
cooperative marketing federation)
Procurement, processing, distribution, export
commodities of agricultural commodities.
Establishment October 1958
Membership PMACS turn over >20 lakhs in advance
states & >10 lakhs in backward states.
31 branches
Head office NEW DELHI.
145. OBJECTIVES OF NAFED
Coordinate and promote the marketing activities
Purchase, sale, and supply (agricultural goods)
Promotion of interstate, international trade
Own and construct godowns
Act as agent in purchase sale storage and distribution of specialized
products.
Insurance agent
Consultancy
Manufacture of agricultural machinery, implements, processing and
marketing.
Transport with collaboration with other marketing function.
Marketing research and marketing intelligence dissemination.
Subscribe share capital of other cooperatives
Advance loans
Training.
146. MANAGEMENT OF NAFED
BOARD OF DIRECTORIES(Representatives)
1 (STATE), 2 (NCDC) , 3 (GOI) – (RBI, SBI, STC,
National cooperative of India and Bharat krishik samaj )
Chairman and Managing director
2 Standing committee ( executive & business)
147. Operations or activities of the
NAFED
Price support operations
Internal trade
Foreign trade
Marketing of agricultural inputs
Promotional activities
Tribal produce marketing activity
Setting of scientific storage system
Processing of fruits and vegetables.
148. STATE TRADING CORPORATION OF
INDIA
Premier international trading house owned by
government of India.
Establishment 1956
Import & Export of all manufactured and agricultural
products.
2010-2011 annual turn over 2456 cr0re with net profit of
Rs. 89 crore.
Trade all the countries of the world.
149. Objectives of STC
Supply of essential commodities to consumers at reasonable
prices.
Firm price (incentive to increase the production)
Effect exports and imports ; increased bargaining power.
Obtain advantage of bulk of transactions.
Implementation of trade agreements and barter deals.
Minimization of price fluctuations (variation in demand and
supply)
Arrangements of inputs dissemination
To undertake the procurement and maintenance of buffer stock.
Arrangement of storage, processing, and packaging.
To check hoarding and black marketing.
150. TYPES OF STATE TRADING
Partial state trading : private traders & government
Restriction on traders ( related to declaration of
stocks, limits of stocks, and submission of regular
accounts.)
Government - purchase commodities - procurement
price.
Distribution of commodities – fair price shops.
Safeguards the interest of producers and consumers.
Check the undesirable activities of traders.
151. Types of state trading
Complete state trading : trading adopted when partial
trading fails.
Private traders are not allowed to enter the market
Government is the purchaser and distribution of
commodities.
Requires huge finance and consumption centres.
example black marketing of pulses and kerosene.
152. BOARD OF DIRECTORS
Chairman and managing director
Four functional directors.
Government nominee and executive directors of CII
Non-official directors (two)
Nine branch offices
(MUMBAI, CHENNAI, BANGLAROE, JALANDER,
GANDHIDHAM, KOLKATA, AHEMEDABAD,
HYDERABAD, AND AGRA)
Four sub branches (COCHIN, GUNTUR, RAIPUR,
JAIPUR)
153. FOOD CORPORATION OF INDIA
Set up under food corporation act 1964,
Fulfill price support to farmers, distribution of food grains
to consumers and maintaining buffer stock.
Handling food grain trade and its distribution to each
section society.
Establish on Janurary 1 , 1965.
Unrivalled food marketing agency.
Its market operations prevent the speculative traders and
provide the remunerative prices for agricultural produces.
Ensures prompt and uninterrupted supply of food grains.
154. FOOD CORPORATION INDIA
FOOD SECURITY SYSTEM
Board of directors (chairman & M.D.)
3 directors of C.G. (ministers related to food,
finance, and cooperation)
six other directors
155. FUNCTIONS OF FCI
PROCUREMENT OF FOOD GRAINS AT INCENTIVE
PRICES
Release of stock timely through PDS. No rise in
consumer price.
To minimize seasonal price fluctuations and
interregional price variations in agricultural
commodities. (purchase and distribution network)
To build up buffer stock of food grains to meet short
falls in internal procurement and imports.
156. GROWTH AND STRUCTURE OF FCI
FIVE MAJOR ZONES
EACH ZONE OFFICE HAS REGIONAL OFFICES .
REGIONAL OFFICE IN EVERY DISTRICT.
Corporation in all have 5 zonal offices, 19 regional
offices, 4 sub regional offices, 4 offices of joint
managers, 173 district offices and thousands of
operating points for distribution and purchase.
157. PROGRESS OF FCI
PROGRESS OF PROCUREMENT
Public procurement agencies
Price Support operations of cereals
Distress sale
Cereals and pulses distribution in defense services.
PROGRESS OF STORAGE
Food grains are stored in production and consumption centre's.
Prevent storage loss (from 10% to 1%)
Constructed 28.30 million tonnes storage capacity of silos, and
CAP., 138 CONTROL LABORATORIES
158. Progress of FCI
PROGRESS IN TRANSPORATION
Railways 80% and 20% roads.
20 million tonnes transported per annum.
Progress in imports
speedy dispatch to various destinations to avoid congestion
at he ports and to augment supplies to PDS
Progress in distribution
DISTRIBUTION OF PROCURED AND IMPORTED FOOD
GRAINS. (4.91 LAKH FAIR SHOPS IN INDIA)
159. Progress in FCI
PROGRESS IN PROCESSING
24 modern rice mills (obtain rice and oil )
Paddy processing unit at Tiruverur in T.N.
Sembanarkoil (T.N.)---- rice barn
Ujjain (M.P.)----Solvent extraction plant – gr. Nut.
Faridabad (Haryana) ---maize mill.
Luck now (U.P.) – DAL MILL
PROGRESS IN CONSULTANCY.
160. Quality control of agricultural
products and manufactured
products.
Directorate of marketing and inspection(DMI), 1935.
PRODUCT GRADE --- AGMARK---Agricultural produce
act 1937.
Grading and standardization cell.
120-165 graded agricultural products.
MANUFACTURED PRODUCTS
Indian standards institution act 1952.
Indian standard institution ( ISI), 1947.
REDUCING COST AND MASS PRODUCTION POSSIBLE.
161. ISI (Indian standard institution)
Prepare standards for products, commodities, and
material for national and international basis.
Survey and training for companies for standardization.
Nine divisional councils: (agriculture, chemical, civil
engineering, consumer products, electro technical and
metals, textile, cargo movements, marine products and
packaging.)
Memberships of 24ooo experts.
Central laboratory (N.D.)
162. ISI (Indian standard institution)
Regional laboratories (Mumbai, Kolkata, Chennai)
Investigation , evaluation AND standardization work.
163. BUREAU OF INDIAN STANDARDS
(BIS)
Rename of Indian standard institution.
Establish April, 1987.
Consumer protection, improvising the quality of
agricultural products and inspection activities in the
country.
17000 Indian Standards in different sectors.
Special efforts in rural development by formulating 2000
standards in fertilizers, pesticides, agricultural
implements etc.
Adopted ISI/ISO 9000 series of standards.
Started ISO 140001 EMS Certification.
Undertaking HACCP CERTIFICATION
WORK AS CENTRAL ENQUIRY POINT FOR W.T.O
164. QUALITY MANAGEMENT IN FOOD
ADOPTION OF HACCP:
(Hazard Analysis and critical control point)
Internationally recognized auditing method.
Focuses on chemical, physical and microbial standards
(Food processing, fruits, vegetables, grains, milk, fish,
meat, poultry, soft drinks and alcoholic beverages.)
One of the largest sector in terms of production,
consumption and employment generation.
Modern concept of quality management of food items.
165. HACCP AND CODEX
International food safety standards are developing by
the CODEX (Codex Alimentaries Commission)
Acceptable as per W.T.O
FUTURE STANDARDS FOR FOOD ITEMS FROM
RAW STAGE TO CONSUMER STAGE.
ECOMARK : IT IS A SCHEME WHICH WAS
LAUNCHED IN 1991
Administered by BIS.
PROVIDES labelling of household and other consumer
products.
166. HACCP AND CODEX
FOOD ADULTERATION ACT, 1955 amended on
June 2002,
VEGETARIAN PRODUCTS
NON VEGETRAIN PRODUCTS
167. MARK OF FPO
MINISTRY OF FOOD PROCESSING INDUSTRIES OF
GOVERNMENT OF INDIA,
MARKED “ “ CIRCLE HAVING
HANGING STRIPS HAVING INVERTED
“V” SHAPED.
168. AGRICULTURAL PRICE POLICY
EQILIBRIUM PRICE.
The aim of agricultural price policy is the intervention
in the agricultural produce markets to influence the
price levels.
Positive role in increase agricultural production.
Agriculture Price Commission (APC) Janurary, 1965.
Renamed as Commission on Agricultural Costs and
Prices (CACP). 1985.
FRAME WORK OF PRICE POLICIES.
169. NEED OF AGRIL. POLICY
Safeguard farmers interest and giving incentives for
production (PDS DEVELOPMENT)
Price fluctuation (SEASONAL AGRIL. PRODUCTS)
TERMS OF TRADE
STABILIZATION OF PRICES
170. OBJECTIVES OF AGRIL. POLICY
Price stability without affecting income of farmers.
Minimum price support commission
Protect interests of consumers
Reasonable relationship between agril. products and
manufactured products.
Maintain appropriate relationship between
competiting crops.
Providing favourable climatic conditions to enhance
agril. Production.
171. TYPES OF PRICES
ADMINISTERED PRICES : Prices decided by market
operations carried out by (NAFED, CCI, JCI ).
Includes minimum support prices for 23 commodities
(seven cereals (rice, wheat, jowar, bajra,……)
Four pulses ( red gram, green gram,…..)
Eight oilseeds(SOYBEAN, GROUNDNUT… )
Copra, jute, raw cotton, raw jute, and tobacco.
172. TYPES OF PRICES
Minimum support prices (MSP) :
FIXED BY CONSIDERING AVERAGE COST OF
PRODUCTION OF CROPS.
Protection from market glut conditions.
Announced at every season (kharif, rabi and summer)
MSP IS ALWAYS LOWER THAN MARKET PRICE.
173. TYPES OF PRICES
PROCUREMENT PRICE :
It is the price at which the government procures
commodities from farmers and processors to feed PDS.
COMPULSORY SELL TO GOVERNMENT AT
PROCURE PRICE.
IMPLEMENTED TO maintain buffer stock.
Procurement prices are generally higher than the MSP
but lower than the market price.
174. Types of prices ……
Issue price : it is the price at which the commodities
are made available to the consumer at the fair price
shops.
Issue price is always higher than procurement price
Ceiling price : it is the upper price level of a
commodity fixed by the government to protect the
consumers from unwarranted price rise.
175. TYPES OF PRICES
LEVY PRICE : Levy price can be imposed to both
farmers and traders
It is a procurement system , which makes it obligatory
for the farmers and traders to sell a special quantity to
government.
