What is the scope and importance of Agricultural Marketing?
Concept and Definition:
Agriculture and marketing are the two words that make up the term agricultural marketing. Agriculture, in its broadest meaning, refers to activities aimed at maximizing the use of natural resources for human benefit, which encompasses all primary production activities. However, it is most commonly used to refer to the process of cultivating and/or rearing crops and livestock. The term “marketing” refers to a set of activities involved in getting products from point of production to point of consumption. It encompasses all activities that contribute to the development of time, place, form, and utility of ownership.
Agricultural marketing, according to Thomsen, encompasses all activities and organizations engaged in the flow of farm-produced goods, raw materials, and derivatives, such as textiles, from farms to ultimate customers, as well as the effects on farmers, middlemen, and consumers of such operations This definition excludes the input side of agriculture.
Agricultural marketing is the study of all the activities, agencies, and policies involved in farmers procuring farm inputs and agricultural products moving from farms to consumers. The agricultural marketing system serves as a conduit between the agricultural and non-agricultural sectors. It entails organizing the supply of agricultural raw materials to processing companies, determining the demand for farm inputs and raw materials, and establishing marketing policies for farm goods and inputs.
Scope and Subject Matter of Agricultural Marketing:
Agricultural marketing, in its broadest meaning, refers to the sale of farm products generated by farmers as well as agricultural inputs used in the manufacture of these farm products. As a result, the term “agricultural marketing” encompasses both product and input marketing.
The topic of output marketing dates back to the dawn of civilization. With the rising marketable surplus of crops following technological progress, the role of output marketing has grown more apparent in recent years. Farmers make goods for sale on the market. Farming becomes more focused on the market. Input marketing is a relatively recent field of study. Farmers employed farm sector inputs like local seeds and farmyard manure in the past. These inputs were readily available to them; farmers’ purchases of inputs for crop production from the market were minimal. Farm inputs, such as improved seeds, fertilizers, insecticides and pesticides, farm machinery, implements, and financing, have been increasingly important in the production of farm products in recent years. The new farming technology responds to input. Product and input marketing must be included in the scope of agricultural marketing. The topic of agricultural marketing is discussed in this book, both theoretically and practically. It describes the system, how it works, and how the offered approach or procedures can be tweaked to achieve the best results.
Marketing functions, agencies, channels, efficiency and costs, price spread and market integration, producer’s surplus, government policy and research, training, and statistics on agricultural marketing are all included within the topic of agricultural marketing.
The importance of Agricultural Marketing
Agricultural marketing is important not just for increasing productivity and consumption, but also for accelerating economic growth. Its dynamic functions play a critical role in encouraging economic growth. As a result, it’s been dubbed “the most powerful multiplier of agricultural development.”
The relevance of agricultural marketing in economic development is discussed in the following paragraphs:
Optimization of Resource use and Output Management
An effective agricultural marketing system optimizes resource utilization and output management. Reducing losses caused by inefficient processing, storage, and transportation, and an efficient marketing system can also help to enhance the marketable surplus. A well-designed marketing strategy can efficiently spread the available supply of modern inputs, allowing the agricultural business to expand more quickly.
Increase in Farm Income
By lowering the number of middlemen or limiting the commission on marketing services and the malpractices they use in the marketing of farm products, an efficient marketing system assures better levels of income for farmers. An effective system ensures farmers get higher prices for their farm products and encourages them to invest their surpluses in modern inputs to boost productivity and production. This results in an increase in the farmers’ marketed surplus and income. There is no motivation for a producer to produce more if he does not have an easily accessible market outlet where he can sell his surplus produce. As a result, offering enough incentives for higher output is critical, and this can only be accomplished through streamlining the marketing system.
Widening of Markets
A well-coordinated marketing system expands the market for products by bringing them to outlying areas both inside and outside the country, i.e., locations far from the point of production. The expansion of the market helps to maintain a steady increase in demand, ensuring a larger income for the producer.
Growth of Agro-based Industries
An enhanced and effective agricultural marketing system promotes the expansion of agro-based companies while also stimulating the economy’s general development. Agriculture is a major source of raw materials for many industries.
Farmers can plan their production in accordance with the needs of the economy with the support of an efficient marketing strategy. Price signals are used to carry out this work.
Adoption and Spread of New Technology
Farmers benefit from the marketing system because it facilitates the adoption of new scientific and technical information. New technology necessitates greater investment, and farmers will only do so if they are certain of a market.
Millions of people are employed by the marketing system in a variety of operations such as packing, transportation, storage, and processing. The marketing system employs people such as commission agents, brokers, traders, retailers, weighmen, hamals, packagers, and regulating employees. Aside from that, a number of individuals work in the marketing system, supplying goods and services.
In addition to National Income
Marketing operations increase the nation’s gross national product and net national product by adding value to the product.
The marketing system is critical to the success of development programs aimed at improving the lives of the entire population. Any economic development plan aimed at reducing agricultural poverty, lowering consumer food prices, increasing foreign exchange earnings, or minimizing economic waste must therefore give special attention to the development of effective food and agricultural marketing.
The difference in Marketing of Agricultural and Manufactured Goods:
Because of the unique aspects of the agricultural sector (demand and supply) that influence marketing, agricultural commodity marketing differs from that of manufactured commodities. Agricultural marketing has been handled as a separate discipline as a result of these qualities, which makes the subject relatively challenging. These unique characteristics of the agricultural sector have an impact on agricultural product supply and demand that is distinct from that which governs the supply and demand of manufactured goods. The agriculture industry has unique qualities that distinguish it from the manufactured sector:
Perishability of the Product:
Most farm goods are perishable by nature, although their perishability lasts anywhere from a few hours to several months. The marketing of farm products is, to a significant extent, a race against death and decay. Because of their perishability, producers find it difficult to set a reserve price for their farm-grown products. The processing function can lessen the perishability of farm products, but they cannot be made non-perishable like manufactured goods. Their supply cannot be made consistent.
Seasonality of Production:
Farm items are produced during a specific season and cannot be produced all year. Prices drop throughout the harvest season. The supply of manufactured goods, on the other hand, can be regulated or made consistent throughout the year. As a result, their prices are nearly constant throughout the year.
The bulkiness of Products:
Most farm goods have a bulky nature that makes transportation and storage difficult and expensive. This fact also limits the location of production to a location close to where the product is consumed or processed. Because of the increased shipping and storage expenses, the price spread in bulkier products is wider.
Variation in Quality of Products:
Agricultural products have a wide range of quality, making grading and standards challenging. In manufactured goods, there is no such issue because the products are of consistent quality.
Irregular Supply of Agricultural Products:
Because the agricultural output is dependent on natural conditions, the supply of agricultural products is unpredictable and irregular. The prices of agricultural products fluctuate significantly due to variable supply and nearly constant demand.
Small Size of Holdings and Scattered Production:
Farm products are produced all throughout the country, and the majority of the manufacturers are small businesses. This complicates supply forecasting and causes challenges in marketing.
The majority of farm goods must be processed before being consumed by the final customers. The price spread of agricultural commodities widens as a result of this processing function. In the market, processing companies benefit from a monopsony, oligopsony, or duopsony. This condition disincentivizes producers and may have a negative impact on production in the coming year.
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