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Significance of agricultural marketing .docx

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International Business
INTB 2200
Luming Wang

Significance of agricultural marketing The 2 basic elements of agricultural system are production and marketing. Marketing of agricultural produce is as important as production itself. As a link between producers and consumers marketing plays an important role not only in stimulating production and consumption but also in increasing the pace of economic development. Its dynamic functions are thus of primary importance in promoting economic development activities and for this reason it has been described as the most important multiplier of agricultural development. The problem of marketing agricultural produce has assumed added significance particularly after the advent of modernization in agriculture. The call to “produce more” without providing efficient marketing machinery, which can ensure fare, returns to the producer-seller. Carries no conviction with the farmer. The United Nations conference on food and agriculture held in October’ 95 at Quepec says, “Marketing is the crux of the whole food and agricultural problems”. It would be useless to increase the output of food and would be equally futile to setup optimum standards of nutrition unless means could be found to move food from the produce to the consumer at a price, which is remunerative to the producer and within the consumer’s ability to pay. The cost of marketing agricultural produce forms a substantial percentage of the price the consumer pays for it. This cost includes expenses borne by the cultivators till the assembly stage and those borne by wholesellers, distributors and retailers. The total marketing cost cannot be considered independently without relating it to the ultimate price realized by the producer. The marketing sector, infact, plays an active role under certain circumstances by changing the demand and cost functions in agriculture in such a way so as to encourage its expansion. According to the National Commission on Agriculture “Agricultural Marketing is a process which starts with a decision to produce a saleable farm commodity and it involves all aspects of market structure or system, both functional and institutional, based on technical and academic consideration and involves pre and post harvest operations assembly, grading, storage, transportation and distribution”. In Agricultural marketing we are concerned with demand and supply conditions, marketing operations including marketing functions, functionaries and cost, price fixation, market structure, conduct and performance and marketing efficiency. Fundamentally there are 3 entities involved in the marketing system they are as follows: 1. Producer 2. Consumer 3. The Middlemen Each of these entities has its own objectives, which often conflict with the others interest. The producers after making a lot of investment and putting in lot of hard work would naturally look forward to get the largest/best possible returns for his produce. The consumer on the other hand would like to get his required quantities of goods of pure quality at the least possible price. The middlemen would aim at realizing the largest possible net profits from the deal. An efficient marketing system should, therefore, aim at balancing this conflicting interest in such a way that each entity gets a fare deal. Increase production resulting in greater percentage increase in marketable surplus accompanied by increase in demand from urban population calls for a rapid improvement in the existing marketing system. It is necessary to improve the marketing system to aid the process of agricultural development for 2 reasons. Firstly, If the additional produce does not move to the market to bring additional revenue to the farmers, it may work as a disincentive to increase production. Secondly, If the system does not support supply food-grains and other agricultural commodities at reasonable prices to the consumer at the time and place needed by them, increased production has no meaning and plays no role in the welfare of society. Thus the farmer in general sell his produce at an unfavorable place at an unfavorable time and usually gets very unfavorable terms. It could be observed that inadequate credit facility to the farmer is the root cause of all defects in the agricultural marketing system in India where the poor peasants are under the firm grip of the moneylenders. The market structure in India is saddled in the long chain of middlemen between the cultivators and the ultimate consumer. These middlemen take away the Lion’s share of the price paid by the consumer and consequently the farmer-seller gets a poor price in his share. Markets for agricultural commodities may be broadly classified into 3 categories viz. 1. Wholesale 2. Retail Markets 3. Fairs There are various dimensions of markets which can be classified on the basis of the following dimensions: 1. On the basis of free intercourse or degree of competition 2. On the basis of time 3. On the basis of nature of commodities (Type of goods transacted) 4. On the basis of area of coverage 5. On the basis of location or importance 6. On the basis of nature of transaction 7. On the basis of volume of transaction 8. On the basis of no of commodities in whi
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