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
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:
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
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
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