Agricultural Marketing and Food Security

1. Meaning of Agricultural Marketing

• Agricultural marketing is the process of transferring goods from where they are produced to where they are consumed.¹
   
• A market is a place or situation where buyers and sellers interact to exchange goods and services (e.g., trading centers, shops, online).²
   

2. Importance of Agricultural Marketing

Agricultural marketing is crucial because it:

• Generates income for farmers.³
   
• Enables farmers to sell their produce.
• Distributes goods and services to the public.
• Creates employment in related sectors (transport, advertising).
• Determines commodity prices.
• Adds value to products through processing.
• Encourages farmers to produce high-quality goods.
• Provides government revenue through taxes.
• Boosts foreign exchange through exports.

3. Principles of Demand and Supply

Market forces (interaction of demand and supply) determine prices.⁴

• Demand: The quantity of goods consumers are ready and able to buy at a given price and time.⁵

   

   

  • Factors influencing demand: Price of related goods (substitutes), population size, consumer income levels, taste and preference, price expectations, government policy (taxes/subsidies), and advertisements.
  • Relationship with Price: Inverse – as price increases, quantity demanded decreases; as price decreases, quantity demanded increases.⁶
     

• Supply: The quantity of goods sellers are willing to sell at a given price and time.⁷

   

   

  • Factors influencing supply: Number of sellers, price of related goods, production techniques, seasonal weather, price expectations, and government policy (quotas/taxes).
  • Relationship with Price: Direct – as price increases, quantity supplied increases; as price decreases, quantity supplied decreases.⁸
     

• Price Determination:

  • When supply is low, demand is high, leading to higher prices.
  • When supply is high, demand is low, leading to lower prices.
  • The equilibrium point is where quantity demanded equals quantity supplied, and the corresponding price is the market price.⁹
     

4. Marketing Functions

These are all activities involved in moving a product from producer to consumer.

A. Exchange Functions: Activities involving ownership transfer.10

* Buying: Identifying suppliers, selecting goods, bargaining, paying, and collecting.

* Selling: Assembling, packaging, displaying, advertising, and receiving payment.

B. Physical Functions: Making goods available in the right place, form, and time.

* Assembling: Gathering products.

* Grading: Sorting by uniform specifications (weight, color, quality).

* Importance of Grading: Incentivizes quality, aids price comparison, meets consumer preference, facilitates online transactions.

* Packaging: Protecting and presenting products.11

* Transportation: Physical movement of goods.12

* Types used by farmers: Bicycles, ox-carts, pick-ups, trucks, rail.

* Factors for choosing transport: Cost, quantity, distance, perishability, speed.

* Storage: Holding products in structures/containers.

* Importance of Storage: Prevents spoilage, stabilizes prices, regulates supply, ensures year-round availability, manages surplus.

* Displaying: Arranging goods attractively.

C. Facilitating Functions: Making exchange and physical functions smooth.

* Financing: Providing money for inputs, farm operations, and marketing activities.13

* Market Intelligence: Gathering information on customer needs, supply, demand, prices, and yield estimates.

* Sources: Friends, relatives, media (newspapers, radio, TV, internet), Ministry of Agriculture, ADMARC.

* Advertising: Promoting products.14

* Risk Bearing: Minimizing uncertainties.15

* Ways to minimize risks: Raising capital, insurance, diversification, market surveys.

5. Problems in Agricultural Marketing & Solutions