Basic Principles and Applications

AGRICULTURAL MARKETING: Basic Principles and Applications

AGRICULTURAL
MARKETING

Melba D. Davis - Mussagy 14 June 2007 IITA – Ibadan, Nigeira


WHAT IS AGRICULTURAL MARKETING

≠ SELLING

≠ PROMOTION

Chairman of a Cooperative:

“Involves finding out what your customers want and supplying it to
them at a profit”

= CUSTOMER-ORIENTED
= it is a commercial process that it has to provide profit for it to become
sustainable



A more detailed definition:

It is the PROCESS of finding out what customers will buy, and
producing and performing all the activities involved in getting
agricultural products from the farm where they are produced to the
final consumers, at the right place, time and form desired by the
consumer, and at a price the customer is willing and able to pay for the
product.



Activities in Agricultural Marketing

1. RESEARCH AND ANALYSIS

2. Assembly

3. Buying and selling

4. Storage

5. Transporting



6. Packaging

7. Processing

8. Standardization and grading

9. Financing

10. Marketing information and dissemination

11. Risk bearing (associated with the vagaries or unpredictable
changes in weather, incidence of pests and diseases, and seasonal
patterns of harvests, demands, prices, etc.)



Remember PDCA Cycle:

RESEARCH
AND ANALYZE

ACT
PLAN

CHECK
DO



WHAT TO RESEARCH

THE PRODUCTION AREA
 problems (constraints) and opportunities (primary selling
points) of the area
 must cover crop production to product consumption (if possible)



THE MARKET
 customers needs and wants
 the suppliers
 the competitors
 etc.



THE MARKETING SYSTEM
 how the market works
 relationships of the different participants in the marketing chain



What Else to Know to Better Understand
the Agricultural Marketing Process and System

Government policies and programs affecting food production,
pricing behavior, and distribution system. Examples are the
Department of Agriculture’s various production programs;
government’s price regulation policies and changes; Import and
export policies.

Large members, spatial distribution and conflicting objectives of the
different marketing participants, buyers and sellers, distance from
each other, and the varying interests of the marketing participants
affect the marketing of a commodity.



Motivations, strategies, reactions, and survival tactics of
marketing participants in response to changes in infrastructure,
organization, institution, management, and technology.
COMPETITION is the engine of markets. However, it should
always be taken as a challenge for product or service
improvement. A good business competitor is one that stays in the
field for a long period of time.

Geographic dispersion of production. Demand areas are usually
located afar from producing areas.

Problems and constraints of those marketing participants
actually involved in producing, processing, distributing and
consuming.



GUIDING PRINCIPLES OF
AGRICULTURAL MARKETING

1. Know who the customers are.

Could be identified as hotels, restaurants, wholesalers,
exporters, retailers, cooperatives, processors.

2. Know the customers needs/wants before planning to make
it.

Commodity, form, frequency of need, price, volume required
per unit of time, etc



3. Determine how much to produce.

Based on principle no. 2, determine the extent of product
volume that should be provided given the existing resources

4. Produce the product(s) that the customer wants to buy, not
products which the producer finds convenient to produce.

5. Organize a distribution system.

The delivery or distribution system should match the customers’
habits, rather than just correspond to any convenient time that the
producer can offer.



6. Feedback mechanism. Make production (or collection) and distribution
(or dissemination) decision based on feedback from customers.

Timely, adequate and appropriate feedback system can be attained
through maintenance of records, regular monitoring, and
surveillance/spot checking.

The feedbacks will tell the producer whether changes that need to be
introduced.



SOME PROBLEMS AFFECTING
AGRICULTURAL MARKETING
1. Characteristics of the product

a) Perishability

Delayed disposal of agricultural products would mean quality
deterioration, weight loss, and eventually reduced price. The
role of marketing system then is to get products to the
consumers before the above actions take place.

b) Seasonality

When product is in season, price is low, and vice versa. Thus
consumers usually pay high prices during scarcity of supply and
low prices when the product is in season. Marketing certainly
becomes simpler if desired products are available in the market
centers with the right volume, quality, form and time.



c) Bulkiness

Small farmers usually have no choice but to sell their produce
to, and accept whatever price is dictated by, traditional or
village traders. This is generally true due to small volume of
production. In marketing, the greater the volume of produce,
the stronger the bargaining power of a farmer/producer.

d) Non-homogeneity

When farmers sell a number of different products at small
volumes, it will take time for the assemblers/traders before
they can collect enough to transport. Also, they may require
different marketing procedures like different buyers/outlets,
different packaging, different transport requirements, different
pricing procedures, and different services. These factors surely
add up to their costs, which eventually cause them to lower
their prices.



2. Number of Producers.

Large and scattered number of producers create
problem for assemblers/traders to efficiently collect,
store and transport agricultural products.

3. Characteristics of consumers.

It is difficult to move with the changing demands of
consumers. They usually differ in demand due to
differences in income, age, taste/preferences,
occupation, place of residence, religion, weather, habit
because of cultural influence, change in price of
substitutes, and the like.



Related Problems ON, and OF, FARMERS:

1. Production-oriented

2. Dependence on traditional traders due to small
marketable surplus

3. Limited credit availability

4. Ineffective rural assembly

5. Lack of credit-marketing tie-up

6. Lack of marketing information



7. Inefficient marketing and postharvest practices

8. Lack of specialization

9. Lack of group action due to lack of trust and unity

10. Lack of knowledge and expertise on marketing



CONSIDERATIONS IN SELECTING PRIORITY
PRODUCTS (NEW OR FOR EXPANSION)
1) Is there a demand?
- whose demand and where
- excess of local demand vs. supply
- products brought in from outside; import
substitution
- suitability to local and neighboring markets
- financially viable
- answers needs/preferences of consumers

2) Agro-climatic condition

3) Soil/geology

4) Slope



5) Other physical factors:
- flooding hazard; drainage; land capability; present vegetation

6) Elevation

7) Economic benefits

8) Availability of production technology

9) Availability of postharvest technology and other support facilities (if
necessary)

10) Socio-cultural acceptability

11) Comparative advantage



12) Knowledge, skills, experience, and production equipment of
local producers.

13) Availability and sufficiency of planting materials and raw materials

14) Availability of technical support to assist production

15) Potential farmers’ organizations and cooperatives

16) Synergy with existing products and ecological requirements

17) Adequacy of transport facilities for product distribution

18) Operational or proposed community development plans to intensify
activities and provide support


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