AGRICULTURAL MARKETING,

TRADE AND PRICES

ECON-353

CREDIT- 3(2+1)
 AGRICULTURAL MARKETING

Meaning

■ The term agricultural marketing is composed of two words-agriculture and marketing.

■ Agriculture, in the broadest sense, means activities aimed at the use of natural resources for

human welfare, i.e., it includes all the primary activities of production.

■ But, generally, it is used to mean growing and/or raising crops and livestock.

■ Marketing connotes a series of activities involved in moving the goods from the point of

production to the point of consumption.

■ It includes all the activities involved in the creation of time, place, form and possession utility
Definition -
“Agricultural marketing is the study of all the activities, agencies and policies

involved in the procurement of farm inputs by the farmers and the movement of agricultural

products from the farms to the consumers”.

■ The agricultural marketing system is a link between the farm and the non – farm sectors.

■ It includes

a) The organization of agricultural raw materials supply to processing industries,

b) The assessment of demand for farm inputs and raw materials and

c) The policy relating to the marketing of farm products and inputs.

■ Agricultural marketing in a broader sense is concerned with the marketing of farm products
produced by farmers and of farm inputs required by them in the production of these farm
products.

■ Thus, the subject of agricultural marketing includes product marketing as well as input
marketing.

■ The subject of output marketing is as old as civilization itself.

■ The importance of output marketing has become more conspicuous in the recent past with the
increased marketable surplus of the crops following the technological breakthrough.

■ The farmers produce their products for the markets. Farming becomes market-oriented.
■ Input marketing is a comparatively new subject. Farmers in the past used such farm sector inputs
as local seeds and farmyard manure. These inputs were available with them; the purchase of
inputs for production of crops from the market by the farmers was almost negligible.

■ The importance of farm inputs-improved seeds, fertilizers, insecticides and pesticides, farm
machinery, implements and credit-in the production of farm products has increased in recent
years.

■ The new agricultural technology is input-responsive. Thus, the scope of agricultural marketing
must include both product marketing and input marketing.

■ Specially, the subject of agricultural marketing includes 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.
IMPORTANCE OF AGRICULTURAL MARKETING

■ Agricultural marketing plays an important role not only in stimulating production and
consumption, but in accelerating the pace of economic development.

■ Its dynamic functions are of primary importance in promoting economic development.

■ For this reason, it has been described as the most important multiplier of agricultural
development.
■ The importance of agricultural marketing in economic development has been indicated as follows –

1) Optimization of Resource use and Output Management:

■ An efficient agricultural marketing system leads to the optimization of resource use and output

management.

■ An efficient marketing system can also contribute to an increase in the marketable surplus by scaling

down the losses arising out of inefficient processing, storage and transportation.

2) Increase in Farm Income :

■ An efficient marketing system ensures higher levels of income for the farmers by reducing the number of

middlemen or by restricting the commission on marketing services and the malpractices adopted by them

in the marketing of farm products.

■ An efficient system guarantees the farmers better prices for farm products and induces them to invest their
3) Widening of Markets:

■ A well-knit marketing system widens the market for the products by taking them to remote

corners both within and outside the country, i.e., to areas far away from the production points.

■ The widening of the market helps in increasing the demand on a continuous basis, and thereby

guarantees a higher income to the producer.

4) Growth of Agro-based Industries:

■ An improved and efficient system of agricultural marketing helps in the growth of agro-based

industries and stimulates the overall development process of the economy.

■ Many industries depend on agriculture for the supply of raw materials.

■ An efficient marketing system helps the farmers in planning their production in accordance with the

needs of the economy. This work is carried out through price signals.

6) Adoption and Spread of New Technology:

■ The marketing system helps the farmers in the adoption of new scientific and technical knowledge. New

technology requires higher investment and farmers would invest only if they are assured of market

clearance.

7) Addition to National Income:

■ Marketing activities add value to the product thereby increasing the nation’s gross national product and

net national product.

■ The marketing system provides employment to millions of persons engaged in various activities, such as
packaging, transportation, storage and processing.

■ Persons like commission agents, brokers, traders, retailers, weighmen, hamals, packagers and regulating
staff are directly employed in the marketing system.

9) Better Living:

■ The marketing system is essential for the success of the development programmes which are designed to
uplift the population as a whole.

■ Any plan of economic development that aims at diminishing the poverty of the agricultural population,
reducing consumer food prices, earning more foreign exchange or eliminating economic waste has,
therefore, to pay special attention to the development of an efficient marketing for food and agricultural
products.
10) Creation of Utility:

■ Marketing is productive, and is as necessary as the farm production. It is , in fact, a part of production itself, for

production is complete only when the product reaches a place in the form and at the time required by the consumers.

■ Marketing adds cost to the product; but, at the same time, it adds utilities to the product.

■ The following four types of utilities of the product are created by marketing:

(a) Form Utility: The processing function adds form utility to the product by changing the raw material into a finished form.

With this change, the product becomes more useful than it is in the form in which it is produced by the farmer.

(b) Place Utility: The transportation function adds place utility to products by shifting them to a place of need from the place

of plenty.

(c) Time Utility: The storage function adds time utility to the products by making them available at the time when they are

needed.

(d) Possession Utility: The marketing function of buying and selling helps in the transfer of ownership from one person to

another. Products are transferred through marketing to persons having a higher utility from persons having a low utility.