Agricultural Marketing

 Agriculture (use of natural resources for human

welfare i.e. cultivation and rearing of animals)
 Marketing connotes a series of activities involved in
moving the goods from point of production to point of
consumption.
 Two types of marketing i.e. Input marketing(seeds,
manure, fertilizers, agricultural implements etc.) &
Product marketing (By products and/or value added
products sell in market.)
DEFINATION & OBJECTIVES
 “Philip Kotler, has defined marketing as a human
activity directed at satisfying the needs and wants
through exchange process”.
 NEED OF UNDERSTANDING BETWEEN
 PRODUCER(remunerative price)
 CONSUMER(reasonable price)
 MIDDLE MAN & TRADERS (income)
 GOVERNMENT (safe link )
IMPORTANCE OF AGRIL.MKT.
 Optimization of resource use and output management
 Increase in farm income
 Widening of markets
 Growth of agro based industries
 Price signals
 Adoption and spread of new technology
 Employment creation
 Addition to national income
 Better living
 Creation of utility
Differences in marketing
agricultural and manufactured
products
 Perish ability of product
 Seasonality of production
 Bulkiness of Products
 Variation in Quality of Products
 Irregular Supply of Agricultural products
 Small Size of Holdings and scattered Production.
 Processing
Scope & Subject Matter
 Input marketing (new subject)
 Output marketing(old civilized)
 Input marketing was negligible
 Agricultural Technology input responsive
 Scope of marketing must include both product and
input marketing.
 Subject matter (market structure, system, functions,
agencies,
Channels, efficiency & costs , price spread, market
integration, producer surplus………………..
MARKET AND MARKET STRUCTRE
 The word MARKET comes from
 Latin word “marcatus” which means merchandise,
trade, or a place where business is conducted .
 “Market means a social institution which performs
activities and provide facilities for exchanging
commodities between buyers and sellers.”
COMPONENTS OF MARKET
 COMMODITY/GOOD (existence not necessary)
 BUYERS AND SELLERS (existence necessary)
 BUISNESS RELATIONSHIP/INTERCOURSE
 AREA
 (EXISTENCE OF PERFECT COMPETITION AND
UNIFORM PRICE NOT NECESSARY)
DIMENSIONS OF MARKET
 Location of place of operation
 Area of coverage
 Time span
 Volume of transactions
 Nature of transactions
 Number of commodities
 Degree of competition
 Nature of commodities
 Stage of marketing
 Extent of public intervention
 Type of population served
 Accrual of marketing margins
Classification of Markets
 On the basis of LOCATION or PLACE OF
OPERATION
 Village market
 Primary market
 Secondary wholesale market
 Terminal markets
 Sea board markets
 On the basis of AREA / COVERAGE
 Local and village market
 Regional market
 National market
 World and international markets
Classification of Markets
 On the basis of VOLUME OF TRANSACTIONS
Whole sale market
Retail market
Classification of Markets
 On the basis of NATURE OF TRANSACTIONS
 SPOT MARKET/CASH MARKET
 FORARD MARKET
Classification of Markets
 ON THE BASIS OF NO. OF COMMODITIES IN
WHICH TRANSCATIONS TAKE PLACE
 GENERAL MARKETS
 SPECALISIED MARKETS
 ON THE BASIS OF DEGREE OF COMPETITION
 Perfect market
 Imperfect market
 MONOPOLY MARKET (one seller) e.g. purchasing
electricity for irrigation
 Monopsony market (one buyer)
 DUPOLY MARKET (two sellers)
 Duopsony market (two buyers)
 OLIGOPOLY MARKET (more than two but few
sellers)
 MONOPOLISTIC COMPETITION(Large no. of sellers
deal with heterogeneous and differentiated products)
e.g. insecticides, pump sets, fertilizers, and
equipments
Classification of Markets
 ON THE BASIS OF NATURE OF COMMODITIES
 COMMODITY MARKETS
 CAPITAL MARKETS (money and share markets)
Classification of Markets
 ON THE BASIS OF EXTENT OF PUBLIC
INTERVENTION
 REGULATED MARKET
 UNREGULATED MARKET
Classification of Markets
 ON THE BASIS OF STAGE OF MARKETING
 PRODUCING MARKETS
 CONSUMING MARKETS
Classification of Markets
 ON THE BASIS OF TYPE OF POPULATION SERVED
 URBAN MARKET
 RURAL MARKET
Classification of Markets
 ON THE BASIS OF MARKET FUNCTIONARIES AND
ACCURAL OF MARKETING MARGINS
 FARMERS MARKETS
 COOPERATIVE MARKETS
 GENERAL MARKETS
Classification of Markets
 ON THE BASIS OF TIME SPAN
 SHORT PERIOD MARKET
 PERIODIC MARKETS
 LONG PERIODIC MARKETS
 SECULAR MARKETS
 CLASSIFICATION OF MARKETS:

 Markets may be classified on the basis of each of the twelve

dimensions mentioned below.
 1. On the basis of Location:
 On the basis of the place of location or operation, markets
are of the following types:
 a) Village Markets: A market which is located in a small
village, where major transactions take place among the
buyers and sellers of a village is called a village market.
 b) Primary wholesale Markets: These markets are
located in big towns near the centers of production of
agricultural commodities. In these markets, a major part of
the produce is brought for sale by the producer-farmers
themselves. Transactions in these markets usually take place
between the farmers and traders.
 c) Secondary wholesale Markets: These
markets are located generally in district
headquarters or important trade centers or near
railway junctions. The major transactions in
commodities take place between the village traders
and wholesalers. The bulk of the arrivals in these
markets is from other markets. The produce in these
markets is handled in large quantities. There are,
therefore, specialized marketing agencies
performing different marketing functions, such as
those of commission agents, brokers, weigh men, etc.
 Terminal Markets: A terminal market is one where
the produce is either finally disposed of to the
consumers or processors, or assembled for export.
Merchants are well organized and use modern
methods of marketing. Commodity exchanges exist
in these markets, which provide facilities, for forward
trading in specific commodities. Such markets are
located either in metropolitan cities or in sea-ports –
in Bombay, Madras, Calcutta and Delhi.
 e) Seaboard Markets: Markets which are located
near the seashore and are meant mainly for the
import and/or export of goods are known as seaboard
markets. Examples of these markets in India are
Bombay, Madras, Calcutta.
 2. On the Basis of Area/Coverage:
 On the basis of the area from which buyers and sellers
usually come for transactions, markets may be classified
into the following four classes:
 a) Local or Village Markets: A market in which the
buying and selling activities are confined among the buyers
and sellers drawn from the same village or nearby villages.
The village markets exist mostly for perishable commodities
in small lots, e.g., local milk market or vegetable market.
 b) Regional Markets: A market in which buyers and sellers
for a commodity are drawn from a larger area than the local
markets. Regional markets in India usually exist for food
grains.
 c) National Markets: A market in which buyers and sellers
are at the national level. National markets are found for
durable goods like jute and tea.
 d) World Market: A market in which the buyers and sellers
are drawn from the whole world. These are the biggest
markets from the area point of view. These markets exist in
the commodities which have a world-wide demand and/or
supply, such as coffee, machinery, gold, silver, etc. In recent
years many countries are moving towards a regime of liberal
international trade in agricultural products like raw cotton,
sugar, rice and wheat.
 3. On the Basis of Time Span:
On this basis, markets are of the following types:
 a) Short-period Markets: The markets which are held only
for a few hours are called short-period markets. The
products dealt within these markets are of highly perishable
nature, such as fish, fresh vegetables, and liquid milk. In
these markets, the prices of commodities are governed
mainly by the extent of demand for, rather than by the supply
of, the commodity.
 b) Long-period Markets: These markets are held for a
long period than the short-period markets. The
commodities traded in these markets are less perishable
and can be stored for some time; these are food grains and
oilseeds. The prices are governed both by the supply and
demand forces.
 c) Secular Markets: These are markets of permanent
nature. The commodities traded in these markets are
durable in nature and can be stored for many years.
Examples are markets for machinery and
manufactured goods.
 4. On the Basis of Volume of Transactions:

 There are two types of markets on the basis of volume of

transactions at a time.

 a) Wholesale Markets: A wholesale market is one in which

commodities are bought and sold in large lots or in bulk.
Transactions in these markets take place mainly between
traders.
 b) Retail Markets: A retail market is one in which
commodities are bought by and sold to the consumers as per
their requirements. Transactions in these markets take
place between retailers and consumers. The retailers
purchase in wholesale market and sell in small lots to the
consumers. These markets are very near to the consumers.
 5. On the Basis of Nature of Transactions:

 The markets which are based on the types of transactions in
which people are engaged are of two types:
 a) Spot or Cash Markets: A market in which goods are
exchanged for money immediately after the sale is called the
spot or cash market.
 b) Forward Markets: A market in which the purchase and
sale of a commodity takes place at time „t‟ but the exchange
of the commodity takes place on some specified date in
future i.e., time t + 1. Sometimes even on the specified date
in the future(t+1), there may not be any exchange of the
commodity. Instead, the differences in the purchase and sale
prices are paid or taken.
 6. On the Basis of Number of Commodities in which
Transaction Takes place:

 A market may be general or specialized on the basis of
the number of commodities in which transactions are
completed:
 a) General Markets: A market in which all types of
commodities, such as food grains, oilseeds, fiber crops, gur,
etc., are bought and sold is known as general market. These
markets deal in a large number of commodities.

 b) Specialized Markets: A market in which transactions
take place only in one or two commodities is known as a
specialized market. For every group of commodities,
separate markets exist. The examples are food grain markets,
vegetable markets, wool market and cotton market.
 7.On the Basis of Degree of Competition:

 Each market can be placed on a continuous scale, starting from a
perfectly competitive point to a pure monopoly or monopsony
situation. Extreme forms are almost non-existent.

 Perfect Markets: A perfect market is one in which the following

conditions hold good:

 a) There is a large number of buyers and sellers;

 b) All the buyers and sellers in the market have perfect knowledge of
demand, supply and prices;
 c) Prices at any one time are uniform over a geographical area, plus or
minus the cost of getting supplies from surplus to deficit areas;
 d) The prices are uniform at any one place over periods of time, plus or
minus the cost of storage from one period to another;
 e) The prices of different forms of a product are uniform, plus or minus
the cost of converting the product from one form to another.

 Imperfect Markets: The markets in which the conditions of
perfect competition are lacking are characterized as imperfect
markets. The following situations, each based on the degree of
imperfection, may be identified:
 a) Monopoly Market: Monopoly is a market situation in which
there is only one seller of a commodity. He exercises sole control
over the quantity or price of the commodity. In this market, the
price of commodity is generally higher than in other markets.
Indian farmers operate in a monopoly market when purchasing
electricity for irrigation. When there is only one buyer of a
product the market is termed as a monopsony market.
 b) Duopoly Market: A duopoly market is one which has only
two sellers of a commodity. They may mutually agree to charge a
common price which is higher than the hypothetical price in a
common market. The market situation in which there are only
two buyers of a commodity is known as the duopsony market.
 c) Oligopoly Market: A market in which there are more
than two but still a few sellers of a commodity is termed as an
oligopoly market. A market having a few (more than two)
buyers is known as oligopsony market.

 d) Monopolistic competition: When a large number

of sellers deal in heterogeneous and differentiated form of a
commodity, the situation is called monopolistic competition.
The difference is made conspicuous by different trade marks
on the product. Different prices prevail for the same
basic product.
 Examples of monopolistic competition faced by farmers may
be drawn from the input markets. For example, they have to
choose between various makes of insecticides, pumpsets,
fertilizers and equipments
 8. On the Basis of Nature of Commodities:

 On the basis of the type of goods dealt in, markets may be
classified into the following categories:
 a) Commodity Markets: A market which deals in goods
and raw materials, such as wheat, barley, cotton, fertilizer,
seed, etc., are termed as commodity markets.
 b) Capital Markets: The market in which bonds, shares
and securities are bought and sold are called capital markets;
for example, money markets and share markets.

 9. On the Basis of Stage of Marketing:

 On the basis of the stage of marketing, markets may be
classified into two categories:
 a) Producing Markets: Those markets which mainly
assemble the commodity for further distribution to other
markets are termed as producing markets. Such markets are
located in producing areas.
 b) Consuming Markets: Markets which collect the
produce for final disposal to the consuming population are
called consumer markets. Such markets are generally located
in areas where production is inadequate, or in thickly
populated urban centres.
 10. On the Basis of Extent of Public Intervention:

 Based on the extent of public intervention, markets may be
placed in any one of the following two classes:
 a) Regulated Markets: Markets in which business is done
in accordance with the rules and regulations framed by
the statutory market organization representing different
sections involved in markets. The marketing costs in such
markets are standardized and practices are regulated.
 b) Unregulated Markets: These are the markets in which
business is conducted without any set rules and regulations.
Traders frame the rules for the conduct of the business and
run the market. These markets suffer from many ills,
ranging from unstandardised charges for marketing
functions to imperfections in the determination of prices.
 11. On the Basis of Type of Population Served:

 On the basis of population served by a market, it can be
classified as either urban or rural market:
 a) Urban Market: A market which serves mainly the
population residing in an urban area is called an urban
market. The nature and quantum of demand for
agricultural products arising from the urban population is
characterized as urban market for farm products.
 b) Rural Market: The word rural market usually
refers to the demand originating from the rural
population. There is considerable difference in the nature
of embedded services required with a farm product
between urban and rural demands.
 12. On the Basis of Accrual of Marketing Margins:

 Markets can also be classified on the basis of as to whom the
marketing margins accrue. Over the years, there has been a
considerable increase in the producers or consumers co-
operatives or other organizations handling marketing of
various products. Though private trade still handles bulk of
the trade in farm products, the co-operative marketing has
increased its share in the trade of some agricultural
commodities like milk, fertilizers, sugarcane and sugar. In
the case of marketing activities undertaken by producers or
consumers co-operatives, the marketing margins are either
negligible or shared amongst their members.

MARKET STRUCTURE
 Size and design of market
 Market operation
 “market structure is the formal organization of the
functional activity of a market institution”
 Traders behavior and their performance
 Understanding and market knowledge
COMPONENTS OF MARKET ST.
 Concentration of market power
 Degree of product differentiation
 Conditions for entry of firms in the market
 Flow of market information
 Degree of integration
DYNAMICS OF MARKET ST.
CONDUCT & PERFORMANCE
 Market conduct includes (market sharing &price setting
policies ; policies aimed at coercing rivals & policies
towards setting the quality of products)

 Market structure should keep pace the following changes

PRODUCTION PATTERN
 DEMAND PATTERN
 COSTS AND PATTERNS OF MARKETING FUNCTIONS
 TECHNOLOGICAL CHANGE IN INDUSTRY
PRODUCER SURPLUS
 The producer’s surplus is the quantity of produce
which is, or can be, made available by the farmers to
the non-farm population.
 Two types:
 Marketable surplus & marketed surplus
 importance 1.framing sound price policies
 2.development proper procurement and purchase
strategies 3.checking undue price fluctuations
4.advance estimate of the surpluses 5.development of
transport and storage systems
 Marketable Surplus : it is that quantity of the produce
which is made available to non-farm population by a
farmer after fulfilling is requirements (family
consumption, farm needs( seeds, fertilizers , feed ,
payment to labourers etc.)
 MS=P – C (MS= Marketable surplus, P= Total
production , C= total requirements)
 Marketed surplus : “ it is that quantity of produce
which is the farmer actually sells in the market”.
Relationship between
Marketable S. & Marketed S.
 Marketed surplus > marketable surplus, when farmer
retains smaller quantity of the crop than is actual
requirements (small & marginal
farmers)….forced/distress sale
 Marketed surplus < marketable surplus, when farmer
retains some of the surplus produce
 (large farmers…higher price , livestock feed)
 Marketed surplus = marketable surplus, when farmer
neither retains more nor less than his requirement
(perishable commodities)
Factor affecting Marketable Surplus
 Size of holding
 Production
 Size of family
 Requirement of seed and feed
 Nature of commodity
 Consumption of habits
 Price of commodity
Marketing functions
 “Any single activity performed in carrying a product from
point of its production to point of ultimate consumer.”
 Packaging
 Transportation
 Grading and Standardization
 Storage and warehousing
 Processing and value addition
 Buying and selling
 Price discovery and price determination
 Market information
lassification of market functions
 Thomnsen classified into three broad categories
 Primary functions : assembling or procurement
Processing, dispersion or distribution
 Secondary functions : packaging or packing,
transportation, grading, standardization, and quality
control, storage and warehousing, determination or
discovery of prices, risk taking, financing, buying and
selling, demand creation, dissemination of market
information.
 Tertiary functions : banking, insurance,
communication (posts, telecommunication), supply of
energy – electricity.

 Kohl’s and Uhl classification : (2nd type)

 Physical functions : storage and warehousing, grading,
processing, transportation.
 Exchange functions : buying and selling
 Facilitative functions: standardization of grades,
financing, risk taking, dissemination of market
information.
 Huegy and Mitchell classification (3rd type)
 Physical movement classification : storage, packaging,
transportation, grading, distribution.
 Ownership movement functions : determining need,
creating need, finding buyers and sellers, negotiation
of price, rendering advice, transferring the title to
goods.
 Market management functions : formulating policies,
financing, providing organization, supervision,
accounting, securing information.
PACKAGING
 Packing means , the wrapping and caring of goods
before they are transported (preserve and delivery).
 Packaging is a part of packing, which means placing
the goods in small packages like bags, boxes, bottles,
or parcels for sale to the ultimate consumers.
Corrugated fiber board
PACKAGING AND PACKING
WRAPPING MATERIAL
PLASTIC NETS AND PORTABLE
PACKGING
ROLL STOCKS
POLLAMINATE POUCHES
ALUMINIUM FOILS
JUTE GUNNY BAGS
 ADVANTAGES
 Quality and quantity maintenance.
 Protection (spoilage, breakage, leakage)
 Compression (cotton, jute and wool)
 Facilitation of handling(fruits)
 Quality identification, product differentiation, branding,
and advertisement.(amul ghee, butter)
 Reducing cost (marketing, retailing, handling)
 Adulteration
 Composition of product.
PACKAGING MATERIAL
 Tin containers, glass containers, polythene, aluminum
foils, polyaminate pouches.
 CFB (Corrugated fibre board)
 Jute bags, corrugated craft paper cartons, plastics.
 PVC TRAYS.
TRANSPORTATION
 Transportation (means movement of products
between places) is one of the most important
marketing function at every stage.
 It adds place utility to goods.
 Trade and transport go side by side due to
urbanization.
 Transport is a sine qua non (beware the consumer)
TRANPORTATION BY RAILWAYS
TRANSPORTATION BY AIR CARGO
TRANPORTATION BY SEA WAYS…..
ADVANTAGES
 Widening of the Market.
 Narrowing price difference over space
 Creation of employment
 Facilitation of specialized farming
 Transformation of the economy
 Mobility of the factors of production
 MEANS OF TRANSPORT

LAND WATER AIR

Inland & ocean Aeroplane &

Pathways, roads, railways water ways helicopter
Transportation cost
 The transportation costs accounts for about 50 percent
of the total cost of marketing.
 Factor affecting cost of transportation
 Distance,
 quality of product,
 mode of transportation,
 condition of road
Factor affecting cost of
transportation
 Availability of return journey consignment
 Risk associated
 Nature of product
 perishability (vegetables),
 Bulkiness (straw),
 Fragility (tomatoes),
 inflammability (petrol )
Problems in transportation of agril.
products
 Mean of transportation (slow moving)
 Poor packaging, overloading
 Transportation cost (price on the basis of volume and
not its value)
 Lack of coordination
 Multiguage system of railways (uniguage mostly
preferred)
Suggestions for improvement
 Full utilization of capacity of transport facility
 Reduction per quintal cost of production
 Packaging to prevent spoilage, damage, breakage, and
use of good wagons.
 Reduction in barriers
 Processing
 Speed and capacity of transport.
 GRADING AND STANDARDIZATION
 Facilitates the movement of produce.
 Standardization means the determination of the basic limits
on grades or the establishment of model processors and
methods of producing , handling, and selling goods and
services.
 (Size, colour, appearance, texture, moisture content, staple
length, amount foreign matter, ripeness, sweetness, taste and
chemical content)
PLANNING MILL FOR GRADING AND STANDARDIZATION
STANDARDIZATION OF PULP WOOD ……..
GRADING AND QUALITY CONTROL
CRITERIA FOR GRADE STANDARDS
 Consideration of user’s opinion
 Objective measurement
 Uniform technology
 Consumer oriented
 Reasonable cost
Inspection and quality control
 Inspection involves the testing of the graded goods
with a view of determining whether they conform to
the prescribed standards.
 Labelling is carried out after inspection.
 This is mainly done by AGMARK
 AGMARK means (Agricultural
 Marketing)
 Grading and marketing act, 1937.
Central AGMARK laboratory is suitated in
Nagpur.
Commodity specific laboratory
Spices- Mumbai
Wool- Jamnagar
Cotton- Surat, Abohar, Khandwa, Raichur
Tobacco- Guntur,
Meat- Nagpur, Mumbai,Newdelhi, Karnataka
Advantages of Grading
 Higher price to produce.
 Facilitates marketing.
 Widens the market
 Reduces the cost marketing.
 Future trading.
 Contribute market competition & pricing efficiency.
PRODUCER’S DIFFUCILITIES IN
GRADING
 Sensory taste
 Deterioration in quality
 Difficult for fixing grade standards
 Standards as per department
 Not of uniform quality
 Poor incentive
Grading and standardization
 Food corporation of India- cereals.
 NAFED- Pulses & Oilseeds.
 Cotton corporation of India- Raw cotton.
 Jute corporation of India- for raw jute.
 (quality standards maintain by above nodal agencies.)
 INTERNATIONAL ORGANIZATION FOR
STANDARDIZATION
 International organization for standardization (ISO)
 Codex Alimentarious Commission (CAC)
International organization for
standardization (ISO)

 Establishment 25th February , 1947

 Founder INDIA
 Objective facilitate international exchange for goods
and services
 ISO- 9000 series (manufacture & service industry)
Codex Alimentarious Commission
(CAC)
 Establishment 1936
 Founder FOOD AND AGRICULTURAL
ORGANIZATION(FAO) & WORLD HEALTH
ORGANIZATION(WHO)
 OBJECTIVE
 Consumer protection
 World trade
 144 members countries.
Storage and Warehousing
 Storage is an exercise of human foresight by means of
which commodities are protected from deterioration,
and surplus supplies in times of plenty are carried over
to season of scarcity.
 Storage function adds time utility.
Need of storage
 Continuous flow of goods
 Protect the quality
 Fulfillment of seasonal demand
 Stabilization of price
 Performance of other marketing function
 Improvement in quality
 Price advantage

RISK IN STORAGE
 QUANTITY LOSS
 QUALITY DETERIORATION
 PRICE RISK
STORAGE PRACTICES IN INDIA
 GUNNY BAGS
 EARTHEN CONTAINER
 BAMBOO CONTAINER
 MASONARY STUCTURE
 UNDER GROUND STRUCTURE
Storage structures
 Underground storage structure:
 Dug-out structures similar to well with sides plastered
with cowdung.; lined with sand and cement.
 Rajasthan (khai) foodgrains are stored.
 Free from seasonal variations, temperature and
humidity.
 Theft, wind, rain.
 Factor of gravity.
 Surface Storage structure:
 Maintenance hygienically, convenient for inspection.
 Heating up less as compare to other str.
 Eg: Vertical silos, Bag storage, bulk or loose storage structure,
Kothi or mud pots, kuthla,
 Thekka, gunny bags, metal drums,
Improved grain storage structure
 For small scale structure :
 PAU Bin, Pusa bin, Hapur tekka
 Large storage structure :
 CAP Storage (cover and plinth)
 Warehouse
 Silos
 Important storage institutes
 Grain storage research and training institute Hapur
(1958)
 Indian grain and storage institute (IGSI)
 Hyderabad, Jabalpur, Jhorat, Udaipur (1981)
 Indian grain storage management research institute.
(IGMRI).
 WAREHOUSES
 Warehouses are scientific storage structures especially
constructed for the protection of the quality and quantity of
stored products.

 WARESHOUSING may be defined as the assumption of

responsibility for the storage of goods . “it is called protector
of national wealth”
FUNCTIONS
 Scientific storage
 Financing
 Price stabilization
 Market intelligence
TYPES OF WAREHOUSES
 On the basis of Ownership:
 Private warehouses
 Public warehouses
 Bonded warehouses
 Entrepot trade (re-export of imported trade)
 On the basis of types of commodities stored
 General warehouses
 Special commodity warehouses
 Refrigerated warehouses
 Warehousing in India
 (1928) Royal commission on agriculture
 (1931) Central banking enquiry committee
 (1944) R.B.I
 (1951) All India Rural Credit Survey Committee
 (1956) Agricultural produce (development and warehousing )
corporation act,
 (1956) National Cooperative development and Warehousing
board.
Warehousing boards
 National cooperative development and Warehousing
board (1st Sept. 1956)
 Central warehousing corporation (CWC)
 (March 18, 1963)
 State Warehousing corporation
 Bihar (1956)
 F.C.I
 COOPERATIVE SECTOR
CENTRAL WAREHOUSING
CORPORATION
 Establish in New Delhi. (2nd of march 1963)
 Seven warehouses and 7000 tonnes capacity
 458 warehouses in all over country, storage capacity 78.87
tonnes
 Storage facilities to 120 agricultural commodities
 Food grains, sugar and fertilizers occupy 78% of total
storage capacity.
 22% used by cement, chemicals, and fertilizers.
 Air conditioned go downs in Kolkata, Mumbai, New Delhi.
 cold storage facilities in HYDERABAD (Preserve the
hygroscopic and fragile commodities)
 Jaggery preservence in hot and rainy seasons.
CENTRAL WAREHOUSING
CORPORATION
 TECHNIQUES developed for storage and preservence
of spices and condiments.
 Custom bonded warehouses (import and export)
 (AHMADABAD, BARODA, BHOPAL, COCHIN,
DELHI, ERNAKULUM, KANDLA, KOLKATA,
LUDHIANA, AND MUMBAI) storage, handling and
import cargo at international airport at palam.(N.D.)
 OTHER FACILITIES LIKE………..
 Transport, insurance, standardization,
documentation, inspection and clearance.
State warehousing corporation
 First state warehouse set up in BIHAR 1956.
 1440 WAREHOUSES with total capacity of 131.38
tonnes .
 Control under CWC
 CONSTRUCTION of go downs in district places .
Funded by state government.
Warehousing in India
 (1957) Central Warehousing board
 (1958) State Warehousing board
 (1962) breakage of act
 National cooperative development corporation act
 Warehousing corporation act
 18th march 1962 Warehousing corporation act came
into existence.
Working of warehouses
 Acts :
 Eligibility:
 Warehouse receipt(warrant) :
 Use of chemicals:
 Financing:
 Delivery of produce:
UTILIZATION OF WAREHOUSING
CAPACITY
 Main reasons of low utilization:
 Lack of knowledge
 Locational disadvantages
 Complicated and time consuming procedure
 Non-existence of nationalized banks
 Small quantity of surplus produce
Slow progress of warehouses in
India
 Small land owners
 Monsoon dependent (lack of regular business)
 Perishable products
 Heterogeneous products; grading required which is
not present in all markets.
 Location in urban centres
 Cost of warehousing
Suggestions

 Network of rural storage structures

 Management by panchayats, cooperatives
 Storage capacity (100- 250) tonnes
 Cost of construction (50% subsidy,(35% C.G. & 15%
S.G.) 50% bank loan)
 Technical guidance, supervision, and assistance.
 Scheme of rural storage structure.
Rural godowns & Cold storage
structures
 National grid of rural godowns (1979)
 Marginal farmers facility
 Prevention of distress sale
 Reduction in quantity and quality losses
 Reduction of pressure on transport system
 Creation of employment opportunities
 Cold storage structures
 Perishable commodities
 -1.1°C to 10°C(30° to 50° F)
 Widening the market
 Price stabilization
 Comfort
 First cold storage in Kolkata (1952)
 OBJECTIVES :
 Ensure hygienic and proper refrigeration conditions
 Regulate growth of cold storage industry
 Technical guidance, and safeguard interests of farmers
Processing and Value Addition
 7% is actually value addition done in India as compare
to 23% in U.S.A
 PROCESSING means to change the basic form of
product into value added one.
 Food processing & Agro-related processing.
Advantages

 Changes raw food into edible form

 Convenience for transport
 Generates employment
 Widens the market
 Processing mostly in commercial crops than in food
grains
 Serve commodity in every season e.g. Mango pulp,
juice, squash etc.
BUYING AND SELLING
 Possession utility
 The buying activity involves the purchase of right
goods at the right time, at right place, at right
quantities, at right price.
 Subsidiary functions in Buying
 Planning and purchase of goods
 Contractual functions
 Negotiation of price and terms and conditions of
buying
 Final agreement and transfer of goods.
SELLING ACTIVITY
 The selling activity involves personal or impersonal
assistance to or persuasion of a prospective buyer to
buy a commodity.
 Subsidiary functions of selling activity
 Product planning and development
 Contractual functions
 Demand creation
 Negotiating the prices and selling the terms and
conditions of sale with the buyers.
Methods of buying and selling
 Under cover of a cloth (Hatha System)
 Private negotiations
 Quotations on samples taken by commission agents
 Dara sale method
 Moghum sale method
 OPEN AUCTION METHOD
 Phar system of auction method
 Random system of auction method
 Roster bid system of auction method
DEMAND CREATION
 Sub function of the selling function in marketing of
product
 Special efforts that are made to stimulate the desire
goods to sale at profit.
 Personal Solicitation by salesman
 Advertisement
 Display of goods in stores
 Arrangement of trade fairs
 Distribution of free samples
 Facilities (discount, sale, …)
PRICE DISCOVERY AND PRICE
DETERMINATION
 “Evaluating demand and supply condition regarding
general level of prices”
 “The price of specific lot of the commodity relative to
the general price level”
 CHARACTERISTICS OF PRICE DISCOVERED
 Distribution of product
 Incentive of producer
 Ensure in business
PRICE DETERMINATION
 ARITHEMATIC APPROACH : Demand, supply and
equilibrium price and output of milk in local market
 Price Rs/liter Qty. demanded (lit.) Qty. supplied
 5 100 20
 10 90 30
 15 80 40
 20 70 50
 25 60 60
 30 50 70
PRICE DETERMINATION
 Price Rs/liter Qty. demanded (lit.) Qty. supplied
 5 100 20
 10 90 30
 15 80 40
 20 70 50
 25 60 60
 30 50 70
 35 40 80
 40 30 90
 45 20 100
Market information function
 Market information may be defined as communication
of knowledge or intelligence.
 Market information on price, supplies, demand, and
other market conditions.
 Lifeblood of market.
 IMPORTANCE
 Farmer/producer
 Market Middleman
 General economy
 Government
 Market intelligence
Types of market information
 Market news
 Criteria for good market information
 Complete comprehensive
 Accuracy
 Relevance
 Confidentially
 Trustworthiness
 Timelines
 Easy accessibility
Suggestions for improvement in
market information
 System of quoting prices
 Price announcement
 Display of price on notice board
 Trained staff
 Remove rumours
 Fresh news
 Correct interpretation
 Proper coordination
 Price range
 Educational programmes
 Government organizations (plan and policies)
MARKET INTELLIGENCE IN INDIA
 137 agricultural commodities and 1300 markets

 Farmer requires (for adjustment of cropping pattern)

 Trader ……………(competitive sale and purchases)
 Consumer ……….(understand market force to purchase
produce)
 Researcher ……….(to asses the efficiency of the
marketing system)
FINANCING FUNCTION
Acquisition and utilization of fund for performing
Various marketing activities is known as financing function.
FACTORS AFFECTING CAPITAL REQUIREMENT FOR
MARKETING
Nature of business
Large stock
Continuity of business
Time span between production and sale
Terms of payment
Risk taking capacity
General conditions in economy.
Types of marketing finance
 Working capital
 Fixed capital
 ROLE OF NABARD IN AGRIL. MKTNG. FINANCE
 Marketing of produce
 Construction of godowns
 Construction of market yards
 Mean of transportation
 Far processing units
RISK TAKING FUNCTION
 Risk in marketing may be defined as uncertainty in
regard to cost, loss, or damage.
 Marketing risk may defined as the danger of loss from
unforeseeable circumstances in future.
 risk in theft, fire, destruction, deterioration of quality,
loss in storage and transportation.
 Fluctuations in prices , personal disibalilities ( illness
& injury).
Types of risks in marketing

 PHYSICAL RISK
 PRICE RISK

 Minimization of risks
 Reduction in physical loss
 Transfer of risks to insurance companies
 Minimization of price risk
 Operation of speculation and hedging
 Future trading
Marketing costs, margin, and price
 The sum of costs incurred by producer as well as all
policy.
intermediaries in a particular channel is known as marketing
cost.
 Factors affecting the cost of marketing
 Volume of the product
 Bulkiness of product
 Extent of grading
 Extent of packaging
 Necessity of storage
 Demand creation
 Extent of loss in storage and transportation
 Perishability of product
 Extent of risk
 Facilities by dealer to consumer
Marketing margin
 The sum of the profits earned by the intermediaries or
middleman to remain in the trade after meeting the cost of
marketing is known as marketing margin.

 Concurrent margin refers to the difference between the

farmer’s selling price and retail price on a specific date.

 Lagged margin refers to the difference between the price

received by a seller at a particular stage of marketing and
the price paid by him at the preceding stage of marketing
during an earlier period.
 Lagged margin takes into account the time that elapse
between the purchase and sale by a party.

 Price spread : it is the difference between price paid by

consumer and the net price received by the producer.
 It is the sum of marketing cost and marketing margin.
 Smaller the price spread, the greater the efficiency of
marketing system.
MARKET INTEGRATION
 KOLHS AND UHL’S define marketing integration as a
process which refers to the expansion of firms by
consolidating additional marketing function and
activities under a single management.
 TYPES OF MARKETING INTEGRATION
 Horizontal integration : this type of integration is
among marketing agencies in order to perform similar
marketing function eg; dairy, poultry.
 Vertical integration : when the firm performs more
than one activity in the sequence of the marketing
process. Eg; dairy and dairy by products.
 Conglomeration : a combination of agencies or activities
or activities which are not directly related to each other
may be termed a conglomeration.
 Eg; agribusiness has food grain trade, fruit processing
fruit unit, cloth mill, and manufacture of vanaspati.

MEASUREMENT OF INTEGRATION
Integration among firms of a market.
Integration among specially separated markets.
MARKETING FUNCTION
 It is the ratio market output satisfaction to marketing
input (cost of resource)
 Movement of produce from producer to consumer at
lowest cost with provision of desired services by the
consumer may be termed as efficient marketing.

 ASSESSMENT OF MARKETING EFFICIENCY

 Conventional method : the efficiency of any activity is
defined as the ratio of output to input.
 E = O/I * 100
ASSESSMENT OF MARKETING
EFFICIENCY
 Shepherd’s method : marketing efficiency is the ratio
of the total value of a commodity marketed to the
marketing cost.

Acharya’s method :
MME = FP/ (MC + MM)
MME : measure of marketing efficiency
FP : net price received by the farmer.
MC : Marketing cost.
MM : Marketing margin.
THEORIES OF INTERNATIONAL
TRADE
 THEORY OF ABSOLUTE ADVANTAGE.

 THEORY OF COMPARATIVE COST.

 MODERN THEORY.
GENERAL AGREEMENT ON TRADE
AND TRAIFF (GATT)
 Multinational treaty to liberalize world trade.
 117 members – Uruguay round, negotiations-
Marrakesh, Morocco (15th April, 1994).
 GATT Administrative structure lead to formation of
WTO (World trade organization)
 International trade rules (agriculture, textiles, and
clothing)
 Trade related investment measures (TRIM’S) & Trade
related intellectual property rights (TRIPS).
World trade organization (WTO)
 INTERNATIONAL BODY to supervise and encourage
international trade.
 Functioning from 1st January 1995.
 Agreement on agricultural (AOA) under WTO
 Market Access Commitment.
 Reduction Commitment for Aggregate Measure of
Support (AMS)
 Sanitary and Phyto-Sanitary Measures(SPS)
 Trade Related Intellectual Property Rights (TRIPS)
TERMS RELATED TO
INTERNATIONAL TRADE
 TRAIFF : Tariff is a duty in the form of tax on
imports.
 Quantitative restriction (QR) : LIMIT on the quantity
to import and export.
 Quota: trade barrier
 Dumping : selling of goods at less than the long run
average cost of production plus transportation cost.
 Anti-dumping : measure to rectify the station arising
of the dumping of good and its trade distortive effect.
 Amber box policies : are related to trade distorting and
are covered under reduction commitment of WTO.
 Blue box policies : refer to direct payments to producers
like decoupled income supports, payments not linked to
production. This relate to safety to income and not to
either the level of production or to prices.
 Green box policies : are domestic support policies that
are not subject to reduction commitments under the
agreement on agriculture (AOA) under WTO.

 TRIPS Agreement : seven categories of intellectual

properties (copy rights and related right trade marks,
geographical indications, industrial design, integrated
circuits, trade secrets and patents).
COOPERATIVE MARKETING
 Marketing cooperatives may collect products of their
members for sale, grade, package and perform other
function.
 Producer’s milk association is the example of
cooperative acting as marketing agent.
 A cooperative sales association is a voluntary business
organization established by its member patrons to
market farm products collectively for their direct
benefit.
 Objective : provide savings for the farmer on
purchases.
Functions of coop. marketing.
 Selling of agricultural products
 Minimization of marketing cost
 Credit facilities
 Storage facilities
 Grading facilities
 Better bargaining power
 Procurement of food grains
 Export of agricultural producers
 Transporting of agricultural produces
 Input supply to farmers
Types of cooperative marketing
 Single commodity cooperative marketing
 Sugarcane /oilseed cooperative processing mill

 Multi-commodity cooperative marketing

 Food grains, oilseeds, and cotton.

 Multi-purpose cooperative marketing

 PDS, Fertilizer/seed/agricultural. implements with
 Fulfillment of farm credit and essential inputs.
Structure of cooperative marketing
 Local association: PACS, Dairy cooperative.

 Regional association: district level

 Multi commodity exchange
 Primary marketing cooperative society.(4398)

 State level association: state level

 27 state level marketing federation
 199 regional cooperative marketing associations
 NAFED (National agricultural cooperative marketing
federation of india)
NAFED(National agricultural
cooperative marketing federation)

 Procurement, processing, distribution, export

commodities of agricultural commodities.
 Establishment October 1958
 Membership PMACS turn over >20 lakhs in advance
states & >10 lakhs in backward states.
 31 branches
 Head office NEW DELHI.
OBJECTIVES OF NAFED
 Coordinate and promote the marketing activities
 Purchase, sale, and supply (agricultural goods)
 Promotion of interstate, international trade
 Own and construct godowns
 Act as agent in purchase sale storage and distribution of specialized
products.
 Insurance agent
 Consultancy
 Manufacture of agricultural machinery, implements, processing and
marketing.
 Transport with collaboration with other marketing function.
 Marketing research and marketing intelligence dissemination.
 Subscribe share capital of other cooperatives
 Advance loans
 Training.


MANAGEMENT OF NAFED
 BOARD OF DIRECTORIES(Representatives)

 1 (STATE), 2 (NCDC) , 3 (GOI) – (RBI, SBI, STC,

National cooperative of India and Bharat krishik samaj )

 Chairman and Managing director

 2 Standing committee ( executive & business)

Operations or activities of the
NAFED
 Price support operations
 Internal trade
 Foreign trade
 Marketing of agricultural inputs
 Promotional activities
 Tribal produce marketing activity
 Setting of scientific storage system
 Processing of fruits and vegetables.
STATE TRADING CORPORATION OF
INDIA
 Premier international trading house owned by
government of India.
 Establishment 1956
 Import & Export of all manufactured and agricultural
products.
 2010-2011 annual turn over 2456 cr0re with net profit of
Rs. 89 crore.
 Trade all the countries of the world.
Objectives of STC
 Supply of essential commodities to consumers at reasonable
prices.
 Firm price (incentive to increase the production)
 Effect exports and imports ; increased bargaining power.
 Obtain advantage of bulk of transactions.
 Implementation of trade agreements and barter deals.
 Minimization of price fluctuations (variation in demand and
supply)
 Arrangements of inputs dissemination
 To undertake the procurement and maintenance of buffer stock.
 Arrangement of storage, processing, and packaging.
 To check hoarding and black marketing.
TYPES OF STATE TRADING
 Partial state trading : private traders & government
 Restriction on traders ( related to declaration of
stocks, limits of stocks, and submission of regular
accounts.)
 Government - purchase commodities - procurement
price.
 Distribution of commodities – fair price shops.
 Safeguards the interest of producers and consumers.
 Check the undesirable activities of traders.
Types of state trading
 Complete state trading : trading adopted when partial
trading fails.
 Private traders are not allowed to enter the market
 Government is the purchaser and distribution of
commodities.
 Requires huge finance and consumption centres.
 example black marketing of pulses and kerosene.
 Chairman and managing director
BOARD OF DIRECTORS
 Four functional directors.
 Government nominee and executive directors of CII
 Non-official directors (two)
 Nine branch offices
 (MUMBAI, CHENNAI, BANGLAROE, JALANDER,
GANDHIDHAM, KOLKATA, AHEMEDABAD,
HYDERABAD, AND AGRA)
 Four sub branches (COCHIN, GUNTUR, RAIPUR,
JAIPUR)
FOOD CORPORATION OF INDIA
 Set up under food corporation act 1964,
 Fulfill price support to farmers, distribution of food grains
to consumers and maintaining buffer stock.
 Handling food grain trade and its distribution to each
section society.
 Establish on Janurary 1 , 1965.
 Unrivalled food marketing agency.
 Its market operations prevent the speculative traders and
provide the remunerative prices for agricultural produces.
 Ensures prompt and uninterrupted supply of food grains.
FOOD CORPORATION INDIA
 FOOD SECURITY SYSTEM

 Board of directors (chairman & M.D.)

 3 directors of C.G. (ministers related to food,

finance, and cooperation)

 six other directors

FUNCTIONS OF FCI
 PROCUREMENT OF FOOD GRAINS AT INCENTIVE
PRICES
 Release of stock timely through PDS. No rise in
consumer price.
 To minimize seasonal price fluctuations and
interregional price variations in agricultural
commodities. (purchase and distribution network)
 To build up buffer stock of food grains to meet short
falls in internal procurement and imports.
GROWTH AND STRUCTURE OF FCI
 FIVE MAJOR ZONES

 EACH ZONE OFFICE HAS REGIONAL OFFICES .

 REGIONAL OFFICE IN EVERY DISTRICT.

 Corporation in all have 5 zonal offices, 19 regional
offices, 4 sub regional offices, 4 offices of joint
managers, 173 district offices and thousands of
operating points for distribution and purchase.
PROGRESS OF FCI
 PROGRESS OF PROCUREMENT
 Public procurement agencies
 Price Support operations of cereals
 Distress sale
 Cereals and pulses distribution in defense services.

 PROGRESS OF STORAGE
 Food grains are stored in production and consumption centre's.
 Prevent storage loss (from 10% to 1%)
 Constructed 28.30 million tonnes storage capacity of silos, and
CAP., 138 CONTROL LABORATORIES
Progress of FCI
 PROGRESS IN TRANSPORATION
 Railways 80% and 20% roads.
 20 million tonnes transported per annum.

 Progress in imports
 speedy dispatch to various destinations to avoid congestion
at he ports and to augment supplies to PDS

 Progress in distribution
 DISTRIBUTION OF PROCURED AND IMPORTED FOOD
GRAINS. (4.91 LAKH FAIR SHOPS IN INDIA)
Progress in FCI
 PROGRESS IN PROCESSING
 24 modern rice mills (obtain rice and oil )
 Paddy processing unit at Tiruverur in T.N.
 Sembanarkoil (T.N.)---- rice barn
 Ujjain (M.P.)----Solvent extraction plant – gr. Nut.
 Faridabad (Haryana) ---maize mill.
 Luck now (U.P.) – DAL MILL

 PROGRESS IN CONSULTANCY.
Quality control of agricultural
products and manufactured
products.
 Directorate of marketing and inspection(DMI), 1935.
 PRODUCT GRADE --- AGMARK---Agricultural produce
act 1937.
 Grading and standardization cell.
 120-165 graded agricultural products.

 MANUFACTURED PRODUCTS
 Indian standards institution act 1952.
 Indian standard institution ( ISI), 1947.
 REDUCING COST AND MASS PRODUCTION POSSIBLE.
ISI (Indian standard institution)
 Prepare standards for products, commodities, and
material for national and international basis.
 Survey and training for companies for standardization.
 Nine divisional councils: (agriculture, chemical, civil
engineering, consumer products, electro technical and
metals, textile, cargo movements, marine products and
packaging.)
 Memberships of 24ooo experts.
 Central laboratory (N.D.)
ISI (Indian standard institution)
 Regional laboratories (Mumbai, Kolkata, Chennai)
 Investigation , evaluation AND standardization work.
BUREAU OF INDIAN STANDARDS
 Rename of Indian standard institution.
(BIS)
 Establish April, 1987.
 Consumer protection, improvising the quality of
agricultural products and inspection activities in the
country.
 17000 Indian Standards in different sectors.
 Special efforts in rural development by formulating 2000
standards in fertilizers, pesticides, agricultural
implements etc.
 Adopted ISI/ISO 9000 series of standards.
 Started ISO 140001 EMS Certification.
 Undertaking HACCP CERTIFICATION
 WORK AS CENTRAL ENQUIRY POINT FOR W.T.O

QUALITY MANAGEMENT IN FOOD
 ADOPTION OF HACCP:
 (Hazard Analysis and critical control point)
 Internationally recognized auditing method.
 Focuses on chemical, physical and microbial standards
 (Food processing, fruits, vegetables, grains, milk, fish,
meat, poultry, soft drinks and alcoholic beverages.)
 One of the largest sector in terms of production,
consumption and employment generation.
 Modern concept of quality management of food items.
 HACCP AND CODEX
 International food safety standards are developing by
the CODEX (Codex Alimentaries Commission)
 Acceptable as per W.T.O
 FUTURE STANDARDS FOR FOOD ITEMS FROM
RAW STAGE TO CONSUMER STAGE.
 ECOMARK : IT IS A SCHEME WHICH WAS
LAUNCHED IN 1991
 Administered by BIS.
 PROVIDES labelling of household and other consumer
products.
 HACCP AND CODEX
 FOOD ADULTERATION ACT, 1955 amended on
 June 2002,

 VEGETARIAN PRODUCTS

 NON VEGETRAIN PRODUCTS

 MARK OF FPO
 MINISTRY OF FOOD PROCESSING INDUSTRIES OF
GOVERNMENT OF INDIA,
 MARKED “ “ CIRCLE HAVING
HANGING STRIPS HAVING INVERTED
“V” SHAPED.
AGRICULTURAL PRICE POLICY
 EQILIBRIUM PRICE.
 The aim of agricultural price policy is the intervention
in the agricultural produce markets to influence the
price levels.
 Positive role in increase agricultural production.
 Agriculture Price Commission (APC) Janurary, 1965.
 Renamed as Commission on Agricultural Costs and
Prices (CACP). 1985.
 FRAME WORK OF PRICE POLICIES.
 NEED OF AGRIL. POLICY
 Safeguard farmers interest and giving incentives for
production (PDS DEVELOPMENT)
 Price fluctuation (SEASONAL AGRIL. PRODUCTS)
 TERMS OF TRADE
 STABILIZATION OF PRICES
OBJECTIVES OF AGRIL. POLICY
 Price stability without affecting income of farmers.
 Minimum price support commission
 Protect interests of consumers
 Reasonable relationship between agril. products and
manufactured products.
 Maintain appropriate relationship between
competiting crops.
 Providing favourable climatic conditions to enhance
agril. Production.
TYPES OF PRICES
 ADMINISTERED PRICES : Prices decided by market
operations carried out by (NAFED, CCI, JCI ).
 Includes minimum support prices for 23 commodities
 (seven cereals (rice, wheat, jowar, bajra,……)
 Four pulses ( red gram, green gram,…..)
 Eight oilseeds(SOYBEAN, GROUNDNUT… )
 Copra, jute, raw cotton, raw jute, and tobacco.
TYPES OF PRICES
 Minimum support prices (MSP) :
 FIXED BY CONSIDERING AVERAGE COST OF
PRODUCTION OF CROPS.
 Protection from market glut conditions.
 Announced at every season (kharif, rabi and summer)
 MSP IS ALWAYS LOWER THAN MARKET PRICE.
TYPES OF PRICES
 PROCUREMENT PRICE :
 It is the price at which the government procures
commodities from farmers and processors to feed PDS.
 COMPULSORY SELL TO GOVERNMENT AT
PROCURE PRICE.
 IMPLEMENTED TO maintain buffer stock.
 Procurement prices are generally higher than the MSP
but lower than the market price.
Types of prices ……
 Issue price : it is the price at which the commodities
are made available to the consumer at the fair price
shops.
 Issue price is always higher than procurement price

 Ceiling price : it is the upper price level of a

commodity fixed by the government to protect the
consumers from unwarranted price rise.
TYPES OF PRICES
 LEVY PRICE : Levy price can be imposed to both
farmers and traders
 It is a procurement system , which makes it obligatory
for the farmers and traders to sell a special quantity to
government.