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Agricultural Marketing

 

 

Agricultural Marketing: Market Functions,

Institutions and Channels for Agricultural Commodities.

 

By

Dr. M.T. Besong (Ph.D)

Farming System Research

And Extension Agronomist

Rumpi Project

Introduction

Marketing is a process? The term “Marketing” means a different thing depending upon who is involved in it.

i)       To the housewife, marketing means shopping for groceries (food needs) and all other household needs.

ii)    For the farmer (food) or rancher (cattle), it means selling their commodities

iii)  To the handler of the commodity, means:

a)     Storing the commodity

b)    Transferring the commodity into a form that consumers want (e.g. cassava to garri),

c)     Shipping it to outlets for retail and

d)    Promoting its sale.

So all of the above things are part of the marketing process. The American marketing Association (AMA) has defined marketing as “The performance of business activities that direct the Flow of Goods and services from the producer to consumers or final user.

What does this mean in agricultural marketing? The point of production (the farm or ranch) is the basic source of supply. Therefore the marketing process begins at that point (farm or ranch and continuesuntil a consumer buys the product in the market places ir until it is purchased as a raw material for another production phase. Marketing also includes input supply firms that serve the farm or ranches. Thus, markeying consist of those efforts that affect;

a)     Transfer of ownership and

b)    Which ereate TIME, PLACE and FORM Utility, to commodities.

What do you understand by Time, Place, and Form Utility?

–         Time utility is added to commodities through storage

–         Place satisfaction is added to – – commodities through transportation services

–         Form utility is added to a commodity through the processing function.

2. Marketing Function

by marketing functions we mean the many activities that are performed in getting farm products from the producer to the consumer. It is these activities that are called functions. Who performs these functions in Cameroon? E.g. Cash crops: co-operatives and private firms (LBAs). For food crops: farmers to wholesellers, farm groups, and may be some NGOs. The market functions worth knowing which are widely accepted for classification purposes are:

  1. Exchange – buying and selling
  2. Physical – processing, storage, tansportation
  3. Facilitating – standardizing, financing, risk bearing and market information.

3. Martet Institutions

These channels took at the activities of business organization or people involved in markeing. Whether organizations or people, they are considered playing the roles of middlemen. These middlemen are classified as follows:

  1. Merchant middlemen (retailers and wholesallers)
  2. Agent middlemen (brokers and commission men)
  3. Speculative middlemen
  4. Facilitative organizations
  5. Food processors.

However it is impotant to note that middlemen perform the operations necessary to transfer goods from the producer to the consumer. Middlemen do this beause of the benefit of specialization and scale that exist in marketing as well as in production. So rather than producers conducting all of the marketing functions, middlemen through specialization and division of labour Market Channels – involve ways by which agriculture products/commodities are marketed.

4. Market Efficiency: Markets are efficient when the ratio of the valve of output to the

           value of input throughout the markeing system is maximized.

Two types of market efficiency:

  1. Technical efficiency
  2. Pricing efficiency

Any change that reduces marketing costs per unit of output is considered desirable.

5.       Ways of improving on Agricultural Marketing in Cameroon.

– General risk bearing

– Education

– Farmers to organize

– Market oriented production

– Specialized Production Concentrate on one or a few things and do it/them well

– Improve road infrastructure (communities and the state)

– Councils and Cooperatives/Groups should make available storage facilities.

Market: Buyers and sellers with facilities to communication with each other.

Market need not be a specific, although some people refer to market in this sense, such as commodity markets and auction markets.

The only requirement is that the forces of Demand and Supply, vice the communication between buyers and sellers determined market price.

Markets therefore must accomplish:

i)   Determine demand and changes that the movement of commodities through the marketing system may be expedited.

ii)   Achieve efficiency in the marketing process by improving pricing and operational efficiencies.

Marketing Functions

Exchange: Rates place through out the market channel and include buyers bidding for the supplies of commodities and sellers offering commodities at the best price they think they can attain.

– Locate supplies and assemble for shipping selling involves packages, labeling, advertising and promoting etc.

Physical

Adds form, time and place utility (value)

Processing – adds form

Storage – adds time

Transportation – adds place

Facilitating

Improves performance of marketing system by increasing operational pricing efficiencies e.g.

(i)  Standardizing establishes grades and quality criteria for a commodity

(ii)  Financing

(iii) Risk bearing

(iv)  Market information – collection, analyzing and dissemination information.

Important Concepts/Actors

Retail: Organization: Usually purchase for resale purchase from wholesalers taking title to the products products they handle.

Wholesalers:

Primary function is to hold inventories, package products in lots that meet consumer needs, prepare lots for shipment, and make arrangements for transportation. They also provide credit to retailers, offer merchandising assistance and assume some of the risk the retailer would have to take if the retailer purchases from manufacturers.

Agent Middlemen:

They engage on negotiating that transfer the title of products from seller to buyer.

Brokers:

They bring buyers and sellers together. Brokers fee based on the amount of the sale.

Commission men:

For agriculture producers are primary interested in grain, livestock and fresh fruits and vegetable. These have more authority than brokers in the selling of products.

Any product consigned to them is sold at the best price available. They collect on the sale of the product deduct their expenses and remit the balance to the seller.

Speculative Middlemen:

Take ownership of and hold commodities thus assuming the risk of loss due to unfavorable price fluctuation e.g. floor broken on commodity exchanges.

Facilitation Organization:

e.g. trade associations are institutions that provide general industry data that provide physical facilities for marketing. They also guide pricing results.

Processors: Transform raw agricultural products into different final products.