Agribusiness marketing can best be defined as a series of services involved in moving a product from the point of production to the point of consumption. Agricultural marketing brings producers and consumers together through a series of activities and thus becomes an essential element of the economy. The scope of agricultural marketing is not only limited with the final agricultural produce. It also focuses on supply of agricultural inputs (factors) to the farmers.
Factors to consider in agricultural marketing
- Perishability of the product: Most farm products are perishable in nature; but the period of their perishability varies from a few hours to a few months. Their perishability makes it almost impossible for producers to fix the reserve price for their farm grown products. The extent of perishability of farm products can be reduced by processing function: but they can not be made nonperishable like manufactured products. The more perishable products require speedy handling and often-special refrigeration, which raises the cost of marketing.
- Seasonality of production: Farm products are produced in a particular season of the year. It leads to intra-year seasonality in the prices. In the harvest season, prices of farm products fall. When doing farming as a business venture, it is advisable to grow crops off season so that they can fetch a good profit during the scarcity of the products.
- Bulkiness of products: The characteristics of bulkiness of most farm products makes their transportation and storage difficult and expensive. This fact also restricts the location of production to somewhere near the place of consumption or processing. The price spread in bulky products is higher because of the higher costs of transportation, handling and storage.
- Irregular supply of agricultural products: The supply of agricultural products is uncertain and irregular because of the dependence of agricultural production on natural conditions. With the varying supply, the demand remaining almost constant, the prices of agricultural products fluctuate substantially.
- Processing: Most of the farm products need some kind of processing before consumption by the ultimate consumers. The processing function, though adds value, increases the price spread of agricultural commodities.
Importance of agricultural marketing
1. Increase in Farm Income
An efficient marketing system ensures higher levels of income for the farmers reducing the number of middlemen or by restricting the cost of marketing services and the malpractices, in the marketing of farm products. An efficient system guarantees the farmers better prices for farm products and induces them to invest their surpluses in the purchase of modern inputs so that productivity and production may increase.
2. Widening of Markets
An efficient 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.
3. Growth of 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 like cotton, sugar, edible oils and food processing depend on agriculture for the supply of raw materials.
4. 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 at remunerative prices.
5. Employment Creation
The marketing system provides employment to millions of persons engaged in various activities, such as packaging, transportation, storage and processing. Several others find employment in supplying goods and services required by the marketing system.
6. 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.
7. 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. A well-designed system of marketing can effectively distribute the available stock of modern inputs, and thereby sustain a faster rate of growth in the agricultural sector.
In conclusion, the marketing concept suggests that an organization is best able to achieve its long term objectives by orienting all of its operations towards the task of consistently delivering satisfaction to the customer. In order to do so, the organization must begin by getting to know what it is that will satisfy the customer. The marketing system as a whole has to be customer oriented.