Transcript Analyzing Agricultural & Food Marketing

Agri-Marketing Functions
• There are 2 main agri-mktg functions.
• I. Functions in Production (Planning
What to Produce): Are functions that
occur before the pdt leaves the farm.
They involve studying climate, soil
capacity, equipment, mkt outlets,
labor & gov’t regulations. The goal is
to produce the crop that will result in
the greatest returns to the farmer.
• II. Marketing Functions: Are activities
performed in accomplishing the mktg
process. There are 3 major mkg functions
performed in mktg process:
• a. Exchange Functions:
• i. Buying (Assembling )
ii. Selling
• b. Physical Functions:
• i. Storage ii.Processing iii.Transportation
• c. Facilitating Functions:
• i. Standardization
ii. Risk Bearing
iii. Market Intelligence iii. Financing
• 1.Exchange Functions:Activities involved
in transfer of title of goods - buying,
selling & price setting
• a. Buying function:Finding out sources of
supply, assembling pdts & purchases.
• b. Selling function: Includes price
acceptance & merchandising - display of
goods, decisions on place & time to sell
pdts, promotion, ads. package.
• 2. Physical Functions: Handling, storage
movements, & physical change activities.
Involved in solving problems of when,
what & where in mkg.
• a. Storage/Packaging Making pdts
available at right Time. Attractive
packages & labels are used for promotion
& pdts are stored to protect quality &
extend shelf life - e.g cucumbers may be
preserved by pickling, packaged in
attractive labeled jars, & stored in
protective warehouses until delivered to
supermarkets. (Identify state grown
products that are packaged, labeled and
stored to extend shelf-life).
• b. Transport/Distribution: Making pdt
available at right place, i.e. transport,
shipping, crating
loading. Use
transport such as trucks, railroads,
ships. Right transportation must be
selected to maintain pdt quality, e.g.
freshly picked beans are kept cool in
refrigeration before delivered to
processing plants
• c. Processing: Making the pdt in the
desired form -converting animals into
meat, wheat into flour/bread Pdt nature as
well as consumer demands influence the
extent of processing that occurs.
• 3. Facilitating Functions: make exchange
& physical functions perform smoothly
• a.Standardization Establishing quality &
quantity measurement that makes selling
& pricing possible. Grading involving
sorting pdt attributes into uniform
categories. e.g. eggs, apples, cotton,.
• b. Financing: Provision of capital
(credit) to carry out the various
activities in the marketing process.
• c. Risk Bearing: Accepting loss/risk in
mkg a pdt. There are Physical risks
that occur from destruction of pdts by
fire, accident, cold etc. & Market risks
that occur from price changes.
Physical risks are borne by insurance
& market risk in futures markets
• d. Market Intelligence: Collecting,
interpreting & dissemination of
market information e.g. an efficient
pricing mechanism depends on wellinformed buyers & sellers. What to
buy & sell, when/how much to store,
where to transport etc. require good
market information.
Agribusinesses (Intermediaries or Middlemen)
• Are the various middlemen, firms or business
structures in the marketing system.
• 1. Middlemen of Marketing: Firms involved in the
flow of pdts from producers to consumers - include
Cooperatives,Proprietors, Partnerships, Corporations
• Five (5) broad groups of Middlemen/Intermediaries
• a. Merchant Middlemen: i. Retailers ii. Wholesalers
• b. Agent Middlemen:i. Brokers ii. Commission men
• c. Speculative Middlemen
• d. Processors and Manufacturers
• e. Facilitators Organizations
• a.
Merchant Middlemen
• They take title to & thus own the pdts they handle.
• i. Retailers:Buy for resale directly to final consumer
• ii. Wholesalers: Sell to retailers, & industrial users
e.g. local buyers or assemblers who buy pdts from
farmers & resell to processors ( livestock buyers).
• b.
Agent Middlemen
• Are client representatives, sell services but not pdts,
do not take title to, & thus do not own the pdts they
handle. The pdt they handle is the market knowledge
they provide. Receive their incomes in the form of
Fees & Commissions. Are classified into Brokers &
• i. Brokers: Do not have physical control of the pdt,
& follow directions of their clients, - grain brokers.
• ii. Commission Men: Handle pdt physically, arrange
for terms of trade, collects & deducts his fees, &
remit balance to clients - livestock commission men.
• c.
Speculative Middlemen
• Buy & sell in order to profit from price changes. Do
not handle the pdt & operate in the futures market also called scalpers or spreaders
• d.
Processors and Manufacturers
• Change pdt form (by processing & manufacturing),
& act as wholesalers & assemblers for finished pdt
• e. Facilitating Organizations: Are facilitators, do
not usually handle pdt, but provide physical
facilities for pdt handling or bring buyers & sellers
together, establish the ‘rules of the game’- terms of
sale e.g. stockyard firms, grain exchange markets.
• CONSUMER AND FOOD MARKETING
• 1. Ruler: The ultimate goal of the mkg system is to
satisfy the consumer. Thus the consumer is the ruler
of the marketing system.
• 2. Consumer Preferences Key to Firm’s Survival: If
firms & farmers fail to recognize the preferences of
consumers they may produce goods & services that
nobody wants. They will then not be able to sell in
order to attain their profit goals.
• 3. Consumer Sovereignty:The act of directing all
mkg activities to satisfy the consumer is called
doctrine of consumer sovereignty or the consumer
is ‘King’.
• 4.Exercise of Sovereignty: Consumer exercise their
sovereignty over the food industry by their dollar
voting & preferences which are powerful influence
on farmers & intermediaries, e.g consumers may
prefer white sugar over brown sugar despite the
industry’s insistence that brown sugar is
nutritionally better. We will have white sugar instead
(brown eggs against white eggs).
• 5. Influence of Consumer Sovereignty: Farmers &
intermediaries do not always follow the whims of
consumers. Through advertising, packaging, product
design & other marketing strategies consumers loose
a degree of their sovereignty as firms influence &
• 6. Marketing Concept: Consumer sovereignty is
recognize in the marketing system by a business
philosophy called Marketing Concept - i.e. the most
important goal of farmers & intermediaries is to
satisfy the consumer at a profit, & that this goal
directs all business activities including production,
finance, packaging etc. towards satisfying the
consumer.
• Ag firms adopt marketing strategy - i.e. the 4 P’s to
influence consumer sovereignty.