Transcript AOM-1 - Xavier Institute of Management

Agriculture Marketing as a part of
Agri-business

Concept of agri-business

Components of agri-business

Agri-business in India – issues

Concept of agriculture marketing in the changing
agri-business scenario
Concept of Agri-business

Agri-business can be defined as commercialization of
agriculture, which refers to market orientation of
agricultural production process.

Transition
from
agriculture.
subsistence
to
commercial

From production oriented approach to market
oriented approach
Agribusiness – Change in Focus




Produce and sell homogenous commodities
- Produce specific attributes and differentiated
products
Emphasis on tradition in agriculture
- Emphasis on innovations
Emphasis on technical skills
- Emphasis on managerial skills
Food security is primary concern for production
- Production is diversified as per market demand
Agribusiness – Change in Focus



Marketing is organized in centrally planned economy
- Marketing is conducted in market economy
Increased role of government to protect the farmers
- partnership web between farmers, corporate
business and government
Low income – low risk for farmers
- High income – high risk for farmers
Agri-business System
AG. INPUT
AG. PRODUCTION
AG. MARKETING &
SUB-SYSTEM
SUB-SYSTEM
PROCESSING SUB-SYSTEM
Agriculture Input sub-system
• Innovation of new technology
• Availability of inputs to farmers

in proper quantity

of good quality

at appropriate time

at appropriate cost
• Extension
approach
institutions
Agriculture Production sub-system
•
Crop planning
•
Maximize production
•
Maximize input use efficiency
•
Food security
•
Employment generation
•
Sustainability of natural resources
Agriculture Marketing & Processing
sub-system
•
Identifying the market
•
Proper return to farmer
•
Higher consumer satisfaction
•
Appropriate market channel
•
Low marketing cost
•
Higher market efficiency
•
Low wastage
•
Increase value addition
Agri-business: Current Status and
Issues


The food chain in India from the farmer to the
consumer involves several intermediaries leading to
handling at multiple points and longer transit time.
It is estimated that 20% of the food produced in
India is wasted. This is valued at Rs 50,000 crores
approximately.
Agri-business: Current Status and
Issues


This wastage is equal to the amount that the
government spends on food subsidy by more than six
times.
Only 25% of the consumer’s rupees reaches the
farmer as compared to 50% in developed countries.
Agri-business: Current Status and
Issues


India produce a wide range of fruits and vegetables
of both the topical and temperate varieties because
of the varied climatic conditions in our country.
Unfortunately, less than 2% of our produce is
processed as against 30% in Thailand, 70% in Brazil,
78% in Philippines and 80% in Malaysia.
Agri-business: Current Status and
Issues



The wastage is estimated as high as over 25% of the
total production of fruits and vegetables.
The cold chain system is primitive and under
developed.
The existing capacity of 1 million tonnes is primarily
used for storage of potatoes.
Agri-business: Current Status and
Issues


The current method of forecasting of agricultural
produce does not provide for any time to take
corrective action in terms of crop failure or surplus.
There is need to develop efficient market information
system.
Concept of Marketing
“Performance of all business activities involved in the
flow of agricultural products from the point of initial
agricultural production until they are in the hands of
consumers”
Concept of Marketing

It does not limit marketing to all non-farm activities
in the food industry
- Marketing begins with production decisions on the
farm itself
- no isolation between production and marketing
- Can farm gate become dividing line between
farming and marketing?
Concept of Marketing

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A mutual interdependence between farmers and
middlemen
- competitive or complementary relationship between
two parties?
Marketing is management decision making
- it is neither mechanical nor an automatic operation
Agriculture Marketing Alternatives

Delivery Alternatives
- local market
- commission agent at farm
- regulated market
- processing plant
- international market
Agriculture Marketing Alternatives

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Storage alternative
- on farm storage
- commercial facility
- government facility
Product alternative
- raw product
- processed products
- branded products
Agriculture Marketing Alternatives

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Pricing alternatives
- cash sale
- forward contract
- as on sale basis
- contracting
Mode of marketing
- individual
- cooperative
Concept of Marketing

Marketing is a value added process
- It adds form utility
- It adds place utility
- It adds time utility
- It adds possession utility
Alternate Business Philosophies

Production Orientation:
Focus: Exploitation of technical capability
(maize grows well here so we grow maize)
Objective: Profits through supplying to markets where
task is one of allocating supplies between different
markets
Alternate Business Philosophies

Selling orientation:
Focus: Promoting the consumption of the product that
you are able to produce
(Let us sell as much of the maize as possible)
Objective: Profits through persuading the people that
what you have is what they really want
Alternate Business Philosophies

Marketing orientation:
Focus: Identifying wants and needs of the consumers
and matching those with your resources
(Income has risen and people want more vegetables, so
let us diversify)
Objective: Profits through provision of customer
satisfaction by meeting their needs and wants