Transcript AOM-1 - Xavier Institute of Management

Agriculture Output Marketing

Concept of agri-business

Components of agri-business

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 subsistence to commercial
agriculture.
Concept of Agri-business

Commercialization of agriculture can take in
to two forms:
- Product commercialization which can occur
on the output front
- Factor commercialization which can occur
on the input side
Agri-business: shift 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
Agri-business: shift 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
Ag. Production Sub-system
• Crop planning
• Maximize production
• Maximize input use efficiency
• Food security
• Employment
• 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
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
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

Marketing does not limit to all non-farm
activities in the marketing system
- 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

Marketing is management decisions
making.
- it is neither mechanical nor an
automatic operation
Farm Marketing Decisions

Delivery Alternatives
- local market
- commission agent at farm
- regulated market
- processing plant
- international market
Farm Marketing Decisions


Storage alternative
- on farm storage
- commercial facility
- government facility
Product alternative
- raw product
- processed products
- branded products
Farm Marketing Decisions


Pricing alternatives
- cash sale
- forward contract
- as on sale basis
- contracting
Mode of marketing
- individual
- cooperative