Agricultural marketing

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Market display in China Qing Guo Dian Bei Jing Yi Qian .jpg
Market display in China

Agricultural marketing covers the services involved in moving an agricultural product from the farm to the consumer. These services involve the planning, organizing, directing and handling of agricultural produce in such a way as to satisfy farmers, intermediaries and consumers. Numerous interconnected activities are involved in doing this, such as planning production, growing and harvesting, grading, packing and packaging, transport, storage, agro- and food processing, provision of market information, distribution, advertising and sale. Effectively, the term encompasses the entire range of supply chain operations for agricultural products, whether conducted through ad hoc sales or through a more integrated chain, such as one involving contract farming.

Contents

Agricultural marketing development

Congestion at a market in Abidjan Adjamemarche2.jpg
Congestion at a market in Abidjan
A typical market in Africa Mercado de Xipamanine Maputo Mocambique.png
A typical market in Africa

Efforts to develop agricultural marketing have, particularly in developing countries, intended to concentrate on a number of areas, specifically infrastructure development; information provision; training of farmers and traders in marketing and post-harvest issues; and support to the development of an appropriate policy environment. In the past, efforts were made to develop government-run marketing bodies but these have tended to become less prominent over the years. [1]

Agricultural market infrastructure

Efficient marketing infrastructure such as wholesale, retail and assembly markets and storage facilities is essential for cost-effective marketing, to minimize post-harvest losses and to reduce health risks. Markets play an important role in rural development, income generation, food security, and developing rural-market linkages. Experience shows that planners need to be aware of how to design markets that meet a community's social and economic needs and how to choose a suitable site for a new market. In many cases sites are chosen that are inappropriate and result in under-use or even no use of the infrastructure constructed. It is also not sufficient just to build a market: attention needs to be paid to how that market will be managed, operated and maintained. [2] [3]

Rural assembly markets are located in production areas and primarily serve as places where farmers can meet with traders to sell their products. These may be occasional (perhaps weekly) markets, such as haat bazaars in India and Nepal, or permanent. [2] Terminal wholesale markets are located in major metropolitan areas, where produce is finally channelled to consumers through trade between wholesalers and retailers, caterers, etc. [4] The characteristics of wholesale markets have changed considerably as retailing changes in response to urban growth, the increasing role of supermarkets and increased consumer spending capacity. These changes may require responses in the way in which traditional wholesale markets are organized and managed. [5]

Retail marketing systems in western countries have broadly evolved from traditional street markets through to the modern hypermarket or out-of-town shopping center. In developing countries, there remains scope to improve agricultural marketing by constructing new retail markets, despite the growth of supermarkets, although municipalities often view markets primarily as sources of revenue rather than infrastructure requiring development. Effective regulation of markets is essential. Inside a market, both hygiene rules and revenue collection activities have to be enforced. Of equal importance, however, is the maintenance of order outside the market. Licensed traders in a market will not be willing to cooperate in raising standards if they face competition from unlicensed operators outside who do not pay any of the costs involved in providing a proper service. [6]

Market information

Efficient market information can be shown to have positive benefits for farmers and traders. Up-to-date information on prices and other market factors enables farmers to negotiate with traders and also facilitates spatial distribution of products from rural areas to towns and between markets. [7] Most governments in developing countries have tried to provide market information services to farmers, but these have tended to experience problems of sustainability. Moreover, even when they function, the service provided is often insufficient to allow commercial decisions to be made because of time lags between data collection and dissemination. [8] Modern communications technologies open up the possibility for market information services to improve information delivery through SMS on cell phones and the rapid growth of FM radio stations in many developing countries offers the possibility of more localised information services. In the longer run, the internet may become an effective way of delivering information to farmers. However, problems associated with the cost and accuracy of data collection still remain to be addressed. Even when they have access to market information, farmers often require assistance in interpreting that information. For example, the market price quoted on the radio may refer to a wholesale selling price and farmers may have difficulty in translating this into a realistic price at their local assembly market. [9] Various attempts have been made in developing countries to introduce commercial market information services but these have largely been targeted at traders, commercial farmers or exporters. It is not easy to see how small, poor farmers can generate sufficient income for a commercial service to be profitable although in India a service introduced by Thomson Reuters was reportedly used by over 100,000 farmers in its first year of operation. Esoko in West Africa attempts to subsidize the cost of such services to farmers by charging access to a more advanced feature set of mobile-based tools to businesses.

Marketing training

Farmers frequently consider marketing as being their major problem. However, while they are able to identify such problems as poor prices, lack of transport and high post-harvest losses, they are often poorly equipped to identify potential solutions. Successful marketing requires learning new skills, new techniques and new ways of obtaining information. Extension officers working with ministries of agriculture or NGOs are often well-trained in agricultural production techniques but usually lack knowledge of marketing or post-harvest handling. [10]

Enabling environments

Agricultural marketing needs to be conducted within a supportive policy, legal, institutional, macro-economic, infrastructural and bureaucratic environment. Traders and others are generally reluctant to make investments in an uncertain policy climate, such as those that restrict imports and exports or internal produce movement. Businesses have difficulty functioning when their trading activities are hampered by excessive bureaucracy. Inappropriate law can distort and reduce the efficiency of the market, increase the costs of doing business and retard the development of a competitive private sector. Poor support institutions, such as agricultural extension services, municipalities that operate markets inefficiently and inadequate export promotion bodies, can be particularly damaging. Poor roads increase the cost of doing business, reduce payments to farmers and increase prices to consumers. Finally, corruption can increase the transaction costs faced by those in the marketing chain.

Agricultural marketing support

Most governments have at some stage made efforts to promote agricultural marketing improvements. In the United States the Agricultural Marketing Service (AMS) is a division of USDA and has programs that provide testing, support standardization and grading and offer market news services. AMS oversees marketing agreements and orders research and promotion programs. It also purchases commodities for federal food programs. USDA also provides support to agricultural marketing work at various universities. In the United Kingdom, support for marketing of some commodities was provided before and after the Second World War by boards such as the Milk Marketing Board and the Egg Marketing Board. These boards were closed down in the 1970s. As a colonial power, Britain established marketing boards in many countries, particularly in Africa. Some continue to exist although many were closed at the time of the introduction of structural adjustment measures in the 1990s.

Several developing countries have established government-sponsored marketing or agribusiness units. South Africa, for example, started the National Agricultural Marketing Council (NAMC), [11] as a response to the deregulation of the agriculture industry and closure of marketing boards in the country. India has the long-established National Institute of Agricultural Marketing. These are primarily research and policy organizations, but other agencies provide facilitating services for marketing channels, such as the provision of infrastructure, market information and documentation support. Examples from the Caribbean include the National Agricultural Marketing Development Corporation, [12] in Trinidad and Tobago and the New Guyana Marketing Corporation in Guyana. [13]

Recent developments

New marketing linkages between agribusiness, large retailers and farmers are gradually being developed, e.g. through contract farming, group marketing and other forms of collective action. [14] Donors and NGOs are paying increasing attention to ways of promoting direct linkages between farmers and buyers [15] within a value chain context. More attention is now being paid to the development of regional markets (e.g. East Africa) and to structured trading systems that should facilitate such developments. [16] The growth of supermarkets, particularly in Latin America and East and South East Asia, is having a significant impact on marketing channels for horticultural, dairy and livestock products. [17] Nevertheless, "spot" markets will continue to be important for many years, necessitating attention to infrastructure improvement such as for retail and wholesale markets.

See also

Related Research Articles

<span class="mw-page-title-main">Supermarket</span> Large format of grocery store

A supermarket is a self-service shop offering a wide variety of food, beverages and household products, organized into sections. This kind of store is larger and has a wider selection than earlier grocery stores, but is smaller and more limited in the range of merchandise than a hypermarket or big-box market. In everyday United States usage, however, "grocery store" is often used to mean "supermarket".

<span class="mw-page-title-main">Grocery store</span> Retail store that primarily sells food and other household supplies

A grocery store (AE), grocery shop (BE) or simply grocery is a foodservice retail store that primarily retails a general range of food products, which may be fresh or packaged. In everyday U.S. usage, however, "grocery store" is a synonym for supermarket, and is not used to refer to other types of stores that sell groceries. In the UK, shops that sell food are distinguished as grocers or grocery shops.

<span class="mw-page-title-main">Farmers' market</span> Market featuring foods sold directly by farmers to consumers

A farmers' market is a physical retail marketplace intended to sell foods directly by farmers to consumers. Farmers' markets may be indoors or outdoors and typically consist of booths, tables or stands where farmers sell their produce, live animals and plants, and sometimes prepared foods and beverages. Farmers' markets exist in many countries worldwide and reflect the local culture and economy. The size of the market may be just a few stalls or it may be as large as several city blocks. Due to their nature, they tend to be less rigidly regulated than retail produce shops.

<span class="mw-page-title-main">Food distribution</span>

Food distribution is the process where a general population is supplied with food. The Food and Agriculture Organization (FAO) considers food distribution as a subset of the food system. The process and methodology behind food distribution varies by location. Food distribution has been a defining characteristic of human behavior in all societies, and recordings of food distribution date back for thousands of years. Most governments and societies are highly shaped by the systems created to support food distribution.

Agribusiness is the industry, enterprises, and the field of study of value chains in agriculture and in the bio-economy, in which case it is also called bio-business or bio-enterprise. The primary goal of agribusiness is to maximize profit while satisfying the needs of consumers for products related to natural resources such as biotechnology, farms, food, forestry, fisheries, fuel, and fiber.

<span class="mw-page-title-main">Agricultural produce market committee</span> Board to protext farmers from large retailers in India

An Agricultural Produce Market Committee (APMC) is a marketing board established by state governments in India to ensure farmers are safeguarded from exploitation by large retailers, as well as ensuring the farm to retail price spread does not reach excessively high levels. APMCs are regulated by states through their adoption of a Agriculture Produce Marketing Regulation (APMR) Act.

<span class="mw-page-title-main">Food industry</span> Collective term for diverse businesses that supply much of the worlds food

The food industry is a complex, global network of diverse businesses that supplies most of the food consumed by the world's population. The food industry today has become highly diversified, with manufacturing ranging from small, traditional, family-run activities that are highly labour-intensive, to large, capital-intensive and highly mechanized industrial processes. Many food industries depend almost entirely on local agriculture, animal farms, produce, and/or fishing.

<span class="mw-page-title-main">Agriculture in India</span>

The history of agriculture in India dates back to the Neolithic period. India ranks second worldwide in farm outputs. As per the Indian economic survey 2020 -21, agriculture employed more than 50% of the Indian workforce and contributed 20.2% to the country's GDP.

<span class="mw-page-title-main">Retailing in India</span>

Retailing in India is one of the pillars of its economy and accounts for about 10 percent of its GDP. The Indian retail market is estimated to be worth $1.3 trillion as of 2022. India is one of the fastest growing retail markets in the world, with 1.4 billion people.

<span class="mw-page-title-main">Agriculture in Malawi</span>

The main economic products of Malawi are tobacco, tea, cotton, groundnuts, sugar and coffee. These have been among the main cash crops for the last century, but tobacco has become increasingly predominant in the last quarter-century, with a production in 2011 of 175,000 tonnes. Over the last century, tea and groundnuts have increased in relative importance while cotton has decreased. The main food crops are maize, cassava, sweet potatoes, sorghum, bananas, rice, and Irish potatoes and cattle, sheep and goats are raised. The main industries deal with agricultural processing of tobacco, tea and sugar and timber products. The industrial production growth rate is estimated at 10% (2009).

<span class="mw-page-title-main">Agriculture in Ghana</span> Agricultural activity in Ghana

Agriculture in Ghana consists of a variety of agricultural products and is an established economic sector, providing employment on a formal and informal basis. It is represented by the Ministry of Food and Agriculture. Ghana produces a variety of crops in various climatic zones which range from dry savanna to wet forest which run in east–west bands across Ghana. Agricultural crops, including yams, grains, cocoa, oil palms, kola nuts, and timber, form the base of agriculture in Ghana's economy. In 2013 agriculture employed 53.6% of the total labor force in Ghana.

<span class="mw-page-title-main">Agriculture in Angola</span>

Angola is a potentially rich agricultural country, with fertile soils, a favourable climate, and about 57.4 million ha of agricultural land, including more than 5.0 million ha of arable land. Before independence from Portugal in 1975, Angola had a flourishing tradition of family-based farming and was self-sufficient in all major food crops except wheat. The country exported coffee and maize, as well as crops such as sisal, bananas, tobacco and cassava. By the 1990s Angola produced less than 1% the volume of coffee it had produced in the early 1970s, while production of cotton, tobacco and sugar cane had ceased almost entirely. Poor global market prices and lack of investment have severely limited the sector since independence.

<span class="mw-page-title-main">Wholesale marketing of food</span> Role and operations of agricultural wholesale markets

The consumption and production of marketed food are spatially separated. Production is primarily in rural areas while consumption is mainly in urban areas. Agricultural marketing is the process that overcomes this separation, allowing produce to be moved from an area of surplus to one of need. Food reaches the consumer by a complex network, involving production, assembly, sorting, packing, reassembly, distribution and retail stages. In developing countries the linkage between the producer and the retailer is still usually provided by assembly and wholesale markets, where wholesale marketing takes place using a variety of transaction methods. Recent years have seen an expansion of wholesale marketing in European and former CIS countries. On the other hand, the growth of supermarkets in many regions has seen the development of direct marketing and a reduced role for wholesale systems.

Market information systems are information systems used in gathering, analyzing and disseminating information about prices and other information relevant to farmers, animal rearers, traders, processors and others involved in handling agricultural products. Market information systems play an important role in agro-industrialisation and food supply chains. With the advance of information and communication technologies for development (ICTs) in developing countries, the income- generation opportunities offered by market information systems have been sought by international development organizations, non-governmental organizations (NGOs) and businesses alike.

In the agricultural context, diversification can be regarded as the re-allocation of some of a farm's productive resources, such as land, capital, farm equipment and labour to other products and, particularly in richer countries, to non-farming activities such as restaurants and shops. Factors leading to decisions to diversify are many, but include: reducing risk, responding to changing consumer demands or changing government policy, responding to external shocks and, more recently, as a consequence of climate change.

Contract farming involves agricultural production being carried out on the basis of an agreement between the buyer and farm producers. Sometimes it involves the buyer specifying the quality required and the price, with the farmer agreeing to deliver at a future date. More commonly, however, contracts outline conditions for the production of farm products and for their delivery to the buyer's premises. The farmer undertakes to supply agreed quantities of a crop or livestock product, based on the quality standards and delivery requirements of the purchaser. In return, the buyer, usually a company, agrees to buy the product, often at a price that is established in advance. The company often also agrees to support the farmer through, e.g., supplying inputs, assisting with land preparation, providing production advice and transporting produce to its premises. The term "outgrower scheme" is sometimes used synonymously with contract farming, most commonly in Eastern and Southern Africa. Contract farming can be used for many agricultural products, although in developing countries it is less common for staple crops such as rice and maize.

An agricultural value chain is the integrated range of goods and services necessary for an agricultural product to move from the producer to the final consumer. The concept has been used since the beginning of the millennium, primarily by those working in agricultural development in developing countries, although there is no universally accepted definition of the term.

Food prices refer to the average price level for food across countries, regions and on a global scale. Food prices affect producers and consumers of food. Price levels depend on the food production process, including food marketing and food distribution. Fluctuation in food prices is determined by a number of compounding factors. Geopolitical events, global demand, exchange rates, government policy, diseases and crop yield, energy costs, availability of natural resources for agriculture, food speculation, changes in the use of soil and weather events directly affect food prices. To a certain extent, adverse price trends can be counteracted by food politics.

Digital agriculture, sometimes known as smart farming or e-agriculture, is tools that digitally collect, store, analyze, and share electronic data and/or information in agriculture. The Food and Agriculture Organization of the United Nations has described the digitalization process of agriculture as the digital agricultural revolution. Other definitions, such as those from the United Nations Project Breakthrough, Cornell University, and Purdue University, also emphasize the role of digital technology in the optimization of food systems.

<span class="mw-page-title-main">Markets in Benin</span>

Fresh (wet) markets occur in most towns and villages in Benin, usually surrounded by large numbers of small shops selling foods, consumer items, imported foods and goods, clothing, household goods, etc. With a large portion of the population producing much of their own food, particularly for starches, open markets are where the diet is rounded out with items not self-produced. For those with higher incomes, more of the food consumed is purchased at market. Most vegetables are in villages and town markets, which usually have a major day, or multiple days, where traders and retailers are active in selling perishables in particular. Fish, meats, staple starch crops, legumes, soy and milk cheeses, fruits, and vegetables are available in the market every week of the year in most places with significant variations in the quantity supplied. Staple crops are usually sold to retailers by wholesalers, who obtain them from the producers. Meat is sold by the butchers who source from the producers. The source of vegetables depends on the season. Regional trade keeps a selection of vegetables available, with price and quantity fluctuations depending on the season. Visits to markets in the Parakou and Nikki areas observed avocados from Lomé in Togo and red onions from Niger. Eastern border markets have many Nigerian traders coming into Benin to purchase fruits and vegetables for sale in Nigeria. Most of these transactions are not captured in either of the countries' statistical records. Vegetables traders/retailers obtain their products either from the intermediary traders or directly at the farm gate if possible. For many items there are unwritten agreements that producers will sell to retailers, not directly to consumers. Intermediaries buy at the farms and transport the products directly to their various market destinations. Women dominate the role of vegetable retailers at these open markets. Vegetable producers market much of their produce in bulk at harvest time because of the highly perishable nature of their products. In general, producers conduct all of their sales immediately after harvest. The long marketing channel of vegetables in the larger peri-urban and urban areas involves several types of intermediaries, from local traders to wholesalers. Studies by INRAB have shown that producers are more inefficient in marketing than in production. There is a lack of market participation of farmers and current barriers to entry by farmers limit their access to markets.

References

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