Chapter_1 Lecture note Agricultural Marketing Extension

Agricultural Marketing Extension

1. Agricultural Marketing Extension November 21, 2022 1 by Haimanot Atinkut College of Agriculture and Environmental Sciences, University of Gondar Gondar | Ethiopia

2. Definition of Agricultural Marketing Marketing? Agricultural Marketing? November 21, 2022 2

3. Market and Marketing November 21, 2022 3 Market is a system or an atmosphere or mechanism that facilitate price fixation thereby exchange of goods and services. Marketing is, on the contrary a total sum of all those activities that are related to the free flow of goods from the point of production to the point of consumption

4. Marketing November 21, 2022 4 includes production, processing, exchange/distribution, and consumption. process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. C onsists of efforts that affect transfer of ownership and creating time , place , and form utility to commodities

5. Marketing November 21, 2022 5 Marketing is the management of process involved in identifying, anticipating and satisfying consumer requirements profitably. Marketing is the process by which companies create customer interest in products or services . It generates the strategy that underlies sales techniques, business communication, and business development

6. Marketing November 21, 2022 6 The economic process by means of which goods and services are exchanged.. Business activities human wants are satisfied by exchange of goods and services. Effecting changes in the ownership and possession of goods and services. Deals with the creation of time, place and possession utilities and that phase of business activity through which human wants are satisfied by exchange of goods and services for some valuable consideration ( American marketing association committee definition)

7. Marketing November 21, 2022 7 Marketing is a total system of interacting business activities designed to plan, price, promote and distribute want satisfying products and services, to present and potential customers.

8. November 21, 2022 8 Market structure Seller entry barriers Seller number Buyer entry barriers Buyer number Product differentiation Perfect competition No Many No Many Homogenous Monopolistic competition No Many No Many Differentiated Oligopoly Yes Few No Many Either of the two Oligopsony No Many Yes Few Either of the two Monopoly Yes One No Many Homogenous Monopsony No Many Yes One Either of the two . Quick Reference To Basic Market Structures in Correct Sequence

9. Marketing System November 21, 2022 9 Marketing system - the sequential set of business firms through which a product passes during the marketing process. It refers to all the institutions and resources devoted to moving a product from producer to consumer. May be considered as the connecting link, the bridge, b/n agricultural producers and consumers. Also called a system b/c it consists of interrelated component parts that contribute towards overall system’s goals. It encompasses two distinct dimensions - market participants (or institutions) and the functions undertaken by these actors.

10. November 21, 2022 10

11. Marketing Function November 21, 2022 11 A. Exchange Functions 1. Buying 2. Selling   B. Physical Functions 3. Storage 4. Transportation 5. Processing 6. Packaging C. Facilitating Functions 7. Standardization 8. Financing 9. Risk Bearing 10.Market intelligence

12. Agricultural Marketing November 21, 2022 12 Agricultural marketing is the study of all activities, agencies, and policy involved in the procurement of farm inputs and the movement of agricultural product from the farms to the consumer. AM is the link between the farm and nonfarm sectors. Includes organization of agricultural and material supply, processing industries, the assessment of demand for farm inputs and raw materials and the policy related to the marketing of farm products to the consumer. AM describes nothing more than a series of services involved in getting goods from the point of production to the point of consumption.

13. Agricultural Marketing November 21, 2022 13 Agricultural marketing is made up of: Agricultural inputs for farming like fertilizer, pesticides, and farm The movement of commodities to customers or to first processors who in turn, sell to consumers. Processors who convert the commodities into consumer and industrial products Export of the commodity in their natural or processed state.

14. Agricultural Marketing November 21, 2022 14 is the proximate examples of the concept of perfect competition that drives many economic theories. Perfect competition is characterized by innumerable sellers selling comparable goods (no brand identification), and there is no barrier to entry into and exit from the market

15. Agricultural goods & Manufacture goods November 21, 2022 15 Agricultural Goods Agriculturist is purely a producer. The farmer has practically no voice in marketing and channel choice Middlemen at liberty to exploit farmers through many mal-practices Assembling plays a very important role Manufactured goods Equal attention on production and marketing Manufacturer has major voice in marketing & channel choice. Middlemen cannot usually exploit manufacturers Assembling has no special importance as goods are produced on a mass-scale

16. . November 21, 2022 16 Agri. Marketing(…Continued) Agricultural goods No effective control over quantity or quality of agricultural produce Agricultural goods Demand creation activities are not paying as demand is inelastic Marketing very elaborate and complicated-host-of middlemen Manufactured goods Effective control over quality and quantity of goods Manufactured goods Promotion plays a very important role in marketing Marketing process not very complicated

17. Need For Reform in Agricultural Marketing November 21, 2022 17 Why does reform in Agricultural marketing needed?

18. Need For Reform in Agricultural Marketing November 21, 2022 18 Empower producers with knowledge, information & capability to undertake market-driven production. Provide Multiple Choice and competitive Marketing Channels to farmers. Attract Large Scale investments needed for Infrastructure facilities.

19. Characteristics of Agricultural Products & Price November 21, 2022 19 Perishability of the product Seasonality of production Bulkiness of products Variation in quality of products Irregular supply and inelastic demand Small size of holdings and scattered production Processing .

20. Price November 21, 2022 20 The economic value of goods and services, determined by the interaction of market forces (demand and supply) It guides the decisions and economic activities of agents (producers, traders, and consumers) through signalling incentives and disincentives. Price serves as a tool of intervention into markets to influence the behaviours of producers, traders and consumers (price policies), as subject of policy intervention to influence income distribution with welfare . It is considered as policy tool mostly because it produces impacts in a short time . It reflects/signals economic situations, hence attracts attention of actors (producers, traders, consumers, policy makers, and politicians).

21. Causes of Price variability November 21, 2022 21 Biological nature of agricultural production Yield variability Time lag between decision of production and actual production Inelastic nature of demand for farm products Less power of farmers Government policies Production abroad

22. Importance of Agricultural Marketing November 21, 2022 22 P lays an important role not only in stimulating production and consumption, but in accelerating the pace of economic development. Optimization of resource use and output management; Increase in farm income; Widening of markets; Growth of agribusinesses;

23. Cont’d November 21, 2022 23 Price signals; Adoption and spread of new technology; Addition to national income; Better living; and Creation of utility.

24. The role of Agricultural Marketing in Economy November 21, 2022 24 Food security (by price reduction to consumers, by giving incentives to farmers to produce more, by allowing spatial and temporal arbitration). Rural development and poverty reduction (allowing the poor participate in markets to generate income) – income security, smallholder commercialization. Employment creation (various actors along supply/value chain). Economic growth (allowing increased production and exchange, hence specialization and productivity growth).

25. Scope of Agricultural Marketing November 21, 2022 25 Input marketing Output /product market . Market functioning

26. Input marketing November 21, 2022 26 Input marketing Fertilizers Credit Insecticides & Pesticides Farm machinery New agricultural technology Farm implements Improved seeds

27. Output /product market November 21, 2022 27 Derivatives Crops Other Agricultural Commodities Surplus Productions

28. Market Functioning November 21, 2022 28 Agencies Channels Efficiency and Costs Prices Spread Market Integration Producers’ Surplus Government Policies Research and Training Imports and Exports

29. Approaches to the Study of Agricultural Marketing November 21, 2022 29 There are six methodological approaches to the study of marketing Functional approach: This approach studies marketing in terms of the many activities that are performed in getting farm products from the producer to the consumer. Institutional approach : This approach examines the activities of business organizations or people involved in marketing. Behavioral approach : This approach tests the behavior of firms in terms of input-out put system, power system, communication system and adaptive behavior system. Structure-conduct-performance (SCP) approach: The SCP analysis emphasizes the nature of competition and attempts to relate the variables of market performance to types of market structure and conduct.

30. Approaches to the Study of Agricultural Marketing November 21, 2022 30 Commodity approach: The commodity approach entails an analysis of marketing functions, system, and structure from the viewpoint of an individual product. 6. Marketing management approach: Marketing management is the process by which firms develop and implement marketing programs that assist them in satisfying consumers and making profit. Under this approach more importance is given to managerial tasks in marketing like the 11 P’s or the marketing mix ( Product, Price, Promoting, Packaging, Performance, People, Process, Physical evidences, Place, Public opinion, Political power).

31. Defects in Agricultural marketing November 21, 2022 31 Lack of Transportation Facility Poor Quality of Product Role of Middleman Lack of Grading Problems of Produce Collection Lack of Storage Facility Weight and Measures Market News Lack of Credit Facilities

32. Measures to improve Agricultural marketing November 21, 2022 32 Improved Transport Facilities Increase in the Credit Facilities Increase in Storage Facility Market Reforms New Markets  Cold Storage  Market Information  Grading of Product  Marketing Research

33. Market Integration November 21, 2022 33 Integration shows the relationship among the firms in a market. (1) Horizontal integration (2) Vertical Integration

34. Vertical Integration November 21, 2022 34 A consolidation of many firms that handle the same part of the production process, is typified by one firm engaged in different parts of production (e.g. growing raw materials, manufacturing, transporting, marketing and/or retailing refers to a single agency performing more than one activity in the sequence of the marketing process so the different market functions coalesce and the number of functionaries diminishes.

35. Horizontal Integration November 21, 2022 35 Horizontal integration occurs when an agency gains control of another one performing the same functions leading to added competency, higher market concentration, increased synergy but reduced competition.

36. 1.3 Paradigm Shift From Production-led Extension to Market-led Extension November 21, 2022 36 Globalization of the market demanded for paradigm shift i.e. from production to market led production. A t global level which stress the need for opting market-led extension in a large scale  Globalization/Economic liberalization  Changed consumer preference  Revolution in ICT  New trade opportunities within and outside the country  Export opportunities

37. To meet these challenges…… November 21, 2022 37 Farmers need to transform themselves from mere producers-sellers in the domestic market to producers cum sellers in a wider market. The questions confronting the farmers are :  What to produce ?  When to produce ?  How much to produce?  When and where to sell ?  At what price to sell?  In what form to sell?

38. Need for Extension led Marketing November 21, 2022 38 Conversion of P-L-E into M-L-E Orientation of extension system with knowledge and skills related to the market. Minimization of production cost. Introduction of export oriented product. Modernization of wholesale markets or new markets with new Agricultural policy.

39. Changing Role of Modern Agricultural Extension Service The transition from Legitimizer-led extension to Market-Led extension is quiet eventful in the country Legitimizer–led extension State-led extension Farmer/Group-Led extension Market-led extension November 21, 2022 39

40. Changing Role of Modern Agricultural Extension Service Market oriented Market participation Commercialization = market oriented + market participation November 21, 2022 40

41. Role of Marketing channels November 21, 2022 41

42. Market-orientation, market participation and Commercialization Market oriententation in agriculture is defined as the degree of allocation of resources (land, labor and capital)to the production of agricultural produce that are meant for exchange or sale It has been used more widely in manufacturing sector such as food industry to refer to the degree to which a producer uses knowledge about market such as customers and prices to answer the three basic economic questions: what to produce, how to produce and how to distribute. Market orientation in agriculture is basically a production decision issue. Market orientation is measured as the extent to which a household’s crop portfolio includes crops that are relatively more marketed evaluated at farming system level (Gebremedhin and Jaleta , 2010) November 21, 2022 42

43. Activity Discuss the national extension delivery and how it integrated with marketing? November 21, 2022 43