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 subsistence to commercial agriculture. 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. MARKETING & AG. INPUT AG. PRODUCTION PROCESSING SUB-SYSTEM AG. INPUT SUB-SYSTEM AG. PRODUCTION 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 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 Storage alternative - on farm storage - commercial facility - government facility Product alternative - raw product - processed products - branded products

Agriculture Marketing Alternatives 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