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Market information

do not carry out research

- includes. Market news

Producing information like price & other

- Roles of market information:-

 to improve operations efficiency

 improve competitiveness: pricing effect
 decision making process
- Information sources are private source, government based, research institution.

Criteria for evaluation for market – information effectiveness:-

a. information must be available timely;

b. information must be complete /comprehensive;
c. information must be reliable, accurate, timely;
d. information must be relevant & in usable from;
e. information must be accessible to all users.
Criticisms of market information:

a. The forcasts are usually in accurate;

b. Market reports inevitably depress farm prices;
c. Market information is of greater value of buyer of farm products than to farmers;
d. Market reports are manipulated/ influenced

Laws and regulation

All organizations has to work under a certain frame work of law which they have to
abide .Regulation aimed at promoting competition and many countries call it anti-trust
laws. And a Monopoly structure in a country is not an efficient structure because the
price is too high and the firms get higher profit. The most efficient and ideal market is
competitive market. So most governments pass laws which are against monopolistic that
promotes competitive market.

Now a days governments are not using terrifies as a barrier since the world trade is being
liberalized and the developed countries are using a non tariff barrier to restrict the
developing countries commodity like using ; child labor use, exploitation of labor ,human
right, origin of the content . The other is sanitary and phyto sanitary requirements.

How do firms react to marketing environment

1. Reactive approach

The firms in such type of market have Passive view of the environment as
uncontrollable .so that firms decide to leave the market, realizing that it is beyond their
capacity. Ex: in the case of rift valley disease, the pastoralists have nothing to influence
the other countries import ban.

2. Proactive approach

Firms actively attempt to shape and influence the environment make a favor in election
campaign. In this approach current strategies are cautiously adjusted to accommodate
environmental changes. Strategies are constructed to over come market challenges and
take advantage of opportunities.

Problem of agricultural marketing in developing countries

1. Absence of grade and standard

It restrict the development of effective and efficient marketing system, this becomes
clear when we consider buyer and seller separated geographically ; if we don’t have
measure of grades and standard ,the buyer has to come and see then visually , in this case
visual inspection is mandatory . But if there is grading and standard it is a measure of
communication and between the buyer and sellers.

Absence of grade and standard inhibit the flow of meaningful information through price
& increase transaction cost
 Transaction cost - Ex-ante : before agreement is achieved
- Post-ante: after agreement is achieved

Absence of grade and standard is an inherent problem in developing countries and in such
cases price is not a measure of a commodity.

As countries develop their transaction cost decrease because they have facilitating
organization which will make their job easy.

Development as an essential factor for cutting transaction cost is reputation i.e creating a
good name from a customer is one way of cutting down transaction cost

Effect of Grading

1. Lower marketing cost

2. Benefit for the consumers and producers/reputation
Better math of need with which different quality will be available for the consumers.
It also brings higher returns for producers. Producers who produce quality product get
high price and get consumer confidence.

Quality control- grading & standardization

- To perfect product is objective of grading & standardization.

 Standardization: more conceptual/provide grade standards/.

- attribute of grade standards:- size, color, tenderness, length-fiber, aroma, fat% like
 Grading: sorting out of the unlike lots of products into uniform categories or
homogeneous lots, according to quality standards.
- Sensory attributes: smell test & like
The advantage of grading & standardization:

1. Improve the competitiveness

2. Improve operational efficiency & price efficiency – cost reduction.

Criteria for grades & standardization

What must be the base for setting grade for goods?

a. Standards should be based on recognizable and user friendly characteristics;

b. Standards should be built up on factors w/c will make grade meaningful as many users
as possible

c. Standards should be built up on factors that can be accurately and informally measure
and interpreted.

d. Should not be economically worse while.

2. Lack of unified measurement system of both quality and quantity : coffee test

With in different area of the country they use different unit of measurement

3. Spatial dispersion of agricultural product

Most of the producers are geographically disperciment and affect the market. Small
amount of products have to be assembled from individual producers which makes the
marketing process costy in terms of time, cost, and the issue of quality come in to point.

Coordination cost is also higher across the dispersed producing unit. Producers which are
dispersed are almost price takers and coordinating this dispersed producers together cost
a lot. Small volume and large number of producers who react in an identical way on
prices and at mostly uncoordinated. The small production unit result ineffective rural
assembling markets.

4. Inadequate infrastructure and poor communication

Because of lack of this infrastructure and communication there is higher rate of physical
loss and spoilage and the quality of the product may distort. Inadequate infrastructures
determine the supply of product to be stored. poor communication/transportation increase
the marketing cost and leads to fragmented market .

5. Poor information system on product and aspect of product

Supply, demand, stock, price and quantity have to be known to act in the market. In
developing countries there is a lack of information in price of commodity across market
and wide market price is observed.


o Processing fresh products by canning or freezing them is anther form of storage.

And b/c storage operations delay sales & subject the farm /firm to inventory risks
financing & risk bearing are considered part of the storage function.
o 25-30% of farm products are lost, due to storage.
o time utility e.g. warehousing
o a no of issues concern the farm products storage function:-
- How large should the food stocks be?
- How should food stocks be managed & financed?
- How can inventory & storage costs be reduced?
- What storage capacity is desirable?
 Storage decreases deterioration both in quantity & qualities.
 Storage structures: there are variety of storage structures used to store farm
 Underground storage structure (mainly at farm levels)
 Metal drums storage
 Bulk or loose storage: keep as it (with out any thing)
 Bag storage
 Improved storage structure: Ware houses, Cold storage.
Three types of risk in stage:-

• Quality risk (deterioration);

• Quantity risk (loss);
• Price risk.
Risk management

Risk is inherent with the ownerships of goods & as with other functions of marketing;
risk must be born by someone. They cannot be eliminated. Risks can, however, be

- every person’s in marketing system ‘bears’ risk

There may be 2- category of risk in marketing management:-

a. Physical damage/stolen, fire, & like/: production destruction from natural

hazards, such as, fire, wind & so on.
- can be measured by;

 Insurance: transferring the risk to somebody.

 Build up of own fund: to cover such a possibility.
b. value detoriation (quality detoriation, price changes): product detoriation in value
resulting from-quality detoriation or price changes b/c of a change in consumer
preferences, a change in general business activity.

- The management for reducing this risk is more important than the physical damage/risk.

 improvement on the market information system;

 Government price support program.
 Selling of a products in advance i.e., fixation of price in the present for delivery at
specific future dates. Called future market
 Via vertical integration of the marketing channel also reduces or transfer risks.

Marketing Institutions

-Possible to eliminate market functionary but not the marketing service.

-Marketing Middlemen take title to the products they handle

-primary objective is to satisfy consumer wants at a

a. Merchant middlemen

b. Agent middlemen: commission agents and brokers in terms of fees,

commission, brokerage

c. Speculative middlemen: those who buy and sell products with the primary objective of
profiting from the price movements.

d. Manufacturer/ Processor/ middlemen: specialize in adding time, form, place, and

possession utility to raw farm products.

e. Facilitative organization: banks, transporters, warehouses, grades, market promotion,

and like.

Market Channels

-The length of channel varies from commodity to commodity, depending on the quantity
to be moved, the form of consumer demand, and the degree of regional specialization in

-Path/root via which product flows.

-It links different marketing middlemen in sequences.

-In LCDs, minimum three intermediaries are there between producers and consumers.

-In DCs, there one or two intermediaries between production and consumption.

• F C;
• F W R C;
• F Processors W R C;
• F W P W R C;
• F W P W R C;
• F W P R C;
• F W Exporter Exporters;
• F P Exporter Exporters.