Solutions to Assignments
MBA and MBA (Banking & Finance)
MMPC 03 - Business Environment
MMPC-003/TMA/JULY/2022
Question No. 4. Describe the key players in the agricultural sector and discuss the role and importance of agricultural marketing.
With growth and increase in production, the active role of middlemen in the movement of
agricultural commodities which specialise in performing marketing roles and are involved in
marketing of products has increased. The number of mediators can be classified into five
groups as follows.
1. Merchant Middlemen
Merchant middlemen are the ones who take title of the goods they deal in while buying and
selling. Their earning or loss depends on the sale and purchase prices. They are of four types:
a) Wholesalers: Those who buy agricultural commodities in large quantities directly
from farmers or from other wholesalers. They mainly assemble the goods from various localities and store produce and often release them in the off-season since
they store them in the peak arrival season.
b) Retailers: They buy from wholesalers and sell it directly to consumers in small
quantities. Retailers are the closest to consumers in the marketing channel.
c) Village merchants: The vendors or retailers who move from village to village to
directly purchase the produce from the cultivators. Village merchants purchase the
produce of those farmers who have either taken finance from them or those who
are not able to go to the market. Village merchants also supply essential
consumption goods to the farmers. They often act as the financers of poor farmers
and sell the collected produce in the nearby market or the villages.
d) Mashakakhores: It is a colloquial term for big retailers who often act as small
wholesalers and majorly deal in fruits and vegetables. They usually sell to bulk
consumers like hotels, para-military units or small retailers/vendors. Over the
years, they have started dealing with all types of customers without the condition
of a minimum quantity and are working like ordinary retailers.
2. Agent Middlemen
They are basically representatives of clients and do not own the products. They act as
negotiators between sellers and buyers and help them in sale and purchase of products. They
usually receive commission or brokerage on sale. Agent middlemen are of two types:
a) Commission Agents: A commission agent generally operates in the wholesale
market and acts as the proxy of either a seller or a buyer by representing them in
buying and selling of products.
b) Brokers: They act as communicators between buyers and sellers to bring them on
the same platform while facilitating personal services to their clients in the
market. They may claim brokerage from buyer, sellers or both depending upon the
market situation as they simply wander to render their services to clients.
3. Speculative Middlemen
These middlemen are the ones who buy products at a low price when arrivals are sizable
usually in off-season when prices are high. They take claim of the product and risk associated
with an aim to make a profit on it.
4. Processors
Processors are the ones who hire agents to buy for them from areas where production is high
either and bring on their businesses either on their own or on custom basis. Agents may also
store the products and may deal with it throughout the year on continuous basis. They often are involved in advertising to generate demand for their managed goods and add form utility
to farm goods.
5. Facilitative Middlemen
As the name suggests, these middlemen facilitate buying and selling while assisting in the
marketing process. They get their income in the form of fees or service charge since most of
them are labourers who help in physical movement of goods and products while loading and
unloading them. Weighmen and graders also fall into this category since they facilitate
weighing of produce and grade products according to different categories. They are often
termed as the core of the marketing wheel.
Transporters who assist in movement of the produce from one market to another and
communication agencies including advertising agencies that majorly help in decision making
about the purchase of goods are a part of this group. Auctioneers who help in exchange of
produce by putting the produce for public sale and bidding by the consumers or buyers are
equally important and help in ironing out the marketing system.
ROLE AND IMPORTANCE OF AGRICULTURAL MARKETING
Agricultural marketing has a vital role as it helps in encouraging the process of production and
consumption. It equally helps in accelerating the pace of fiscal development since it is an
important multiplier of agricultural development.
A shift from traditional to modern agriculture system has been a challenge and marketing has
been a big experiment in the entire process. But the role of marketing remains utmost
important. The importance of agricultural marketing is revealed from the following.
1. Optimization of Resource use and Output Management
The key role of an efficient marketing system is to help the market in pulling down the losses
and accelerating the marketable surplus. The marketing losses often arise due to inefficiency
in processing, storage and transportation of products. An efficient marketing wheel will help
in optimization of resources and output management and a well-thought out system of
marketing can help in even distribution of available stocks. Taking everything into account, it
is indeed a modern approach to sustainable growth and sustains it.
2. Increase in Farm Income
Reducing the number of middlemen while ensuring higher level of income to restrict the cost
of marketing services and the malpractices is what a good marketing system would aim at
achieving. An efficient system assures improved prices for farm products and encourages
them to invest their surpluses in buying modern inputs so that yield and produce may
increase.
3. Widening of Markets
When a system widens the market by taking the products to remote corners both within and
outside the country is considered profitable since it increases the demand on a continuous
basis while guaranteeing a higher income to the producer.
4. Growth of Agro-based Industries
Agri-dependant industries rely on the supply of raw materials such as cotton, sugar, edible
oils, food processing and jute on farm produce and therefore require an efficient system to
help in the growth to encourage the overall development process of the economy.
5. Price Signals
Efficient marketing systems allow farmers in scheduling and arranging their production in
accordance with the needs of the economy. This work is carried out through transmitting
price signals.
6. Adoption and Spread of New Technology
Adapting to demands and adopting latest technologies and scientific knowledge always leads
to growth. But a technology upgrade requires greater investment and farmers would invest
only if they are guaranteed of ago-ahead at remunerative price.
7. Employment Creation
This is a system of marketing which focuses on employment generation and engages millions
of people in activities, such as wrapping, packing, transferring, storing and doling out.
Persons like commission agents, brokers, traders, retailers, weighmen, hamals, packagers and
regulating staff are directly employed in the marketing system. Apart from them, several
others are able to look for employment opportunities when dealing with supply of goods and
services.
8. Addition to National Income
Marketing events are value additions to the product since they increase the nation's gross
national product and net national product.
9. Improved Living
Development that adds to growth while diminishing poverty of the population and adds to
foreign exchange while eliminating economic waste should be given special attention. The
development of an efficient marketing for food and agricultural products is also vital to
overall economic development. The marketing system is the key for the success of the
development programmes which are aimed to uplift people.
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