How can agricultural marketing margins be improved


Intermediaries at each stage earn sizeable margins for little value addition. One way of reducing the length of marketing channels is by limiting intermediaries through better connectivity consisting of roads, railway connections and lorries. This would remove geographical isolation and bring the farmer


Agriculture is the cultivation of animals, plants, fungi, and other life forms for food, fiber, biofuel, medicinal and other products used to sustain and enhance human life. Agriculture was the key development in the rise of sedentary human civilization, whereby farming of domesticated sp…

closer to the consumer.


What is effective agricultural marketing?

Effective agricultural marketing campaigns are developed with multiple targets, including consumers, restaurants, supermarkets, and government industries. (See also Industrial Marketing) In fact, some states have mandated marketing programs; that is, producers are required to pay the state for its marketing efforts on the industry’s behalf.

Is your profit margin improving?

It’s important to note, though, that your profit margin isn’t just something you should measure; it’s a metric that you should continuously improve. As author Doug Hall said, “If your profit margins aren’t rising, chances are your company isn’t thriving.”

How can retailers maximize margins?

“One way to maximize margins which also has other significant benefits is to have 100% visibility of inventory. By doing so, this minimizes markdowns and thus margin erosion. Zara are a particularly good example of this,” says Andrew Busby, Founder & CEO at Retail Reflections.

What are some of the challenges of Agricultural Marketing?

Effectively gathering and using information in agricultural marketing poses some unique challenges. For example, the most important information signal in the marketplace is price; however, agriculture is often subject to price controls, and thus the wrong message can be communicated to customers.


How can marketing of agricultural products be improved?

Marketing Strategies for Farmers and RanchersFarmers Markets.Community Supported Agriculture.On-Farm Sales and Tourism. On-Farm Sales and Tourism, Page 2. … Direct Marketing Meat and Animal Products.Season Extension.Value Added Products.Sales to Restaurants and Institutions.Buy Local Campaigns.More items…

How can we solve the agricultural marketing problem?

Suggestions for Agricultural Marketing Problems in IndiaElimination of Mediators. … Use of Standard Weight. … Loan Facilities. … Development of Means of Transport. … Publicity of Market Policies. … Training Facilities. … Regulation of ‘Mandis’ … Market Survey.More items…

What are the marketing strategies in agriculture?

10 easy agribusiness marketing promotion strategies that actually workAdvertisements. … Business branding. … Value addition. … Exhibitions. … Hand out samples and freebies. … Offer discounts. … Network with people in your field.

What are the problems faced by agricultural marketing?

In agricultural marketing transportation cost, inadequate market infrastructure, lack of market information, lack of processing units, storage facility, price fluctuation are the major problems.

Which of the following are remedial measures for improvement of agricultural marketing?

1 Establishment of regulated market.2 Establishment of co-operative marketing societies.3 Extension and Construction of additional storage and warehousing facilities for agricultural produce of the farmers.4 Expansion of market yards and other allied facilities for the new existing market.More items…

What is the importance of agricultural marketing?

Marketing is an important component for the success of agricultural businesses. With effective agricultural marketing, farmers can increase profits, boost sales, and reach out to more customers. The first step to successfully market food products is knowing your customers.

What is the best marketing strategy?

The best marketing strategies to try in 2020Educate with your content.Personalize your marketing messages.Let data drive your creative.Invest in original research.Update your content.Try subscribing to HARO.Expand your guest blogging opportunities.Use more video.More items…•

What are five agricultural challenges?

What kind of problems do farmers face?Cope with climate change, soil erosion and biodiversity loss.Satisfy consumers’ changing tastes and expectations.Meet rising demand for more food of higher quality.Invest in farm productivity.Adopt and learn new technologies.Stay resilient against global economic factors.More items…

Who employs agricultural marketing?

Agricultural marketing techniques are used in every corner of “agribusiness,” including small farms, corporate farms, and collectives; distributors ; manufacturers of farm equipment, pesticides, and genetic enhancements for crops and livestock; feed and seed sellers; and more. Additionally, there are also government agencies which monitor and direct agribusiness practices.

What kinds of customers does agricultural marketing target?

The ultimate target for agricultural marketing practices are those who actually buy and eat the farm produce (See also B2C Marketing). As this consumer base represents nearly everyone, marketing campaigns often focus on one segment of the population at a time. People from different regions, as well as different cultural and socioeconomic backgrounds, tend to purchase different foods.

How is an agricultural marketing campaign developed?

Marketing is fundamentally about communicating information to increase demand for a product or service. Effectively gathering and using information in agricultural marketing poses some unique challenges.

How can a marketing school help you in this field?

GCU’s Colangelo College of Business offers leading edge degrees that address the demands of contemporary business environments.

What is the agricultural marketing service?

The USDA Agricultural Marketing Service runs a number of different programs to promote farm sales (and prices). The agriculture-rich state of California produces some $30 billion dollars’ worth of agricultural products annually, and is one of the largest food exporters in the world.

What classes do you need to become an agricultural marketing specialist?

Classes in economics and finance will help prepare you to properly analyze economic data. Agricultural marketing specialists must be aware of market issues particular to agriculture, such as commodities markets, futures trading, government subsidies, and the impacts of farm debt. Classes in law will prepare you for a field flooded with regulations.

What is marketing in agriculture?

Fundamentally, marketing revolves around understanding and communicating with people. In agricultural marketing, this includes people from a number of different groups, including farmers, consumers, and legislators—all with wildly different goals and concerns.

How does marketing affect customer satisfaction?

In practice, changes in the cost of marketing influence consumers’ satisfaction, and efforts to increase the customer’s utility often affect marketing costs. A new marketing practice that reduces costs but also reduces consumers’ satisfaction may actually reduce the efficiency ratio. For instance, millers might improve efficiency by withdrawing 5 kg bags of meal from the market and sell minimum quantities of 10 kg bags. If a substantial number of consumers prefer to buy the 5 kg bag then the decrease in customer satisfaction could be greater than the gains made in cost reduction to the miller. The compromise which must be made between operational efficiency and customer satisfaction explains the difficulty of improving marketing efficiency. It is not difficult to reduce marketing costs by taking such measures as reducing the number of pack/bag sizes, eliminating packaging or reducing the number of retail outlets supplied but there may be a greater loss in customer satisfaction than is compensated for by the fall in marketing costs and retail prices. When evaluating any marketing change intended to improve marketing efficiency, both cost reductions and customer utility must be considered.

How does marketing help consumers?

By performing certain functions and services, various marketing organisations and agencies make it possible for commodities, produce and products to move from producers to consumers. However, these functions incur costs, often of considerable magnitude. Discussions on margins and costs usually include the topic of marketing efficiency. An efficient marketing system is one capable of moving goods from producer to customer at the lowest cost consistent with the provision of the services that customers demand. Once the costs involved in marketing have been identified then means can be devised to make the system more efficient. Increases in efficiency can be achieved in a variety of ways: by increasing the volume of business using improved handling methods, investing in modern technology, locating the business in the most appropriate place, implementing better layouts and working practices in production, improving managerial planning and control and/or by making changes in marketing arrangements (e.g. through horizontal or vertical integration).

What are the services that farmers provide in Nepal?

Such services would include some or all of the following: crop drying, grading, sorting into convenient lots, bagging, storage and transporting. In fact, Nepal’s farmers provide few of these services. Pant states that due to financial constraints and a lack of storage facilities, most farmers sell their paddy at the earliest opportunity. In practice this means that paddy is sold chiefly between November and January. It is the millers and wholesalers who provide the storage services and so are able to sell rice throughout the year. However, as figure 12.1 shows, the millers and wholesalers receive only a small percentage of the consumer price, as do retailers. There is a prima facie case for concluding that the marketing intermediaries in Nepal are inadequately rewarded relative to the farmers. There are other equally plausible conclusions. Since the farmer’s share includes the farmer’s costs, production inefficiencies will increase the proportion of the final price which will go to farmers. These inefficiencies can arise for a number of reasons. If the great majority of farmers are very small then the farming sector may be denied access to economies of scale. Where credit cannot be obtained from the formal sector then smallholders may be forced to pay exorbitantly high interest rates to informal lenders. Another cause of inefficient production is the continued use of obsolete technology or husbandry methods.

Why do farmers need to store food?

Storage is carried out in order to extend the period of availability of a crop to a consumer . In the case of staple food crops long-term storage is, of course, essential. The harvest period may be just a few months but the staple has to be consumed throughout the year. Storage can be carried out by the farmer, the trader (or marketing board) or by the consumer. With regard to more perishable crops, storage can be used to extend what is often a very short period of availability. However, this is only viable when the produce can be sold after storage at a price higher than the into-store price, with the difference fully covering the costs of storage, as well as offering an incentive to take the risk that a loss may result.

What is pricing efficiency?

Pricing efficiency is a second form of marketing efficiency and is based on the assumption that competitive markets are efficient. It is concerned with the ability of the marketing system to allocate resources and coordinate the entire agricultural/food production and marketing process in accordance with consumer directives. The evidence of pricing efficiency is efficient resource allocation and maximum economic output. Possibly the best measure of the satisfaction-output of the marketing system is the price that customers will pay in the marketplace for the produce, commodity or product in question. If consumers are willing to pay three cents more per orange for orange juice than for fresh oranges, it can be inferred that the process of juicing adds three cents of form utility to fresh oranges. The pricing mechanism directly affects production, in this instance, by indicating that a certain amount of the available oranges should be processed rather than sold as fruit.

How does operational efficiency improve?

Improved operational efficiency is evident where marketing costs are reduced but outputs are either maintained or actually increase. Examples of operational efficiency gains would be the introduction of a less expensive method of storing grain or an innovative milk package that reduces energy costs when the product sits in retailers’ refrigerators. Technological innovations are not the only avenue leading to higher levels of operational efficiency. An organisation that improves its raw material procurement practices, by say centralising purchases, buying in larger quantities or taking advantage of unit freight rates, is likely to increase operating efficiency. In the same way, an organisation that rearranges sales territories and distributes fewer but larger loads to each delivery point can improve its levels of operational efficiency. Physical losses as commodities, produce or products move through the channels of distribution are another aspect of operational efficiency. The higher the losses, the lower the level of operational efficiency.

What is the data presented in figure 12.1?

The data presented in figure 12.1, is not sufficient to allow conclusions as to problem causes but merely suggests areas to which analysts could direct their attention. Indeed, no matter how complete the data it is dangerous to rely only upon quantitative data when assessing the efficiency and fairness of a given marketing system, or the efficiency of particular market participants. Consider the hypothetical data in table 12.1 in which different prices are obtained from growing tomato varieties suitable for canning and those which are best consumed fresh. The table shows the prices paid by consumers, the farm-retail price spread and the percentage of the consumer’s dollar that went to the farmer for each type of tomato.

How does food processing affect the rural economy?

A well-developed food processing industry increases farm gate prices, reduces wastages and ensures value addition. It assists farmers in getting knowhow from factories and promotes crop diver­sification. However, unless government rationalizes food laws, sets up the mega food parks and encourages foreign investment, facilities for food production are unlikely to come up in a big way.

How does storage infrastructure help farmers?

Storage infrastructure such as warehouses and cold storages help save the harvested crops. Agricultural produce is still stored in jute bags. As a result, the produce cannot be stored for long. Many farmers resort to distress sale of their produce to clear the loans from moneylenders.

What percentage of food grains are lost in rural markets?

Due to lack of proper handling facilities at the village level, about 7 percent of food-grains, 30 percent of fruits and vegetables and 10 percent of spices are lost before reaching the market,” it says. 6. Access to Finance:

Why are farmers in remote villages unable to use price information?

Even if they know the prices, they are unable to make use of the information, because harvesting and transporting of a crop cannot be done in a day . 8.

How to reduce the length of marketing channels?

One way of reducing the length of marketing channels is by limiting intermediaries through better connectivity consisting of roads, railway connections and lorries. This would remove geographical isolation and bring the farmer closer to the consumer.

What is isolated regional market?

Isolated regional markets means that farm­ers cannot sell their produce where it is needed. Agents, wholesalers and processors enjoy significant clout in agricultural markets. Intermediaries at each stage earn sizeable margins for little value addition.

Why is the farmer always under pressure to sell stocks?

As a consequence, the farmer is always under pressure to sell stocks to meet his burden of debt. Farmers lack access to formal channels of finance in many parts of the country. Crops are not considered a financial asset against which farmers can take loans.

3.1 Marketing System

Although farmers and consumers sometimes directly interact (e.g., farmers markets), most food products usually go through a complex processing and distribution system after they leave the farm-gate and before they land on a shelf of a retail store.

3.2 Vertical Coordination

One way to facilitate a coordinated performance among members of the supply chain is by means of contracting. A contract is an arrangement between a buyer and a seller, where the parties agree on quantity and price of a commodity to be exchanged months in advance.

3.3 Marketing Margins

In the farm-retail price relationship, the difference between what consumers pay and what farmers receive is called price spread, also known as marketing margin. Consider a profit maximizing retailer, which uses a farm commodity and marketing services as inputs in production.

3.4 Elasticity of Derived Demand

Assuming linear demand functions, and constant marketing costs, elasticity of derived demand (faced by a farmer) can be given by: ϵf = ϵr pf pr ϵ f = ϵ r p f p r where ϵr ϵ r is elasticity of primary demand (in a retail market), and pf p f and pr p r are the farm commodity and the retail product prices.


Consider an economy with a single farmer and a single retailer. Suppose the farmer produces a commodity with a cost function of c(q) = 10q+q2 c ( q) = 10 q + q 2. Suppose the retailer buys this commodity from the farmer and processes it to a food product available to consumers.

What does a web designer do for a farm?

Armed with the photos, text and guidance you provide, a web designer will work to incorporate these elements, along with your logo and tagline, to create a unified site that is consistent with the rest of your farm marketing efforts. Costs will vary depending on the complexity of your needs, whether you are selling products online, the completeness of the information you provide and subsequent revisions.

What are the components of a marketing plan?

Among those you will need to consider include a logo, tagline, website, association membership, advertising, events, customer service, timing and budget.

Why is a website important?

A website is cost effective and reaches a wide number of customers. Whether you use your site as a static farm brochure to get your name out or actually sell products online, a website can help take your marketing to the next level without a huge investment.

What is a good USP?

A good USP is a clear, simple and concise statement of the benefits you offer. Along with your product line and target demographic, your USP becomes your North Star, always guiding you even when things seem foggy and the future uncertain.

What to do if your farm already has customers?

Who are they and how would you describe them? If you’re just starting out and don’t have customers yet, observe your potential competitors and their customer base . By knowing who your customers or prospects are, you can increase the likelihood they will buy from you by tailoring your marketing message to their needs and desires.

What are the potential income streams for a farm?

Agritourism, breeding stock, fiber, yarn, fresh or prepared food, farm-related services—the list of potential income streams for your farm is only limited by your interest, time and imagination. Your farm marketing plan starts with a simple list of all of the products and services you currently offer or want to offer in the future. A successful plan can help expand your customer base and lead to additional revenue.

Where is Gretta MacIntyre’s farm?

When Gretta MacIntyre, who markets llamas , White Dorper sheep and colored Angora goats from her Firethorn Farm in western Pennsylvania, was looking for the right tagline she knew it needed to include something about her farm’s superior customer service.

What is a good profit margin in retail?

Given the averages presented above, a “good” profit margin depends on your region and industry. Take a look at the above-mentioned benchmarks to gauge your performance against other retailers.

Why do retailers raise their prices?

Raising your prices will enable you to make more money on each sale, thus widening your margins and improving your bottom line. Many retailers, however, balk at the prospect of increasing their prices out of fear that they’ll lose customers.

What should retailers focus on when looking for ways to increase profits?

“Retailers often focus on pricing strategies when searching for ways to increase profits, but most should try to start with streamlining operations,” says Krista Fabregas, a retail analyst at

How does Vend help you?

If you’re a Vend user, you can gain immense inventory visibility by looking at your reports. Vend’s Reporting capabilities allow you to closely monitor stock levels and inventory movements, so you can keep products moving.

Why do large retailers seek joint purchasers?

A few years ago, for example, Walmart sought out joint purchasers for raw materials, so they can consolidate purchases and get more buying clout.

What software did Murray Crane use to automate sales?

Rather than manually plugging the numbers into the program, he integrated his point-of-sale system (Vend) with his accounting software (Xero ).

How to avoid markdowns?

Markdowns are notorious profit-killers, so avoid them whenever possible. How do you do that? Start by improving how you manage your inventory. You should always have a handle on the merchandise you have on hand, as well as what your fast and slow-movers are . This will help you make better decisions around purchasing, sales, and marketing, allowing you to sell more products and reduce the need for markdowns.


Objectives of The Chapter

Structure of The Chapter

Assessing The Performance of A Marketing System

Marketing Efficiency and Effectiveness

Operational Efficiency

  • Improved operational efficiency is evident where marketing costs are reduced but outputs are eithermaintained or actually increase. Examples of operational efficiency gains would be the introduction of aless expensive method of storing grain or an innovative milk package that reduces energy costs when theproduct sits in retailers’ refrigerators. Te…

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Pricing Efficiency

Identifying Marketing Costs and Margins

The Reference Product Concept

Handling Costs

Packaging Costs

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