The marketing of agricultural products is vitally important as it has a direct impact on the cousumer, the producer and the economic development of a country. The consumers are hard-hit by high marketing costs. If there is no market outlet farmers will not produce beyond their own needs.
Marketing is an essential means of building up income and foreign exchange for general development of the whole economy to the most of the Asian countries which mainly depend upon agriculture. Part of the population may go hungry or be confined to a diet that is not nutritionally adequate because the food they need costs more than they can afford.
Since a large part of the price is often made up of marketing costs, it is clear that high marketing costs are an important reason why some people have not enough food. The more these costs can be reduced, therefore, the easier will it be for poor consumers to get the food they want . This aspect is all the more important in that the proportion of the population living away from farms and dependent on the marketing system for their food is increasing rapidly.
Classification of Farm Products
Farm products are generally clssified into two broad groups—(a) consumer farm products and (b) industrial farm products. A distinction between these two broad classes of farm products is important for understanding the problems and methods of marketing farm products.
Consumer farm products are those which are ultimately sold to household consumers in essentially the same form in which they are produced. Eggs, fluid milk, vegetables and fresh fruits are the examples of consumer farm products. They do not undergo significant processing which changes their farm but they are cleaned, trimmed, purified, graded and packed. They are ready for consumption without any processing or at most with as slight change from their original state.
Industrial farm products are those which are used as industrial raw materials. Tobacco, fibre crops, grains are the examples of such products. The raw materials require elaborate market preparation. The consumer farm products are generally marketed differently from industrial farm products. But the various stages in the marketing systems for both classes may be similar.
The same types of middlemen and marketing methods, for instance, are often used in the early stages of the channels of distribution for fruits and vegetables. The existence of the two classes of farm products makes it necessary to keep clearly in mind that the marketing of consumption goods involves their transfer to consumers in their original form but with a slight change.
The marketing Of raw materials, however, involves further processing for placing them in the hands of manufacturers. A particular commodity may appear in either or both classes. Thus fruits are sold for home consumption as well as for canning industry. Similarly, milk is consumed in its natural state as well as used as raw material for making butter and ghee. There is a fundamental difference in the type of sale promotion activities in the two major types of farm products. Efforts to increase demand can be used to enlarge the market for those products sold to consumers in their original state, whereas there is comparatively lesser likelihood of success in such efforts when applied to raw materials.
In the case of former, consumer can be induced to increase their consumption. In the latter case, demand is primarily dependent on the demand for the finished products, in the sale of which the farmer usually exercises no influence. The problems of marketing and the methods to be adopted for the preparation of these two classes of products for the market, are thus not the same.
