Agri-Marketing Functions

• There are 2 main agri-mktg functions. • I. Functions in Production (Planning What to Produce) : Are functions that occur before the pdt leaves the farm. They involve studying climate, soil capacity, equipment, mkt outlets, labor & gov’t regulations. The goal is to produce the crop that will result in the greatest returns to the farmer.

• II. Marketing Functions: Are activities performed in accomplishing the mktg process. There are 3 major mkg functions performed in mktg process: • a. Exchange Functions: • i. Buying (Assembling ) ii. Selling • b. Physical Functions : • i. Storage ii.Processing iii.Transportation

• c. Facilitating Functions : • i. Standardization iii. Market Intelligence ii.

Risk Bearing iii. Financing

• 1.Exchange Functions selling & price setting • a. Buying function :F • b. Selling function • 2. Physical Functions: : Activities involved in transfer of title of goods - buying, inding out sources of supply, assembling pdts & purchases.

: Includes price acceptance & merchandising - display of goods, decisions on place & time to sell pdts, promotion, ads. package.

Handling, storage movements, & physical change activities.

Involved in solving problems of when, what & where in mkg .

• a. Storage/Packaging Making pdts available at right Time.

Attractive packages & labels are used for promotion & pdts are stored to protect quality & extend shelf life - e.g cucumbers may be preserved by pickling, packaged in attractive labeled jars, & stored in protective warehouses until delivered to supermarkets.

(Identify state grown products that are packaged, labeled and stored to extend shelf-life).

• b. Transport/Distribution: available at right place , Making pdt i.e. transport, shipping, crating loading .

Use transport such as trucks, railroads, ships. Right transportation must be selected to maintain pdt quality, e.g.

freshly picked beans are kept cool in refrigeration before delivered to processing plants

• c. Processing : desired form Making the pdt in the converting animals into meat, wheat into flour/bread Pdt nature as well as consumer demands influence the extent of processing that occurs.

• 3. Facilitating Functions : make exchange & physical functions perform smoothly • a.Standardization

Establishing quality & quantity measurement that makes selling & pricing possible .

sorting pdt Grading involving attributes into uniform categories. e.g. eggs, apples, cotton,.

• b. Financing : Provision of capital (credit) to carry out the various activities in the marketing process.

• c. Risk Bearing : Accepting loss/risk in mkg a pdt. There are Physical risks that occur from destruction of pdts by fire, accident, cold etc. & that occur from Market risks price changes.

Physical risks are borne by & market risk in futures insurance markets

• d. Market Intelligence : interpreting & Collecting, dissemination of market information e.g. an efficient pricing mechanism depends on well informed buyers & sellers. What to buy & sell, when/how much to store, where to transport etc. require good market information.

Agribusinesses (Intermediaries or Middlemen ) • Are the various middlemen, firms or business structures in the marketing system.

• 1. Middlemen of Marketing : Firms involved in the flow of pdts from producers to consumers - include Cooperatives,Proprietors, Partnerships, Corporations • Five (5) broad groups of Middlemen/Intermediaries • a. Merchant Middlemen : i. Retailers ii. Wholesalers • b. Agent Middlemen : i. Brokers ii. Commission men • c. Speculative Middlemen • d. Processors and Manufacturers • e. Facilitators Organizations

• a.

Merchant Middlemen • They take title to & thus own the pdts they handle.

• i. Retailers :Buy for resale directly to final consumer • ii. Wholesalers : Sell to retailers, & industrial users e.g. local buyers or assemblers who buy pdts from farmers & resell to processors ( livestock buyers).

• b.

Agent Middlemen • Are client representatives , sell services but not pdts do not take title to , & thus do not own the pdts they handle. The pdt they handle is the market knowledge , they provide. Receive their incomes in the form of Fees & Commissions Commission Men .

. Are classified into Brokers &

• i. Brokers: Do not have physical control of the pdt , & follow directions of their clients, - grain brokers.

• ii. Commission Men: Handle pdt physically, arrange for terms of trade, collects & deducts his fees, & remit balance to clients - livestock commission men.

•

c.

Speculative Middlemen

• Buy & sell in order to profit from price changes . Do not handle the pdt & operate in the futures market also called scalpers or spreaders •

d.

Processors and Manufacturers

• Change pdt form (by processing & manufacturing), & act as wholesalers & assemblers for finished pdt

•

e. Facilitating Organizations

: Are facilitators, do not usually handle pdt, but provide physical facilities together for pdt handling or , establish the bring buyers & sellers ‘rules of the game’ - terms of sale e.g. stockyard firms, grain exchange markets.

•

CONSUMER AND FOOD MARKETING

• 1. Ruler: The ultimate goal of the mkg system is to satisfy the consumer. Thus the consumer is the

ruler

of the marketing system.

• 2. Consumer Preferences Key to Firm’s Survival: firms & farmers fail to recognize the preferences If of consumers they may produce goods & services that nobody wants. They will then not be able to sell in order to attain their

profit goals

.

• 3. Consumer Sovereignty: The act of directing all mkg activities to satisfy the consumer is called doctrine of consumer sovereignty or the consumer is ‘King’ .

• 4.Exercise of Sovereignty: Consumer exercise their sovereignty over the food industry by their dollar voting & preferences which are powerful influence on farmers & intermediaries, e.g consumers may prefer white sugar over brown sugar despite the industry’s insistence that brown sugar is nutritionally better. We will have white sugar instead (brown eggs against white eggs).

• 5. Influence of Consumer Sovereignty : Farmers & intermediaries do not always follow the whims of consumers. Through advertising, packaging, product design & other marketing strategies consumers loose a degree of their sovereignty as firms influence & alter consumers buying decisions & preferences .

• 6. Marketing Concept: Consumer sovereignty is recognize in the marketing system by a business philosophy called Marketing Concept - i.e. the most important goal of farmers & intermediaries is to satisfy the consumer at a profit , & that this goal directs all business activities including production, finance, packaging etc. towards satisfying the consumer.

• Ag firms adopt marketing strategy - i.e. the 4 P’s to influence consumer sovereignty.