CHAPTER ONE

AGRICULTURAL MARKETING
MKT 6217

17 September 2024 Prof. Dr. Md. Nur Alam

 AGRICULTURE IN BANGLADESH

Employment Combating
Food Security Economic Engine
Powerhouse Poverty

Agriculture is providing In 1972-73, Bangladesh The contribution of World Bank reports a

livelihoods for over 42.7% of produced only 9.9 million agriculture to the GDP has decline in rural poverty in
the workforce. tonnes of rice. Now it decreased but still holds a Bangladesh from 43.1% in
produces around 39 million substantial weight of 2000 to 24.3% in 2015.
tonnes of rice. around 11.5%.
 AGRICULTURAL TRADE
Bangladesh's agricultural exports have been positive, experiencing an 18% CAGR in the last five years.

Agricultural products earned $1.16 BILLION in FY 2021-22, with a 13% GROWTH.

TOTAL AGRICULTURAL EXPORTS (USD BILLION)

Total Agricultural Exports (USD Billion)

Processed

1.16
Snacks

1.02
0.9
0.78
0.67

Vegetables
Fruits Frozen Fish & Shrimp

2017-18 2018-19 2019-20 2020-21 2021-22 Spices

 LANDCRAFT.

The term agricultural marketing is composed of two words: Agriculture and

Marketing.
• Agriculture, in the broadest sense, means activities aimed at the use of natural
resources for human welfare, i.e., it includes all the primary activities of
production. But, generally, it is used to mean growing and raising crops and
livestock.
• Marketing involves a series of activities moving the goods from the point of
production to the end of consumption.

WHAT IS AGRICULTURAL MARKETING?

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 A process of flow of agricultural and
farming produces produced through
MEANING the use of natural resources for the
welfare of the people i.e. It includes all
Agricultural Marketing generally means the marketing of
such activities of primary production
agricultural product to the first handler.
related to the agricultural or farming
Definition by the National
produces which includes activities
In the macro (social) perspective, Agricultural Marketing is the Committee on Agriculture:
such as growing up or rising of crops,
performance of all business activities involved in the forward
cultivation of crops, harvesting and
flow of food and fibre from farm producers to consumers.
management of livestock.

Study of all such operations related to

agricultural production and the
agencies conducting them in the
movement of farm-produced goods or
agricultural products from the farms
Definition According to
to the final consumers and the effects
Thompson:
of such operations on farmers,
middlemen, agents and all those who
are concerned with it.
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 PRIME FUNCTIONS FACILITATED

THROUGH AGRICULTURAL MARKETING

Function 01 Function 02 Function 03

To provide critical opportunities To provide means and ways for the To ensure the implementation of
for the development of development or formulation of agricultural marketing policies
agriculture markets to facilitate agricultural policies for the benefit of and agricultural development
the exchange of agricultural farmers consumers buyers and policies for the development of
inputs and outputs. sellers of produce. Bangladesh.

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 DIFFERENCE BETWEEN AP & CP
Agricultural Products Basis Consumer Products
Goods are highly perishable. Perishability Less perishable products.

The supply of consumer products can

Farm products are produced in a
be adjusted or made uniformly
particular season; they cannot be
Seasonality of Production throughout the year.
produced throughout the year.
Their prices therefore remain almost the
In the harvest season, prices fall.
same throughout the year.

Produced in large volume. Volume of Production Produced in low volume.

Products highly vary on account of

Variation in Quality of Products Quality doesn’t vary to a great extent.
grading and standardization.

Supply highly seasonal i.e., discrete in

Nature of Supply Consistent and continuous in nature.
nature.

Quite large. Size of Holding Very small.

More affected by nature. Nature of Production Less affected by nature.

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IMPORTANCE OF AGRICULTURE MARKETING

Optimization of Resources Growth of Agro Industries Employment

Increase in Farm Income Price Signals Addition to National Income

Widening of Markets Adoption of Technology Better Living

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Optimization of Resource use and Output
Management

An efficient efficient agricultural marketing system leads to the

optimization of resource use and output management.

It can lead to better price realisation for farmers. Furthermore, it fosters market
expansion and diversification, creating new opportunities for agricultural producers.

An efficient efficient marketing system can also contribute to an increase in the

marketable surplus by scaling down the losses arising out of inefficient processing,
processing, storage and transportation.

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 Increase in Farm Income

An efficient marketing system ensures higher levels of income for the farmers by

reducing the number of middlemen or by restricting the commission on marketing

services and the malpractices adopted by them in the marketing of farm products.

An efficient system guarantees the farmers BETTER PRICES for farm products and

induces them to invest their surpluses in the purchase of modern inputs so that

productivity and production may increase.

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 Widening of Markets

A well-knit marketing system widens the market for products by

taking them to REMOTE CORNERS both within and outside the
country, i.e., to areas far away from the production points.

Expanding the market increases demand consistently,

ensuring higher income for the producer.

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 Growth of Agro-Based Industries

An improved and efficient system of agricultural marketing helps in the

growth of agro-based industries and stimulates the overall development
process of the economy.

Price Signals

An efficient marketing system helps farmers plan their production according

to the needs of the economy.

Agriculture & Farming

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Adoption and Spread of New Technology

The marketing system helps farmers adopt new scientific and technical
knowledge. New technology requires higher investment, and farmers will
invest only if they are assured of market clearance.

Employment

The marketing system provides employment to millions of people engaged in

various activities, such as packaging, transportation, storage, and processing.

Agriculture & Farming

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 Addition to National Income

Marketing activities add value to the product, thereby increasing the nation's
gross national product and net national product.

Better Living

The marketing system is essential for the success of development programs

designed to uplift the population as a whole.

Agriculture & Farming

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Approach to the Study of Agriculture

Commodity
Institutional
01 Approach or
a 02
Approach
Product Approach

The Decision-
Functional
03 Making 04
Approach
Approach

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 Creation of Utility

01 Form Utility Place Utility 02

Possession
03 Time Utility 04
Utility

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 Creation of Utility

Form Utility Time Utility

Place Utility Possession Utility

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 ON THE BASIS OF ON THE BASIS OF TIME
LOCATION SPAN

ON THE BASIS OF
AREA/COVERAGE
CLASSIFICATION
OF MARKETS
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 ON THE BASIS OF THE ON THE BASIS OF
NATURE OF DEGREE OF
TRANSACTIONS COMPETITION

ON THE BASIS OF THE ON THE BASIS OF

VOLUME OF NUMBER OF
TRANSACTIONS COMMODITIES IN WHICH
THE TRANSACTION
TAKES PLACE

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 ON THE BASIS OF STAGE ON THE BASIS OF TYPE
OF MARKETING OF POPULATION SERVED

ON THE BASIS OF ON THE BASIS OF

NATURE OF EXTENT OF PUBLIC
COMMODITIES INTERVENTION

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 ON THE BASIS OF LOCATION
Primary Wholesale Secondary Wholesale
Village Markets Terminal Markets Seaboard Markets
Markets Markets

These markets are

A terminal market is one
generally located in
These markets are where the produce is Markets located near the
district headquarters,
located in big towns near either in final centres, or seashore, meant mainly
A market located in a important to railway
the centres of production disposed of to the for the import and/or
small village where major junctions. The major
of agricultural consumers or processors, export of goods, are
transactions take place transactions in
commodities. In these or assembled for export. known as seaboard
among the buyers and commodities take place
markets, a major part of Such markets are located markets. Examples of
sellers of the village is between village traders
the produce is brought for either in metropolitan these markets in
called a village market. and wholesalers. The bulk
sale by the producer- cities or in seaports such Bangladesh are
of the arrivals in these
farmers themselves. as Chittagong, Chittagong and Mongla.
markets are from other
Narayanganj, and Dhaka.
markets.

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 ON THE BASIS OF AREA/COVERAGE

Local or Village Regional Markets National Markets World or International

Markets Markets
A market in which the buying A market in which buyers and A market in which buyers and A market in which the buyers
and selling activities are sellers for a commodity are sellers are at the national and sellers are drawn from
confined among the buyers drawn from a larger area than level. National markets are the whole world. These are
and sellers drawn from the the local markets. Regional found for durable goods like the biggest markets from the
same village or nearby markets in Bangladesh jute and tea. area’s point of view. These
villages. Village markets exist usually exist for food grains. markets exist for
mostly for perishable commodities which have a
commodities in small lots. worldwide demand and/or
supply.

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 ON THE BASIS OF TIME SPAN

Short-period Long-period Secular

Markets Markets Markets

Markets held only for a few These markets are held for a These are markets of a
hours are called short-period longer period than short-period permanent nature. The
markets. The products dealt markets. The commodities commodities traded in these
within these markets are of a traded in these markets are markets are durable in nature
highly perishable nature, such less perishable and can be and can be stored for many
as fish, fresh vegetables, and stored for some time; these years. Examples include
liquid milk. include food grains and markets for machinery and
oilseeds. The prices are manufactured goods.
governed by both supply and
demand forces.

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ON THE BASIS OF THE VOLUME OF TRANSACTIONS

Wholesale Markets Retail Markets

A wholesale market is one in which A retail market is one in which commodities
commodities are bought and sold in large lots are bought by and sold to consumers as per
or in bulk. Transactions in these markets take their requirements. Transactions in these
place mainly between traders. markets take place between retailers and
consumers. The retailers purchase in
wholesale markets and sell in small lots to
consumers. These markets are very near to
the consumers.

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ON THE BASIS OF THE NATURE OF TRANSACTIONS

Spot or Cash Markets Forward Markets

A market in which goods are exchanged for A market in which the purchase and sale of a
money immediately after the sale is called the commodity take place at time 't' but the
spot or cash market. exchange of the commodity occurs on some
specified date in the future, i.e., time 't+1'.
Sometimes, even on the specified future date
(t+1), there may not be any exchange of the
commodity. Instead, the differences in the
purchase and sale prices are paid or received.

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ON THE BASIS OF NUMBER OF COMMODITIES IN
WHICH THE TRANSACTION TAKES PLACE

General Markets Specialized Markets

A market in which all types of commodities, A market in which transactions take place
such as food grains, oilseeds, fibre crops, gur, only in one or two commodities is known as a
etc., are bought and sold is known as a specialized market. For every group of
general market. These markets deal in a large commodities, separate markets exist.
number of commodities. Examples include food grain markets,
vegetable markets, wool markets, and cotton
markets.

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ON THE BASIS OF DEGREE OF COMPETITION
MONOPOLY
MARKETS

PERFECT
MARKETS

DUOPOLY
MARKETS

COMPETITION

OLIGOPOLY
MARKETS

IMPERFECT
MARKETS

MONOPOLISTIC
COMPETITION
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 PERFECT MARKETS

There is a large number of buyers and sellers.

All buyers and sellers in the market have perfect knowledge of demand, supply, and prices.

Prices at any one time are uniform over a geographical area, plus or minus the cost of getting supplies from
surplus to deficit areas

The prices are uniform at any one place over periods, plus or minus the cost of storage from one period to another.

The prices of different forms of a product are uniform, plus or minus the cost of converting the
product from one form to another.

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 IMPERFECT MARKETS
MONOPOLY DUOPOLY
MARKETS MARKETS

• Monopoly is a market situation in which there is only one • A duopoly market has only two sellers of a commodity.
seller of a commodity. • The two sellers may mutually agree to charge a common
• The seller exercises sole control over the quantity or price of price, which is higher than the hypothetical price in a common
the commodity. market.
• Prices of commodities in monopoly markets are generally • The market situation in which there are only two buyers of a
higher than in other markets. commodity is known as a duopsony market.
• When there is only one buyer of a product, the market is
termed a monopsony market.

MONOPOLISTIC OLIGOPOLY
COMPETITION MARKES

• When a large number of sellers deal in heterogeneous and • A market with more than two but still a few sellers of a
differentiated forms of a commodity, the situation is called commodity is termed an oligopoly market.
monopolistic competition. • A market having a few (more than two) buyers is known as an
• Different prices prevail for the same basic product. oligopoly market.
• Examples: Various makes of insecticides, pump sets, fertilizers,
and equipment. Page 33
 ON THE BASIS OF NATURE OF COMMODITIES

Commodity Markets Capital Markets

A market that deals in goods and raw The market in which bonds, shares, and
materials, such as wheat, barley, cotton, securities are bought and sold is called
fertilizer, seed, etc., is termed a a capital market; for example, money
commodity market. markets and share markets

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 ON THE BASIS OF STAGE OF MARKETING

Producing Markets Consuming Markets

Markets that mainly assemble the Markets that collect the produce for
commodity for further distribution to final disposal to the consuming
other markets are termed producing population are called consumer
markets. Such markets are located in markets. These markets are generally
producing areas. located in areas where production is
inadequate or in thickly populated urban
centers.

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 ON THE BASIS OF EXTENT OF PUBLIC
INTERVENTION

Regulated Markets Unregulated Markets

Markets in which business is done in Markets in which business is conducted
accordance with the rules and regulations without any set rules and regulations.
framed by a statutory market organization Traders frame the rules for the conduct of the
representing different sections involved in the business and run the market.
market. These markets suffer from many issues,
Marketing costs in such markets are ranging from unstandardized charges for
standardized and practices are regulated. marketing functions to imperfections in the
determination of prices.

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 ON THE BASIS OF TYPE OF POPULATION
SERVED

Urban Market Rural Market

A market that serves mainly the population The term rural market usually refers to the
residing in an urban area is called an urban demand originating from the rural population.
market. There is a considerable difference in the
The nature and quantum of demand for nature of embedded services required with a
agricultural products arising from the urban farm product between urban and rural
population characterize the urban market for demands.
farm products.

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BASIC PROBLEMS IN AGRICULTURAL MARKETING

Low-quality of Costly Transport Lack of Market

Produce Facility Knowledge

Chain of
Lack of Storage
Middlemen And Problems In
And Warehouse
Commission Product Collection
Facilities
Agents

Weight And Lack of Grading Multiplicity of

Measures charges

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Prof. Dr. Md. Nur Alam