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Agricultural Marketing

12 min read

What is agricultural marketing?

Agricultural marketing covers all the activities that move farm products from the farmer to the consumer: grading, packing, processing, storage, transport, selling and advertising. It adds place, time and form utility.

A marketing chainA crop passes from the farmer to the consumer through several steps. At each step someone adds a cost or a margin, so the price rises. A short chain, such as direct sale at a market or a cooperative, gives the farmer a bigger share.FarmerTSh 800/kgCollectorTSh 1 000/kgWholesalerTSh 1 300/kgRetailerTSh 1 800/kgBuyerthe price rises at each step
Market functionExamples
PhysicalTransport, storage, processing
ExchangeBuying and selling
FacilitatingGrading, market information, finance, risk-taking

Marketing channels and problems

The marketing channel may be short (farmer to consumer at a market) or long (farmer, collector, wholesaler, retailer, consumer). Each person adds a margin. Marketing boards, cooperatives and warehouse receipt systems help farmers get better prices. Problems include perishability, seasonal gluts, bulky goods, poor roads and storage, lack of market information, price changes and middlemen.

The farmer’s share is the percentage of what the consumer pays.
Worked exampleThe farmer’s share

Tomatoes are sold by the farmer for TSh 600 per kg and by the retailer for TSh 1 800 per kg. Find the margin and the farmer’s share.

  1. Margin.
  2. Farmer’s share.

Answer: Margin TSh 1 200 per kg; farmer’s share 33%.

Ways to improve marketing

Farmers can improve their position by forming cooperatives, selling directly, processing their products (adding value), using storage and the warehouse receipt system, using mobile phones for market prices, following grades and standards, and producing at times when the price is high.

The price rises as the crop moves along the chain.
Try itMarketing margin

Choose the price the farmer gets and the price the consumer pays.

Check yourself Which adds time utility?
Check yourself A marketing margin is
Check yourself A good way for farmers to raise their share is to

Key terms

Marketing
Moving products from the farmer to the consumer.
Marketing channel
The path a product follows to the consumer.
Value addition
Processing that raises the value of a product.
Perishable
Likely to go bad quickly.

Summary

  • Marketing includes grading, storage, transport, processing and selling.
  • Shorter channels leave more for the farmer.
  • Problems: perishability, seasonality, poor roads and information.
  • Farmer’s share = farm price ÷ retail price × 100.