Agri-Marketing Functions

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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
  govt regulations. The goal is to produce the
  crop that will result in the greatest returns to
  the farmer.

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• 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 ii. Risk Bearing iii.
  Market Intelligence iii. Financing

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• 1.Exchange FunctionsActivities involved in
  transfer of title of goods - buying, selling
  price setting
• a. Buying functionFinding out sources of supply,
  assembling pdts purchases.
• b. Selling function Includes price acceptance
  merchandising - display of goods, decisions on
  place time to sell pdts, promotion, ads.
  package.
• 2. Physical Functions Handling, storage
  movements, physical change activities.
  Involved in solving problems of when, what
  where in mkg.

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• 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).

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• b. Transport/Distribution Making pdt available
  at right place, 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

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• c. Processing Making the pdt in the desired form
  -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. Grading involving sorting pdt
  attributes into uniform categories. e.g. eggs,
  apples, cotton,.

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• 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.
  Market risks that occur from price changes.
  Physical risks are borne by insurance market
  risk in futures markets

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• d. Market Intelligence Collecting, interpreting
  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.

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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 Middlemeni. Brokers ii. Commission men
• c. Speculative Middlemen
• d. Processors and Manufacturers
• e. Facilitators Organizations

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• a. Merchant Middlemen
• They take title to thus own the pdts they
  handle.
• i. RetailersBuy 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. Are
  classified into Brokers Commission Men.

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• 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

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

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• 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 Firms Survival
  If firms farmers fail to recognize the
  preferences 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 SovereigntyThe act of directing all
  mkg activities to satisfy the consumer is called
  doctrine of consumer sovereignty or the consumer
  is King.

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• 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 industrys 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.

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• 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
  Ps to influence consumer sovereignty.