UNIT 4

INTRODUCTION TO
AGRICULTURAL MARKETING
Structure
4.0 Objectives
4.1 Introduction
4.2 Meaning and Scope of Agricultural Marketing
4.2.1 Scope of agricultural marketing
4.2.2 Evolution of agricultural marketing
4.3 Role of Agricultural Marketing in Economic Development
4.4 Marketing Functions
4.5 Activities and Objectives of Agricultural Marketing System
4.6 Importance of Marketing in Agricultural Development & Growth
4.7 Marketed & Marketable Surplus of Agricultural Commodities
4.7.1 Marketable surplus
4.7.2 Marketed Surplus
4.7.3 Factors affecting marketable surplus
4.8 e -Marketing
4.8.1 Importance
4.8.2 Benefits of e-marketing
4.9 Let Us Sum Up
4.10 Keywords
4.11 Suggested Readings/ References
4.12 Answers to Check Your Progress

4.0 OBJECTIVES
After studying this unit, you should be able:
●● explain the meaning and scope of agricultural Marketing and its role
in economic development;
●● identify the various functions of agricultural marketing;
●● discuss the meaning of marketed and marketable surplus; and
●● explain the concept of e-marketing, its importance, and benefits.

4.1 INTRODUCTION
In India, Agriculture was practiced formerly on a subsistence basis; the
villages were self-sufficient, people exchanged their goods, and services
within the village on a barter basis. With the development of means of
transport and storage facilities, agriculture has become commercial in
character; the farmer grows those crops that fetch a better price. Marketing
of agricultural produce is considered an integral part of agriculture since
an agriculturist is encouraged to make more investments and to increase
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Agricultural Marketing: production. Thus there is an increasing awareness that it is not enough to
An Overview produce a crop or animal product; it must be marketed as well. The increasing
trend of agricultural production has brought, in its wake, new challenges in
terms of finding a market for the marketed surplus.

4.2 MEANING AND SCOPE OF

AGRICULTURAL MARKETING
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/
or raising crops and livestock. Marketing connotes a series of activities
involved in moving the goods from the point of production to the point
of consumption. It includes all activities involved in the creation of time,
place, form, and possession utility.
According to Thomsen, the study of agricultural marketing comprises all the
operations, and the agencies conducting them, involved in the movement of
farm-produced foods, raw materials and their derivatives, such as textiles,
from the farms to the final consumers, and the effects of such operations on
farmers, middlemen and consumers. This definition does not include the
input side of agriculture.
Acharya has described, in a dynamic and growing agricultural sector, the
agricultural marketing system ought to be understood and developed as a
link between the farm and the non-farm sectors. A dynamic and growing
agricultural sector requires fertilizers, pesticides, farm equipment, machinery,
diesel, electricity, packing material, and repair services which are produced
and supplied by the industry and non-farm enterprises. The expansion in
the size of farm output stimulates forward linkages by providing surpluses
of food and natural fibers which require transportation, storage, milling or
processing, packaging, and retailing to the consumers.
We can, therefore, define agricultural marketing as comprising of all activities
involved in the supply of agricultural inputs to the farmers and the movement
of agricultural products from the farms (production point) to the consumers/
users. Thus, as per this definition, agricultural marketing system includes
the assessment of demand for agri-inputs and their supply, post-harvest
handling of farm products, the performance of various activities required
in transferring farm products from farm gate to processing industries and/
or ultimate consumers, assessment of demand for farm products and public
policies and programmes relating to the pricing, handling, and purchase and
sale of farm inputs and agricultural products.
4.2.1 Scope of Agricultural Marketing
In a broader sense, agricultural marketing is concerned with the marketing
of farm products produced by farmers and of farm inputs and services
required by them in the production of these farm products. In fact, the
subject of agricultural marketing includes both product marketing as well
as input marketing.
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With the increased marketable surplus of agricultural commodities following Introduction to
the technological breakthrough, the importance of output marketing has Agricultural Marketing
gained momentum in the recent past. On the other hand, input marketing is
a comparatively new subject. The importance of farm inputs like improved
seeds, fertilizers, insecticides and pesticides, farm machinery, implements,
etc. in the production of farm products has increased over time. Thus, based
on the above discussion it becomes clear that the scope of agricultural
marketing must include both product marketing as well as input marketing.

Efficiency and
Marketing
costs
functions,

Agencies, Producer’s
channels, surplus,

Agricultural
marketing
Government
Price spread and
policy and
market
research
integration,

Training and
statistics on
Imports/exports agricultural
of agricultural
commodities.

Fig.4.1: Agricultural marketing

The scope of the field of marketing can be examined from five angles viz.,
producers’ interest, consumers’ interest, societal interest, traders’ interest,
and Government role:
Farmers’ interest: Farmers have limited resources at their disposal. A
healthy marketing system acts as an incentive for the farmers to use the
scarce resources judiciously. Thus efficient input marketing and output
marketing systems are indispensable to bring the desired level of welfare
to the farmers. Farmer in fact may turn out to be a major beneficiary in the
market system properly functions.
Consumers’ interest: Marketing is a system that facilitates the movement of
farm commodities from the place of production to the place of consumption.
Thus, it enables the consumer to choose farm commodities of her/his choice
to satisfy her/his and family needs. Consumers’ welfare is brought about
through increased marketing output by following efficient methods of
marketing.
Society’s interest: Society’s interest is the aggregate of an individual’s
interest. When the consumption requirement of an individual is met by an
effective marketing system, society at large gets benefit from this process
which in turn leads to an increasing standard of living of the people. In this
people’s welfare is directly influenced by the efficient marketing system.
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Agricultural Marketing: Traders’ interest: Middlemen are those individuals which specialize in
An Overview performing various marketing functions and thus facilitate the movement
of the products from producers to consumers. Through the process of
marketing apart from fulfilling the needs of producers and consumers, they
earn their livelihood. They may be merchant middlemen or agent middlemen
or facilitative middlemen.
Government’s role: Government acts as custodian of the welfare of all
the sections of the society i.e. producers, consumers, traders, etc. For this
purpose, it has to perform certain functions like procurement of foodgrains
for the maintenance of buffer stocks as well to meet the public distribution
system, fixation of minimum support prices for various foodgrains, etc. The
government also regulates marketing activities through various legislations
and marketing policies to safeguard the interest of both producers and
consumers.
4.2.2 Evolution of Agricultural Marketing
The agricultural marketing system is understood to comprise of two sub-
systems i.e. product and input marketing. Under traditional agriculture,
input marketing was not so important as today because farmers used to rely
heavily on their own inputs. Only after the evolution of improved farming
techniques and use of modern inputs i.e. high yielding variety seeds, hybrid
seeds, chemical fertilizers, plant protection measures, machinery, etc.,
farmers have started entering the market for buying inputs. Now, the farmers
depend upon purchased inputs for production. Similarly, under traditional
agriculture farmers had very little quantity to sell in the market. Because
farmers’ priority was to meet their home requirements and other obligations
i.e. to pay off rent & debts, etc. Actually, the output market developed only
after the farmers were able to produce more food than their requirements.
However, the process of producing more than own requirements came
about slowly. Now, a large proportion of what the farmers produce is taken
to market as they have become market-oriented. This process has resulted
in the overall development of the market mechanism and the economy as
a whole. The following factors have led to the evolution and growth of
agricultural marketing in India.
(i) Specialization: The increasing tendency of the farmers towards
increasing specialization has increased their efficiency. Specialization
leads to increased production, which is the base for the growth of
marketing and, in turn, of the entire economy.
(ii) Urbanization: It is fact that the urban population is the main buyer
of agricultural surpluses. It is also true that the urban population is
growing much faster than the rural population (due to rural-urban
migration), which has necessitated a faster growth of agricultural
marketing activities.
(iii) Transportation and Communication: It is a fact that agricultural
production is undertaken at every length and breadth of the country.
Therefore effective transportation and communication facilities are
required for moving the product from production areas to consumption
areas. However, due to the lack of these facilities, the movement of
produce from one area to another was limited, and the consumption
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 of a product was restricted only to the areas of production or, at Introduction to
the most, to nearby areas. The improvement in transportation and Agricultural Marketing
communication facilities has enabled the movement of products from
production areas to consumption areas. This has resulted in increasing
the scope of the marketing manifold.
(iv) Technological Change in Agriculture: Technological changes in
agriculture, such as the evolution of HYV’s seeds/dwarf varieties
seeds, intensive use of modern inputs, and cultivation technology
in the agricultural sector, have resulted in a substantial increase in
farm production. This in turn has caused the marketed surplus of the
agricultural produce to increase at a substantial rate resulting in the
growth of the marketing system.
Check Your Progress 4.1
Note: a) Use the spaces given below for your answers.
b) Check your answer with those given at the end of the unit.
1) What is the meaning of agricultural marketing?
………………………………………………………………………
………………………………………………………………………
2) Discuss the scope of marketing in terms of farmers’ interests.
………………………………………………………………………
………………………………………………………………………
3) Enlist the factors causing the evolution and growth of agricultural
marketing.
………………………………………………………………………
………………………………………………………………………

4.3 ROLE OF AGRICULTURAL MARKETING

IN ECONOMIC DEVELOPMENT
Agriculture has been the lifeblood of the Indian economy. It is not because
its contribution is lower than that of services in the Gross Value Added of
the country. It is because many of the services have been emerged due to
modern agriculture. The importance of agricultural marketing in economic
development can be understood for the following reasons.
(i) Optimizer of Resources and Output Management
An efficient agricultural marketing system leads to the optimal use
of the available resource. An efficient marketing system can also
contribute to an increase in the marketable surplus by reducing the
losses arising out of inefficient processing, storage, and transportation.
An efficient market can effectively distribute the available inputs, and
thereby sustain a faster rate of growth in the agricultural sector which
results in overall economic development.
(ii) Widening of Markets
An efficient and orderly marketing system helps in the development
of demand for agricultural produce and thus widens the market for
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Agricultural Marketing: the product by taking them to remote corners both within and outside
An Overview the country. At the same time, it helps a large number of consumers in
satisfying their demand for various farm products.
(iii) 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. Many industries like cotton,
sugar, edible oils, food processing, and jute depend on agriculture for
the supply of raw materials.
(iv) Price Signals
The marketing system through transmitting price signals at different
stages of marketing helps, apart from the farmers, market functionaries
in planning their buying and selling activities.
(v) Increase in Farm Income
An orderly marketing system enables the farmers to earn higher levels
of income by reducing the number of middlemen or by restricting the
cost of marketing services and the malpractices in the marketing of
farm products. If the producer does not have an easily accessible market
where he can buy required inputs and sell her/his surplus produce, he
has little incentive to produce more. The need for providing adequate
incentives for increased production is, therefore, very important, and
this can be made possible only by streamlining the marketing system.
(vi) Employment Creation
The marketing system employs millions of persons engaged in various
activities, such as assembling, packaging, transportation, storage, and
processing. Also, several others find employment in supplying goods
and services required by the marketing system.
(vii) Adoption and Spread of New Technology
The marketing system helps the farmers in the adoption of new
scientific and technical knowledge. New technology requires higher
investment and farmers would invest only if they are assured of
market clearance of their surplus production at remunerative prices.
(viii) Addition to National Income
Marketing activities add value to the product thereby increasing the
nation’s gross national product and net national product.
(ix) Better Standard of Living
A better marketing system leads to a better standard of living for the
farmers. This system provides more disposable income in the hands
of the farmers and that income is spent by the farmers to avail and
enjoy modern facilities. Therefore, modern farmers can enjoy a better
standard of living besides contributing to the growth of the economy.
(x) Creation of Utility
Marketing adds cost to the product, but, at the same time, it adds
utilities to the product. The following four types of utilities of the
product are created by marketing:
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 (a) Form Utility: The processing function adds form utility to the Introduction to
product by changing the raw material into a finished form. Agricultural Marketing

(b) Place Utility: The transportation function adds place utility to

products by shifting them to a deficit place from the surplus
areas.
(c) Time Utility: The storage function adds time utility to the
products by making them available at the time when they are
needed.
(d) Possession Utility: The marketing function of buying and
selling helps in the transfer of ownership from one person to
another.

4.4 MARKETING FUNCTIONS

Any single activity performed in carrying a product from the point of its
production to the ultimate consumer may be termed as a marketing function.
A marketing function may have any one or combination of three dimensions,
viz., time, space, and form. The marketing functions are presented as per the
following classification:
Function of Transfer of Function of Physical Facilitating Functions
Function of changing the
Ownership Movement
form of the product

a) Selling a. Transportation a. Standardization a. Market

and grading and financing
b) Buying b. Storage
b. Risk bearing
c) Demand b. Packaging and
c. Market
creation and
information
d) Price
determination

Fig. 4.1: Marketing functions

1) Function of Transfer of Ownership

Selling and buying are the two important functions involved in the transfer
of ownership. Selling is the process of finding the buyers and convincing
them to buy the product at a price that is satisfactory to both sellers and
buyers. Buying includes identifying one’s needs, finding the source of
supply of the goods, and procuring them at the right price.
a) Selling: The selling function consists of the following sub-functions:
i) 
Product Planning and Development: The needs of the
consumers should be taken into consideration in selling. We
identify that product that is required by the buyer and sell the same.
ii) Contractual Function: It involves identifying the potential
consumers for the product and initiating and maintaining
contacts with them for selling the commodity.
iii) Demand Creation: Once the potential consumers are identified
we introduce various sales techniques to stimulate them so that
the desired sales target can be achieved.
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Agricultural Marketing: iv) The Function of Negotiation: Some important factors to be
An Overview considered at the time of selling are quality and quantity of
the commodity proposed to be transacted, time of transfer,
particulars of packing, mode of payment, etc. These should be
well negotiated to avert any future conflicts between the buyers
and the sellers.
b) Buying: Buying includes identifying one’s needs, finding the source
of supply of products, and procuring them at the right price. Following
are the sub-functions of buying:
i) The Function of Planning the Purchases: The buyers must
plan their needs and undertake the purchases. Also, the buyers
should survey their markets to identify the quality and quantity
of the goods that are required.
ii) Contractual Function: It is the identification of the sources of
supply to confirm the suppliers of a commodity so that the flow
of supplies can be made continuous to the market.
iii) The Function of Negotiation: The terms and conditions of
purchase along with the prices are negotiated with the sellers.
Once the negotiations are completed, the goods are transferred
to the buyers. The prevailing methods of buying and selling in
the markets are as follows:
a) Sale Under Cover of a Cloth: Under this method of
sale, the prices of the products are settled through a
transaction, which is done under the cover of a cloth. The
transaction under the cover is that a given price is fixed
between the buyers and the commission agents of the
sellers by pressing the fingers of each other, for which
code symbols are arranged.
b) Sale Through Negotiations: This is a method, which
facilitates direct contact between the buyers and sellers.
c) Sales Based on Samples: In this method, commission
agents approach the buyers with the sample of the lots
proposed to be disposed of. The commission agents go
round the shops of the buyers and produce is offered to
that buyer, who offered the highest price per unit of the
produce.
d) Morghum Method: A common method of sale found
in villages when the farmers borrow funds from local
moneylenders. The transactions are effected based on
the oral agreement that is made between the buyers and
sellers.
e) Open Auction Sale: This is the method, which prevails
in most of the regulated markets. The prospective buyers
examine the lots of the produce kept for sale and offer
their bids openly.
f) Closed Tender System: This is, more or less, the same
as that of the open auction system except that the bids
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 are offered in the form of closed tenders. This method is Introduction to
followed in some regulated markets. Agricultural Marketing

c) Demand Creation: When commodities are basic requirements of the

consuming section, the demand is automatically created. The need for
demand creation arises for those products with which the consumers
are not familiar and they are likely to consume by an act of persuasion
highlighting the merits of the products through personal approach
of the salesmen, advertisement through various mass media like
newspapers, posters, pamphlets, radio, television, etc. Besides sellers
resort to sales promotion activities like distribution of free samples,
price discounts, exhibitions, sales by installments, etc.
d) Price Determination: The concepts of price determination and price
discovery need to be specified. Prices are determined by the aggregate
forces of demand and supply in a market, while prices are discovered
at each stage in the marketing channel i.e., market intermediaries
discover the prices based on the availability of the commodities and
the demand for the commodities from the buyers at each stage.
2) Function of Physical Movement
Transportation and storage facilitate the physical movement of products
from the producer to the consumer.
a) Transportation: Transportation creates place utility. The products
are moved rights from the farmer’s fields to the ultimate consumers
through transportation. The spatial variations in agricultural
production need the movement of the commodities from the places of
surplus production to the places of deficit production. The common
modes of transportation are bullock carts, tractors, trucks, rail, etc.
b) Storage: Agricultural production is seasonal in nature. On the
other hand, consumption of the products is regular and continuous.
Seasonality and regular & continuous consumption require the need
of storing the commodities after harvest to make them available
throughout the year. Storage is involved at various stages in marketing.
The middlemen in the process of buying and selling activity also store
the produce to take advantage of the market situation.
3) Function of Changing the Form of the Product
It facilitates making the products available to the consumers with various
specifications in the usable form and also as per the choice of the consumers.
a) Standardization and Grading: Standardization proceeds grading.
The characteristics based on which the standards are determined are
freshness, ripeness, size, weight, colour, foreign material, moisture
content, etc. Standardization is defined as “the determination of the
basic limits on grades or the establishment of model processes and
methods of producing, handling and selling goods and services.”
Grading means the sorting of produce into different lots having the
same characteristics with respect to quality specifications. Grading
is of two types. Fixed grading/mandatory grading and permissive/
variable grading. In fixed grading, the standards set out are fixed
and it is mandatory for the individuals to follow the set standards if
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Agricultural Marketing: they are going to sell the graded commodities. Permissive grading is
An Overview subject to variations over time
b) Packaging: To make the products move from farm gate to merchants
and finally to different users, some kind of packaging is essential.
It facilitates easy handling, reduces spoilage, ensures cleanliness,
reduces marketing costs, prolongs storage life, etc.
4) Facilitating Functions
These include market financing, risk bearing, and market information.
a) Market Financing: Farmers find it difficult to continue the farm
business with their owned funds and they need a helping hand from
external sources. Apart from production credit, farmers need market
finance too before they dispose of the produce at a favourable price.
The traders who are found at various stages of marketing too find their
owned funds short of the requirement to purchase the stock and carry
on other functions like packaging, processing, storage, etc. Distress
sales are averted if adequate marketing finance is given to the farmers.
b) Risk Bearing: There is always a time lag between the harvesting and
final consumption. Risk is imminent under such a situation and this is
borne by the producers, traders, and others involved in the marketing
process. Following are the kinds of risks associated with the marketing
process.
1. Physical Risks: Physical risk is caused during weighment,
bagging, transportation, storage, etc. Physical risk consists of
loss of quantity as well as loss of quality of the product
2. Price Risk: Price fluctuates during the same day, from week to
week, from month to month, and from year to year. Price rise
can help the farmer and trader and equally, they are at loss, if the
price falls.
3. Institutional Risk: Government policies like movement
restrictions of food grains, imposition of levies, etc. bring losses
to the marketers.
c) Market Information: Market information is broadly defined as the
communication of reception of knowledge or intelligence. It includes
all the facts, estimates, opinions, and other information which affect
the marketing of goods and services. This information is of great
importance to the farmers, merchants, and Government as well.
Market information constitutes market news and market intelligence.
Market news is the present information on prices of the commodities,
market arrivals, stock, directions of outflows, etc. Market intelligence is the
historical record of market situation.
The sources from which one can get the market information are newspapers,
Bulletin of Agricultural Prices (weekly), Agricultural Situation in India
(monthly), Agricultural Prices in India (annual), etc., and the reports of
the Bureau of Economics and Statistics, the Directorate of Marketing and
Inspection (DMI), the Directorate of Economics and Statistics, regulated
markets, etc.
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 Introduction to
4.5 ACTIVITIES AND OBJECTIVES OF Agricultural Marketing
AGRICULTURAL MARKETING SYSTEM
A study of the agricultural marketing system is necessary for an
understanding of the complexities involved in providing efficient services
in the transfer of farm products and inputs from producers to consumers. An
efficient marketing system minimizes costs, and benefits all the sections of
society.
The expectations from the system vary from group to group; and, generally,
the objectives of various groups conflict. The efficiency and success of
the system depend on how best these conflicting objectives are reconciled
which are enumerated below:

Orientation Focus Objective

Production Exploitation of Profits through supplying markets where

technical capabilities task is one of allocating supplies

Promoting the
Profits through persuading people that
Selling consumption of the
what the organization happens to have is
product that the
what they really want.
organization is able to
make or produce.
Profits through the provision of customer
Identifying wants and satisfaction by meeting their needs and
Marketing needs and matching wants.
these to organizational
resources.

Fig 4.2; Business philosophies

Source: Adopted from FAO: https://www.fao.org/3/w3240e/w3240e01.htm

Producers: Producer-farmers want that their produce to be sold in the
market without loss of time and at the maximum possible price for their
surplus produce. Also, they want the system to supply them with the inputs
at the lowest possible price.
Consumers: This objective of marketing conflicts with the objective of
marketing for the farmer-producers. The consumers of agricultural products
are interested in a marketing system that can provide food and other items in
the quantity and of the quality required by them at the lowest possible price.
Market Middlemen and Traders: They are interested in a marketing
system that provides them a steady and increasing income from the purchase
and sale of agricultural commodities.
Government: The objectives and expectations of all the three groups
of society-producers, consumers, and market middlemen conflict with
one another. However, all three groups are indispensable to society. The
government has to act as a watchdog to safeguard the interests of all the
groups associated with marketing. It tries to provide the maximum share
to the producer in the consumer’s rupee; food and other farm products of
the required quality to consumers at the lowest possible price; and enough
margins to market middlemen so that they may remain in the trade. Thus,
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Agricultural Marketing: the government wants that the marketing system should be such as may
An Overview bring about the overall welfare to all the segments of society.
The objectives of an efficient marketing system are:
1. To enable the primary producers to get the best possible returns,
2. To provide facilities for lifting all produce, the farmers are willing, to
sell at an incentive price,
3. To reduce the price difference between the primary producer and
ultimate consumer, and
4. To make available all products of farm origin to consumers at a
reasonable price without impairing the quality of the produce.
The overall objective of the agricultural marketing system in a developing
country like India should be to help the primary producers viz., the farmers
in getting remunerative prices for their produce on the one hand and to
provide the right type of goods at the right place, in the right quantity and
quality at a right time and right prices to the processors and/or ultimate
consumers on the other.

4.6 IMPORTANCE OF MARKETING IN

AGRICULTURAL DEVELOPMENT &
GROWTH
Agricultural marketing was, for many decades, not fully accepted as an
essential element in agricultural development in the countries of Asia and
Africa. Agricultural marketing occupied a fairly low place in the agricultural
development policies of developing countries. The National Commission
on Agriculture (1976) and Farmers Commission (2007) had emphasized
that it is not enough to produce a crop or an animal product; it must be
satisfactorily marketed.
Agricultural marketing plays an important role not only in stimulating
production and consumption but in accelerating the pace of economic
development. In fact, it has been described as the most important multiplier
of agricultural development. The technological breakthrough has led to a
substantial increase in production on the farms and a larger marketable and
marketed surplus. To maintain this tempo and pace of increased production
through technological development, assurance of remunerative prices to
the farmer is a prerequisite, and for this purpose, an efficient marketing
system is needed. The importance of agricultural marketing in agricultural
development and growth can be understood through the following reasons:
(i) Decreasing the channel members
An efficient marketing system ensures increased levels of income for the
farmers by reducing the number of middlemen and malpractices in the
market. For example, ITC through e-choupals, have removed all the middle
man and the benefits are directly going to the farmers. They can get adequate
prices for their crops. This again results in an increase in the marketed
surplus and income of the farmers which results in more demand for the
other products and ultimately leads to the development of agriculture.

86
(ii) Growth in production Introduction to
Agricultural Marketing
The Indian farmer has been shifting from a traditional farming system to
a modern farming system and this has become possible due to an efficient
marketing system that is responsible for providing modern equipment to
the Indian farmers. The system also guarantees better prices of the produce
and thus farmers increase their income. This acts as a multiplier effect in the
economy for growth.
(iii) Earning foreign exchange
The country is not only self-sufficient in the field of agri-products but
also exports these products. In the year 2000-01, principal agricultural
commodity worth Rs. 282657 crore ( 14.08 % of total national export) were
exported which increased to Rs. 274571 crore (11.40 % of total national
export) in 2018-19 (Agricultural Statistics at a Glance, 2020)
The other factors such as better standard of living, optimizer of resources
and output management, increase in farm income, widening of markets,
growth of agro-based Industries, adoption and spread of new technology
and employment creation have already been discussed under the role of
agricultural marketing in economic development.
Check Your Progress 4.2
Note: a) Use the spaces given below for your answers.
b) Check your answer with those given at the end of the unit.
1) What is the difference between market news and market intelligence?
………………………………………………………………………
………………………………………………………………………
2) Define marketing function?
………………………………………………………………………
………………………………………………………………………
3) What do you mean by selling and buying?
………………………………………………………………………
………………………………………………………………………

4.7 MARKETED & MARKETABLE SURPLUS

OF AGRICULTURAL COMMODITIES
Producer’s surplus is the quantity that is actually made available to the non-
producing population of the country. From the marketing point of view,
this surplus is more important than the total production of commodities.
Because the arrangements and the expansion of markets have to be made
only for the surplus quantity available with the farmers, and not for the total
production.
So, the producer’s surplus is the quantity of produce that is, or can be, made
available by the farmers to the non-farm population. The producer’s surplus
is of two types:

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Agricultural Marketing: 4.7.1 Marketable Surplus
An Overview
The marketable surplus is the quantity of the produce that can be made
available to the non-farm population of the country. The marketable surplus
is the residual left with the producer-farmer after meeting his requirements
for family consumption, farm needs for seeds and feed for cattle, payment
to labour in kind, payment to the landlord as rent, social and religious
payments in kind, the gift to relatives and friends, etc. This may be expressed
as follows:
MS = P - C
Where,
MS = Marketable surplus, P = Total production, and C = Total requirements
(family consumption, farm needs, payment to labour, artisans, landlord and
payment for social and religious work, etc).
4.7.2 Marketed Surplus
Marketed surplus is the quantity of the produce that the producer-farmer
actually sells in the market, irrespective of his requirements for family
consumption, farm needs, and other payments.
Relationship between marketed surplus and marketable surplus
The marketed surplus may be more, less, or equal to the marketable surplus,
depending upon the condition of the farmer and type of the crop. The
relationship between the two terms may be stated as follows:
1. Marketed Surplus is more than marketable surplus: when the
farmer retains a smaller quantity of the crop than his actual requirements
for family and farm needs. This is true under the condition when
farmers particularly the small and marginal farmers, are hard-pressed
for cash and resort to distress sales to meet their commitments to the
money lenders and other sources. The situation of selling more than
the marketable surplus is termed as distress or forced sale.
2. Marketed Surplus is less than marketable surplus: The marketed
surplus is less than the marketable surplus when the farmer retains
some of the surpluses produce. Farmers particularly the large farmers
generally sell less than the marketable surplus because of their better
retention capacity and they anticipate that they would get a higher
price in the lean period. However, small and marginal farmers may
not be in a position to retain more because of their immediate cash
requirements.
3. Marketed Surplus is equal to marketable surplus: The marketed
surplus may be equal to the marketable surplus when the farmer
neither retains more nor less than his requirement. This holds true for
perishable commodities.
4.7.3 Factors Affecting Marketable Surplus
The marketable surplus differs from region to region and, within the same
region, from crop to crop. It also varies from farm to farm. On a particular
farm, the quantity of marketable surplus depends on the following factors:
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(i) Size of Holding: There is a positive relationship between the size of Introduction to
the holding and the marketable surplus. Generally, the larger the size Agricultural Marketing
of the farm, the more will be marketable surplus.
(ii) Size of production: The higher the production on a farm, the larger
will be the marketable surplus and vice versa.
(iii) Price of the Commodity: The price of the commodity and the
marketable surplus have a positive as well as a negative relationship,
depending upon whether one considers the short and long run or the
micro and macro levels.
(iv) Size of Family: The larger the number of members in a family, the
smaller the surplus on the farm.
(v) Requirement of Seed and Feed: The higher the requirement for
these uses, the smaller the marketable surplus of the crop.
(vi) Nature of Crops Grown: It is a well-established fact that marketable
surplus in the case of food crops tends to be low while for cash crops
it is more. For example, in the case of cotton, jute, and rubber, the
quantity retained for family consumption is either negligible or a
very small part of the total output. Even among food crops, for such
commodities as sugarcane, spices, and oilseeds which require some
processing before final consumption, the marketable surplus as a
proportion of total output is larger than that for other food crops.
(vii) Consumption Habits: Producer’s consumption habits also affect the
extent of marketable surplus. In those areas where a commodity is a
staple food, the marketed surplus is low.
(viii) Hoarding: The tendency of hoarding depends on the current level of
prices and anticipated prices. The traders, peasants, consumers, etc. to
earn more profits in the future may do hoarding. Thus, the larger the
tendency to hoard lesser will be the volume of marketable surplus and
vice-versa.
(ix) Subsistence Farming: In subsistence farming, farming is mainly
undertaken to provide for the family. Only the surplus is marketed.
The majority of landholdings being small, there is a little surplus left.
(x) Cash Requirements: After harvesting, Indian farmer needs cash to
meet certain obligations like land revenue, repayment of the debt, etc.
Therefore, the volume of produce, he is ready to sell in the market
depends on his cash requirement. If s/he needs more cash, s/he will
sell more produce and, thus, there will be more marketable surplus.
Check Your Progress 4.3
Note: a) Use the spaces given below for your answers.
b) Check your answer with those given at the end of the unit.
1) What is a marketable surplus?
………………………………………………………………………
………………………………………………………………………
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Agricultural Marketing: 2) What do you mean by distress sale?
An Overview
………………………………………………………………………
………………………………………………………………………
3) Enlist the factors affecting marketable surplus.
………………………………………………………………………
………………………………………………………………………

Activity 4.1:
Visit a farmer in a nearby village. Measure the marketable and marketed
surplus of that farmer. Also, calculate marketed and marketable surplus-
output ratio.
……………………………………………………………………………
……………………………………………………………………………
……………………………………………………………………………
……………………………………………………………………………

4.8 E-MARKETING

The methods of marketing now have changed and improved. E-Marketing

is the product of the meeting between modern communications technologies
and the age-old marketing principles that humans have always applied.
Very simply put, e-Marketing or electronic marketing is the application
of marketing principles and techniques using electronic media and
more specifically the Internet. There are different interrelated terms like
e-Marketing, Internet marketing, and online marketing and these terms
can often be considered synonymous. This type of meraketing includes
both direct response marketing and indirect marketing elements and uses a
wide range of technologies that help to bring together businesses and their
customers. In this, we can say that e-Marketing encompasses all the activities
a business conducts via the world wide web to attract new business, retain
current business, and develop its brand identity.

Fig. 4.3: E-marketing

Source: https://www.mbaskool.com/business-concepts/marketing-and-strategy-
terms/1679-e-marketing.html
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4.8.1 Importance Introduction to
Agricultural Marketing
When implemented correctly, the return on investment (ROI) from
E-marketing can far exceed that of traditional marketing strategies. It is a
means to reach literally millions of people. The nature of the internet has
enabled businesses to have a truly global reach. Through internet marketing,
now a marketer can reach consumers in a wide range of ways and offer a
wide range of products and services to fulfill the needs of the consumers.
As the new technologies are becoming available all the time, the scope
of e-marketing will further grow. Imagine you’re reading your favorite
magazine. You see an advertisement for some new product or service may
be a new model of a tractor or combine- harvester-cum- thresher offering.
With the kind of traditional media, it’s not that easy for you, to take the
step from hearing about a product to the actual acquisition. Now through
e-Marketing, it has become easy to make that step as simple as possible,
within a few short clicks you could have booked a test drive or ordered
the product. Moreover, this can happen regardless of normal office hours.
Effectively, Internet marketing makes business hours 24 hours per day, 7
days per week throughout the whole year. In fact, e-marketing bridges up
the gap between providing information and eliciting a consumer reaction, as
a result of which the consumer’s buying cycle is speeded up.
4.8.2 Benefits of E-Marketing
The benefits of e-marketing are:
(i) More affordable than traditional one,
(ii) More business partners can be reached,
(iii) Caters to a more geographically dispersed customer base,
(iv) Procurement cost is lower,
(v) Purchase costs, sales, and marketing costs are lower,
(vi) Reduction in inventories
Benefits to Consumers
(i) Increased choice of vendors and products,
(ii) The convenience of shopping at home or office,
(iii) Greater information access on-demand, and
(iv) More competitive prices and increased price comparison capabilities.
Benefits to Business Community
(i) Exchange of a larger quantity of information,
(ii) Global visibility,
(iii) Rapid planning cycles and strategies,
(iv) Avoids communication gaps,
(v) Access to new consumer groups,
(vi) Reach to more persons at a lower cost, and
(vii) Relationship building is easy.
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Agricultural Marketing: Check Your Progress 4.4
An Overview
Note: a) Use the spaces given below for your answers.
b) Check your answer with those given at the end of the unit.
1) What do you understand about e-marketing?
………………………………………………………………………
………………………………………………………………………
2) How is e-marketing better than traditional marketing?
………………………………………………………………………
………………………………………………………………………
3) What are the benefits of e-marketing to the consumers?
………………………………………………………………………
………………………………………………………………………

4.9 LET US SUM UP

Agricultural marketing can be defined as comprising of all activities involved
in the supply of farm inputs to the farmers and the movement of agricultural
products from the farms to the consumers. The subject of agricultural
marketing includes marketing functions, agencies, channels, efficiency and
costs, price spread and market integration, producer’s surplus, government
policy and research, training, and statistics on agricultural marketing and
imports/exports of agricultural commodities. Any single activity performed
in carrying a product from the point of its production to the ultimate
consumer may be termed as a marketing function. Agricultural marketing
plays an important role not only in stimulating production and consumption
but in accelerating the pace of economic development. In fact, it has been
described as the most important multiplier of agricultural development. The
marketable surplus is the quantity of the produce that can be made available
to the non-farm population of the country whereas marketed surplus is the
quantity of the produce that the producer farmer actually sells in the market,
irrespective of his requirements. The marketed surplus may be more, less,
or equal to the marketable surplus, depending upon the condition of the
farmer and type of the crop. E-Marketing is the product of the meeting
between modern communications technologies and the age-old marketing
principles that humans have always applied. Internet marketing allows the
marketer to reach consumers in a wide range of ways and enables them to
offer a wide range of products and services.

4.10 KEYWORDS
Agent middlemen: Those individuals who do not take title to the goods
they handle.
Agricultural marketing can be defined as comprising of all activities
involved in the supply of farm inputs to the farmers and the movement of
agricultural products from the farms to the consumers.
Agriculture: means growing and/or raising crops and livestock.
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Buying: It includes identifying one’s needs, finding the source of supply of Introduction to
the goods, and procuring them at the right price. Agricultural Marketing

Channel: The path through which goods and services move from producers
to consumers.
E-Marketing: E-marketing or electronic marketing is the application
of marketing principles and techniques via electronic media and more
specifically the Internet.
Facilitative middlemen: Those individuals who do not buy and sell but
assist in the marketing process.
Grading: Grading means the sorting of produce into different lots having
the same characteristics with respect to quality specifications.
Market intelligence: The historical record of the market situation.
Market news: It presents information on prices of the commodities, market
arrivals, stock, directions of outflows, etc.
Marketable Surplus: The quantity of the produce which can be made
available to the non-farm population of the country.
Marketed Surplus: The quantity of the produce that the producer farmer
actually sells in the market, irrespective of his requirements for family
consumption, farm needs, and other payments.
Marketing connotes a series of activities involved in moving the goods
from the point of production to the point of consumption.
Marketing functions Any single activity performed in carrying a product
from the point of its production to the ultimate consumer may be termed as
a marketing function.
Merchant middlemen: Those individuals who take title to the goods they
handle.
Selling: It is the process of finding the buyers and convincing them to buy
the product at a price that is satisfactory to both sellers and buyers.
Standardization: It is defined as the determination of the basic limits on
grades or the establishment of model processes and methods of producing,
handling, and selling goods and services.

4.11 SUGGESTED READINGS / REFERENCES

Acharya, S.S. 1997. Agriculture-Industry Linkages: Public Policy and
Some areas of Concern, Agricultural Economics Research Review, Vol. 10,
No. 2, p.162.
Acharya, S.S. and N.L.Agarwal. 2011. Agricultural Marketing in India.
Oxford & IBH Publishing co. Pvt. Ltd, New Delhi.
http://www.angrau.ac.in/media/1638/AECO 341.pdf
Kohls, R.l. and J.N. Uhl. 1980. Marketing of Agricultural Products.
MacMillian Publishing Co. Onc., New York
Subba Reddy, S., P.Raghu Ram., P. Sastry, T.V.N. and Bhavani Devi I. 2010.
Agricultural Economics., Oxford & IBH Publishing Company Private Ltd.,
New Delhi.
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Agricultural Marketing: Thomsen, F.L. 1951. Agricultural Marketing. McGraw-Hill Book Company,
An Overview Inc, New York.

1.12 ANSWERS TO CHECK YOUR PROGRESS

Check Your Progress 4.1
1) All activities involved in the supply of farm inputs to the farmers and
movement of agricultural products from the farms to the consumers.
2) A healthy marketing system acts as an incentive for the farmers to use
the scarce resources judiciously. Thus efficient input marketing and
output marketing systems are indispensable to bring the desired level
of welfare to the farmers. Farmer in fact may turn out to be a major
beneficiary in the market system properly functions.
3) Specialization; Urbanization; Transportation and Communication;
and (iv) Technological change in agriculture
Check Your Progress 4.2
1) Market news refers to current information about prices of the
commodities, market arrivals, stock, directions of outflows, etc.
Market intelligence is the historical record of the market situation.
This relates to such facts as the prices that prevailed in the past and
market arrivals over time. These are records of what has happened in
the past.
2) Any single activity performed in carrying a product from the point of
its production to the ultimate consumer may be termed as a marketing
function. A marketing function may have any one or combination of
three dimensions, viz., time, space, and form.
3) Selling is the process of finding the buyers and convincing them
to buy the product at a price that is satisfactory to both sellers and
buyers. Buying includes identifying one’s needs, finding the source
of supply of the goods, and procuring them at the right price.
Check Your Progress 4.3
1) The marketable surplus is the quantity of the produce that can be made
available to the non-farm population of the country after meeting all
its requirements.
2) The situation of selling more than the marketable surplus is termed as
distress or forced sale.
3) (i) Size of Holding, (ii) Size of production, (iii) Price of the Commodity,
(iv) Size of Family, (v) Requirement of Seed and Feed, (vi) Nature
of Crops Grown, (vii) Consumption Habits, (viii) Hoarding and (ix)
Cash Requirements
Check Your Progress 4.4
1) e-Marketing or electronic marketing is the application of marketing
principles and techniques via electronic media and more specifically
the Internet. E-Marketing includes both direct response marketing
and indirect marketing elements and uses a range of technologies to
help connect businesses to their customers.
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2) It is a means to reach literally millions of people. While traditional Introduction to
media costs limit this kind of reach to huge multinationals. Agricultural Marketing
E-Marketing opens up new avenues for smaller businesses, on a much
smaller budget, to access potential consumers from all over the world.
Internet marketing allows the marketer to reach consumers in a wide
range of ways and enables them to offer a wide range of products
and services. Effectively, Internet marketing makes business hours 24
hours per day, 7 days per week for every week of the year.
3) Increased choice of vendors and products, (ii) Convenience of shopping
at home or office, (iii) Greater information access on-demand, and (iv)
More competitive prices and increased price comparison capabilities.

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