AGB341 UNIT 1

INTRODUCTION TO AGRICULTURAL
MARKETING
by
EM Syampaku
Production Consumption
point point
•farm produce •hospitals
•consultancy •general public
•fishery Marketing •companies
•inputs •schools
•machinery •farmers
•green houses •manufacturers

Marketing process linking producers to

consumers
 Why do you think marketing is a
core activity of any company?
• brings revenues to the business as products
and money exchange hands
• creation of utility appreciated by customers
• value for money as the main reason for an
exchange in the market
• need to balance price, product,
communication and distribution for sellers
and buyers to engage successfully in
exchanges
 What is an agricultural market?

• from Kotler (1994) an agricultural market is "a

group of potential buyers sharing a particular
need or want ‘for farm products’ who might be
willing and able to engage in an exchange to
satisfy that need or want"
• Limitations of this definition:
o Only potential buyers are captured; role
played by suppliers left out
o For sellers, market comprises buyers, and for
buyers, the market comprises sellers
o thus, an agricultural market should be defined
to cover different participants.
• An agricultural market may be viewed differently by
different participants:
o For final consumers, an agricultural market is a place
where sellers offer farm produce for sale
o For farmers, it is a location where buyers procure farm
produce for resale to either final consumers or to
processors
o For aggregators, it is a place where farmers converge to
deliver farm produce of interest for possible customers
o For traders, it is a place where to source farm produce and
locations where to find buyers
o For processors, it is location/suppliers where to source
farm products for further value addition.
 Thus, for buyers, the market comprises potential sources of
the products of interest to meet their needs and wants.
Likewise, for sellers, the market is a set of potential buyers
• Emergence of facilitating platforms like
commodity exchange fora creates the need for
further modification of the definition
• On basis of this argument, a market may be
viewed as a platform for interaction between
suppliers and buyers for the purpose of
engaging and effecting exchanges
• Ultimate definition:
o an agricultural market is defined as a set of
potential buyers and sellers or location or
platform or indeed environment where
potential buyers and sellers can interact for
the purpose engaging in an exchange to satisfy
a particular need or want
o need or want for suppliers is money to cover
costs of supply and generate a profit
o need or want for buyers is commodity or
service they required for their livelihood
 Types of agricultural markets
• Agricultural markets may also be differentiated by various
elements:
o By nature of commodity transacted: output, service, contract and
input markets
o By type of commodity: grain markets, livestock markets, dairy
markets, and so on
o By scale of quantities traded: small-holder markets and large scale
markets
o By location on value chain: retail markets, wholesale markets;
consumer and farm supply markets
o By formality: formal and informal markets
o By type of exchange: spot (cash), credit and futures markets
o By level of freshness: green markets, non-green markets
o By time: morning and evening markets, and weekend and weekdays
markets
What is agricultural marketing?

• There are two approaches:

o Agricultural marketing as an exchange
activity
o Agricultural marketing as a business
activity
 Agricultural marketing as an
exchange activity
• an activity that results into an exchange from interaction
between buyers and sellers
• centres on building case for bringing about:
o attractiveness to engage into transactions
o conviction to buy or sell
• blends four elements - product, price, location and
communication for conviction to buy or sell
• defined by Kotler (1994) as a "social and managerial
process by which individuals and groups obtain what they
need and want through creating, offering, and exchanging
‘agricultural’ products of value with others”.
 Agricultural marketing as a
business activity
• defines agricultural marketing as a value adding activity
• Kohls and Uhl (2002) defines it as the performance of all business
activities involved in the flow of agricultural products and services from
the point of initial agricultural production until they are in the hands of
consumers
• thus, agricultural marketing creates four different types of utility
aimed at satisfying customers:
o form utility via processing, aggregation, dispersion
o position or place utility via transportation
o time utility via storage
o possession utility via exchange functions like buying and selling,
contracts, auctions, tenders
• utility creation is associated with price adjustment: the higher the
utility created, the higher the exchange price
• links producers to consumers, and consumers to producers
 What problems necessitating
evolution of agricultural marketing
chains?
• agricultural production, value adding and
consumption taking place in different geographical
locations necessitate transportation
• production, value addition and consumption taking
place at different times of the year necessitate
warehousing and storage
• differences in form the product is consumed as
compared to form in which it is produced
necessitates processing
• small business size and family orientation
necessitate input/output aggregation via
cooperatives and associations
• influence of socio-cultural factors such as religious
faith, race, culture, etc necessitate modification of
• differences in market power between suppliers and buyers
resulting in formation of interest groups like cooperatives
and associations
• seasonal variations leading to evolution of price risk
management markets that include markets for futures,
swaps, options and forward contracts. Weather related
problems have led to creation of insurance markets for
drought and flood insurance
• bulky nature of some agribusiness products leading to
evolution of bulking centres, storage facilities and
specialized transportation arrangements in agricultural
markets
• perishability of agribusiness products creates the need for
special handling and processing techniques, and acquisition
of specialised marketing skills that ensure speedy disposal
of products
• need for political stability has also led to involvement of
government participation
 Political economy roles of
agricultural markets
• one of the largest employer in an economy
through its forward and backward linkages
• stimulate development of non-agricultural
sectors: radios, cars, and other assets from non-
agricultural sectors
• boost foreign currency earnings from exports of
products and services
• income distribution incomes to rural households
• taking nutrition to citizens
• stabilize domestic politics
 Activity
• Select a farm produce of your
choice and trace the different
stages of marketing it goes
through from production to final
consumption. See how marketing
is defined by different actors in
the chain. Try also to assess how
the marketing process is that way
and not different.
 Evaluation
• Kindly read Unit 1 of the module notes posted
on moodle, and answer the following
questions
o Define agricultural marketing as an exchange activity
o What do you think are fundamental differences between
marketing as an exchange activity and marketing as a
value adding activity?
o If you pick milk as an example of agribusiness product,
what do you think are the key factors that have given
rise to the evolution of marketing system as we know it
today in Zambia
o Zambia does not have a uniform nutrition status for
each age group. Why?
the end