Q1. Define Agricultural Marketing. Give Scope & importance 2.

Area or coverage a) Local or Village Markets: A market in

of Agricultural marketing in economy which the buying and selling activities are confined among the
Definition : Agricultural marketing can defined as comprising buyers and sellers drawn from the same village or nearby
of all activates involved in supply of farm inputs to the farmers villages e.g., local milk market or vegetable market b) Regional
and movement of products from the farms to the consumer Markets: A market in which buyers and sellers for a
Subject Matter of Agricultural Marketing: Agricultural commodity are drawn from a larger area than the local
marketing in a broader sense is concerned with the marketing markets. c) National Markets: A market in which buyers and
of farm products produced by farmers and of farm inputs sellers are at the national level. National markets are found for
required by them in the production of these farm products. durable goods like jute and tea d) World Market: A market in
Thus, the subject of agricultural marketing includes product which the buyers and sellers are drawn from the whole world
marketing as well as input marketing. The importance of 3. Time span a) Short-period Markets: The markets which are
output marketing has become more conspicuous in the recent held only for a few hours are called short-period markets. The
past with the increased marketable surplus of the crops The products dealt within these markets are of highly perishable
farmers produce their products for the markets. Farming nature, such as fish, fresh vegetables, and liquid milk b) Long-
becomes marketoriented. Input marketing is a comparatively period Markets: These markets are held for a long period than
new subject. Farmers in the past used such farm sector inputs the short-period markets. The commodities traded in these
as local seeds and farmyard manure. These inputs were markets are less perishable and can be stored for some time;
available with them; the purchase of inputs for production of these are food grains and oilseeds. The prices are governed
crops from the market by the farmers was almost negligible. both by the supply and demand forces c) Secular Markets:
The importance of farm inputs-improved seeds, fertilizers, These are markets of permanent nature. The commodities
insecticides and pesticides, farm machinery, implements and traded in these markets are durable in nature and can be
credit-in the production of farm products has increased in stored for many years. Examples are markets for machinery
recent years. The new agricultural technology is input- and manufactured goods4. Volume of transactions - a)
responsive. Thus, the scope of agricultural marketing must Wholesale Markets b) Retail Markets 5 Nature of transactions
include both product marketing and input marketing. In this - a) Spot or Cash Markets b) Forward Markets 6. Number of
book, the subject matter of agricultural marketing has been commodities - a) General Market b) Specialized Markets 7.
dealt with; both from the theoretical and practical points of Degree of competition - 8. Nature of commodities - a)
view. It covers what the system is, how it functions, and how Commodity Markets b) Capital Markets 9. Stage of marketing
the given method or techniques may be modified to get the - a) Producing Markets b) Consuming Markets 10. Extent of
maximum benefits. Specially, the subject of agricultural public interventions - a) Regulated Markets b) Unregulated
marketing includes Markets 11. Type of population served - a) Urban Market b)
IMPORTANCE OF AGRICULTURAL MARKETING Rural Market . 12. Accrual of marketing margins
1.Optimization of Resource use and Output Management Q3. Define Market integration. Explain the types of Market
2.Increase in Farm Income 3.Widening of Market 4.Growth of integration
Agro-based Industries 5.Price Signals 6.Adoption and Spread Market Integration : Market integration as a process which
of New Technology 7.Employment 8.Addition to National refers to the expansion of firms by consolidating additional
Income 9.Creation of Utility – (a) Form Utility (b) Place Utility marketing functions and activities under a single management
(c) Time Utility (d) Possession Utility Types of Market Integration : 1 ) Horizontal Market
Q2. Define markrt Give the classification of Market based on: Integration : Occurs when a firm or agency gains control of
Transaction, Dimensions, Time Span and Location other firms or agencies performing similar marketing functions
Definition : Market is the sphere within which price at the same level in the marketing sequence e . g . Various
determining forces operates firms doing the same activity but located at different locations
Dimensions for classification of markets . 2 ) Vertical Market Integration : This occurs when a firm
1. Location or place of operation - a) Village Markets: A performs more than one activity in the sequence of marketing
market which is located in a small village, where major e . g . firm performing wholesaling as well as retailing activity .
transactions take place among the buyers and sellers of a 3 ) Conglomeration Integration : A combination of agencies or
village is called a village market b) Primary wholesale Markets: activities not directly related to each other may when it
These markets are located in big towns near the centers of operates under unified management e.g. Hindustan liver Ltd. ,
production of agricultural commodities c) Secondary Birla Group , Tatas , J.K. Group etc
wholesale Markets: These markets are located generally in Q4. Define Risk in Marketing. State the types of Risks in
district headquarters or important trade centers or near Agricultural marketing.
railway junctions d) Terminal Markets: A terminal market is Risk : It is uncertainty about cost , loss or damage
one where the produce is either finally disposed of to the Types of risks involved in marketing
consumers or processors, or assembled for export e) Seaboard a ) Physical risk: Physical risk includes loss of quantity and
Markets: Markets which are located near the seashore and are quality. It may be due to fire, flood, earthquake, rodents, pests,
meant mainly for the import and/or export of goods are excessive moisture or temperature, careless handling,
known as seaboard market improper storage, looting or arson b ) Price risk: Price risk
associates with fluctuation in price from year to year or within market or make their entry difficult by their dominance in the
the year c ) Institutional risk: Institutional risks include the market. There may also be some government restrictions on
risks arising out of a change in the government budget policy, the entry of firms. 4. Flow of Market Information: A well-
imposition of levies price controls etc. organized market intelligence information system helps all the
Q5. Define Co-operative Marketing. Enlist the types of co- buyers and sellers to freelyinteract with one another in
operative Marketing and explain functions of cooperative arriving at prices and striking deals. 5. Degree of Integration:
Marketing The behavior of an integrated market will be different from
Meaning : Cooperative Marketing sales association is a that of a market where there is no integration either among
voluntary business organization established by its members to the firms or of their activities
market farm products collectively for their direct benefit . Q7. Define Marketing cost & Explain the factors which affect
Co - operative Marketing structure the cost of marketing
1.Base level- Primary cooperative marketing societies Marketing Costs The movement of products from the
Regional 2.District level - Central cooperative marketing producers to the ultimate consumers involves costs, taxes, and
unions / federations 3.State level- Apex / State cooperative cess which are called marketing costs. These costs vary with
marketing societies / federations the channels through which a particular commodity passes
Functions: The main functions of co operative marketing through
societies are: i) To market the produce of the members of the Factors Affecting Marketing costs 1. Perish ability 2. Losses in
society at fair prices; ii) To safeguard the members for storage and transportation 3. Volume of the product handled
excessive marketing costs and malpractices; iii) To make credit Volume of the More – less cost Volume of the Less – more cost
facilities available to the members against the security of the 4. Regularity in supply : Costless irregular in supply – cost is
produce brought for sale; iv) To make arrangements for the more 5. Packaging : Costly (depends on the type of packing) 6.
scientific storage of the members’ produce; v) To provide Extent of adoption of grading 7. Necessity of demand creation
facilities of the grading and market information which may (advertisement) 8. Bulkiness 9. Need for retailing : (more
help them to get a good price for their produce vi) To introduce retailing – more costly) 10. Necessity of storage 11. Extent of
the system of pooling so as to acquire a better bargaining Risk 12. Facilities extended by dealers to consumers. (Return
power than the individual members having a small quantity of facility, home delivery, credit facility, entertainment)
produce for marketing purposes; vii) To act as an agent of the Q8. Define Producer's surplus & give its types. Explain the
government for the procurement of food grains and for the factors affecting marketable surplur
implementation of the price support policy viii) To arrange for The producers surplus is the quantity of produce which is or
the export of the produce of the members so that they may can be made available by the farmers to the non-farm
get better returns population
Q6. Define Market Structure. Enlist the components of 1. Marketable Surplus The marketable surplus is that quantity
Market Structure and explain it in brief of the produce which can be made available to the non-farm
Market structure refer to those organitization characterstic of population of the country. It is a theoretical concept of surplus.
market which influence the nature of competition and pricing The marketable surplus is the residual left with the producers
and affect the conduct of business frame farmers after meeting his requirement for family consumption,
Components of market structure : farm needs for seeds and feed for cattle, payment to labour in
1. Concentration of Market Power: The concentration of kind, payment to artisans, blacksmith, potter and mechanic
market power is an important element determining the nature payment to landlord as rent and social and religious payments
of competition and consequently of market conduct and in kind. This may be expressed as follows : MS = P - C where
performance. This is measured by the number and size of firms MS = Marketable surplus P =Total production, and C = Total
existing in the market. The extent of concentration represents requirements (family consumption, farm needs, payment to
the control of an individual firm or a group of firms over the labour, artisans, landlord and payment for social and religious
buying and selling of the produce. A high degree of market work)
concentration restricts the movement of goods between 2. Marketed Surplus Marketed surplus is that quantity of the
buyers and sellers at fair and competitive prices, and creates produce which the producer farmer actually sells in the
an oligopoly or oligopsony situation in the market. 2. Degree market, irrespective of the requirements for family
of Product Differentiation: Whether or not the products are consumption, farm needs and other payments. The marketed
homogeneous affects the market structure. If products are surplus may be more, less or equal to the marketable surplus.
homogeneous, the price variations in the market will not be Whether the marketed surplus increases with the increase in
wide. When products are heterogeneous, firms have the production has been under continual theoretical security. It
tendency to charge different prices for their products. has been argued that poor and subsistence farmers sell that
Everyone tries to prove that his product is superior to the part of the produce which is necessary to enable them to meet
products of others. 3. Conditions for Entry of Firms in the their cash obligations. This results in distress sale on some
Market: Another dimension of the market structure is the farms. In such a situation any increase in the production of
restriction, if any, on the entry of firms in the market. marginal and small farms should first result in increased on-
Sometimes, a few big firms do not allow new firms to enter the farm consumption. An increase in the real income of farmers
Q9.Differentiate between marketed surplus and marketable when to market their products. This facility helps in preventing
surplus distress sales for immediate money needs or because of lack
1.Marketed surplus is equal to marketable surplus: when the of proper storage facilities. It gives the producer holding
farmer neither retains more nor less than his requirement. power; he can wait for the emergence of favourable market
This holds true for perishable commodities and of the average conditions and get the best value for his product
farmer. 2.Marketed surplus is greater than marketable Q11. Explain different. types of State Trading Corporation and
surplus: when the farmer retains a smaller quantity of the crop write their objectives
than his actual requirements for family and farm needs. This is Types of state trading: State trading may be partial or
true especially for small and marginal farmers, whose need for complete, depending upon the extent of intervention desired
cash is more pressing and immediate. This situation of selling by the government. i) Partial state trading In partial state
more than the marketable surplus is termed as distress or trading, private traders and government coexist. Traders are
forced sale. Such farmers generally buy the produce from the free to buy and sell in the market. The government may place
market in a later period to meet their family and/or farm some restrictions on them, such as declaration of stocks, limits
requirements. The quantity of distress sale increased with the on the stock which can be held at a point of time and
fall in the price of the product. A lower price means that a submission of regular accounts. The government enters the
larger quantity will be sold to meet some fixed cash market for the purchase of commodity directly from producers
requirements. 3.Marketed surplus is less than marketable at notified procurement price. It undertakes the distribution of
surplus: when the farmers retains some of the surplus commodities to consumer through a net work of fair price
produce. This situation holds true under the following shops. In this way, it safeguards the interest of producers and
conditions. (a) Large farmers generally sell less than the consumers alike, and keeps a check on the undesirable
marketable surplus because of their better retention capacity. activities of traders. ii) Complete state trading This is extreme
They retain extra produce in the hope that they would get a form of trading adopted by the government when partial state
higher price in the later period. Sometimes, farmers retain the trading fails to ensure fair prices to producers and make goods
produce even up to the next production season. (b) Farmers available to consumers at responsible prices.
may substitute one crop for another crop either for family The objectives of state trading are: i) To make available
consumption purpose or for feeding their livestock because of supplies of essential commodities to consumers at reasonable
the variation in prices. With the fall in the price of the crop prices on a regular basis; ii) To ensure a fair price of the
relative to a competing crop, the farmers may consume more produce to the farmers so that there may be an adequate
of the first and less of the second crop incentive to increase production; iii) To minimize violent price
Q10. What is need of storage of agricultural produce? explain fluctuations occurring as a result of seasonal variations in
the important functions of warehouse. supply and demand; iv) To arrange for the supply of such
Warehousing: warehouses are scientific storage structures inputs as fertilizers and insecticides so that the tempo of
especially constructed for the protection of quantity and increased production is maintained; v) To undertake the
quality of stored products Warehousing may be defined as the procurement and maintenance of buffer stock, and their
assumption of responsibility for the storage of goods. It may distribution, whenever and wherever necessary
be called the protector of national health, for the produce Q12. Define the term “Speculation and Hedging''. State
stored in warehouses is preserved and protected against benefits of “Speculation and Hedging”
rodents, insects and pests. and against the ill-effect of Speculation : Purchase or sale of a commodity at the present
moisture and dampness. The warehousing scheme in India is price with the object of sale or purchase at some future date
an integrated scheme of scientific storage, rural credit, price at a favourable price.
stabilization and market intelligence and is intended to Hedging : It is a trading technique of transferring the price risk.
supplement the efforts of co-operative institutions “Hedging is the practice of buying or selling futures to offset
The important functions of warehouses are : 1.Scientific an equal and opposite position in the cash market and thus
storage: Here, a large bulk of agricultural commodities may be avoid the risk of uncertain changes in prices” (Hoffman).
stored. The product is protected against quantitative and benefits of Speculation - 1. Purchases and sales in the cash as
qualitative losses by the use of such methods of preservation well as in futures markets are made with the objective of
as are necessary. 2.Financing: Nationalized banks advance making profit 2. The activities of buying and selling are not
credit on the security of Warehouse receipt issued for the necessarily opposed to each other. 3. It is not necessary that
stored products to the extent of 75 % of their value 3.Price the two types of transactions should be of equal quantity.
stabilization: Warehouses help in price stabilization of benefits of Speculation – 1.To protect oneself against
agricultural commodities by checking the tendency to making excessive price fluctuation. 2.Are always opposed to each
post-harvest sales among the farmers. Warehouse helps in other. 3.If is obligatory to buy and sell the goods in equal
staggering the supplies throughout the year. Thus helps in quantities in the two markets.
stabilization of agricultural prices. 4. Market intelligence:
Warehouses also offer the facility of market information to
persons who hold their produce in them. They inform them
about the prices prevailing in the period, and advice them
Q13. Define processing. Explain in brief about importance of Q14. State the origin, objectives and functions of FCI
processing of agricultural commodities Food Corporation of India was setup on 14th January 1965
The processing activity involves a change in the form of the under Food Corporations Act 1964 to implement the following
commodity. This function includes all of those essentially objectives of the National Food Policy : i. Effective price
manufacturing activities which change the basic form of the support operations for safeguarding the interests of the
product. Processing converts the raw material and brings the farmers ii. Distribution of foodgrains throughout the country
products nearer to human consumption. It is concerned with for Public Distribution System iii. Maintaining satisfactory level
the addition of value to the product by changing its form of operational and buffer stocks of foodgrains to ensure
about importance of processing of agricultural commodities National Food Security
1. It changes raw food and other farm products into edible, FUCTIONS: The main functions of the Food Corporation of
usable and palatable forms. The value added by processing to India are: a) To produce a sizable portion of the marketable
the total value produced at the farm level varies from product surplus of foodgrains and other agricultural commodities at
to product. It is nearly 7 percent for rice and wheat, about 79 incentive prices from the farmers on behalf the central and
percent for cotton and 86 percent for tea. It is generally higher state governments b) To make timely releases of the stocks to
for commercial crops than for food crops. Examples of the public distribution system(Fair price shops and controlled item
products in this group are: the processing of sugarcane to shops)so that consumer prices may not raise unduly and
make sugar, gur, khandsari; oilseeds processing to make oil; unnecessarily c) To minimise seasonal price fluctuations and
grinding of food grains to make flour; processing of paddy into inter regional price variation in agricultural commodities by
rice; and conversion of raw mango into pickles establishing a purchasing and distribution network and d) To
Q14. State the origin, objectives and functions of NAFED. build up a sizable buffer stock of food grains to meet the
The objectives of the NAFED shall be 1) to organise, promote situation that may arise as result of short falls in internal
and develop marketing, processing and storage of agricultural, procurement and imports
horticultural and forest produce, 2) to distribute agricultural Q15. Describe the advantages of packing in marketing of
machinery, implements and other inputs, 3) undertake inter- agricultural commodities .
State, import and export trade, wholesale or retail as the case Advantages of packing : 1 ) It protects against breakage ,
may be and 4) to act and assist for technical advice in leakage during the movement 2 ) It involves compression 3 ) It
agricultural production for the promotion and the working of facilitates the handling of commodity 4 ) It helps in reducing
its members and cooperative marketing, processing and the marketing cost 5 ) It helps in quality identification , product
supply societies in India. differentiation 6 ) It helps in checking adulteration 7 ) It
functions of NAFED. ensures cleanliness 8 ) packaging with covering facilitates the
1. to facilitate, coordinate and promote the marketing and conveying of instructions to buyers 9 ) Packaging prolongs the
trading activities of the cooperative institutions in agricultural storage quality of the products
and other commodities, articles and goods; 2. to undertake or Q16. Describe the factors affecting marketable surplus
promote on its own or on behalf of its member Institutions or Factors affecting marketable surplus .
the Government or Government Organisations, Inter-State i . Size of holding ii Production iii Price of commodity iv Size of
and international trade and commerce and undertake, family v Requirement of seed and feed vi Nature of commodity
wherever necessary, sale, purchase, import, export and vii . Consumption habits . i. Size of holding : There is positive
distribution of agricultural commodities, horticultural and relationship between the size of the holding and the
forest produce. 3. to undertake purchase, sale and supply of marketable surplus. ii. Production : The higher the production
agricultural products, marketing and processing requisites, on a farm, the larger will be the marketable surplus and vice
such as manure, seeds, fertiliser, agricultural implements and versa. iii. Price of the Commodity : The price of the commodity
machinery, packing machinery, construction requisites, and the marketable surplus have a positive as well as a
processing machinery for agricultural commodities, forest negative relationship, depending upon whether one considers
produce, dairy, wool and other animal products; 4. to act as the short and long run or the micro and macro levels. iv. Size
warehouseman under the Warehousing Act and own and of family : The larger the number of members in a family the
construct its own godowns and cold storages; 5. to act as agent smaller the surplus on the farm. v. Requirement of Seed and
of any Government agency or cooperative institution, for the Feed : The higher the requirement for these uses, the smaller
purchase, sale, storage and distribution of agricultural, the marketable surplus of the crop
horticultural, forest and animal husbandry produce, wool,
agricultural requisites and other consumer goods; 6. to act as
insurance agent and to undertake all such work which is
incidental to the same 7. to organise consultancy work in
various fields for the benefit of the cooperative institutions in
general and for its members in particular; 8. to undertake
manufacture of agricultural machinery and implements,
processing, packing, etc. and other production requisites and
consumer articles.