AGRICULTURE MARKET STRUCTURE

By:Dr. S. Mahapatra

Objective of Study: Concept and components of Market Classification and growth of market Market structure ,conduct and performance Market forces and pricing decisions

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Market is a place where commodities are bought and sold with the presence of potential buyers and sellers as a commercial activity for any product or place. It is the area where forces of demand and supply decide the price. It is the aggregate demand of potential buyers for a product/service for potential exchange. Components of Agril. MarketExistence of good/commodity for transactions Existence of buyers and sellers. Business relationship between buyers and sellers. Demarcation of area/place

Dimensions and classification of Markets: Place of operation: Village 1. Primary near to agril. Production. 2. Secondary i.e. Wholesale at district headquarters, nearer to railway junctions. 3. Terminal market: for export 4. Seaboard: near to seashore/seaport towns. On the basis of coverage 1. Local/village markets 2. Regional markets for food grains 3. National Markets: Buyers /Sellers spread at national level 4. International/Global Market

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Time Span: Short period market for a day or less. Periodic Long period markets Secular Marketing for manufactured items Volume of transactions; Wholesale and Retail On the basis of nature of transactions Cash markets Forward markets Number of commodities General markets Specialised markets

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On the basis of degree of competition Perfect Imperfect-monopoly, Monopolistic, oligopoly On basis of nature of commodities Commodity market Capital market Producing markets and consuming markets Extent of public intervention Regulated and unregulated Type of population served: Urban and Rural Market functionaries and marketing margins Farmers market Co-operative market General market

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Growth of markets Functional growth:General,specialised,sample,grade Geographical:Local,regional,national,international Factors affecting rate of market development Nature of demand Nature of products Transportation and Communication facilities Quantum of supply and demand Public policies Banking facilities Peace and security Economic growth

MARKET STRUCTURE Shape, size and design is based on 1. functions 2. manner of market operation 3. competition, pricing and conduct of business firms Characteristics affect traders behavior and performances and hence an understanding of market structure is essential. Components of market structure include 1. Concentration of market power 2. Degree of product differentiation 3. Conditions for entry of firms in the market 4. Flow of market information 5. Degree of integration

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Dynamics of market structure (Conduct & performance) includes Market sharing and price setting policies Policies for rivals Policies for setting quality products Criteria of market performance Efficiency in resource use Existence of monopoly profits Adopting technological innovations for NPD Inequalities due to higher profits to middleman, poor support price to farmers & interproduct price parity.

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Market structure to keep pace with changes likeProduction pattern Demand pattern Costs and patterns of marketing functions Technological change in Industry

MARKET FORCES Demand----Price vs. Quantity demanded 1. Effective demand 2. Derive demand 3. Reservation of demand and price 4. Demand function Factors affecting demand of farm products: 1. Population size and per capita income 2. Changes in tastes as per weather,religion,occupation,social status,urbanisation. 3. Processing technology 4. Income distribution 5. Income elasticity differs between Rural and Urban depends on substitute.

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Supply of product Schedule/quantity of a product required at a given time in a given market : higher the price, larger is the sale quantity offered. Short run: Existing production on hand. Intermediate run-Time required for production. Long run: Expansion of production facilities. Factors affecting supply of farm products Farm productivity Import from outside Factors affect domestic production : Weather, technology, irrigation facilities, cultivable land, cropping area, input availability, relative inter crop and input-output prices. Domestic supply augmented by imports or restricted exports depends on : Difference of domestic and international prices allowing shipment costs.

2. Objective of the national policy to protect domestic producers and consumer interests. 3. Ability of the country to resort to imports. 4. Need to earn foreign exchange by exports depends on time and countrys situation. Current production, net exim, carryover stocks decide the quantity available to consumers in a year. Net availability of cereals, pulses and food grains in a country during the year is given by =Carryover stocks+current years production +importsexports-year ending balance. Quantity demanded and supplied is affected by price and at equilibrium price both buyers and sellers are satisfied. Tabular approach ,equilibrium price and quantity of milk. Price/lit Qty demanded Qty supply 4 10 2 12 6 6 20 2 10

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Marketing Concepts: Balance of trade : Difference of exports and imports. Brand and Branding : Name/sign/symbol naming a product. Cartel: Association of firms regulate output and price by mutual agreement. Consumer Franchise : Consumer loyalty to a firm for past experience and promotional efforts. Consumerism: Social force to protect consumers interest in the market and redress the existing in the market and redress the existing imbalance in the sale transactions. Organised consumers pressure on the marketing system protest against unfair practices and help consumers in Consumer education Product rating Maintain liaison between Govt. and producer companies.

Differentiated Marketing: Farmers terms of trade Food retailing Free market Law of one price (LOOP) Marketing Mix: Product Price Physical distribution Promotional Mix

Marketing Process: It is the sequence of events and actions co-ordinate the flow of goods and value addition in the marketing system. Producer provides a marketing mix that meets consumer demand of a target market and brings both together for the exchange of the product. Exchange takes place when market offering is acceptable to the consumer and both being benefited with a win-win situation. Marketing Strategy: It is a specific procedure to achieve goal and is a functional one , plan of action to meet the needs of an enterprise working in an environment. Formulation of marketing strategy involves: 1. Decide objectives 2. Alternate market mix options 3. Select the most profitable market mix options 4. Conditions to implement chosen market mix.

Market Segmentation : It is a technique to develop separate products/marketing programs to appeal to different consumer classes and method to achieve max. market response and a strategy to divide. It enables for better attention to selected customers and offer market mix for each segment (group of buyers having homogeneous demand) Types of marketing strategies are product differentiation through branding. Market segmentation offers following benefits: 1. Marketers are in a better position to locate and compare marketing opportunities. 2. Marketers can effectively formulate and implement marketing programs to match the demand of that segment. 3. Marketers can make adjustments in products segments, communications.

4. Marketers can avoid competition by assessing strengths and weaknesses of competitors using resources profitably. 5. It leads to effective use of marketing resources as customer focus in target markets. Terms of Trade: It is the relationship of prices of one nation to the other and rate of exchange of exports with imports. It is the ratio of index of agricultural to industrial prices with respect to a common base year. Trade Mark of a branded product is registered under the trade marks act and hence legally protected.