AGRICULTURAL ECONOMICS AND EXTENSION INTRODUCTION
In the course of
your training in Agriculture at both the Junior and Senior Secondary School
levels, you have learnt about the basic technical and social factors involved
in agricultural production. All these factors contribute towards increasing the
farmer’s productivity.
In order to achieve
higher levels of productivity, it is important to familiarize and educate our
farmers with the improved technologies and methods of production. This can only
be achieved through an efficient agricultural extension service. The adoption
of improved production techniques leads to high productivity, with farmers
producing more than they can consume (surplus). Hence, there is the need to
provide outlets for farmers to profitably dispose of this surplus. Moreover,
farmers also need to sell their produce
to enable them to purchase other items which they need hence, agricultural
marketing is very central to agricultural production.
In this unit,
therefore, we shall learn about the importance of agricultural extension and
the methods of disseminating new technologies and ideas to farmers. We shall
also learn about the importance of agricultural marketing, and the conduct of
marketing through various agents and outlets.
MARKETING
OF AGRICULTURAL PRODUCE
A market is a place
where buyers and sellers meet to exchange goods and services. Markets are
necessary because people are not capable of producing all the things they
require for their survival. Even in the olden days when money was not
introduced as a medium of exchange, people exchanged goods by barter. The
appearance of money facilitated greater exchange of products and modern
telecommunications have succeeded in widening the scope of commodity exchange
activities. Therefore, marketing is an integral part of the production process.
In this chapter, we
shall discuss the meaning and importance of agricultural marketing and the
functions of various marketing agents and channels. At the end of this chapter,
you should be able to:
1.
State
the meaning and importance of agricultural marketing;
2.
List
the various marketing agents and market outlets in Nigeria; and
3.
State
the advantages and disadvantages of the various marketing agents.
MEANING
AND IMPORTANCE OF AGRICULTURAL MARKETING
Agricultural
marketing comprises all activities that take place from the point of production
(farm gate) to the final consumer. These activities include transportation,
grading, processing, storage, and the act of buying and selling. This simples
that production in most cases will be useless without complementary marketing
activities. The importance of marketing moreover increases with:
1.
Economic
development;
2.
Separation
of production areas from areas of consumption;
3.
The
need for spreading the consumption of a range of products over time beyond
immediate post production needs.
Contrary to popular
belief, marketing is a productive activity because it provides items of useful
value when, where, and in the form they are needed. If you transport a tone of
cowpeas from Katsina to Lagos, you are performing a marketing service (i.e.
location-utility). Also, if you store a bag of maize for a period of time to
make it available later in the market when it is scarce –(i.e. time utility),
and when you process groundnut to supply groundnut oil or cake, you are
performing a market service termed form utility.
It is important to
note that these utilities arise from marketing activities and as in the case of
production, it also requires resources like land, labour, and capital.
Therefore marketing is not costless.
MARKETING
AGENTS
Given the number of
functions that are contained under the umbrella of agricultural marketing, it
is obvious that many people and institutions would be involved. There are
transporters, warehouse owners, processors, and large/small scale buyers and
sellers. These are found at various points as the products move from the farm
to the final consumer. There are other marketing agents who are not so directly
involved but are equally important. These are individuals and institutions that
facilitate the activities of the marketing agents; they include bankers,
financiers, insurers, advertisers, and the government. The latter is included
because it establishes the rules and regulations under which marketing takes
place.
As such, marketing
agents may be private individuals, co-operatives, marketing boards, or
companies, and so on. All these assume various functions within the marketing
spectrum, wholesalers, middlemen, commercial agents, retailers processors, and
transporters, etc.
One thing is clear,
no matter what the circumstances are; marketing functions have to be performed
by someone; therefore, there is the need to have an efficient and well
integrated marketing system that rewards both the producers and marketing
agents. The system must be capable of providing cheap and safe goods to the
consumer.
PROBLEMS
OF VARIOUS MARKETING AGENTS
Various marketing
problems have often been associated with the operations or performance of the
different marketing agents. Transporters for example, are being accused of
hiking transportation costs thereby increasing the cost of the products.
Warehouse owners have also been accused of hoarding.
Middlemen have been
accused of cheating both the producer and the consumer. Before validating these
charges however, it is important to take into account the costs they incur in
performing their various functions and how far they have succeeded in meeting
consumer demands. As such, the most important thing is to consider alternative
arrangements that can reduce costs without compromising consumer satisfaction
and conveniences.
Several attempts
have been made to establish bodies which were believed to be capable of helping
both the producers and consumers to escape from the unsavoury (unwholesome)
activities of some of the marketing agents e.g. middlemen. In Nigeria, it took
the form of the creation of various marketing boards, producer marketing
co-operative societies, and encouraging individual producers to become their
own marketing agents.
Most marketing
boards in developing countries have concentrated their attention on export
crops. In Nigeria, they are involved with food crops as well, e.g. Nigerian
Grains Board. In general, marketing boards are given monopoly powers to
procure, assemble, grade, pack, and transport a particular crop or set of crops
for sale abroad or for local distribution. They are meant to give producers a
guaranteed minimum price which serves as incentives for production increases.
In Nigeria, this expectation did not materialize. In the colonial era, they
generated huge trading profits which were not re-invested into agriculture.
They failed to stabilize prices and offered farmers prices lower than the open
market – this is one of the reasons why
they were scrapped recently.
The use of
Co-operative Societies as marketing agents was made to counter-balance the
activities of the other marketing agents who were believed rightly or wrongly
to be exploiting the producers. The records of such co-operatives are also not
satisfactory. Their operations have been hampered among other things by poor
management, ignorance of commercial producers, and lack of proper leadership.
Producers as
marketing agents:- producers can act as their own marketing agents and carry
out all the functions that middlemen and other agents perform as well as
receiving the rewards that the agents received. However, except for a very few
large scale producers, most of them are not skilled enough and do not have the
facilities to provide satisfactory marketing functions.
Market
outlets
Producers and other
marketing agents usually sell agricultural products through marketing outlets.
Some of these outlets with their characteristics and functions are outlined
below:
1.
Local
Markets:-involved
in retailing, wholesaling, assembling, and packaging. They conduct direct
buying and selling in open or built-up areas in a town, city or village
designated as a market.
2.
Supermarkets:-
mainly in urban areas; involved in retailing and packaging.
3.
Processors:-
these are industrial concerns involved in the processing of agricultural
produce and selling of products and a range of by-products. Examples are Feed
millers, Rice millers, Oil mills, Textile firms, and other agroallied
industries.
4.
Public and private Institution:- using
agricultural products for direct consumption, or as raw materials. Examples are
schools, hospitals, companies, hotels, etc.
5.
World
Market:- mainly for export crops consumed directly or as raw materials; to earn
foreign exchange.
Summary
1.
Marketing
is an integral part of the production process which involves activities such as
transportation, grading, processing and the act of buying and selling of
agricultural commodities from the point of production to the point of
consumption.
2.
Marketing
is a productive activity which provides useful services and adds value to
agricultural commodities.
3.
There
are various agents involved in the marketing process as commodities move from
one point to the other.
4.
These
agents might be private individuals, companies, marketing boards, or
co-operatives, who perform various functions.
5.
Various
problems arise as a result of the nature and performance of the marketing
agents, leading to either scarcity or exhorbitant costs of goods and services.
6.
Attempts
have been made to supplement the services of some of these agents by involving
marketing boards, co-operatives, and producers, but this has not been very
successful.
7.
There
are also various market outlets for different agricultural commodities produced
in Nigeria.
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