Of the different characteristics of farm products, their seasonal character, their perishable nature and the variation in their quality and volume are most important from the marketing point of view. Secondly, most farm crops mature during a relatively short period of the year and as such there usually occurs a peak period in their sales, storage and transportation.
Farm products are also perishable. There is, however, a great variation in perishability between products and also between the same products under different physical conditions such as moisture, temperature and the presence of rodents, insects and plant diseases. Cereals, cotton and tobacco under proper condition can be held for a considerable period without danger of deterioration. Livestock dispatch to the market need considerable care. Milk deteriorates rapidly as do many fruits and vegetables, eggs and fish. The perishable nature requires the commodities to be prepared for the market in such a manner that they can be preserved for a longer period.
There are significant differences between the marketing of farm products and that of manufactured products with respect to the marketing methods and institutions used. Let us discuss the characteristics of marketing farm products as against those of manufactured products.
(1) Nature of production: The farm products are produced in dispersed areas which are scattered all over the country. But the industrial products may be manufactured in concentrated area.
(2) Scale of production: The scale of operation in the agriculture is often small and specialized. Hence the farm products must be concentrated to supply manufacturers or consumer markets. But industrial products are produced mostly in large-scale as a result of which they require no concentration for supplying to the users. Large-scale production has also important impacts on methods of marketing.
(3) Number of middlemen: In the case of farm products, major segment of the market is made up of numerous units—household consumers. As a result, there is definite need of middlemen who will assemble the products and later disperse them to consumers or industrial users. So farm products require the presence of a large number of middlemen for dispersion and concentration.
Since industrial goods are produced in concentrated areas, the number of middlemen for their distribution is very few.
(4) Trade channel : In considering the marketing of those farm products which are raw material it is customary to think of the trade channel as extending only from he farmer to next processor or manufacturer. Thus the trade channel for slaughter livestock usually ends with the purchase by the packer. In the marketing of manufactured goods the traditional trade channel is as follows :
(5) Coincidence of demand and supply: Another characteristics of farm products is that supply reacts very slowly to price changes or changes in demand. In the short-run, if the price rise, it is not possible to increase appreciably the output of crops. By the same token when prices decline, the farmer growers can rarely withhold supply from the market, in an attempt to stabilize prices. As industrial goods are continuously produced throughout the year, the demand can, to a greater extent, be adjusted to supply.
(6) Price fluctuation : The actions of a single farmer are negligible in affecting prices. Even where farmers act as a group, as in a Producers’ Co-operative either their inability to store products more than a few months or their financial needs force them to send their output to market. Consequently prices of most agricultural products fluctuate frequently, freely and considerably. The resultant risks to the growers are serious. In the industrial products the price fluctuation is not so rampant as that of the farm products because of the producer’s ability to store the goods for a long time.
(7) Variation in quality : The quality of agricultural products varies from year to year. The quality also varies not only among units produced on a given farm, but also from farm to farm and from region to region. Thus the quality of farm products can not be guaranteed as they are gifts of nature.
The industrial producers always maintain a standard of quality of their products. According to the predetermined standard, they manufacture the goods. That is why, there is no such widespread variation in quality of manufactured products as in farm product.
(8) Perishability : Most farm products are perishable or semi perishable. That is why, they are to be quickly marketed to protect from deterioration. But manufactured goods are mostly non-perishable and so they can be stored easily for long time to sell in the future as and when demanded.
(9) Unit value and bulkiness : Most farm products are bulky and of low unit value. Majority of the manufactured products arc light and have larger unit value (especially the fashion and service goods).
(10) Seasonality in production : The production of farm products is seasonal although the demand for most of them is fairly steady throughout the year. Except a few ones, the production of industrial goods is carried on throughout the year.
(11) Transportation costs : Agricultural marketing entails high transportation costs. Because costs increase due to collection of products from the scattered areas and distribution in the dispersed areas. Bulkiness is also another cause of high cost. Marketing of manufactured goods does not entail high transportation costs. The perishability of commodity, and the adequacy or otherwise of transport facilities determine the condition in which a commodity is to be presented to the consumers.
(12) Storage : In agricultural products storage is necessary because of—(i) variation in volume produced and (ii) seasonal variation in production
(13) Delivery: Farm product requires quick delivery for protecting against damage. But absence of quick delivery does not cause any deterioration to the manufactured products.
(14) Standardization and grading : Due to variation in the quality of farm products, grading the products according to predetermined standard is very important. Effective standardization and proper grading are imperative when industrial users demand uniformity among the raw materials they use. For this reason, jute is always graded before they are sold to the foreign buyers.
(15) Sales promotion : Within given grades, most units of a commodity are homogenous. This characteristic coupled with the factor of small producing units, makes it very difficult for a single grower to use advertising, personal selling or other forms of promotion. In case of manufactured goods, a single producer can use the sales promotion devices freely without facing any difficulty.
(16) Type of buyer : The buyers of farm products may he both ultimate consumers and industrial users but the buyers of manufactured goods is only ultimate consumer except the dealers.
(17) Shifting from product : An important characteristic of farm production is that the farmers can shift from one product to another product, for example, from jute to paddy. But an industrial producer can not shift from, say, production of cosmetics to production of machineries easily. Such shifting embraces the changes of marketing methods and practices.
(18) Organized Produce Exchange : The farm products, when graded, can be dealt in the Produce Exchange but manufactured goods are not susceptible to be transacted in soh exchanges.
(19) Nature of marketing: In our country , especially, well organized wholesale markets are rare for agricultural products. Consequently these products, e.g., rice, jute, cotton, food grain, change hands with a number of commission agents, merchants and middlemen. But the manufactured products are mostly distributed through wholesale markets. Some manufacturers have their own retail outlets like Bata and Sadhana Ousadhalaya. Others like BTC have only distributors spread all over the country. For instance, BTC had about 250 distributors which passed on goods to 2,00,000 retailers all over the country.
(20) Control over market : Agricultural marketing also differs from the marketing of manufactured products in that individual agricultural producers ordinarily have no significant control over the marketing of their output.
(21) Market-plus and market-minus : The farm products are subject to market-plus and market-minus. The sellers operate in the market-minus and the buyers operate in the market-plus. But there is no such factor as market-plus or market-minus in case of finished goods.
(22) Sale by sample and description : Since the quality is subject to close control, most manufactured products are standardized as they come from the factory. Thus the standardized products can he sold by sample and description. The quality of farm products are dictated by the nature and so they can not be accurately standardized. This fact does not always permit the sale of agricultural products by sample and description.