According to Kotler (2010), marketing is the management function responsible for identifying, anticipating and satisfying customer requirements profitably. Therefore, marketing is both a concept and a set of techniques, which address such matters as research, product design and development, pricing, packaging, sales and sales promotion, advertising, public relations, distribution and after-sales services. Bradley (2005) define marketing as a social and managerial process by which individuals and groups obtain what they need and want through creating, offering and exchanging valuable products with others.
In accordance with the current academic practice, marketing is considered as the business activities associated with the flow of goods and services from production to consumption. The marketing of agricultural products begins at the farm level, with planning of production to meet specific needs and wants as well as markets prospects. Marketing is completed during the sale of the fresh as well as processed products to consumers or manufacturers for the case of raw materials for industrial processes (Abbott, 2007). He explains further that agricultural marketing also includes the supply of fertilizers and other relevant inputs for production to farmers. According to Abbott (2007), marketing tasks and responsibilitiesmay be summarised as follows: -
i. Finding a buyer and transferring ownership; ii. Assembling and storing;
iii. Sorting, packaging and processing; iv. Financing of marketing and risk taking; and
v. Assorting and presenting to consumers.
If marketing is to fulfil its role of stimulating and extending development, specific firms must be responsible for finding domestic as well as foreign markets for the various types and qualities of produce. “In export marketing, or in substitution for imports in domestic markets, the firms must be able to match the competence of rival enterprises in other countries” (Abbott, 2007). Hill and Ray (2007) consider the marketing of agricultural and food products as one of the two ways; either as a commercial activity carried out by farmers and food companies along the food chain or as an area of concern for policy makers in government. It can be noted that successful marketing in agriculture requires organisational integration and where individual farms and food firms are unable to provide sufficient integration, we may expect to see integration imposed by the commercial expansion or the government. This is because the concept of marketing involves all those concerned with research, development, design, production, finance, distribution, after-sale services as well as the labour force. There are special features that make agricultural marketing different from other forms of marketing. There are a large number of small farm businesses each supplying more or less the same product. Many of these farms are limited to a few production possibilities and individual farmers are seldom in a position to apply the marketing concept. Instead they rely on joint action through co-operation or crop marketing boards. This is the case in countries such as Spain and Italy where farms are much smaller and marketing disadvantage is so large. It is for this reason that the EC introduced policies to improve marketing through co-operatives. Farms in the same countries are so small but co-operatives are very strong and well organised. For instance, there is no such problem in Denmark and the Netherlands anymore (Hill and Ray, 2007).
1.3.5 Government’s Role in Marketing of Agri-products
A far-sighted government will orient its overall policy framework towards growth of those enterprises that are able to take on the necessary marketing responsibilities and will establish and maintain a favourable economic and political climate for this to happen. Abbott (2007) proposes that governments should provide and maintain basic requirements of marketing such as railways, airports, roads, bridges and other facilities for transport, and and telecommunication services. . Furthermore, the provision of organised markets such as local assembly, wholesale and retail at convenient places must be central or a local government's responsibility. Abbott (2007) further recommendes the collection and dissemination of marketing information on crop prospects, prices and supplies in producer wholesale and retail markets because it can be undertaken more efficiently on behalf of all market participants than by any individual. "In addition to these, the importance of banking services cannot be overemphasised, thus the development of banking system oriented to financing marketing operations needs government apparatus to work on it" (Abbott, 2007).
As regards marketing challenges facing the agricultural sector, Verhaegen and Van Huylenbroeck (2011) suggest the establishment of Farmers' Markets in order to increase the income of farmers or unify the domestic quality characteristics of the products. The central idea is that of domestic quality of farm products produced at local farms. Thus, it is the local reputation that attracts consumers and increases the sales volume and, in turn, the farmers’ revenues. Although some people consider it weak, the governance structure of Farmers' Markets is sufficient to create a framework to allow the Farmers' Markets transactions to take place and to realise the economies in transaction costs (Verhaegen and Van Huylenbroeck, 2011).
Castano (2011) observes that developing countries suffer from marketing imperfections due to excess use of distorted resources because market signals, such as demand and market risks, that are transmitted via the market channels and received by farmers do not fully reflect the market panorama. He argues that market imperfections tend to mislead farmers towards inappropriate farm decisions with respect to resource allocation and use. Therefore, Castano (2011) suggests that identifying a strategy that addresses and corrects market imperfections and guides adequately farm-resource decisions is definitely fundamental for the long-term continuance of small-farm system in developing countries.
Verhaegen and Van Huylenbroeck (2011) observe that the agricultural sector has experienced several evolutions that have prompted farmers to start or to participate in new production and or marketing channels. The authors mention such evolutions as the fact that farm income continues to be lower than comparable
and farm workers. Another is that the possibilities of increasing farm income are limited because agricultural markets are saturated due to regulations on markets and environmental issues that restrict agricultural activities. Finally, there is the loss of independence due to the growing number of regulations, integration of the sector and direct income support by the government. Verhaegen and Van Huylenbroeck (2011) view that the EU agricultural policies have shifted away from supporting agricultural income via market and price policies and toward a policy based on direct income support. As aresult, agricultural policy is gradually shifting towards rural policy, which in turn, gives the necessary support (such as advice, education and investment support) to competitive enterprises in areas that are naturally suited for an agricultural enterprise competing in the global market place. In other areas, Verhaegen and Van Huylenbroeck (2011) appreciate that multifunctional agriculture has promoted extensive agriculture, organic agriculture and agriculture which offers recreation or regional products to the consumer. They conclude that both producers and consumers are looking for alternative forms of agricultural production, food consumption, new supply channels and new rural products. 1.3.6 Prices of Agri-products
The price of agricultural products (including coffee) influences the performance of the agricultural sector and the well-being of the producers and consumers. Price Policies determine or strongly influence food and agricultural prices, but production increase depends criticallyon the adequacy of the whole agricultural infrastructure. By themselves, price incentives are necessary but not sufficient (FAO, 2012). In addition, prices are of daily concern, especially for developing countries that are increasingly dependent on purchased rather than home-grown supplies. Most people depend on better prices for their agricultural products in order to afford imported supplies. Thus, according to FAO (2012), governments are giving more attention to improving agricultural price policies than at any time since the early post WW II period.
FAO (2012) suggests that price changes in the food and agricultural sector at large directly affect incomes demand output and indirectly affect the demand for and supply of non-agricultural commodities and their prices (they have multiplier effect). They even affect government’s revenue and expenditure as well as exports and imports of both agricultural and non-agricultural commodities. However, a rise in food prices may lead to an increase in industrial wages and general inflation. Thus, it threatens industrial profits and output at large. This suggests that agriculture and the economy as a whole form a web of complex interdependence. The effects of change in prices of agricultural commodities are summarised in Table 1.1.
Table11.1: Effects of Change in Prices of Agricultural Commodities
Nature of the Change Introduced Main Consequences Observed
Increase in producer (farm gate) price in
food crops Output of food crops increases and that of export crops fallHigher incomes of food producers expand the aggregate demand Inflationary impact is reflected in higher consumer prices Budget outlay on food procurement rises
Government’s savings share of total revenue falls Increase in producer (farm gate) price of
export crops Output of agricultural export crops commodities increasesFood crops production decreases Macro-economic effects to but less potent than above
Increase in consumer food subsidies Consumption of both food and non-food items rise as purchasing power increases
Food imports increases
Adverse BoP effects at least in short-run Fiscal costs of subsidies rises
Increase in agricultural inputs subsidies (reduction of import duty on imported agricultural inputs)
Agricultural output increases
Consumption and incomes for all sectors rises, agricultural income increases more than wages and profits
Fiscal costs become higher (tariff/taxes or revenue falls)
Source: FAO (2007)
Agricultural prices affect development in other sectors of the economy, but the reverse also holds (Cramer and Jensen, 2011). They argue that policy action directed to some aspects of the economy can have serious repercussions on agriculture. The priority given to industrialization over agriculture in the development strategies of most developing countries including Tanzania is a vivid example. For example, different policies on price, investments, trade and exchange rate and manufacturing have been much more protected than agriculture. The logical result of these policies is that agricultural growth has taken place at a slower rate than would otherwise have been achieved. FAO (2007) summarises policy implications regarding instability of agricultural prices that the far-reaching effects of policy bearing on prices are evident in the interdependencies illustrated in the whole economy or inter-sectoral analyses above. The policy issue, which is clear in the view of this, is that agriculture alone, and equally, neglect in macro-economic policy of the need for appropriate prices in agriculture can be expected to cost dearly.