AGRI INPUT MARKETING

Understanding Agriculture Input

Market
Classification of Agricultural Inputs
Characteristics of Demand for Inputs
Market Mix for Agriculture Inputs vis--
vis consumer and industrial goods
Framework for Marketing Environment
Classification of Agricultural
Inputs
Based on their economic contribution or
use
- Production increasing
- Production saving
- Production facilitating
Based on their economic life
- only for one production period
- over several production period
Classification of Agricultural
Inputs
Based on their economic nature
- land saving inputs
- labor saving inputs
Based on skill to use
- simple to use
- require new skills and methods
Classification of Agricultural
Inputs
Based on technical product features
- High differentiated inputs
- Low differentiated inputs
Characteristics of Demand for
Inputs
Derived demand
- Farmers do not use the inputs per se but what
they can do to their crops.
Complementary demand
- inputs are demanded not individually but as a
package
Dependent demand
- depends upon weather, nature and health of the
crop, subsidies, loans
Dynamic nature
- change in cropping pattern, change in availability
of irrigation water
Characteristics of Demand for
Inputs
Willing to experiment
- depends upon risk bearing ability
Seeing is believing attitude
Role of opinion leaders
Value for money seeking buyers
- calculate cost and benefits of using the
inputs
Market Mix for Agriculture Inputs vis--vis
consumer and industrial goods

Marketing Mix components

- Price
- Product
- Promotion
- Place (distribution)
People, process, Physical evidence
Market Mix for Agriculture Inputs vis--vis
consumer and industrial goods

Price
- Agricultural inputs and industrial products
share similar response patterns
- Users of these two products tend to be
more quality conscious than price
conscious
- Response to the consumer goods is likely
to be influenced by the price factor
Market Mix for Agriculture Inputs vis--vis
consumer and industrial goods

Product
- Incase of agricultural inputs and
industrial good, consumers are more
interested to know the technical details
or the performance parameters
- importance of product knowledge and
advisory services
Market Mix for Agriculture Inputs vis--vis
consumer and industrial goods

Promotion
- agri input consumers share similarities with the
consumer goods users
- in both the cases, the number of prospects to be
reached is large, diverse and spread across
different regions.
- Both the product groups require market
segmentation
- Prospects of the industrial products are relatively
small in numbers, uniform in their requirements,
and generally concentrated in cluster of region.
Market Mix for Agriculture Inputs vis--vis
consumer and industrial goods

Place (distribution)
- levels of channel and the network intensity
required for consumer goods and agricultural
inputs are relatively higher than that required for
industrial products.
- Role of channel as a dispenser in consumer
goods and agricultural inputs
- The channel does not have a pulling function
- Pulling is done by advertisement,
demonstrations, personal contacts and other
extension means
Market Mix for Agriculture Inputs vis--vis
consumer and industrial goods

- In case of industrial products, channel

is small
- channel has to act as an advisor and
not merely a dispenser
Market Mix for Agriculture Inputs vis--vis
consumer and industrial goods

Component Consumer Agricultural Industrial

goods inputs products
Product * *

Price * *

Promotion * *

Place * *
(Distribution
)
Marketing Environment for
Agriculture Inputs
Understanding farmers Perception about
Inputs
- Why the farmers want to use Inputs?
(usefulness)

How to create effective demand for

Agriculture Inputs?

Converting Effective Demand into

consumption of Inputs.
Marketing Environment for
Agriculture Inputs
Effective Demand

- Desire to use the inputs

- Willingness to pay for inputs

- Capacity to pay for inputs

Marketing Environment for
Agriculture Inputs
Usefulness of inputs to farmers

- quantity of production raised

- quantity of production saved
- improved quality
- reduce the uncertainty or risk of obtaining
good production

Agronomic potential of Agricultural Inputs

Marketing Environment for
Agriculture Inputs
Increase the Agronomic Potential of
Agriculture Input

- Research & Development

It is a long term process

It requires large investment initially
Basically Technological Intervention
Marketing Environment for
Agriculture Inputs
Agronomic potential of a input depends
on use of other inputs

- agricultural inputs are derived demand

products

- Inputs are purchased as package, not

individually
Marketing Environment for
Agriculture Inputs
Does the Agronomic Potential of Input
is sufficient to create Desire among the
farmers to use Input?
- No or Yes
- Why?
Marketing Environment for
Agriculture Inputs
Inputs are typically expensive units.

Two important considerations:

- Value of additional output gained by using
the input (x1)
- Value of output lost by not using the input
(x2)
Unless the value of x1 or x2 is substantial
and sufficiently more than the cost of input
farmer will not use the input
Agro-economic Potential of Input
Marketing Environment for
Agriculture Inputs
Agro-economic potential of Input is
affected by

Price of output
Cost of Input
Non-monetary inputs (techniques)
Marketing Environment for
Agriculture Inputs
There is sufficient lag between the point
when input is used and the point when
output is realized
Price of output is expected price and it
may be less or more than the actual
price realization
- It may differentiate the actual
realization of Agro-economic potential
of Agriculture Input
Marketing Environment for
Agriculture Inputs
Cost of Input

- Price of Input

- Transaction cost of obtaining the Input

-Due to varying level of transaction cost, cost of

Input may vary to different groups of farmers
Marketing Environment for
Agriculture Inputs
To create effective demand:

- Extension services

- Credit

- Entrepreneurship
(risk management)
Marketing Environment for
Agriculture Inputs
When effective demand has been
created, actual consumption will depend
on:

- Adequate production

- Effective Distribution
Marketing Environment for
Agriculture Inputs
Effective Distribution

- Catering to a large number of small farmers

- Scattered over a large area

- How to minimize the cost?

- Institutional Intervention in the form of Group

Approach
FRAMEWORK FOR MARKET ENVIRONMENT OF AG.
INPUTS
Research & Development Agronomic Potential

Output Price

Input Cost
Agro-Economic Potential
Extension Services

Infrastructure

Transport Services

Credit

Entrepreneurship
Effective Demand

Adequate Production

Effective Distribution

Actual Consumption
Marketing Environment for
Agriculture Inputs
Agriculture input supply should not be
seen in isolation

Integrated approach with input,

production and marketing

Recent initiatives by input companies

are in similar lines