Agricultural and Food Marketing Enterprises Unit 10 PDF

AGE 4142 UNIT 10: AGRICULTURAL AND FOOD MARKETING ENTERPRISES Agricultural and Food Marketing Enterprises 1  Overview Principal components of any marketing system are its institutions and enterprises. Three forms of enterprises are:  P...

AGE 4142 UNIT 10: AGRICULTURAL AND FOOD MARKETING ENTERPRISES Agricultural and Food Marketing Enterprises 1  Overview Principal components of any marketing system are its institutions and enterprises. Three forms of enterprises are:  Private companies  Marketing boards  Co-operatives. Agricultural and Food Marketing Enterprises 2  Private Enterprise advantages :  Higher level of financial independence from government than public enterprises.  Able to adapt, rapidly, to changing circumstances and opportunities Agricultural and Food Marketing Enterprises 3  Strengths of Private Enterprises Low operating costs High levels of equipment utilization Adaptability Personal initiative Rapid decision-making Independence of spirit and persistence Willingness to work hard, for long and/or irregular hours Relevant experience and/or expertise Agricultural and Food Marketing Enterprises 4  Marketing Boards Government agency and/or statutory organization having the function of intervening in the marketing process established to result in efficient and orderly marketing. Generally, marketing boards tend to be borne out of government policy rather than by consensus among commercial parties. Focus on storable products Agricultural and Food Marketing Enterprises 5  Marketing Boards (2) The effectiveness of a particular marketing board is often viewed in terms of three factors:  Its contribution to orderly and efficient marketing  The reduction in the capacity of intermediaries to manipulate margins at the expense of producers and consumers  The generation of producer-oriented monopoly power Establishment of a marketing board is usually a reaction to situations where middlemen were perceived to hold monopolistic power over producers. Agricultural and Food Marketing Enterprises 6  Buying Operations of Marketing Boards Marketing boards would normally buy at fixed prices. Each season or year, the government sets the price for scheduled crops. Kept at the same level for a period of time, typically about 6 months.  What are the implications of this? Buying takes place at official buying points where there are either appropriate storage facilities for produce or transportation. Agricultural and Food Marketing Enterprises 7  Political Objectives of Marketing Boards Promotion of agricultural and rural development with social goals overriding commercial objectives. Mechanism for containing urban wages through price restraint on staple foods. Device to encourage farmers to grow and sell more food and export crops, by pushing higher producer prices. Means of consolidating power by placing political appointees on the Board. Agricultural and Food Marketing Enterprises 8 Cooperatives in Agriculture & Food Sector Agricultural and Food Marketing Enterprises 9 What is an Agricultural Cooperative? An agricultural cooperative, also known as a farmers' co-op, is a cooperative where farmers pool their resources in certain areas of activity. Cooperatives have their origins in the 19th century. Agricultural and Food Marketing Enterprises 10  Motivation of Cooperatives Motivation to form cooperatives has three particular aspects:  The need for protection against exploitation by economic forces too strong for the individual to withstand alone.  The impulse for self-improvement by making the best use of often scarce resources.  The concern to secure the best possible return from whatever form of economic activity within which the individual engages whether as a producer, intermediary or consumer. Agricultural and Food Marketing Enterprises 11  Structure and Organization of Cooperatives Two principal forms of cooperative organization:  Primary and Secondary. Potential role of cooperatives:  Well suited to the economic, social and institutional needs of development in the rural economy.  Can provide the mechanism to organize and mobilize people for self-help action in providing the services they require as a farming and rural community. Agricultural and Food Marketing Enterprises 12  Weaknesses of Cooperatives in Zambia Common features of cooperatives:  Low standards of performance, bad management, financial failure, corruption and misuse of funds, use of cooperatives for political ends, etc. Thus, a great deal of understandable criticism has been leveled at the co-operative system doubting its ability to play an effective role in the development process. Agricultural and Food Marketing Enterprises 13  Selling Arrangements between Cooperatives and their Members Outright Purchase  Cooperative takes title to the produce.  Profits used to meet the operating expenses with surplus decided upon by the general meeting.  Cooperative carries all post harvest risks and costs Sale on Commission  Cooperative is the producers' agent with no legal title to the goods.  After sales, deducts a commission at a previously agreed rate from the sale price. Agricultural and Food Marketing Enterprises 14  Post harvest risks and costs are borne by the individual farmer. END OF UNIT 10 Agricultural and Food Marketing Enterprises 15