L2 Agribusiness Module 2 Gaining Access to Markets hlayiso.com

NATIONAL CERTIFICATE (VOCATIONAL) PRIMARY AGRICULTURE SUBJECT: AGRIBUSINESS LEVEL: 2 LECTURER: MBHELE M.L MODULE 2 GAINING ACCESS TO MARKETS Downloaded from hlayiso.com

INTRODUCTION • Market access refers to the ability of a company or country to sell goods and services across borders. Market access can be used to refer to domestic trade as well as into customers hands , most international trade, In terms of getting products into customers farmers will choose one of the 3 options 1. Direct Marketing 2. Membership of a cooperative 3. Agreement with processor /distributor. Downloaded from hlayiso.com

DIRECT MARKETING • Direct marketing is an advertising strategy that relies on the individual distribution of a sales pitch to potential customers. Mail, email, and texting are among the delivery systems used. It is called direct marketing because it generally eliminates the middleman such as advertising media. • Its involves questions such as : - who are your customers? (Demographic factors) - purpose/use of the product? When and where? - affordability Downloaded from hlayiso.com

MEMBERSHIP OF A COOPERATIVE • Farmers can sell products to a cooperative that handles the marketing. This is often the primary method for grain and fluid ilk sales. Even if you decide to become a member of an agricultural cooperative, there are still a number of questions that your marketing plan must answer : - Should product be sold at harvest for cash? - Should product be held in on-farm storage for sale at later date? - Should it be stored in commercial store? - Should it be sold with cash forward contract? Downloaded from hlayiso.com

AGREEMENTS WITH PROCESSOR /DISTRIBUTOR • The farmer may make agreements with processors/distributors, selling products to companies who process and/distribute the products • For example: a dairy farm may sell to a processor who also retails products; a cattle producer might sell to a meat-packing facility. • However it is accomplished, the producer needs a marketing plan that outlines what will be sold, to whom ,where and for how much. • Some basic components of a marketing plan will answer the following questions: Downloaded from hlayiso.com

AGREEMENTS WITH PROCESSOR /DISTRIBUTOR • Personally, how much time and effort do I want to put into the marketing of my product? • Do I have the skills to effectively deal with customers? • Who are my customers? Individuals? Companies? Cooperatives? Government? • Do I need to store my product past harvest? How will this be done? • Does my product need to be specially packed or labelled? • How will I transport my products to the market? • Will I need product liability insurance? Downloaded from hlayiso.com

DISTRIBUTION CHANNELS • The marketing chain consist of series of activities to get the product from the farmer to the consumer. • The distribution or marketing chain shows the various ways in which farm produce can move from the farm gate to the final consumer. usually the distribution channel involves several intermediaries such as retailers, wholesalers and market agents. Downloaded from hlayiso.com

FARM GATE MARKETING • The farmer sells directly to buyers • This marketing is done by the farmer at the place where the product is produced. Examples include the sale of vegetables from a community garden, the sale of broilers from a broiler unit or the sale of animals from the farm directly. Downloaded from hlayiso.com

FARM GATE MARKETING ADVANTAGES • There are no transport costs involved • The farmer is able to sell his produce himself and then cost can be reduced • This marketing channel is well suited to the small-scale farmer • The farmer is able to sell fresh produce directly from the farm to the consumer Downloaded from hlayiso.com

FARM GATE MARKETING DISADVANTAGES • The local consumers might not have enough money to buy the produce, which means that the farmer will have to accept the local price for his produce • Prices for the produce may be too low to make a profit • The farmer might not be well located to sell the product. Downloaded from hlayiso.com

VILLAGE MARKETING • At this channel, a farmer stall may be operated by farmers selling their own produce, progressing to individual stall holders or hawkers selling on behalf of local farmers. Generally the type of products that would be marked on a farm stall would be perishable food such as fruits and vegetables . Downloaded from hlayiso.com

ADVANTAGES OF VILLAGE MARKETING • The farmer can benefit from a larger market • Farmer can take advantage of more favourable prices • Price fluctuations are generally not high Downloaded from hlayiso.com

DISADVANTAGES OF VILLAGE MARKETING • The farmer might have difficulty transporting the produce . • The quality of the product may have to be high • The farmer should ensure a constant supply of the produce • The farmer might have to be flexible on pricing of the produce. Downloaded from hlayiso.com

FRESH PRODUCE MARKET • Sales are done by marketing agents on behalf of the farmer on a commission basis. These markets are set up in larger centres mainly for the sale of vegetables and fruits. • They have traditionally cantered for the commercial fruit and vegetables producer and in turn, supply the larger urban centres. • Quality and presentation are very important and produce must conform to accepted grading and packaging standards. Downloaded from hlayiso.com

FRESH PRODUCE MARKET ADVANTAGES • The farmer might get high prices • The farmer can sell larger quantities of produce • The farmer can employ an agent to perform the task of marketing Downloaded from hlayiso.com

FRESH PRODUCE MARKET DISADVANTAGES • The farmer might have high transport cost because markets are often far from the point of production. • The farmer will have higher marketing costs • The prices tend to fluctuate all lot and may pose a problem to the farmer. • The produce must conform to accepted grade and packaging standards. • Quality ,packaging and presentation are very important. Downloaded from hlayiso.com

CONTRACT MARKETING • In this type of market, the farmer signs an agreement (contract)with the retailer and then sells directly to the retailer. Agreements are often concluded between producers of large retails, pointing out the quantity to be delivered, quality of the produce and delivery times. Downloaded from hlayiso.com

ADVANTAGES OF CONTRACT MARKETING • The farmer is guaranteed volume and price of his produce before sale • Marketing margins could be reduced and thus the producer could obtain a higher price for the product. Downloaded from hlayiso.com

DISADVANTAGES OF CONTRACT MARKETING • The farmer must ensure constant supply to the customer /retailer at all times • The farmer must ensure that the quality off the produce is high at all times • If the farmer cannot meet the needs of the retailer, he will have to buy in produce to make the order of quantities required Downloaded from hlayiso.com

COMMUNAL MARKETING • Farmers may choose to market collectively with other local farmers . • Farmers can form an association and jointly market their crop on a formal market Downloaded from hlayiso.com

ASSESSMENT ACTIVITY 1. NAME FIVE DISTRIBUTION CHANNELS AND SHOW THEM DIAGRAMMATICALLY 2. LIST ADVANTAGES OF THE FRESH PRODUCE MARKET 3. CHOOSE AND DESCRIBE A MARKETING CHANNEL FOR YOUR BUSINESS. Downloaded from hlayiso.com