Lesson Notes By Weeks and Term v3 - Senior Secondary 3
Marketing of Agricultural Produce
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Marketing of Agricultural Produce
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Subject: Agricultural Science
Class: Senior Secondary 3
Term: 1st Term
Week: 8
Theme: Agric Economics And Extension
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State the meaning and importance of agricultural marketing. List the various marketing agents/channels. State the advantages and disadvantages of various channels. List the functions performed by marketing agents. Mention and list the types of crops that are commonly expected to other nations. Rules that guide exportation of crops. Importance of exports to agricultural development.
Farmers: Often receive lower prices, susceptible to exploitation due to lack of market information.
For Consumers: Adds a layer of cost, potential for quality degradation if not handled well.
3. Wholesalers: Description: Buy large quantities of produce from local buyers, farmers, or processors, store them, and then sell them in smaller bulk to retailers. They act as a link between producers/assemblers and retailers.
Examples: Traders at major commodity markets like Bodija (Ibadan), Mile 12 (Lagos), or Dawanau (Kano) who deal in bags of rice, baskets of tomatoes, or heaps of yam.
Advantages: For Farmers/Assemblers: Provides an outlet for large quantities, reduces need for extensive small-scale selling.
For Retailers: Can buy a variety of goods in manageable quantities, reduces need to source from multiple farms.
For Consumers: Ensures wider availability of products.
Disadvantages: For Farmers: Further reduces profit margin as wholesalers take their cut.
For Consumers: Adds significant cost to the product.
4. Retailers: Description: Buy produce in smaller quantities from wholesalers or sometimes directly from farmers/assemblers, and sell them directly to the final consumer.
Examples: Market women, shop owners, roadside vendors, supermarkets.
Advantages: For Consumers: Convenience (available in local neighbourhoods), small quantities can be bought, often offer variety.
For Wholesalers: Provides a wide distribution network.
Disadvantages: For Consumers: Products are usually most expensive at this stage due to accumulated markups.
For Farmers: The furthest removed from the farmer, highest price disparity.
5. Processors: Description: Companies or individuals who transform raw agricultural produce into different, often more durable or convenient forms.
Examples: Cassava processing factories (for garri, starch), tomato paste factories, flour mills, fruit juice companies.
Advantages: For Farmers: Provides a consistent market for raw materials, can handle large volumes, adds value to otherwise perishable goods.
For Consumers: Offers convenience, extended shelf life, diverse product options.
For Economy: Creates jobs, promotes industrialisation, reduces post-harvest losses.
Disadvantages: For Farmers: Processors often dictate prices, which can sometimes be low.
For Consumers: Processed goods are generally more expensive than fresh produce.
6. Cooperative Societies: Description: Groups of farmers who pool their resources (labour, capital, produce) to collectively market their goods. They aim to achieve better bargaining power and reduce marketing costs.
Examples: Cocoa farmer cooperatives in Ondo, rice farmer cooperatives in Kebbi.
Advantages: For Farmers: Improved bargaining power, reduced individual marketing costs, access to credit/inputs, shared knowledge.
For Buyers: Consistent supply of standardised produce.
Disadvantages: For Farmers: Potential for mismanagement, internal conflicts, slow decision-making.
For Consumers: May not always translate to lower prices immediately.
7. Exporters: Description: Individuals or companies that purchase agricultural products from local markets or directly from farmers/processors with the aim of selling them to buyers in other countries.
Examples: Companies exporting cocoa beans, cashew nuts, sesame seeds, ginger, or hibiscus to Europe, Asia, or America.
Advantages: For Farmers: Access to international markets, potential for higher prices, encourages production of high-quality produce.
For Nation: Earns foreign exchange, creates employment, diversifies the economy.
Disadvantages: For Farmers: Requires meeting stringent international quality standards, complex logistics.
For Exporters: High capital investment, exposure to international market risks (currency fluctuations, trade barriers).
C. Functions Performed by Marketing Agents These functions can be broadly categorised into:
1. Exchange Functions: Buying: The act of acquiring ownership of the produce, either for consumption or for resale. It involves searching for suppliers, negotiating prices, and taking possession.
Selling: The act of transferring ownership of the produce from seller to buyer. It involves market research, promotion, price setting, and negotiation.
2. Physical Functions: Storage: Holding produce over time to balance supply and demand, especially important for seasonal crops. This prevents gluts during harvest and ensures availability during off-season.
Example: Storing yam in barns or maize in silos after harvest in Nigeria.
Transportation:** Moving produce from production areas to consumption centres, processors, or export points. This adds place utility.
Example:* Trucks moving tomatoes from Kano to Lagos, or fish from coastal areas to inland markets. safety, and phytosanitary standards of the importing country (e.g., EU regulations, USDA standards). This includes limits on pesticide residues, heavy metals, and mycotoxins.
3. Packaging and Labelling: Appropriate Packaging: Use packaging materials that protect the product during transit, maintain quality, and comply with international standards (e.g., food-grade packaging, sturdy cartons, proper ventilation).
Accurate Labelling: Labels must contain essential information such as product name, net weight, country of origin (Made in Nigeria), expiry/production dates, nutritional information (for processed goods), and any specific warnings or instructions required by the importing country.
4. Documentation: A comprehensive set of documents is required for customs clearance and international trade: Commercial Invoice: Details of the transaction (goods, quantity, price).
Packing List: Itemised list of goods in each package. Bill of Lading (Sea Freight) or Air Waybill (Air Freight): Contract between the owner of the goods and the carrier.
Certificate of Origin: Certifies that the goods were produced, manufactured, or processed in Nigeria. Issued by the Chamber of Commerce or NEP
C. Phytosanitary Certificate: Issued by the Nigerian Agricultural Quarantine Service (NAQS) to certify that the plant or plant product is free from pests and diseases and complies with the importing country's phytosanitary requirements.
Health Certificate: Required for certain food products, issued by NAFDAC, certifying fitness for human consumption.
Insurance Certificate: To cover risks during transit.
Clean Report of Findings (CRF): For pre-shipment inspection (if required).
5. Customs Clearance: All export goods must undergo clearance procedures at Nigerian Customs Service (NCS) points of exit.
6. Logistics and Transportation: Arranging suitable transportation (sea, air, or land) and ensuring proper handling and temperature control for perishable goods.
7. Payment Terms: Establishing secure payment methods (e.g., Letters of Credit, Telegraphic Transfers) with the overseas buyer.
8. Compliance with Bilateral Agreements: Adhering to trade agreements Nigeria has with other countries or regional blocs. Corporate bodies engaged in export marketing in Nigeria: Nigerian Export Promotion Council (NEPC): A government agency promoting non-oil exports. Nigerian Agricultural Quarantine Service (NAQS): Ensures phytosanitary and sanitary standards for imports and exports. National Agency for Food and Drug Administration and Control (NAFDAC): Regulates and controls the manufacture, importation, exportation, advertisement, distribution, sale and use of food, drugs, cosmetics, medical devices, packaged water and chemicals.
Standards Organisation of Nigeria (SON): Develops and enforces standards for products.
Nigerian Customs Service (NCS): Manages customs duties and trade facilitation.
Various private export companies: Examples include Olam Nigeria, Flour Mills of Nigeria (through their export divisions), and countless smaller, specialised export firms. F. Importance of Exports to Agricultural Development Exporting agricultural produce offers significant benefits for Nigeria's agricultural sector and overall economic development:
1. Foreign Exchange Earnings: Exports generate foreign currency (e.g., US Dollars, Euros), which is crucial for Nigeria to import essential goods, pay international debts, and stabilise its economy.
2. Increased Farmer Income and Livelihoods: Access to international markets often provides better prices for farmers compared to local markets, leading to improved income, reduced poverty, and better living standards for agricultural communities.
3. Job Creation: The entire export value chain, from cultivation, harvesting, processing, packaging, logistics, and documentation, creates numerous employment opportunities in both rural and urban areas.
4. Economic Diversification: Reducing reliance on crude oil exports and diversifying the economy through agricultural exports makes the nation more resilient to global commodity price fluctuations.
5. Investment in Agriculture: Higher returns from exports attract local and foreign investment into agricultural production, processing, and infrastructure, fostering growth and modernisation of the sector.
6. Technology Transfer and Modernisation: To meet international standards, farmers and processors often adopt improved technologies, farming practices, and processing methods, leading to overall agricultural advancement.
7. Improved Quality Standards: The stringent quality requirements of international markets compel Nigerian producers to enhance their product quality, processing techniques, and packaging, ultimately benefiting domestic consumers too.
8. Reduced Post-Harvest Losses: Focus on processing and packaging for export can lead to better handling and value addition, thereby reducing losses of perishable produce.
9. Market Expansion: Exports open up new, larger markets for Nigerian agricultural products, going beyond domestic consumption limits and preventing gluts. produce from seller to buyer. It involves market research, promotion, price setting, and negotiation.
2. Physical Functions: Storage: Holding produce over time to balance supply and demand, especially important for seasonal crops. This prevents gluts during harvest and ensures availability during off-season.
Example: Storing yam in barns or maize in silos after harvest in Nigeria.
Transportation: Moving produce from production areas to consumption centres, processors, or export points. This adds place utility.
Example: Trucks moving tomatoes from Kano to Lagos, or fish from coastal areas to inland markets.
Processing: Transforming raw agricultural produce into more useful, durable, or palatable forms. This adds form utility and reduces perishability.
Example: Converting cassava tubers into garri or fufu flour, groundnuts into groundnut oil, or milk into yoghurt.
Grading and Standardisation: Grading: Sorting produce into different classes based on specific physical characteristics (size, shape, colour, quality, maturity).
Standardisation: Establishing uniform measures and criteria for different grades, making buying and selling easier without physical inspection.
Example: Sorting cocoa beans by size and defect percentage, or classifying yam tubers by weight and condition. This is crucial for exports.
Packaging: Enclosing and protecting produce for storage, transport, and display. Proper packaging reduces damage and enhances appeal.
Example: Burlap sacks for grains, baskets for tomatoes, cartons for eggs, plastic wraps for processed foods.
3. Facilitating Functions: Financing: Providing the necessary funds for various marketing activities like purchasing, storage, processing, and transportation. This can be through loans or direct investment.
Example: A wholesaler taking a loan to buy a large consignment of rice, or a farmer getting credit to transport produce to the market.
Risk-Bearing: Accepting the possibility of losses during marketing due to price fluctuations, spoilage, damage, theft, or natural disasters.
Example: A trader buying perishable tomatoes faces the risk of spoilage if not sold quickly, or a transporter faces the risk of accidents.
Market Information: Gathering, interpreting, and disseminating data about supply, demand, prices, quality, and consumer preferences. This enables informed decision-making.
Example: Farmers receiving SMS alerts on current market prices of their crops, or exporters researching international market trends. D. Types of Crops Commonly Exported from Nigeria Nigeria has a rich agricultural base and exports a variety of crops, primarily raw or minimally processed forms.
Some key export crops include:
1. Cocoa Beans: Major cash crop, historically significant for foreign exchange.
2. Cashew Nuts: Increasingly important, exported both raw and roasted.
3. Sesame Seeds: High demand in international markets for oil extraction and confectionery.
4. Ginger: Valued for its spice, medicinal properties, and culinary uses.
5. Shea Nuts/Butter: Used in cosmetics, confectionery, and pharmaceuticals.
6. Hibiscus (Zobo leaves): Used for tea, beverages, and food colouring.
7. Rubber: Raw rubber sheets/lumps for industrial use.
8. Groundnuts (Peanuts): Primarily for oil extraction and confectionery.
9. Palm Kernel Oil/Cake: Derivatives from oil palm processing.
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0. Sorghum/Millet: Some varieties are exported for feed or brewing.
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1. Soybeans: For oil and animal feed. E. Rules that Guide Exportation of Crops Exporting agricultural produce from Nigeria is a complex process governed by various national and international regulations. Adherence to these rules is critical for successful and sustainable export trade.
1. Registration with Export Promotion Council: Exporters must register with the Nigerian Export Promotion Council (NEPC) and the Corporate Affairs Commission (CAC).
2. Quality Control and Standards: National Standards: Compliance with standards set by agencies like the Standards Organisation of Nigeria (SON) and National Agency for Food and Drug Administration and Control (NAFDAC) for food safety and quality.
International Standards: Meeting the quality, safety, and phytosanitary standards of the importing country (e.g., EU regulations, USDA standards). This includes limits on pesticide residues, heavy metals, and mycotoxins.
3. Packaging and Labelling: Appropriate Packaging: Use packaging materials that protect the product during transit, maintain quality, and comply with international standards (e.g., food-grade packaging, sturdy cartons, proper ventilation).
Accurate Labelling: Labels must contain essential information such as product name, net weight, country of origin (Made in Nigeria), expiry/production dates, nutritional information (for processed goods), and any specific warnings or instructions required by the importing country.
4. A. Meaning and Importance of Agricultural Marketing Marketing (General): This refers to the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organisational objectives. In simpler terms, it is everything involved in getting a product from the producer to the consumer, satisfying both parties.
Agricultural Marketing: This specifically refers to the entire range of activities involved in moving agricultural commodities from the point of production on the farm to the final consumer. It includes all the business activities involved in the flow of goods and services from agricultural producers to ultimate consumers. Agricultural marketing is unique due to the perishable nature of many products, seasonality of production, bulkiness, and variability in quality.
Importance of Agricultural Marketing:
1. Income Generation for Farmers: Effective marketing ensures farmers can sell their produce and earn income, motivating them to produce more and improve their livelihoods.
2. Meeting Consumer Demand: It makes agricultural products available to consumers in the right form, at the right time, at the right place, and at reasonable prices, thus ensuring food security.
3. Encourages Production: A reliable market acts as an incentive for farmers to increase production, adopt improved farming techniques, and invest more in their farms.
4. Price Discovery and Stability: Marketing processes help in determining fair prices for produce and can help stabilise prices by managing supply and demand over time and space (e.g., through storage).
5. Employment Opportunities: The marketing chain creates numerous jobs, including transporters, retailers, processors, market traders, and packaging specialists.
6. Economic Development: A robust agricultural marketing system contributes significantly to the national Gross Domestic Product (GDP), earning foreign exchange (through exports), and supporting industrial growth (agro-allied industries).
7. Standardisation and Quality Improvement: Marketing often requires grading and standardisation, which encourages farmers to produce higher quality goods.
8. Value Addition: Marketing activities include processing, which transforms raw produce into more valuable and less perishable forms (e.g., cassava to garri, tomatoes to paste).
B. Marketing Agents/Channels and their Advantages/Disadvantages Marketing Agents: These are individuals or organisations involved in the flow of goods and services from the point of production to the point of consumption. They perform various functions that facilitate this movement.
Marketing Channels: This refers to the path or route through which agricultural products move from the farm to the final consumer.
Common Marketing Agents and Channels:
1. Farmers (Direct Marketing): Description: Farmers sell their produce directly to consumers without intermediaries.
Examples: Selling at farm gates, local roadside stalls, farmers' markets, direct supply to hotels/restaurants, or even door-to-door sales in rural areas.
Advantages: For Farmers: Higher profit margins (no middlemen deductions), direct feedback from consumers, build customer loyalty.
For Consumers: Fresher produce, often lower prices, direct connection with the producer, can verify origin.
Disadvantages: For Farmers: Limited reach and volume, time-consuming (takes away from farming), requires marketing skills, challenges with transport and storage.
For Consumers: Limited variety, may need to travel to the farm, inconsistent supply.
2. Local Buyers / Assemblers (Middlemen): Description: Individuals who buy small quantities of produce directly from many farmers in rural areas, consolidate them into larger lots, and then sell to wholesalers or processors. They often operate at the village level.
Examples: "Mama Put" buying vegetables from farmers, traders buying yam from rural farmers in Benue.
Advantages: For Farmers: Convenient, quick sale, reduces transport burden, can sell small quantities.
For Wholesalers/Processors: Receive bulk quantities, reduced logistical effort to source from many small farmers.
Disadvantages: For Farmers: Often receive lower prices, susceptible to exploitation due to lack of market information.
For Consumers: Adds a layer of cost, potential for quality degradation if not handled well.
3. Wholesalers: Description: Buy large quantities of produce from local buyers, farmers, or processors, store them, and then sell them in smaller bulk to retailers. They act as a link between producers/assemblers and retailers. *
Examples: Traders at major commodity markets like Bodija (Ibadan), Mile 12 (Lagos), or Dawanau (Kano) who deal in bags of rice, baskets of tomatoes, or heaps
Community-level Marketing Challenges: Students can observe and discuss how farmers in their local community sell their produce. They can identify the specific marketing agents involved (e.g., a local market woman buying from a village farmer), the challenges faced (e.g., poor roads to transport goods, lack of cold storage for perishable items like tomatoes or vegetables leading to spoilage), and how these challenges affect farmer income and consumer prices. This fosters an understanding of the immediate impact of marketing systems. Entrepreneurial Opportunities in Value Addition: This topic can inspire students to consider agribusiness ventures. For example, instead of just selling raw cassava, they can explore processing it into garri, fufu flour, or starch, which are less perishable and command higher prices. This highlights the concept of value addition as a marketing strategy and a source of income, connecting directly to entrepreneurial skills development.
National Economic Impact of Exports: Students can relate the export of crops like cocoa or cashew nuts to Nigeria's foreign exchange earnings. By understanding that these exports bring in money from other countries, they can appreciate how agricultural trade contributes to the national budget, impacts the value of the Naira, and helps fund national development projects. This broadens their perspective on the macroeconomic significance of agriculture beyond local consumption.