The subject of agricultural marketing has been treated as separate discipline because agricultural commodities possess special characteristics than manufactured commodities.
The special characteristics of agricultural commodities are given below:
- Perishability of the product: Most farm products are perishable in nature; but the period of their perishability varies from a few hours to a few months. Their perishability makes it almost impossible for producers to fix the reserve price for their farm grown products. The more perishable products require speedy handling and often-special refrigeration, which raises the cost of marketing.
- Seasonality of production Farm products are produced in a particular season of the year. They can not be produced throughout the year. It leads to intra-year seasonality in the prices. In the harvest season, prices of farm products fall. But the supply of manufactured products can be adjusted or made uniform throughout the year.
- Bulkiness of products The characteristics of bulkiness of most farm products makes their transportation and storage difficult and expensive. This fact also restricts the location of production to somewhere near the place of consumption or processing. The price spread in bulky products is higher because of the higher costs of transportation, handling and storage.
- Variation in quality of products There is a large variation in the quality of agricultural products, which makes their grading and standardization somewhat difficult. There is no such problem in manufactured goods because they can be produced of uniform quality.
- Irregular supply of agricultural products The supply of agricultural products is uncertain and irregular because of the dependence of agricultural production on natural conditions. With the varying supply, the demand remaining almost constant, the prices of agricultural products fluctuate substantially more than that of manufactured products.
- Small size of holding and scattered production Farm products are produced throughout the length and breadth of the country and most of the producers are of small size. This makes the estimation of supply difficult and also creates problem in marketing
- Product pricing Apart from the problem in estimation of total supply in a small-farm agriculture, an individual farmer faces a typical marketing situation. As his share in total supply is very small, he can not influence the market supply. Further, owing to the inelastic nature of demand of most of the farm products, the market price for his product is determined independent of his supply. It is in this context that an individual farmer is supposed to be operating in a buyer’s market. Contrary to this, most of the manufacturing firms, owing to their larger share in the market, can control, to some extent, the supply and thus influence the price of the product they sell.
- Processing Most of the farm products need some kind of processing before consumption by the ultimate consumers. The processing function, though adds value, increases the price spread of agricultural commodities. Processing firms enjoy the advantages of monopsony, oligopsony or duopsony in the market. This situation sometimes creates disincentives for the producers.