You already learn about the characteristics of agricultural products and production. Now, you have to learn about the problems associated with farm marketing. If you clearly observe farm marketing, you can see that farmers are facing so many problems. Now, I‘m telling you about it.
At first, farmers face unstable and relatively low farm prices and incomes. They have no control over production. Agricultural goods are identical products. So, there are so many farmers who produce the same goods. As a result, the total output comes from many small individual farmers. Production depends on the weather and the natural environment. Farmers can change their output by planting fewer acres of land. Besides, there are some Uncontrollable factors that affect production like floods, drought, tornadoes, cyclones, excessive rain, etc.
Sometimes, the Market forecast could be wrong. The weather could be unfavorable. Changes in consumer tastes. High price reduces consumer demand. All the producers have faced these problems.
The farm marketing problems are-
- Free-rider problem: The farmers are not connected with each other. They can not influence farm prices. They face free-rider problems. Free riders hamper the farmers a lot. Free riders collect goods from farmers at a cheaper rate. And selling these goods at a high price to the customers. Farmers have no control over this. Besides, they have a great lack of knowledge about the market.
Sometimes, Farmers go to their cooperatives society but it is not so effective. Because all farmers are scattered. They have no interconnection with each other. Some farmers may adopt to raise their prices through marketing advertising efforts. If that farmer is able to succeed, all farmers get benefits. Thus, there needs group participation which can bring success for the farmers.
- Cost price squeeze: This farm marketing problem. As an individual farmer produces goods, he can’t squeeze the cost price. Besides, there are many farmers producing the same goods and selling the market. So, there is no option to charge a high price.
- Superior bargaining power of buyers: The middlemen have superior bargaining power. They are the price setter. Whatever middleman set the price, producers are ready to sell their products. Because there are so many producers. If one producer refuses to sell his goods at a lower price, the middleman switches this producer and goes to another one.
- Changing food market pricing efficiency: At one time, farmers are not bothered with food marketing pricing efficiency. Because they all get fair or at the least equal price. But at present, middlemen are directly negotiated. They can interact or go for contractual agreements with farmers to reduce the high levels of pricing efficiency. As a result, farmers choose whatever they like.
- Profit gap between farm and food sector: The farmers are produced only the raw materials. They can’t produce food. Even, they can’t enjoy a high price. Besides, they lack knowledge, skill, and specialization, in food products. As a result, the middleman collects raw materials from farmers. They turn this raw material into food. The producers directly sell these to the final consumers. And they can get a high price.
All this suggests that farm marketing is changing gradually. Because there are so many problems in these sectors. As a result, food marketing firms are operating in a different market environment.