Module 2-A

ILOCOS SUR POLYTECHNIC STATE COLLEGE
Sta. Maria Campus
MODULE
MODULE 2
Introduction to Agricultural Marketing
Marketing is one of the most important aspects of an agricultural business. This
could be considered as the most important since it is more rational to think of the
market first before producing any kind of agricultural product. Generally, however,
marketing is thought of as just buying and selling. Many people do not realize that it
spans across more complicated activities which start from customer needs analysis to
deliver the products to the customers embracing all the facilitating functions in the
process.
In the agriculture sector, marketing begins when the farmers first think of
crops/livestock to be produced to earn a profit and at the same time to satisfy the need
of the market. Unlike in manufacturing, farmers usually encounter marketing problems
because they have to deal with the peculiarities of the production processes and
likewise of the products produced. There is a need therefore to organize, manage and
design marketing strategies to market farm produce effectively and efficiently.
This unit looks into the agricultural marketing Situation in the Philippines its
status. problems and prospects. Moreover, it also identifies agricultural development
objectives and describes approaches to the study of agricultural marketing.
Here are the topics to be studied in the module:
A. Overview of the Agricultural Marketing System in the

Philippines
B. Commodity Approach
C. Institutional Approach
D. Functional Approach
E. Market structure conduct-performance Approach
By the end of this lesson, you should be able to:
1. Understand the concept of Market and Marketing.

2. Know the role of the different subsystems of the Agricultural Marketing System.
3. Discuss the different approaches to the study of Marketing.
Course Code: AgriBus101

Descriptive Title: Principles of Agricultural
Instructor: Venus G. Ragon
Entrepreneurship and Marketing
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A. Overview of the Agricultural Marketing System in the Philippines
The agricultural sector has been playing a crucial role in the Philippine
economic development. This sector provides employment and product for export. In
addition to these, agriculture provides raw materials to the manufacturing sector.
Marketing provides an important key in the growth of the sector. This is closely
linked with efforts in increasing productivity which consequently increases products
available for local consumption and exports. Many. however, are not aware of the real
importance of marketing in agriculture. For the past decades. many programs and
projects have been implemented and almost all of them were production programs.
Little attention has been given to agricultural marketing and it seems that this area is
being neglected.Thus, in most agricultural production programs. marketing has always
been identified as one with many problems.
The Philippines is already beset with a lot of agricultural marketing problems

which have been plaguing the country for several decades now. As much as possible,
attention should be given to agricultural marketing to minimize potential problems
brought about by the actions of middlemen and the personality of production.
B. Concepts of Marketing and Markets Agricultural Marketing
Agricultural marketing includes all those services (activities. functions) involved

in moving farm products from the point of production (farm) to the point o consumption
(market) to meet market needs. There are, however, three terms in the definition that
need clarification.
The first one is "services”. These are any function or activity performed on or
for the product that alters its form, time, place, and possession characteristics. They
add value to the product and someone has to pay for the services rendered. The
services are generally performed on or for the product to meet existing consumer
demands. The profit for performing the activities/functions is the difference between
the cost of the services and the value added.
The activities/functions are categorized into:
1. transactional functions, which include finding buyers, buying and selling, and risk-
taking;
2. logical functions, which include grading, assembling, packaging, storage,

transportation, and presentation to customers; and
3. facilitating functions, which include dissemination of market information,

marketing research, and financing.

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The second term that needs further explanation is "point of production". It is
taken as the point of usual first sale by the farmer, typically at the 1arm or at the
farmer's home. At this point, a transaction occurs and a bonafide price (i.e. the farm
price) is established. It is a price from which costs of marketing may be developed.
The third term is “point of consumption”. This is the point where marketing ends.
In other words. it is the point of last purchase/sale where the goods are in the
possession of the final consumer. Again a transaction occurs and a price is
established.
Why is Marketing Complex and Costly?
The process of buying farm products in the production area and forwarding
them to other concentration points is complicated and costly. The initial production of
the raw materials for food products takes place in many farms scattered throughout
the country. Some farms produce only small amounts of several commodities. Other
farms produce a large amount of only a single commodity. Many farm products are
highly perishable and widely varying in quality. Also, these products are grown
seasonally and in areas that are far away from places where consumers are
concentrated.
Performance of various services such as packaging, transporting, processing,

etc. involves a large amount of money. Hence, the job of making goods available from
the point of production to the point of consumption is costly.
Marketing is Productive
Marketing is productive because it creates utility. i.e... the process of making

useful goods and services. Utility is not a physical quality of a thing itself. It is the want
satisfying power of an object or service.
Four types of utility are created:
1. Form utility is created if goods possess the required properties. The packer
who slaughters the hogs and cuts them into pork carcasses adds form utility.
They change the form of raw materials and create something new.
2. Time utility is created when products are made available at a time when they
are most wanted. Meat wholesalers who freeze some of the pork products for
later use add time utility to the product. This is because the pork becomes more
useful by being held from periods of relative plenty to periods to relative
scarcity.
3. Place utility is created when products are made available in the place where
they are most wanted. Hog traders who bring the product from a place where
supply is abundant to a place where supply is relatively scarce add place utility
to the product.

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4. Possession utility is created when goods are transferred or are placed under
the control of the persons who desire to use them.
Market
A market has three elements-buyers, sellers, and trading facilities. Thus a

market may be defined as a group of buyers and sellers with facilities for trading with
one another. It is also a place where buyers and sellers meet to exchange goods and
services.
The market may also refer to a large geographic area wherein a given set of
supply and demand forces operate to set prices, such as the world sugar market, the
US copra market, or the Japanese abaca market.
Most markets are informal organizations where buying and selling may be done
by almost anyone at almost anytime and usually in relatively small lots. Buyers and
sellers do not have to meet together face to face: the telephone, social media,
shopping applications, and others may be used, especially when buyers and sellers
are located far apart from each other and personal contact is not possible.
The Agricultural Marketing System and its Role in the Economy
The marketing system for agricultural products is a complex system within the
various subsystems that interact with one another and with the different marketing
environments (Figure 1). As a system. it has the following characteristics:
1. It has objectives or goals to achieve. These are normative criteria set by society.
2. In the course of attaining these objectives, it has components or participants that

perform certain functions such as transport, storage, processing, grading,
standardization, and market information: and all the necessary jobs between the
decision to produce and the final consumption of the product.
3. It needs institutional arrangements which are necessary for the performance of its
function.
4.It needs a planning and management decision structure that controls and
coordinates the forces at work.
5. It has spatial and temporal dimensions and is most often commodity specific.

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There are six components or subsystems and opposite each is their intermediate and
ultimate goals.
1. Producer Subsystem consists of the initiators of production who are maybe small
farmers or corporate farms. Goods prođuced in this subsystem are brought to the final
consumers via the channel subsystem.
2. Channel Subsystem consists of market participants or intermediaries who are

directly responsible for making the 1amers product available to the user at the right
place, time, and form. They are considered the actors and branded as a necessary
evil in the system who perform vital functions, but sometimes they get the ire of the
producers. consumers and the government.
In addition to these intermediaries are the government and private institutions and
associations which are also involved in moving the products from the production sites
to the consumption centers.
3. Flow subsystem facilitates product financial and information flows. Information to

be relayed usually consists of product trends, grading and standardization, and prices.
4. Functional subsystem which consists of marketing functions or services related

to the creation of place, time, and form utilities that assembly, concentration,
dispersion, and equalization activities
5.Consumer subsystem refers to the final repository of products produced by

farmers.
6. Environmental subsystem facilitates market performance encompasses our other

areas or factors that affect the working of the entire marketing system:
Climatic/physical, socio-cultural, economic/technological, and legal/political factors.
These different subsystems interact with and are interdependent and within the
environment they operate.
The Role of Marketing in Economic Development
The development of the agricultural sector requires a balanced improvement in

both production and marketing. It becomes ineffective if the objective is to improve the
production side but neglects the marketing side. This is the farmer's point of view. An
effective and efficient marketing system will induce the production of those products
and in quantities which when sold to consumers will result in maximum marketing
charges and farm production margins.
Knowledge of marketing and its problem will help farmers make important
decisions on the following aspects:
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1. What to produce and how to prepare it for sale. For example, some fruit and
vegetables are more preferred by consumers than others. Some harvesting practices
and other pre-sale services may affect the value of the product.
2. When and where to sell. Different products have different high and low periods of
prices throughout the year. Production and storage practices may be adjusted to take
advantage of these. Many alternative outlets are usually available. Knowing how to
appraise the advantages and disadvantages of each will help in selecting the one that
will maximize returns (income).
3. How much of the marketing job to be done by the farmer himself either as an
individual or as a member of a group. In many instances, transportation may either be
hired or provided by the farmer himself. Similarly, someone may be hired to do the
selling and other marketing costs and problems will help in appraising the best line of
action.
4. What to be done to expand markets. Many proposals and schemes for advertising
and other techniques for influencing consumers are being offered. Knowledge of the
factors that influence consumers and their behavior can help determine which of the
several proposals for action might be most effective.
5. Which of the many different marketing arrangements are desirable. Increasingly,

farmers are being offered different methods of selling their products, e.g. contact
marketing arrangement.
6.How to secure changes necessary to correct undesirable practices. New laws and
various market programs are often proposed and implemented to improve the
marketing system. Government intervention may be desirable in some cases.
On the part of the middlemen and consumers, a marketing system

perform the following functions:
1. Provides an outlet for intermediaries of agricultural products.

2. Distributes goods and services to consumers in the desired forms and
condition and delivers them at price consumers are willing and able to
pay
3. Provides employment for middlemen and producers as well.

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Characteristics and Problems of Agricultural Marketing in the Philippines
Dependence on Middlemen
The Philippine agricultural marketing sector is heavily dependent on middlemen

in bringing the agricultural product to the end-users. In rice marketing, for example, it
passes through at least six buyers before reaching the final consumers. The same is
true with vegetables, fruits, and even livestock.
The farmers' dependence on middlemen could be explained by several factors

usually interrelated with one another.
1. Farm size. The majority of the farms in the country are small with an average size
of 2.8 hectares. About 70% of farms have an area of three hectares or less.
2. Poor cash position of the farmers. Farmers produce seasonal products, which
are usually low-priced during peak seasons. This plus the fact that their farms are
small contributes to their poor cash position. Upon harvesting, the farmers are
therefore prompted to sell at once their products to middlemen to convert them into
much-needed cash.
3. Unavailable marketing facilities. Farms are usually far from the marketplace. Few
feeder roads will facilitate the movement of products from the farms. Transportation
facilities are unavailable. The middlemen are most often the only ones who can afford
to acquire marketing facilities; so, the farmers understand the importance of the
middlemen in the marketing process.
Inadequate Market Information
Marketing information is defined as a continuing and interacting structure of

people, equipment, and procedures to gather, sort, analyze, evaluate and distribute
pertinent, timely, and accurate information for use by marketing decision-makers to
improve their marketing planning, implementation, and control.
Market information is very important in the whole agricultural marketing system.

On the part of the farmers, this will help them decide what to produce, when, how to
price their products and how to handle them efficiently. The impact on the whole
marketing system on the other hand is the leveling of supply and demand, better
prices, and less risk due to losses.
Unfortunately, fair dissemination of market information in the Philippines is

lacking. Small farmers have very poor access to market information. Low
dissemination of market information may be attributed to the archipelagic condition of
the country and the lack of marketing infrastructures, support, and communication
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facilities.
Inadequate Marketing Support Services
Marketing support services are particularly lacking in the Philippines. We have

government agencies mandated to provide marketing assistance to disseminate
market information.
Unique Features of Agricultural Products
Generally, bringing the produce from the farm to the marketplace is not an easy
task on the part of the farmers and traders due to the different unique features of
agricultural products.
1. Seasonality. Agricultural products are unavailable at times. Supply is irregular while

demand is relatively stable. Seasonality creates a strain in the marketing system since
farmers and traders find it hard to meet consumer requirements. Although the needed
product is available in some areas. but it is not sufficient enough to meet the required
volume.
2. Perishability. Most agricultural products are perishable. The farmer and the
marketers have to make a fast decision on where or to whom the products are to be
marketed. They have to either market the products at once or store these cold storage
facilities especially if they are vegetables, fish, and meat products.
3. Handling requirements. Agricultural products have to pass through some levels of

transformation before being taken to the market. Farm products must be graded,
cleaned, and even processed before reaching the final consumers. Moreover, the
bulky nature of agricultural products results in increased transportation and handling
costs.
Number of Producers
The marketing of farm products would be simple if one farm produces only a
single item or a limited number of different items. But there are million farms in the
country and hundreds of different products are produced by them. This situation
creates a special problem in that the small outputs of individual farms must be
assembled into larger volumes before they can be efficiently stored or transported.
Characteristics of Consumers
Keeping pace with the changing demands of consumers is one of the most
intriguing marketing problems. Some have a high income, others low income. Some

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are old, others young. Some have sophisticated tastes, others conservative. Still,
some like a broad range of food and other agricultural products.
Demand may also vary on a hot or cool day. It may also change during regular
workdays or holidays, or as the need for variety in meals changes, or as the income
of people changes. For most farm products, their marketing system has a broad
selection of appropriate schemes available at the right time, and at the right place
making the above a major challenge.
Entry Points in Agricultural Marketing
The above-mentioned problems should not put an end to the development of

an agricultural marketing system in the Philippines. Instead, more efforts should be
directed to make the system stronger and more efficient. The following are some of
the alternatives entry points that can be considered by both government and private
groups.
Organization of Small Farm Businesses
One reason why farmers are very dependent on the middlemen is that they are
small. It was mentioned earlier that farm size has a lot to do with the farmers' capability
to perform other outside activities. It could not be expected, however, that farmers will
acquire bigger farmlands. The fact is more farmlands are now being converted into
businesses, like real estates which yield higher profits. Therefore, the organization of
these small farmers can help a lot in increasing their capacity to do other functions.
They can pool their resources and use these to acquire inputs to produce better quality
products. On the marketing side, they can also acquire marketing facilities like
transportation vehicles. They can also put up their storage facilities. Farm
organizations also have higher bargaining power in tying up with government agencies
supporting the agricultural sector.
Corporate and Small Grower Arrangement
This arrangement is one of the better strategies to solve the problem of the
dissemination of market information. Small growers do not usually have access to
market information. On the other hand, commercial farmers have all the market
information which they could make use of in decision making. With the existence of
the tie-up between the two groups, the small farmers would be benefited. Information
dissemination would be more effective.
Establishment of Trading Posts

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Distance to the major markets is one of the problems of the agricultural
marketing system. The establishment of trading posts in strategic locations can help
both the suppliers (farmers) and the traders to meet volume requirements at less cost.
This will also help them minimize losses due to transportation and spoilage.
Setting up of Grading Standards for Agricultural Products
The uniformity of products is one factor that contributes to the efficiency of

marketing. Uniformity is acquired not only through the use of good varieties but also
through a set of standards that farmers and traders can follow in handling products.
Following a standard will facilitate packaging. storage and pricing.
Building of Marketing Infrastructures
A lot of marketing problems are traceable to the lack of marketing infrastructure.

Important marketing decisions are hampered due to this problem. Hence, the needed
services will be facilitated through the establishment of all of these infrastructures.
Market Research in Agricultural Products
There are a lot of technological researches in producing agricultural products.

Market research on the other hand is not being given attention. Market research is
needed to determine requirements or the marketing system and consequently improve
its operations.
Traditional Agricultural Marketing Practices
Agricultural marketing in the Philippines revolves around the "suki” system.

Suki refers to regulars or special exchange partners. Under this system, there is a
special arrangement between the sellers and the "suki” and this was found to affect
the sellers’ pricing, distribution and promotion strategies.
Some of the marketing practices under the "suki" system are the following:
1. "Tawad" or “haggling” is a practice in which the buyer asks for a reduction in price
or an
an additional unit of a commodity.
2. "Price by piece" or "tingi" is a practice of selling bits and pieces rather than the
whole standard size. This is the same as economy packaging wherein instead of
selling one liter of cooking oil, for example, the sellers will sell the product depending
on how much money the buyer has. If he has only P 10.00, then the seller will just give
her the corresponding amount or volume.

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3. "Por kilo” is another economy packaging activity. Instead of selling the whole piece.
e.g. the whole chicken or the whole pig shoulder, the meat is chopped into pieces and
packed by the sellers.
4. "Buena Mano" is a term used to describe the first sale buyer for the day. The first
buyer is usually given special treatment because the seller believes that if the first sale
is good, then all the others will also be good.
ln research conducted on the "'suki" system by Trinidad (1990), it was found

out that the "'suki” system appeared to be based on mutual trust. Usually, the "suki"
system starts with a friendship developed between the buyer and the seller. To
continue the relationship, the buyer has to patronize the products of the seller. The
two parties benefit from the "suki” relationship. On the part of the seller, he is assured
of a ready market. On the other hand, the buyer is assured of a better buy and other
benefits such as buying on credit or discounts. Sellers of agricultural products know
how to observe these “indigenous” marketing practices because of the nature of the
products that they are handling. Their objective is to dispose of the products (that they
are handling) as soon as possible because these are perishable. If these products are
not sold at the right time, they even resort to "presyong palugi” (presyo agawid in Iloko)
just to dispose of their product. Considering that there are a lot of sellers of agricultural
products in the market, they must have a captive market. They can have this by
developing an interpersonal relationship with the buyers through the suki system.
APPROACHES TO THE STUDY OF AGRICULTURAL MARKETING
1. Commodity Approach
One way of analyzing the market system is by studying the commodity

concerned. The commodity approach is product-oriented rather than marketing
function-oriented. The study may cover the characteristics of the product, the
market demand, and the supply situation at the domestic and international levels,
the behavior of the consumers concerning a specific product, and prices at the farm
ether wholesale or retail level.
2. Institutional Approach
Another method of analysis is to study the various agencies and

business structures that perform the marketing process. The institutional
approach attempts to answer the question “who”? Marketing institutions
include a wide variety of business organizations that have developed to operate
the marketing machinery. The institutional approach considers the nature and
character of the various middlemen and related agencies and also the

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arrangement and organization of the marketing machinery. In this approach,
the human element receives primary emphasis.
Middlemen
Middlemen are those individuals or business concerns who specialize in

performing the sale of goods as they are moved from producers to the
consumer. They are classified into:
1. Merchant Middlemen. They take title to and therefore own the products they
handle. They buy and sell for their own gain. Examples are:
a. Contract buyers-estimate the total value of the crop by appraising the
probable harvest multiplied by the expected price at harvest time. If
the price set is agreeable to the producer, the contractor from there
on until harvest fakes care of the plantation and harvests all the crops
for the season. The contract-buyer shoulders all the expenses in
preparing the produce for the market, and assumes the pre-harvest
and post-harvest risks.
b. Grain millers-own warehouses and mills and procure grains from

suppliers including their own agents, farmers, wholesalers, and
farmers cooperatives.
c. Wholesalers sell to retailers, other wholesalers, and industrial users

but do not sell in significant amounts to ultimate consumers.
Wholesalers make up a highly heterogeneous group of varying sizes
and characteristics.
d. Retailers buy products for resale directly to the ultimate consumers.
2. Agent Middlemen. They act only as representatives of their clients. They do

not take title to and therefore do not own the products they handle. Agent
middlemen receive their income in the form of fees and commissions.
Agent middlemen can be broken down into two major groups:

a. Commission men normally take over the physical handling of the
product, arranges the terms of sales, collect, deducts his fees, and
remits the balance to his principal. They are usually granted broad
powers by those who consign goods to them.
b. Brokers usually do not have physical control of the product. He
ordinarily follows the instructions of his principal closely and has less
power in price negotiations.

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3. Functional Approach
One method of classifying the activities in the marketing process is to

break processes into functions. A marketing function may be defined as a major
specialized activity performed in accomplishing the marketing process. The
functional approach attempts to answer "what” in the question “who does
what”.
Functions are classified as follows:
1. Exchange Functions are the activities involved in the transfer of the title of
goods. They represent the point at which price determination enters into the
study of marketing.
a. Buying (assembling) function. The buying function is largely one of

seeking out the sources of supply, assembling of products, and the
activities associated with the purchase. This function can be either
the assembling of the raw products from the production areas or the
assembling of finished products into the hands of other middlemen in
order to meet the demands of the ultimate consumers.
b. Selling function. The selling function covers all the various activities
that are sometimes called merchandising. Most of the physical
arrangements or the display of food advertising and promotional
devices to influence or create demands are also part of the selling
function. The decision as to the proper unit of sale, the proper
packaging, the best marketing channel, the proper time, and the
place to approach potential buyers are decisions included in the
selling function.
2. Physical Functions. Are those activities that involve handling movements

and physical change of the actual commodity itself. They are involved in
solving the problems of when, what, and where in marketing.
a. Storage function. The storage function is primarily concerned with

making goods available at the desired time. It may be an activity of
holding supplies of finished products such as inventories of
processors. wholesalers and retailers.
b. Transportation function is primarily concerned with making goods

available at the proper place and the adequate performance of
alternative routes and types of transportation costs also includes the
activities involved in preparing the product for shipment such as
crating and loading.
c. Processing function includes all essential manufacturing activities

that change the basic form of the product such as converting a live
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animal into meat, fresh pineapple into canned pineapple. It
3. Facilitating Functions makes possible the smooth performance of exchange

and physical functions. These activities are not directly involved in either the
exchange of title or in the physical handling of products.
a. Standardization Function is the establishment and maintenance of

uniform measurements of both quality and quantity. This function
simplifies buying and selling since it makes possible the sale of
products by samples and descriptions.
b. Financing function is the advancing of money to carry on the various

aspects of marketing. The need for financing arises because of the
time lag between the purchase and sale of the product. Whenever
storage or delay takes place. someone must finance the holding of
goods.
c. Risk-bearing function is the acceptance of the possibility of loss in

the marketing of a product. Risk can be classified into physical risks
and market risks. Physical risks arise from destruction or
deterioration of the product through fire, accident, wind, earthquakes.
cold and heat. Market risks occur because of the changes in the
value of a product being marketed.
d. Market intelligence function is the job of collecting, interpreting, and

disseminating the large variety of data that are necessary to the
smooth operation of the marketing process.
e. Market Research. Much of the market research is being undertaken

to evaluate the possible alternative marketing channels that may be
used in the different ways of performing other functions and the
market potentials for new products.
f. Demand creation is usually achieved through effective advertising of

the product and other promotional devices using either the media or
a house-to-house campaign.
4. Market structure conduct -performance approach
In this approach, the elements of market structure and conduct are outlined and
discussed regarding their effect on market performance.
1. Market structure refers to how a market is organized with particular

emphasis on the characteristics that determine the relationships among the
various sellers in a market, among the various buyers, and between the
various buyers and sellers in a market. In other words, market structure
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deals with the organization of a market as it influences the nature of
competition and pricing within the marketing system:
a. The degree of buyer and seller concentration

b. The degree of product differentiation
c. The condition of entry to the market
d. The degree of knowledge of the market
Based on the above conditions, markets may be classified as competitive,

oligopolistic, or monopolistic. Another category that is sometimes used, is monopolistic
competition.
Purely competitive (perfectly competitive) market is one where the number

of buyers and sellers is sufficiently large so that no individual can perceptively
influence the price by his decision to buy or sell. The product is sufficiently
homogeneous so that the product or one firm is essentially a perfect substitute
for that of another firm.
Absolute monopoly market structure with a single seller. It is the opposite of

perfect competition.The firm's demand schedule coincides with the industry's
demand schedule. Product differentiation is implicit in this definition since a
monopoly could not exist if the firm's product is substantially different from the
products of other firms.
Monopolistic competition refers to a market in which a large number of sellers

offer differentiated products. These products are presumably close substitutes,
but the individual sellers can differentiate their products based on a trade name,
style, quality, service, location, or other factors.
Oligopoly refers to a market with a few large sellers. Each firm produces a
large fraction of the industry's total product, and consequently, the action of one
firm in the industry can greatly influence other firms. In a pure oligopoly, the
sellers are producing a homogeneous product. In a differentiated oligopoly,
the firms are producing a similar but not identical product.
This classification of markets emphasizes the number of sellers and implicitly

assumes a large number of buyers. Other classification may be devised with
an emphasis on the number of buyers in the market. For instance, a market
with a single buyer is referred to as monopsony.
Oligopsony is a market with few buyers but many sellers.

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2. Market conduct refers to the way firms adjust to the markets in which they
are engaged as buyers and sellers. In other words, it is the behavior or
pattern that the firms exhibit in the market. When translated into action, this
behavior is generally termed as marketing practices.
3. Market performance is the appraisal of how much the economic resources

of the industry's market behavior or conduct from the best possible
contribution they can make to achieve relevant socio-economic goals.
Several approaches to the study of marketing may be utilized to gain a thorough

understanding of marketing principles. The use of each approach, however, will
depend on the researcher's objectives in analyzing marketing problems. For example,
if one is interested in a specific product, the commodity approach is the best. It helps
to focus attention on the characteristics of the product. The functional approach, on
the other hand, looks at the various activities that are performed to increase the utility
of the product as it moves from the farmer to the consumer. Hence, any marketing
problem that necessitates the analysis of performed marketing services and their costs
calls for this kind of approach. The institutional approach to marketing describes the
people, who perform the various functions in the marketing system. Thus. this
approach emphasizes the people and business organizations and not the
characteristics of the product or on services added to it. If one wants a better
understanding of the market for goods and services where buyers and sellers meet,
then the market structure-conduct –performance approach must be used. So far, this
is the most competitive among all approaches. In doing marketing studies, however,
a combination of two or more of these approaches are usually used.

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ILOCOS SUR POLYTECHNIC STATE COLLEGE

Sta. Maria Campus

Here are the topics to be studied in the module:

A. Overview of the Agricultural Marketing System in the

By the end of this lesson, you should be able to:

1. Understand the concept of Market and Marketing.

Course Code: AgriBus101

Sta. Maria Campus

The Philippines is already beset with a lot of agricultural marketing problems

B. Concepts of Marketing and Markets Agricultural Marketing

Agricultural marketing includes all those services (activities. functions) involved

The activities/functions are categorized into:

2. logical functions, which include grading, assembling, packaging, storage,

3. facilitating functions, which include dissemination of market information,

Course Code: AgriBus101

Sta. Maria Campus

Why is Marketing Complex and Costly?

Performance of various services such as packaging, transporting, processing,

Marketing is productive because it creates utility. i.e... the process of making

Four types of utility are created:

Course Code: AgriBus101

Sta. Maria Campus

A market has three elements-buyers, sellers, and trading facilities. Thus a

The Agricultural Marketing System and its Role in the Economy

2. In the course of attaining these objectives, it has components or participants that

Course Code: AgriBus101

Sta. Maria Campus

2. Channel Subsystem consists of market participants or intermediaries who are

3. Flow subsystem facilitates product financial and information flows. Information to

4. Functional subsystem which consists of marketing functions or services related

5.Consumer subsystem refers to the final repository of products produced by

6. Environmental subsystem facilitates market performance encompasses our other

The Role of Marketing in Economic Development

The development of the agricultural sector requires a balanced improvement in

Sta. Maria Campus

5. Which of the many different marketing arrangements are desirable. Increasingly,

On the part of the middlemen and consumers, a marketing system

1. Provides an outlet for intermediaries of agricultural products.

Course Code: AgriBus101

Sta. Maria Campus

Characteristics and Problems of Agricultural Marketing in the Philippines

The Philippine agricultural marketing sector is heavily dependent on middlemen

The farmers' dependence on middlemen could be explained by several factors

Inadequate Market Information

Marketing information is defined as a continuing and interacting structure of

Market information is very important in the whole agricultural marketing system.

Unfortunately, fair dissemination of market information in the Philippines is

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Inadequate Marketing Support Services

Marketing support services are particularly lacking in the Philippines. We have

Unique Features of Agricultural Products

1. Seasonality. Agricultural products are unavailable at times. Supply is irregular while

3. Handling requirements. Agricultural products have to pass through some levels of

Course Code: AgriBus101

Sta. Maria Campus

Entry Points in Agricultural Marketing

The above-mentioned problems should not put an end to the development of

Organization of Small Farm Businesses

Corporate and Small Grower Arrangement