MARKETING OF LIVESTOCK PRODUCTS : Digital  Marketing solutions in Supply Chain Integrated Approach

 The focus area in Indian Agriculture & Livestock , in the recent times has been on enhancing farmer incomes. This took the shape of official government policy after the clarion call of the Prime Minister of India to double farmers’ incomes and the subsequent budget announcement1 to this effect. As far as agricultural & Livestock production is concerned, India ranks2 first in the production of milk, jute and pulses, and is placed second in producing wheat, rice, groundnut, vegetables, fruits, cotton and sugarcane. It is also among the leading producers of fish, livestock, poultry, spices and plantation crops. Thus, to an extent, production is not the biggest problem of Indian Agriculture, whereas due to tiny landholdings, farmers’ incomes are definitely not sufficient. One of ways of enhancing farmer incomes is through the use of Digital Technologies in Animal Husbandry & Agriculture to increase the overall efficiency of the agricultural production processes as well as the entire value chain. The future of food is unequivocally digital, and the future of digital is inevitably AI (Artificial Intelligence). From gene sequencing in seed production to Internet of Things (IoT) networks of implements and sensors that generate data and image recognition technologies that assay and grade crops and commodities, AI applications are being deployed across different aspects of agriculture & Livestock.

As India rose as a primary ground for IT hub, it facilitated the landscape change for digital innovations and transformations across businesses over the past decade.  Digital transformations and IoT (Internet of Things) enablers have all become a critical stepping stone for organizations in achieving long-term goals and providing solutions for long-standing challenges.Ushering on the phenomenon of startups and venture capitalists, many tech-based services have started surfacing that aim to provide more solution-based and customer-friendly environment.

Livestock and animal husbandry sector has also not remained untouched from the changing tides.  The digitalization wave has penetrated across the species and the value chain whether it is related to precision nutrition or better farm management.  With the increasing penetration of digitalization into animal production and the advancement of IoT technology, a new frontier has opened in which science and technology have combined to increase automation and bring more rapid real-time decision-making options.  In this article, we look at three core areas where digital solutions have become an enabler for the industry.

IoT solutions to address the challenges in value chain

Over the last few years, there has been a rise in tech-startups who have brought in innovative solutions especially for dairy and aqua value chain.  They aim to simplify farm and feed management, bring in better efficiencies while ensuring quality throughout the value chain.Given the huge opportunity India presents with a growing animal protein consuming population, these solutions have also garnered the attention of investors.

 MARKETING OF LIVESTOCK PRODUCTS

The word “Market” is derived from the latin word marcatus meaning thereby merchandise, ware, traffic, trade or a place where business is conducted. Marketing is the performance of all business activities involved in the flow of goods and services from the point of initial production until they are in the hands of the ultimate consumer.  It is a process by which the producer and buyer of goods are brought together.  The buyers of livestock products are those who

1.       purchase livestock products for direct consumption.
2.       demand livestock products for use as intermediate goods and

iii.    buy livestock products for sending them abroad i.e. exports.

Marketing is that area of Economics concerned with the exchange and valuation of goods and services. It includes activities associated with physical movement and transformation of goods, and the pricing of goods and services.

The marketing of livestock and livestock products is concerned with procuring raw materials (milk, sheep/goat, and eggs), processing them (milk products, mutton/meat, and egg powder), packaging, storing, transporting and distributing to the ultimate consumers.  The main actors involved in this are the livestock owners (producers), middle-men and consumers.

1. Essentials of market
2. A commodity which is dealt with
3. The existence of buyers and sellers
4. A place where exchange takes place
5. Interaction between sellers and buyers.
6. Marketing Approaches: The following four approaches usually help to study marketing:
7. Functional Approach
8. Institutional Approach
9. Commodity Approach
10. Behavioural system – decision making approach

2.1.Functional Approach:

In this approach all the marketing process is broken down into many functions.  A marketing function may be defined as a specialized activity performed in accomplishing the marketing process.  The marketing functions are classified as

1. Exchange function: the activities, which are involved in the transfer of ownership of goods. The two exchange functions are buying and selling.
2. Physical function: those activities that involve handling of the products, storage, movement and processing of the goods.
3. Facilitating function: those activities, which make possible the smooth performance of the exchange and physical functions. They include standardization and grading, financing,  risk bearing and market intelligence functions of marketing.

2.2.Institutional Approach:

In this approach, principles of marketing are formulated around the institutions performing the marketing functions.  This approach considers the nature and character of various middlemen and related agencies and also the arrangement and organization of the marketing machinery.  In this approach, the human element receives primary emphasis and hence institutional approach involves the study of middlemen.

Based on the differentiation on whether the principals to the transaction (i.e.sellers and buyers) utilize the services of a professional intermediary i.e. middleman, marketing may be classified into direct and indirect marketing.  If middlemen are involved it is an indirect marketing.

Middlemen are those individuals or business concerns who specialize in performing various marketing functions involved in purchase and sale of goods as they are moved from producers to consumers.

• Merchant middlemen:

They own the products they handle.  They buy and sell for their own gain.  There are two types of merchant middlemen.

1. Wholesaler: who sell the commodity to retailers or other wholesalers but do not sell in significant amount to ultimate consumers.
2. Retailer: who buys products for resale directly to the ultimate consumer of the goods.

• Agent middlemen:

They act only as representatives of their clients.  They do not own the products they handle.  While merchant middlemen secure their income from a margin between the buying and selling prices, agent middlemen receive their income in the form of fees and commissions.  The two types of agent middlemen are

1. Commission agent: The commission agents normally take over physical handling of the product, arrange for sales, sell the goods in their name, prepare bills, collect money from the buyer, extend credit to the buyers, deduct their fee and remit the balance to the seller.
2. Broker: The broker does not have physical control over the product. He has less discretionary power in price negotiations than commission agent.

• Speculative middlemen: are those who own the products with the major purpose of profiting from price movements.
• Processors and manufacturers: They undertake some action to change the form of the product.  Apart from their main processing work, many processors take an active part in other institutional aspects of marketing, ex.: as buying agents in the area of production.
• Facilitating organizations: They help the middlemen in performing their tasks.  Such organizations do not directly participate in the marketing process.  They furnish the physical facilities for handling of products or for bringing buyers and sellers together.  They receive their income from those who use their facilities.  Co-operative marketing societies, regulated markets.

2.3. Commodity approach:

In this approach, specific commodities are selected and they are followed through from the producer to the consumer. Ex. when we study marketing of egg, we will have to begin by examining the sources of supply, volume and nature of demand, different marketing functions involved etc.

2.4. Behavioural system approach: 

(Decision-making approach/Management approach)

Marketing process is continuously changing in its organizational and functional combinations.  Understanding and predicting these changes are a major problem in marketing.  Every marketing system is composed of people who are making decisions in an attempt to solve problems in marketing.  They take decisions on the products to be handled, the distribution policies, pricing, selling etc.  In this approach, an attempt is made to find out how marketing decisions are made and should be made.

3. Marketing Channels

           Marketing channels are the routes through which products move from producers to consumers.  The length of the channel varies from commodity to commodity, depending on the quantity to be moved, the form of consumer demand and degree of regional specialization in production.

Marketing channels for livestock & livestock products vary from product to product, country to country, lot to lot and time to time.  The level of the development of society or country determines the final form in which the consumers demand the product.  For example, consumers in developed countries demand more processed foods in a packed form.   Processors play a dominant role in such societies.  In a developing country like India consumers mostly purchase products in the raw form and processing is done at the consumer’s level. In addition, the lots originating at small farms follow different route or channels than those originating in large farms.  For example, small farms usually sell their products to village traders and they may or may not enter the main market.  But large farms usually sell their produce in the main market, where it goes into the hands of wholesalers.

With the expansion in transportation and communications network, changes in the structure of demand and the development of markets, the marketing channels for farm products in India have undergone considerable changes, both in terms of length and quality.

3.1. Factors affecting marketing channel

1. Consumers distribution

(Number of Potential consumers, their density, concentration of markets)

1. Product characteristics

(Perishability, standardization required, product bulk & weight, unit value)

1. Characteristics of consumers (Income, buying habits etc.)
2. New marketing technologies
3. Changes in the management
4. Changes in the policies of the government
5. Cost requirements.

3.2. Marketing channels for milk

Marketing of milk in India is done through organized and unorganized marketing channels. However, more than 80 per cent of the milk in India is being handled by unorganized sector.

Major differences between organized and unorganized marketing

—————————————————————————————

Organised                                                                   Unorganised

—————————————————————————————

Participation of Government                 Private Vendors / Individual Institution/

or Co-operative  Societies/                    agents

Unions in marketing.

Service motive                           Profit motive

 

No Drastic  fluctuation in consumer       Drastic fluctuation in consumer

Price                                                        price

—————————————————————————————

As far as milk is concerned, producers do marketing through co-operatives as well as vendors. In Pondicherry in the urban areas vendor marketing of milk is common; there are not many milk collection centres as it is found in rural areas.

3.3. Marketing channels for cattle and buffaloes

Cattle and buffaloes are usually marketed through cattle markets (shandies), which operate on regular specified weekdays, in big villages.  The owner of the livestock directly brings the animal and sells it to the buyer in the market.  The common practice is to sell the cattle to middlemen (broker or commission agent) who in turn sell them in the market.  The animals are sold directly to the buyers through a broker, without taking to a market also.

4. Types of Market:

Markets are classified into various categories depending upon the location, area, time span, volume of transactions, nature of transactions, number of commodities, degree of competition, nature of commodities, extent of public intervention etc.

4.1.On the basis of location:

4.1.1Village markets: These markets are located in the small villages where major transactions of produce take place between buyers and sellers in the village.

4.1.2.Primary wholesale markets: are located in big towns near the centres of production of livestock products. Transactions usually take place between the livestock owners and the traders.

4.1.3.Secondary whole sale markets: are located in district head quarters or railway junctions. Transactions take place between the village traders and wholesalers.

4.1.4.Terminal markets: In these markets the livestock products are usually disposed of to the processors for processing or to the consumers for final consumption. The merchants are well organized and use modern methods of marketing. These markets are usually located in big cities or sea ports like Bombay, Chennai and Calcutta.

4.1.5.Sea board markets: are located near these shores and are meant mainly for export or import of the livestock products.

Ex. Bombay, Chennai and Calcutta.

4.2.On the basis of area of the market:

4.2.1. Local or village markets: The markets where selling and buying of livestock products are confined to the sellers and buyers of the same village or nearby villages. ex. milk market.

• Regional markets: In these markets the buyers and sellers are not confined to few villages but are spread in larger areas. ex. Shandies for the exchange of livestock.
• National markets: Markets in which the buyers and sellers operate at national level. Ex: Milk products.
• World market: If the buyers and sellers are operating at international level such markets are called as world market. European market for sale of milk products.

4.3.On the basis of time span:

4.3.1.Short period markets: are those markets which operate only for few hours. In these markets the highly perishable products like milk, fish are transacted. The prices in these markets are governed usually by the demand rather than the supply of the commodities.

4.3.2. Long period markets: are the markets which operate for long period of time. Less perishable products are transacted in these markets. Here the prices are governed both by the supply and demand of the product.

4.3.3. Secular markets: These are permanent markets where durable commodities that can be stored for longer period are transacted.

4.4.On the basis of volume of transactions:

4.4.1 . Wholesale markets: Where commodities are bought and sold in large or bulk quantities. Transactions usually take place between the traders.

4.4.2. Retail markets: Here the quantity handled is less and the transactions take place between the retailers and consumers.

• On the basis of nature of transactions:

4.5.1. Cash or spot markets: are those where commodities are exchanged for money or cash immediately after the sale.

4.5.2. Forward markets: are those markets where purchase and sale of commodities take place at an earlier time than the exchange of commodity take place. Sometimes there may not be any exchange of commodities but only the differences in the purchase and sale prices are paid or taken to end the transaction.

4.6.On the basis of number of commodities in which transaction   takes place:

4.6.1.General markets: are those markets in which all types of commodities are transacted. They deal in a large number of commodities which include food grains, milk products, stationery, confectionaries, vegetables etc.

4.6.2. Specialized markets: deal only with one or few commodities. Each and every commodity has a specialized market. Fir ex. Gold market, fish market, vegetable market, grain market etc.

4.7.On the basis of competition :

4.7.1. Perfect :  A market is said to be perfect when all the potential sellers and buyers are promptly aware of the prices at which transactions take place and all the offers made by other sellers and buyers and when any buyer can purchase from any seller and conversely.  Under such condition the price of a commodity will tend to be the same all over the market at the same time. When every buyer and seller is so small relative to the entire market,  he can not influence the market price by increasing or decreasing his purchases or his output.

 The conditions of perfect competition are:

* Large numbers of buyers and sellers

* Homogeneous product

* Free entry or exit

* Perfect knowledge of prices

* Perfect mobility of factors of production

* Absence of transport cost

4.7.2.Imperfect :  A market is considered as imperfect when some buyers or sellers or both are not aware of the offers being made by  others.  In an imperfect market, different prices prevail for the same commodity at the same time.  There are three forms of imperfect competition.

 

1. Monopolistic competition: The main features are

 

* Number of dealers is not large

* Different prices are charged by different producers for

their products   which   are really similar.

* Products are not homogeneous (different brands)

*  The demand curve is downward sloping curve.

* The product is responsive to changes in price.

Ex: Ice creams of different brands.

2. Oligopoly : Under oligopoly there are only a few sellers of a product. Every seller exercises an important influence on the price-output policies of his rivals. When a market is having more than two buyers of a product such a market is called as oligopsony market. Ex. Cheese
3. Monopoly : In this a single producer or seller controls the entire market.  There is no substitute for his product.  The producer controls the entire supply and he can fix the price. ex: Railways. When there is only one buyer of a product the market is termed as monopsony market.
4. Duopoly : Only two sellers exist in this market. Both the sellers may mutually agree to charge a common price which is usually higher than the common market price. If there are two buyers in the market such a market is called as duopsony market.

  Pure competition  is said to exist when there are large number of buyers and sellers dealing with homogeneous product.

5.   Significance of livestock/livestock products marketing

         The livestock products marketing serve different purposes. It acts as a stimulant to the livestock owners to boost the production.  Accessibility of marketing facilities to the livestock owners is vital for increasing production. It also helps in improving the availability of goods and services to the consumers located far away from the production point.

But for the modern marketing facilities, it would not have been possible to collect the raw materials from millions of small scale livestock owners scattered in the country, process and distribute them to the urban consumers.

6. Special problems in the marketing of livestock products

            In addition to the usual problems encountered in marketing of goods and services, livestock products marketing involves some special problems which are indicated below:

1. The livestock output is largely raw material which needs further processing. The process may be simple (eggs do not require processing) as in the case of sheep to mutton and complex as in converting milk- to – milk products like ice cream, cheese, milk powder etc. The raw material sold by the livestock owner soon loses its identity when it is converted into food.
2. Livestock products especially milk are both bulkier and more easily perishable than cereals. Hence transportation is difficult as it occupies more space and needs to reach the ultimate consumer fast.  The storage and transportation needs special facilities, e.g. refrigerated milk tankers, deep freezers, chilling centres, spray dryers, meat processing equipments, etc.

• Seasonal production: Much of the livestock production is highly seasonal. There are peak and lean seasons for milk availability though the demand for milk is almost uniform throughout the year. To process huge quantities of milk in the peak season, needs more storage and processing facilities. Whereas, in lean season these facilities lie either unutilized or underutilized.  This leads to increased costs in marketing of   livestock products.

1. The quantity as well as the quality of livestock products are influenced but not controlled by the producers. The quantity and quality depend upon a number of factors such as season, climate, breed, type of feeds, management practices adopted by the producers, etc.   Because of the variations in quantity and quality of livestock products, there is imbalance in supply and demand of the products, fluctuation in prices and difficulty in applying uniform standards of quality.
2. Livestock products such as milk come from very small dairy units and hence, pose special problems in procurement of small quantities of milk from scattered small producers.

 

1. The demand for livestock output is relatively inelastic and hence their prices rise steeply during lean production season (summer months for milk and milk products and winter months for chicken) and fall sharply in peak production season. Because of these fluctuations marketing of livestock output has to face the problem of price stability.

The main characteristics of livestock output which make the marketing more elaborate and complex is depicted in the paradigm.

 

 

Characteristics of Livestock Products

 

Production                                  Product                                     Consumption

Characteristics                           Characteristics                               Characteristics

 

 

1. Small scale      1. More bulky & less value 1. Continuous

 

2. Scattered      2. Perishable                                   2. Regular & Small

Quantity

 

3. Seasonal production. 3. Variation in quantity &              3. Inelastic demand

Quality

4. Elastic supply

 

7. functions OF Marketing

The important function of marketing is to move the desired kinds of farm products to consumers in the desired forms and conditions at lowest possible cost.  The three principal marketing functions are assembling, processing and dispersion.

1. Assembling (Procuring): Assembling includes collection and concentration of goods of the same type from various sources of supply at centrally located places.  It is necessary to meet the demand of consumers and to provide sufficient volume of business to retailers and wholesalers.  This is a very important function because most of the livestock owners in our country are small holders maintaining fewer animals and are spread through out the country.
2. Processing: Excepting milk and eggs, most of the livestock products are to be processed for final consumption.  In addition, products like milk are to be procured to meet the demand in future and maintain the quality of the product for a longer period.  The processing function hence involves a series of acts by which a product is converted into a more usable form.  g. Live animals to meat, live fish to canned fish, frozen foods, milk- to- milk powder and ghee etc.

• Dispersion (Distribution): It is the opposite of assembling.  It involves finding the location of potential buyers, quantity and products they prefer, and price they are ready to offer, in addition to selling of goods.

To carryout these functions of marketing, certain other functions called “secondary services” are to be performed.  These secondary services include (i) Grading  (ii) Packing  (iii) Transporting  (iv) Storing (v) Financing (vi) Assuming risk and (vii) Selling.

8.  Secondary services

The Secondary services assumed greater significance in view of the modernization of livestock industry, increased competition as well as demand for the livestock products and increased incomes.  As a sequel the competition is also increasing. These services are briefly described below

8.1 Standardization and grading:

Standardization means the determination of standards to be established for different commodities. Standardization includes the establishment of standards, sorting and grading of products to conform to these standards. Ex. Standardization of milk, grading of eggs, sorting and grading of wool.

Standards are established on the basis of certain characteristics such as weight, size, colour, appearance, texture, moisture content, taste, chemical content etc. These characteristics are referred to as grade standards.

Grading means the sorting of the unlike lots of the produce into different lots according to the quantity specifications laid down. It is a method of dividing the products into certain groups or lots in accordance with the pre determined standards. Grading follows standardization. For a number of agricultural commodities, grade standards have been fixed by the Agricultural Marketing Advisor, Government of India and it is compulsory to grade the produce according to these standard specifications.

Inspection and quality control:

         Inspection involves the testing of the graded goods to determine whether they conform to the prescribed standards. It is necessary to ensure quality control. The graded products, as per the standards fixed by the Agricultural Marketing Advisor, bear the label “AGMARK.” This label indicates the purity and quality of the product on the basis of standards laid down. Different colour labels are used to indicate the grade of the product.

Advantages of grading:

1. Grading enables livestock owners to get better price for their Produce

2. Grading facilitates marketing
3. Grading widens the market for the product as buying is possible without inspecting the product for quality. (Telephone, e mail )
4. Grading reduces the cost of marketing by minimizing the expenses on the physical inspection of the product
5. Grading makes it possible for the livestock owner to get various facilities such as finance on storage, place for storage, market information, pool the produce of different producers etc.
6. Grading helps consumers to get standard quality products at fair prices.
7. Grading contributes to market competition.

Standards for MILK  under Prevention and Food Adulteration (P.F.A) rules (All India )

Class	Designation	Fat %	SNF %
Standardised milk	Raw, Pasteurized, Boiled, Flavoured and Sterilized	4.5	8.5
Recombined milk	——     do ——–	3.0	8.5
Toned milk	———  do ——–	3.0	8.5
Double  toned milk	———   do ——–	1.5	9.0
Skim milk	———–  do ——–	Not more than 0.5	8.5

Grade standards for Chicken eggs

Sl.No.	Grade	Agmark label	Minimu Wt. (Ounce)	Other conditions
01	Special	White	2.00	1. Eggs should not have been preserved by any method   2. Eggs should be spot free and without blemishes   3.  Egg yolk should be central   4.  Egg should be solid   5.          Eggs should be transparent   6.          Air space size less than 3/8 “
02	A grade	Red	1.75
03.	B grade	Blue	1.50
04.	C grade	Yellow	1.25

 

8.2. Packing:  Wrapping and crating of goods before they are transported is called packing. Packaging is a part of packing which means placing the goods in small packages for sale to the ultimate consumers. Packaging is an important function in marketing of agricultural commodities.

Advantages of the packaging :

1. Protects the goods against breakage, spoilage, leakage or pilferage during product movement. Ex. Milk powder bags
2. Facilitates handling of the commodity during storage and transportation. Ex. Milk sachets, butter, cheese packets
3. Helps in quality identification, product differentiation, branding and advertisement of the product. Ex. Amul butter, Horlicks, Nescafe
4. Helps in reducing the marketing costs by reducing the handling and retailing costs.
5. Helps in checking adulteration
6. Ensures cleanliness of the product.
7. Packaging with labeling facilitates conveying of instruction to the consumers as to how to store, how to use and date of expiry etc.
8. Prolongs the storage quality/ life of the products.

Though packaging is advantageous especially in marketing livestock products which are highly perishable, it adds to the cost.

Characteristics of the packaging material: The packaging material

1. must have protective strength
2. attractive
3. consumer convenience
4. cheap
5. free from chemical reaction

Packaging material used in packing livestock products 

Sl.no	Materials	Product
1	Glass bottles	Liquid milk, flavoured milk, lassi, processed fish
2	Tin containers	Butter, milk powder, processed fish
3.	Polyethylene	Milk powder, milk
4.	Aluminium foils	Butter, Cheese, Cooked foods
5.	Poly laminate pouches (Tetrapak)	Sterilized milk

 

8.3.  Transportation: It is primarily concerned with making goods available at proper place and at appropriate time.  An efficient transport system enables the products to reach the markets far and wide and also without losing any precious time.  It plays an important role especially in transporting highly perishable commodities like milk, meat and fish.  With improvements in marketing, milk from Bangalore is being made available to the consumers in Calcutta through rail tankers.  Export of canned fish and beef provide another interesting example.

8.4. Storage:  Storage is another important function, which involves holding and preserving goods from the time they are produced until they are needed for consumption. It adds the time utility to products. The storage of livestock products is necessary for the following reasons:

1. The livestock products like milk are produced in plenty during winter and monsoon months compared to summer months. But the demand or consumption for milk is almost constant throughout the year.  This fact necessitates storing these perishable commodities in peak seasons to make them available in lean seasons.  Storage thus creates time utility.  Ex.. Converting of liquid milk into products and store them in cold storage and frozen foods.
2. Storage is necessary to protect the perishable products like milk, meat and fish from deterioration.
3. Some products like woolen garments have seasonal demand. Storage becomes necessary to cope with the demand.
4. Storage is necessary for products like milk and eggs till they are lifted from the production or collection point.
5. Storage helps in stabilization of prices by adjusting the demand and supply
6. Storage of some products like pork are necessary for improving the quality or for destroying the ova /cysts of the parasites.
7. Storage provides employment and income through price advantage. Commission agents purchase products at low prices and store them for sometime to release at high prices.

 

However, the storage of livestock products especially milk, meat and eggs are not devoid of risks. The important risks associated with storage of livestock products are quality deterioration, quantity loss and price risk. In addition Indians have preference for raw and fresh products rather that stored or packed products.

 

Most of the livestock products need storage. The products are usually stored in refrigerator chambers. In a cold storage the temperature maintained in the range of -1.1C to 10 C. Some products need to be frozen which requires freezers where the temperature is kept below -1.1 C

8.5.  Financing:  It involves the use of capital to meet the financial requirements of the agencies engaged in various marketing activities.  Capital remains blocked for the period of collection to final distribution to the consumers.  Hence, the finance function includes supply of credit and money needed to meet the cost of selling merchandise to the final consumer.

8.6.  Risk bearing function:  Acceptance of loss in the marketing of a product is considered as risk.  The risk can be physical (destruction of product by natural hazards) and market (due to changes in market prices).  Physical risk is very high with perishable products like, milk, meat, eggs, fish etc. However, physical risk can be minimised through insurance whereas, market risk can be reduced through accurate sales forecasting and market research, buying and selling on future markets.

 

8.7. Selling:  All marketing services revolve around selling of a product, which includes transfer of title and collecting or receiving of payment.  It also helps in identifying prospective consumers, stimulating demand and providing information and services to buyers.

 

Marketing margin: It is the difference between the amount consumers pay for the final product and the amount producer receive.  This margin between farm prices and retail prices reflect up on the cost of marketing.  In general the distribution costs of livestock products are very high and the livestock owners share in the consumer’s price is relatively small, compared to the middlemen in the market channel.

The distribution costs in livestock products are high because

1. Difficulty in procurement of products from a large number of scattered small producers
2. Greater transport costs for bulky and low priced products

iii.        Difficulties of grading due to wide variations in type and quality of livestock products.

1. Impossibility of maintaining regular production and supply
2. Greater need for storing and processing of livestock products to cope up with seasonality of production.
3. Perishable nature of livestock products, which necessitates special arrangements for transport and storage.

vii.       Difficulty in maintaining food standards.

 

9.  Defects in livestock product marketing

There are many defects in the marketing of livestock and livestock products.  Some of the important defects are presented below:

1. Forced sales: A large number of livestock owners are resource poor and they do not have the capacity to with hold the product for long time. Hence, they are forced to sell the produce almost immediately after its production even at lower prices.
2. Inadequate and expensive facilities of transport and communication: The infrastructure facilities for transport and communication are inadequate as well as costly. This poses serious problems for the procurement and transportation of livestock products especially during monsoon season where the condition of the roads is awfully bad in the rural areas.

• Inadequate storage facilities: In rural areas there are few facilities like refrigeration and cold stores to store the livestock products, which are highly perishable. Hence, the milk producers have to dispose of the milk almost immediately after it is drawn from the cows that too both in the morning and evening.

1. Un – organized market: The livestock as well as livestock products marketing is in the un-organized sector and is controlled by middlemen who more often than not exploit the producers and consumers. . Milk marketing to some extent (about 20 %) is organized due to cooperative network. Whereas in case of meat and wool, it is totally unorganized.
2. Absence of grading & standardization: Though, standards and grades are prescribed for some of the livestock products, the concerned departments are not enforcing the standards. Practically in livestock products marketing there are neither standards not grading, which is attributed to the fact that it is mostly in the unorganized sector.
3. Lack of marketing information: Marketing information helps both the producer as well as the consumer and unfortunately either party is unaware of the supplies and demand and prices of the livestock products. In the absence of market information the middlemen exploit both the producer as well as the consumer of livestock products.
4. AGRICULTURAL MARKETING

The Directorate of Marketing and Inspection (DMI) under the Ministry of Rural Areas and Employment, Department of Rural Development advises the Central and State Governments on agricultural marketing policies and programmes and implements various schemes in agricultural marketing. The DMI is operating with its Headquarters at Faridabad and Branch Head Office at Nagpur and five regional offices in addition to 57 sub offices and 22 laboratories spread all over the country.

The DMI is responsible for administering Agricultural Produce (Grading and Marketing) Act, 1937, which was later amended in 1986 to promote standardization and grading of agricultural and allied produce including livestock products. The grade standards are popularly known as “ AGMARK “ standards.

A number of important livestock products like deshi ghee, creamery butter, fat spread etc are being graded according to Agmark grade standards for domestic marketing. Obtaining quality certification is voluntary in respect of domestic marketing except fat spread, for which quality certification is compulsory.

DMI is one of the designated agencies for pre- shipment inspection of agricultural products, which is to be exported. It is implementing the Meat Food Products Order, 1973, which was notified under Essential Commodities Act, 1955, which was later amended in 1994. The main objective is to enforce hygienic and sanitary standards and to exercise strict quality control over the production of meat food products.

MARKET INFORMATION

Market information is a communication or reception of knowledge pertaining to the facts, estimates, opinions and all other information, which affect the marketing of goods and services.

Importance: Market information serves the following purposes:

1. For the producers in taking appropriate decisions regarding when and where to sell the produce and to whom to sell and where to buy and when to buy the required inputs.
2. For the middlemen to plan the purchase, storage and sale of goods based on the information which helps them to know the pulse of the market ( active or sluggish) temperature of the market ( prices rising or falling) market pressure ( supply  adequate, scarce or abundant )
3. For the general economy to regulate the prices of the commodities.
4. For the Government to make policy decisions in the regulation of markets, buffer stocking, import and export of commodities.

Types of Market information:

There are two types of market information: i) Market intelligence and ii) Market news.

Market intelligence: The market intelligence includes information pertains to the past i.e. prices and market arrivals of the commodities in the past. Hence, it is historical in nature. Analysis of the past prices and supply help in taking decisions for the future.

Market news: It refers to current information about the prices, arrivals and changes in the market conditions. It helps the livestock owners to take decisions about when and where to sell their produce. Market news quickly becomes obsolete and requires frequent up dating.

Criteria for good market information:

1. Comprehensive: Market information must cover all the agricultural commodities including livestock products and their varieties in different geographical regions. It also must cover prices, production, supply movements, stock and demand conditions.
2. Accuracy: The information must be accurate and to collect accurate information is a tedious process.
3. Relevance: The data collected must be processed and disseminated keeping in view the interests of the users. The data must be useful to the concerned people.
4. Trustworthiness: The agency, which collects data from various sources, must create faith and trustworthiness among the users.
5. Timeliness: Market information must be made available in time to enable the users to take appropriate decisions. Late dissemination of information does not serve any purpose. To see that information reaches the users in time, efforts should be made to collect, process and disseminate it as speedily as possible.The Directorate of Economics and Statistics in India collects data on various agricultural commodities covering a large number of markets and publishes it in various reports.

 

Linking Farmers with Markets

The Government has been working continuously and has taken several concrete steps to link the farmers with the markets with the aim to help the farmers in trading of their foodgrain. Agricultural marketing is a state subject and wholesale agricultural marketing is undertaken by the network of 6946 regulated wholesale markets, set up under the provision of respective State Agricultural Produce Market Committee (APMC) Act. 

In order to provide better marketing facilities to the farmers, the Government has released a new model “The Agricultural Produce and Livestock Marketing (Promotion & Facilitation) Act, 2017” in April 2017 for its adoption by States/Union Territories (UTs). The provisions therein provide for alternative marketing channels other than APMCs to farmers in marketing their produce at competitive & remunerative prices.

In order to optimise the use of scarce resources and mitigate the uncertainty in price and marketing, the Government has formulated and released a progressive and facilitative Model Act “The —-State/ UT Agricultural Produce & Livestock Contract Farming and Services (Promotion & Facilitation) Act, 2018” in May, 2018 for its adoption by the states/Union Territories (UTs). The aforesaid Model Contract Farming Act covers the entire value and supply chain from pre-production to post harvest marketing including services contract for the agricultural produce and livestock.

The Government has implemented National Agriculture Market (e-NAM) scheme an online virtual trading platform to provide farmers with opportunity for transparent price discovery for remunerative prices for their produce through competitive online bidding system. So far, 585 wholesale regulated markets of 16 States and 02 UTs have been integrated with e-NAM platform.

The Government is implementing Market Research and Information Network (MRIN) Scheme covering 3356 wholesale mandies across the country linked to Agmarknet portal, wherein Agricultural Produce Market Committees (APMCs) markets are reporting data on mandi arrivals and prices of their traded agricultural commodities on daily basis. The farmers have free access to the Agmarknet portal for getting market price information easily.

In order to ensure remunerative prices to farmers for their produce, the Government of India has launched an umbrella scheme ‘Pradhan Mantri Annadata Aay SanraksHan Abhiyan’ (PM-AASHA). Under PM-AASHA, the Department of Agriculture, Cooperation and Farmers Welfare (DAC&FW), Ministry of Agriculture & Farmers Welfare, Government of India, implements the Price Support Scheme (PSS) for procurement of pulses, oilseeds and copra. For oilseeds, DAC&FW also implements the Price Deficiency Payment Scheme (PDPS) and Private Procurement Stockist Scheme (PPSS). 

The Government is also providing marketing facilities to famers under the schemes of Paramparagat Krishi Vikas Yojana (PKVY) and Mission Organic Value Chain Development for North Eastern Region (MOVCDNER).

Price discovery and price risk management are the major objectives of futures markets. Futures contracts of various durations and on multiple commodities are available for trading on these markets/ exchanges. Futures are standardized, exchange traded contracts for buying/selling a standardized quantity of a particular commodity at a pre-decided price on a future date.

Farmers and growers can benefit through the price signals emanating from futures markets even if they may not directly participate in the futures market. A farmer can determine the kind of crop which he would prefer to sow and plan his cultivation in advance, by taking advantage of the advance information of the future price trends of alternate crops, and probable supply and demand of various commodities in future. Farmers can also simultaneously enter into the futures contract of the planted crop at the prevailing futures price thereby locking-in the price at which they can sell the underlying commodity at a specific point of time in future. In a futures contract, the farmer can deliver the crop directly on the exchange platform, subject to payment of market levies charged by the respective States.

As per the Fifteenth Report on “The Forward Contracts (Regulation) Amendment Bill, 2010” of the Parliamentary Standing Committee on Food, Consumer Affairs and Public Distribution, futures markets also lead to reduction in the amplitude of seasonal price variations and help the farmer realize somewhat better price at the time of harvest or to postpone the sale of his produce, in part or in full, thereby moderating market arrivals as well as the ability of the trader to monopolise price setting.

 

MARKETING OF LIVESTOCK PRODUCTS