MANAGEMENT OF DISTRIBUTION CHANNELS FOR AGRICULTURAL INPUT MARKETING

FOLLOWING CHART ILLUSTRATES SOME AGRI INPUT

Input classification:-Agro inputs can be classified into two categories: consumable inputs
and durable inputs. Consumable inputs include fertilisers, seeds generation, veterinary medicines, packing materials, which are required by farmers season after season. Durable inputs include tractors, motors, pump equipments, transportation equipments/systems, farm once sometimes for life. , feeds, consumable for power agro chemicals & pesticides etc. sets, farm machinery, irrigation animals etc. which are purchased

Conventional methods of Fertiliser extension

1. Direct Communication with the farmer by way of: Crop Demonstrations ( method and result) farmers training programmes (Crop seminars) Field days Farmers conducted tour Farm Advisory services Exhibitions etc 2. Indirect Communication: Through press radio television, slides, films , literature, posters ,charts, ready reckoners , balloon hoisting, dealers training ,product display and other displays at Dealers premises, drama and one act plays , puppet magic shows, folklore and music , Audio- visual- vans

MANAGEMENT OF DISTRIBUTION CHANNELS FOR AGRICULTURAL INPUT MARKETING

Extension tools that help effectively educate farmer

Advisory services to Farmers

Service cum multi- input centers to farmers Single window approach- All facilities under one roof: Knowledge Inputs Services Equipments Implements etc Objectives of Fertiliser Extension Services Increase Fertiliser consumption in traditional and non-traditional areas Promote balanced and efficient Fertiliser use- Maintain Soil health Promote use of latest Package of Practices Basic component of a Promotional Programme

Objectives of Fertiliser Extension Services

In case of Fertilisers ,comm.. Is by the following agencies Central Government State Government Fertiliser industry University Extension Services Voluntary Organisations ICAR Research Institutes Message Design takes into account

MANAGEMENT OF DISTRIBUTION CHANNELS FOR AGRICULTURAL INPUT MARKETING

Sample Distribution Demonstrations/ Field Days Rural Seminars Conferences Visit to Production units/ research institutes Crop competition Farmer quiz Farmer/ Dealer training / conference Display of Product at Sale Point Minikit distribution Cocessional Sales on Special occasion Service oriented Programmes also need Establishment of Kisan Sewa Kendras Distribution of mini kits Seed Multiplication Programmes Establishment of Soil Testing Laboratories Special Project- image building Adoption of village ( Clusters) Soil Testing Soil Forestry Reclamation of Alkaline Soils Programmes in rain-fed farming Development of infrastructure Health care Family welfare

Media in sales Promotion for Fertilisers is made up of:

Advertising in Fertilisers- The learning Hierarchy Model

Aim of Advertising in Fertilisers Increase Brand Awareness Highlight usage conditions of Product Advertising through Newspapers :- Advertisements through Newspapers show- Photographs of healthy seedlings and crops in some Cracked and Saline Soil. In advertising emphasis is on:

MANAGEMENT OF DISTRIBUTION CHANNELS FOR AGRICULTURAL INPUT MARKETING Purity of the Product Ease of Availability Increase in yield Better Absorption Copies of Ads give: Usage of Fertiliser Benefits accrued from usage Optimum mix used Soil testing in labs Differentiation Eg: Double Power Packing Advertising through Journals Mostly for corporate image building Eg: Nourishing the Roots of the Nation

Pesticides
Sales Promotion efforts undertaken by offering better terms to the Dealers Sales Promotions through the Sales Force Other media used include: Newspapers Advertisemnents Radio Pamphlets Audio cassettes Cinema slides Wall paintings Market Development and Promotion Activities Field Demonstrations Exposure Trips Meetings Training Camps Agriculture fairs ( Kisan Melas) TV and Radio Programmes Video Shows Leaflets and Pamphlets Wall Paintings and Hoardings Local Media

Distribution
Marketing Channel for Fertiliser
Every manufacturer need a link with the customers to sell his products.The set of intermediates forming this important link is called the marketing/distribution channel.Selecting the right channel is the most important, complex and challenging task for every business organisation.

MANAGEMENT OF DISTRIBUTION CHANNELS FOR AGRICULTURAL INPUT MARKETING

Marketing Channel for Pesticides Pesticides :- Supply and Demand

1.Supply side: It is characterised by Technical Grade Manufacturers And Formulators. A TGM supplies at least 50% of its produce to non-associated Formulators This makes a single technical grade available under different Brand names 2. Demand side: A single pest could be treated with by several technical compounds and therefore options available to the buyer may be quite large Small scale sector is only engaged in making Formulations Large scale sector produces both technical grade material and Formulations A Formulator is generally in the me-too category , an entrepreneur , has low technology of mixing ingredients is small scale,with low financial resources , sells in limited area of a state ,

MANAGEMENT OF DISTRIBUTION CHANNELS FOR AGRICULTURAL INPUT MARKETING has wide range of Product linkages , has tremendous production flexibility and does not get affected seriously by discontinuation of products Pesticides Pricing Companies follow different pricing strategies for different products: At different stages of their growth and evolution Sometimes there is same price of the product in all markets In some cases there could be regional variations Depending on the paying capacity of the market , local taxes and duties Distribution System of Pesticides

There no fixed pattern nor any fixed terms , regarding distribution of pesticides The same company seems to have different policies with regard to the same product in different markets Nearly 80% business is conducted against unsecured credit , the period of which varies between 30-120 days Dealers extend credit to farmers , but very rarely they invest their own money in their business By and large , these operations are financed by manufacturers , who depending upon popularity of product may extend credit upto 25% Dealers ideally keep a margin of 5-10%. In some markets upto 1-2% In such areas focus is on turnover of money Like other input dealers, the pesticide dealers also do not represent any one company and sell all those products which have high demand and high returns In these markets , dealer push can be carried out only with those customers who depend on credit from dealers Problems in Distribution of Pesticides Spurious products Lack of Long term credit High liability of non-sold stock Higher cost of small packs

MANAGEMENT OF DISTRIBUTION CHANNELS FOR AGRICULTURAL INPUT MARKETING Lack of extension service

Seeds
Seed Distribution And Marketing The availability of high quality seeds to farmers through an improved distribution system and efficient marketing set-up will be ensured to facilitate greater security of seed supply. For promoting efficient and timely distribution and marketing of seed throughout the country, a supportive environment will be provided to encourage expansion of the role of the private seed sector. Efforts will be made to achieve better coordination between State Governments to facilitate free Inter-State movement of seed and planting material through exemption of duties and taxes. Private Seed Sector will be encouraged and motivated to restructure and reorient their activities to cater to non-traditional areas. A mechanism will be established for collection and dissemination of market intelligence regarding preference of consumers and farmers. A National Seed Grid will be established as a data-base for monitoring of information on requirement of seed, its production, distribution and preference of farmers on a district-wise basis. Access to term finance from Commercial Banks will be facilitated for developing efficient seed distribution and marketing facilities for growth of the seed sector. Distribution and marketing of seed of any variety, for the purpose of sowing and planting will be allowed only if the said variety has been registered by the National Seeds Board. National Seeds Board can direct a dealer to sell or distribute seeds in a specified manner in a specified area if it is considered necessary to the public interest Distribution

MANAGEMENT OF DISTRIBUTION CHANNELS FOR AGRICULTURAL INPUT MARKETING

Ideally Distributors are appointed at district level ,which in turn appoint dealers within the district These distributors and Dealers handle other agricultural inputs like : Fertilisers, Pesticides ,and Agricultural machinery A Distributor / Stockist may be appointed for a region which may be one or more states Depending upon market potential the number of distributors in the region is decided Distributors, Dealers and Retailers are paid commission on sale Normally 15 to 25 % Commission is given to distributors who pass 12-22% to Dealers While retailers get 9-19% discount on sales In some cases , the company directly deal with Dealers who are paid at par with the Distributors Distributor/ Dealer has to place the order well in advance The company insists on advance payment at the time of placing the order Or full payment on Delivery of Stocks However depending upon the track record of Dealers ,credit is allowed for a maximum of 30 days

Marketing of Farm Machinery

The socialist oriented five year plans of the 1950s and 60s aggressively promoted rural mechanization via joint ventures and tie-ups between local industrialists and international tractor manufacturers By the late 1980s, tractor production was nearly 140,000 units per year and by the late 2000s ,with production approaching 270,000 per year, India over-took the United States as the world's largest producer of four-wheel tractors with over 16 national and 4 multi-national corporations producing tractors today. The next slide shows some of the known makers of tractor and their range The choice of appropriate HP of tractor will depend upon type of soil, purpose for which the tractor will be used and the load it is expected to carry after harvest. The marketing person should be able to advice the farmer on these points The implements commonly used are disc harrows, seed cum fertilizer drills, spray pumps, threshers, combines, potato planters, cane crushers, sugarcane cutter-cum-planters, bed planters trailers, balers etc. Several government initiatives to promote use of farm machinery include: demonstrations, financial assistance, institutional credit, reduction/exemption in excise duties

Tractor marketing

MANAGEMENT OF DISTRIBUTION CHANNELS FOR AGRICULTURAL INPUT MARKETING The farmer, in addition to investing in tractor, will have to procure implements Marketing of tractor will depend upon: Loan availability Personal selling Trouble free service Easy spares and service facilities Resale value of tractors Training on usage Fuel efficiency Implement attachment facilities 1. Balwan Tractors, Force Motors Ltd 10 - 50 HP 2. Eicher ( now an unit of TAFE) 25 HP to 75 HP 3. Escorts (Escort, Powertrac and Farmtrac) 27-75 HP 4. HMT Tractors 25 HP to 75 HP 5. Indo Farm 30-50hp 6. John Deere 35, 40, 42, 47, 50, 55 and 70 & 75HP 7. Mahindra Gujarat Tractor Limited 30-45hp 8. Mahindra & Mahindra 25 HP to 75 HP 9. New Holland 35 - 75 hp 10. Preet Tractors 35-70hp 11. Punjab Tractors Ltd (now owned by M&M) 35 - 75 hp 12. Sonalika (International Tractors Ltd.) 30 HP to 90 HP 13. TAFE 25 HP to 72 HP

Prominent Indian Manufacturers

Agricultural Credits
Agricultural credit or financial needs is one of the most important inputs to determine the usage of all other inputs Credits as per borrower needs are classified into three categories time, purpose and activity. The details are shown in next slide Institutional needs ie by the lendor is classified into : approach( individual or group), nature( direct / indirect) and security( secured / unsecured). Common approach is hypothecation which is a charge preferred on movable property like tractor etc. so that the lending institution may take possession of and sell the property in case of default by the borrower.

MANAGEMENT OF DISTRIBUTION CHANNELS FOR AGRICULTURAL INPUT MARKETING

Credit Classification:Credit as per Needs of Borrowers

Time

Purpose

Activity

Short term

Consumption

Sericulture

Medium term

Production

Tractor

Long term

Investment

Marketing

Credit disbursement: Agri credit is disbursed through a multi agency network consisting of cooperatives, commercial banks and RRBs. RRBs provide credit and adopt region specific strategies Flow of agriculture credit in 2006-07 was Rs.16, 0352 billions The average share of credit disbursements is 22% by cooperative banks, 10% by RRBs and 68% by the commercial banks Kissan Credit Card Scheme was introduced in 1998 to provide timely support from the banking system to the farmers for their cultivation needs including their need for purchase of all inputs in a flexible manner