Marketing Losses and Their Impact on Marketing Margins

8/9/2019 Marketing Losses and Their Impact on Marketing Margins

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Marketing Losses and Their Impact

on Marketing Margins: A Case Study

of Banana in Karnataka


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Introduction

` Post harvest losses due to Handling, Transport, Storage and

distribution in F&V.

` Decrease in per capita availability, money loss, increase in

transport and marketing cost.` These losses are generally included in marketing margins of

intermediaries and retailers or in farmers net price.

` Thus this study is important to find the impact of these

losses on marketing margins and marketing efficiency.


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Objective of Study

` To develop & validate the Methodology to measure losses

at different stages of marketing.

` To examine the impact of such estimation procedure on

farmers net price, marketing costs, margins and efficiency


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Estimation Procedure

` Farmers Net Price/ margin

NPf= Gross Price (farmer)- [Marketing cost farmer+(wastage x gross price)]

` Marketing Intermediaries Margin

MMw = Gross Price wholesaler(Sales price) Gross pricefarmerMarketing Costwholesaler [Wastage x Gross priceWholesaler]

MMR = Gross PriceRetailer Gross priceWholesaler MarketingCostRetailer[Wastage x Gross priceRetailer]

MM = MMw + MMR

` Marketing CostMC= MCfarmer + MCwholesaler + MCRetailer

` Marketing Losses

ML = MLfarmer + ML Wholesaler + ML Retailer


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` Marketing EfficiencyUsual methods were:

Output /Input Method

Shepherds Ratio-Value of marketed goods/ Cost of

marketing

Acharyas modified marketing method

To estimate efficiency by calculating loss as separate

component

ME= NPf/ [MM + MC + ML]


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Data collection` Product Name Banana, var.Ney Poovan

` Sampling Technique Multi stage Random Sampling

Stages of Selection of sample

Karnataka

Bangalore

RamanagaramChannapatna Kanakapura

32 Farmers

3 bunches from

each field

Stage I

State Level

Stage II

District level

Stage III

Taluka Level


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` For wholesale Level Losses estimation

15 Commission agents

5 main HOPCOMS

`

For Retail level Losses estimation 15 retail outlets

HOPCOMS also act as outlet


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Marketing Channels

` Wholesale Channel

60-70% Banana marketed through this channel

` Co-operative Channels

` Pre Harvest Contractor Channel

Farmer Wholesaler Retailer Consumer

Farmer Farmers Co-operative Society Consumer

Farmer Wholesaler Retailer ConsumerPre- Harvest

Contractors


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Post Harvest Losses at Different Stages of

Marketing of Banana

SL

.N

o

Stages of

Marketing

Wholesale Channel Co-operative Channel

Post

Harvest

Losses (%)

% of total

losses

Post

Harvest

Losses (%)

% of total

losses

1 Field and Assembly

level

5.53 19.17 7.82 42.71

2 Wholesale Level 6.65 23.06 1.77 9.67

3 Retail Level 16.66 57.77 8.72 47.62

4 Total 28.84 100 18.31 100


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Marketing Cost

SL.N

oParticulars Wholesale

Channel (Rs/Kg)

Co-operative

Channel (Rs/Kg)

1 Farmers 3.64 0.57

2 Wholesalers 0.21 0.73

3 Retailers 0.51 0

4 Sub-total 4.36 1.30

5 Share in consumers price (%) 27.53 10.0


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Marketing Losses

SL.N

oParticulars Wholesale

Channel (Rs/Kg)

Co-operative

Channel (Rs/Kg)

1 Farmers 0.66 0.72

2 Wholesalers 0.93 1.30

3 Retailers 2.64 0

4 Sub-total 4.23 2.02

5 Share in consumers price (%) 26.70 15.54


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Impact of Marketing Losses on Farmers net Price,

Margin, Efficiency Index and price- spread

SL

.N

o

Stages of

Marketing

Before Separating

Losses

After Separating Losses

Wholesale

Channel

Co-operative

Channel

Wholesale

Channel

Co-operative

Channel

1 Farmers net price 8.36 8.68 7.70 7.96

2 Wholesalers margin 1.79 3.22 0.86 1.92

3 Retailers margin 1.33 - -1.31 -

4 Marketing efficiency 1.12 2.01 0.95 1.58

5 Price spread (Rs/kg) 7.48 4.32 8.14 5.04

6 Consumers price (Rs/

kg)

15.84 13 15.84 13


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` Farmers net price Farmers net price reduced by 8.75% (61.23 %) in

wholesale and 9.05% (48.61%) in Co-operative channels.

Losses were Rs 0.66/ Kg and 0.72/ kg respectively.

Value of rejects were not accounted.

` Wholesalers and Retailers margin

Wholesalers Margins of both wholesaler channel and co-

operative channel decreased.

Retailers margin become ve (Loss) due to heavy loss

(16.67%)

Highly perishable product variety.


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` Price- Spread Increase in price spread due to

I. Decrease in producers share and margins of intermediaries

II. Inclusion of marketing loss as component of cost

Wholesale channel-53% P.H. loss in price spread and Co-operative- 40% P.H. loss component in its Price spread.

` Efficiency Index

Co-operative channel-higher price realization, Operationalefficiency due to low marketing cost and less post harvest

losses Co-operative channel was found most efficient with lowest

consumer price of Rs 13 compared to Rs 15.84 /kg inwholesale channel


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Conclusion

` Co-operative Channel is more efficient

Low Post Harvest loss- 18%

High pricing efficiency-low price spread

Increased producer share and low consumer price` Limited procurement and second grade material marketing

should also be considered as area of improvement.

` After removing losses Producers and wholesalers margin

reduced substantially.` Retailers margin was found in loss.

` Marketing efficiency 1/ Post Harvest Losses

Documents

Marketing Losses and Their Impact on Marketing Margins