Small scale production

Scattered and specialized production

Seasonal production


Variations in quality and quantity


Perish ability

Inelasticity in demand


Small Scale Production: Production of agricultural goods is mostly carried on a small scale. More than 75% of the product that come to the market are produced on a small scale. Most of the farmers are quite ignorant about the modern methods of cultivation and marketing.(except few countries in Europe, Asia and US.) Goods have to be produced on a large scale if marketing like storing, grading, and selling etc. are to be conduct efficiently and economically. An individual farmer is very weak in marketing his products efficiently and therefore unable to get better price for his products. This is because, (1) his output is too small; (2) his resources are limited so that he cannot arrange for storing and grading of his goods, (3) he may be ignorant about the market conditions: (4) the branding is not possible in case of agricultural goods and (5) his lack of technical knowledge in managing the goods. Therefore he has to depend upon either middleman or co-operative marketing society. (Cooperatives)


Cultivation depends upon the suitability of soil and climate. Moreover, cultivation or production of agricultural goods is scattered over wide areas which are situated far away from the consumers. (In most of the countries) Further, all lands are not suitable for cultivating all type of agricultural goods. Different plots of lands are suitable for production of different kinds of agricultural goods depending upon the nature of land, its fertility, climatic conditions, amount of rainfall, irrigational facilities, use of fertilizers etc. Thus different regions are best suited for different crops. Further, not only regions differ but even in the same region different holdings specialize in the production of different products depending upon the fertility of the soil. Thus, production of agricultural goods is scattered and specialized.

Due to the small scale, scattered and specialized production of agricultural goods, it becomes necessary to concentrate the small quantities produced at various places. Once they are gathered at central places, they can be transported in large quantities to big cities and towns where they are badly needed for consumption. Industrial raw materials like cotton, jute, oil seeds etc., are also collected from various small producers at the local markets and then they are transported to the central or terminal markets where they are sold to the factories.


Most of the agricultural goods like cotton, groundnuts, wheat, paddy, oats etc, are grown seasonally whereas they are required for consumption throughout the year. This character of seasonal production gives rise to the problems of storage and warehousing, transportations from the store houses to the consumption centers regularly and in adequate quantities, and also the problem of adequate finance required for financing these activities. Therefore, adequate storage facilities, adequate and quick transportation facilities, and adequate finance must be provided for the marketing of agricultural products.


The quality and quantity of agricultural production vary greatly from season to season and from place to place. Man has no control over the quality or quantity of these commodities. The quantity produced depends upon natural factors though some extent human effort influences the production. For example, floods, draughts, frost, animal and plant diseases, pests and insects, earth-quakes, volcanoes etc, destroy the crops and therefore the production of agricultural goods is affected. There is certainty of getting an estimated quantity of produce from the holdings. Farmer may try to increase the production of agricultural goods by using scientific fertilizers, irrigational facilities, and adopting modern method cultivation. But still he has no control over the production which is subject to natural factors.

Similarly, the quality of the agricultural goods/products cannot be assured. It varies from season to season and from place to place. The quality depends upon the nature of the soil or fertility, climatic conditions, irrigational facilities, use of fertilizers, quality of seeds used for cultivation etc. But consumers of agricultural goods always prefer to consume goods of standard quality. Therefore variations in quality and quantity of agricultural goods have given rise to certain marketing problems like:

Supply of agricultural goods cannot be adjusted with the demand for them as it can be done in the case of manufactured goods and therefore, their prices fluctuate widely.

During good season there is too much strain on the transport, storage and finance while during bad season, they will become uneconomic.

Grading and standardization assume greater importance in agricultural goods since the consumers whether they are the final consumers or the manufactures using raw materials always prefer to use standard goods.

Direct sale by the farmers to the manufacturers is not possible and therefore a large number of middlemen are required to collect the goods from a large number of scattered agriculturists and sort them out in to different grades according to certain pre-determined standards and then make them available to the consumers and manufacturers a and when they requires in as much quantities as they require.


Most of the agricultural goods are bulky relative to their value. Therefore, their storage and transportation becomes costly. Therefore, the extent of the market for such bulky and weighty goods, limits by these factors.


Most of the agricultural goods are perishable. Some are highly perishable and others are less perishable. Some goods like, vegetables, fruits, milk, meat etc., which are highly perishable requires improved transportations and storage facilities such as cold storage, and refrigerated cars. Other goods like, wheat, cotton, jute, tobaccos etc., which do not perish quickly, are required to be stored properly and carefully.


The demand for agricultural goods is inelastic. The demand for them does not increase or decrease with a fall or rise in their prices. Even though their prices rise due to shortage in their supply, demand remains more or less the same. Again even though prices fall too much because of huge supply, the demand cannot increase largely. Therefore, the marketing of agricultural goods has to face the problem of price stabilization.


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