AGRI INPUT MARKETING – Things I Can Never Learn In Class

Every Monday morning we rush to attend a class with a sleepy head called Agri Input Marketing. Having religiously attended all classes (except the day she showed the movie and remembered me with a remark stating “the youth today is not motivated”), I though I should share a few things that I learned about Agri Input Marketing which off course I did not learn in class (also I did not learn a lot IN class either). With my previous blogs we have started viewing the rural market and we have understood that the rural population is diversified. Let’s take up a particular district to understand how marketing goes on in rural pockets. The area we would we concentrating is Lower Himachal (Una, Mandi, Kangra, Hamirpur etc).

We all know that the government provides various subsidies for agricultural produce. And seeds are also subsidized products. Anyone would like to buy for cheap. Can you imagine what role the government can play in making a product subsidized and making it available for consumption? Let’s look at seeds in particular. To understand how the government reaches the rural corners, we need to understand the government model for distribution and control.

Every District has a District Development Administrator (DDA) / District Agriculture Officer (DAO). Every district comprises of approximately five Block Offices. Now every Block office has a Subject Matter Specialists (SMS), an Agriculture Development Officer (ADO) and some Agriculture Extension Officer (AEO). Each AEO is assigned a circle to work in (i.e. a designated area). The AEO collects the demand of his circle and reports to the ADO. The ADO confirms the same from every AEO and sends the final report to the SMS. The SMS forwards the demand to the DDA. Every block office is in charge of at least 50 panchayats and every panchayat has 5 villages. So this is how the government reaches the rural population.

Now, which is the most important Agricultural input? Seeds off course... And we know that in India, seeds are subsidised. So the sale price of a seed might be say Rs. 100 per kg. Hence subsidised seeds purchased from block offices will come down to approximately Rs. 80 – 90 per kg. This margin is huge for rural population as on an average minimum 10 kg (in case of corn) is required for 1 acre of land. Now if a seed company has to tab the rural farmers to use its product, they have to make sure that their product is available at block offices at the right time. However just pushing the seeds through the government is not enough. Research says that 44% of farmers make their purchase from co operative societies (e.g. IFFCO) and distributors where as a major chunk of 56% of the farmers make their purchase through government stores/block offices. Not only that, when asked to the farmers why they choose to buy products from the above source, 41% favoured for fair price, 24% for close proximity, 14% for availability and 21% for other factors like personal relations. Let’s see now what are the other various channels that are used by companies to market their products but along we that we also need to understand the consumer behaviour of the farmers. Farmers either possess no knowledge, or they are extremely well informed. It has been found that most of the farmers were educated, at least till primary level. The well informed farmers are mostly the zamindars or ‘progressive farmers’. Progressive farmers are large land owners. These are looked upon by the smaller farmers who simple follow what these progressive farmers practice. The well informed farmers are aware about every nitty gritty detail of the farms like the technological advancements, the varieties available, the fertilizers to be used, the pros and cons of using hybrid, the PH level of soil etc. These farmers are the ones who are often willing to adapt to new technology. In rural India the most effective way to market a product is through word of mouth. Hence if a progressive farmer recommends a particular brand, immediately the word spreads like wild fire. Also what works is WYSIWYG (What You See Is What You Get). One cannot go on advertising about the benefits of using ones product unless one can prove the same. The rural population does not believe in experimenting as it might lead them to incur huge loss. Hence if you need to market your product and its benefits, show them so. Also the results must be visible quickly at a short period of time. To prove that, seed companies actually own farms or adopt farms to show the yield as promised. If by any chance the crop fails, it’s the end of story then and there. Word of mouth is the most reliable source of information available to the farmers. It’s wrong to say that only progressive farmers are well informed. Even small land owners are packed with knowledge. They never fail to miss an agricultural fair, a product launch campaign or agricultural meets. The farmers are inquisitive and are sensitive to both price and quality of the products.

The second most important distribution channel is the distributor. In order to succeed, the distributor must be a local as a mutual trust is established between the distributor and the consumer. A snowball effect is developed in rural areas. The distributor mostly draws customers on basis of his personal contacts. Once a good relation is established between the distributor and the customer (i.e. based on good results from the products), the customer further recommends the product to other farmers who again recommend the same when desired results are achieved. Hence a hub and spoke model is developed which deepens with every contact. Hence it is very crucial for a company to choose the right distributor for itself. Personal contact is the key to tab the rural market.

Some other interesting facts found out were that agriculture is no more the primary occupation of the rural population. Most have shifted to join the armed forces or are entrepreneurs (e.g. shop owners). Women infact are the ones tending the farms. As a result of which various Farmer Women Groups (FWG) are flourishing in these rural areas. These groups are similar to Self Help Groups (SHG) in functionality. Input companies can also see an opportunity to market its products through these FWG’s.

The present agriculture input marketing environment has thrust input companies into intense battles . This has necessitated the need for adoption of efficient marketing strategies to market new products, ideas and services to farm customers.

This Blog would not have shaped the way it has without the valuable inputs from Ms. Rishika Mittal, Summer Internee at Monsanto India Ltd, 2010.