Development of Agribusiness Enterprises - Asian Productivity ...

usually bulky and perishable, with wide quality differences, output variations, geographic
differences or specialized requirements.
The current trend is for more and more farming activities to use, and be dependent on,
inputs. Hence, the input market is becoming more and more important. Due to its nature,
farmers are usually price-takers while those of the marketing firms are oligopolistic and some
even have a monopoly. The prices of farm products have been improving very slowly while
changes in input prices are being translated or transferred immediately to the farm, which is
causing a cost-squeeze problem. Consequently, there is relatively sluggish growth in the
profit margin in the farming business.
Some areas need to be considered in efforts to improve agribusiness marketing
efficiency and promotion, such as markets and marketing institutions, prices and marketing
costs, functional and organizational issues, and the government role in promoting
agribusiness marketing. These areas are discussed below.
MARKET PROMOTION
Markets and Institutions
Markets and consumers are the ultimate targets of any business. However, the old
philosophy of just selling what you produce is no longer relevant in today’s marketing.
Consumers become the central focus of any business. Production is aimed at delivering
products that satisfy consumers. The saying that “the consumer is king” is true. In fact, in
some places it is said that “consumers are gods”. This concept is also true for agricultural
products. Some Asian countries, for example, frequently experience rejection or automatic
impoundment of their products by importing countries. If they really want to penetrate the
export market, they need to comply with the requirements of the importing countries. They,
the buyers, should be the focus, with the objective to fulfil their needs.
Demographic trends in any country affect agricultural products. Certain groups within
a population have different food demand patterns compared to other groups. The young
generation, for example, tends towards more international tastes. A particular culture might
have a particularly demand for a product. Population growth certainly increases demand for
food.
Rising consumer income affects the pattern of food demand by creating a trend towards
the purchase of processed products. Recently, we have witnessed a broadening range of
products that are consumed by the population, partly because of rising income. As many
families now have two sources of income, i.e., both husband and wife working, the demand
for convenience foods is increasing. In addition, more people are eating out, a habit that also
affects food demand. In big cities, for example, people stay at the office late in order to avoid
traffic and thus eat outside their homes much more frequently. Consequently, consumers are
becoming more concerned about quality.
These are some of the changes in consumer behavior and demography. Failure by
agribusiness players to observe and respond to such changes will lead to market inefficiency.
Price inefficiency might also occur due to inefficient resource allocation. Therefore, in
promoting agribusinesses, the issues mentioned above should be taken into consideration.
Efficiency in the processing and manufacturing stages of agribusiness can also be
improved. Processing and manufacturing add form utility to farm products through
processing, new product development, product improvement, packaging, labeling, branding,
etc. In addition, the continuity and quality of raw material supplies could become a source
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