Exercise No. 2 Extra Notes

Ex. No. 2                                Marketing of Agricultural Inputs: Seeds - Conceptual Clarity

Date: 14/09/2015

Conceptual Clarity

Agronomic Potential	Agro-economic Potential
It is the capacity of inputs to lead to input-specific desired results.	It is the income generating capacity of all the inputs used up.
The inputs have to be judiciously used for their desired results to be obtained.	The price or value from the output or yield realized should always be greater than the price of all the inputs used up to obtain the desired output.
It includes the individual potential of both the yield enhancing (e.g. seed, fertilizer) as well as the crop protecting inputs (e.g. insecticide).	As it considers only the yield component, it refers the overall impact of all the inputs used up in a cropping cycle.
For e.g. The agronomic potential of seed/ fertilizer is in terms of ‘yield’; the agronomic potential of pesticide is in terms of ‘pest control’ and that of fungicide is in terms of ‘disease control’.	For e.g. The value of yield of paddy obtained as a result of the use of fertilizers, manures, seed, crop protection chemicals, labour, and machinery should always be greater than the value of all the inputs used up.

Inference for Price Spread and Marketing Efficiency:

            The value of Shepherd’s Index in Channel II (1.61) is greater than that of Channel I (1.33). Thereby, the Marketing Efficiency is better in Channel II when compared to Channel I. This refers that the price spread is low in Channel II when compared to Channel I and the producers’ share is also more in Channel II.  

            In Channel III, as MC and MM are not given, it is not possible to interpret Price Spread (PS) and ME. Moreover, as there happen to be no intermediaries in Channel III, there is no need to find out PS. But if the storage, transportation and marketing costs are given, then it may be possible to find out ME in Channel III.

Effective Demand	Derived Demand
The willingness to pay backed by the capacity / ability to pay is called as effective demand.	The demand or usage of one input / product leading to the demand or use of another input / product is referred to as derived demand.
The demand for an input/ product is self sufficient. It need not lead to the demand for another.	This is a special case, whereby the demand for different inputs/ products complements each other.
For e.g. The willingness of a farmer to buy a tractor after getting the required bank loan.	For e.g. The use of hybrid seeds necessitating the demand for fertilizers, pesticides and other agro-chemicals.