Marketing of agroforestry products in Sindh province of Pakistan

3.4 Marketing Cost

In Pakistan, producers of agricultural products believe that benefits of the value added due to marketing costs are mainly availed by the intermediaries, due to the time, place and form, must be equivalent to the corresponding differences in costs. Prices of particular commodity, at one time, therefore must be uniform over geographical areas plus or minus the cost of getting supplies from the area of surplus. Therefore, per unit marketing cost incurred by various agencies were estimated for agroforestry products to examine the pricing efficiency.

Marketing cost is referred as designate expenditure incurred by various marketing participants from the time as the commodity leave the farm-gate to reach marketing agents for processing. Marketing costs were incurred by the producers as well as all the intermediaries participating between producers and consumers in the flow of commodity. The principle components of marketing cost included loading, unloading, transportation, commission charges, processing, grading and marketing tax. These costs were computed on per 40 kg of wood. Each functionary was enquired about the amounts it spent on each 40 kg.

3.5 Net Margin

The net margin of a specific agency is the net earning, which it earns after paying

all marketing costs. Net earnings of various market agencies involved in the marketing of agroforestry products were computed with the following formula.

Nm = Ps - Pb - Cm

where, Nm stands for net margin, Ps indicates sale price, Pb represents buying price and Cm represents marketing costs incurred by the same agency.

3.6 Limitations of the study

The study was based on the primary data, collected through the field survey. Due to the shortage of time and financial constraints, the sample size was kept limited. During collection of data, many problems were faced. Due to the low literacy rate among the respondents, no written records regarding their costs and income etc were available. They hesitated to provide information about personal questions and incomes from trees/wood/wood-products they were doubtful about the purpose of the study despite of the fact that they were explained about the study, yet great care was taken to collect reliable information. All the information collected is based on the memories and estimates of the respondents.