Marketing of agroforestry products in Sindh province of Pakistan

4.5 Marketing Margin Analysis for Agroforestry wood products

Marketing margins are the differences between prices at two market levels. Margins represent the price charged by marketing agencies for all services provided including buying, transportation, storage and processing. In order to measure marketing margins, data on wood and wood-product prices were obtained at different stages in the marketing chain. Marketing margins depend upon the length of the marketing chain and the extent to which the product is marketed. It was investigated that marketing chain is not so longer; only three intermediaries were involved in the marketing of agroforestry products in the study area.

4.5.1 Marketing Costs

Marketing costs consists of the total costs incurred on marketing of product by each agency. One way of defining costs is all of the expenses incurred in organizing and carrying out the marketing process. Another definition is the charges, which are paid for any marketing activity such as, loading unloading, transportation, market taxes, storage and assembling. The most important factors which influence marketing costs are distance between production and consumption market.

4.5.2 Net Margin

The net margin of a specific agency is the net earning, which it gains after paying all marketing costs. The net profit margin of the agroforestry producers was calculated on a per 40 kg basis as the sale price of the wood, less production costs of wood producers. The net profit margins of collection Local Assembler/Saw-mill/Retailer were calculated as sale price of wood in the market minus purchase price and marketing costs.

Table 4.2 Marketing Margins of Acacia nilotica (Babul) Products (Rs per 40 K

Middlemen	Products purchased	Products sold	Price paid	Marketing Cost	Price received	Net Margin
Local Assembler	Logs from block plantation	Mining props, timber & firewood	50	17	83	15
	Logs from shelterbelt and scattered trees	Mining props, timber & firewood	63	17	88	07
Contract agent	Mining Pit props	Mining Pit props	83	15	103	5
Saw mill	Timber logs	Timber & firewood	103	16	130	11
Retailer	Firewood	Firewood	77	6	92	9

Table 4.2 presents that average price Rs 50 paid by Local assembler per 40 kg of wood logs of Acacia nilotica block owner and it was estimated that Rs 17 was spent as marketing costs, which included cutting, loading unloading and transportation, from the block plantation price received Rs 83 per 40 kg, which was weighted average price based on the percentage of wood products sold by the Local Assembler, his net margin was Rs 15 per 40 kg, apart from that he also purchased Scattered and Shelterbelts trees and paid price Rs 63, where he made marketing costs per 40 kg, including cutting, loading-unloading and transportation Rs 17, and he received price Rs 88 per 40 kg, which was weighted average price of the product sold and thus he took Rs 7 as net margin per 40 kg. Contract agent of mining props purchased props for Rs 83 per 40 kg and sold to coal mine for Rs 103 per 40 kg, where his expenditure at transportation only, was Rs 15 per 40 kg, thus his net margin was Rs 5 per 40 kg. Saw mill purchased timber logs for Rs 103 per 40 kg, after processing he sold processed timber (Essyoon, Pawa Takhta/ Phata etc) and fire-wood (wastage/small pieces) at weighted price of Rs 130 per 40 kg, his marketing cost, includes transportation only Rs 16 per 40 kg, where net margin took by saw mill owner was Rs 11 per 40 kg. From findings of field survey the retailer, that deals with fire-wood only, purchased fire-wood from Local Assembler as well as from Saw-mill at Rs 77 per 40 kg and sold to restaurants and households at Rs 92 per 40 kg, where his marketing cost was Rs 6 per 40 kg, thus his net margin was Rs 9 per 40 kg.

Note that the prices were calculated on average per 40 kg basis and only explicit costs of each intermediary were calculated, but labor working, monthly rent as well as investment costs were not calculated.

Table 4.3 Marketing Margins of Eucalyptus camaldulensis Products (Rs per 40 K

Middlemen	Products purchased	Products sold	Price paid	Marketing Cost	Price received	Net Margin
Local Assembler	Logs from shelterbelt and scattered trees	Mining props, timber & firewood	61	17	85	7
Contract agent	Mining Pit props	Mining Pit props	83	15	103	5
Saw mill	Timber logs	Timber & firewood	95	16	121	10
Retailer	Firewood	Firewood	77	6	92	9

The information on the margins of Eucalyptus camaldulensis products are presented in Table 4.3. The results show the average price of Rs 61 per 40 kg was paid by Local Assembler to the Eucalyptus camaldulensis producer, where he made marketing costs Rs 17 per 40 kg, that included cutting, loading- unloading and transportation, he received price Rs 85 per 40 kg, which was weighted average price of the product sold (mining props, timber and fire-wood), thus his net margin was Rs 7 per 40 kg. Mining props purchased by contract agent for Rs 83 per 40 kg and sold to coal mine for Rs 103 per 40 kg, where his expenditure on transportation only, was Rs 15 per 40 kg, thus his net margin calculated was Rs 5 per 40 kg. Saw mill purchased timber logs from Local Assembler for Rs 103 per 40 kg, after processing saw mill owner sold processed timber (Beams, Wooden crates, Takhta etc) and fire-wood (wastage/small pieces) at weighted price of Rs 121 per 40 kg, his marketing cost, including transportation and processing was Rs 16 per 40 kg, where net margin took by saw mill owner was Rs 10 per 40 kg. In case of wood retailer, he dealt with fire-wood only, from findings of field survey the retailer purchased fire-wood from Local Assembler as well as from Saw-mill at Rs 77 per

40 kg and sold to bakers, restaurants and households at Rs 92 per 40 kg, where his marketing cost was Rs 6 per 40 kg, thus his net margin was Rs 9 per 40 kg.

Note that the prices were calculated on average per 40 kg basis and only explicit costs of each intermediary were calculated, but labor working, monthly rent as well as investment costs were not calculated.