Marketing of seed is the most important as well as a challenging aspect of seed industry, because of the nature of the product. Seed being a living organism, its quality deteriorates faster. Thus, its shelf life is limited and it must be marketed within the season. Another peculiar feature of seeds is that it requires two to three years lead-time to meet the specific requirements, i.e., to meet the demand for a particular seed, its production has to be organised at least two years in advance.
The changes in the weather, price of the crop, and prices of the competing crop, may change the prospects of demand for seed of a particular crop variety at the commencement of sowing season. In times of increase in demand for seed, its supply cannot be organised immediately, whereas a fall in demand would result in carry-over of stocks.
In fact, seed marketing requires working within a whole chain of seed business. It includes not only seed production and processing subsectors, but also many other agencies like research, quality control and other input services as in any other agribusiness chain.
While looking into the marketing aspect of seeds, the following dimensions need careful analysis:
Product:
Seed is perishable product by nature. Its demand is seasonal and derived. There are also wide fluctuations in its demand, as its demand is the function of various factors like prices of the crop under consideration, prices of other crops, climate, replacement rate, and the information about the market.
Also, it is not possible to create an exclusive distribution network at the retail level, as it is a small time and a highly seasonal product. This nature of the product results in much specificity at the various stages of marketing process like production of seeds, procurement, its Distribution, seed pricing, and promotion of the product.
Arrangements for Certified Seed Production:
Production of quality seeds is carried out in a decentralised manner on individual farms. The certified/truthfully labelled seeds are produced by the contract growers. Here two alternative approaches are in vogue. Firstly, growers are selected from a number of villages scattered over a large area which is the case with many small seed companies and seed corporations.
Secondly, a few villages are selected for intensive coverage of farmers as is the case with Advanta India Ltd (formerly ITC Zoneca). The contract growers, either produce seeds for the enterprise or lease out land to the enterprise.
Multinationals like Unilever and Cargill source certified seeds from India through a network of seed production organisers who pass on the inputs supplied by the company to the contract growers, collect seeds, conduct tests and give to the multinationals. This is quite common in A.P. in cotton, sunflower and jowar seed sectors.
Normally, seed enterprises enter into a contract with the growers for production and supply of quality seed of some specified acreage. The growers bear all costs including cost of parent/foundation seed, cost of cultivation, quality monitoring cost, transporting seed to the factory, and wastage and losses at the farm, in transit, in grading and packaging.
They also bear all risks like low germination, reduced yield, poor quality, and rejections. They are paid at a pre-agreed price only after the quality of seed is tested and for quantity that passes through those tests. Normally, it takes about 60 days to get the payment.
If the germination of parent seed/foundation seed goes down to 70 per cent or lower, the growers are advised to ‘plough down’ because it will not be economical to pursue the production till the end. Plough down can be ordered at subsequent stages in case of severe pest attack, or if cross- pollination is not effective.
In such cases, the company certainly loses some quantity of quality seed, but the growers’ loss is much more in terms of not only costs incurred, but also loss of the income from the area. There is no provision for compensation against ‘plough down’ of the crop. The companies however, take care of their risk by planning 10-20 per cent more area.
Sometimes, companies also give incentive for better germination rate and better quality of seed production. The default rates of contract growers have been low as they are assured market price of grain at least and yields are better than grain crops.
There are various ways of obtaining land facility for contract production of seeds:
a. Lease System:
In this system, the seed company undertakes the risk of seed production. The land is taken on lease and all inputs are supplied by the company. The output from the leased land is processed and packed at the company’s cost. Pro-agro Company is following this system for certified seed production.
When a company introduces certain new varieties, the grower may not be willing to undertake certified seed production, as the new varieties are not tested. In those cases, the companies tend to undertake certified seed production through lease system.
b. Collaboration:
This is one more way of ensuring the procurement of certified/labelled seed. J K Agrigenetics in Secunderabad is the only seed company that follows this production arrangement. They have collaboration with Raasi seeds of Tamil Nadu for procuring the raw seed.
Under this arrangement, certified seed is produced by the seed growers. Raasi seeds procures the raw seed from the seed growers. Processing of the raw seed is done in a custom processing plant which is near to the production area. The packaged seed is marketed by JK Agrigenetics under its brand name.
c. Seed Grower:
Under this arrangement, a seed company directly enters into an agreement with the seed grower for procuring the raw seed. National Seeds Corporation follow this system. No financial assistance is given to the grower by the Corporation for his production expenses under this system.
This system is also used by small companies like Ankur and Nav-bharat and State Seed Corporations (SSCs) for procuring seed. Most of the farmers put small acreage under contract which is even as low as 0.25 acres in cotton in the case of small companies as it is labour intensive production.
d. Seed Production Organiser (SPO):
This arrangement is preferred by most of the private seed companies. Most of the companies appoint commission agents called seed production organisers to identify growers and secure their area commitment for seed production of variety hybrid during the season. They also guide the growers in the proper use of input and sometimes extend credit for seed crop.
The minimum commission to be paid to the organisers is decided at the annual meeting conducted between the representatives of the Seedmen association (a body of representatives of various seed companies) and the organisers. The services, financial and non-financial, provided by the company to the grower and the organiser to the grower, vary from one company to the other and from time to time.
The Seed Production Organisers, who undertake seed production in an area of more than 500 acres, generally employs a sub-organiser under them, so as to facilitate better monitoring and implementation of the programme.
Trade Practices in Seed Production:
There are different trade practices in the seed industry practised by the different players involved such as the growers, the seed production organisers, and the seed companies. The trade practices are slightly different from one company to the other and also from one region to the other. These practices are highly dependent on the production arrangements followed by the company.
a. Supply of Foundation Seed:
Foundation seed required for the production of certified seeds is generally supplied to the growers by the seed companies through the seed production organisers or directly under contracts, and contract growers are registered with the seed contification agency as sub-growers.
The cost of foundation seed in the case of private companies is deducted while disbursing the payment for the raw seed. However, in the case of National Seeds Corporation or State Seeds Corporation foundation seed is supplied on cash and carry basis. Any subsidy given by the government is passed on to the growers.
b. Operational Expenses:
Generally, the grower arranges at his expense all the operations required such as land preparation, sowing, irrigation, interculture, manuring, plant protection, rouging, detasseling (in case of maize) removing pollen shedders (sorghum and bajra), harvesting, shelling/ threshing and any other farm operation connected with the raising of the seed crop.
He is required to follow the seed production practices prescribed by the company from time to time. The National and State Seed Corporations do not supply fertilisers or pesticides to the grower. However, some private companies supply pesticides and fertilisers to the farmers on credit.
This amount and the interest (18-24 per cent) are recovered from the growers at the time of making payment for the raw seed. However, under the lease system of production, as in the case of Proagro Seeds, the entire expenses of production are borne by the company.
c. Financial Inputs:
With a view to meet the bonafide requirements of the grower for inputs and other expenses for seed production, National and State Seeds Corporations may render reasonable assistance to the growers in securing the necessary credit from the cooperative/commercial banks, nominated by the corporation against terms and conditions laid down by the lending bank.
The private seed companies lend money to the growers only when the crop requires very high investment as in the case of cotton seed production. An interest rate of 10-15 per cent is charged on the loan given and the amount is deducted from the payment for raw seeds.
d. Technical Inputs:
The seed production organiser generally gives technical guidance to the seed growers at his own cost. The organiser arranges for required number of technical staff to conduct periodic field inspections at various stages of growth of seed crop. It is the duty of the organiser to ensure completion of the required number of field inspections by the seed certification staff at proper growth stages.
The organiser arranges for the completion of all formalities and conditions and other work for getting the seed certified, supplies the requisite number of sample bags, slips for packing, packing seals, marking inks etc., at the time of ginning and the cost, thereafter, is borne by the organiser.
The organiser bears the expenses pertaining to cost of tags, field test charges and all other incidental expenses to be incurred for the purpose of getting seed certified by the State Seed Certification Agency.
e. Transport:
Generally, it is the grower who arranges to transport the raw seed at his own cost, in the gunny bags provided by the company or the seed production organiser after harvest of the crop to the processing plant of the company. However, in some cases, the company provides transportation cost to the grower.
f. Processing Facilities:
The Organiser fixes up the processing facilities for seed like the ginning centre(s) having adequate facilities to complete cotton ginning in time and completes the ginning operations within given time schedule, specified by the company and agreed by the State Seed Certification Agency.
The organiser informs the company about the details of the mechanised processing facilities along with intake capacity and storage space prior to processing season. In the case of small companies, growers are given ginning schedule and they bring the seeds to the ginning factories which was hired by small companies on job work basis.
g. Packing Material:
The organiser supplies the certified seeds in the standard pack sizes. The company supplies printed cloth bags and truthful labels for packing of the certified seed at its cost. However, for transporting the raw seed from the grower’s field to the processing plant, gunny bags are supplied by the organiser/company.
h. Quality Standards:
The seed lots are tested for germination, genetic purity, physical purity, disease incidence and moisture and inert material content etc. at the company’s Quality Control Laboratory or at the Government Seed Testing Laboratory. Those lots indicating variation over and above the tolerance limits prescribed are subjected to retesting.
i. Conditions for Rejection:
The Organiser has to supply only fresh certified seed, certified by the certification agency as per the specifications of the Seed Act 1966. If the seed is rejected at the quality test, the loss is borne mainly by the grower. The seed has to be supplied from the fresh stock and not from the revalidated stock.
If the seed is found rain damaged or the container is found damaged or torn and unsealed during the transit, the organiser is not entitled for any payment for such rejected/damaged seeds. The rejected seed can be used for food/feed or for sale to other agencies for other edible/non-edible purposes.
j. Processing Expenses:
The expenses of processing are borne either by the organiser or by the grower. There is no standard trade practice on this count. If the organiser bears the processing expenses, then he gets a higher commission from the company. In the case of large and medium seed companies, the processing operation is undertaken under the close supervision of the company’s representatives.
k. Procurement Price:
The minimum procurement price for the seed crop in most of the states is decided by the representatives of the Seedsmen Association, seed production organisers and the growers. However, this rate varies and is dependent on the demand and supply factors to a larger extent and each company may have its own rate. But, generally the seed price is higher than the price of the crop output in the grain market.
l. Procurement and Payment:
The contract growers are to supply the entire product of seeds to the company under a contract at the agreed place and time. Though there is generally a clause in the contract for penalty for default, it is rarely implemented due to practical difficulties. The state bodies and companies pay about 80% of the payment at the time of seed procurement and the remaining 20% after seed passes the final quality test.
Seed Pricing:
The uncertainties in demand for seed and making its price estimate is a complicated exercise. Seeds grown by contract growers for seed corporations and the private sector which meet specified standards attract a premium price over and above the commercial grain price, for the crop which varies anywhere between 25 per cent for self-pollinated crops like cereals to over 100 per cent for hybrid crops.
In the public sector, the NSC is usually the retail price setter. There is government intervention in pricing of seed produced by public sector corporations with the degree of intervention varying from state to state.
In some crops like sunflower, retail prices which the farmer pays are double or three times that of the price at which the seed company procures from contract growers. The pricing strategies of the private sector are also influenced by the pricing structure followed by the public sector.
The final marketing price of the certified seed is the result of number of components as follows:
a. Basic seed price.
b. Price paid to the seed growers for the raw seed.
c. Processing and storage costs.
d. Transportation distribution, and marketing costs.
Supply and Demand:
The total supply available and the total demand generated by the dealers owing to the acreage and credit availability also influence seed price. In case of short supply, the seeds could be sold at a higher price, whereas in case of excess production, the prices has to be realistic and the profits will be reduced.
The Indian Seed Industry has not been able to keep pace with the demand over seeds in most crops for several years. It is witnessing the entry of several companies both Indian and foreign. With the introduction of the newer varieties and the increased prospects for exports, the demand for seeds is growing significantly. Supply too is growing, but not at the same pace as there is a lag between the development and introduction of new seeds.
Prices of Other Farm Products and Time Trend:
Time trend and prices of other farm products should be taken into consideration while fixing the price. In case of high price situation, the consumption of seed as a food grain would be reduced. The supply should keep in pace with the demand in terms of quantity, quality, price, place and time.
Some of the seed companies especially MNCs also go for non-price competition wherein they emphasise quality and consumer confidence as their selling points instead of competitive pricing. The higher price is justified in terms of higher yield, farmer confidence and after sales backup.
Distribution System:
The private seed companies as well as public sector corporations, market seed through a network of distributors and dealers (see Fig. 3.3).
At present, public sector markets its product through the following distribution channels:
a. Dealers in Private Sector.
b. Dealers in co-operative Sector.
c. Sale Points and Depots.
d. Departmental Sales.
The major sales of public sector come from the private dealers followed by dealers in co-operative sector and departmental sales respectively. The distributors are appointed for district, which inturn appoint dealers within the district. These distributors and dealers handle other agricultural inputs like fertilisers, pesticides and agricultural machinery.
A distributor/stockist is generally appointed for a region that may consist of one or more states. However, in some areas, the company reserves the right to appoint more than one distributor, depending upon the potential of the state.
There may be more than one dealer depending upon the potential of the district and marketing strategy of the seed agency. Generally, they are appointed on non-exclusive basis, which means the dealers, can deal in products of other companies or even in other commodities.
The different channels used for the distribution of seeds are as follows:
All the above mentioned distribution channels are used for selling all kinds of seeds including food grains, oilseeds, spices, vegetables and, fodder crops. Departmental sales include sales to the Department of Agriculture under various heads namely, minikits, field demonstration, DPAP and other drives being made for popularisation of modem agricultural practises.
Seed demand is usually seasonal and for a particular seed, it lasts only for 3 to 4 weeks in a season. Hence, the seed forms only a part of the overall business of the dealer in all the agricultural inputs. The retailers combine seed business not only with other agricultural inputs but also with other commodities as well.
The distributors, dealers and retailers are paid commission by the companies on sale. Normally 15 to 25 per cent commission is given to distributors who pass 12 to 22 per cent to the dealers while the retailers get 9 to 19 per cent discount on sales. In some cases, the companies directly deal with the dealers, who are paid at par, with the distributors.
The distributor/dealer has to place the order well in advance, for the company to get an estimate demand for the seeds from a particular region. The company insists on advance payment at the time of placing an order or full payment at the time of delivery of stocks. However, depending upon the track record of the distributor/dealer, credit is allowed for a maximum of 30 days.
Management of Seed Distribution:
Demand for seeds fluctuates from year to year, even within a season depending on the onset of monsoons and the spread of rainfall during the sowing period. Excess production or scarcity of seeds, is most common in this industry. Further, in the case of seeds, both supply and demand are affected by natural factors as a result of which the enterprise has to contend with either excessive stocks or excessive demand.
Excessive stocks have to be revalidated in subsequent seasons. This may, however, involve a high rate of rejection due to deterioration in quality. Such losses cannot be borne by the distribution channel. Since in the case of some seeds, shelf life is as short as one season, the cost of excess quantities may have to be borne by the enterprise.
In times of scarcity, the temptation to pass the burden onto the consumers would be strong. Effective strategies should be developed keeping in mind, the long term relationships between the seed enterprise and its consumers.
Seed marketing at the micro level involves, the matching of the farmers needs with timely seed supply. Therefore, adequate supply has to be ensured much ahead of the season. In other words, storage at distribution points that are close to the distributors/dealers has to be ensured. This involves development of a sound management information system.
Information on the following aspects is critical:
Availability of seeds for any season:
i. Projections of area to be covered by seed varieties.
ii. Expected output prices.
iii. Behaviour of rainfall.
iv. Adequacy of support system including financing.
v. Stocking at different levels.
vi. Offline information on a weekly basis during the sowing season.
The selection of distribution channel for seeds is not an easy task. Since seeds have a time specified demand, an exclusive channel for seeds is not feasible; seeds have to be sold with other farm inputs, like fertilisers and pesticides.
Quick reallocation of stocks may be difficult, if there is an information lag. Effective and continuous communication between the enterprise, the distribution network and farmers is of great significance in this process.
In the event of shortages, dealers begin to charge a very high premium on certain special varieties of seeds, whereas in the event of lower demand, prices are reduced. Decisions pertaining to price are taken in the local market. Seeds are generally sold through a two-tier system, involving the distributor and the dealer.
The terms of distribution vary from market to market. All dealings are conducted either, in cash or on, secured credit basis. Credit to a dealer is normally extended at the personal risk of the distributor. Dealers sell the seeds to the farmers on cash basis.
The biggest problem in the seed industry is to maintain uniform prices. Seed companies exercise no flexibility over price, as they operate on very small profit margins due to high competition. The distribution channel constantly expects the firm to make available to them, new varieties of seeds and this has become the most important factor in their relationship with the firm.
The channel undertakes very limited responsibility for unused and expired date seeds. In the coming years, when the seed market becomes more competitive, the role of distribution channel is going to become more crucial.
Seeds are a perishable commodity they can get easily damaged, if the seed handling is not satisfactory at any stage in the overall marketing strategy. Seed marketing being seasonal, will lead to heavy losses, if the unsold stocks are carried over for too long time. The transportation of seeds from production areas to end-users is an immense task and takes considerable time.
Successful seed marketing depends on the timely availability of the seeds to the dealers and the users. Transportation of seeds becomes difficult particularly during the rainy season. Therefore, the existence of buffer godowns with proper storage conditions is a must in the end-use areas.
The advantages of buffer godown is as follows:
(a) Seeds can be transported during favourable weather conditions, which minimises the risk of seed damages during transit.
(b) Assured timely supply to the dealers.
(c) Seed quality can be tested again after the seed has reached these godowns thus, detecting possible causes of damage during transit. The climate of the location should be dry and cool, since seed storage is better in such areas.
Promotion:
The demand for hybrid seeds is largely dormant and has to be awakened and stimulated. Creative use of promotional tools that reach the cultivators, is an important way to accomplish this goal. Since the market for hybrids seed is still small, companies especially MNC’s focus on market expansion for hybrids as a generic market promotion strategy, rather than pushing their own particular hybrid brand.
For example, Cargill organises a series of field days and demonstration plots. The company has a team of field assistants who visit farmers and do ‘cold selling’. The company also does farmer advocate, wherein, the farmers themselves advocate company’s seeds to other farmers who are invited to the field showing uncommonly high yields of branded seed.
It chooses a few exemplary fields at the end of the growing season from its customers’ fields and invites hundreds of farmers to these fields, who are not its customers. On the other hand, ITC Zeneca (Advanta India) chooses a few farmers before the growing season and give the company seed to plant alongside local varieties.
At harvest time, hundreds of farmers are invited to a field day, where the company growers narrate their experience of growing the seed to other farmers.
Cargill also has intensive customer contact programme, where Cargill staff sit with a group of farmers under a tree with a flip chart to talk to them. It also has a farmers’ handbook which is published fortnightly in local newspapers during the growing season.
This offers farmers practical advice on maximising the yields they obtain with the hybrid seeds. Some companies like ITC Zeneca also organise inter-village competitions for the best crop wherein the victory of one village is attributed to the company seed.
Promotional Media:
Seeds form a critical input to ensure higher yield of the crop. Therefore, the farmers involvement is very high at the time of the purchase of the seeds. Here, the advertisements should influence the behaviour of the farmers by encouraging trial, leading to loyalty for the product, and further leading to learn about it. Here, the Dissonance- Attribution hierarchy is used and the advertising objectives to encourage purchase, build conviction and to stimulate awareness.
In seeds, the promotion activities include free samples of the seeds being distributed to the farmers. This is being practiced by both MNCs as well as by local seed companies. This induces trial. Here, the “seeing as well as doing is believing” attitude is being addressed.
Video shows, exhibition, krishi mela, mobile vans, and wall trolley painting are the most commonly used promotional tools by the seed marketing firms; which give identity and help the farmers in knowing that a particular seed is available.
The advertisements in the various media is used to inform, remind and persuade the consumers and further positively influence the purchase behaviour of the farmers. With the increasing awareness among the farming community through the habit of watching T.V., many of the firms have resorted to advertise in the electronic media. In a typical village, farmers gather in the house of the T.V. owner and watch the programmes.
Radio is still a major force for farm advertisement in the rural areas due to its easy affordability and convenient size availability. The regional news at 7.30 p.m. has a strong base among rural masses. This spot has been highly sought after by the fertiliser companies.
Advertising in the radio is a cost-effective way of reaching the farmers. Mass contact through the Field Staff augments the sale to a larger extent. Currently, most of the promotional activities in both the public and the private sector are focusing on television and radio.
Newspaper ads can briefly give the advantages of good seed, price, location of the dealer and variety name. Cinema slides can be developed for local conditions and should emphasise local dealers and seasonal crops. Hoardings are effective for year round publicity and should be placed in important locations like bazaars, bus stands etc.
The organisation of “Kisan Melas” by various agricultural universities is effective in reaching the target population in an effective manner. A well-organised demonstration would always encourage the farmers to adopt scientific agricultural practices and good quality seeds. This can be done in coordination with the available extension agencies.
At the retail point level, the effectiveness of glow signboard, danglers, calendars and stickers can also be explored. Further, dealer incentives in terms of rebates for advance orders and higher sales can be attempted.
The advertisements highlights the farmer about the seeds and mainly emphasise on the quality of the output. In the point of purchase material, the handouts/flyers and the posters show colourful and appealing photographs of the crops. This attacks the affective component of attitude of the farmer.
The handouts give further information about the different varieties available for the same vegetable. More information is available about the resistance of the crop to the various diseases and the exact cropping season.
The maturity period and the quality of the output are emphasised in the handouts. There are companies, like Namdhari Seeds, which go on give further information about the agricultural practices, like irrigation requirement and fertiliser requirement.
In posters, there is generally no information regarding the agricultural practices that can be followed for better yields. However, the stress is on the freshness and the high quality of the crop.
The message execution format used for the posters is “slice of life” that depict young girls enjoying fresh fruits in the farms. Testimonial evidence is used as the message execution format, since the ordinary farmer is used to communicate the product benefits to other fellow farmers.
Post-Sales Service:
More emphasis should be placed on educating the farmers and how they can purchase certified seeds and protect themselves from spurious seeds. In addition to this, technical help also should be provided to the farmers and follow up of the complaints about seed quality etc. should be done.
A rather different approach is needed for the marketing of the hybrid seeds, in case of which the farmer needs new seeds each season. The dealers should make market survey periodically, to determine the market potential at least one season in advance.
Farmer Behaviour:
It is very essential to understand the behaviour buyer and user behaviour in this product line the as it is characterised by many external influences and information asymmetries.
The following are some of the major aspects of farmer behaviour in purchase and use of seeds:
A. Low Replacement Rate:
Seed Replacement Rate (SRR) is very important for a seed firm, because more time the farmer goes for replacement of the seed that he uses, the more will be the demand for that firm’s seed. Seed Replacement Rate for certified seeds of a given crop is defined as the ratio of amount of cultivated land under the certified seeds with respect to the total cultivated area under the crop.
This is generally taken as a measure of use of improved seed practices of the farmers. Quality seed is the key input for realising the productive potential of a crop. As quality practically deteriorates for subsequent generation, the old seed must be replaced with fresh lots of quality seeds.
Ideally, the seeds for hybrid should be replaced every year, while for cross-pollinated crops, the seed should be replaced every three years. For self-pollinated crops or non-hybrids, the seed should be replaced every four years.
However, the reality is that the Seed Replacement Rate by the farmers is much lower because farmers prefer to use the seed from their own production or from the exchanged seed from the fellow farmers.
The reasons for low SRR could be any one or more of the following:
1. In some crops, the smaller farmers prefer to use the seeds of their own crop due to various reasons including high price, taste preferences, and non-availability of credit. In crops like cotton, which require to undergo further processing like delinting for obtaining seeds after the harvesting, farmers sell their crops, rather than delinting on their own, and hence, purchase new seeds every year.
2. Sometimes, farmers are not aware of the recommended replacement schedule of the different seeds. As a result, they do not go for seed replacement.
3. Quality seeds are not easily available at the time when farmers need them.
4. The farmers do not attribute the fall in crop yield to the delayed seed replacement.
5. The increased use of other inputs or better management practices compensate for the fall in yield due to the low SRR.
6. Farmers exchange seeds among themselves within the recommended period for replacement.
7. Poor extension.
8. Non-availability of credit.
There is an attitude among farmers that the seed alone will do the job of improving productivity. This leads to ignoring the complementary input use and therefore, a credibility loss for the seed when good yields are not achieved.
In general, farmers will not go beyond a distance of 30 km to buy the seeds. Hence, the distance becomes a crucial factor in the adoption of quality seeds and choice of variety. Inappropriate timing of sowing of seeds also affects the yield or performance of the seed. Thus, farmers end up believing that new seeds are not really worth all that search and cost.
Credibility of source of seed is important, as the seeds are bought from places or from those outlets with which farmers are familiar or which is generally popular with the people at large. The seeds are purchased largely on cash basis, especially HYVs and only a few days before actual use.
Major channels still are fellow farmers and private traders. The reasons for preferring them are quality assurance, timely availability and easy access. The cooperatives are approached only because they provide credit. The promotional media used for making a purchase decision are demonstration, video shows, Kisan melas, and dealer advice.
B. Forecasting:
Demand forecast is absolutely essential in order to estimate the production requirements. This is extremely difficult because of the nature of the product. Hence, there is either a situation of glut or of short supply.
Seeds companies do make some estimates of requirement for the seeds, by considering relevant information on individual crops like area in the previous year, area targeted for the ensuing year, and the expected yield and price of produce. This exercise is done for each crop district wise.
Though this helps in organising production, often it goes awry with unexpected changes in variables like weather in the sowing season. As a result, there is excessive supply to some centres where, demand has fallen on the commencement of the season. On the other hand, supply may be short in some areas, where the demand has increased just before sowing due to some favourable condition.
Forecasting demand and production of seed are important inputs to production planning. Accurate forecast at an appropriate time involving expenditures does help in avoiding over or under production and maximising net returns.
Normally, the gains from a good forecast are much more than the costs. Short term demand forecasting is useful in efficient management of inventory and distribution of seeds across areas. It also helps in arranging logistics, working capital and decisions on payment of compensation and payment for seeds.
Short term forecasts are generated primarily through discussions on the basis of feedback obtained from sales force and the distribution channel. The marketing personnel based on the previous years’ sales and current crop prospects determine the likely demand for a particular crop.
The likely share of the variety in the total demand is estimated later. The resources of each division are assessed for carrying out the production and estimates are revised accordingly. Similarly, information would be generated at various stages of implementation of the production programme for monitoring quality and quantity of seeds.
On the other hand, medium term forecasting helps in arranging parent seed, foundation seed, finance for expansion and training of work force, and long term forecasting is an input in the corporate planning.
The supply of seeds should keep pace with demand in terms of quantity, quality, price, place and time.
The factors affecting demand are:
(a) Total cultivated acreage.
(b) Seed rate.
(c) Extension efforts on the introduction of improved techniques.
(d) Current acreage under HYV and seeds sold in the previous year.
(e) Cultivator preference for varieties, package size, quality, and price.
(f) Climate of the area, and rainfall.
(g) Crop failure and re-sowing.
(h) Substitution between crops and varieties of seeds.
(i) Irrigation facilities.