commitment to purchase all the produce offered for sale through MSP. Government buys
at its discretion without any compulsion to meet its obligation procurement price.
When
procurement is done under compulsion from the millers, the
procurement price is called
levy price. Government considers various issues suggested by CACP on fixation of
prices.
Lecture : 14
Risks on marketing -meaning -types of risks- measures to minimize risks-
speculation-hedging-future trading-meaning-commodities for future trading-
services rendered by a forward market-dangers of forward market-contract
farming/contract farming-Price forecasting
RISKS IN MARKETING
Risk is inherent in all marketing transactions. Fire, rodents, quality deterioration, price
fall,
change in tastes, habits or fashion, placing the commodity in the wrong hands or area
are all also associated with marketing risk. Hardy has defined
risk as uncertainty about
cost, loss or damage. The longer the time lags between production and consumption, the
greater the risk. Most of the risk is taken by market middlemen. The bearer of the risk
may be better off or worse-off. A risk cannot be eliminated because it also carries profit.
Types of Risk : The risks associated with
marketing are of three types, namely physical
risk, price and institutional risk.
i. Physical risk includes loss of quantity and quality. It may be due to fire, flood,
earthquake, rodents, pests, excessive
moisture or temperature, careless handling,
improper storage, looting or arson.
ii. Price risk associates with fluctuation in price from year to year or within the year.
iii. Institutional risks include the risks arising out of a change in the government
budget policy, imposition of levies price controls etc.
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