Agricultural marketing

Measures to Minimize Risks : 
a. Reduction in Physical loss through fire proof storage, proper packing and better 
transportation. 
b. Transfer of physical losses to Insurance companies. 
c. Minimization of price risks through.

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ü Fixation of minimum and maximum price by government.
ü Dissemination of price information to all sections of society over space and time. 
ü Effective system of advertising and create a favourable atmosphere for the 
commodity. 
ü Operation of speculation and hedging : Futures trading, forward market, contract 
farming, contract marketing.
Speculation : Purchase or sale of a commodity at the present price with the object of sale 
or purchase at some future date at a favourable price.
Hedging : It is a trading technique of transferring the price risk. “Hedging is the practice 
of buying or selling futures to offset an equal and opposite position in the cash market 
and thus avoid the risk of uncertain changes in prices” (Hoffman).
Futures Trading : It is a device for protecting against the price fluctuations which 
normally arise in the course of the marketing of commodities. Stockicsts , processors or 
manufactures utilize the futures contracts to transfer the price risks faced by them. 
Future trading includes both hedging and speculation.  
S.No. 
Speculation 
 
Hedging 
1. 
Purchases and sales in the cash as 
well as in futures markets are made 
with the objective of making profit 
: 
To protect oneself against excessive price 
fluctuation. 
2. 
The activities of buying and selling 
are not necessarily opposed to each 
other.
: 
Are always opposed to each other.
3. 
It is not necessary that the two types 
of transactions should be of equal 
quantity.
: 
If is obligatory to buy and sell the goods in 
equal quantities in the two markets.
4. 
Speculator purchases and sells 
goods when prices are as per his 
: 
The commodities are not stored by traders. 
Only the difference in the price is given or 

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expectations.
taken on the due date.