Question

Question 3:

Just as there are many risks that take place in producing agricultural products, there are also a number of risks that occur in the marketing (value) chain between the farm gate and the consumer.

List and explain the types of risk that may occur in the marketing chain.

Answer 1

Supply disruption is the basic problem and disturbs the normal flow of goods and services in the marketing chain. But there are some other types of risk as well.

1. Financial Risk- Which mainly occurs due to irregular fluctuation in exchange rate. Some of the financial risk are like budget overruns, constructive changes etc.

2. Schedule Risk – when the works are not properly planned, a type of internal problem in company. Which in turn increases cost of the product and timeline as well, may lead to decrease customer’s interest over the product.

3. Legal risk- Due to not maintaining the rules or legal provisions. For example Intellectual Property rights (Patent Rights). Patent Rights- exclusive right when given to the owner for a definite time, but the owner is not want to go for the commercialization beyond the time period.

4. Environmental risk- Production of something may possess risk to water, air, soil etc. for e.g. CFC which emits from AC or Freeze production unit breaks the ozone shield and making the path for the UV Ray.

                  For that government imposes rules and regulations for the production of it which disturbs the supply chain as well.

5. Human Behaviour Risk- Human behaviour are the most difficult to access. Sometimes key personnel leaves company which may lead to decrease in production.

Apart from those in the international arena, relation between countries, imposing of tariff, subsidy given by the government to the domestic sector also disturbs the market chain.