 The traditional structure of farm production and farm market can each be described in terms of a single identifying characteristic; product and production.  Characteristics of the products  A raw material  The output of agriculture is largely a raw material that will be used for further processing. This processing may be limited, as in converting livestock into meat. It may be highly complex, as in converting wheat into bread. Regardless of the complexity, however, the product sold by the farmer soon loses its identity as a farm product becomes simply food.

 Compared to most other products, agricultural products are both bulkier and more perishable.  Bulk affects the marketing functions concerned with physical handling. Products that occupy a lot of space in relation to their value almost automatically raise unit transportation and storage costs.  A truckload of drugs would be considerably more valuable than a truckload of wheat. In this sense, fruits, vegetables, grain, and meats are all quite bulky. Perishable, too, can be measured only in relation to other products. All products ultimately deteriorate.  Some agricultural products, like fresh strawberries or fresh peaches, must move into consumption very quickly or they completely lose their value.

 Such products as cattle or poultry continue to grow and change if storage in the form of withholding them from market is attempted.  Wheat, on the other hand, can be stored for a considerable length of time without much deterioration.  Even the most storable agricultural products, however, are usually more perishable than other industrial products.  Perishable products require speedy handling and often special refrigeration. Quality control often becomes a real and costly problem.  From the farmer’s viewpoint, withholding from the market is extremely difficult; when the products are ready, they must move.

 The general quality as well as the total production of agricultural commodities varies from year to year and from season to season.  During some years the growing conditions are such that the crop in general is of high quality. In other years, unfavorable conditions prevail and the crop is of much lower quality.  Such variations in the quantity of production make it very hard to apply uniform standards for grades from year to year. If the quality of the apple crop is uniformly high, the standards for top-grade apples may be strictly adhered to.

 On the other hand, if the quality of the apple crop is poor, grading standards may be relaxed somewhat to permit some apples to be marketed as top quality.  Variations in the quality may also change marketing patterns.  For example, during a year in which corn does not mature properly, large amounts of ‘soft’ corn are harvested. The corn will spoil if it is not used before the following years. Farmers may then buy additional feeder stock in order to utilize this corn. The marketing pattern of these feeders, however, will be different from the usual pattern because the feeding period is adjusted to the condition of the corn.

 Total output:  The long run trend in food production is upward. The rising food supply per capita has been a mixed blessing for farmers. On the one hand, it is dramatic proof of the efficiency of agriculture and its contribution to the rising standard of living.  On the other hand, this tremendous productive capacity of agriculture has frequently depressed farm prices and incomes. Maintaining an acceptable balance of rising food supplies and fair farm prices has been a difficult task for food policy.

 Annual variability in production:  There are years where the situation of increasing, decreasing, and stable farm output. These are caused by farmer responses to prices and other uncontrollable factors such as weather and disease.  Such changes in farm output influence the food marketing process and the use of the food marketing system’s capacity.  Year to year changes in farm supplies have a significant impact on the purchase prices, need for storage facilities, and plant utilization rates of food marketing firms.  The desire to reduce the risks and uncertainties of fluctuating farm supplies is one of the forces creating closer contractual ties between marketing agencies and farmers.

 Seasonal variability in production:  In addition to the annual production variability, much of agricultural production is highly seasonal. Livestock receipts may vary substantially throughout the year.  The harvest of such crops as paddy, fruits, and vegetables is crowded into a relatively short period. Egg and poultry production is larger in seasonal fest and remain stable after the period.  To the extent that the product is storable, storage facilities must be furnished to hold the product until it is consumed. This means that during part of the year, storage will be used at near capacity, at other times it will be almost empty.

 If the product cannot be stored it must either be processed or consumed immediately.  This may result in processing plants running at capacity for some periods and well below capacity, or even shut down, for other periods.  If the product must move directly into consumption, transportation and refrigeration facilities must be available immediately. These situations affect the costs of the marketing process.

 Geographic concentration of production:  Although a variety of farm products is produced in all states, there is increasing geographic specialization of farm production.  For example in Malaysia, north area tends to specialize in the production of commodities for which its resource base is best suited: paddy, fruits, etc. The marketing system, of course, must adjust to these changing geographic production patterns.

 Varying costs of production:  There is no single cost of production for all farmers. Farmers cost of production are affected by climate, technology, farm size, and individual managerial skills.  Consequently, the cost of producing a farm commodity varies widely by regions and among farmers. Most studies have found that the average cost of farm production falls as small farms grow larger, but there is a point at which average cost do not fall further as farm size increase.

 The farm supply industry:  The farm supply industry provides such agricultural inputs as chemicals, seeds, machinery, feeds, capital, labor, land, and so on.  These may be supplied by the farm or purchased from the industrial or farm supply sectors. The growth and importance of the farm input sector affects farmers in several ways.  It has added another market for the farmer to operate in. The farm input markets have also been responsible for much of the dramatic gain in agricultural efficiency in recent years, especially the chemical and machinery markets.