Download Organic Rice Marketing Concepts and Issues (Dr Nerlie Manalili)

Organic Rice Marketing
Concepts and Issues
Nerlie M. Manalili
AsiaDHRRA –LSFM Project
Advisory Committee
Member
Presentation Outline
•Objectives
•Overview of Regions Organic Industry
• Marketing Opportunities of & Challenges
Confronting the organic sector
•Some regional insights
Objectives
• Gain enhanced understanding and appreciation
of Marketing Organic Rice (concepts and issues)
within context of sustainable agricultural chains
• Find association between concepts learned/ issues
revisited & current challenges in organic marketing
• Be able to Identify entry points for applying newly
enhanced knowledge on tasks on hand & their
anticipated outcomes
Southeast
Asia
Economic Development
A region
Of contrast
 Home to tiger economies (Malaysia, Thailand)
and emerging economy (Vietnam) and yet
home to least developed economies (Laos,
Myanmar)
Food Production & Availability
Accounts for 45% of the World’s Agricultural production
and 30% of agricultural inputs and yet
home to most food insecure (1$ a day households)
 Home to the world’s two largest rice exporters,
Thailand & Vietnam as well the biggest importer,
the Philippines
 Though having the biggest rice producing areas,
organic area only about 1% of total production area
Organic Industry Situationer
• The organic market though still limited is increasing
• Organic & natural products’ global sale =US$B 100 (2008)
• Growth in organic product demand and supply is due to:
o increasing food safety awareness
o desire to lower input costs
o decrease reliance on nonrenewable resources
o participate in high value markets & obtain premium prices
o advocacy to promote healthy lifestyle
• With the limited players in organic farming, supply
will not meet the demand
•
Organic farming endorsed mostly by NGOs worldwide
Organic Product Defined
Those grown
without the use of
chemical fertilizers/pesticides and
with the use of organic fertilizers and
botanical sprays extracted from plants
Adopted from Pequaria,Phils
Types of organic producers
 Certified organic
farms producing for
a premium price
market
 Recognizes both
ecological &
economic benefits
 Primarily sales
oriented (export)
 Non certified organic
farms producing for
their own households
and/or local markets
 Basic reason for
going organic is
intrinsic local benefits
( improved soil, less
external input, nature
friendly)
Challenges
 Sustainable marketing of
organic products
 (Social vs economic)
promoting healthy and
environmentally lifestyle
through organic may be
the aim but you cannot
do it sustainably without
gains or profit
 Thus the need to better
understand your market
 The need to know more
about marketing and
marketing plans
 While marketing plan
alone is no guarantee for
success, at least you
have considered all
factors affecting
profitability
Importance of Marketing
to Enterprise Ventures
• Relates
the enterprise to
outside world
•Sells and delivers products /
services to customers
•Brings investment back to
the enterprise
Some Concerns
• Marketing ones product is the hardest part of being a farmer
•Most farmers:
* lack the skills and are not familiar with marketing
if they need technical assistance in production
which they have been doing all their productive lives,
then more so in marketing which is new to them
* not
use to dealing with market participants
* neither
know how to identify who will buy their product nor
determine where to sell their products with profits
The usual questions
when trying to market produce
Lots of people
Buying vegetables in
the market near me
Surely I have a
I am
producing
vegetables
Why despite increasing
demand for organic
products most cannot
find a market for their
organic produce
ready market
No assurance of ready Markets
Most of the time
find themselves taking
the same price as those
of non organic produce
Common Questions on
Marketing Organic Products
Producers: Why can’t
we easily market?
Market not yet that developed
Consumers unable to differentiate
organic from non organic
Target market may be
erroneously identified
Consumers: Why I should
pay more?
Low supply, high demand
Yield may be low: losses
diseases, pest, wider plant spacing
More organic inputs
Labor intensive
Shifting trend
Produce first
Then sell
Know market
Then Produce
to
Specifications
Requires farmers’ awareness of
• who their end consumers are
• in what agricultural chain they
are in
 Whether existing
market or market still
to be developed
(as in the case of
organic products)
You have to know
your market !
A Simple Marketing System
Information/ communication
Industry
(sellers)
Goods / services
money
Action / decision
Market
(Buyers)
Value Creation
Information/ communication
Producers
(sellers)
Market
(Buyers)
Goods / services
Value creation (cost)
•Core competencies
•Resources
• partners/networks
trader
processor
Payments/revenues
Action/ decision
Wholesalers/
retailers
•End consumers
preferences
satisfaction levels
• consumer relations
All Products passes through a value chain to get to a market then and now
The only difference is that currently there are proliferations of efficiency
driven chains
an offshoot of enhanced dynamics in the market place
changing mix of players
(old and new entrants)
changing mix of
commodities
changing rules of the
games
These leads to dynamic markets
Smallholder producers are
ill equipped to compete in these ever increasing dynamic markets (excluded)
need to be brokered in to be able to cope/be integrated in dynamic markets (included)
Market Analysis
Describes current market who the
buyers are in terms of:
• Market size
(volume &value of products)
• Buying motives & behavior
• Current marketing
strategies of key players
Cambodia
Philippines
Indonesia
Area (ha)
.2%(5,000)
1%(4,000)
9%(40,000)
value
Targeting
export market
250M pesos
40% domestic
60% imports
Targeting
export market
Expansion
10%
10-20%
10%
Level
infancy
Infancy
Developing
Market
Health
conscious
Health conscious
& environment
advocates
Health
conscious
Distribution
Supermarkets
Other buyers
(Institutional
Supermarkets
Other buyers
(Institutional )
Specialty
stores
Demand
increasing as
well as supply
Demand will
outpace
production
Demand
increasing as
well as supply
Farmer
groups, NGO
assisted
Cooperatives,
farmer groups
Big
agribusiness
producers
•Past /current supply & demand
as well as Projected demand
• Market shares - key players
Primary
producers
Marketing
Core Concepts
•
Segmentation
• Target market
• Positioning
Market Segmentation
 Process
subdividing a big
heterogeneous market
into more homogeneous
groupings
 Considerations
Market size,
accessibility,
measurability
 Product Map
Helps determine:
Business boundaries
Who are your competitors?
Which are your products’
substitutes?
Sample Organic Rice market Map
Rice Consumers
Non Rice
Consumers
Consumption
pattern
rice as staple
Occasional
consumers
lifestyle
Health conscious
Non health
conscious
Income
purchasing
power
High
Low
Who makes
decision
Adult decision
Kids decision
Buying where
Specialty shops,
supermarkets
Wet market
Middle
Target Market
 Set of clients which an
organization would like
to serve or is currently
serving
 identified from different
market segments
• Creation of an image
on the clients’ mind
 Primary Market
 Secondary Market
 Tertiary Market
Product Positioning
Positioning
For Organic Products
(current positioning)
Creation of an image
on the clients’ mind
 High Quality High Price
 High quality medium
price
Marketing Strategies
Broad approaches implemented to meet
marketing objectives
Components:
• Product strategies
Branding
Packaging
Labeling
• Price strategies
• Place strategies
- giving a product a name
- total presentation of the product
- providing information about the product
- primarily communicate value of the product
in monetary terms
- making the right product available at the right
place & at the right time thru distribution channels
• Promotion Strategies- communicating the strategies (promo mix)
sales, advertizing,publicity, personal selling
Product Strategies
Entails decision :
Product line – related products as to function, client
needs being satisfied, marketing and
marketing channels
• width
- number of products in the line
(short or long)
• strategy - to extend product position
downward, upward or both
Pricing Strategies
PRICE value of products
expressed in monetary
terms
Steps in Pricing
1.
2.
3.
4.
Set pricing objectives
Determine demand
Determine costs
Determine competitors’
prices and pricing
strategies
5. Evaluate different
pricing methods
6. Set the price
Pricing Methods
 Cost + % Margin
 Full cost +
 Fixed cost +
 On going Market
Price
 Competitive Pricing
Distribution Strategies
•
Making the right products available at
the right place and at the right time;
done through distribution channels
•
Choice of channels dependent on:
a. Nature of product
b. Capability of the producers to
produce
c. Willingness of the middlemen to
carry organizations products
Promotion Strategies
• Done to communicate part of the
marketing strategies
• The promotion mix includes:
a.
b.
c.
d.
Sales promotion
Advertising
Publicity
Personal selling
Marketing Mix
by Sample Strategies
Price
Product
Price
Product
Product Strategy
Place
Price Strategy
Market Study Preparation
1. Define the market objectives
4. Describe the target market
 Market groupings
 Market size
 Market location
3. Conduct further market
 Estimated market share
research
 Target study population and 5. Forecast demand and sales
 Survey of buyers’
sample
intentions
 Data gathering methods
 Sales force composite
 Instruments to be used
 Experts’ opinions
 Market researches and time
 Quantitative methods
of actual conduct of
6. Formulate Marketing Strategies
interviews
 Data analysis and report
writing
2. Analyze the market for the
products
Rapid Market Appraisal Tips
Ask key market players
perceived constraints
market behavior
trends (quality and prices)
shipping lines, airlines have
data on goods transported
and transport prices as well
Review Secondary Information
import statistics
prices and origins
gaps & opportunities
know taxes and fees to pay
regulations to follow
Usual Challenges within organic rice Value Chain
Information/ communication
Value creation (cost)
Producers
(sellers)
trader
•Core competencies
•Resources
• partners/networks Limited volume, non
sustained trading
(high transaction cost
- of assembly)
•Seeds (source/price)
•Lacking in technological
knowhow
•High certification cost/
Competition with non
certified
•No Premium price
•Needs to be brokered
in , cannot do it alone
initially
Some manipulate
prices (increasing
prices of NO to O )
•
processor
Wholesalers/
Market
(Buyers)
retailers
Same milling facilities
(O & NO)
Volume not big
enough to warrant
separate milling
Side by side display
of O & NO rice easily
creates confusion
(NO taken as O)
Point of rice quality
reduction (mixed with
NO rice)
Pass on the cost to
suppliers (shelf
maintenance, promo)
Know your chain, who the participants & end consumers are
• enhance coordination (act as one, no longer competitors)
• strengthen chain position, participate in decision process
• Key is becoming better producers /value adders/ effective
marketers
•End consumers
preferences
satisfaction levels
• consumer relations
•Consumers still unable
to differentiate (O & NO)
•If able not willing to pay
the price differential
•Lacking in
environmental
consciousness
Thank You !