Post on 02-Jan-2016
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UNDERSTANDING AGRICULTURAL CHAINS TOWARDSENHANCED MARKET ACCESS
Nerlita M. ManaliliVREDESEILANDEN
Outline
A Simplistic View of Marketing & Agricultural Chains Dynamic Markets and Accompanying Challenges Towards a Deeper Understanding of Agricultural Chains Market Access and Agricultural Chains Towards Strengthened Positions in the Chains
Producers(sellers) Market
(Buyers)payment
Information/ communication
Action/ decision
A Simple Marketing System
Goods / services
Porter
Producers(sellers)
Market (Buyers)
payment
Information/ communication
Action/ decision
•a product passes through number of intermediaries (trader, processors, wholesaler, etc) before it reaches the end user(consumer/buyer)
• each level that a product passes through adds value to it (storage, cleaning, processing, etc) and becomes a chain of value adding activities
and leads to a different product form• information flow governs the value addition decisions in the chain• if in simple marketing system - information distortion occurs, more so in a chain
- buyer seller behavior is complicated, more so in a chain
value
In reality marketing is not as simple as it seems
Goods / services
I am producing vegetables
Lots of people buying vegetables in the market nearest me
Surely I have a ready market formy vegetables
The Reality isNo assurance of ready Markets
Simple Notion of Markets and Marketing
Who are Currently/buyingSupplying?
What form, mode& Price are they sold/purchased?
In what way are my products Similar/different?
What areThe potential entry points or barriers to entry?
Points Commonly Missed About Markets & Marketing
Shifting Trend7
Produce first Then sell
Know marketThen Produce
to Specifications
Requires farmers’ awareness of :
• who their end consumers are• in what agricultural chain they are in
Dual Face of Agrifood Markets Enhanced Presence of Modern retailers
Popularity of Traditional retail markets
These leads to dynamic marketsSmall producers are
ill equipped to compete in these ever increasing dynamic marketsneed to be brokered in to be able to cope and be integrated in dynamic markets
Information and Communication, among others plays a crucial role in the process of integrating producers to dynamic markets
•Consumer Pull•Policy “push”•Urbanization•Commercial opportunity•Food standards•Foreign investment Entry PointsPolicies Institutions Business Models Collective Action
Support Systems Research &
development
•Technology•Management• Organization•Industry Structure concentration•Procurement•Standards•Finance
INCLUSION
SMALL PRODUCER
S& SMEs
EXCLUSION
Skills & Assets
Of Produc
ers&
SMEs
Factors driving dynamic market change
Regoverning Market
Creates changes in supply chains
Leading to small scale producers & SMEs
Small holder producers
Modern retailers
Traditional Markets
nichers passers
failures
Entry requirementsbonds accountinglegal documentsbusiness permits, traceabilityetc.
Procurement ModesConsignmentDeferred payment
Sustainabilityprice warDiscountsPromotion costs
Farming system(nichers)Continous supply (specialty produce)Production planningMono croppingStaggard planting (regularity of supply)
Manalili 2007
Spillover Effects
Changing• Quality• Quantity• Variety• Price• Marketing systems (distribution,etc)• consumer behavior
Market Dynamics’ Impact Pathways to Smallholder producers
Usually lacking
in capacity to absorb produceAnd the
incentives to
Produce more
•Network of independent units/enterprises contributing to the planning,
design, production & distribution of a product from its inception (production planning) to its consumption by end consumer/user
• where product flow at each enterprise unit which transforms product into different forms (raw materials to final product) and that
transformation is refer to as value added • value delivery system• a chain participant captures only a certain percentage of the total value
generated by the system
•May come in different names depending on focus of analysissupply chain - on managing the chainvalue chain - on the value added
Understanding Agricultural Chains
Retailer 1(At your doorstep)Retailer 2
(At your neighborhood , cleaned)
Producers market
Trader /wholesaler (volume, place)
Retailer 3One stop shopping convenience
Supply Chain Management (SCM):an approach to managing agricultural chains
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• the coordination & management of all activities within an agricultural chain with the goal of maximizing value for the consumer
• it aims to satisfy consumers through continual improvement of the elements (managed system, managing system and interfaces)
• competition is no longer between the business units of the same level but between chains operating in the same or substitute industries
• the key is coordination among and between participants in the chain
• the challenge is to ensure each participant who captures only a certain percentage of the total value generated by the system gets their fair share
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Knowing more about the agricultural chain
contribution to the chain do you add value or are you just duplicating other’s function?
Is there a danger my contribution can be taken over by others?
identify opportunities within
are their gaps not served
Strength and weaknesses
( to improve on) Threat (to anticipate & prepare for)
Assess future, to evaluate and decide
Will help determine your Tells you about
Market Access & Agricultural Chains
Market access means Be able to bring products to markets On a sustainable basis, getting an acceptable
price for their products Within the context of sustainable agricultural
chain (SAC) Being part or integrated in an SACfinding what you can do best having a strong position in it
Product and service differentiation Value-added demand Quality Safety Sustainability Reducing interventions Eliminating non value activities Improving efficiency
Market segmentation Chain differentiation
Satisfy the need for Integral chain care
Low cost strategy Chain optimization
Market Driving Forces
World Bank 2002
•Information on markets product & product standards volume and prices• technology, resources (+credit) Source and accessibility process and raw materials•Consumer preferences•Varying quality perceptions•Access to alternative markets• competition & competitors’ strategies• trade requirements (export, certification, food safety, etc)• a lot more
Challenges
Market Strategies in an SAC context
Enhancing position and integration in the chain
Assuming other roles and position in the chain
Integration of post farm activities
Specialization in farm production
Participation in coordination and management of the chain
Observer active participant
Vertical integration Horizontal Integration
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How do we help farmers be integrated in the chain
In terms of activities
To improve on his current segment as chain participant
To add more activities and move to other chain segments
In terms of coordination & management
To participate in decision process
In setting norms and standards
Through innovation
Four forms of inclusive chain development
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Integrationof post-farm activities
no participation in
chainManagement
CHAIN Activity integrator
CHAIN (CO-) OWNER
participation in chain
mnagement
CHAIN Participant
CHAIN Partner
Specializationin farm production
Source: Regoverning Market (with enhancements by Manalili)
Pathways of enhancing farmers’ position in the chain within the Four forms of inclusive chain development
22
Integrationof post-farm activities
no participation in
chainManagement
CHAIN Activity integrator
CHAIN (CO-) OWNER
participation in chain
mnagement
CHAIN Participant
CHAIN Partner
Specializationin farm production
Source: Regoverning Market (with modification by NMM)
1
2
3
4
Four forms of inclusive chain development
23
Integrationof post-farm activities
no participation in
chainManagement
CHAIN Activity integrator
CHAIN (CO-) OWNER
participation in chain
mnagement
CHAIN Participant
CHAIN Partner
Specialization in farm production
Source: Regoverning Market (with enhancements by Manalili)
Know more about improvingFarming systems and qualityOf product (to have betterChance at the market and Get better prices)
Four forms of inclusive chain development
24
Integration of post-farm activities
no particpaipation
in chainManagement
CHAIN Activity integrator
CHAIN (CO-) OWNER
participation in chain
mnagement
CHAIN Participant
CHAIN Partner
Specializationin farm production
Source: Regoverning Market (with enhancements by Manalili)
Enhance qualityAdd value and Processproducts
Four forms of inclusive chain development25
Integrationof post-farm activities
no participation in
chainManagement
CHAIN Activity integrator
CHAIN (CO-) OWNER
participation in chain
mnagement
CHAIN Participant
CHAIN Partner
Specializationin farm production
Source: Regoverning Market (with enhancements by Manalili)
Farmer study groups Specialized activity/Knowledge & Negotiation skills that they get to influence chain
decisions
Four forms of inclusive chain development26
Integration of post-farm activities
no participation in
chainManagement
CHAIN Activity integrator
CHAIN (CO-) OWNER participatio
n in chainmnagement
CHAIN Participant
CHAIN Partner
Specializationin farm production
Source: Regoverning Market (with enhancements by Manalili)
Cooperatrive businessProduct developmentBranding, marketing