UMFI Experience - Linking Community- Based Enterprises with the Mainstream Markets “Making markets work for small farmers: Understanding Marketing and Market Intermediation” First Regional Forum cum Training Workshop Linking Small Farmers to Markets June 7-11, 2008 Hanoi, Vietnam
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UMFI Experience - Linking Community-Based Enterprises with the Mainstream Markets
“Making markets work for small farmers: Understanding Marketing and
Market Intermediation”
First Regional Forum cum Training WorkshopLinking Small Farmers to Markets
June 7-11, 2008Hanoi, Vietnam
UMFI Background and Context Marketing Program that started in 1989 as a
program component on Upland Development for Tribal-Upland Communities
Project Objective was to address “Marketing” concerns of Upland Communities
Current Mandate is to provide market access to Community Based Enterprises (CBEs) with support services on access to Technology and Finance
Bridging the Big
MARKET
Divide
UMFI’s Core BusinessCBEs Supermarkets
Primary Clients:Community Based
Enterprises (CBEs) inSustainable Development
Sustainable Forest/Resource Mgt
-Non Timber Forest Products
Sustainable Agriculture
- Use of appropriate Farming Technology
- Organic Farming
- Non Destructive/ Environment Friendly
Sectors in Partnership
- Indigenous Communities
- Agrarian Reform Communities
- Coastal Communities
- Micro-Small Enterprises
Primary MarketsConsumer Market
- Supermarkets (230)
- Groceries/ Convenience Stores (100)
Current Operations
Distribute 8 CBE products
- Organic Rice, Muscovado Sugar, Jams-Jellies,
- Bottled Sardines, Honey, Juices, Vinegar, VCO
0
5
10
15
20
25
30
35
40
2001 2002 2003 2004 2005 2006 2007
Sales Performance 7 year period
So we have accessed the Mainstream
Market! Success???
Problem Solved?
OR
Just the beginning of an endless state of Solving Problems
UMFI’s core learningThe easiest thing to do in Market
Intermediation is getting there – accessing the market.
What happens next is the real challengeHow do you survive or maintain the
market?How do you grow in the market?How do you protect your share of the
market?
Getting ThereHiring of Personnel – Professionals from
within the IndustryWith Expertise (knows the systems, policies)With Experience (knows how to manage
dynamics)With Contacts (knows the people inside)With Right Attitude and Orientation
Know the Market – In order to have the right product to sell
Market Opportunities and Realities Market Trends: Increasing Demand for the following:
“Healthy” Food products, All natural product, No Chemicals, Preservatives, Organic
Consumer Survey (200 respondents) Results:50% willing to pay premium price for healthy productsPremium Price is 35% higher than commercial priceHealthy Products defined as Fresh (fruits and
vegetables) No Preservatives, No Chemicals, No Additives
2% willing to pay premium prices for Environment Friendly Products
1 % willing to pay premium prices for Fairly Traded Products
Strategic Positioning Community-Based Products as “HEALTHY
PRODUCTS” Healthy for the Consumers No Chemicals, No
Preservatives, All natural Ingredients, Organic Healthy for the Environment Use of
Appropriate Technology, Supports Sustainable Forest Use
Healthy for the Community Fair Trade Practices
How Do We Recover our Marketing and Distribution Costs?
CBEs Upland
UMFI
Supermarkets,Groceries,Retail Shops
END CONSUMERS
Book Orders
Distribute
Collect
Merchandise
Maintain
Promote/Adv
CBEs LowlandCBEs Coastal
SMEs
Consolidation = Scale to cover costsAny volume but must be constant
Champion Products – Large VolumeRider Products – Small Volume
Consolidating for SustainabilityLimited Volume/
Limited Products To sell
STILL not Enough Products/ Volume
To sell
70%< 1%
Surviving/ Maintaining the Market
How Do We Grow the Markets given the limited capacities of CBEs?
CBEs
UMFIChampion Products
Supermarkets,Groceries,Retail Shops
END CONSUMERS
CBEsCBEs
Common Brand = Shared Quality Standards, Shared Costs-MANY
Allows CBEs to collectivelySupply the market and to recoverFrom impact of natural disasters/
Internal problems
Common Brand for Sustainability
How do we Protect our share of the Market – Erecting Barriers
Making it harder for new entrants to come inBuild a Strong Brand, Saturate the marketProduct Standards on an Industry LevelCertification
Making it harder for new entrants to copyProduct Development – Higher Value products – going
beyond access to markets and better packaging
Current Level of Operations89% increase in Farmers gross incomeRecognized in the supermarkets as the
distributor of organic productsRecognized as the No. 1 Brand for organic rice
in 2007 consumer survey, Estimate share 40% (25% Main Brand, 15% Smkt Brands)Brand recall of 24% unaided (highest) 43%
(aided), Product usage: Trial: 31%, Used most often: 24%, Brand used in the past 12 months 26% Brand used last: 23%, Brand will use next: 25%
Overall Survival Strategy If you can, know everything but do NOT do
everything. Address the bottlenecks Establish partnerships – Trust and TransparencyOutsource services outside your core businessWork with past/existing/relevant initiatives
(organized communities, standards, policy)Focus on core business