Understanding agricultural chains towards enhanced market access
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Understanding Agricultural chains Towards Enhanced Market Access. Nerlita M. Manalili VREDESEILANDEN. Outline. A Simplistic View of Marketing & Agricultural Chains Dynamic Markets and Accompanying Challenges Towards a Deeper Understanding of Agricultural Chains

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Understanding agricultural chains towards enhanced market access

Understanding Agricultural chains TowardsEnhanced Market Access

Nerlita M. Manalili

VREDESEILANDEN


Outline

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


Understanding agricultural chains towards enhanced market access

A Simple Marketing System

Information/ communication

Producers

(sellers)

Market

(Buyers)

Goods / services

payment

Action/ decision

Porter


Understanding agricultural chains towards enhanced market access

In reality marketing is not as simple as it seems

Information/ communication

Goods / services

Market

(Buyers)

Producers

(sellers)

value

payment

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


Simple notion of markets and marketing

Simple Notion of Markets and Marketing

Lots of people

buying vegetables

in the market

nearest me

Surely I have a

ready market for

my vegetables

I am producing

vegetables

The Reality is

No assurance of ready Markets


Points commonly missed about markets marketing

Points Commonly Missed About Markets & Marketing

What form, mode

& Price are they sold/purchased?

Who are

Currently/buying

Supplying?

In what way

are my products

Similar/different?

What are

The potential entry points or barriers to entry?


Shifting trend

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


Dual face of agrifood markets

Popularity of Traditional retail markets

Dual Face of Agrifood Markets

Enhanced Presence of Modern retailers


Understanding agricultural chains towards enhanced market access

  • These leads to dynamic markets

  • Small producers are

    • ill equipped to compete in these ever increasing dynamic markets

    • need 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


Understanding agricultural chains towards enhanced market access

Creates changes

in supply chains

Factors driving

dynamic market change

Leading to small scale

producers & SMEs

  • Consumer Pull

  • Policy “push”

  • Urbanization

  • Commercial

  • opportunity

  • Food standards

  • Foreign

  • investment

  • Technology

  • Management

  • Organization

  • Industry Structure

  • concentration

  • Procurement

  • Standards

  • Finance

Skills & Assets

Of Producers

&

SMEs

INCLUSION

SMALL PRODUCERS

& SMEs

EXCLUSION

Entry Points

Policies Institutions Business Models Collective Action Support Systems Research

& development

Regoverning Market


Understanding agricultural chains towards enhanced market access

Market Dynamics’ Impact Pathways to Smallholder producers

Small holder producers

Usually lacking in capacity to absorb produce

And the incentives to

Produce more

passers

nichers

failures

Modern retailers

Traditional

Markets

Sustainability

price war

Discounts

Promotion costs

Entry requirements

bonds

accounting

legal documents

business permits, traceability

etc.

Procurement Modes

Consignment

Deferred payment

  • Changing

  • Quality

  • Quantity

  • Variety

  • Price

  • Marketing systems

  • (distribution,etc)

  • consumer

  • behavior

Spillover

Effects

Farming system

(nichers)

Continous supply

(specialty produce)

Production planning

Mono cropping

Staggard planting

(regularity of supply)

Manalili 2007


Understanding agricultural chains

Understanding Agricultural Chains

  • 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 analysis

  • supply chain - on managing the chain

  • value chain - on the value added


Understanding agricultural chains towards enhanced market access

Trader /wholesaler (volume, place)

Producers market

Retailer 3

One stop shopping convenience

Retailer 1

(At your doorstep)

Retailer 2

(At your neighborhood , cleaned)


Supply chain management scm an approach to managing agricultural chains

Supply Chain Management (SCM):an approach to managing agricultural chains

  • 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


Knowing more about the agricultural chain

Knowing more about the agricultural chain

Will help determine your

Tells you about

  • 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


Market access agricultural chains

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 SAC

    • finding what you can do best

    • having a strong position in it


Market strategies in an sac context

Market Strategies in an SAC context

Challenges

Market Driving Forces

  • 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

World Bank 2002


Enhancing position and integration in the chain

Enhancing position and integration in the chain

Vertical integration

Horizontal Integration

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


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

How do we help farmers be integrated in the chain


Four forms of inclusive chain development

Four forms of inclusive chain development

Source: Regoverning Market (with enhancements by Manalili)


Understanding agricultural chains towards enhanced market access

Pathways of enhancing farmers’ position in the chain within the Four forms of inclusive chain development

2

4

1

3

Source: Regoverning Market (with modification by NMM)


Four forms of inclusive chain development1

Four forms of inclusive chain development

Know more about improving

Farming systems and quality

Of product (to have better

Chance at the market and

Get better prices)

Source: Regoverning Market (with enhancements by Manalili)


Four forms of inclusive chain development2

Four forms of inclusive chain development

Enhance quality

Add value and Process

products

Source: Regoverning Market (with enhancements by Manalili)


Four forms of inclusive chain development3

Four forms of inclusive chain development

Farmer study groups

Specialized activity/

Knowledge & Negotiation skills that they get to influence chain decisions

Source: Regoverning Market (with enhancements by Manalili)


Four forms of inclusive chain development4

Four forms of inclusive chain development

Cooperatrive business

Product development

Branding, marketing

Source: Regoverning Market (with enhancements by Manalili)


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