UMFI Experience - Linking Community-Based Enterprises with the Mainstream Markets

1. “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 UMFI Experience - Linking Community-Based Enterprises with the Mainstream Markets

2. 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

3. UMFI’s Core Business CBEs Supermarkets Bridging the Big M A R K E T Divide

4. Primary Clients:Community Based Enterprises (CBEs) inSustainable Development 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 • Sustainable Forest/Resource Mgt • Non Timber Forest Products

5. Primary Markets Consumer 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

6. Sales Performance 7 year period

7. So we have accessed the Mainstream • Market! Success??? • Problem Solved? • OR • Just the beginning of an endless state of Solving Problems

8. UMFI’s core learning • The easiest thing to do in Market Intermediation is getting there – accessing the market. • What happens next is the real challenge • How do you survive or maintain the market? • How do you grow in the market? • How do you protect your share of the market?

9. Getting There • Hiring of Personnel – Professionals from within the Industry • With 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

10. 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 products • Premium Price is 35% higher than commercial price • Healthy 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

11. 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

14. Surviving/ Maintaining the Market How Do We Recover our Marketing and Distribution Costs? Consolidating forSustainability 70% < 1% Limited Volume/ Limited Products To sell STILL not Enough Products/ Volume To sell CBEs Upland CBEs Lowland SMEs CBEs Coastal Champion Products – Large Volume Rider Products – Small Volume Consolidation = Scale to cover costs Any volume but must be constant UMFI Merchandise Book Orders Maintain Distribute Promote/Adv Collect Supermarkets,Groceries,Retail Shops END CONSUMERS

15. How Do We Grow the Markets given the limited capacities of CBEs? Common Brand for Sustainability CBEs CBEs CBEs Common Brand = Shared Quality Standards, Shared Costs-MANY UMFI Champion Products Organic Rice = 1 10 CBEs Muscovado Sugar = 1  5 CBEs Honey = 1  6 CBEs Allows CBEs to collectively Supply the market and to recover From impact of natural disasters/ Internal problems Supermarkets,Groceries,Retail Shops END CONSUMERS

16. How do we Protect our share of the Market – Erecting Barriers • Making it harder for new entrants to come in • Build a Strong Brand, Saturate the market • Product Standards on an Industry Level • Certification • Making it harder for new entrants to copy • Product Development – Higher Value products – going beyond access to markets and better packaging

17. Current Level of Operations • 89% increase in Farmers gross income • Recognized in the supermarkets as the distributor of organic products • Recognized 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%

19. Overall Survival Strategy • If you can, know everything but do NOT do everything. Address the bottlenecks  • Establish partnerships – Trust and Transparency • Outsource services outside your core business • Work with past/existing/relevant initiatives (organized communities, standards, policy) • Focus on core business Research, Studies Assessments, Analysis Input Sourcing Production Distribution Sales and Marketing Customer Service/ Market Feedback

20. Thank You