Organic Rice Marketing Concepts and Issues

1. Organic Rice Marketing Concepts and Issues Nerlie M. Manalili AsiaDHRRA –LSFM Project Advisory Committee Member

2. Presentation Outline • Objectives • Overview of Regions Organic Industry • Marketing Opportunities of & Challenges • Confronting the organic sector • Some regional insights

3. 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

4. Southeast Asia • Economic Development • Home to tiger economies (Malaysia, Thailand) and emerging economy (Vietnam) and yet home to least developed economies (Laos, Myanmar) A region Of contrast • 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

5. 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: • increasing food safety awareness • desire to lower input costs • decrease reliance on nonrenewable resources • participate in high value markets & obtain premium prices • 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

6. 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

7. 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)

8. 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 Challenges

9. 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

10. 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

11. The usual questions when trying to market produce Why despite increasing demand for organic products most cannot find a market for their organic produce Lots of people Buying vegetables in the market near me Surely I have a ready market I am producing vegetables • Most of the time • find themselves taking • the same price as those • of non organic produce No assurance of ready Markets

12. Producers: Why can’t we easily market? Consumers: Why I should pay more? Common Questions on Marketing Organic Products • Market not yet that developed • Low supply, high demand • Yield may be low: losses • diseases, pest, wider plant spacing • Consumers unable to differentiate • organic from non organic • More organic inputs • Target market may be • erroneously identified • Labor intensive

13. Whether existing market or market still to be developed (as in the case of organic products) Shifting trend Produce first Then sell Know market Then Produce to Specifications • You have to know • your market ! • Requires farmers’ awareness of • who their end consumers are • in what agricultural chain they are in

14. A Simple Marketing System Information/ communication Industry (sellers) Market (Buyers) Goods / services money Action / decision

15. Value Creation Information/ communication Producers (sellers) Market (Buyers) Goods / services • Core competencies • Resources • partners/networks • End consumers • preferences • satisfaction levels • consumer relations Value creation (cost) Payments/revenues Action/ decision

16. 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)

17. 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 • Past /current supply & demand • as well as Projected demand • Market shares - key players

18. Marketing • Core Concepts • Segmentation • Target market • Positioning

19. 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? Market Segmentation

20. Sample Organic Rice market Map

21. 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 Target Market

22. Positioning Creation of an image on the clients’ mind For Organic Products (current positioning) High Quality High Price High quality medium price Product Positioning

23. Marketing Strategies Broad approaches implemented to meet marketing objectives Components: • Product strategies • Branding - giving a product a name • Packaging - total presentation of the product • Labeling - providing information about the product • Price strategies - primarily communicate value of the product • in monetary terms • Place strategies - 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

24. 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

25. Cost + % Margin Full cost + Fixed cost + On going Market Price Competitive Pricing Pricing Strategies Pricing Methods • PRICE value of products expressed in monetary terms • Steps in Pricing • Set pricing objectives • Determine demand • Determine costs • Determine competitors’ prices and pricing strategies • Evaluate different pricing methods • Set the price

26. 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: • Nature of product • Capability of the producers to produce • Willingness of the middlemen to carry organizations products

27. Promotion Strategies • Done to communicate part of the marketing strategies • The promotion mix includes: • a. Sales promotion • Advertising • Publicity • Personal selling

28. Marketing Mix by Sample Strategies Price Product Place Promo Promo Price Place Product Price Strategy Product Strategy

29. 4. Describe the target market Market groupings Market size Market location Estimated market share 5. Forecast demand and sales Survey of buyers’ intentions Sales force composite Experts’ opinions Quantitative methods 6. Formulate Marketing Strategies Market Study Preparation • Define the market objectives • Analyze the market for the products • Conduct further market research • Target study population and sample • Data gathering methods • Instruments to be used • Market researches and time of actual conduct of interviews • Data analysis and report writing

30. Rapid Market AppraisalTips 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

31. Usual Challenges within organic rice Value Chain Information/ communication Value creation (cost) Producers (sellers) Market (Buyers) • Core competencies • Resources • partners/networks • End consumers • preferences • satisfaction levels • consumer relations • 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 • Consumers still unable to differentiate (O & NO) • If able not willing to pay the price differential • Lacking in environmental consciousness • 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

32. Thank You !