HE most disturbing part of Agribusiness is not successful implementation of GAPs but the Marketing process. Most farmers, especially the new farmers, find it very difficult to secure markets, which is why it is important for us as Ag organisations to train and equip farmers with market linkages as well as ways in which to secure them. Here is what you have to know about Marketing in Agribusiness.
Principles of Marketing in Agriculture
Marketing involves finding out what customers want or need, producing and packaging a product which they will buy from you, rather than from your competitors, for a price that will give you a profit.
Steps to Marketing
Step 1: Find out:
- What products customers want and what can be produced in your area.
- How many buyers are there in the market for those products?
- How many other farmers are already supplying that product?
- Are the prices good enough for you to make a profit?
- Do buyers collect the harvested crop or expect you to transport it and how far is it?
- Is the crop seasonal or can it be grown all year round?
- If the selling price is low, can the product be stored until the price improves?
- Do you have contacts for buyers?
The answers to these questions will help you to do a Gross Margin Analysis which is the selling price of the product minus the costs involved in producing the product.
Step 2: Find out which types of buyers want your goods such as: those who come to buy your produce directly, shops, food processing companies, the Grain Marketing Board, informal market vendors, schools, restaurants and hotels. You should target the type of buyer who will pay the best price and the one it is easiest to sell to. Make sure you know all the requirements of the buyer that you choose.
Step 3: Decide what product (crop/ livestock) you are going to keep and set a goal of how much you are going to produce and the quality.
Step 4: Plan your value chain activities – what needs to be done to produce enough of the right quality product to satisfy your market? Make a production calendar to ensure that you carry out all of the activities at the right time in order to meet the market requirements.
Step 5: Carry out the plan. Buy the inputs, arrange labour, storage, transport etc. Keep records to ensure everything is going according to plan. If not, make corrective measures.
Step 6: Determine the minimum price for your product to make sure that you cover your costs and make a profit. If the price is not right store the product until a better time or process the product (such as drying, canning, blending) to get a better price.
Step 7: Contact buyers, promote your product. Sell the product. Using your records decide what could be done better next time.