Marketing
is an important management tool on which the success of any business lies. Although,
the primary aim of any agribusiness is to maximize profit, hence, there is need
for agropreneurs to shift their focus from ‘producing for the market’ to
‘producing what the customers want’. Many agribusiness owners have gone
bankrupt because they failed to prioritize the need of the consumers. In order
to successfully benefit from the opportunities of the market, it is necessary
to understand the market (local, domestic or export) and prepare well for it. For
organic products, marketing is especially important as the higher value and sometimes
price of organic
products often needs
to be explained
accordingly to customers. Marketing ensures that these values are well
communicated, whether face-to-face or through promotion material, in order to
boost demand and develop new markets.
Demand for organic products is growing in nearly all countries
of the world due to growing awareness and improved availability for organic
products. Consumers are increasingly buying organic for the following reasons:
·
They
want to buy guaranteed food which is produced without pesticides;
·
They
care for food that promotes sustainable agricultural production practices and
especially biodiversity (e.g. promoting rare plant and animal species,
diversity of plants and animals);
·
They
care about the well-being of animals;
·
They
want food whose origin they know and how its production benefits producers and
the environment;
·
They
prefer products that contribute to the mitigation or the effects of climate
change.
Consumers
are willing to pay a better price for better quality. This is only one of many
benefits organic farming offers to agropreneurs from developing countries, through
export of organic products to premium markets in developed countries. Demand
for organic products is growing since more than twenty years and offers a huge
income potential for producers, processors and trading companies all over the
world. Certified organic products provide access to attractive local and
international markets, where higher prices and incomes are possible. As a consequence,
organic products from Africa are currently exported to many countries,
especially in Europe, and are being successfully exhibited in international trade
fairs. Organic markets have
developed fast in
the past decades,
especially in richer countries. The reasons for this growth include:
Increased consumer
demand for healthy
and sustainably produced
food, which triggered important
investments from the
side of retailers
to boost the awareness for these
products, and Enhanced public support for the organic sector, aiming to set in
place a regulatory framework that benefits
both farmers and
consumers and involving subsidies and control mechanisms to
ensure consumer protection.
The
support for organic agriculture is particularly high in Europe and North
America where consumers are well informed about organic agriculture and the
benefits of organic products. Therefore, North America, the European Union, Switzerland
and Japan are the largest markets for organic products; their respective
regulations play an important role not only in these countries themselves but
also in the exporting countries. By far the largest organic market is the
United States, followed by the European countries of Germany and France. Even
though these countries are important organic producers themselves, there are
major opportunities for exporting countries – particularly for crops that
cannot be grown in the countries as well as off-season products.
The
fast growing world market for organic produce offers increasing trade opportunities
for African entrepreneurs. In fact, the majority of
certified organic produce from Africa is destined for export markets, with the
large majority being exported to the European Union, which is Africa’s largest
market for agricultural produce. For instance, the total value for the export
of organic produce from Uganda has been estimated at 37 million US dollars in
2009. In most cases, due to the dominance of small-holders in Africa, the
typical supply chain is made up of a private
enterprise organizing many small-holders as out-growers to
secure the sufficient quantities
for export, or farmers are working together on one project supplying and
packaging for exporting trading companies.
In
Tanzania, for example, the total value for the nine most exported organic product
categories was estimated at almost 10 million Euros in 2009. The exports are
mostly destined for the European Union and the USA. In terms of tons, heavier
nut products like cocoa, cashews and coffee are on the top. In economic terms, cocoa, cashews,
vanilla and tea
are the most
important export products. They represent 55 percent of the total
organic export value. The driving factor for the organic export business lies
in the growing interest of big retailers
and processing companies
to broaden the
portfolio of organic products. Consumers should not only
be able to buy fresh organic products, but also different types of convenience
food, ranging from frozen organic pizza to ready-to-eat breakfast cereal mixes.
Since the fast growth of such processed food implies the purchase of a broad
range of organic ingredients, countries have started to specialize on specific
ingredients including: medicinal herbs and spices, dried fruits and mushrooms, flavours
and sweeteners.
Although
the African market for organic products is still small, domestic organic
markets are growing in Africa.
Local organic markets
are usually located
near capital cities and
major towns. The majority of the consumers that know and care
for organic are foreigners and upper-middle class citizens with values similar
to European organic consumers. The products marketed
include organic fresh fruit and vegetables, dairy products, meat, wine, herbs
and personal care products.
In Tunisia and
in Egypt, specialized
shops and a
number of supermarket chains (Metro and Carrefour) have
organic sections. Similarly, organic shops in South Africa, Kenya and Uganda
and Ghana are also picking up organic products and, therefore, playing a growing
role in the domestic organic market. In Zambia, organic farmers sell their
produce in local farmers’ markets or to urban supermarkets. There is no doubt
that, with increasing awareness, the potential of local or domestic African
markets for organic products will increase. However, few African countries have
articulated a concrete promotion strategy for domestic markets. The driving
factor in the domestic market for
organic products relate to the fast expansion of big retail chains. Targeting
upper class consumers in urban areas –including foreigners and well-educated
national citizens – they increasingly try to respond to consumers’ interest for
best quality, including organic. As competition among different retail
chains is increasing, specific retailers are more willing to get involved in
the promotion of organic as part of their strategy to attract consumers and
generate a favourable image compared to their main competitors. Since freshness
is one major quality factor for consumers, especially for fresh vegetables and
fruit, street markets may also become important promoters of organic
food—especially if well-located, near upper-class consumers and are
well-managed and ensure quality through hygiene and trustworthy sellers.
In
Uganda, organic products for the domestic market are sold via a number of
outlets including supermarkets, restaurants, international schools and open markets.
There is a big range of organic products supplied by small-scale farmers and
processors on the domestic market. These include
coffee, bee products, fresh fruits and vegetables and dried fruits. Over
the years, the demand for organic products has been growing steadily. For some products such as organic dried fruits, the
demand by far exceeds supply. Products like organic Arabica coffee are increasingly
being consumed in restaurants and coffee shops. Through a basket
delivery scheme of one of the organic outlets (NOGAMU shop), fresh fruits and
vegetables and other organic products (e.g. sesame,
spices, teas, fruit concentrates) are supplied on an order basis to
customers. Customers place their orders
by telephone or
email and baskets
are prepared and
delivered to their doorsteps.
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