Marketing by

1
Chapter 12

• Marketing by
• Farmer Groups
• Collective Action

2
Collective Action

• By acting jointly, farmers can achieve marketing
  objectives they cannot achieve by acting
  separately
• Goals
• To improve demand
• To regulate supplies and qualities more in
  keeping with demand
• To improve competitiveness and efficiency in the
  marketing channel
• To gain more channel control and leadership

3
Generic Promotion

• Promotion of a particular commodity financed
  collectively by producers
• Includes advertising and other activities to
  increase demand
• Purpose to change demand and raise price

4
Possible Short- and Long-Term Impacts of Generic
Promotion
5
Program forGeneric Promotion

• Clear, measurable objectives
• A strategy fitting commodity, marketing system,
  buyers attitudes
• Use of professional advertising agency
• Sufficient money to achieve objectives
• A program to evaluate results

6
Marketing Cooperatives

• Cooperative a user-owned and controlled business
  from which benefits are derived and distributed
  equally on the basis of use
• Differ from investor-owned firm (IOF)
• Types of cooperatives
• Federated
• Centralized
• A combination of federated and centralized

7
Top 10 Cooperatives,by Revenue
8
Goals of Marketing Cooperatives

• Provide efficient marketing outlets
• Expand demand for members commodities
• Provide better coordination between production
  and consumption
• Provide more dependable market outlets
• Achieve channel leadership, including vertical
  integration

9
Societal Licenseto Marketing Cooperatives

• Continues to evolve, but main features cast by
  Capper-Volstead Act of 1922
• Fairly exempt from antitrust legislation
• Secretary of agriculture empowered to intervene
  with any coop he finds to be raising prices
  unduly
• Income tax laws recognize unique non-profit
  nature of cooperatives

10
Problems ofManaging a Coop

• Raising capital
• Recognizing that patron-owners may make
  management challenging
• Distinguishing duties of directors and managers
• Managing competition with other cooperatives

11
Criteria for SuccessfulMarketing Coop

• Requirements
• Run a viable business
• Keep producers in control of the board
• Keep board in control of coop
• Expected accomplishments
• Increased demand at farm level for the marketed
  commodity
• Assurance for members that they have dependable
  market access, power and influence in marketing
  channel that they can protect in the future

12
New GenerationCooperatives

• Distinct business from traditional coop
• Principles of new generation coops
• Closed membership
• Upfront equity position by members
• Delivery rights in proportion to equity position
• Transferability of delivery rights and existence
  of market for delivery rights
• Possibility of immediate return of profit to
  members

13
Farmers Bargaining Groups

• Bargaining association coop that represents its
  members by collectively negotiating terms of
  trade but does not engage in physical aspects of
  marketing
• Association has most clout when in control of
  commodity
• Processors may resist dealing with associations

14
Societal Licenseto Farmer Bargaining

• Basically same as for cooperatives
• Agricultural Fair Practices Act of 1967 (S.109),
  intended to win solid protection for farmers, was
  weakened by strong processor lobbying
• Farmer bargaining purely voluntary on both sides
  (farmers and processors)

15
Class Exercise

• For assigned commodity, provide an example of how
  producers are working collectively to market or
  add value to the commodity