|Exporting High-Value Food Commodities: Success Stories from Developing Countries (WB, 1993, 119 p.)|
|II. Economic and institutional issues in the marketing of high-value foods|
2.1 A high-value food product represents the outcome of a multiple and sequential series of investments, decisions, activities and decisions; the outcome of a process which begins with the articulation of consumer demand, leads to decisions by farmers and fishermen to produce, raise, or catch particular crops, animals, and fish, and continues through a series of activities which produce and subsequently transform the crop or animal product in form, time, and place to match consumer demand (Breimyer (1976)). Hence, in the case of high-value foods, all profitable and sustainable production, post-harvest, and distribution activities must be demand-driven: they must cater to and adjust to changes in consumer preferences for quality, variety, convenience, location, price, etc.
2.2 Food marketing is the physical and economic bridge which links raw material production and consumer food purchases. It involves a set of interdependent decisions, investments, institutions, resource flows, and physical and business activities (Kohls and Uhl (1985). As the bridge between producers and consumers, the main roles for food marketing are to: a) Stimulate and Support Raw Material Production-- food marketing plays a critical role in stimulating, orienting, and facilitating raw material production at the farm level. This entails the communication of information to farmers regarding what (and when) to produce, the provision of financial (and other) incentives to farmers to produce food items for sale, the reduction of transaction costs between producers and consumers, and the facilitation of farmer access to those production resources (e.g. credit, material inputs) needed to respond to such incentives. b) Balance Commodity Supply and Demand-- food marketing institutions must provide the organizational framework to coordinate production and consumption. It must balance the supply and demand for food raw materials and commodities, not only in quantity terms, but also in terms of quality, time, and place. This entails logistical and informational tasks, transacting for current or future supplies, quality control measures, and making physical changes to the raw materials/commodities themselves. c) Stimulate Demand and Enhance Consumer Welfare-- food marketing should promote increased effective demand, consumption, and consumer welfare by introducing new products, improving product quality, reducing consumer costs, making foods available on a more consistent basis, and educating consumers on the merits and alternative uses of products. These tasks will require the development and application of processing and logistics technologies, the dissemination of information, and the development of efficient mechanisms for the exchange of goods.
2.3 The process of marketing high-value food products transcends several different industries and markets and may cross international borders (Marion et al. (1986)). In this process, the physical commodity can be conceived of as 'flowing' from one value adding stage to another, with each of these stages being associated with a particular industry as conventionally defined (e.g. transport, food processing, packaging, retailing). The product gains value as its form is changed and/or as it is graded, stored, packaged, and transported to more closely match consumer demand. Preceding, accompanying, or following these physical commodity flows are additional flows, namely for a) product, market, and technical information, b) financial resources, and c) ownership rights to the commodity.
2.4 In the marketing of high-value food products, many of the pertinent production, post-harvest, and distribution activities require specialized technical or market knowledge, skills, or assets and/or require the presence of participants in particular locations. This suggests possible gains from a division of labor, whereby potentially many different individuals and organizations specialize in the performance of one or relatively few physical and business activities. However, given the nature of food marketing, there will remain a strong degree of interdependence among these various individuals/organizations; an interdependence which must be reflected in effective coordination of participant decisions and activities, whether through market, administrative, or other means (Davis and Goldberg (1957)).