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Establishing collection centres and assembly markets. Collection centres enable produce to be assembled in volume which, in turn, attracts buyers and creates competition between buyers. Better prices are realized and economies can be achieved in transport.
In a situation where some ad hoc shipments of produce are being made into a distant market, the extension officer should consider the possibility of establishing a collection centre or assembly market. This would be achieved by:
Provided the assembly market is a success it will become self-sustaining, but at a later date it can be used as a springboard for group transport and marketing into the high-price, distant, urban markets.
TABLE 16. Recommended transport practices
|Remove products from cold store during the cool part of the day||In warm conditions produce attracts condensation. Water creates an environment for microbial attack|
|Transport produce during the coolest part of the day (dawn or night)||Heat causes faster water loss and respiration|
|Supervise loading and unloading, Boxes should be lifted or carried, never thrown||To prevent boxes being dropped|
|Loading can be made easy by the use of loading bays or with steps or planks. Trolleys, conveyors and fork-lift trucks reduce handling||Produce can be carried on and off easily|
|For loading bulk-transported pineapples, cabbages and melons, the throw-catch system can be used but should involve at least five people||This is acceptable because of the need for speed in unloading and the low value of the individual fruit|
|Provide space between crates for adequate ventilation||To prevent accumulation of heat and gases|
|Containers should be packed to reduce movement and to distribute weight evenly. Only stack to a height which the lowest containers can withstand without crushing. Stow goods in reverse order to their unloading sequence||Shifting loads and poor weight distribution damage produce and cause vehicle handling problems|
|Use white or white-painted convas to cover the produce||The sun's heat will be reflected produce|
|Provide ventilation during transport by raising the canvas cover 20 cm with a plank Into a low tent shape||To provide airflow for the removal of heat and gases|
|Vans should be double-skinned and allow ventilation||To prevent the transmission of heat to the produce|
|Use horizontal dividers to separate layers of containers in the truck This system can also be used for bulk transport of such produce as melons, cabbages, citrus and pineapples||Prevents compression damage to the produce being transported Can be used for containers that do not stack, as well as bulk shipments|
|Bulk shipments should be cushioned with a thick layer of straw or leaves on the bottom and sides of the lorry||Water melons are transported this way in the United States of America to prevent damage|
|Jolting should be reduced by not driving too fast, particularly on poor roads Long wheel-bases reduce damage, as does air-ride suspension, which is preferable to leaf-spring suspension||Jolting increases crop bruising and wastage, reducing sales income|
|Vehicles should be properly maintained||Breakdowns result in time wastage and may result in high levels of produce damage|
|During loading, unloading and when parked the truck should be in the shade||Gives protection from sun and rain|
Farmers' markets and village markets. Farmers' markets in selected towns, where farmers or their associations can sell direct to retailers or individual consumers have been a Success in countries as different as Malaysia, North America and Pakistan.
In Egypt, highly successful village markets have been established which operate on a weekly basis. These enable farmers to sell directly either-to consumers or wholesaler agents from the city markets.
Establishing new markets is a valuable function for an extension officer because it provides new outlets for growers, increases the efficiency of middlemen and enables farmers to build Up an understanding of market orientated production.
Working with farmer groups. Working with farmer groups increases the effectiveness of an extension officer and provides opportunities for collective or cooperative action.
The success of both the above examples depended on the extension officer having formed a farmers' group through which he worked. The farmers had sufficient mutual trust to make the enterprises work.
Working with agribusiness. The presence of an effective extension officer can attract businesses to invest in an area or into attempting to start marketing produce. The extension officer can carry out a vital intermediary role between the farmers and the agribusiness. He can organize farmers to coordinate production, provide training and negotiate contracts on behalf of the growers.
In Java an extension officer encouraged a group of farmers to develop new enterprises.
The group recognized that there was a market for bananas in the town but that small farmers in the high-aititude areas could not sell their fruit. The extension officer organized a loan to cover working capital. The group collected bananas from the farms. They cleaned, graded and packed the fruit in their village before selling 'd in the town.
Some five years later the small growers in the high altitude areas, where the crop grows especially well, have expanded banana production because they now have a distribution system in place. The farmer group now has a regular marketing business in addition to the farmers' own agricultural activities.
Normally the growers sold their papaya and bananas to visiting traders. The farmer group was unhappy with the prices offered. The extension officer encouraged them to take responsibility for their own marketing.
One farmer offered to take all the group's produce to market provided they all committed themselves. Therefore he was assured of sufficient volume. The produce was sold on a commission basis. Initially he used hired transport. Later he was able to afford his own transport.
The farmer group now gets better prices. The marketing profits are made in the local area rather than by the city based trader. The group now has much closer links with the market and can adapt their production accordingly.
A horticultural exporter, for example, with help from the extension officer could introduce a modern system whereby selected farmers grow specifically for export and produce is graded for the export market in the production area. The extension officer could, for example, work with the agribusiness to: identify suitable export farmers and form them into an export growers group;
The extension officer will need to make himself aware of the businesses which might be interested in developing ventures in his area.
An agribusiness wanted 10 start mint oil (menthol) production, a process which Involves steam distillation of Mentha arvensis.
The extension officer, who in this case was attached to the agricultural bank, selected suitable progressive farmers to undertake the initial field trials and multiply the planting material. He organized production credit and ensured that the growers carried out the correct production practices. The agribusiness established the steam distillation units.
Field results demonstrated that high yields and excellent quality mint oil were possible. Farmer Incomes are well above those for traditional crops. Production is expanding and new buyers are coming on to the market as the country develops new uses for the essential oil.
Contracts. Contract farming is a feature of more developed agriculture. It has the advantage of reducing price fluctuations and therefore risk, both for the grower and for the buyer. Contracts generally operate between farmers and agribusinesses who need to be assured of supplies. Problems generally arise when there is a great difference between the contract price and the price in the open market. Growers are tempted to make a short-term profit but this is generally a short-sighted view because it discourages the agribusiness from working with the farmer again. Agribusiness, when oversupplied, will sometimes unfairly reject produce, normally on the basis of quality.
The extension officer can be extremely valuable in assisting negotiation of the contract, possibly on the basis of the break-even cost of production (see Table 11) plus a percentage profit. He should encourage both sides to stand by their contractual agreements and he can act as an arbitrator in the case of dispute.
Many farms in developed countries will grow a proportion of their crops under contract in order to reduce the risk of being fully exposed to the price fluctuations of the open market. Contract prices will generally be below the average wholesale price because of the lower risk element.
SOME EXAMPLES OF DIFFERENT TYPES OF CONTRACT
The price is agreed on in advance. Volumes are also agreed on.
A minimum price is agreed on and a bonus paid after the agribusiness has sold the produce, depending on the profit made.
The risks are jointly shared between the agribusiness and the grower. Profits or losses are equally divided between the two parties.
The agribusiness sells on behalf of the grower and deducts an agreed commission.
Cooperatives. In countries cooperatives have been formed to take on the marketing role on behalf of farmers. An effective cooperative will increase the chances of small farms remaining viable as the market becomes more developed and demanding. The manual has shown many examples of informal cooperation between growers. When considering the formation of a cooperative the extension officer should take into account:
Cooperatives are born out of necessity, when growers recognize that their survival depends on the collective negotiating strength that a cooperative can provide.
Negotiating and selling. For the grower perhaps the most critical time in the production/marketing chain is the point when he negotiates a price with the buyer. The extension officer's role should be to improve the farmers' negotiating strength, training the grower in the art of selling and alerting him to dishonest practices.
Chapter 3 of this book has discussed the extension officer's role in identifying for farmers reputable and appropriate trading partners. He or she should become a bridge between traders and farmers and emphasize that mutual benefit is based on cooperation. Successful business relationships are always selfsustaining because they bring advantages to both sides.
Generally farmers are at a disadvantage in negotiation because of lack of price knowledge. Their strength in negotiation can be increased by:
The extension officer will be able to assist the farmer in these three areas with information as well as by negotiating on behalf of groups of growers and drawing up contracts.
Part of the technique of obtaining good prices for produce is good promotion and selling skills. The farmer in effect needs to be his own salesman. This will involve persuading people to buy. Advantages over other products need to be emphasized. Attractively presented and appetising produce is also effective in obtaining good prices.
Middlemen and traders can be dishonest. A bad dealer can cheat the farmer:
The extension officer can reduce these kinds of problems by identifying honest traders in the first place. He or she can also test the accuracy of scales. (A subtle and effective method is to test if the scales measure the marketing advisor's own weight accurately.) Market news services and market knowledge will enable a farmer to be confident of how the quality of his produce compares with the competition. By encouraging the sharing of information about the reputation of traders, growers will rapidly learn which traders to trust.
A simple method for recording price information and reducing chances of cheating, when produce is sold on commission, is to have despatch notes printed with four copies, one to be retained by the producer, one for the haulier and two for the commission agent. All despatch notes are serially numbered. The producer checks with the commission agent daily by phone how the sales are progressing and will note on his copy of the despatch note the individual selling prices. When the whole consignment is sold the commission agent will return one copy of the despatch note with the selling prices recorded, along with the cheque.
Horticultural research is notoriously weak in both the area of post-harvest handling and developing market-oriented production techniques. The extension officer may have an important role in identifying research topics. For example, he may encourage researchers to develop off-season vegetable production techniques, or to consider an improved packaging design and to research into onfarm crop storage techniques.
The extension officer should also play a role in assisting the planning of national projects to expand horticultural production. In addition, his advisory functions may include assisting in the planning of national market development programmes, i.e. sites and designs of new markets, marketing systems and improved infrastructure.
At the beginning of this manual the marketing task of an extension officer was defined as: finding out what the market wants and then setting up the system to supply that demand at a profit.
Put simply there are four ways to increase profitability:
It is useful for an extension officer to test his plans to see how they could lead to achieving one or more of these criteria.
Lowering costs and reducing wastage are high priorities because they provide the chance of cheaper produce. In all developed societies the cost of food has fallen in real terms. Cheaper food, in turn, means fruit and vegetables will be affordable by the poorer sectors of society. Not only will the market for horticultural produce increase but higher consumption levels can also lead to improvements in health and nutrition. Lower unit costs can be achieved by higher yields and lower transport, packaging and distribution costs. Lower wastage mainly depends on improved post-harvest handling but also on better production and harvesting techniques.
Higher prices can be obtained by producing the right crops, at the right times and the correct quality. They may also depend on negotiating skills and targeting high price buyers.
Increased sales may depend on lower costs but also on finding and developing new markets, new business ventures, new crops, new periods of supply.
Traditionally extension officers have provided technical production advice. Development brings with it the increased commercialization of agriculture. Farmers need assistance in this transition. Marketing and business advice is a new dimension for extension officers, which requires technical, financial, marketing and management skills. It is an exciting area with scope for innovation and the opportunity to significantly improve rural incomes.
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