THE INDUSTRIOUS PASTORALIST

The Southern Island Lamb Co.

Having marketed Tasmanian wool under the Natural Tasmanian Wool brand for a couple of years, the opportunity became quite clear.

Customers in international markets hold Tasmanian produce in high esteem. Yet and here it comes, commodity selling systems do not reward Tasmanian producers for the 'Tasmanian difference'. When selling their produce as commodity, farmers get paid almost identically to any other Tom, Dick or Harry. In Japan, parts of Europe and North America, the Tasmanian brand is very well regarded and highly sought after.

In the supermarket meat cases of Hong Kong and Singapore quite often you will see New Zealand branded lamb (I must say how much I respect the Kiwi's and what a great job they have done with their origin branding); where's the 'Australian' or 'Tasmanian' branded lamb?

   

The opportunity is just too good. Lamb producers want to participate in supply chains where they can build a relationship with the final customer. So often you hear it - "we want to work further down the supply chain". Producers want to get involved in active marketing programs, where they better understand customers needs and deliver the right produce accordingly. And of course, they want to move towards becoming a price-maker, rather than the reverse.

Abattoirs, boning rooms, packers, traders and exporters can read the 'tea leaves'. They know their customers are demanding more lamb of the right type to meet their consumers demand. Is this going to change? I don't think so. Savvy manufacturers are looking to new and interesting ways to lock in supply. The same savvy folks are closer to the customer and often have a better understanding of their needs. So, a brand like the Southern Island Lamb Company has some appeal.

Perhaps most importantly customers also find the brand very appealling. Quality assured lamb from dedicated Tasmanian producers. The customer has traceability right back to the farms where the lambs grow and can see all the good work done and care taken by the farmer. Right now we're in the process of building relationships with the right customers for the Southern Island Lamb Company brand and our aim is to start selling January 1st 2009.

So, we're meeting with the customers, we have the support of the team from Roberts and have just about signed up a fantastic manufacture and export partner.

Now we just need to start talking to the right Tasmanian growers. If you are interested get in contact - mark@sutt-le.com

What a delightful view!

A better approach to marketing primary produce is one where the producer gets to see the fruits of his or her labour. Farmers go to extraordinary lengths to create better produce and often they lose sight of their produce as soon as it leaves the farm gates. Wouldn't it be more rewarding for the producer to be able to see where their grain goes, or their meat, or their wool?? The truth is in my experience, farmers love to see the fruits of their labour being enjoyed, or stocked in a retail store.

Photography by Claire Drum, April '08. Sheep country, South Africa.

Likewise, today's consumer is discerning. More than ever they want to know where the produce they buy came from. If the shopper is going to be asked to put their hand a little deeper in their pocket to pay a little more, surely they are entitled to know the care and effort the farmer when to?

When produce off the farm is sold via an auction or a commodity selling approach this information is blocked as is 'the view' in both directions. The consumer can't see back to the farmer and likewise the farmer does not get the feedback or satisfaction of knowing where their produce goes.

Creating a dialogue

In commodity based supply chains products lose their identity. There is no incentive to retain the information about the product through the supply chain; in fact there's a substantial dis-incentive!! The discincentive is that if the information were available to buyers further down the supply chain, parties in the middle may be taken out, removed, rubbed out.

The commodity based supply chain has a number of discrete conversion steps between producer and consumer. Each performs their part of the process in turn, converting the produce into a consumer ready form. The product is carried through from producer to consumer but loses its identity; or all the important information that goes with it. Information such as;

• Who produced it?
• Where was it produced?
• What was their approach to production?
• Was it fair trade or sustainably sourced?

The market-oriented value chain ensures relavent information about the product is carried forward. More and more customers really want this information. Where did the product come from? How was it produced? What's the farmers approach to the environment, or sustainability? Are chemicals used in production? And which chemicals? Equally, in the market-oriented value chain, communication of customer needs back through the supply chain is encouraged.

The best outcome of a marketing oriented value chain is when customers and producers are brought together and the communication becomes face to face. Producers have been robbed of information about what it really is the customer wants. When producers are exposed to customers needs and exposed to price signals, they are encouraged to start producing in line with customers needs.

Developing your product in line with customers needs may be 2nd nature in many industries. The interesting fact is the commodity selling mechanisms used in agricultural selling simply discourage communication.

Matching customers and producers

From my biased perspective, the key variables in commodity selling systems are volume, price, averages and aggregation.  Efficient and effective selling mechanisms, yes certainly. Commodity selling most probably evolved during the industrial revolution, which created these efficiencies and economies of scale and hence required these selling mechanisms. The very variables that work for commodity selling systems, run counter to targeted marketing and effective differentiation.

The well known Woolmark brand covered a range of wool product from low quality wool for insulation materials and blended carpets, right through to the very highest quality fine wools for exquisite suits, which sell for thousands of dollars. There's a huge variance in the types and quality's of wool available. This is equally matched at the customer level. There are highly price sensitive customers that want a low end product that will deliver them margin at volume, through to the highest end premium brands, where the price of the wool content in a garment is virtually of no consequence.

At The Merino Company, we created the Natural Tasmanian Wool brand. The key benefits if this brand - high quality, fine, Tasmanian origin, scarce and produced by farmers who take care of the environment. Arguably, Natural Tasmanian Wool is the jewel in the crown of the wool world!

Naturally this wool lends itself to a premium positioning, targeting the right apparel brands, retailers and textiles who respect, demand and are prepared to pay for this type of quality.

I'd propose effectively marketing primary produce is matching exactly the right type of produce with the right customer. The quality variation that occurs in wool from the lowest quality to the highest, tends to occur with other primary produce. Equally, there's vast disparity and variation in customers needs and the way they serve their consumer.

So, my view is matching works. Customers have specific needs and love having their specific needs met. Producers love being rewarded for the care they take in producing better produce.

Viva La Difference!!

Interaction, not transaction

As far as I'm concerned, the business of marketing is all about forming and building the right relationships. Commodity selling systems, like auctions, are adversarial by their very nature. The only way the seller gains is at the expense of the buyer - and vica versa. This discourages relationships, rather than encouraging them.

Auction systems effectively create transactions, whereas relationships encourage interaction. What is the difference?? A transaction is fleeting, an instant in time, execution of a trade at a price point and to a an agreed quality. Interaction may in fact involve a great many transactions, where each is a learning experience for the buyer and the seller.

Relationships exist based upon mutuality. Each participant in the relationship must get something over time for their participation. If this reward were not there, the relationship would not exist, it would wither and die.

Customers love relationships with producers because at the simplest level it can provide them a source of differentiation - maybe it's even an exclusive relationship. Producers also dearly want relationships with customers. Producers, often described as 'salt of the earth' types know that once you've shared a bbq'd chop and a cold beer, you've got a fair chance at an enduring relationship.

 

Christina Jensen from Nike, USA meets Roberts Wool Link Tasmanian Wool Producers in '07.

We knew we had something special at TMC when we brought a customer from Nike, Marks & Spencer, or Muji to meet with some of the dedicated farmers.

Marketing's different to commodity selling!

Often, in the world of agriculture, you will see the words "commodity marketing" together. I believe commodity selling and active marketing are worlds apart.

For the past three years I have been involved in establishing the marketing function of a business called The Merino Company, or TMC. TMC offers wool growers in Australia and South Africa the opportunity to effectively market their wool, rather than sell it via the commodity auction system. TMC's now underway and there's a terrific team taking it from strength to strength. My experience with TMC has been quite a revelation; wool producers desperately want this marketing alternative and customers loved the customer focused and differentiated product.

This marketing approach works so well for wool, well how about the other agricultural commodities? That's what struck me and my business partner, William Lempriere. Why can't we market our grain, meat, fish, eggs, or poultry as differentiated and valuable - rather than the "volume and price-point" commodity?? So we created our marketing service called New-Market.

Wool growers embrace this marketing alternative for the same reasons the apparel brands, retailers and textile brands also do. The reasons are these;

1. Relationships - are formed between the producer and the customer.
2. Matching - a basic matching process occurs between the quality and type of produce the grower produces and what it is the customer actually wants.
3. Communication - an ongoing dialogue of communication is established between the producer and the customer.
4. View - because a marketing channel has been established, there's a view from the grower to the customer. Customers and consumers have the opportunity to look right back to the grower.

I view commodity selling and branded marketing at either end of a spectrum. In its purest form, commodity selling does not encourage any of the four points above. At the other end, when marketing is working well, these points are all important for success.

I'll write up a post on each of the four points above, hoping to encourage some discussion!!