Vivien L. delos Santos DA RFO No. 02 Tuguegarao City March 11, 2013 Marketing our Produce (Group Marketing, Group buying & saving) Vivien L. delos Santos DA RFO No. 02 Tuguegarao City March 11, 2013

OBJECTIVES By the end of this session, participants shall have: Discussed concept of group marketing and its advantages and disadvantage to the members; Identified the different marketing channels and the cost of selling produce to these markets; Discussed the importance and advantages of group buying of inputs; Explain the concept of group buying and credit and its advantages and disadvantages. This session has a significant role to develop a farm business plan. We will be exploring the different parts of the business plan and will also learn how to complete the business plan format.

How many of you have marketed their produce last season? What marketing channel and outlets you used last season?

Seller Products Buyer MARKETING CHANNELS PRODUCT PACKAGING HANDLING TRANSPORT CONSUMER MARKETING CHANNELS

Distributor Wholesaler/ Farmer 100% Coop Municipal Assembler 5% 95% 1% Marketing Channel 19% 57% 24% Inter City Traders & Millers Distributor Wholesaler/ Retailer Consumer 43% 100% Rice Miller/ Reg’l Assembler Prov’l Assembler 4% 72% 24% 57%

Prov’l / Reg’l Traders/ Region 02: Rice Supply Chain Cost Structure Traders (Coop, Mun’l / Prov’l / Reg’l) Farmers Distributors 5.80 Farmgate Cost 0.66 Distribution Cost Handling Cost & Processing = 3.30 Seeds 0.37 Fertilizers 1.26 Insecticide 0.36 Labor 1.63 Irrigation fee 0.23 Threshing & harvesting 1.20 Drying 0.06 Hauling 0.10 Sacks 0.20 Interest 0.39 Municipal Traders Sacks 0.20 Transport 0.40 Losses Hauling Interst 0.10 Total 1.10 Prov’l / Reg’l Traders/ Miller Milling 1.00 Sacks 0.20 Transport 0.40 Losses Hauling Interest Total 2.20 = 9.76 = 14.00 Consumer

Region 02: Rice Supply Chain Cost Structure Traders (Coop, Mun’l / Prov’l / Reg’l) Farmers End-Users Farmer Traders 1 &2 / Miller Wholesaler/Retailers Farmgate Price 8.00 Price Paid by Wholesalers 14.00 Price Paid by Retailers 18.00 Farmgate Cost 5.80 Handling Cost & Processing 3.30 Handling Cost 0.66 Price Paid to Trader 1 Net Income 3.80 2.70 3.34

When marketing produce, it is also important to understand marketing costs. Understanding these costs will assist farmers to select marketing outlets that generate better returns to them.

“Marketing Costs” What kind of produce did you sell? How did you bring the product to the market? Did you prepare your produce in a special way? Did they use packaging? How the selling was organized at the market?

PRODUCE PREPARATION Different Stages in marketing produce PACKAGING HANDLING TRANSPORT STORAGE

Different stages in marketing produce GROUP MARKETING PRODUCE PREPARATION This involves cleaning, sorting, and grading PACKAGING The type of packaging used may range from simple jute bags to plastic packaging for the direct transport of product to the consumers. HANDLING Products are handled several times on their way to the market. Handling includes loading & unloading, re-packing, weighing, etc.

Different stages in marketing produce GROUP MARKETING Transport Costs are incurred by farmers when they take the produce to the market. These costs maybe payment s to a transporter or may also be include running costs of farmer’s own transport. Storage Products that are not sold immediately are usually stored. It is an important cost for many product. The main purpose of storage is to extend the availability of produce over longer period than if it were sold immediately after harvest. The assumption behind storing produce for the market is that the price will rise enough while the product is being stored to cover the cost of storage.

In the different stages of marketing the following should be taken into considerations: GROUP MARKETING Losses Losses include of weight in storage and transit, loss of color, shape, bruise, over ripping, etc. The cost of these is measured by cash paid out. It is measured by loss of income. Other Marketing Cost Other marketing costs include fees, commissions and others.

Together Each Achieves More A Case Study Together Each Achieves More

Discuss the following questions in your group: What opportunity did Aida and Lorna discover in the city? Which opportunity did they choose? What price could Aida get for her corn at the local market? What price could Aida get for her corn at the market in the city? What were the conditions for getting the price in the city? What costs would she have it if she sold her corn in the coty? What did she have to do to meet the conditions? What contracts did Aida write out? How did things work out? What was the difference in profit that Aida and her partners got by selling in the city? What decision did the 4 farmers make about collective farming in the future?

Workshop Review/ Implementation of the Marketing Plan: What market outlets do you plan to sell your produce? Why did you use that market outlet? Present you marketing plans.

Your marketing Plans should be able to answer the following: What products are you marketing? Which market outlet will you use? When will you go to the market? What day? What time? What do you need to prepare product for the market? How will you bring the produce to the market?

Your marketing Plans should be able to answer the following: What arrangements do you need to do at the market before you take your produce to the market for sale? How will you record your sales, income and other information? How will you share the transport and marketing costs? How will you divide the income among the members of team?

Was the price fair? What was the basis for deciding the price? Who conducted the marketing? How long did it take to market the produce? How was the product packaged? What challenges did you face in marketing the product? What will you do differently next time you market the product?

Group buying and saving

Describe your experience in buying inputs and equipment from other farmers, dealers, suppliers, retailers, and manufacturers.

Assessing group buying Advantage Disadvantage Increase bargaining power Possibility of over-centralization Improves economies of scale Loss of individual flexibility Lowers transaction costs Levies and feed for the group Better prices Exploitation of weaker members Combined small surplus can access transport to the market Forced to accept prices of the group The smallest producer can sell at the price at international marketing networks sharing risks encourages innovations

Managing Breakthroughs Investment 2000 Ability increases as he overcomes shame Save 10% 200 Weeks/Year 52 ---------- 1yr Savings 10,400 Ability increases as he learns to sell other products 1,000 52 ---------- 2yr Savings 52,000 Ability & resource increase as he learns logistics 5,000 52 ------------ 3yr Savings 260,000 Ability & resource increase as he manages business 25,000 52 There are two “breakthroughs” in business and two “breakthroughs” in growing a fruitful plant ------------- 4yr Savings 1,300,000 There is enough savings to bear fruit and profit

Salamat Po