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Marketing local products:
Short and long distribution channels

[ Summary ]

Section I
Marketing local products via short distribution channels

 

Chapter 6
Support for producers’ groups

 


Although the initial stages of selling via short distribution channels are open to individuals, the subsequent stages, which also lead to the most stable and lucrative ways of placing products on the market, require a complete product range, heavy financial investment and sustained motivation and hence, in many cases, a collective form of action.

Support for collective action may involve a number of different scenarios:

  • A group of businesses or farmers is planning a marketing project via short distribution channels. How can the group best be helped?

  • The entities proposing marketing projects are economically too weak (product range, investment capability, volumes) for each project to be viable individually. How can the creation of a collective initiative be fostered?

  • The LEADER group is directly involved in marketing products via short distribution channels. Is this desirable?

Project support calls for several different phases and approaches.

 


6.1 Arranging for potential project
proposers to meet

 

The desire and motivation of individuals to form a group and make it work cannot be externally imposed or created. However, certain factors can help it along. Firstly players that are likely to become project proposers should first meet individually so that they can get to know one another on a professional basis, or even, if there is sufficient trust between them, so that they can explain their objectives and strategies. In many cases, people working in the same business do not have any opportunity to discuss business matters together even if living in the same area brings them into close contact. Indeed, in some cases they may perceive one another as competitors, even when collaboration between them would be possible, desirable, or even essential for certain projects.


    Example:
    Training to form a bakers’ association: “Ur-Paarl nach Klosterart”, a traditional monastery bread (Vinschgau/Val Venosta, Trentino-Alto Adige, Italy)

    “Ur-Paarl nach Klosterart” is the traditional bread from the upper Adige valley. Its origins date back to the time when the bakery at the Benedictine monastery of Monte-Maria de Burgusio was built in the 17th century. Its production had virtually ground to a halt, as had the cultivation of the cereals formerly used in the bakery. The LEADER programme helped to bring “Ur-Paarl” back to life by funding part of the project design stage (involving training for the bakers), carrying out market surveys, promoting the initiative and establishing quality standards.

    For a more detailed description of this initiative, see the directory of “Innovative action programmes and rural development” (LEADER European Observatory).

 


6.2 Setting up forums for discussion
and expressions of interest is likely to open
up new prospects and to create a new balance

 

By establishing a forum for discussion and expressions of interest, the coordinators of the support project are sometimes able to help create new balances that are more conducive to the contemporary development of an area, even in cases where entrenched interests had been able to block certain initiatives for years.

Again in the Vinschgau/Val Venosta region, the tourist sector wanted tourists to be able to easily move from place to place to discover the area (footpaths and cycle paths, etc.), whereas the farmers whose farm tracks were often solicited for organising walking and cycling routes, had always been reluctant. By encouraging an open discussion between the tourist sector and farmers and showing the good sense of organising a tourist route to promote the region’s agricultural products, LEADER group coordinators were able to propose new types of exchange between the tourist sector and farmers.

 


6.3 Encouraging regional development
initiatives around local products

 

Sometimes traditional products form the basis of a huge range of economic activities in a region. This is the case with cheese production in the Pyrenees, which provides a livelihood for a significant proportion of the population. The “Mission Agro- Alimentaire des Pyrenées” is an example of the integrated regional development of the entire production circuit for local products.


    Example:
    “Mission Agro-Alimentaire Pyrenées” (France)

    In 1982, a specialised team of three people was created in the French Pyrenees to provide support for farmers and project proposers wishing to set up procedures for processing, developing and marketing their products. This support was provided in close association with the producers and encompassed every phase of the project, from improving product quality to implementing marketing strategies. Over 15 years, 29 projects have been successfully implemented, directly involving more than 1,000 mountain farms. Since the outset, the areas covered by the initiative have been numerous and varied: farmhouse and traditionally-produced cheeses, suckling lamb, salted meats, delicatessen meats, foie gras, luxury canned food, jams, liqueurs, honey, medicinal and aromatic herbs, fruit juices, etc.

    The key elements of this initiative are:

    • Input of business skills to the mountain farming sector where such skills are often lacking.

    • Creation of considerable added value that brings in extra income to a community of farmers and craft workers, enabling them to continue living in the mountains.

    • Support provided on the basis of three sets of criteria: technical (associated with possibilities for qualitatively improving production), economic (associated with analysing potential markets) and human (associated with upgrading the skills of project proposers).

    For a more detailed description of this initiative, see the directory of “Innovative action programmes and rural development” (LEADER European Observatory).

 


6.4 Guiding and assisting an existing group

 

Over the past ten years it has become increasingly common for farmers to join forces to market their farm produce direct.

These groups operate in a wide variety of ways. The most common form of marketing is a permanent point of sale, in the form of a shop, although other formulas are emerging, such as collective markets on the farm, collective itinerant vans or even collective deliveries.

The conditions for setting up a marketing system and customer requirements are the same for collective sales structures as they are for individuals.

However, a collective project is more complex to manage, since individual motivations and objectives have to be encompassed and expressed within the collective objectives and strategy.

 


6.5 Defining objectives and priorities
for contractually agreeing on collective
organisation

 

The discussion/training phase prior to starting up the project, preferably guided and assisted by a coordinator, can and should take time. It should last at least one year but no more than two; any longer and the group starts to lose momentum. This allows members to get to know one another by expressing the personalities, plans and strategies of each individual or farm, whilst at the same time constructing the first stages of the project, i.e.:

  • identifying each farm’s objectives and potential involvement;
  • contractually agreeing on a coherent operating strategy;
  • creating a collective identity that meets consumer expectations.

 


6.6 Helping all participants to clarify
their motivations

 

During this phase, all project members evaluate:

  • their short- and medium-term commitments, in terms of product range and volume, working time, financial investment and modifications to their work organisation to comply with their collective responsibilities;

  • their objectives for the joint project in terms of anticipated earnings;

  • their commercial strategy with regard to other sales sites;

  • their motivation for direct contacts with consumers, selling products other than their own, team working and joint decision- making.

Pooling resources will make it possible to select the most appropriate operating method:

  • Is there a large enough variety of products to put together an attractive range that meets the requirements of the target clientele, or should new producers be brought in?

  • Is the group capable of tackling joint management and how should tasks be distributed?

The aim of this phase is to raise awareness of an important factor of success: if the purpose is to make farms economically viable, the commercial objectives will not be enough on their own to guarantee the success of the venture without strong human motivation.

 


6.7 Taking time to get acquainted and
to create a collective identity

 

By alternating periods of action and reflection, the team will gradually cohere around the project. Seeking premises, working out the amount of investment and the means of finance, identifying the appropriate legal status of the group, visiting other collective shops, going to visit one another’s farms to find out their individual know-how and learning basic sales techniques all provide good opportunities.

The group chooses a name for itself, as well as communication tools that reflect the image it wishes to attribute to its products and producers. It can then start to implement marketing initiatives (stands at fairs or markets, local awareness activities, promotion campaign), whilst at the same time continuing to develop the final project. These early attempts at working together are useful for testing collective action prior to making a heavier investment (e.g. setting up a permanent point of sale).

This gradual approach to collective action allows the group to anticipate difficulties in working together. Little by little, each group member learns to adjust to the way in which the others work, without for all that confronting the greatest obstacles straight away. By the time these obstacles emerge, the group is already well established and its members know each other and have learned to work together.

 


6.8 Drawing up the contract and
the internal operating rules

 

This phase consists of formalising in writing the contract for engaging future members.

The contract should include:

  • the conditions of admission, departure and exclusion of members;

  • the status of the producers (Did all of the group’s members invest an equal amount? Do they all participate in the full range of collective tasks? Are members subject to different admission conditions? What margins will be deducted from the sale of products to cover operating costs?);

  • the farms’ area of origin (is it limited to a local region or geographical location?);

  • the distribution of products among producers (Is the rule only one producer per product? What are the supply criteria for ensuring complementarity between producers?);

  • the producers’ responsibility for products (it is vital for producers to agree to provide regular priority inputs to the sales group, in compliance with the legislation in force and the quality criteria collectively defined in advance, as well as to manage stock shortages, unsold articles and returns of substandard goods);

  • developing the pricing policy: exchanging product information among producers and informing consumers.

The internal rules and regulations should stipulate:

  • rules regarding internal decision-making and communication;

  • reviews and discussions at regular intervals (an annual meeting allows the long-term objectives and priorities to be formalised, whereas monthly meetings provide an opportunity to review sales dynamics and customer requirements. At monthly meetings the objectives are identified and short-term issues resolved: stock shortages, promotion campaigns, awareness activities, etc.).

Internal communication tools ensure the day-to-day management and follow-up of sales between producers who report to each other on a daily basis.

 


6.9 Distributing tasks

 

This involves:

  • identifying responsible and competent persons who are recognised as such by the group; they have supplementary skills and assume clearly-defined duties, such as accounting, administration, stock management, decoration, etc.;

  • managing time selling for the collective organisation - Should this amount of time be the same irrespective of earnings, or should it be proportional to the turnover achieved, with the risk that producers presenting loss-leader items will be predominantly involved? Should a compulsory fixed amount of time per month be established, or should the principle be a task bank on a paid hourly basis? Each group has to seek the fairest system, under which all of the other duties, including accounting and management, administration, external relations, promotion and maintenance, should all be considered on the same basis as selling time;

  • managing salaried post(s) - these should be adapted to the needs of the sales group (accounting, sales support for producers on the busiest days) and to the needs of the farms. Perhaps a good solution is to create a post where the employee shares his or her work time between the sales group and the member farms. Whatever the tasks of salaried workers, producers must include them in the team. A salaried worker must be able to describe the selling points with the same competence as producers and feel comfortable with the informal relationship expected by the clientele of this particular form of marketing.

 


6.10 Updating objectives and priorities

 

Experience has demonstrated the need to periodically organise a review between producers to discuss whether their sales objectives have been achieved, whether their farm is ready to adapt to meet growing demand, whether to create a new product, or whether to abandon a sales site.

In parallel, did the measures implemented by the sales structure come up to the producers’ expectations? Should the internal regulations be reviewed? Is the intervention of a mediator or an outsider’s view necessary?

It is useful to think about one basic question: where does the sales group stand within each farmer’s hierarchy of priorities?

Experience has shown that, in cases where the collective sales group is the priority sales medium, or even the only one, the farmers’ motivation remains more constant over the long term than when the group forms only part of their sales network.


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European
Commission

Agriculture
Directorate-General