Title: New Agrofood Marketing Strategies for Agricultural Cooperatives a case from a Dutch European point o
1New Agrofood Marketing Strategies for
Agricultural Cooperatives a case from a Dutch
/ European point of view
Chiang Mai, Thailand - November 30,
2004 Richard van der Maden National Cooperative
Council for agriculture and horticulture The
Netherlands
2(No Transcript)
3Agriculture in The Netherlands (1)
- Total area (land and water) 41.528 km2
- Agricultural use 56
- Water 19
- Woodland 12
- Residential area 8
- Infrastructure 3
- Recreation area 2
4Agriculture in The Netherlands (2)
- Agricultural land use
- Grass land 51
- Arable land 42
- Horticulture 6
- Open land 5,5
- Glasshouses 0,5
- Other 1
5Agricultural sector, some figures
- Gross domestic product (GDP) 454 billion
(2003) - Contribution to GDP
- Primairy sector 2,2 (10 years ago 4)
- Total agricultural sector 10
- Agricultural employment
- Primairy sector 3
- Totale agricultural sector 10,1
- Net agricultural export 20 billion
- The Netherlands are the 3rd largest exporter of
agricultural products - The Netherlands are market leader in exporting
floricultural products
6Cooperatives in The Netherlands
- More than 125 years of cooperative history
- More than 6.000 cooperatives
- 50 in the agricultural sector
- Single purpose
- Economic goal / marketing function
- Not a goal, but a means
7- NCR
- National
- Cooperative
- Council
- for agriculture and
- horticulture
8Mission NCR
- Being a center of expertise and knowledge
network for board members, directors and
professional employees of cooperative
enterprises.
But also looking after interests of
cooperatives and representation in the political
scene, science and other sectors, both national
and international
9Categories of cooperatives
- supply co-operatives
- marketing co-operatives
- co-operative banks
- co-operative auctions
- co-operatives providing other services
10Largest Dutch cooperatives (2003)
11 Market shares of cooperatives (2002)
60
Fruit and vegetables
Starch
100
63
Sugar
Products
87
Credit to farmers
85
Milk
54
Supply
95
Flowers
0
10
20
30
40
50
60
70
80
90
100
Market shares ()
12In the top 20 of world dairy firms 8 are
cooperatives
Nestle Dean Foods Dairy Farmers of
America Fonterra Kraft Foods Danone Parmalat Unile
ver Lactalis Meiji Arla Foods Morinaga Friesland
Coberco DF Bongrain Land OLakes Campina Snow
Brand Sodiaal National Dairy Holdings Nordmilch
Cooperative Non cooperative
Mrd turnover
13In the top 20 of world dairy firms 8 are
cooperatives
25
20
slaughterings in mln p.a.
15
10
5
0
Excell
Hormel
Dumeco
ConAgra
Tyson/IBP
Smithfield
Farmland
Seaboard
Grampian
Maple Leaf
Nordfleisch
Westfleisch
Socopa S.A.
Nanjing Yurun
Danish Crown
Swedish Meats
Olymel/Fletcher
ShenZhen Food
ShineWay Group
Premium Standard
14Number of farms decreases
- Decrease in the number of farms 4 to 5 per year
- Each day 11 farms disappear
x 1.000
15Number of farms (according to size)
Very small
Small
Average
Large
16Number of cooperatives and turnover(in millions
of )
17The five (historical) reasons for setting up
co-operatives
- Countervailing power
- Access to the market
- Economy of scale
- Risk management
- Social reasons
- - preservation of employment
- - development of the country
- - preservation of the countryside
18Primary cooperative marketing
value added
market
max price
cooperative firm
max price
farms of members
labour land capital
max ROI
19Cooperative as a form of entrepreneurship
Basic model
members/owners member community member
administration
business connection
member financing
business operations
customers
20Auction clock
- Cooperative auctions
- Price formation auction clock
- Flowers / plants auction clock is still dominant
- Fruit / vegetablesauction clock ? contract
mediation
21Cooperative as a form of entrepreneurship
A typical model of a modern large cooperative
members/owners member community member
administration
member financing
business connection
business operations of the cooperative owner
administration
business operations of the limited company
equity financing
purchase
External financing
customers
22Traditional marketing channel
retail wholesale farmer controlled
businesses (auctions) producers
23Changing market conditions
- Stronger competition
- Concentration in food retailing
- Higher quality standards
- New structures farmer controlled businesses are
necessary
24Dissatisfaction with the auction system
- Purchase costs too high
- Buying large quantities drives up the price
- Buyer prefers stable prices
- Specific demands are not negotionable
25VTN The Greenery
26History The Greenery
- 1996 Merger of 9 auctions into The Greener
- ? concentration of supply
- 1998 Take over 3 trading groups
- ? concentration of sales
- 2000 Integration auctions and trading groups
27Development of The Greenery
28Consequences
- Importance of auction clock reduced
- Asymmetric information problems
- Interests members become heterogeneous
29Advantages
- Economies of scale in marketing
- Broad product portfolio
Value added and control of markets
Second line activities of coops first
line activities of coops
Value added and control of markets
30Disadvantages
- Large growers
- High tariffs
- Cross-subsidization of small growers
- Innovative growers
- Investments in marketing needed
- No direct contact with retailers
31Number of new producer organisations (per year,
1993-2000)
32Reasons new cooperatives
- Guarantee of product quality
- More bargaining power
- Continues supply
- Brand name
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34Differentiation among cooperatives
- Countervailing power cooperative
- Generic products
- Private label brand
- Specialty product cooperative
- Vertically integrated into wholesale
- Incentives to marketing agents
- Making sales
- Long term relationship retail customers
- Information on customer needs
35- Thank you for your attention!