MARKETING – think alternatively
Why are you farming? The most obvious reaction should be to make money. How can you make money from a farming business? Produce a product/s for which there is a demand – people want the products – and which you can sell (market) at a profit, profit being Income - Costs.
To be able to make a profit you must manage your business properly where to manage entails to plan, to organise, to implement and to control. A farming business, has several areas that need to be managed properly. These areas are production management, marketing management, financial management, human resource management, purchasing management, asset and stock management, administrative management, public relations management and general management.
Of these management areas production management, marketing management and financial management are practically the critical areas. The other areas are all supportive of these three areas. However, should you want to be a number one farmer, it is important to manage all areas properly.
In South Africa we still find the position that our farmers tend to concentrate on is production but neglect marketing, especially new comers. Neglect in the sense that we still carry on marketing in a more formal way – deliver crops to the formal markets as most are doing.
The formal markets are structured and regulated by some form of agreement, implicating that there is normally a third party involved and expect to be paid some form of marketing fee such as a commission. The formal markets will be to deliver your crops to the silos of agricultural businesses, vegetables to fresh produce markets, livestock to livestock sales or abattoirs and so forth.
As smaller farmers and those that are still new to a farming business, we must remember the formal markets require very high-quality products, normally delivered in larger quantities and delivered consistently every day or every week. This restricts the smaller and/or new farmer. Therefore, we often hear the comment that our farmers find it difficult to enter these markets and call on government to assist.
But there are other ways and means to market your products – on proviso you will be willing to put in some effort. And we are specifically referring to the so-called informal market. And this is a major market that can be exploited with remarkable success if you are prepared to put in some extra effort.
Informal market refers basically to a situation where you yourself do the marketing by excluding a third party and any formal structured way of marketing. The informal markets are found mainly in the township areas surrounding all major cities and towns. This is a major market and it is ever growing because of urbanisation and an increase in numbers. And remember people must eat – it is an absolute basic need. In 1950 in South Africa 40% of the population lived in urban areas and the rest (60%) in suburban areas. In 2004 60% of people lived in urban areas and at present some 65% people are urbanised. Forecasts indicate that by 2030 some 71% of people will be urbanised. In 1960 our population was 17,4 million people and today 56 million.
Urbanisation is a reaction to poor economic conditions in the suburban areas mainly because of unemployment. Most people migrate to the larger urban areas because of the impression that work will be available. Better schooling facilities are also a motivator for migration to urban areas.
If we look at the informal market there is a major demand for instance for goats and to a lesser extent cows for ceremonial or cultural reasons. There is a major shortage of goats in South Africa and some 300 000 goats are imported every year from our neighbouring countries. Why not investigate this market?
Fresh meat, chicken, eggs, vegetables are all in demand from the informal market. You have all seen people selling fresh vegetables and other products along the roadside from their stalls and some preparing food (braai mealies, kotas, sishanyama, sishebo). Have you ever explored the possibility to provide such entrepreneurs with the produce they require? Or even set up your own stall if it is practical?
If you are a maize farmer, consider selling some of your maize as green mealies. There is very good money to be made. Consider adding value – pack some of your maize in smaller packages to sell in the informal market to people who keep a few chickens. Or produce your own maize meal.
Earlier on we indicated that the formal markets are very strict on superior quality products, fixed quantities and consistent delivery. The informal markets are more lenient on this, but good quality and consistent availability will always sell and normally at a better price.
Our message – rethink your marketing, use your initiative, get information, investigate alternative ways of marketing and perhaps even investigate producing alternative products. You must look after yourself, nobody else is going to do it.
Article submitted by Marius Greyling, Pula Imvula contributor. For more information, send an email to email@example.com.
Publication: June 2018