Department of Department of Agricultural Agricultural Economics Economics

Organic Organic Marketing Marketing

Study OverviewStudy OverviewBy Simon WeseenBy Simon Weseen

Purpose and ObjectivesPurpose and Objectives PurposePurpose

Profile 4 commodities as they move from producer Profile 4 commodities as they move from producer to end consumer (wheat, lentils, oats, flax)to end consumer (wheat, lentils, oats, flax)

ObjectivesObjectives Provide a description of the vertical supply chainProvide a description of the vertical supply chain Identify issues and opportunities for the marketing Identify issues and opportunities for the marketing

of these commoditiesof these commodities Determine if there are opportunities for the gov’t to Determine if there are opportunities for the gov’t to

facilitate industry development (e.g. provide facilitate industry development (e.g. provide information)information)

Provide new producers with basic marketing Provide new producers with basic marketing informationinformation

Identify opportunities for further research Identify opportunities for further research

Need for Marketing Need for Marketing StudyStudy

Few studies in the area of organic Few studies in the area of organic marketingmarketing Thompson (2001) examined feed Thompson (2001) examined feed

markets in Europe and the USmarkets in Europe and the US Alberta Food and Rural Development Alberta Food and Rural Development

(2001) profiled an organic grain and (2001) profiled an organic grain and oilseed enterpriseoilseed enterprise

Neither study attempted to Neither study attempted to understand the entire supply chain understand the entire supply chain for non-feed commoditiesfor non-feed commodities

Need for Study cont’dNeed for Study cont’d

The organic industry is rapidly The organic industry is rapidly expanding and is now entering expanding and is now entering mainstream marketsmainstream markets New marketing information requiredNew marketing information required

New entrants into the industry may New entrants into the industry may require information about organic require information about organic marketsmarkets

Examples of Examples of Issues/OpportunitiesIssues/Opportunities

Why does Saskatchewan export raw Why does Saskatchewan export raw commodities and import finished goods?commodities and import finished goods?

How can local processors develop How can local processors develop relationships with local retailers?relationships with local retailers?

Is there a lack of marketing information Is there a lack of marketing information available to producers?available to producers?

Are producers, marketers, processors Are producers, marketers, processors and certifiers satisfied with the and certifiers satisfied with the relationships that they have with each relationships that they have with each other?other?

Issues and Opportunities Issues and Opportunities Cont’dCont’d

What types of end products are What types of end products are produced from commodities grown produced from commodities grown on the Prairies?on the Prairies?

How do producers and other How do producers and other industry groups perceive regulation?industry groups perceive regulation?

How can producers maximize their How can producers maximize their returns?returns?

Approach to StudyApproach to Study

Survey’s conducted on 4 major groupsSurvey’s conducted on 4 major groups Producers, marketers, processors, and Producers, marketers, processors, and

wholesaler/retailerswholesaler/retailers ““Mirror Image” approachMirror Image” approach

Interviewees are asked the same questionsInterviewees are asked the same questions Can determine if all industry participants Can determine if all industry participants

perceive the same problems and perceive the same problems and opportunitiesopportunities

Can make recommendations to industry Can make recommendations to industry based on results based on results

ApproachApproach ExampleExample

Marketers indicate that they are providing Marketers indicate that they are providing producers with all information required to sell a producers with all information required to sell a cropcrop

In contrast, producers indicate that they need more In contrast, producers indicate that they need more information to sell e.g. time to sell, what to grow, information to sell e.g. time to sell, what to grow, etcetc

Result: Result: Marketer loses producer as potential clientMarketer loses producer as potential client Producer loses potentially valuable marketing opportunityProducer loses potentially valuable marketing opportunity

Potential Recommendation:Potential Recommendation: Marketers can keep producers happy by providing Marketers can keep producers happy by providing

additional informationadditional information Lobby gov’t to provide additional marketing informationLobby gov’t to provide additional marketing information

Preliminary ResultsPreliminary Results

Results will be presented in a series Results will be presented in a series of short industry papersof short industry papers

Current Results are based only on Current Results are based only on producer surveyproducer survey

Analysis of Organic Wheat Buyers in Analysis of Organic Wheat Buyers in Saskatchewan: A Vertical Coordination Saskatchewan: A Vertical Coordination ApproachApproach Examines the type of marketing Examines the type of marketing

arrangements that offer producers the arrangements that offer producers the highest return on wheathighest return on wheat

ConclusionsConclusions There are significant differences in farm price and There are significant differences in farm price and

marketing costs under alternative marketing marketing costs under alternative marketing arrangementsarrangements

Producer owned marketing firms were found to Producer owned marketing firms were found to generate the highest profit per tonne for generate the highest profit per tonne for producersproducers

Organic Producers’ Perceptions of Organic Producers’ Perceptions of Their MarketersTheir Marketers Examines the perceived importance of Examines the perceived importance of

various functions performed by marketersvarious functions performed by marketers Examines the effectiveness of marketers at Examines the effectiveness of marketers at

carrying out these functionscarrying out these functions E.g. advice on timing of sale, what to grow, E.g. advice on timing of sale, what to grow,

future market prospectsfuture market prospects Conclusions:Conclusions:

Producers were generally pleased with serviceProducers were generally pleased with service Young producers and very large producers Young producers and very large producers

were less satisfied with marketing services were less satisfied with marketing services

Organic Producers’ Perceptions of Organic Producers’ Perceptions of Market Information AvailabilityMarket Information Availability Examines specific problems that Examines specific problems that

producers may have with marketing their producers may have with marketing their wheatwheat E.g. Contracts not honoured, quality and E.g. Contracts not honoured, quality and

price disputes, can’t find buyers, no market price disputes, can’t find buyers, no market infoinfo

Conclusions:Conclusions: Producers feel that they have much less Producers feel that they have much less

market information than buyersmarket information than buyers There may be a role for public or private There may be a role for public or private

market information organizationmarket information organization

Organic Producers’ Perceptions of the Organic Producers’ Perceptions of the Role of CBsRole of CBs Examines the importance of various Examines the importance of various

functions performed by certifiersfunctions performed by certifiers Examines the effectiveness of certifiers at Examines the effectiveness of certifiers at

performing these functionsperforming these functions ConclusionsConclusions

Producers are divided on the importance, Producers are divided on the importance, appropriateness and effectiveness of services appropriateness and effectiveness of services provided by CBs (e.g. connecting with buyers, provided by CBs (e.g. connecting with buyers, research)research)

Less experienced and larger producers are less Less experienced and larger producers are less satisfied with services performed by certifierssatisfied with services performed by certifiers

Organic Producers’ Perceptions of Organic Producers’ Perceptions of Organic Regulation in CanadaOrganic Regulation in Canada Examines producers opinions on Examines producers opinions on

regulating the organic industry in Canadaregulating the organic industry in Canada E.g. How would regulation affect market E.g. How would regulation affect market

access? What are the main marketing access? What are the main marketing challenges for the organic industry?challenges for the organic industry?

Conclusions:Conclusions: Producers support regulation that provides Producers support regulation that provides

market accessmarket access Developing a mandatory standard is deemed Developing a mandatory standard is deemed

more important than educating and promoting more important than educating and promoting organics to consumersorganics to consumers

TimelineTimeline

Near completion of survey stageNear completion of survey stage Next Stages: Next Stages:

Data AnalysisData Analysis Writing of Industry Papers Writing of Industry Papers Marketing Guide?Marketing Guide?

Industry papers available at our Industry papers available at our tradeshow booth - come visit!tradeshow booth - come visit!

Questions or Questions or Comments?Comments?