Issue No 12, July 1999.

NOTICE: Hard copies of the Australian New Crops Newsletter are available from the publisher, Dr Rob Fletcher. Details of availability are included in the Advice on Publications Available.

7. The Value Chain in the Native Australian (Bush) Food Industry (concluded)

Anthony Hotson
Tuckombil Native Foods
Telephone: 02 6628 5558
Facsimile: 02 6628 5558
Email: ahotson@nor.com.au

[This article first appeared in the Technical Journal of the Australian Rainforest Bushfood Industry Association, Issue 7: 9-13. It is reproduced with the kind permission of the author. Anthony Hotson is the Vice President of the Australian Rainforest Bushfood Industry Association Inc., which can be contacted at:

This article comprises three parts; they were written to satisfy the requirements of a unit of study in a tertiary educational context. Their inclusion in the ARBIA Journal and this newsletter is for the potential interest of their content. These articles do not claim to be a thorough or exhaustive analysis of the subject]

Other parts of this article:
Part 1. Analysing the Value Chain(s) of the Native Australian (Bush) Food Industry.
Part 2. Developing Suitable Collaborative Relationships within the Native Australian (Bush) Food Industry

Anthony Hotson
Tuckombil Native Foods
Telephone: 02 6628 5558
Facsimile: 02 6628 5558
Email: ahotson@nor.com.au

[This article first appeared in the Technical Journal of the Australian Rainforest Bushfood Industry Association, Issue 7: 17-19. It is reproduced with the kind permission of the author. The article was written to satisfy the requirements of a unit of study in a tertiary educational context. Its inclusion in the ARBIA Journal and this newsletter is for the potential interest of its content. The article does not claim to be a thorough or exhaustive analysis of the subject]

Copyright of this article remains with the author, Anthony Hotson

For the smaller growers of the developing Australian Bushfood industry, changes in supply have compromised their ability to offer significant value to purchasers of their product. This has resulted in the weakening of their influence in the market and subsequent loss of margin and viability.

There is an opportunity for value-creation to win back market and margin through the collaboration of these growers with one another. In their collaborative marketing they must also adopt and embrace a professional and far-sighted attitude to their activity in the industry.

To do this requires the building of closer and more extensive relationships with people in all the stages of the value-chain and a disciplined and dedicated attitude to their business relationships with each other. It also requires creativity and flexibility, and the acquisition of new skills and capacities as producer-marketers.

If these things can be realised, the Producer Network they form will provide the basis for the building of a more solid and strategically positioned enterprise which will maintain and enhance the viability of themselves as growers and the overall value of the industry they create.

Bushfood grower-producers in the industry need to create a structure which can provide long lines of consistent product in a form which offers sufficient value to purchasers that they maintain or expand their business with that structure.

Individual producers are presently at the whim of processors, brokers and other purchasers and are in competition with one another.

There is an opportunity to create collaborative marketing structures to redress these failings and improve market stability and share, whilst at the same time providing improved quality, consistency and accountability value to bushfood consumers.

Of the collaborative relationships available to producers, an appropriate structure to embrace would be the Producer Network. This structure is generally small-scale and suits new or specialty crops because of the specialised market networks they must rely on and work within.

The Bushfood industry is at present based on low-volume, high value products. Because of their unfamiliar nature and necessarily high end price, products must satisfy niche targets in specific market sectors.

Because many growers in the industry own small, poly-cultural, largely unmechanised and largely underspecialised orchards, these growers face difficulties in producing economic volumes of specific product at economic prices. As market conditions change and the revenue base supporting the participants in the industry is spread more thinly, these small growers need to combine their operations so they can:

• avoid being undercut,
• prevent themselves from being played off against each other;
• become bigger players in the marketplace;
• increase their bargaining power;
• increase their awareness of what people want and why they do or do not buy their product(s);
• co-ordinate quality grading, quality assurance and product branding;
• carry out some of the marketing tasks otherwise done by 'middlemen'; and
• increase consumption of their product by promotion.

The core tactical activities the producer network would be advised to aim towards could be outlined as follows.

• The pooling of resources and product to consolidate market contact to a common source, thereby maintaining a cohesive pricing structure amongst Network members; the value that this would harness in the value chain lies in providing more consistent pricing, offering more predictable margins and more efficient purchasing through consolidated market contact.
• Coordination of common grading standards, quality assurance and product branding between all producers in the Network, thereby ensuring appropriate product form and nature for targeted market sectors, providing product traceability for purchasers and satisfying market and legislative demands for producer accountability.
• Differentiation of the product of the Network from other product; This would be based on the strengths of the Network and qualities unique to it; Product branding provides insurance of Network value through the differentiation of other produce which may 'coat-tail' on Network markets or detract form the value the Network creates.
• Establishment of communication amongst members of the Network and between the Network and Purchasers to ensure adequate market intelligence and comprehensive technology transfer in response to market change; This provides relevance-value to the purchasers in that the producers will maintain appropriate product specifications and pricing for their needs, as well as maintaining appropriate supply : demand ratio.
• Ensuring the Network establishes and maintains a high profile in the awareness of purchasers; This communicates to the industry the value offered by the Network and its produce and also serves to provide a reflective self-awareness of the Network members, thus maintaining commitment, focus and relevance in its value systems.
• Maintenance of an involvement in the dictation of industry standards and guidelines so as to protect the value system the Network creates from erosion, due to pressures from other areas of the industry or forces outside the industry.

Other actions the Network should take to ensure its successful functioning would be:

1. Undertake a resource appraisal of the potential growers, including inventories of production and projections, equipment and skills or special capabilities with a view to identifying those suitable for the formation of the network in terms of agronomic methods and conditions, and size and preparedness to join a Network; This will also take into consideration geographic distribution and proximity to centralised or at least shared part-processing, packing and dispatch facilities.
2. Undertake market appraisal to ascertain the value of the market potentially available to producers and of market trends and directions predicted throughout the anticipated life of the Network venture; Seek market intelligence on other players in the industry and their plans throughout the venture period; Formulate a Marketing Plan for the Network and its produce with the aid of a Marketing Consultant.
3. Formulate operational plans for the Network and put the proposal to potential producers; Inaugurate the Network and formulate a Strategic Plan based on the actual capabilities of the Network; Formulate a Business Plan in conjunction with The Business Adviser.
4. Establish contracts and sales agreements with purchasers.
5. Rent or purchase and fit out premises with appropriate processing equipment, packing and storage facilities.
6. Establish the Quality Assurance programme in conjunction with purchasers, including product specifications, product availability, agronomic inputs, cultivar and chemovar selection.
7. Access any governmental assistance or funding via relevant government initiatives.

Relationships between people in the value chain will determine the success or failure of the Network in its marketing aims and as an organisation. To this end it is recommended that the Network would:

• Maintain producer to purchaser contact with regular meetings between purchasers, retailers and consumers; for example, by hosting field trips to farm and processing facilities for purchasers and possibly consumers.
• Maintain solidarity and commitment between members of the Network with regular meetings, both business and social; Hold field days demonstrating and discussing Quality Assurance and agronomy issues to maintain common focus and purpose.
• Establish email and internet usage and list subscription through relevant listservers to keep in touch with other industries' marketing ventures.
• Maintain an industry presence through membership of industry association(s) and participation in industry direction.
• Investigate and pursue co-marketing opportunities, particularly from within the Tourism Industry and with exporters of gourmet food products.
• Maintain working relationships with Financial Adviser and Marketing Consultant.

Communicating the benefits of purchasing the produce of the Network is integral to its functioning as a marketing organisation, and to the perpetuation of its business with purchasers. The mix of promotional strategies engaged by the Network will determine the efficiency and accuracy of this communication.

Initially a strategy of market stabilisation will be pursued, this is the primary objective of the formation of the Network.

The promotional emphasis will be within the existing players in the industry and will focus on the professionalism of the product and its supply line, particularly in relation to the small, non-agribusiness nature of most of the small producers who will be interested in the Network.

Market penetration will most likely not be a major strategy, nor a major strength and instead a product-development-based marketing strategy will be nurtured.

Consequently the marketing images which will be promoted as the Network matures will be of a creative, dynamic and innovative organisation providing a professionally supplied product (range) to the high value niches of the Bushfood market. The value ultimately will lie in the identifying of the Network produce and its region with uniqueness and high quality, enabling that image to add value to the products or establishments in which the Network produce is used.

The growers in the Network may ultimately find that they are really selling Culinary Tourism to support their horticultural pursuits.

3.2 Core Tactical Activities

Promote the Network and its aims to the industry as a professionally organised and operating supplier of bushfood produce, in processed and part-processed form, in bulk, Quality Assured volume. Emphasis will be on convenience, quality and professionalism.

Differentiate the product and the Network from other products and product sources. Do this predominantly in relation to other food, spice and flavour products, but also in relation to other Bushfood product, with the aim of communicating a 'leader' image of the Network.

As the Network matures, promotional emphasis can consolidate on the Network's professionalism and extend into its innovative and creative focus, ultimately building a reputation and brand recognition synonymous with quality and creativity.

Advertise the Network, its product, its ethics and its value to purchasers in industry publications and associated or ancillary magazines from other relevant industries, particularly food and hospitality industries.

Foster a culture of quality within the Network Membership and ensure this becomes a part of the Network identity.

Publish and circulate a Network newsletter championing the activities and goals of the Network, advertising its presence and value, and promoting its image as an industry leader in quality and management.

Encourage supply chain loyalty through strategic alliance and complementary and reciprocal promotional activities.

Foster and maintain close working relationships with prominent chefs and innovative food technologists in working towards high quality at first, and then innovative products, possibly through the formation of strategic alliances with high quality food processors.

Investigate opportunities for the co-marketing of Network or allied product with exporters of gourmet-type foods.

The Network should maintain strict and disciplined focus on quality, reliability, integrity and service for the purchasers of Network products and/or services. This will ensure that the Network will always remain attractive to its clients and adapt to changes in market needs, so long as its products are priced and positioned in relation to the Network's strengths.

Maintain good communication between members of the supply chain and encourage supply chain loyalty.

Develop the physical, technological and human resource capabilities appropriate to the Network operations and, at the same time, develop and execute a means of monitoring the performance and appropriateness of each operation with regard to the value it produces for the consumer.

In response to operational monitoring, modify any operations of the Network in order to maintain their value-generation in the value chain.

Maintain active communication with all members of the supply chain from grower to consumer and enable adequate awareness of the activities of value chain players.

Publish a regular newsletter which is circulated to members of the supply chain and serves to maintain focus on the aims and requirements of the product in its progression to the consumer.

Invest in the supply chain if appropriate, either by way of capital investment or through reciprocity of services.

Regularly review the activities and services of the Network and Network staff.

Maintain customer and end-consumer contact with the Network through targeted telephone surveying regarding quality and satisfaction; Accompany this with more general surveying of the Bushfood industry via inserts in industry magazines and mail-outs.

Ensure prompt, courteous and trouble-free customer service, particularly regarding product or service quality issues or complaints.

NSW Northern Rivers Agricultural Export And Marketing News. Issue #1 April 1998 Northern Rivers Agricultural Development Association and the Regional Internet Marketing Cooperative, 1998. Ballina.

New Crops DOOR-Marketing (Do Our Own Marketing Research) Manual, University of Queensland Gatton College, 1998. Gatton.

ARBIA Newsletter, (1996 -1998) Australian Rainforest Bushfood Industry Association. Lismore.

ARBIA Technical Journal (1996 -1998). Australian Rainforest Bushfood Industry Association. Lismore.

ANFRD News Sheet. (1998) ANFRD. Lennox Head.

Prospects for the Australian Native Bushfood Industry (1997) RIRDC Research Paper No. 97/22. Rural Industries Research and Development Corporation. Barton, ACT.

Rainforest Bushfood on the Tweed Conference Papers (1996) Murwillumbah.

Bush Food Seminar Papers and Proceedings (1994) Bangalow.

Good Fruit and Vegetables. Rural Press. Port Melbourne.

Australian Horticulture, Rural Press. Port Melbourne.

Australian Bushfoods Magazine. Sammy Ringer. Maleny.

Competitive Performance DPIE, Hawthorn.

Marketing (1998). Kotler, Armstrong, Brown, Adam and Chandler. Prentice Hall. Sydney.

Marketing on the Internet (1998). Adam and Westberg. Prentice Hall. Sydney.

Other parts of this article:
Part 1. Analysing the Value Chain(s) of the Native Australian (Bush) Food Industry.
Part 2. Developing Suitable Collaborative Relationships within the Native Australian (Bush) Food Industry

Contact: Dr Rob Fletcher, School of Land and Food, The University of Queensland Gatton College, 4345; Telephone: 07 5460 1311 or 07 5460 1301; Facsimile: 07 5460 1112; International facsimile: 61 7 5460 1112; Email: r.fletcher@mailbox.uq.edu.au

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originally created by: GK; latest update 17 October 2001 by: RF