Issue No 3, January 1995.

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.

5. Marketing of New Crops: Background

Chai McConnell, Postgraduate student
Department of Management Studies
The University of Queensland Gatton College

Our ancestors used crops to satisfy their needs for food, fibre and shelter. Selection and improvement of crops has co-evolved with the development of humanity.

Although the basic necessities of life are intrinsic to every human community, our developed society has seen the rise of the phenomenon known as "consumerism" and the evolution of the "consumer society". This has lead to a need for different types and different uses of crops. We have seen changes in the criteria used to select new crops, and hence changes in the methods of selection.

Production-orientated research has been the traditional approach often followed in new crops selection. Generally, the primary emphasis of this method has been to produce commodities at the lowest possible cost. Once the product, derived from a new crop, has been produced in the most efficient manner, the responsibility then passes to the marketing department to engage in the activities associated with its processing, packaging, distribution and sale.

This approach was relatively successful until the 1960s because the demand, until then, for many commodities had been largely unmet. Later, however, advancements in technology increased society's production capacity and demand for many commodities was surpassed. Consumers were confronted with an extensive array of products from which to choose. Products not meeting demand were not purchased.

With emphasis on production and not on ascertaining and efficiently fulfilling the needs and wants of consumers, negative returns to the costs of research and development occurred.

Today, consumers of final, and to a lesser extent, intermediate goods are confronted with a high degree of substitutability between products. In such a market, selection of new crops needs to be market-orientated.

While production issues remain an integral part of the process, the market-orientated approach increases the probability of selecting a successful new crop. This is achieved by determining whether its product(s) satisfies current or latent demand in a particular target market.

Using this method, research on new crops whose products are unable to generate satisfactory demand at financially acceptable levels would be discarded or postponed in favour of other crops offering greater rewards.

At the University of Queensland Gatton College, a market-orientated method is being used in an attempt to identify new crops with commercial potential suitable for research and development. The purpose of the marketing research is to design an objective and generically applicable model to identify new crops using marketing criteria.

An integral part of this research has been the identification of consumption trends for all final and intermediate goods of plant origin exported and imported into Australia.

The commodities are classified as: textiles and fabrics, paper and associated products, rubber products, organic chemicals, essential oils and resinoids, medicinal and pharmaceutical products, dyeing and tanning products, oils, crude vegetable materials, pulp and waste paper, cork and wood, oil seeds and oleaginous fruits, tobacco, beverages, animal feedstuffs, coffee, tea and spices, sugar and sugar preparations, vegetables and fruit and cereals and cereal preparations.

For these commodities, real prices over 10 years from 1982-83 to 1992-93 have been recorded for 582 imported and 548 exported products.

With the assistance of other data, such as demographic records, consumption and demand trends are being ascertained at the aggregate level, prior to conducting investigations of market potential. By examining commodities that are currently being produced or imported, estimates of what is desired and whether it is being efficiently provided can be determined. With this information, decisions can be made on selecting new crops for research if its product(s) satisfy the above-mentioned criteria.

While the analysis remains to be finalised, several commodities including paper and pulp materials have shown potential to warrant further research.

Between 1982-83 and 1992-93, the import costs to Australia for these products equated to just under $9 billion in real terms. Although the investigations are incomplete, tentative inferences can be made suggesting research into new crops that profitably produce substitutes for these imported goods is warranted. Indeed, with the December 1994 release of the national Balance of Payments figures revealing Australia's worst monthly current account deficit on record, research into new crops that can offer products that not only enhance exports but replace imports is not only timely but relevant.

While increasingly tighter research and development budgets have resulted in greater accountability and emphasis on successfully developing commercial crops, research into new crops is as old as civilisation itself. As societies change so should the criteria by which new crops are selected as only then will the requirements of society be truly satisfied.

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 6 June 1999 by: RF