purdue offers new part 1 of a continuing series...

Remember in school when agriculturalmarketing classes were all about futuresand options, charting and standard devia-tions? While marketing in that sense iscritical to production agriculture, a newset of marketing principles is becomingever more important to producers.

Today’s producers, are for one, pro-ducing a variety of crops sold to a vari-ety of outlets.

White corn, waxy corn, high oil corn,popcorn, tofu soybeans, and guaranteednon-GMO soybeans and corn are just afew that are now familiar to many pro-ducers. And, that list continues to growwith the introduction of pharmaceuticalcrops in many areas.

Each of these examples providesproducers an opportunity — providedthe fundamentals are well understoodand the foundation for successfullymarketing these products is in place.The importance of specialty grains andsoybeans continues to grow as evi-denced by the fact that the Tokyo grainexchange now has a contract for guar-anteed non-GMO soybeans and someprocessing firms are designating cer-tain facilities as non-GMO.

Marketing value added crops presentsa unique opportunity for those who viewthe big picture. The important thing is tounderstand more than just how to grow aproduct, and to think of the supply chainand the needs of the final user... under-standing that growing the crop is justone part of a bigger picture.

What we understand about marketinghelps us be better prepared to be suppli-ers to our customers… and additionally,or at least potentially, add value to ourvalue added or specialty crops.

What is Marketing?Many farmers were “brought up” in

an era where they were producers ofraw commodities that they sold to the

local elevator. But times have changed,as many producers of value-addedgrains can attest.

One commonly accepted definitionof marketing today is, “Creating cus-tomer satisfaction profitably by build-ing value-laden relationships withimportant customers.”

John Deere and Case New Hollandare two firms that effectively operatewith a marketing-oriented philosophy.Just look around and you will see evi-dence of the time, money and effort thatthese two firms invest in order to devel-op customer satisfaction. Their goal isto build long-term relationships withtheir customers, using a variety of meth-ods, including product features, service,product quality, image and pricing.

Four “P’s” of Marketing Value Added Grain

Producers of value-added grainsalso have an opportunity to tap thatmarketing expertise by employing the4 P’s of Marketing, known as Product,Place, Price, and Promotion.

As you define your product, keep inmind that Product involves Product,Variety, Quality, Design, Features,Brand Name, Services, Packaging, andSizes. When considering the Productcomponent of your marketing mix, payparticular attention to what your cus-tomer wants, as well as what the finalconsumer wants. If guaranteed non-GMO is the added value of your crop,you will need to not only employ verystringent handling and storage prac-tices to ensure no contamination, butalso impeccable records as your guar-antee of the identity preservation andproduct quality.

Place involves Location, DeliveryTiming, Market Channels, Coverage,Assortments, Inventory andTransportation. Which of these aspects

24 SEED & CROPS DIGEST

Part 1 of a Continuing Series

Marketing Value-AddedCrops — Not Just for

Analysts Anymore!Understanding marketing fundamentals

enhances opportunities for today’s producers.

by Kathleen Erickson, Joan Fulton, Ph.D. and Frank Dooley, Ph.D.

“Value-Added Grain” is as an on-line dis-tance education course on quality assuredvalue-added/specialty/identity preservation(IP) grains and oilseeds, developed byPurdue University Ag Economics faculty.The on-line Distance Education Course isoffered through the university’s CooperativeExtension Service and Agricultural andBiological Engineering, AgriculturalEconomics, Agronomy, Animal Science,Botany & Plant Pathology and Entomology.

“Profitability is key to every agribusi-ness entity,” said Dr. Frank Dooley. “Andprofitable marketing of value-addedgrains requires some re-thinking, re-appli-cation and distinctive understanding ofthis market segment and exactly how weengage in a marketing strategy. We thinkthis course will offer professionals somevaluable tools to help improve their abili-ty to minimize risk and maximize incomethrough improved understanding.”

The marketing curriculum includes10 one-hour modules:

Dooley said the program has broadappeal to those in the field or to anyoneinterested in sharpening his or her mar-keting skills in agriculture. “The Value-added Grain course will help producers,handlers and processors of value-addedgrains and oilseeds understand profitablemarketing of these special commoditiesthrough review of some basics and appli-cation of those fundamentals toward thisunique and growing market.”

Narrated professional-qualityPowerPoint lectures will be deliveredon CDs to course participants. Modulesare taught in sequential order as multi-disciplinary learning materials and willtie together and build on each other.Modules also will be available on-line.

Course material delivery will usePurdue University’s internet-based WebCTvirtual classroom software. Individualsregister for this fee-based course throughPurdue’s Lifelong Learning division andwill receive continuing education credits(CEU/CCH ) as well as a professionaldevelopment certificate upon successfulcompletion of all modules.

Purdue Offers NewDistance EducationProgram on MarketingValue-Added Grain

What is Marketing?Product LifecycleValue CreationSupply ChainsLogisticsCustomer Relationship

Management

Developing a StrategicOrientation

Managing RiskContractsDeveloping a

Marketing Strategy

of place are important for your prod-ucts? As a producer, your location canbe extremely important, as not all ele-vators want to handle these specificvalue added crops. If your farm islocated close to a river market withconnections to export opportunities,tofu soybeans for export to Japan maybe an appropriate product for you.Alternatively, you may have trucksavailable and on-farm storage so thatyour specialty is that you are a pre-ferred supplier for a corn processorsince you can deliver product within afew hours of a call from the buyer.

Promotion consists of Advertising,Personal Selling and Public Relations.Which of these aspects of promotionare most important for your business?How could you be using other promo-tional tools to increase the profitabilityof your business? An individual pro-ducer can understand there are waysthey can promote what they are doingwhich is not traditional advertising.Perhaps it is through word of mouthand the relationship you have with anelevator manager, or your reputation asa provider of high quality product.

Pricing considerations prompts yetanother series of questions. While it is

often (at least at first) assumed that themarket determines the price and youhave no control over it, the situation ismore complex than that. Take a look atpremiums and discounts and evaluatethese carefully. How can you adaptyour production, handling and storagepractices to gain the most from the sys-tem of premiums and discounts? Whenthe math is done, it may turn out differ-ently than you first expected. Pricingconsiderations are critical to success-fully marketing value added crops.

You’ll use the four P’s — Product,Place, Promotion, and Price — to devel-op a marketing mix that can bring valueto your customer. These are fundamen-tals, but provide an opportunity for us tolook at our business and our marketingof value added products differently.

Parallels ExistProducers of value added grains may

be new at marketing their value addedcrops, but as an industry, many produc-ers have gained valuable experienceand insights in specifically marketingother commodities. Hog producers arenow quite adept at producing a certainnumber of animals within a strict set ofspecifications, including weight, lean

percentages, discounts and premiumsfor timely delivery of consistent hogs.

Wheat producers have also experi-enced the “next level” of marketingtheir product. Distinct markets exist forhard, soft, spring or winter wheat.Millers really care about what kind ofproduct they are getting. Corn and soy-beans are now moving in that direction.

In 1991 Tom Urban, then CEO ofPioneer Hi-Bred, Inc., noted, “It is, infact, the coming change in grains andoilseeds production patterns which isperhaps the least recognized, yet themost significant in the long run.” Weare now to that point and indeed it is anew marketing world. Understandingthe fundamentals of marketing will bestenhance opportunities for producers ofvalue added grains.”

Kathleen Erickson is President ofErickson Communications. Joan Fultonis Associate Professor in AgriculturalEconomics and Frank Dooley isProfessor of Agricultural Economics atPurdue University. More informationand future articles are forthcoming onmarketing value added grains in S&C.fultonj@purdue.edudooleyf@purdue.edu.

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