Commodity Branding as a Developmental Agriculture Strategy

  • Price Takers: Homogenous, undifferentiated soft commodities are characterized by buyer-driven markets, meaning emerging market producers are price takers. Their primary customers (supermarkets, F&B, wholesalers etc) can source inputs and products from multiple suppliers across the globe which drives down profit margins for the smallholder farmers who need it most.
  • Brand Leverage: By placing commodity branding at the centre of developmental strategy, we can increase the negotiating leverage on the producer side which will increase total profits for the smallholders
  • De-commoditization: The end consumer is always kings, and agribusinesses, along with support from national governments must focus on building a national commodity-specific brand that justifies a higher price to the end consumer and has a higher perceived value. Differentiation and de-commoditization is the key.
  • Operational Effectiveness vs Strategic Positioning: The conventional approach to developmental agriculture has emphasized the tangible objectives of food production efficiency (farming practices, input efficiency, storage, technology, etc) as opposed to the intangible higher risk opportunities with strategic positioning and brand building.
  • Not Radical: This strategy has been deployed by western agribusinesses for a long time and indeed, superior positioning, branding, and marketing capabilities are the primary driver of top-line growth and profitability for supermarkets and F&B companies. The advent of digital marketing has never made it easier for the producer to reach the consumer and build a differentiated brand perception for their commodity.
  • 95/141 developing countries depend on commodities for at least half of their export earnings
  • Approximately 2/3rds of the world’s 3bn rural people live in 475m small farm households working on land plots smaller than 2 hectares. Globally, farms smaller than 2 hectares are responsible for 30–35% of the world’s food production.
  • Agricultural export value (also a measure of retail value captured by growers), has been in heavy decline for all major soft commodities in developing countries since the 1970s, meaning smallholder producers are capturing less value than ever before.
  • Wine: France $6312/tonne, Toga $1144/tonne and Madagascar $3689/tonne
  • Roasted Coffee: Italy $7511/tonne, Laos $1507/tonne and Uganda $1507/tonne
  • Vanilla: Madagascar $253,790/tonne, Papa New Guinea $95,022/tonne and India $103,116/tonne
  • Strategy: Conduct deep quantitative and qualitative analysis to establish which markets to play in and how to win in those markets. Match market opportunities with core capabilities to build a positioning strategy which maximizes profit potential
  • Branding: Build a differentiated brand perception amongst the target consumer by building on the strategic positioning analysis. The process will involve everything from building the brand’s values to the visual identity.
  • Marketing: Marketing experts will be the final piece of the jigsaw and ensure the right message gets in front of the right audience.

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Founder & CEO Kavida.ai | Supply Chain Digital Twin | Artificial Intelligence | Supply Chain 4.0 | Social Impact | www.kavida.ai | www.anamrahman.com

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Anam Rahman

Anam Rahman

Founder & CEO Kavida.ai | Supply Chain Digital Twin | Artificial Intelligence | Supply Chain 4.0 | Social Impact | www.kavida.ai | www.anamrahman.com

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