Niche Marketing - Thursday, Jan 4, 2001
A flaw in the "niche market" philosophy so loved by the politicians and industry leaders is emphasised
by the article below on what US farmers must do to survive.
Putting aside the blindness to the continuing subsidy death wish by the US farmer, this economist sees
the need for farmers to break out of the commodity-based mindset. An opinion held by many NZ commentators.
Niche marketing is the way to go they say- maybe for hand knitted possum/merino wool
garments sold in a tourist shop - but not a practical option for thousands of individual farmers
with an average of 15 tonnes of medium/coarse wool for sale annually.
Niche marketing is the unfortunate description of the current fad for skip and run selling of surplus
products. Not a useful tool for the long term development of an industry based on farm production
which producers are committed to up to four years of breeding and feeding prior to the product leaving
the farm gate. Sure the horticulture producer can claim to be a niche marketer in years when
supply matches demand but ask any potato or squash grower what happens after his crop is planted
in a year of over supply.
Unless the competitive world of consumer marketing is going to be turned upside down and consumers will
accept paying higher prices for similar quality products, on farm efficiency gains will continue
to be important for the survival of the farm business and to improve the standard of living of
the farmer. The biggest marketing task the farmer has is ensuring that the marketing channel does
not snatch his efficiency gains to support a long and poorly managed processing and distribution function.
Marketing of farm production is about maintaining the broadest marketing front sustainable. Forming
a relationship with the buyer that moves from a bidding to a contractual supply agreement. A relationship
that promotes, orderly and sustainable long-term development of the market with that buyer.
An environment that demands a cooperative approach by farmers that gives buyers the confidence of
security of supply
In the past traders relied on the ignorance of the producers to the market conditions. Technology has
removed part of that limitation. Farmers need to use that knowledge to discipline their cooperatives
and traders and to give a harder edge to the negotiation of deals when selling their produce.
Being price takers may now be a lazy cop out
Finally Alan Greenspan, US Federal Reserve deserves a degree of thanks from rural NZ for at least momentarily
halting if not deferring the rise of the NZ dollar. A dollar under 43 cents at least until
May would be justice for all producers following the big 'farming boom' expectations placed on
them by the urban community.