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CTA/CCST
       Marketing
        Boards




                Adding Value to Local Foods
                   The Role & Impact of Marketing
                               Boards
                                Ian Ivey




November 2012                              ©
CTA/CCST
       Marketing
        Boards




                   Setting the Scene




November 2012                     ©
CTA/CCST
       Marketing               Background research
        Boards



        Desktop research



                           Stakeholder survey



                                                     Stakeholder
                                                    conversations


November 2012                                   ©
CTA/CCST    In 2012 these are the big sector
       Marketing
        Boards
                               drivers




November 2012                        ©
CTA/CCST
       Marketing
                   The food and H&W trend is
        Boards           strengthening




November 2012                    ©
CTA/CCST                   Thriving in the 21st century
       Marketing
        Boards                         requires a shift …

          VALUE


                                                        Solutions
                                             Systems   Fascinations

                                   Bundles
                     Commodity
                      products



                                                        KNOWLEDGE
                  FACTOR DRIVEN    EFFICIENCY DRIVEN   INNOVATION DRIVEN
                     Jamaica              T&T              Denmark
November 2012                                               ©
CTA/CCST                …and that shift is being driven
       Marketing
        Boards
                                     by consumers….

           Age Defiance


                     Fascination


                                   Egoism


                                            Global living


                                                      Sustainability


                                                               Health / wellness


                                                                           Gifts of time
November 2012                                                          ©
CTA/CCST
                                       ….who create a                               Customer:
                                                                                     Hi-value
       Marketing                       demand pull…                                 Vol X $$$
        Boards                                                 $
                                                                                            Customer:
                                                               $
                                               $                                            Mid-value
                                                               $                            Vol X $$$
                                               $                           RETAIL
                                               $
                                                                                                Customer:
                                $                      Value Add                                 Lo-value
                                                       Processors
                                                                                      +
       Plant                    $                                                               Vol X $$$
                                                                                      -
      material                  $
                                         1st Stage                     +
                                        Processors
 Equipment                                                             -

                       Producers                         +
    Inputs
                                                         -
                                         +
                        +                -
     Scale /            -
     systems


                Facilitators: R&D institutions, Government Incentives, financiers, logistics
                        providers, marketing and branding, health and wellness, etc
November 2012                                                              ©
CTA/CCST             …and this defines the viable
       Marketing
        Boards
                            market spaces going forward


                       FUTURE CONSUMER / CLIENT ‘WANTS’
                          & ‘NEEDS’ - GROWTH DRIVERS




                      NATIONAL BEST BET OPPORTUNITY AREAS




       NATIONAL RESOURCES     NATIONAL ENABLERS      NATIONAL CAPABILITIES
            (All types)           (All types)             (All types)


November 2012                                          ©
CTA/CCST
       Marketing            Agriculture as a % of GDP
        Boards      40




                    20




                     0
                          Jamaica   Trinidad &   St. Vincent       Dominica   Saint Lucia
                                      Tobago

                    -20
                                                                                1995
                                                                                2010/11

                    -40
                                                                                Change



                    -60




                    -80




                   -100

November 2012                                                  ©
CTA/CCST
       Marketing                  How does that compare?
        Boards

                        New Zealand
                        • Agriculture 4.7% of GDP in 2011
                        • Value added exports a further 13% of GDP, 40%
                          high value added

                        Australia
                        • Agriculture – 4% of GDP in 2011
                        • One of the lowest cost commodity producers
                          internationally

                In T&T value-add estimated to be 2.8% of GDP in 2010
November 2012                                          ©
CTA/CCST
       Marketing
        Boards




     What is Food & Nutrition Security?




November 2012                ©
CTA/CCST
       Marketing                              A couple of views
        Boards

                     “Food security means you need to be able to feed yourself.
       If it is based upon core competencies then it would mean you would focus on those
      areas which you are best at. Food security is not just about growing your own food.”




    “There is a need to define what is meant by ‘national food security’. In my view it is the
     ability of a nation to feed itself with the least risk – at least in the basic food area. It
   doesn’t mean we need to grow all our own food. It means we need to set up a structure
   to minimise risk. In that case it may be better to contract the growing of food to Guyana
                            if they can produce it more competitively.”

November 2012                                                        ©
CTA/CCST
        Marketing              A good question from Raffique
         Boards                           Shah!
    T&T govt. plans to reduce food imports 50% by 2015 = USD 335 million p.a.
    Agriculture = 0.3% of GDP today
    62.5% of current food imports in 9 categories:
    •   70,000 tonnes of wheat.
    •   51,000 tonnes of maize.
    •   15,000 tonnes of cheese and whole milk.
    •   28,000 tonnes of compressed livestock feed.
    •   28,000 tonnes of rice.
    •   15,000 tonnes of soybean oil.
    •   70,000 tonnes of sugar.
    •   4,000 tonnes of beef.
    •   4,000 tonnes of dried milk.

           What substitutes can be produced in T&T at competitive
                   international prices – and by whom?

November 2012                                             ©
CTA/CCST
       Marketing   And even more so because, for
        Boards              example…

 ..in Jamaica 97.8% of all farms are
 <5ha..

 .. And 78.7% are < 1ha..

 ..how can they produce ‘cheap’
 commodities compared to highly
 mechanised, systems-based 3000 ha
 Australian wheat farms?

November 2012                          ©
CTA/CCST
       Marketing      A view of how we could achieve
        Boards                     that
        “The agricultural sector in small island nations should be
   maximising the addition of real value to locally produced food and
     the value created should be used to pay for the import of cheap
   commodity foods (which will always be the case in relative terms if
                 global food prices continue to increase).”


                                         What a great idea!




November 2012                                     ©
CTA/CCST
       Marketing          Why focus on value adding?
        Boards

  • Fresh produce is expensive in Caribbean
    countries.
  • Low-cost commodity products can’t be
    produced on small-scale units.
  • ‘Cheap food’ is being relegated to history.
  • Poor people are less able to afford fresh
    nutritious foods - so we need to lift incomes.
  • 400 – 1000%+ value can be generated from
    basic raw materials in the region – and lift
    incomes.
November 2012                                        ©
CTA/CCST
       Marketing
        Boards




    Marketing Boards vs. Entrepreneurs




November 2012               ©
CTA/CCST
       Marketing              What’s the Marketing Boards’
        Boards                     track record (-ve)?
                   Jamaica
                   • Production down, little value creation, disillusioned growers, ‘cooking the books’


                   Grenada
                   • Little value creation, no adjustment, ‘anti-entrepreneur’


                   Saint Lucia
                   • Competing with the private sector, poor collaboration


                   St. Vincent & the Grenadines
                   • Competing with the private sector, distorting the market


                   Trinidad & Tobago
                   • ‘Anti-entrepreneur’, little value creation, misguided efforts, ‘cooking the books’



November 2012                                                           ©
CTA/CCST
       Marketing                 Is this the way to address FNS?
        Boards



                                                                Sell to KFC at US 23 c/kg




    Buy from farmer at
        US 69 c/kg

                Source: http://guardian.co.tt/business/2012-11-18/sweet-potato-fries-deal-turns-sour


November 2012                                                                        ©
CTA/CCST
       Marketing         What’s the Marketing Boards’
        Boards               track record (+ve)?
                   Guyana
                   • Rice board opens up new markets, non-monopoly


                   St. Kitts & Nevis
                   • Facilitation of grower/client trading success


                   Trinidad & Tobago
                   • Export ready certification and market development



November 2012                                         ©
CTA/CCST
       Marketing              A success story in Nevis
        Boards




                   By facilitating rather than regulating

November 2012                                      ©
CTA/CCST       What are some big Marketing
       Marketing
        Boards               Board issues?

    Designed for a different age

    • Confused and conflicting agendas

    Traders rather than marketers

    • Political manipulation and corruption

    Production rather than market driven

November 2012                                 ©
CTA/CCST
       Marketing
                            What’s the Entrepreneurs’ track
        Boards                       record (+ve)?
                   Antigua & Barbuda
                   • High value products, value chain development, customer focus


                   Grenada
                   • High value creation from cocoa, nutmeg, value chains, export, customer focus


                   Saint Lucia
                   • Product innovation, value adding, value chains, exports, customer focus


                   St. Vincent & the Grenadines
                   • Healthy food and nutrition, customer focus, value chain


                   Trinidad & Tobago
                   • High value creation from cocoa, value chains, exports, healthy food, customer focus



November 2012                                                             ©
CTA/CCST
       Marketing
                     What are some big Entrepreneur
        Boards                  issues?
      Scale of operations

       • ‘Coopetition’ and collaboration

      Export capabilities

       • Infrastructure and funding

      Standards and regulatory compliance

November 2012                               ©
CTA/CCST
       Marketing
        Boards




           Going forward - some thoughts




November 2012                   ©
CTA/CCST
       Marketing           What are some reality gaps?
        Boards

  Focus Area       State Boards/Agencies         Successful Entrepreneurs

  Orientation      Production driven             Customer/client driven
  Product          Traded                        Marketed
  Agendas          Confused                      Focused
  Direction        Politically oriented          Market oriented
  Mentality        Commodity                     Value-adding
  Structure        Stand alone                   Collaborative
  Value Chains     Poorly developed/integrated   Highly developed/integrated
  Food security    Local state driven            Global value driven
  Agriculture      Is social                     Is a business
  Nutrition/H&W    A second thought              A high growth opportunity area
  PPPs             ‘We know best’                ‘We know best’




November 2012                                          ©
CTA/CCST
       Marketing
                                  Who is best at picking priority
        Boards                              sectors?
  Ranking       ‘Top Down’ Priority Sectors                      ‘Bottom Up’ Priority Sectors


        1       Agriculture (11%)                                 Food & Beverage (11%)

        2       Tourism (11%)                                    ICT (9%)

        3       ICT (9%)                                         Agriculture (8%)

        4       Financial Services (8%)                          Fashion (8%)

       5=       Agro-processing (6%)                             Health & Wellness (7%)

       5=                                                        Creative (7%)




                                Source: IADB Priority Sector Research, NEXT, 09/09
November 2012                                                                        ©
CTA/CCST
       Marketing
                                       Innovation creates value
        Boards




                                                                            US$ 400 – 1,500/kg +




                                                                                US$ 50 – 300/kg
 US$ 2 – 4/kg




                                                                                  US$ 15 – 25/kg
                Factor X – e.g. flavenols, PEA, Theobromine, Anandamine, Methylglyoxal
November 2012                                                         ©
CTA/CCST
       Marketing                                How much value could we
        Boards                                         create?
   Market Focus                                                                 Gross                    Gross Profit/
                                                                               Revenue                    acre/year
   Farm Gate                                                                       $11,250                       $1,550

   Direct Export                                                                   $17,500                       $3,850

   Origin Specific Cocoa                                                           $35,000                      $10,400

   Farmgate Chocolates                                                            $280,000                     $100,000

   Signature Chocolates (e.g. Gina’s, Cocobel, Tobago                            $1,020,000                    $350,000
   Estate)
   Health & Wellness ‘Chocolates’                                                $3,500,000                  $1,000,000+?


                                                                                     Entrepreneurs are
                                                                                     already showing us
            Source: ‘Cocoa Research Unit – Past, Present and Future’, a Power Point presentation by Dr Path Umaharan, 2012

November 2012                                                                                 ©
CTA/CCST
       Marketing   Big value adds
        Boards




November 2012              ©
CTA/CCST
        Marketing
                                 10 things needed for a thriving
         Boards                        agricultural sector

    1     The right scale of operations (viability - $$$/unit area)

    2     The right product/crop focuses (more on the unique)
    3     The right value propositions (more high-end niches)
    4     Develop modern win-win value chains (> share of end-price)
    5     The right branding and marketing approach (less trading)
    6     More alliances, partnerships and networks (must be win-win)
    7     Appropriate technologies (often quite simple)
    8     Attractive to young people (‘friendly’ working conditions)
    9     Adopt a systems approach (agriculture is a business!)
   10     Financially viable (ROI of 5 – 10% - minimum!)


November 2012                                                         ©
CTA/CCST
       Marketing
                                       Making PPP’s work to deliver
        Boards                                    FNS
  Public Partner Contribution                 Private Sector Contribution
  Access to land at a realistic cost          Optimal utilisation and maintenance of that land
  Standards setting and monitoring            Standards implementation
  Market access and support                   Market exploitation
  Appropriate R&D                             Application of R&D
  Infrastructure                              Effective infrastructure use
  Facilitation                                Implementation
  Regulatory                                  Commercial
  A single regional market                    Supplying that single market
  A future vision (majority buy in)           A future vision (majority buy in)
  Food safety and health regulation           Compliance with safety and health requirements
  Training and skills development             Modern attractive and rewarding work
                                              environments
  Technology testing and introduction         Technology application
  Consumer education e.g. nutrition           Consumer aligned solutions, including nutrition


November 2012                                                      ©
CTA/CCST         A clear end-goal helps define the
       Marketing
        Boards
                                    challenge
                                               GDP/Capita
                                                 2030

                                            US$ 20,000+
                                           (Developed nation level)




           GDP/Capita
             2010

         US$ 8,300                 A 250% value add on
                                  everything is required!
November 2012                              ©
CTA/CCST             Without a long-term vision and
       Marketing
        Boards
                            PPPs, how can we achieve FNS?

                                                     e.g.
                                                    Vision
                                                    2030

                   1 – 2 Years




November 2012                               ©
CTA/CCST
       Marketing
        Boards




                   Thank you!




November 2012                   ©

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Food & Nutrition Security

  • 1. CTA/CCST Marketing Boards Adding Value to Local Foods The Role & Impact of Marketing Boards Ian Ivey November 2012 ©
  • 2. CTA/CCST Marketing Boards Setting the Scene November 2012 ©
  • 3. CTA/CCST Marketing Background research Boards Desktop research Stakeholder survey Stakeholder conversations November 2012 ©
  • 4. CTA/CCST In 2012 these are the big sector Marketing Boards drivers November 2012 ©
  • 5. CTA/CCST Marketing The food and H&W trend is Boards strengthening November 2012 ©
  • 6. CTA/CCST Thriving in the 21st century Marketing Boards requires a shift … VALUE Solutions Systems Fascinations Bundles Commodity products KNOWLEDGE FACTOR DRIVEN EFFICIENCY DRIVEN INNOVATION DRIVEN Jamaica T&T Denmark November 2012 ©
  • 7. CTA/CCST …and that shift is being driven Marketing Boards by consumers…. Age Defiance Fascination Egoism Global living Sustainability Health / wellness Gifts of time November 2012 ©
  • 8. CTA/CCST ….who create a Customer: Hi-value Marketing demand pull… Vol X $$$ Boards $ Customer: $ $ Mid-value $ Vol X $$$ $ RETAIL $ Customer: $ Value Add Lo-value Processors + Plant $ Vol X $$$ - material $ 1st Stage + Processors Equipment - Producers + Inputs - + + - Scale / - systems Facilitators: R&D institutions, Government Incentives, financiers, logistics providers, marketing and branding, health and wellness, etc November 2012 ©
  • 9. CTA/CCST …and this defines the viable Marketing Boards market spaces going forward FUTURE CONSUMER / CLIENT ‘WANTS’ & ‘NEEDS’ - GROWTH DRIVERS NATIONAL BEST BET OPPORTUNITY AREAS NATIONAL RESOURCES NATIONAL ENABLERS NATIONAL CAPABILITIES (All types) (All types) (All types) November 2012 ©
  • 10. CTA/CCST Marketing Agriculture as a % of GDP Boards 40 20 0 Jamaica Trinidad & St. Vincent Dominica Saint Lucia Tobago -20 1995 2010/11 -40 Change -60 -80 -100 November 2012 ©
  • 11. CTA/CCST Marketing How does that compare? Boards New Zealand • Agriculture 4.7% of GDP in 2011 • Value added exports a further 13% of GDP, 40% high value added Australia • Agriculture – 4% of GDP in 2011 • One of the lowest cost commodity producers internationally In T&T value-add estimated to be 2.8% of GDP in 2010 November 2012 ©
  • 12. CTA/CCST Marketing Boards What is Food & Nutrition Security? November 2012 ©
  • 13. CTA/CCST Marketing A couple of views Boards “Food security means you need to be able to feed yourself. If it is based upon core competencies then it would mean you would focus on those areas which you are best at. Food security is not just about growing your own food.” “There is a need to define what is meant by ‘national food security’. In my view it is the ability of a nation to feed itself with the least risk – at least in the basic food area. It doesn’t mean we need to grow all our own food. It means we need to set up a structure to minimise risk. In that case it may be better to contract the growing of food to Guyana if they can produce it more competitively.” November 2012 ©
  • 14. CTA/CCST Marketing A good question from Raffique Boards Shah! T&T govt. plans to reduce food imports 50% by 2015 = USD 335 million p.a. Agriculture = 0.3% of GDP today 62.5% of current food imports in 9 categories: • 70,000 tonnes of wheat. • 51,000 tonnes of maize. • 15,000 tonnes of cheese and whole milk. • 28,000 tonnes of compressed livestock feed. • 28,000 tonnes of rice. • 15,000 tonnes of soybean oil. • 70,000 tonnes of sugar. • 4,000 tonnes of beef. • 4,000 tonnes of dried milk. What substitutes can be produced in T&T at competitive international prices – and by whom? November 2012 ©
  • 15. CTA/CCST Marketing And even more so because, for Boards example… ..in Jamaica 97.8% of all farms are <5ha.. .. And 78.7% are < 1ha.. ..how can they produce ‘cheap’ commodities compared to highly mechanised, systems-based 3000 ha Australian wheat farms? November 2012 ©
  • 16. CTA/CCST Marketing A view of how we could achieve Boards that “The agricultural sector in small island nations should be maximising the addition of real value to locally produced food and the value created should be used to pay for the import of cheap commodity foods (which will always be the case in relative terms if global food prices continue to increase).” What a great idea! November 2012 ©
  • 17. CTA/CCST Marketing Why focus on value adding? Boards • Fresh produce is expensive in Caribbean countries. • Low-cost commodity products can’t be produced on small-scale units. • ‘Cheap food’ is being relegated to history. • Poor people are less able to afford fresh nutritious foods - so we need to lift incomes. • 400 – 1000%+ value can be generated from basic raw materials in the region – and lift incomes. November 2012 ©
  • 18. CTA/CCST Marketing Boards Marketing Boards vs. Entrepreneurs November 2012 ©
  • 19. CTA/CCST Marketing What’s the Marketing Boards’ Boards track record (-ve)? Jamaica • Production down, little value creation, disillusioned growers, ‘cooking the books’ Grenada • Little value creation, no adjustment, ‘anti-entrepreneur’ Saint Lucia • Competing with the private sector, poor collaboration St. Vincent & the Grenadines • Competing with the private sector, distorting the market Trinidad & Tobago • ‘Anti-entrepreneur’, little value creation, misguided efforts, ‘cooking the books’ November 2012 ©
  • 20. CTA/CCST Marketing Is this the way to address FNS? Boards Sell to KFC at US 23 c/kg Buy from farmer at US 69 c/kg Source: http://guardian.co.tt/business/2012-11-18/sweet-potato-fries-deal-turns-sour November 2012 ©
  • 21. CTA/CCST Marketing What’s the Marketing Boards’ Boards track record (+ve)? Guyana • Rice board opens up new markets, non-monopoly St. Kitts & Nevis • Facilitation of grower/client trading success Trinidad & Tobago • Export ready certification and market development November 2012 ©
  • 22. CTA/CCST Marketing A success story in Nevis Boards By facilitating rather than regulating November 2012 ©
  • 23. CTA/CCST What are some big Marketing Marketing Boards Board issues? Designed for a different age • Confused and conflicting agendas Traders rather than marketers • Political manipulation and corruption Production rather than market driven November 2012 ©
  • 24. CTA/CCST Marketing What’s the Entrepreneurs’ track Boards record (+ve)? Antigua & Barbuda • High value products, value chain development, customer focus Grenada • High value creation from cocoa, nutmeg, value chains, export, customer focus Saint Lucia • Product innovation, value adding, value chains, exports, customer focus St. Vincent & the Grenadines • Healthy food and nutrition, customer focus, value chain Trinidad & Tobago • High value creation from cocoa, value chains, exports, healthy food, customer focus November 2012 ©
  • 25. CTA/CCST Marketing What are some big Entrepreneur Boards issues? Scale of operations • ‘Coopetition’ and collaboration Export capabilities • Infrastructure and funding Standards and regulatory compliance November 2012 ©
  • 26. CTA/CCST Marketing Boards Going forward - some thoughts November 2012 ©
  • 27. CTA/CCST Marketing What are some reality gaps? Boards Focus Area State Boards/Agencies Successful Entrepreneurs Orientation Production driven Customer/client driven Product Traded Marketed Agendas Confused Focused Direction Politically oriented Market oriented Mentality Commodity Value-adding Structure Stand alone Collaborative Value Chains Poorly developed/integrated Highly developed/integrated Food security Local state driven Global value driven Agriculture Is social Is a business Nutrition/H&W A second thought A high growth opportunity area PPPs ‘We know best’ ‘We know best’ November 2012 ©
  • 28. CTA/CCST Marketing Who is best at picking priority Boards sectors? Ranking ‘Top Down’ Priority Sectors ‘Bottom Up’ Priority Sectors 1 Agriculture (11%) Food & Beverage (11%) 2 Tourism (11%) ICT (9%) 3 ICT (9%) Agriculture (8%) 4 Financial Services (8%) Fashion (8%) 5= Agro-processing (6%) Health & Wellness (7%) 5= Creative (7%) Source: IADB Priority Sector Research, NEXT, 09/09 November 2012 ©
  • 29. CTA/CCST Marketing Innovation creates value Boards US$ 400 – 1,500/kg + US$ 50 – 300/kg US$ 2 – 4/kg US$ 15 – 25/kg Factor X – e.g. flavenols, PEA, Theobromine, Anandamine, Methylglyoxal November 2012 ©
  • 30. CTA/CCST Marketing How much value could we Boards create? Market Focus Gross Gross Profit/ Revenue acre/year Farm Gate $11,250 $1,550 Direct Export $17,500 $3,850 Origin Specific Cocoa $35,000 $10,400 Farmgate Chocolates $280,000 $100,000 Signature Chocolates (e.g. Gina’s, Cocobel, Tobago $1,020,000 $350,000 Estate) Health & Wellness ‘Chocolates’ $3,500,000 $1,000,000+? Entrepreneurs are already showing us Source: ‘Cocoa Research Unit – Past, Present and Future’, a Power Point presentation by Dr Path Umaharan, 2012 November 2012 ©
  • 31. CTA/CCST Marketing Big value adds Boards November 2012 ©
  • 32. CTA/CCST Marketing 10 things needed for a thriving Boards agricultural sector 1 The right scale of operations (viability - $$$/unit area) 2 The right product/crop focuses (more on the unique) 3 The right value propositions (more high-end niches) 4 Develop modern win-win value chains (> share of end-price) 5 The right branding and marketing approach (less trading) 6 More alliances, partnerships and networks (must be win-win) 7 Appropriate technologies (often quite simple) 8 Attractive to young people (‘friendly’ working conditions) 9 Adopt a systems approach (agriculture is a business!) 10 Financially viable (ROI of 5 – 10% - minimum!) November 2012 ©
  • 33. CTA/CCST Marketing Making PPP’s work to deliver Boards FNS Public Partner Contribution Private Sector Contribution Access to land at a realistic cost Optimal utilisation and maintenance of that land Standards setting and monitoring Standards implementation Market access and support Market exploitation Appropriate R&D Application of R&D Infrastructure Effective infrastructure use Facilitation Implementation Regulatory Commercial A single regional market Supplying that single market A future vision (majority buy in) A future vision (majority buy in) Food safety and health regulation Compliance with safety and health requirements Training and skills development Modern attractive and rewarding work environments Technology testing and introduction Technology application Consumer education e.g. nutrition Consumer aligned solutions, including nutrition November 2012 ©
  • 34. CTA/CCST A clear end-goal helps define the Marketing Boards challenge GDP/Capita 2030 US$ 20,000+ (Developed nation level) GDP/Capita 2010 US$ 8,300 A 250% value add on everything is required! November 2012 ©
  • 35. CTA/CCST Without a long-term vision and Marketing Boards PPPs, how can we achieve FNS? e.g. Vision 2030 1 – 2 Years November 2012 ©
  • 36. CTA/CCST Marketing Boards Thank you! November 2012 ©