«FAO ANIMAL PRODUCTION AND HEALTH paper ADDING VALUE TO LIVESTOCK DIVERSITY Marketing to promote local breeds and improve livelihoods Cover ...»
stock trading and other important aspects of Somali pastoralism. Men, with their strong clan affiliation, cannot easily buy and sell milk from other clans’ camels without detailed negotiations between the clans involved. This does happen, but only to a limited extent.
Both men and camels are embedded in clan-related mechanisms, so arrangements for milk trading have to be continuously renegotiated between the clan leaders of the different herds grazing in an area. This would imply very high transaction costs.
Women, on the other hand, face none of these problems. Their affiliation to the clan system is weak: they do not belong to a clan, so do not embody its interests. They cannot be seen as “competitors” by members of other clans. The only arrangements they have to undertake with local pastoralists are purely commercial: the purchase price, the form of payment, and options for credit. For them, transaction costs are minimal.
We can thus see a clear dualism between production and marketing. Men manage camels, but women sell the milk. Women manage sheep and goats, but men buy and sell them. These complementary roles share power and responsibility within the household and give the system a series of checks and balances that are critical to ensure its sustainability.
Analysis Paul Mundy, Evelyn Mathias and writeshop participants This book describes eight cases – three each from Asia and Africa, and two from Latin America – where people in marginal areas produced specialty products from local breeds and minor species (Bactrian camels, dromedaries, goats and sheep). The raw products include wool, cashmere, meat, hides and milk.
This analysis draws on the cases and intensive discussions with the authors and other writeshop participants. For convenience we refer to each case by its country and animal species (e.g., India sheep), and occasionally to the product (e.g., wool).
SITUATION BEFORE THE NICHE MARKETING INITIATIVETable 5 summarizes the locations, breeds and production systems in the eight cases. The cases represent a range of production systems, from sedentary (South Africa), through transhumant (Kyrgyzstan and Argentina goats), to nomadic pastoralist (Somalia, Mongolia, Mauritania). In all cases the animals are kept under extensive management and with few external inputs.
In all eight cases, the livestock keepers raised their animals mainly or partly for subsistence: they or their family and neighbours consumed much of the meat and milk produced by the animals, and they wove the wool into various handicrafts and garments for home use. Most also produced an unprocessed, low-value product (unsorted, unwashed fleeces, hides, live animals, milk) for sale. These items competed with similar, often superior products from other breeds (white Merino wool) or locations (cashmere from China, imported milk from Europe). None of the livestock-keeping groups had tried to exploit the specific characteristics of their breeds commercially. For this and other reasons, many of the breeds were in decline.
Many of the animals were multi-purpose: they also produced various other products and services – milk, tillage, dung and transport. In several cases, the animals in question were not the main source of income or livelihood for the livestock keepers. The Linca sheep breeders in Argentina, for example, also keep larger flocks of Merino sheep; Somali herders keep cattle and other species besides their camels; and farmers in South Africa grow crops and raise other livestock apart from goats.
ENTERING NICHE MARKETS
Product first, or market first?
In business ventures, it is common to identify a market opportunity first, then develop the products to supply it. This was the approach used by Tiviski in Mauritania. It first identified a promising market – camel milk consumers in Nouakchott – and then established a value chain to serve this market. This involved building infrastructure, identifying milk suppliers, and creating the links between them.
Adding value to livestock diversity
In development projects, however, it is usual to start off with a group of disadvantaged people (for example, poor farmers in a particular area) and try to find ways to help them improve their livelihoods. This often involves seeking markets for a product that they already happen to produce. This approach was indeed used in most of the cases in this book. For example, in Kyrgyzstan, the project is creating linkages with buyers for cashmere;
in Mongolia, the project seeks marketing channels for camel wool; and in South Africa, Umzimvubu Goats buys animals from farmers who already raise them. This is likely to be the approach used by most initiatives to conserve local breeds through niche marketing.
One case serves more of a mass market: the camel milk in Somalia is sold to urban residents.
In the final case, the Tiviski dairy in Mauritania illustrates a combination of niche and mass-marketing strategies. It started out by serving a niche market – northerners in the city of Nouakchott who prefer camel to cow milk. But the dairy has experienced difficulties in getting reliable supplies of camel milk, so expanded into cow and goat milk. It sells to middle-class urban consumers and competes with other locally produced milk products as well as imported powdered and reconstituted milk. Tiviski has also developed a truly niche product, camel cheese, but efforts to market this have so far fallen foul of regulatory barriers.
MARKETING STRATEGIESEnterprises can consider four alternative marketing strategies (Table 6). This table is known as the Ansoff matrix after the business specialist who developed it.
Market penetration An enterprise can try to increase its sales of existing products in existing markets (those it already serves) – for example, by better marketing, advertising, repackaging, or cutting prices. This approach is called “market penetration”. It is generally seen as the safest marketing strategy, as the enterprise is already familiar with both the product and the market.
Only one case (Argentina goats) focused on market penetration. This initiative involved labelling an existing product (goat meat) without any major modifications to the product Adding value to livestock diversity itself, and selling it within existing markets. The labelling aimed to differentiate the Criollo meat from competing products, thus enable retailers to charge consumers a higher price, which they could pass on to the processor and producers.
Product development The enterprise can develop new products to serve an existing market. For example, a company that already sells jackets to young men can expand its product range to include shirts and trousers. This approach is known as “product development”.
None of the cases report attempting (initially, at least) to develop new products for existing markets. This is surprising, as product development is a reasonably risk-free strategy. Product development did come into play at a later stage in several cases, though (see below).
Market development Alternatively, the enterprise can sell an existing product to a new market. For example, the company could expand sales of its jackets to a new region of the country, or could target a different group of consumers. This approach is called “market development”.
Four cases (Kyrgyzstan, Mongolia, Argentina sheep, Somalia) sought new markets for an existing product. The initiatives in Kyrgyzstan and Mongolia targeted new markets in Europe or America, because they thought it would be too difficult to transform existing channels serving Chinese buyers. In order to serve the new markets, it was necessary to improve the quality of the product by introducing new processing techniques.
In the Argentina case, the product (ponchos and other handicrafts) already existed, but were made for home use rather than for sale. The Mercado de la Estepa was able to tap a new market (tourists) for these traditional products.
The Somalia case focused on market development (supplying urban consumers in Boosaso) for an existing product without any modification (camel milk). The product already existed, but producers had no way of selling it. The innovation here was to arrange the chain of milk collection, transport and trade to serve demand in the new market.
Diversification The final approach is to develop a new product for a new market. The company that sells jackets to young men could start producing blouses to sell to women. This approach is known as “diversification”. It is the riskiest and most expensive strategy as it requires both developing a new product and stepping into an unknown market.
The three remaining cases (India, South Africa and Mauritania) created entirely new products (bags, sausages, leather goods, pasteurized dairy products) to serve new markets (foreign buyers, supermarkets, urban consumers). In India, demand for coarse, coloured wool from Deccani sheep was declining in the markets that shepherds traditionally supplied. The solution was to develop new products (specially designed bags) for new markets (foreign buyers).
In South Africa, local demand for goats was sporadic, so farmers had little interest in raising more animals. Existing customers would not be interested in other products from the goats, so it was necessary to find new markets. In order to supply these with items they PART 4: Analysis 113 would buy, it was necessary to create new products (meat, sausages and handicrafts), and establish a processing facility to produce these.
In Mauritania, camel herders had a surplus of milk that they could not sell (because of lack of a buyer) or would not sell (because of cultural barriers). Tiviski’s innovation was to identify a potential market for this product in faraway Nouakchott, and to create the facilities needed to bring the milk to the city, process it and deliver it to customers. It is trying to export camel cheese to Europe.
Shifting strategies Once these enterprises had developed their new products and established themselves in the new markets, they were free to pursue lower-cost, less risky strategies to expand their sales. They have adopted both product-development and market-development strategies. Both Shramik Kala and Umzimvubu Goats are continually expanding their range of bags, rugs and handicrafts, and are seeking new buyers and retail outlets. Tiviski also has expanded its range of dairy products into various types of yoghurt and cheese made from milk from cows and goats as well as camels, and has invested in a UHT plant. It sells dairy products to cities other than Nouakchott, as well as to neighbouring countries.
THE FOUR Ps OF MARKETINGFor a product to serve a niche market, it has to be differentiated in some way from other, competing products. This can be done in various ways, which we can conveniently classify under the four Ps of marketing: product, price, place and promotion. Table 7 summarizes the approaches for the eight cases.
Product We look at two aspects of product: the features of the product itself that differentiate it from other items, and the characteristics of the breed that contribute to these product features.
Special features. To serve a market niche, a product has to have some distinctive quality. In all the cases except Somalia, the enterprises produced such products: attractive handicraft designs (India, South Africa and Argentina wool), unusually fine cashmere (Kyrgyzstan), hypoallergenic wool (Mongolia), distinctive taste (meat from South Africa and Argentina goats), and high quality and long shelf-life (Mauritania).
Breed characteristics. In six cases, the characteristics of the breed or species are key to these product features. In Kyrgyzstan, the goats’ fine cashmere, evolved to cope with the harsh winters, is the most valuable part of the fleece. The coloured wool of the Indian Deccani and Argentine Linca sheep enables artisans to make handicrafts with distinctive designs. The softness and attractive natural colours are major features of Mongolian camel yarn. The multicoloured hides of the South African goats allow Umzimvubu Goats to make a range of attractive leather handicrafts. And the taste of Criollo goat meat – a result of the combination of breed and environment – is one of the bases of marketing Neuquén Criollo kid meat in Argentina.
In a seventh case, Mauritania, efforts to market a niche product (camel-milk cheese) have so far failed because of the lack of local demand and European import restrictions. If Adding value to livestock diversity
these restrictions can be lifted, the Tiviski dairy is in a good position to take advantage of a potentially large and profitable market.
pete with other specialty wools for space in the American hobbyist’s knitting bag. And if one Somali milk trader or Argentine poncho maker charged more than the rest, she would quickly find her product would fail to sell.
Market position. Some of the cases have deliberately positioned themselves at the upper end of the market. The Criollo goat meat in Argentina, for example, is designed to appeal to people willing to pay a little more for an extra-tasty barbecued rib. Tiviski’s strategy in Mauritania emphasizes superior quality and good packaging. And Umzimvubu Goats processes much of its meat into sausages, which it can sell at a higher mark-up than regular cuts of meat.
Place In marketing theory, “place” refers to the location where a product is sold – a stall, shop, supermarket, or website. The cases illustrate how the products are sold at various locations.