«FAO ANIMAL PRODUCTION AND HEALTH paper ADDING VALUE TO LIVESTOCK DIVERSITY Marketing to promote local breeds and improve livelihoods Cover ...»
Own sales outlets. The point of sale is especially important for the wool products in Argentina: the Mercado de la Estepa and a retail store in Buenos Aires are the only places where it is possible to buy the ponchos and other handicrafts made by the Mercado members. This means that sales staff (local women who make the items for sale) can meet customers and tell them about how the products were made. Running its own sales outlets also allows an enterprise to capture a larger percentage of it products’ value, since it is not necessary to give a wholesale discount to third-party retailers. But as the Mercado de la Estepa cooperative grows, this may prove too restricting, and it may have to seek new outlets for its products.
Third-party retailers. Three cases rely almost entirely on third-party retailers: the Criollo goats in Argentina are sold via supermarkets, butchers and restaurants, while Tiviski’s dairy products are distributed through 2 000 retail outlets. The camel milk in Somalia is sold by a network of market retailers in the city.
Mixed outlets. Umzimvubu Goats in South Africa use a mixture of sales outlets: it has its own retail outlets (a restaurant and handicraft store) on site, but sells much of its produce through third-party outlets: the meat goes to nearby butchers and other small, local retailers, while the leather items are sold through craft retailers throughout the country.
Shramik Kala also has a mix of outlets: it exports much of its output, sells much of the rest through third-party retailers, and has started marketing through its website.
Exports. Three cases focus on export markets. In India, the cooperative that manages production recognized that it lacks skills in marketing, so created a partly owned subsidiary to handle this aspect. Since then, its sales have boomed. In Kyrgyzstan, village organizations sell cashmere to foreign buyers. The Mongolian camel wool is sold through volunteers and an international distributor and can be bought in hobby shops in the United States.
These two cases describe relatively new ventures, and they have not yet managed to establish stable marketing chains.
Emphasizing product features. The special features of a niche product make them obvious selling points. Enterprises in each of the cases draw customers’ attention to the natural colours of wool, the fineness of cashmere, the superior taste of meat or the quality of the milk. Even in Somalia, where a raw product is sold, fresh milk sells for a higher price than a product that has gone sour in the heat.
Branding and labelling. The majority of the cases describe this. The Mongolian camel wool is sold through the “Nomad Yarns” initiative in the United States; goat meat and leather handicrafts are sold in South Africa under the “Umzimvubu Goats” label, while in Mauritania, Tiviski sells its dairy products in attractive packaging under its own brand. It is not necessary to insist on a brand, however: in India, Shramik Kala does not brand its products, but instead relies on the design of its product range to carry its product identity.
Emphasizing local links. Basing the product on a distinctive local tradition ties it in the customers’ minds to that area. That can be important, for example, for products aimed at tourists. An example of this approach is the ponchos and other handicrafts made from Linca sheep wool in Argentina. The Mercado de la Estepa emphasizes local links in various ways: the product itself (distinctive garments – ponchos – woven in ethnic designs), the label showing who made the item (creating an unseen link between the maker and the buyer), and through the sales staff (see below).
Geographical indications. Geographical indications are a special type of labelling that make local links explicit and allow producers to label their products in an exclusive way (Box 8). Two of the cases describe Protected Designations of Origin, a specific type of geographical indication: the “Northern Neuquén Criollo kid” designation in Argentina, and “Gobi desert camel wool” in Mongolia. As the Argentina case shows, the process for establishing a geographical indication is far from simple, and once it is established, a great deal of effort has to be put into marketing the product and ensuring that producers comply with the requirements. Geographical indications are relatively new to livestock marketing in the developing world, but offer much potential for marketing indigenous breeds.
PROJECT INTERVENTIONSAll eight cases discuss some kind of intervention in the production and marketing system by an NGO, donor organization, research organization, government or private company, or some combination of these. (The Somalia case mentions a food security programme and research initiative, but there is not enough information to allow us to draw many conclusions about these. In the discussion of the Somalia case below, we refer to the women traders’ system, unless we explicitly mention the outside initiatives.) In four of the cases (India, Kyrgyzstan, Mongolia and Somalia), foreign donors provided the bulk of the funding for the project. In three cases (South Africa and both the Argentina cases), the funding came primarily from national or local governments. In one case (Mauritania), funding came from commercial loans and private investment.
According to Article 22 of the World Trade Organization’s Agreement on Trade Related Aspects of Intellectual property (TRIPS), geographical indications are “indications which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin.” Geographical indications serve as “collective brands” which indicate the reputation of a particular agricultural product. This reputation is a result of cultural attachment, peculiar climatic and ecological conditions and history that make a particular product distinguishable. A familiar example is champagne: only a certain type of sparkling wine produced in a certain region of France may be called “champagne”.
Geographical indications help consumers identify a product and prevent producers from outside a region from passing off their goods as coming from that region. A geographical indication is a permanent property of the inhabitants of a particular region. It remains valid as long as the product it indicates continues to be identified with that particular locality. It encourages producers and processors to maintain the quality and reputation of their product.
More information: www.wto.org/english/tratop_e/TRIPS_e/gi_e.htm
– and even in these cases it was not necessarily the major reason for the initiative (Table 8). Poverty alleviation or economic development were the main motivation for six of the eight cases, while establishing a profitable business was the motivation for the other two (Mauritania and Somalia). For one case (Mongolia camels), nature conservation was a partial motivation for the project, while for another (India sheep), preserving a lifestyle was a contributory factor.
Type of intervention
The projects focused on four different types of interventions (Table 8):
Animal production. Several of the projects attempted to increase or improve production of the animals that produce the raw materials: by establishing breeding herds, increasing the number of animals with the desired traits, and improving animal management and health. However, in none of the cases was production of the raw material a major focus of the project.
None of the projects focused on modifying animal production to achieve specific production standards (such as organic production) or other production-related goals (e.g., environmental and breed conservation, or enhanced animal welfare standards).
But such goals were indirectly included in the Argentina goat project, the Mongolia camel case and the South African Umzimvubu Goats initiative.
Processing. Improving the processing of the raw materials was a major focus in the majority of the cases. This meant establishing factories (in Mauritania and South Africa), designing new products (in India), introducing new techniques (in Mongolia and India), and improving sorting and grading (in Kyrgyzstan).
Organizing. Organizing groups of producers and processors was key in several cases. This might mean organizing them in production cooperatives, employing them as staff, establishing formal companies, or subcontracting work out to processors.
Organizing efforts are not always successful, however, as shown by the attempts to form groups of producers or processors in Kyrgyzstan, Mongolia and Mauritania (see the section on Institutions below).
Building a value chain. All of the cases included efforts to identify markets and build a value chain. Without such a chain, producers and processors are left with products they cannot sell.
Champions Seven of the eight cases involved a “champion” – a dedicated individual, group or organization from outside the community of livestock producers, but with intimate knowledge
of the local area, who decided to change the situation. Some of these champions contributed to this book. Only in Somalia does the marketing effort go back to a local initiative:
stimulated by the growing demand for milk from the rapidly growing cities, local women started to market camel milk. Here the project came in later, helping to improve an existing value chain.
Champions often play a vital role in development work. They provide impetus, seek funding, bring in information about marketing opportunities, technologies and business skills, and link local producers to the outside world. Their long-term commitment ensures that a solution will be found – if one exists. The lack of such champions is often a key reason that development projects fail. While it does not seem to have occurred in any of the eight cases, champions can also lead an enterprise off in the wrong direction, and the loss of a champion, for whatever reason, can mean the death of an initiative.
Champions may be from government (as in the South Africa case), an NGO or university (as in Mongolia), or the business world (as in Mauritania). In general, businesses work best when they are run by entrepreneurs who aim to make a profit. Sadly, many enterprises set up with the highest philanthropic motives run the risk of not having a profitable business model or lacking the skills to make money, leaving them unsustainable in the long run.
Research Research was a key ingredient in seven cases (there is insufficient information about the
Somalia project). This research included three types:
Production research. This studied the production process and the social and economic situation of the producers. It was necessary to discover (for example) what the producers’ needs were and whether they would be willing and able to supply the amounts required on time. This was often done through a combination of formal studies and informal, participatory research that involved producers.
Adding value to livestock diversity Product research. This focused on the product itself: the characteristics of the wool or cashmere fibre, breed genetics, milk characteristics and product development.
This research required the services of specialist institutions, in some cases located abroad.
Market research. This investigated the potential market for the product: the demand for different products, the potential buyers, quality requirements, prices, marketing arrangements, and so on. It was typically done by marketing organizations and consultants.
It is hard to overstate the importance of adequate research when planning interventions such as these. An understanding of the production system, product and market is vital to ensure that enterprises produce items that can be sold in a particular market. But even the most detailed research does not guarantee success: other factors, such as political changes (the European Union’s ban on milk imports from Mauritania), macroeconomic trends (the long-term decline in demand for coarse wool) and unexpected events (the loss of a key staff member, the arrival of a competitor) may ruin an otherwise well-thought-out plan.
Good research will anticipate many such hazards, but it cannot predict them all.
Technology Adding value usually means introducing new technologies. The cheapest inputs in terms of technology were probably in Kyrgyzstan, where the project introduced low-cost combs for the goat herders to buy. The interventions in India, Argentina (sheep) and Mongolia also involved low-cost equipment to card and spin wool.
The cases in South Africa and Mauritania involved large-scale investments in factories, processing equipment and transport. These bigger ventures can potentially benefit larger numbers of people and have a bigger impact on the local economy. But they may also be riskier if the venture has to be handed over to local management (as in South Africa) or if the investments do not meet the need of the producers or markets change.
The latter risks are illustrated by the Somalia case, where low-cost, community-based interventions (providing containers and building basic market facilities) were more successful than the effort to establish a large-scale processing plant, probably because the former strengthened the local value chain rather than trying to modify it according to outsiders’ ideas. The Somalia example also shows that value chains can develop without any chainspecific outside investment.
of training and a formal qualification on animal production. Other courses were shorter, such as those give to the Kyrgyz and Mongol spinners. Some of the training was on-thejob, for example the experience gained by women who took turns to sell handicrafts in the Mercado de la Estepa in Argentina.
Training is particularly important for livestock keepers because many have little formal education. It may be necessary to teach basic literacy and numeracy as well as more specific skills.