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Chapter 12

Chapter 12. Marketing by Farmer Groups: Collective Action. Collective Action. By acting jointly, farmers can achieve marketing objectives they cannot achieve by acting separately Goals: To improve demand To regulate supplies and qualities more in keeping with demand

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Chapter 12

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  1. Chapter 12 Marketing by Farmer Groups: Collective Action

  2. Collective Action • By acting jointly, farmers can achieve marketing objectives they cannot achieve by acting separately • Goals: • To improve demand • To regulate supplies and qualities more in keeping with demand • To improve competitiveness and efficiency in the marketing channel • To gain more channel control and leadership

  3. Generic Promotion • Promotion of a particular commodity financed collectively by producers • Includes advertising and other activities to increase demand • Purpose: to change demand and raise price

  4. Possible Short- and Long-Term Impacts of Generic Promotion

  5. Program forGeneric Promotion • Clear, measurable objectives • A strategy fitting commodity, marketing system, buyers’ attitudes • Use of professional advertising agency • Sufficient money to achieve objectives • A program to evaluate results

  6. Marketing Cooperatives • Cooperative: a user-owned and controlled business from which benefits are derived and distributed equally on the basis of use • Differ from investor-owned firm (IOF) • Types of cooperatives: • Federated • Centralized • A combination of federated and centralized

  7. Top 10 Cooperatives,by Revenue

  8. Goals of Marketing Cooperatives • Provide efficient marketing outlets • Expand demand for members’ commodities • Provide better coordination between production and consumption • Provide more dependable market outlets • Achieve channel leadership, including vertical integration

  9. Societal Licenseto Marketing Cooperatives • Continues to evolve, but main features cast by Capper-Volstead Act of 1922 • Fairly exempt from antitrust legislation • Secretary of agriculture empowered to intervene with any coop he finds to be raising prices unduly • Income tax laws recognize unique non-profit nature of cooperatives

  10. Problems ofManaging a Coop • Raising capital • Recognizing that patron-owners may make management challenging • Distinguishing duties of directors and managers • Managing competition with other cooperatives

  11. Criteria for SuccessfulMarketing Coop • Requirements: • Run a viable business • Keep producers in control of the board • Keep board in control of coop • Expected accomplishments: • Increased demand at farm level for the marketed commodity • Assurance for members that they have dependable market access, power and influence in marketing channel that they can protect in the future

  12. New GenerationCooperatives • Distinct business from traditional coop • Principles of new generation coops: • Closed membership • Upfront equity position by members • Delivery rights in proportion to equity position • Transferability of delivery rights and existence of market for delivery rights • Possibility of immediate return of profit to members

  13. Farmers’ Bargaining Groups • Bargaining association: coop that represents its members by collectively negotiating terms of trade but does not engage in physical aspects of marketing • Association has most clout when in control of commodity • Processors may resist dealing with associations

  14. Societal Licenseto Farmer Bargaining • Basically same as for cooperatives • Agricultural Fair Practices Act of 1967 (S.109), intended to win solid protection for farmers, was weakened by strong processor lobbying • Farmer bargaining purely voluntary on both sides (farmers and processors)

  15. Class Exercise • For assigned commodity, provide an example of how producers are working collectively to market or add value to the commodity

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