INTERNATIONAL AG MARKET RESEARCH.How Marketers Contend with Fewer Farms, Increased Competition Around the Globe Everyone knows that U.S. agriculture has been undergoing rapid consolidation. But is this just an American trend, or is worldwide agriculture in the midst Adv. 1. in the midst - the middle or central part or point; "in the midst of the forest"; "could he walk out in the midst of his piece?" midmost of the same numbing numb adj. numb·er, numb·est 1. Deprived of the power to feel or move normally; benumbed: toes numb with cold; too numb with fear to cry out. 2. drop in the number of farmers? How many farms will exist worldwide five years from now? How will farm size and structure change across borders, across continents? What implications do these changes have on developing and marketing products and services for the world's current and future agricultural producers? International market research tells us that consolidation is leading to increased competition not only among agricultural firms, but also among farmers. Fewer farmers mean bigger operations and the need to produce more efficiently. These trends are obvious in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , but they also are happening in major agricultural countries throughout Europe. Farming operations in France, for example, have dropped from 1.5 million farms in 1979 to 680,000 farms in 1996. (See Chart 1.) Mad Cow Disease mad cow disease: see prion. mad cow disease or bovine spongiform encephalopathy (BSE) Fatal neurodegenerative disease of cattle. Symptoms include behavioral changes (e.g. as well as Foot-and-Mouth Disease foot-and-mouth disease, highly contagious disease almost exclusive to cattle, sheep, swine, goats, and other cloven-hoofed animals. It is caused by a virus that was identified in 1897. will accelerate the rate of farm consolidation in Europe. [GRAPH OMITTED] DEVELOPING PRODUCTS FOR WORLDWIDE USE Aside from consolidation everywhere, what are the latest agricultural developments in countries across the world? How does a marketer stay atop local developments abroad -- for example in Europe, where the market is so fragmented frag·ment n. 1. A small part broken off or detached. 2. An incomplete or isolated portion; a bit: overheard fragments of their conversation; extant fragments of an old manuscript. 3. -- or in Australia, where crop harvests fluctuate drastically from year to year because of the weather? Paying attention Noun 1. paying attention - paying particular notice (as to children or helpless people); "his attentiveness to her wishes"; "he spends without heed to the consequences" attentiveness, heed, regard to farmer needs when developing new products is key. But marketers also must consider the needs of farmers on a worldwide basis to determine the best markets and fit for new products. In Europe and South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. more products and seed varieties are entering the market. Does the influx of new products and varieties meet the demands of farmers? A global research study by Kleffmann, based in Ludinghausen, Germany, found that, in general, Western European farmers tend to use fewer seed varieties on their farms now than they did three years ago. As a result, a wider choice does not necessarily result in a greater use of different products. The recent entrance of international competition in the Eastern European market currently is masking mask·ing n. 1. The concealment or the screening of one sensory process or sensation by another. 2. An opaque covering used to camouflage the metal parts of a prosthesis. this trend, but the results will be the same there also: More market choices, yet fewer product selections by farmers. (See Charts 2 and 3.) CHART 2 Number of Corn Varieties Observed in KLEFFMANN Panel - Germany - Variety (Number) 1995 322 1996 349 1997 383 1998 368 1999 414 2000 425 While overall number of corn varieties available in the market is increasing individual farmers are using fewer corn varieties in their operations. 1998 - 3.7 varieties per farmer on average 2000 - 2.3 varieties per farmer on average Development 1995-2000; +32% Source: KLEFFMANN Note: Table made from a line graph. CHART 3 Number of Corn Varieties Observed in KLEFFMANN panel - Hungary- Variety (number) 1995 1996 1997 1998 154 1999 191 2000 209 The number of corn varieties used by individual farmers in Eastern Europe is increasing in this market. 1997 - 3.2 varieties per farmer on average 2000 - 4.0 varieties per farmer on average Development 1998-2000: +36% Source: KLEFFMANN Note: Table made from a line graph. INTERNATIONAL PRODUCT PURCHASE DECISION MAKING So the question becomes, with the onslaught of new products and increasing seed varieties, how do farmers determine which ones to purchase? Where are they getting their information? How can companies ensure that they are differentiating themselves in the fierce competition? It turns out that farmers are unique from country to country when it comes to how they make their decisions. Yet Kleffmann's work has found similarities that cross borders: Along with product attributes and availability, farmers rely on recommendations and information obtained from articles, advertisements and the Internet. Product differentiation Product Differentiation A source of competitive advantage that depends on producing some item that is regarded to have unique and valuable characteristics. is key to being a major competitor worldwide because new products tend to be converging con·verge v. con·verged, con·verg·ing, con·verg·es v.intr. 1. a. To tend toward or approach an intersecting point: lines that converge. b. on the same set of characteristics, for example, the same efficiency rate. But unique market positions and answers can be provided by market research conducted in the context of the native culture. To compare data across countries, it's important to ensure that each country collected the data in the same way, while taking into account the cultural issues that predominate in a country, as well as translation and wording issues. Having in-country expertise is invaluable in this process. (See Chart 4.) CHART 4 Factors Influencing International Agriculture Market Research Data DATA RELEVANCE Farm size Status Type of farming activities Crop usage Cultivation programs Subsidies Age Education Crop Source: KLEFFMANN Note: Table made from a pie graph. EXAMPLES OF IN-COUNTRY RESEARCH ADVANTAGES As an example of how in-country expertise affects the richness and relevance of data collected, let's start with market research in Russia. The agricultural potential of Russia is huge compared to its Eastern and Western European neighbors. Russia currently cultivates 209,950,000 acres of land. The average farm size is more than 2,500 acres, and most of the land (87 percent) is cultivated cultivated, n in herbal medicine, used to describe plants that are commercially farmed rather than collected from the wild. by agricultural enterprises rather than private farms. While this may appear not to be an issue to someone not familiar with Russian agriculture, this structural difference needs to be taken into account when collecting research panel data. So research should include questions regarding usage of subsidized sub·si·dize tr.v. sub·si·dized, sub·si·diz·ing, sub·si·diz·es 1. To assist or support with a subsidy. 2. To secure the assistance of by granting a subsidy. products or priority of payment for seed and machinery. In other words Adv. 1. in other words - otherwise stated; "in other words, we are broke" put differently , which supplier gets paid first? Moving to South America, in Brazil, the agricultural market is expanding rapidly every year due to clearing of the rainforest (almost 2.5 million additional crop acres every year). Most of this land becomes used for soybean soybean, soya bean, or soy pea, leguminous plant (Glycine max, G. soja, or Soja max) of the family Leguminosae (pulse family), native to tropical and warm temperate regions of Asia, where it has been cultivation cultivation, tilling or manipulation of the soil, done primarily to eliminate weeds that compete with crops for water and nutrients. Cultivation may be used in crusted soils to increase soil aeration and infiltration of water; it may also be used to move soil to or , which translates into huge potential for marketers of soybean seed and crop protection products. In Argentina, genetically modified genetically modified Adjective (of an organism) having DNA which has been altered for the purpose of improvement or correction of defects genetically modified genetic adj [food etc] → varieties dominate the seed market. Farmers' purchasing behavior differs on non-GMO crops and links between seed and crop protection information become an important supply issue. Collecting compatible data within the correct cultural context is key to providing clients with meaningful market insight. That's why Kleffmann has offices and partner arrangements in most leading country markets specializing in this kind of global market research, including the use of amis[R] software (Agricultural Marketing Information System). In the United States Kleffmann is represented through Millennium Research Inc., Apple Valley, Minn. Doris Hulsbusch is vice president of sales for Kleffmann, a market research firm headquartered in Ludinghausen, Germany. The company's Web site is located at www.kleffmann.com. |
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