Coaching on the Marketing of Primary Agricultural Products Processing Yards

Coaching on the Marketing of Primary Agricultural Products Processing Yards

HSIAO-CHU,HUANG(China Productivity Center Agricultural Innovation Department)

Coaching Background 1. Regulations Governing Primary Agricultural Products Processing Yards

  As Taiwan is densely populated, agriculture businesses mainly belong to small farmers. Building of processing yards on farmland violates the relevant laws and regulations on land use and cannot be legally registered. Besides, individual farmers do not meet the qualifications to obtain factory registration. To help small-scale farming operators to conduct simple processing business in plants legally registered, the Regulations Governing Primary Agricultural Products Processing Yards was promulgated on March 26, 2020 to enable small farmers to successfully transform to legal primary processing yards. Farmers who apply to the local competent authority for this project should first take a total of 40 hours of courses on food processing, food safety and hygiene management regulations, workplace facility planning and management, food 5S, hazard analysis and control, planning of processing...etc. Statistics of the Agriculture and Food Agency (AFA) of the Council of Agriculture (COA) indicates that, as of November 26, 2021, 26 individual farmers and farmers groups have passed the review and obtained the registration certificates of primary agricultural products processing yards, so they can perform primary processing of agricultural products like bitter gourd tea, dehydrated pineapple, fairy grass (mesona) cooking bag, turmeric powder and dehydrated burdock slices.

Coaching Background 2. Limitation on functions to avoid over-competition

  The formulation of the Regulations took into account the environmental concerns of the processing yards operated on farmland and the safety risks of their operation process. The functions of the processing yards are positively listed to four types of processes only: frying, grinding, drying and crushing. Any other functions to be performed must be specifically applied for and subject to approval. There are some problems anticipated, such as high homogeneity of the products and few leisure farming products. In the transformation of small farmers from primary production to secondary processing, besides the knowhow on food production, they also need assistance on the back-end marketing skills such as packaging design, channel development and pricing, and marketing and promotion. All of these require innovative marketing strategies different from the past to help strengthen the brand value and to build affective links with the consumers.

  In the above context, in order to help individual primary agricultural products processing operators survive in the market, the following strategies are introduced.

Key Strategy 1. Solid foundation for brand marketing coaching

  With the coaching by local consultancies and value-added agricultural product prototyping centers, the primary agricultural product processors have formed solid foundations in terms of the hardware configuration of the processing yards, the planning of the flow of people and logistics, and the prototyping of products. The hygienic quality and safety of their food products are comparable to those of major food manufacturers. However, as Hsu Chung, a well-known dietary culture expert, said, "hygiene is just the basics." In order to pursue sustainable development from the primary to the secondary level of the industry, the solid foundation is built on the integration of designing and brand building. The communication between the products and the consumers is helpful to the enterprises being coached in their brand stories, CI system establishment, product packaging improvement, and brand imaging.

  Take for instance "Peng Chiao-Hsien’s Primary Agricultural Products Processing Yard", a famous agricultural products processor in Hsinchu. It started as a dealer of Hakka-style orange jam and pickled products. After transformed into a primary agricultural food processing yard, it acquires agricultural products from young local farmers, particularly those suffering retardation, and processes the products into dehydrated items for sale under the brand name "Goldsister" a brand with the traditional image of warmth and frugality of the Hakka group. In order to improve the marketing effectiveness of the dehydrated fruits, the management team collaborated with the consultants to redefine the image on the consumers, to adjust the weight of packaging and product price setting, and to change the packaging from family-size to small handy packages. Visual designs were changed to adopt a lively and youthful packaging design. Eventually, a new brand "Enjoy Sunshine" was developed for the dried fruit, with the text "each piece made with layers of sunshine". The unique fruit aroma of dried fruit is linked to the daily mood of consumers, successfully overturning the old brand image and creating new business opportunities.

  Left picture: Original brand of dried red heart guava: "Aunt Jin’s Kitchen". The labelling emphasizes "handmade", "no preservatives" and "no chemical additives". It is in large family size with higher unit price.

  Right picture: New brand of dried red heart guava: "Enjoy Sunshine". The texts used include "Shy and blushed, I want to be by your side 365 days a year" and "No chemical additives". It comes in small handy packaging with low unit price.

Key strategy 2. Integrated promotion through multiple channels

  Nowadays, there are often small farmers selling their own agricultural products or processed products in markets on holidays and directly interact with consumers. There is often positive feedback as farmers share their cultivation experience and help the products speak for themselves. Holiday market fair, however, is not a stable marketing model that lasts long. Most of these markets are at downtown locations, which means interference with the traffic and high costs of direct management. Primary processed agricultural products are steadily available throughout the year and are, therefore, more suitable for channel marketing, where products are provided at different locations for the convenience of scattered consumers.

  However, the mindset of primary processors directly marketing their products in market fairs may be totally different from that of those who choose channel marketing. The following difficulties therefore often occur. For one thing, packaged foods that are sealed for durability and possess unpackaged identifiability should have complete labelling of matters such as product name, content, net weight, food additives (if any), place (country) of origin, expiration date, manufacturer or domestic agent, nutrition information, and other matters demanded by the central competent authority, such as possible allergens that should be positively labelled. Primary agricultural product processors and packaging designers who lack relevant knowledge may inadvertently violate the regulations and have the goods rejected by the channel and even punished by the health authorities upon inspection. Secondly, some primary agricultural product processors mostly produce and sell their own products so they have not obtained the international barcode, which is now regarded as a basic qualification by marketing channels. This certainly leads to resistance from the marketing channel. It is often observed that products using the in-store code provided by the marketing channel may incur extra cost of packaging materials and tally labor when they are returned as the outer packaging is damaged. Thirdly, primary agricultural product processors, if neglecting the necessary cost of commission for the marketing channel in the early stage of the product design and planning, will often have to give up the marketing channel as they eventually find the commission rate unbearable. They then have to resort to the model of direct sales in local holiday markets.

  Business operators receive advices to cope with the above difficulties in the coaching process. Channel operators are invited to review the processed products and offer their opinions and suggestions. Products are then launched for sale in chained supermarkets, organic product channels, and department stores. Consumer groups of different regions and characteristics are studied and developed to analyze the marketing cost structures so that processors are able to conduct more accurate financial analysis on the target market. In the era of new retailing, the coaching projects integrate online and offline marketing activities on various platforms, bringing consumers a consistent consumption experience across all channels.

Key strategy 3. Endorsement from the government

  Several government-endorsed agricultural product marketing projects in recent years, such as "Fresh from Chiayi", "Yunlin Goods" and "Top Choice in Kaohsiung ", have paid off, suggesting the strength of government involvement in marketing efforts. Primary agricultural product processing yards, however, have not had a unified identification mark since the announcement of the Regulations Governing Primary Agricultural Products Processing Yards, so there is no way for consumers to judge the quality. In order to help the processing yards seeking the registration and the consumers hoping to better familiarize with the status of agricultural product processing yards, and to elevate the images of the raw materials of traceability and the legally registered processing yards, publicity events are organized for the official opening ceremonies of the processing yards with the presentation of officials from the central and local competent authorities. In those events, regulations on the sanitation of the registered yards are introduced, products are displayed for sampling, and news is released to announce the government endorsement of the safety and quality of the products.

  As a part of the effort to guide the industrial transformation and to help the market familiarize with the idea of primary processing yards, publicity events are organized to celebrate the achievement of those leading yards that have obtained the processing yard registration in the first wave. These yards are to serve as exemplary models so that more agricultural product processors can follow and the registration system can be further promoted.


  For the primary processing industry of agricultural products in Taiwan, the coaching projects are meant to help with the market positioning and the establishment of the core brand value of the industry of processed agricultural products, not just in terms of good packaging design, but also in the unique quality of the products, so as to enlarge the potential consumption based on the characteristics of the individual businesses. There is, however, still a lot of need for further coaching and inspiration by the primary agricultural product processing industry, which takes time to have the effect witnessed. Without proper follow-up plans, no sustainable benefits can be generated. Therefore, close collaboration and joint effort between the primary agricultural product processors and the government and academia are still essential to truly realize the ideals of the amendment of the Regulations Governing Primary Agricultural Products Processing Yards. Transformation of small farmers requires the assistance and coaching from the government and academia to develop into regional cooperative relations and form the competitive edge through concerted efforts. Based on this strategic thinking, the coaching projects will be adjusted based on the maturity and needs of the industry. It is hoped that, with the close collaboration with the small farmers longing for transformation, a sixth industrialization concept can be formed, and each business can have a suitable position in the highly competitive thin market.