Identity Preservation: There's a premium in looking beyond the farm gate: Matching the crop to the customer is a winning recipe By Kay Ansell
GroundCover™ Issue: 43
FROM A DOZEN GROWERS producing 600 tonnes of grain to about 300 growers producing 350, 000 tonnes - this is the success story of durum wheat in one Australian state, and achieved in just over a decade.
It started when a major pasta maker went directly to growers to meet the company's specific needs.
The vast increase of this durum harvest is an example of the potential benefits for growers of 'identity preservation' - a means of capturing value by separating and marketing the product for its premium qualities. Identity preservation requires growers to put their end users first, to look beyond the farm gate to discover what their users need.
A GRDC-commissioned report by agribusiness economists Fiona Roberts and Selwyn Heilbron explores both the potential benefits and pitfalls for farmers of this approach through a series of case studies.
Maintaining Integrity in the Grain Value Chain: Beyond Commodity Marketing points to the fundamental importance of forging closer relationships between participants in the value chain in order for the concept to succeed.
So what is identity preservation? It can vary according to the product and the needs of the customer. For Dr Heilbron it occurs where a crop is treated separately in some way. It can range from segregating different varieties for the next user in the supply/ processing chain or involve more complex identification, such as labelling that actually informs consumers where a crop was grown. The dilemma, however, is often how to achieve a balance between too much or too little segregation, which can mean the difference between success and failure.
The grower loses out if the cost is more than the returns from theidentity preservation activity. A grower could, for example, invest heavily in segregating a crop to ensure it can be traced back to a specific field, but not earn a premium because the users don't value or need such a high degree of integrity. The reverse can also be true, when the users demand more than what is done. The key is the quality of communications between grower and buyer.
As well as offering farmers a mechanism for generating more value, identity preservation is becoming increasingly important in meeting consumer concerns about food safety, says Dr Heilbron. The advent of genetic modifying technology in agriculture has also beena significant driver, with consumer resistance or legal requirements behind the need to handle GM crops separately.
At the other end of the spectrum there are similarly stringent requirements for organic crops, where consumers require a high degree of reassurance about the integrity of the product through licensing, certification and detailed labelling.
Despite its necessity in these types of situations, Dr Heilbron says identity preservation won't be relevant to all growers: "Many prefer to deal only with statutory marketing bodies and stay with a bulk commodity approach. There are risks and rewards along both roads. "