Session 4: Presentation 2: UMFI Experience - Linking Community-Based Enterprises with the Mainstream Markets (Phils.)

Session 4: Marketing Concepts, Strategies and Intermediation Models

UMFI Experience - Linking Community-Based Enterprises with the Mainstream Markets (Phil.)
By Mr. Rene Guarin, Executive Officer, Upland Marketing Foundation, Inc. (UMFI)

A marketing program established in 1989, UMFI’s current mandate is to provide market access to Community Based Enterprises (CBEs) with support services on access to technology and finance.

UMFI has been successful in helping CBEs get access to the markets because it has the right mix of staff. While it is organized as a foundation with a board of trustees, management is composed of professionals from the industry with expertise, experience, contacts, and the right attitudes. UMFI also knows the market and so it knows what kind of product to sell.

But once CBEs are able to access the market, they require further support to stay competitive in the market. UMFI has helped CBEs survive in the market by positioning community-based products as “healthy” products (i.e. muscovado sugar labeled as healthy sugar), consolidating products in order to recover marketing and distribution costs, and by creating a common brand for sustainability. This means maintaining a shared standard of quality regardless of source or variety (i.e. organic rice). It also protects CBE market shares by erecting market barriers. Creating a strong brand, setting high standards, and getting certifications all make it difficult for new entrants to “copy” the product.

Some results to date include an 89% increase in CBE farmers’ gross income, as well as recognition as the no. 1 brand for organic rice in a 2007 consumer survey.

In terms of lessons learned, it is important to:

Establish partnerships, trust and transparency. UMFI does not have contracts with its suppliers. It counts on the long-term standing relationships that it has with the farmers that they will deliver when they say they will. It continues to strengthen relationships, have regular meetings and provides services. UMFI is transparent about price setting and makes use of the value chain to determine the margins. Profits are directly built in the price and so the distribution of returns is direct (on a per transaction basis). “Trust is important when you start talking business”.

Ensure quality and quantity. At the farmer level, there is an internal control system that looks after this. At the national level, standards are set. However, there are still some outstanding issues: 1) some products do not meet the standards and have to be returned (one strategy to address this is to require smaller deliveries for new suppliers); 2) suppliers that are growing two varieties (of rice) in one field sometimes compromise the quality of their product; 3) there is not enough supply of organic rice to meet local demands, let alone export (looking at converting regular rice fields to organic ones instead of looking for new land).

Focus on core businesses and roles. It is important to know what and when to outsource other tasks. In looking at the role of farmers (are they producers or entrepreneurs?), it is better to look at what business opportunities the farmer can get into. If farmers are in a good value chain, it may not be necessary to “convert” them to entrepreneurs.

Download the UMFI Experience.ppt