Branding Agricultural Commodities: The development case for adding value through branding
Agricultural commodities matter to development. Commodity products such as sugar, coffee or beef contribute to more than a quarter of GDP in developing countries, where over 1 billion farmers derive at least part of their income from them. As most of these farmers are smallholders, raising the value of commodities can do much to reduce poverty.
Unfortunately, the trend has been the opposite. Modern food chains place increasing importance on branding, distribution and services — activities ‘downstream’ of farmers’ traditional role in supplying produce to markets. As a result, primary producers of agricultural commodities have been capturing less and less of the total value of their products. At the same time, power has become concentrated in the hands of a small number of buyers — the giant supermarket chains and manufacturers who dominate the global food market.
By branding commodities, producer countries and organizations can reverse this growing imbalance. Branding creates consumer demand, giving producers leverage in negotiations with major buyers.
This paper examines the potential for branding agricultural commodities in developing countries. We look at how producers in these countries can exploit the same commercial marketing principles and supply chain innovations commonly used in the mature markets of the developed world.
A shorter briefing paper is also available. See "additional information" for details.