On February 26, 2022, the "2022 Fruit Industry High-quality Development Public Welfare Tour • Hunan Station and Xiangguo Forum" jointly sponsored by China Fruit Circulation Association, Nongben Consulting, iFresh YaguoHui, Hunan Fruit Association and Red Star Global Agricultural Approval Center was held at Hunan Red Star Global Agricultural Approval Center. Cai Jianfei, founder of iFresh Asia Fruit Association, gave a keynote speech on "3 Views of Asian Fruit Association on the High-quality Development of China's Fruit Industry". This article is based on audio recordings, with deletions.
From three perspectives, I would like to talk about the Asian Fruit Association's understanding of the implementation path of the high-quality development of China's fruit industry.
First, organizing farmers, protecting farmers, and developing farmers are the prerequisites for the high-quality development of the fruit industry
The most important thing for the high-quality development of the fruit industry is to let the fruit farmers have money in their pockets and a light on their faces, which is the premise and the ultimate goal. From the perspective of the benefit distribution structure, it is necessary to pay attention to the key role of farmers in the high-quality development of the fruit industry. Under this premise, to organize farmers, protect farmers, develop farmers, let farmers benefit, let farmers have money to earn, let farmers think that engaging in agriculture is a very glorious thing, let them get a reasonable distribution in the entire industrial chain, they will be very careful to produce, for sellers, consumers to provide good products.
In 2019, the China Foundation for Poverty Alleviation, the Dutch Farmers' Producers Association and the iFresh AsiaGo association organized a delegation to visit the Netherlands. We have noticed that the advanced mechanism of dutch farmers' cooperatives has very good reference value for farmers' organizations in China. Farmers, fruit traders and enterprises in Dutch cooperatives are not interest gamblers, but value co-creation and benefit-sharing. In such a profit distribution mechanism, the operating entities of all parties in the industry can be well cohesive, and can be better developed, and jointly create a high-value well-known brand.
The picture above is a model of the Dutch farmers' cooperative organization provided by the Dutch Farmers' Producers Association. The dividend mechanism for the members of the cooperative does not depend on the proportion of equity, but on the proportion of the total supply of the cooperative to the cooperative each year that the members supply to the cooperative that meets the criteria. The cooperative is under the responsibility of the board of directors, the chairman of the board of directors and the board of supervisors, and most of the members are from local farmers, family farms, processing plants, sorting plants and corresponding industrial supporting groups.
The Board of Directors employs a professional management team, whose CEO and staff are professionals, who are responsible for the cooperative's standardized planting technical services, post-harvest commercialization, marketing, sales promotion and other professional areas. The management team shares a certain percentage of the annual profits of the cooperative.
This is an organizational model that separates ownership and management rights, allowing professional people to be responsible for management, and members to do their own industrial division of labor and reasonably share the industrial benefits they deserve. In terms of benefit distribution, this model is a good guarantee for the interests of growers.
Transforming the relationship with farmers from the original price game to substantive value co-creation and benefit sharing is a win-win situation for all parties. Through professional corporatized operation, while ensuring operational efficiency, it can also ensure the reasonable distribution of benefits of all parties. Due to the clear property rights relationship, effective governance structure and perfect distribution system, the corporatized operation of farmers' management organizations should become an important direction for the high-quality development and upgrading of the fruit industry.
Second, science and technology is the primary productive force for the high-quality development of the fruit industry
We often find a helpless fact in our front-line work, that is, many excellent scientific and technological workers have not received reasonable returns from the industry, and their achievements stay more in the laboratory and papers, and there are few practical applications with the industry.
We believe that the driving force of scientific and technological innovation should be derived from the needs of the market and the industry, and promote the virtuous and sustainable cycle of the three, of which the key lies in the distribution of benefits. The deep integration of scientific research institutions and agricultural business entities to form a market demand-oriented applied technology research and development linkage mechanism is the basis for ensuring the high-quality development of the fruit industry.
Take the Netherlands as an example. In the Netherlands, the research results of universities and research institutions can be used as a result of commercialization in cooperation with agricultural enterprises, and researchers can participate in the distribution of benefits in the application of technology in the entire industry, which continues to promote more technological innovation of R&D teams. In China, due to the limitations of the mechanism, many colleges and universities and scientific research units have no way to do industrialization and commercial technology application. There is also a dislocation between the new research results and the current pain points of the market and the industry, which is also one of the reasons that restrict the high-quality development of the fruit industry.
Next, let's talk about what exactly is the market's demand?
(1) From the perspective of differentiated products
Differentiated products are very much needed by many buyers. The so-called differentiated products, first of all, are variety differentiation, and there can be differentiated performance from the characteristics, appearance and inherent quality of the variety. Secondly, the same variety, if there is a stable supply, is also a product differentiation based on the ability of the supply chain. In addition, differentiated time to market, differentiated packaging, etc. are all manifestations of product differentiation. These differentiations can bring better premiums and better empowerment to sellers.
(2) From the perspective of standard currency
Most of the circulation products that buyers need are standard currency, and its variety and quality may not be too strongly differentiated, but it has enough stable product quality, supply, as long as possible supply time, and very extreme cost performance. Such suppliers are also very much needed by many sellers and buyers, even if a single batch does not bring too high profits, but a volume, small profits and high-selling products have a huge market.
So, how to form the scarcity and value of products?
In many countries, the model of dual licensing of varieties and brands is adopted. They define the name of the brand based on the needs of consumers, and it is likely that the variety name is defined as the brand name. At the beginning of the promotion of this variety, they created this variety from the perspective of the brand, so there was a model of double authorization of the variety and the brand.
China has too many decentralized small farmers and small farms, and there are many large family farms or agricultural enterprises abroad. What are the points we can combine? In China, there are now some state-owned platform companies or village collective economies in counties and townships, which can be managed within the region through the power of the government. It is feasible to license varieties or brands within a limited range. Through the production of varieties within a certain range, the limitedness and scarcity of the product are framed, and the premium and value of the product are made at the same time. With such scarcity, it is possible to authorize processing plants, wholesalers, and retailers.
Of course, there is now a way of operation, many retailers, wholesalers directly find the variety company, or directly find the variety team, to get the exclusive authorization of the variety, with the exclusive authorization to find a cooperation base for production.
At present, these models have just begun in China. The interests of variety research and development institutions will also be in the closed-loop authorization model, after the benign development of varieties, in the seedling breeding, base authorized planting, sales authorization and other links to get sustainable feedback.
Because there are very big differences between domestic and foreign countries, the development of many varieties of club models in China is difficult, but there are also gradually some directions and hopes, the state attaches more and more importance to the intellectual property rights of new varieties, and there are also some legal provisions introduced and implemented. From this point of view, we are also looking forward to China to form such a variety club model, through the variety authorization or variety and brand double authorization model, the scarcity of products, the product premium really do.
Third, the deep ploughing of the market is the only way for the high-quality development of the fruit industry
Whether it is a regional public brand or a corporate brand, it requires continuous efforts and operations year after year. To find its own positioning in the market segment, the brand potential should be "bigger and stronger", and the target market positioning needs to be "small and small".
Non-differentiated products still rely on relatively strong supply capacity. Earlier we mentioned standard currency in the Buyer's Demand column. The so-called standard currency, from the standard of production, the standard of processing to the standard of marketing and branding, it must meet three sets of standard systems.
The first is to establish production standards based on the needs of the market. Unfortunately, most of the actual production standards are out of line with market demand. Many of our production standards are based on past technical experience, and in the process of standard development, there is no extensive research on sellers and consumers in the target market. We recommend that when establishing production standards, the production area must conduct more extensive market research and accurately match the production standards and circulation standards. Through such standards, the standardized planting management techniques in the region are reversed, including dynamic assessment from soil to cultivation conditions, and professional standardized planting program services are provided for member orchards. From this link, the standardization of production is done.
Second, in the commercialization process, we will further promote the standardization of products through hierarchical sorting, processing and storage, packaging logistics, etc. Many people in the industry believe that standardized products are seven points of three points, seven points are standardized planting, three points are graded sorting, and the front-end link is very critical.
The third is to combine the market feedback of buyers to carry out effective market promotion. At present, most of the production areas are relatively fragmented, scattered, and not sustainable and effective when they are promoted. In fact, the marketing of agricultural product brands is to be deeply cultivated.
The building mode of many international fruit brands is to authorize the variety to the production base in the front end through the double authorization of the variety and brand, while providing standardized production technology services, using the authorized packaging and labeling to position and land the product brand, and locking its sales channels through authorized wholesale or authorized retailers, and carrying out very meticulous and continuous marketing.
Fruit brand building is actually a chain of buckles and links. Differentiated products are a practice, so large goods and currency may pay more attention to the stability of the front end, as well as frequent promotions and promotions.
We believe that either way it is possible to create a better fruit brand, which takes a certain amount of time, not a year, two years to form a fruit brand. If we must shorten the time of brand building, then we must narrow our market scope, not to do national promotion, but to lock in a city or a format to deepen cultivation.
We found that there are many domestic fruit brands that have invested a lot of manpower and material resources to build, but some brands walk around and have no more, while many foreign brands have always been strong, because they have done a lot of work in the front end and back end, and have been doing marketing for ten years, so they can continue to exist.
Finally, to summarize the three implementation paths for the high-quality development of China's fruit industry: First, we believe that we must develop farmers, organize farmers, and benefit farmers. The high-quality development of the fruit industry is first of all inseparable from the farmers, so that the peasant brothers have money in their pockets, have a light on their faces, let them feel honored because they are engaged in agriculture, and structure a suitable organizational model and a suitable interest distribution mechanism. Second, science and technology is the primary productive force, science and technology should originate from market demand, and form a sustainable interest linkage mechanism with all aspects of the industry. Third, the deep cultivation of the market is the magic weapon for the high-quality development of the fruit industry.
iFresh AsiaGo will be deeply engaged in fruit products and brand marketing for ten years, and has a large number of cases and successful experience in the expansion and marketing of public brands and commodity brands in the fruit region. We believe that the use of a professional team to operate in a refined and sustainable manner in marketing will be the only way for the brand to land.
Thank you!