Greenhousemarketing2006 Presentation

Horticultural Crop Marketing Strategy Prepared by: Cesar Flores, East-West Management Institute Prepared for:

International Rescue Committee

RURAL ECONOMIC DEVELOPMENT PROJECT (RED)

RURAL ECONOMIC DEVELOPMENT PROJECT (RED) Project Goal: To establish profitable and sustainable agricultural production and processing systems in order to improve food security, increase farmer income and assist in the building of integrated rural market chain systems in nine targeted regions of Azerbaijan. • 9 Demonstration Farms with Greenhouses

Comparison of Greenhouse Systems

Wood construction Single sheet plastic Steel tube construction Double layer UV resistant cover

Traditional Azerbaijan Greenhouses

Demonstration Farm Greenhouses

Comparison of Greenhouse Systems:

Open Flame Heating

Support for thermal blanket Thermostat controlled Forced air heating

Flood Irrigation Drip irrigation

Soil

Sterile media

Traditional Azerbaijan Greenhouses

Demonstration Farm Greenhouses

• Less Expensive to construct

• Longer structural lifespan

• Easier technology to adopt

• Higher yield per plant • Lower heating fuel costs • Lower pesticide costs • Labor saving automation

Constraints: •

Cool season greenhouse crops generate higher per kilogram production costs than field crops

•

Horticultural crops have strong seasonal price movements

•

Lack of marketing cost information may result in growers accepting lower than fair prices

•

The 9 demonstration farms are located in regions with poor road conditions and are generally far from urban markets

Objectives: • Identify crops with the highest returns in the highest priced target markets • Plan production to coincide with a limited competing supply • Provide marketing information that empowers growers to negotiate from a position of strength • Prevent excessive losses through coherent grading, packing and shipping solutions

Export Market Analysis:
44% of food consumed in Russia is imported
60-80% of fresh Azeri produce is grown for export to Russia
Outdoor Moscow vegetable markets are Azeri controlled

Tomato Cultivar Selection Criteria: •

Long shelf-life to withstand potentially long, difficult road transport and other post-harvest delays

•

A medium fruit weight to appeal to established consumer preferences

•

Indeterminate, widely resistant varieties, suitable for early and cooler temperature production in plastic greenhouses

Selected tomato cultivars: Marissa F1 An early-maturing indeterminate tomato hybrid with vigorous plants and a high yield potential. Produces firm, round to flat round fruits that weigh 150-170 g, have good shipping capability and hold well, without loss of quality, for over two weeks after picking. Suitable for the fresh market. Marfa F1 An indeterminate tomato hybrid with an early maturity, very good vigor and excellent root system. Produces firm, round fruits that weigh 130-160 g and hold for up to 15 days at room temperature after picking. Suitable for fresh market. Fruit setting is very good even at subnormal temperatures Jaguar F1. A new indeterminate tomato hybrid of early maturity. The plant is vigorous, with an open habit. The outstanding cold tolerance of Jaguar makes this variety suitable for a wide range of growing techniques and areas. The uniform, flat round-shaped and nicely ribbed fruits are medium-sized and have an average weight of 160-180 g and long shelf life. Fruits can be harvested green.

Market Timing: 2 harvests set

to coincide with

cool season high prices 10

R 8

6

W

4

2 1000 AZM

J

F

M

A

M

Spring Harvest March through May

J

J

A

S

O

N

Fall Harvest Oct through Dec

D

Create Horizontal Linkages to the 9 farms:
Reduce costs through bulk input purchases
Increase efficiency by exchanging market information, production skills and resources
Ensure product quality through shared production standards
Reduce transportation and transaction costs by consolidating shipments

Unified Branding: Caravanserai Tomato


“Aran Shirvan” or “Caravanserai” or “Kur ”


…or similar Geographic trade name
Caravan graphics? printed on the box label
“Product of Azerbaijan”

Export Market Value Chain: 0.75 US Dollars per kilogram 0.10

0.17

3.00

0.44

0.20 1.34

Farm gate Price

Transport

Middleman Margin

Tariff 15%

Market Fee

Trader Margin

Moscow wholesale price

Knowing the real costs that accrue after the product leaves the farm, gives the grower negotiating strength

Total Potential Production: • • • • • • •

9000 tomato plants (1000 per greenhouse) 90000 kg 90 Tons 11,250 total crates 125 crates per day average 9 truck loads One 10 ton truck every ten days for 3 months

Supply Chain Coordination: • Transplanting the same seedlings on the same date to synchronize production • Growing out the crops using similar fertigation regimes • Harvesting fruit at the same maturity and ripeness • Sorting and grading produce using shared standards • Packing into standardized packaging at the greenhouse • Assembling shipments and transporting on a fixed schedule

Consistent Product:

9,000 seedlings propagated in one centrally located greenhouse and distributed to the 9 greenhouses for transplanting

Consistent Product: Harvest tomatoes when “mature-green” and not “firm-ripe” •

Mature means: that the tomato has reached the stage of development which will ensure a proper completion of the ripening process, and that the contents of two or more seed cavities have developed a jelly-like consistency and the seeds are well developed. (USDA)

•

Green means: "the surface of the tomato is completely green in color. The shade of green color may vary from light to dark (USDA)

Standardized Packaging: •

Currently in use: 15-18 kg wood crates 4-5 tomatoes deep

•

Small grocery shops in Russia prefer a smaller weight container that will sell out before spoiling and can be used for retail display

•

8 Kg crate gets a higher price per kg

•

Fewer layers of tomatoes reduces losses

•

Corrugated fiberboard marginally more expensive than wood, lighter and stackable

8 kg Two layer corrugated fiberboard

8 kg One layer corrugated fiberboard

Consolidated Transport:

Consolidation and transport scheme

Consolidated Transport: Roundtrip 1600 km Azerbaijan to Moscow = 0.20 USD per kilo GAZ-53 5 ton truck

GAZ-53212 10 ton truck

• 10 ton truck can run the 9 greenhouse route every ten days and

collect up to 130-140 crates from each greenhouse. • The trip to Moscow takes 2-4 days, tomatoes ripening in transit

Fall Crop Schedule: Align the supply chain with the marketing strategy 1.

Sow a minimum of 9000 certified "Marissa F1" seeds into plug seedling trays in one centrally located greenhouse on or about June 30th

2.

Propagate the 9000 seedlings for six weeks

3.

Distribute 1000 seedling starts to each greenhouse and transplant no later than August 14

4.

Grow out tomato plants using standardized drip fertigation regime

5.

Harvest October-December when tomatoes are "mature green".

6.

Pack into standard crates at the rate of approximately 13 crates per greenhouse per day.

7.

Load a 10 ton truck every ten days with 130 crates from each of the nine greenhouses making up 1200-1300 total crates. Transport 3 days to Moscow. Sell out in 2 days and return

8.

December 16 - remove plants and sterilize beds