Autumn production has extended into winter, resulting in an oversupply of many products. Prices have tumbled as a result. And soon spring production will be entering the fray.
I wonder if retail prices of oversupplied products have reflected that downward slide to the benefit of the consumer?
This aside, it’s times like these that separate the truly professional farmers from those who are not quite on top of their game. When prices are down and products are difficult to move, two key factors come into play: quality and continuity of supply.
Buyers will pay for quality
A senior potato salesman at a market recently complained to me about the situation. When I asked him about prices, he said he was struggling to get anything resembling a decent price for most of his farmers. In many cases, he had to sell at below cost for the producer, and be grateful to have made a sale.
But he was quick to explain that this did not apply to the top brands on his floor: these were selling for perhaps R10 or more per pocket than most of the others. The prices themselves might not have been good, but at least they covered costs and perhaps produced a small profit in some cases.
The reason is simple: quality! And quality is closely followed by continuity of supply. By having produce on the market floor as regularly as possible, riding the highs as well as the lows, a producer builds up a good average price. It’s that average which counts when it comes to assessing the success of the crop. I maintain that for these top producers, the average is still the best price they will achieve from any marketing option available.
Reliability secures buyer loyalty
Continuity has a hidden benefit which producers often fail to appreciate: it builds buyer loyalty. When buyers see a particular brand on the floor, through those highs and lows, they know they can rely on it. This means they can buy it all the time, which is exactly what any retailer wants – a regular, reliable supply at the right quality. And that is why when there is an oversupply the top brands still sell, despite the situation on the market.
This is not rocket science, it’s Marketing 101.