The demand for high-quality food creates niche markets and enables farmers to produce sustainably and market their products directly.
The United Nations Conference on Sustainable Development – or Rio+20, or World Earth Summit, in Rio in 2012: Member States decided to launch a process to develop a set of Sustainable Development Goals (SDGs), which built upon the Millennium Development Goals and converged with the post 2015 development agenda.
Practitioners of sustainable agriculture seek to integrate three main objectives into their work:
According with the Guidelines of Organically Food Produce of the Codex Alimentarius (2007), an organic production system is designed to:
According with IFOAM (2002), the organic agriculture practices are based on the following principles:
the role of organic agriculture, whether in farming, processing, distribution, or consumption, is to sustain and enhance the health of ecosystems and organisms from the smallest in the soil to human beings. In view of this, it should avoid the use of fertilizers, pesticides, animal drugs and food additives that may have adverse health effects.
organic agriculture should be based on living ecological systems and cycles, work with them, emulate them and help sustaining them. Organic management must be adapted to local conditions, ecology, culture and scale. The reduction of inputs by reuse, recycle and the efficient management of materials and energy will contribute to improve environmental quality and will conserve resources.
This principle emphasizes that those involved in organic agriculture should conduct human relationships in a manner that ensures fairness at all levels and to all parties – farmers, workers, processors, distributors, traders and consumers.
This principle states that precaution and responsibility are the key concerns in management, development and technology choices in organic agriculture.
The aim of organic agriculture is to contribute to sustainability. In the context of agriculture, sustainability refers to the successful management of agricultural resources to meet human needs while maintaining or improving environmental quality and conserving natural resources for future generations. Sustainability in organic farming must therefore be seen in a holistic sense that includes environmental, economic and social aspects.
The demand for organic products creates market opportunities. Organic products are sold at higher prices than products from non-organic farming. However, entering this lucrative market is not easy. Farmers need not only good agricultural practices, but also organic certification to annually verify and confirm that their farms and enterprises comply with organic standards.
During the conversion period to organic farming, which lasts 2 to 3 years, farmers cannot sell their produce as “organic” and thus cannot obtain price premiums. The reason for this is that consumers expect organic products to be free of residues. However, according to the Codex Guidelines for Organically Produced Food (2007), produce that has been produced on organically farmed land for at least one year but less than the required two to three years can be sold as “transitional” produce, but very few markets have developed for such produce.
The goal of organic agriculture is to contribute to the enhancement of sustainability.
In the context of agriculture, sustainability refers to the successful management of agricultural resources to satisfy human needs while at the same time maintaining or enhancing the quality of the environment and conserving natural resources for future generations.
Sustainability in organic farming must therefore be seen in a holistic sense, which includes ecological, economic and social aspects.
Integrating sustainability considerations into financial management strategies can lead to improved financial performance and long-term value creation while addressing environmental and social challenges.
Achieve economic growth while encompassing wider environmental, social, and governance (ESG) objectives.
Refers to the consideration of a company’s impact on the environment. It includes factors such as
Companies with strong environmental practices aim to minimize their negative impact on the planet and promote sustainability.
The social component of ESG focuses on a company’s relationships with its employees, customers, communities, and other stakeholders. It considers factors such as:
Companies with a strong social focus prioritize fair treatment, diversity, social justice, and community development.
Governance refers to the way a company is managed and controlled. It includes aspects such as
Companies with strong governance practices prioritize integrity, ethical decision-making, and responsible leadership.
In the last two decades, the market for organic food products has undergone a very significant growth. Global organic food sales have gone from near zero in the early 1990s to surpassing the $100 billion in 2018 (Ecovia Intelligence, 2019).
The global organic market is dominated by the United States which alone account for almost half of the total value, followed by Germany and France. Italy in fourth position, after China, and Spain tenth.
In 2018, the EU market for organic food products amounted to 40.7 billion euros (FiBL & IFOAM, 2020) and marked an increase of 7.8 percentage points compared to 2017, while this trend is still increasing. EUROSTAT indicates that, in 2018, the total organic cultivated area in the European Union (EU) was 13.4 million hectares, corresponding to 7.5% of the total utilized agricultural area (UAA), an increase of 34% between 2012 and 2018. This trend has been continuing to increase, with 14.7 million hectares in 2020 to 15.9 million hectares in 2021, which represents 9.9% of the total UAA, while a significant percentage increase is recorded in almost all European countries.
Two observations must be made about the facts and figures previously shown:
Furthermore, Europe is the geographical region where consumers are most willing to pay a higher cost for organic products, as considered healthier for the consumer and the environment, according to several recent surveys, and trust in organic certification, as European Commission laid down in Article 1.1 of the EC Reg. 834/2007: ‘This Regulation provides the basis for the sustainable development of organic production while ensuring the effective functioning of the internal market, guaranteeing fair competition, ensuring consumer confidence, and protecting consumer interests.’ (EC, 2007).
Analysis of the location of the farm
The procedure of conversion of a farm consists basically of three steps:
Implementation of organic practices throughout the entire farm should be considered, once sufficient experience with different practices has been gained. As soon as organic practices are implemented throughout the entire farm, a farmer can claim to be an organic farmer. Commonly, consistent application of organic practices marks the beginning of a long process of improving the production system:
Farming organically means continuously learning from personal observation, from outside experiences and sharing experiences with other organic farmers.
Organic certification requires undergoing a process that guarantees consumers that production follows the principles and practices of organic farming. In most countries, certification is a service offered by nationally or internationally accredited private certification bodies. In a few countries, such as Denmark, certification is offered at no cost by a governmental body.
Farmers and processors attain third party certification for compliance with specific standards or regulations. The certification process can begin only after the conversion period has been completed and the requirements of the specific standard or regulation demanded by the market have been met.
At the request of a farmer or a group of farmers, a CB (certification body) will send an independent inspector to visit the farm and verify compliance. Based on this information, usually compiled in an inspection report, the CB makes a decision whether the farm is being managed in compliance or not.
In some countries, organic products can be sold locally without mandatory certification, while in others certification is mandatory for the local market. For export markets, no organic product can be traded without certification. The main export markets (such as EU, Japan, US) have official regulations in place and imports of organic products must comply with them. In addition to the official regulations in the EU, different countries sometimes demand additional certification under specific private standards – both to fulfil organic requirements and to ensure good agricultural practices (GAP).
In addition to the obligatory EU regulations, organic products often also must be certified under local private organic standards in order to access specific national markets. This system is a result of the perception that
local consumers have more trust in organic products when they exhibit private standard labels.
The most important private standards for organic agriculture in Europe are Bio Suisse (which is considered essential for the Swiss market), Soil Association (preferred in the British market) and Demeter and Naturland (for the German market). Demeter, however, is the main standard for biodynamic organic products and, therefore, is also essential for biodynamic products throughout the world.
Furthermore, fair trade standards are also popular, which are certified under the Fairtrade Labelling Organizations International.
It takes conversion time to achieve Organic or Demeter certification.
The conversion time can be shortened in some cases provided requirements are met.
For details the respective standards of the certification scheme adressed should be read. It is recommendable to not only get in touch with the certification body but as well with other farmers who already have gone through the process.
A database on organic rules, control authorities and bodies, and technical means is provided within the organic farming information system (OFIS) on the link: agriculture.ec.europa.eu/farming/organic-farming/organic-production-and-products/organics-references_en The legislation connected to the Council Regulation (EC) No 834/2007 is also provided and updated at the web link agriculture.ec.europa.eu/farming/organic-farming/legislation_en
1. Farm Questionnaire & Documentation
2. Conversion Contract
3. Membership
Depending on the Standard and the Label the farmer/ enterprise applies for membership in the respective association.
4. Training
The farmer is recommended to attend an approved introductory and further courses in
5. Inspection
6. Certification Decision
7. Processing and Licensing Fees
The farmer will be charged by the Certification Organization a fee according to a fixed scale of fees for the use of the trademark and certification costs.
There is a broad and divers offfer of certification systems and certification bodies.
If you got to the conclusion that certification is basically interesting and of added value for you, your farm and your markte approach, then you can find some exemplary criteria of comparison in the two following slides.
The systems, rules, and laws are on steady change.
Therefor the steps shown in the slides above as well as the comparison of the systems is an ongoing task for the entrepreneur:
|
Producers / Criteria |
Conventional | EU organic | Naturland | Bioland | Demeter |
|---|---|---|---|---|---|
|
Maximum Number of Hens per building
|
no limit
|
20000 |
12000 |
6000 |
3000 |
|
Number of permitted food additives |
>300 |
47 |
22 |
23 |
13 |
|
Pigs per hectare |
no limit |
14 |
10 |
10 |
10 |
|
Laying hens per square metre |
10 |
6 |
6 |
6 |
4,4 |
|
Dehorning of cattle |
Permitted without anaesthesia |
Permitted |
not recommended |
permitted in exceptions |
forbidden |
|
Organic feed
|
no regulation
|
95% |
100% |
100% |
100% |
|
Use of genetic engineering |
Allowed |
< 5% |
No |
No |
No |
| EU organic label | organic associations labels |
|---|---|
|
Partial conversion to organic permitted |
complete conversion is mandatory |
|
5% conventional protein feed for pigs and poultry allowed |
only a few conventional protein feeds are allowed. With Demeter only organic feed |
|
up to 14 fattening pigs or 580 chickens for fattening or 230 laying hens allowed per hectare of agricultural land |
up to 10 fattening pigs or 280 fattening chickens or 140 laying hens per hectare of agricultural land |
|
Use of conventional slurry and poultry manure allowed under certain conditions |
Use forbidden |
|
Maximum fertiliser quantity: 170kg nitrogen per hectare and year |
Maximum fertiliser quantity: 112kg nitrogen per hectare and year |
|
For herbivores at least 60% of the feed must come from the own farm, for pigs and poultry 20%. |
For herbivores at least 60% of the feed must come from the own farm, for other animals 50%. |
|
Year-round feeding with silage possible |
Year-round feeding with silage forbidden
|
| Product | EU organic label | organic associations labels |
|---|---|---|
|
Fruit juice |
Production from concentrate permitted |
Only pure pressed juices |
|
Milk |
UHT (UHT milk) and sterilised (condensed milk) permitted. |
Ultra-high temperature is forbidden by Demeter, sterilisation is forbidden by all associations. |
|
Bread and bakery products |
Enzymes such as amylase and ascorbic acid are allowed in flour. |
Prohibited |
|
Meat and sausage |
Nitrite curing salt permitted, in smaller quantities than in conventional methods |
Prohibited or only permitted in small quantities for products that are not fried |
Private organic standards in the EU are usually more strict than official regulations and vary widely on specific issues concerning agricultural processing and marketing practices.
The main problems arising from the multitude of certification requirements are as follows:
While several certification bodies are aware of this situation and are making some efforts to remedy this situation for their clients, it is important to be aware that many of the above mentioned constraints are beyond the reach of single certification bodies.
Without claim to completeness 8 case studies are included as additional learning materials focused on local biodiversity, organic agriculture and geographical indications, within different farming sectors, with aim to inspire the opportunities given by a niche market vision, keeping in mind some basic criteria:
This unit provides farmers and interested stakeholders with devices and resources they need to identify, create, and develop niche markets in agriculture. It describes which aspects should be considered at the beginning of entering niche markets and what you should keep in mind during the whole process. Also, the unit gives an overview of selling methods and distribution models in niche markets. For better practical relevance and understanding, the unit shows short examples from practice.
The aims and objectives of the unit are:
Niche markets often involve specialized products or production methods. Farmers should consider what they are most interested in or have the most experience in and focus on that area. Does niche marketing fit the company’s resources, capabilities and preferences?
One way to identify the potential for a niche market is to think about the products and services you need. There may be a product or service that you need that is hard to get in your area. Maybe others need that product and service as well and you can offer it to them, or you find that others are asking you to offer it to them as well. Do you seem to be recognized as an expert in something that everyone needs? Maybe others in your community come to you for advice, help, or a certain type of service.
It is helpful to identify a specific customer group with their specific needs and preferences. What do your customers need and want? What interests and buying habits do they have? Thereby communication is key: regular exchange with customers, preferably in practice.
It is important to have very good knowledge of the target market in order to be able to respond to changing consumer preferences and market conditions. Understanding the target consumer segments is a crucial factor in determining whether an operation has the resources, interests, and business elements necessary to meet the needs of prospective customers.
In order to stand out in a niche market, farmers should consider what makes their products or farm unique and highlight those characteristics in their marketing efforts.
What is a Unique Selling Proposition?
What is meant by a USP along added value chain?
A Unique Selling Proposition (USP) takes into account the entire process of creating, producing, packaging, distributing and delivering the product.
Creating a USP along the added value chain can help a farmer to differentiate their products from those of competitors and increase the perceived value of their products.
A USP along the added value chain can include, for example, the sourcing of sustainable and ethically-produced ingredients, eco-friendly packaging, fair trade practices, and transparent and traceable supply chains, as well as the traditional product benefits.
For example, a USP for a small farm that sells artisanal cheeses made with organic and grass-fed milk, could be:
“Our farm provides artisanal cheeses made with organic, non-genetically modified organism and grass-fed milk, produced following traditional methods, and using sustainable and ethically-sourced ingredients, all of it, packaged in eco-friendly materials, guaranteeing not only the best taste but also the best for the environment and animal welfare.”
Characteristics of a good USP
How do you create your own USP along added value chain?
Here are some steps that a farmer can take to build and establish a USP.
With this diagram it should be noted that the sequence of steps is not authoritative and the order can be changed or should be changed to suit the goal, depending on the individual situation of the operation and the circumstances.
Niche market farming can be a way for farmers to increase their income and profitability by targeting a specific market with specialized products.
To begin, an inventory of internal resources, values, potential strengths/capabilities, and weaknesses/inadequacies of the current operation is recommended.
As with any business venture, it’s important for farmers to understand the costs involved in producing and marketing their products, as well as the potential profitability. Conducting a thorough financial analysis can be helpful in determining the feasibility of entering a niche market.
After the niche is identified, the next step is to get attention of the consumers. This takes thoughtful promotional planning and development of messages to connect with potential buyers. Marketing materials, such as websites, brochures, personal communications, packaging, public image, etc., need to integrate credible claims, motivational messages, and consistent images to connect to (and build loyalty with) niche market consumers.
Set clear goals and objectives for what the farm hopes to achieve by following a niche marketing approach: Reach new customer segments? Lower marketing costs? Secure premium pricing?
Any plan focused on niche markets should include the following:
Building relationships with customers and other stakeholders (retailers, wholesalers e.g.) can be especially important in niche markets.
Farmers should consider ways to connect with their customers and build loyalty, such as through direct marketing efforts or participation in community events.
Niche Markets also require a high level of coordination and collaboration among the participants, which can be difficult to achieve. The following slide provides advice and what to consider for finding partners and building partnerships along the niche market value chain. This can help to increase their market reach, share knowledge and expertise, and collaborate on new products or services.
When looking for partners and building partnerships along the value chain of niche markets, farmers should consider the following:
By considering these factors, farmers and other industry players can build partnerships that are well-suited to their niche market products and that can help bring their products to market efficiently and effectively.
Niche markets may have specific distribution channels, and the farmer must identify these channels to ensure that their products reach the target customers. This may involve working with distributors or developing their own distribution channels. For a detailed insight, see Chapter 3
Marketing and promotion: In niche markets, effective marketing and promotion are essential to reach potential customers. The farmer should consider using targeted advertising, social media, and other promotional tools to reach the target audience.
You will need advice and help to plan and build your niche marketing business. Look for reference material on the Internet, from counselors and professionals, and in the news media. Attend trade shows and exhibitions. Likewise, one of the best sources of information and support is people who are doing something similar. So, make contacts and put a focus on networking.
It’s important to keep in mind that creating a niche market takes time, dedication and that it is a long-term investment. A solid understanding of consumer preferences, market trends and a clear marketing strategy will help to increase the chances of success. Additionally, niche market farming requires the ability to effectively market and sell the products to the target market.
The choice to pursue a niche marketing strategy will not guarantee success, and, similar to any business decision, requires critical assessment and ongoing learning. Exploring niche markets is representative of the set of management choices every agricultural operation faces.
The four aspects shown in the diagram and described in detail below should be taken into account throughout the process of creating and entering a niche market.
The four aspects are directly and indirectly connected with each other and can condition and influence each other depending on the situation and characteristics:
Reputation is what the company itself communicates about itself and how this is received by other stakeholders and consumers. Transparent processes let customers convince themselves. Promises of guarantees, such as in the form of labels and certified production, are controlled by third parties and can also contribute to the formation of opinion. When building a good reputation, transparent processes or ensuring guarantees, can help or be used specifically to create a certain image of the company with its values and qualities. However, this image of the company can also be destroyed again by a negative incident/scandal. Regular monitoring and revision can help to ensure transparent processes and guarantees and thus maintain the good reputation.
Reputation is extremely important in niche markets in agriculture, as it plays a key role in building trust and credibility with customers, and in differentiating the products from those of competitors.
Build and maintain a good reputation, by consistently providing high-quality products, transparent communication, and good customer service. A good reputation can help farmers to:
Reputation is built over time. It can take a long time to build a good reputation, but it can be easily damaged by a single negative experience or bad product. Therefore, farmers should be proactive in building and maintaining their reputation.
Additionally, farmers can also build their reputation by getting certifications and guarantees, which can help to demonstrate that their products meet certain standards, and by being involved in the community and being active in promoting sustainable agriculture and fair trade practices.
Guarantee plays an important role in niche markets in agriculture.
Guarantees can help farmers to build trust and credibility with customers by demonstrating that the products meet certain standards or are produced in a certain way. Also guarantees can differentiate the products of the farmers from those of competitors and increase the perceived value of their products. Thereby it will be build trust and reliability with the customers and in the market. At the same time it can increase sales and profitability by charging premium prices for products that meet certain standards or are produced in a certain way. Often the reputation of the farm and the brand can be enhance.
A guarantee can be a promise or a certification. Obtaining certification can be a great addition to a farmer’s marketing efforts, adding value to farm products and attracting the attention of a particular niche market. The process for certifying farm products varies with each product and type of certification. The introduction of such a standard should be considered only after the farmer has gained some experience with quality production. For example, a guarantee can be a certification that a product is organic, non-GMO, or grown using sustainable methods, or a promise that the product meets certain quality standards.
However, it’s worth noting that it’s important for the farmers to be able to meet the guarantee they are providing, and that the guarantee is credible, verifiable and trustworthy. If the guarantee is not met, it can lead to a loss of customer trust and credibility, which can be difficult to regain. Be prepared for seasonality: Many niche markets are seasonal, and farmers should be prepared for this when planning their production and marketing efforts!
Transparency is extremely important in niche markets in agriculture, as it helps to build trust and credibility with customers. Consumers in niche markets are often willing to pay a premium for products that they perceive as high quality, unique and sustainably produced, and transparency is a key factor in building this perception.
Transparency can be achieved through a variety of means, including:
Transparency allows for better communication and understanding of the product, making it easier for consumers to make informed decisions about what they are buying and supporting. Additionally, transparency can help to ensure that the products are produced ethically and sustainably, which is important for many consumers in niche markets.
Monitoring here means that, on the one hand, one should keep an eye on one’s own sales, processes, etc. in quantitative terms.
In addition, it is important to talk to customers in order to understand why something has been well accepted and liked, or why it has not.
For this purpose, it is important not only to talk to your own customers or to analyze your own sales, but also to keep an eye on competitor products in order to include new products in your own range that are (not) available from the competition.
🡪 Continuous monitoring and review, at its best, facilitates adaptation to changing consumer preferences and market conditions.
In niche market farming, there are various selling and distribution methods that can be used by farmers to sell their products.
These models can have a significant impact on the success of a niche market farm.
The selling and distribution methods that a farmer chooses should depend on the specific product, target market, and the resources available to the farmer.
Farmers should also consider the cost and logistics of their distribution model when deciding which one to use.
A combination of the different distribution models and selling methods could also be beneficial for some farms. In chapter 3 you will find examples from practice.
Business-to-business (B2B) and business-to-consumer (B2C) are two different types of sales methods used by farms and can equally be applied in niche market farming.
Both B2B and B2C selling methods have their own unique challenges and opportunities. The most effective selling method will depend on the specific product, target market, and the resources available to the farmer.
| Business-to-business (B2B) | Business-to-consumer (B2C) |
|---|---|
|
The sale of goods or services from one business to another. |
The sale of goods or services directly to the end consumer. |
|
B2B sales often involve larger quantities of product and longer sales cycles. |
B2C sales often involve smaller quantities of product and shorter sales cycles. |
|
The buying decision is often made by a team rather than an individual. |
The buying decision is often made by an individual consumer. |
|
B2B sales often require a higher level of technical knowledge and sales expertise, as well as a good understanding of the industry and the target market. |
B2C sales often require more focus on branding, packaging, and marketing, as well as a good understanding of consumer preferences and behavior. |
These traditional methods have been used for many years, they are widely known and accepted by farmers, retailers and consumers. They rely on personal relationships and trust, and they can provide a stable source of income for farmers. They also allow farmers to build a reputation for their products and to gain a better understanding of customer preferences and market conditions.
These innovative methods can help farmers to reach a larger customer base and to increase their income. They also allow farmers to use technology to improve customer engagement and to increase their understanding of customer preferences and market conditions. Additionally, they can help to build trust and credibility with customers by providing more information about the product and its origin.
In the era of global commerce commodities are dominated by big players determining food flows and markets.
Small farmers can not be comfortable within this dimension while niche markets are sometimes viable as market holes.
Succesfull stories, such as the case studies annexes to our learning materials, demonstrate how small family farms can be rentable and competitive as seed savers and biodiversity hunters part of the local community rural traditions, and well connected to niche market channels.
From local farmers‘ markets to big national and international exhibitions dedicated to sustainable, organic and natural world dedicated to organic food, nature based care and beauty, green and healthy lifestyle products, niche markets are moving on helping farmers survive and environment be more resilient.
Successful marketing for any types of farming starts with authenticity and a genuine connection to people you’re selling to.
The key to any marketing strategy is communicating.
Analysis of your Strengths, Weaknesses, Opportunities and Threats (SWOT) is a place to start if there isn’t a niche for you set yet.
🡺 Types of farming and the possibilities are endless!
Sometimes your niche is obvious, but others you just have to experience, talk to customers or other entrepreneurs to see what the needs are.
Is the process of analyzing how a system’s different parts interrelate and how systems work within the context of other bigger systems.
Whether you’re just starting out, sell in a small market or have lifetimes of experience and live in an overly saturated market, having a niche for your farm is an important step!
It involves assessing information and arguments, identifying assumptions, challenging the status quo, and reflecting on how personal, social and cultural backgrounds influence thinking and conclusions.
Without claim to completeness, as only 8 case studies were included:
Basics:
Exemplary calculation (no matter if conventional/ organic/ biodynamic)
Make your own calculation!
Not every farmer is a good key accounter!
Not every key accounter is a good farmer!
And! Processing and packaging is not done by itself!
🡪 Therefore be very careful with the first simple calculation.
To reach added value in the market is based on lots of working hours or high level technology
which means invest capital.
Think carefully about your resources and where you put those!
Funded by the European Union. Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union or the European Education and Culture Executive Agency (EACEA). Neither the European Union nor EACEA can be held responsible for them.
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