Market Research For Agroprocessors

 

by
Andrew W. Shepherd
Agricultural Support Systems Division

 

Why is it that agroprocessing ventures are often unsuccessful? Processing developments often fail to take into account the simple fact that the processed product has to be sold. Activities are started because they are technically possible, because they are “in fashion” in other countries and, perhaps, because there are abundant raw materials. The fact that people have to buy the finished product and that ways of selling and distributing it have to be developed often receives only limited attention. The result can be a shiny new factory, which loses money because it cannot sell enough of the processed product. Such “white elephants”1 are to be found in every country.

 

Individual entrepreneurs (businessmen or women) or private companies are perhaps less likely to make such a mistake because they are investing their own money in the processing facility. More likely to fail are facilities established by groups or cooperatives, with the support of outside bodies such as government departments, NGOs or donors. The private sector usually begins with the question: “can we make money by making this product and, if so, how much?” An important way of finding out the answer is to do market research. Outside bodies, on the other hand, frequently start with the question: “what can we do to help people in this area?” Such a question rarely leads to a detailed investigation of the market.

 

Market research is essential before beginning any venture of this type. Without market research there is a risk that consumers do not need or want the product, or do not like it or the way it is packaged and presented. There is a danger that retailers do not want to sell the product.There is the possibility that the price the processor wants to charge is too high for consumers to afford.

 

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