Archive for June, 2001

Regional food brands

June 8, 2001

Regional branding is commonplace in the USA and Europe. French food retailers clearly identify the country or region of origin of fruit and vegetables. The Parma region in Italy has legal systems supporting its ham producers.

But it has never taken off in Australia – opponents argue that the Australia brand and its ‘clean, green’ status are the identifying features.

But overlaying these with state and regional dimensions confuses consumers.

And the labelling requirements are too costly.

And Australian food producers are either too small or too competitive.

And manufacturers and growers face definitional problems.

And legal action might ensue should the origins of products be inadvertently mislabelled.  

Most of this is narrow-mided nonsense. However, things are changing. There has been a distinct shift in recent years, with major dailies running articles that celebrate regional food and wine initiatives. 

Regional branding has come into its own as a response to globalisation, the search for product differentiation and rising levels of consumer sophistication. Consumers increasingly want to make informed choices – the treatment of consumers as passive and undemanding is giving way to more enlightened approaches that include region of origin, variety, quality classification etc.

Significant opportunities are opening up on world markets due to our clean/green image, the post-Olympics interest, and the environmental problems surfacing in overseas markets. A new, younger generation of horticulturalists and niche food specialists are embracing these opportunities arising from changing consumer demand.

Last year, Mr. Michael Dimock, President, Sunflower Strategies (Santa Rosa, California) lectured to WA growers, and ABARE staff in Canberra. He said that people will prefer your product for one or more of the following reasons:

·          Like the idea of the land where you live, the way you farm etc.
·          See your region as wholesome, clean and healthy.
·          See you as distinctive – traditional or progressive or old-fashioned or cutting edge.
·          Had a good experience while visiting. 

He stresses that ‘place’ counts once they know your region/product.

The other ingredient is ‘mystique’, defined as ‘having the capacity to stir the heart, emotions or sentiments by bringing deeper meaning to an otherwise ordinary experience’.

Successful regional branding is the result of persistent building of loyalties around unique characteristics. It also depends on finding the mystique to present to the consumer. It is more  than just fashionable labelling. Mr. Dimock stressed that regional branding is not easy – it takes time, flexibility, cooperation, capital and belief by producers in their own values. 

This is an extract of ‘Food for Thought’ – a major report being released in 2001. It details action agendas for the development of food clusters in regional South Australia – the work was undertaken under the aegis of the City of Playford, with support from the federal Department of Transport & Regional Services. Some of our members are forming a consortium to drive regional branding further. If you have an interest, please contact me on apd@orac.net.au. 

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North Carolina’s Research Triangle Park

June 8, 2001

Mikel Landabaso was at the University of North Carolina under an EU fellowship. a few years back, where he sent me a draft of a most interesting paper “Reflections on US economic development policies: meeting the New Economy challenge”.  

North Carolina is one of the pioneer states in the U.S. regarding the design and implementation of innovation programs and public private partnerships.

The Research Triangle Park (RTP) was the second U.S. technology park (established in late 1950s). Its role was ‘to serve as the focal point of the state’s efforts to be at the forefront of technological development…by providing a physical location for private firms to develop new products cheaply, drawing on the resources of nearby universities.’ 

An early strategy to induce high-tech firms to move to RTP was to establish public and quasi-public public anchors there – U.S. Forest Service facility, National Institute of Environmental Health Sciences, and the U.S. Environmental Protection Agency – all recruited by NC Governor Luther Hodges.  He was the governor ‘who launched North Carolina on a pattern of diversified economic growth through aggressive, State-led industrial policies”.  He also launched a number of ambitious complementary industrial policies – a program of customized industrial education via the State’s community college system, made to order job training, Business Development Corporation of NC.

Hodges brought corporate leaders directly into policy-making through a series of institutions linking government, business, and universities. This approach was deepened by his successors who focused on recruiting foreign (to the state) technologically-advanced companies and R&D facilities.

This emphasis led to a two-track economy:

 a relatively few technologically-advanced firms (some being global players), working in emergent sectors, and a high degree of geographical concentration with a skilled, highly-paid workforce.

 a vast majority of regional firms still working in traditional sectors with low levels of skills, productivity and wages.

North Carolina ranks 43th in the US in terms of manufacturing wages, and 48th in the number of engineers in the workforce. The RTP has been without doubt the flagship of North Carolina’s science and technology recruitment strategy. Since its inception, at least 226 technology firms employing almost 14,000 have started in the RTP region, including 136 since 1990 – 28 percent of firms are in the Park itself. RTP ranks in the top three U.S. science and technology centers – the results come after a long ‘maturity phase’ which involved decades of continuous support, even with the first mover advantage. It is paradigmatic of some of the types of industrial policies carried out in a number of US states – long term public commitment to industrial policy goals, in close partnership with the private sector, sparks off new economic activity through a regional modernization process by external recruitment. Public action is seen as instrumental in catalysing the joint public-private efforts.

Cooperatives – reinvention required

June 6, 2001

Professor Mike Cook of University of Missouri-Columbia (USA) gave a thought-provoking address to the Australian Agricultural Economics Society meeting in Canberra in March.

H has over a decade of industry experience with Tenneco, Inc. (Houston), Farmland Industries (Kansas City) and the Rice Growers Association (SacramentoSome of his points were:

 ·          Most agricultural cooperatives in Australia were set up for defensive reasons, around State legal frameworks, between 1900-1940 – to address market failure of various types. Similar timing and trends in other British-influenced places (US, Canada, South Africa) and Argentina, Brazil, Paraguay etc.
·          Co-operatives can ‘tie you up’ because they make producers think horizontally. But the world in now operating very vertically as well – international VI supply chains etc. They have other flaws – free rider problem, short/long-term horizon differences, difficulty of exit.
·          Will see the slow death of co-ops unless a ‘new generation’ co-op can be developed. The US has developed sophisticated co-ops in some instances e.g. Ocean Spray – dominates world cranberry industry, Sunsweet in prunes. Dutch have got their act together too.
·          Nestle and Cargill will have it all in Argentina – because these two multinationals are very good. In 7-8 years there will be no local agrifood companies left of any significance –– countervailing action is required – unless of course people are satisfied with this.
·          Brazil will also be down to two local agrifood majors within a few years.
·          New forms of collective action are required. 

What do you think? I am thinking about where the Bega Cooperative fits on the scale, having interviewed the Chairman a few months back, and being impressed that they’d cope with global pressures. I believe that the dairy market deregulation underway in Australia will expose weaknesses in organisational and governance systems – for both cooperatives and vertically-integrated corporates. For example, Bonlac is one of the latter, and is on the slippery slide as Professor Cook noted. 

Software cluster NZ

June 6, 2001

One of our readers is Trish Brimblecombe, Head of the Computing School at Whitireia Community Polytechnic in NZ (22 km from Wellington CBD).

 Trish is working with Innovation & Systems in Wellington. She facilitates a Software Cluster and a Mobile Internet Cluster through a contract I&S has with the Wellington City Council.

Clusters are a key component of WCC’s economic development strategy.  The IT-related incubator currently established in Wellington has a couple of businesses also involved in the early stages of building the software cluster. She makes the general comment that in this early part, when relationship building and profiling skills/capability is the main focus, these activities also provide similar help and support for start-ups in related incubators.

Later on when clusters are involved in setting strategic agendas and identifying projects for possible collaboration, links to incubators can be used to look for additional potential partners or subcontractors, thus stimulating incubator activity and providing useful models for collaborative action.  

Trish is interested in contact with other cluster facilitators working in similar areas. We have put her in contact with the Newcastle and Adelaide folk, but are there others out there in cyberspace. Interested in comparing notes? trish.brimblecombe@xtra.co.nz