زنجیره ارزش نام گذاری تجاری (برندینگ) و کشاورزی در کشورهای در حال توسعه : دیدگاه از بیهار (هند)

Local brands are rapidly gaining agricultural market share in developing countries. However, it is not well understood how they reshape agricultural value chains. In a detailed case study of the value chain of makhana in Bihar, we see the fast emergence – a doubling over 5 years – of more expensive packed and branded products. The effect on consumers is ambiguous. While the emergence of brands leads to increasing differentiation in retail markets, the brands in these settings provide however mostly incomplete or misleading information for the consumer and quality contained in branded bags is often lower than for loose products. We further also find that there are little direct benefits to the farmers from the presence of these brands.

Significant changes are happening in food and agricultural markets in a large number of developing countries. They concern most importantly the emergence of modern retail in food retail (Reardon et al., 2010) and the increased consumption of high-value agricultural products (Gulati et al., 2007 and Delgado et al., 2008). Rapid market changes have led to a large body of research to better try to understand the impacts on producers, consumers, and on the food system as a whole (e.g. Reardon et al., 2010, Pingali, 2007, Swinnen and Vandeplas, 2010 and Maertens and Swinnen, 2009). One of the changes in food systems that has recently been documented is the rapid emergence of packed and branded products of retailed food in Asia (e.g. Pingali, 2007, Minten et al., 2010a and Minten et al., 2010b). For example, the sales of branded rice in traditional markets in Beijing increased by 8% over the course of 5 years (Reardon et al., 2010).1 Similar patterns are seen in other developing countries, e.g. in a recent study in Delhi, it was shown that 31%, 70%, and 78% of all rice, wheat atta, and mustard oil sold by traditional retailers was branded (Minten et al., 2010a). While unbranded and unpacked products are indistinguishable from those of competitors, marketing of packed and branded produce adds a ‘brand value’ to products which enables sellers to charge higher prices for their products. The real benefit for the brand-owner occurs over time as the loyalty of the consumers to the brand and the cheapness of retaining these loyal customers, compared to the costs of attracting new ones, make it a profitable enterprise for a branding firm (e.g. Anholt, 2005). The benefits to consumers are guaranteed quality or food safety (Berges-Sennou et al., 2004). The available analysis in the international development literature on branding in food markets has been limited to the study of the switch from manufactured labels to private retail labels, often linked with the emergence of modern retail (e.g. Reardon et al., 2003), or the effects of the development of brands for export markets in developed countries (e.g. Ponte, 2002). Despite its growing importance in local agricultural value chains in developing countries, few studies have looked empirically at what the effects are in local – traditional as well as modern – retail markets, what the impact is of the branding process on economic agents working along the value chain, and what potential policy implications are. To fill that lacuna, we present the case study of makhana (Euryale ferox) in Bihar, one of the poorest states in India. Makhana2 is an interesting product because it is almost exclusively commercialized from this state, quality distinction is easy and branding and packing for this crop was not started until recently. It is thus a unique case study on the development of local brands in developing countries and its implications for the functioning of the value chain. The contributions to the international literature of this study are threefold. First, this is the first analysis that documents, based on primary survey results, the fast emergence of brands in agricultural value chains in poor settings in India. In a 5 year period, the share of branded products increased from 25% to 50% of the total market. It is quite possible that similar fast growth rates happen in other value chains in India, and beyond, and it then raises important questions on the implications of this trend. Second, we implement a unique study setup where stacked surveys were fielded for all agents in the value chain. By using such a methodology, we are able to document where the costs and benefits of brands in the value chain occur. While the retail prices of these brands are significantly higher than those of loose products, we find however that there are little direct benefits to the farmers from the emergence of these brands. Third, a typology of brands in this developing market shows that two types of brands can be distinguished, low-price and high-price brands. Low-price brands focus exclusively on attractive glossy packaging with little consideration for quality and with no investments in advertising. Investments are small and so are price differences with loose products. The high-price brands pay attention to quality beyond packing, invest in advertisements and promotion, and employ specialized salesmen. We find that both types of brands are characterized by incomplete or misleading information for the consumer. The structure of the paper is as follows. In ‘Conceptual framework on changes in the agricultural value chain’, we present a conceptual framework. ‘Background’ provides background information on the product studied. In ‘Data’, the data collection methodology is discussed as well as some descriptive statistics. Following the setup of agricultural value chains, we analyze pricing, packing and branding upstream in ‘Downstream’, midstream in ‘Midstream’, and downstream in ‘Upstream’. In ‘Price composition’, we look at the price composition of the whole value chain. We finish with conclusions and implications in ‘Conclusions’.

In response to growing incomes and increasing willingness to pay for food quality and safety, developing countries see an increasing differentiation and choice in food retail markets. In a detailed case study of makhana in Bihar, we document the fast emergence of more expensive packed and branded products. Two types of brands can be distinguished, i.e. low-price and high-price brands. Low-price brands focus exclusively on attractive glossy packing with little consideration for quality. Investments and profits are small. The high-price brands pay attention to quality beyond packing, including investment in advertisements and promotion, and they explore options for value-addition, and employ specialized salesmen. We find that there are little direct benefits to the farmers from the emergence of these brands. A common feature of the low- as well as high-price brands is that they make several false or misleading claims to consumers. First, several brands have printed on their bags that the quality contained in the bags is an “export quality grade”. However, such publicly or privately enforced grades do not exist in practice. As reported by the wholesalers themselves, the quality of the makhana contained in branded bags is often no different from loose products. Second, on several branded bags, it is printed that the product was approved by the local makhana research organization, while in actuality the organization was not involved. Third, further claims are made by the largest branding company regarding backward linkages with farmers, while in truth few of such backward linkages exist. In short, these findings highlight an important problem in these settings related to the protection and empowerment of consumers against a lack of quality assurance and transparency. The brand name’s failure to guarantee quality to its consumers seems symptomatic of the problems of enforcing intellectual property rights in a number of developing countries, including India. Effective branding processes in agricultural markets are often undermined by the emergence of other, sometimes illegal, brands very similar to original ones, but they put little effort in to ensuring the required quality or safety of their products.22 Such brands then often create confusion for consumers, especially in low-educated populations. The emergence of these brands and the lack of effective intellectual property right protection can lead to less than optimal market choices and a loss of consumer welfare as innovators willing to make investments in quality assurance might not have the right incentives to do so. This research indicates several policy implications. First, the results highlight the importance of independent certification mechanisms for consumer protection. Several claims done by some of the low-price and high-price brands are false and misleading. The lack of an effective consumer protection body leads to misinformation to consumers and less effective quality determinants for consumers in the market place. Second, an important question remains regarding how poor farmers can be directly connected to major branding companies and potentially capture some of the benefits of branding in retail markets. In food markets we see that some modern companies in developing countries – be it processing or retail – invest in backward linkages to farmers to ensure timeliness, quality, food safety, and traceability characteristics of their supplies (Reardon et al., 2009). The role of the government is then to assure that the appropriate conditions for investments by the private sector are in place. This can be done by assuring property rights, law and order, road and communication infrastructure, and education of rural households; all things that the state of Bihar had been lacking and only improved recently. Third, the branding systems found in this research differ widely from effective branding practices in other sectors and countries.23 Brands in this setting in India have seemingly little function other than the packing function as they provide little credible information to the consumer on the characteristics of the product. It is likely that most current branding practices will be unsustainable as consumers become more demanding and informed over time and because they do not lead to a loyal consumer base, which is a requirement for success of a given brand. Given the fast emergence of brands and the lack of empirical evidence on the effects of brands in food markets in developing countries, this should be fertile ground for future research. The research questions that should be further pursued relate most importantly to the needed conditions of an institutional environment for successful development of effective brands, to ensure quality and safe food at prices that are affordable for consumers in developing countries. Also, the conditions required to ensure direct benefits to poorer farmers from the emergence of food brands and a better understanding of the evolution of branding practices over time in developing countries is required, especially when transitional states move toward a situation where branding represents a guarantee of quality.