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Rural Industries Research & Development Corporation
Summary of full report
A Model for Expansion of the Australian
Domestic Pasture Seed Market
by Peter Schroder
Executive Summary
The project involved five integrated steps:
• Qualitative market research, from which flowed a tailored extension program.
• Implementation of the program.
• Quantify the size and attitudinal profile of the different market segments.
• Evaluation of the program.
• Testing in other regions to verify the validity of the approach.
It is my understanding that this is the first time such an integrated project has been conducted in the temperate extensive grazing area of Australia.
Qualitative Research A foundational premise of the project was significant gains in pasture seed sales would not come from tinkering with the marketing mix – product, price, promotion and place – but would require fresh insights into the drivers of customer values.
The qualitative market research identified two broad distinct groups of graziers. The first, termed the “intensive” group, had a productivity orientation, were likely to be members of discussion groups, were interested in peer comparisons and aimed to run their enterprise as a business. The second group, termed the “extensive” group, were focussed on reducing costs, relied almost exclusively on their rural retailer for pasture related information, were sceptical of high input farming, had no interaction with the Department of Agriculture and were not interested in direct peer comparisons.
There was very little communication between the two groups and in fact each group was convinced that the other was heading in the wrong direction.
This research highlighted that it is easy to be a complacent grazier. The characteristics of the land use for grazing, and the industry, is such that there is very little pressure from customers or competitors as drivers for change. The cost drivers are such that graziers can survive far longer than others, such as crop growers, where machinery replacement decisions tend to force inefficient growers to exit the industry quickly. Peer group pressure was likely to provide the only, but a weak, driver for change.
Two key insights which formed the basis of the subsequent programs were:
• Members of the intensive group, when faced with scenarios such as advising a city-based investor on the approach to generating profit from a grazing property in the area, or what were the three or four key areas they had to get right, or what they took into account when judging the overall performance of a grazing enterprise, were mostly at a loss to answer and they had very little sense of focus and priorities.
The challenge was to talk to them as managing directors needing to position pastures in the overall business profit context, and not as pasture technologists.
• Members of the extensive group could be motivated by helping them deal with a problem(s) that concerned them.
Program The program for the intensive group involved two streams of activities. The first involved developing a better understanding, from a managing director’s perspective, of their profit drivers. The approach was not to teach them how to be better managers, but to expose them to situations where, along with their peers, they develop a business framework that makes sense to them as individuals. The situations included redesigning the board game “Squatter”, developing models of the farm as a business, scenario role playing, building a case study, and visiting Melbourne to interact with other small businesses. The value of this approach was highlighted during discussions after the first day of the trip to Melbourne. The graziers made very sound observations, and gained new insights, on the wide range of businesses visited.
The second stream of activities focussed on the production function of their business. Over 12 months, with input from a Department of Natural Resources and Environment specialist, and Melbourne University’s McKinnon Project, they developed a simple but robust framework for answering five critical questions:
1. How good is my grazing system?
2. What is holding my system back – pasture or animals?
3. If it is pastures, is the constraint pasture utilisation or pasture
growth?
4. If it is pasture growth, is the problem fertilisers or species?
5. If it is species, can I solve the problem through grazing management
or should I resow the pasture?
From this, growers could relatively quickly develop an appropriate strategy for each paddock, and equally importantly, become critical information seekers. They knew, for each paddock, whether to seek fertiliser information, pasture species and sowing expertise, animal breeding information or grazing system management advice. In addition, the answer to the first question would provide an indicator of how much profit they were forgoing by having an under performing grazing system.
The program for the extensive group involved a local rural merchandiser working with peer groups on their farms to show them how to control onion grass, a problem they considered reflected badly on themselves as managers. The program involved using herbicides to kill the onion grass, resowing pasture and applying relatively high rates of fertiliser.
Quantitative Survey A telephone survey of 100 graziers in the region found the intensive group comprised 35% of the population and 21% comprised of the extensive group. Both would be suitable targets for a focussed extension program. Both groups were likely to be members of Landcare groups and were confident about the future of farming but only those in the intensive group were likely to be members of productivity groups and to use a consultant. The remaining 46% of the population are unlikely to ever become interested in sowing pastures, no matter what approach was taken.
Evaluation The evaluation of both programs clearly demonstrated that graziers could be influenced to use more pasture seed.
The intensive group sought more information on pastures, saw pastures as a key profit driver of their business, had the tools to plan the appropriate strategies on their property and were implementing them.
Purchase of pasture related inputs by members of the extensive group increased by up to 30% in the twelve months following the program. The rural merchandiser considered the project was a sound commercial investment.
Testing key parts of the results in other regions indicated the recommended program should work equally well there. It also showed that while the program could be reduced from the 18 months taken in this project, it does take time to effect the quite dramatic changes in thinking required.
Recommendation Local service providers to the grazing industry hold the key to how quickly and extensively the key findings of this project are adopted. An extension program, which focuses on communicating the vision and achievements of this project to them, and providing skills training and follow up support is recommended. The idea of a managing director searching to find the role pasture plays in the running of a profitable grazing business will be the key theme for those who will work with the intensive segment of the market. The deliverers of large-scale extension programs to the grazing industry, such as Triple P, Prograze and Woolpro, should be a key target in this program.
Rural merchandisers, the main retailers of pasture seed, can be involved along however that several other groups in working with the intensive segment of the market. This project found they have an almost exclusive role to develop the extensive segment of the market. Their role will be to identify a problem this segment wants solved, which involves pastures, and involving groups to deal with this on their properties. Through their current training programs it should be straight forward to make merchandisers aware of the opportunities this project has highlighted but to get a high level of successful adoption significant ongoing encouragement, training and support will be required.
Pasture seed growers are the obvious initiators and early financial supporters of the programs but given the number of groups that will benefit some cost sharing after this stage would seem reasonable.
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