The James Hutton Institute
This page is no longer updated. The Macaulay Land Use Research Institute joined forces with SCRI on 1 April 2011 to create The James Hutton Institute.
The James Hutton InstituteThis page is no longer updated. The Macaulay Land Use Research Institute joined forces with SCRI on 1 April 2011 to create The James Hutton Institute.
It is widely accepted that the majority of the UK agricultural
community are engaged in some form of diversification activity. Motives
for change differ markedly from profit maximisation to supply chain and
management control. Many new channels of diversification have evolved over
the past fifteen years - amongst which are alternative animal fibre enterprises.
There are many areas within the European Union with a
long history of fibre production, but it is only over recent years that
efforts have been made to develop production operations for such fibres
as cashmere, angora, mohair, alpaca, llama and fine wool. Many of these
projects have been exclusive to a particular region or state, and few have
since attempted to develop strategic and commercial alliances between such
groups
This paper attempts to identify the current relationships
between interested parties, related to the European fibre producing groups,
and in particular takes, as its point of reference, two such fibres: mohair
and camelid. The paper illustrates its points by examining current markets
in Denmark, France and the UK.
Through a series of market-orientated models, one can
attempt to identify future opportunities for present and potential contributors
to the European fibre pool. Whilst highlighting areas of current strength
and weakness.
The term adding value can be applied to any process
in which the product is brought closer to the customer - be that tangible,
(such as processing/knitting), or intangible , (such as transportation
to the market place). In doing so, any of these activities effectively
incur a cost which adds value to the product. Many European producers have
expressed concern regarding the discrepancy between the price the consumer
pays for the product and the farm gate price - this is frequently referred
to as the marketing margin.
By controlling the supply chain, it is possible to avoid
transfer of title regarding product ownership and. Under such circumstances,
the marketing margin remains with the producer. Through co-operation, scale
economies can be achieved, permitting producers/growers to effectively
replace the roles of the intermediaries. Due to relatively low world prices,
many European fibre enterprises are unable to generate sufficient margins
from production alone. Through co-operative, value added diversification,
the total margin to the producer may be increased, thus economically justifying
the enterprise (assuming market demand exists).
It can be concluded that there is still a need for closer identification of the market place, in order to design and produce the right type of product, to the right location at the right price, to meet the wants and needs of the target consumer. The paper also highlights the need for stronger co-operation in order to truly exploit the economic opportunities of added value diversification.