General variety produced by small scale unorganised farmers. This can result in
- plentiful supply and lean demand.
- plentiful demand and lean supply.
Glut in supply, crash the prices and low production results in lower income for the producers respectively in the above two scenarios.
Specific varieties grown by a farmer and managed by a cooperative (or a producer organisation or a club). This can result in
- Subdued sales of a particular variety and low consumer interest due to lack of marketing activities.
- Sudden increase in production because good marketing ensures huge interest for a variety among the growers and consumers. This can cause sudden increase in production and crash of prices because of excessive supply.
The issues are more or less same in situation 1 & 2 as producers are losing in one way or the other.
Cooperatives manage production and marketing of a IP (Intellectual Property) protected plant variety.
In situation 3, cooperatives can manage a proper balance in terms of quality and product volumes, ensuring higher returns to the members of the cooperative. A cooperative (or producer organisation or club) can ensure some unique marketing advantages because of its capability to manage the complete value chain from farm to consumers. They ensure proper legal protection to produce varieties in terms of patents, trademarks and geographical indicators.
Example depicting marketing of IP protected varieties by a cooperative
- The case for “SweeTango,” a new variety from University of Minnesota that has a registered trademark. A small group of growers around the United States produces “SweeTango,” which is controlled by Next Big Thing Cooperative
- Club (or cooperative) varieties are produced in restricted volumes by a selected group of growers. Quality stays high, supply does not rise too much and demand stays strong, ensuring high returns to those growers who pay to be part of the club.
- Trademark provides a way to differentiate products in the marketplace, create excitement and new flavors by controlling the volume in the market, and controlling the quality to elevate the premium.
Understanding IPR (Intellectual Property Rights) terminology and concept
This is to recognise the form of intellectual property manifested in plant and seed varieties. As per the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement, countries are obliged to provide intellectual property rights protection for new varieties of plants – either by a patent or by an effective sui generis (class of its own) or a combination of both. The act is to encourage plant breeders to produce superior varieties and provide greater access to varieties from abroad. Patent and trademark definitions are explained below:
- A Patent is an exclusive monopoly right granted by the Government to an inventor over his invention for a limited period of time. Patent grants the right to exclude any other person from practicing the invention e.g. manufacture, use, sale or transfer, make, import the patented product or process
- Trade mark means a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include shape of goods, their packaging and combination of colours.
Example depicting practical implementation of the concept of IPR
- Honeycrisp apple also know as Honeycrunch apple is patented by the University of Minnesota. They charged a royalty fee of $1 for every Honeycrisp tree sold until the patent expired in 2008.
- Once the patent expired, apple varieties are trademarked to provide an additional layer of protection for the holder of intellectual property rights. Trademark offers exclusive rights to the owner to sell it for perpetuity.
- Patent and trademark secure legal rights of the owner for his effort and investment for developing new varieties.
IPR infringement leads to
- In case, any grower infringes the intellectual property rights of others, then there could be imposition of penalties and grant of injunction (temporary or permanent) against the grower.
- Injunction prohibits the infringer from continuing to market fruits produced from proprietary plants, uproot the plants and cease growing the protected variety.
Some key insights about produce marketing from developed nations
- Fruits like apples are marketed by cultivar name.
- Consumers buying habits are more inclined towards brands and varieties offering quality, flavour, taste and color.
- In most cases, the substantial difference is about the marketing efforts and intellectual property rights, rather than the look and flavour of the fruit.