Product and service design for urban agriculture
This is the editorial for the iZindaba Zokudla on the 19th of August.
We will meet in B3 in Enoch Sontonga Halls at 9am for 930. Please bring an ID or form of identification to gain access to the campus.
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Introduction: Thinking about your Enterprise
We have discussed the overall approach to enterprise development and the idea of a “township” or local economy. I created a narrative on how this can proceed and this is available at https://www.izindabazokudla.com/post/the-idea-of-a-liberation-agriculture-and-the-rise-of-a-new-food-system but was preceded by several other blogs with additional ideas: https://www.izindabazokudla.com/post/a-sustainable-and-circular-urban-agricultural-enterprise-29-july and https://www.izindabazokudla.com/post/creating-institutions-for-urban-agriculture-an-editorial-for-all-leading-urban-farmers-in-soweto-5. Please also see the all important chapter that details the 19+ technologies that may be relevant to an urban agricultural enterprise: https://www.izindabazokudla.com/post/the-essential-technologies-for-an-urban-farm-editorial-for-24-june-2023.
The overall approach that we are chasing is enabling local capital to circulate several times in the local area, before it leaves through spending on distantly manufactured goods and services. This is one of the keystones of the strategy detailed in this blog. This calls for the development of local systems of circulation and exchange. To find and conserve value, we must build production, exchange and distribution and waste systems on this idea. Hence, we need to build agro-ecological production systems that makes the most of local wastes and opportunities. We need to innovate technology to process these local wastes and enhance our biological production systems. In this regard, “composting cages” will be the most important and we need to find way to safely process wastes as inputs in our local urban farms.
The local production and processing of wastes need to be seamlessly integrated with enterprise development and the form of the enterprise that results from this integration of waste processing will have regenerative and circular features. To do this we have proposed a retail model for this urban agricultural enterprise that adapts and implements the idea of a circular enterprise to local conditions. To do this we propose a food for food waste exchange programme and a food for recyclables programme and we will discuss these in detail in this blog.
The Unique Value Proposition of Urban Agriculture and local food retail
The Unique Value Proposition UVP of Urban Agriculture is this:
The creation of a price reduction mechanisms for urban agricultural produce through the local recycling and repurposing of waste.
This unique value proposition can be even further enhanced by the way urban farmers construct their enterprises. Below you will find ways to do so including:
1. Emphasizing “freshness” of local produce and harvesting strategies (same day as sale).
2. Emphasising the exchange of wastes and the effects this will have on landscape, pests, convenience and price.
3. Price positioning of produce. We recommend a pricing strategy of offering your produce at 5% lower price than formal and other alternatives. This reduction in income will be offset by the food for waste exchange system.
4. Local services, like credit, convenience, community cohesion and local collective action.
5. Packaging and presentation of products as conducive to community cohesion.
6. The creation of a database of local customers that can be used for advertising and marketing, the creation of a loyalty programme, and the creation of specials like bulk selling.
7. Loyalty programmes.
8. Bulk-selling days
9. Community events and nutrition education.
10. Record keeping and analysis of sales on paper and on social media.
11. Advertising, signage and branding strategies.
12. Using social media.
13. Additional strategies to consider.
Retail Strategies for Urban Agriculture
Building the UVP with freshness, price and exchange: Freshness is the key attribute of locally produced and sold produce. This is a worthwhile UVP, but we can enhance this significantly. On top of this we will add the opportunity to exchange food for both recyclable and food waste and this then creates a more compelling UVP. Customers need to see the freshness and also see how they themselves reduce the price of produce by their own behaviour. This can be further enhanced by pricing – sell your produce at 5% lower price than competitors – and by the organisation of community events – where you explain how this price reduction works and you show your customers your biological or “imvelo” production system. A community event can enhance this even further as you will explain to people what good food is and this will be nutritious food and freshness is the key to achieving it. The food that you sell may well be more nutritious than formal store-bought foods. The biological or “regenerative” production system further enhances this and show people the benefits of local processing of waste.
This UVP of reducing food prices through recycling and repurposing behaviour is the key to structuring our enterprise, and this will have effects beyond selling in your production system, in the kinds of technology that is needed on the farm and in the kinds of engagement methods you will use to build your market.
Starting the business: In our previous blogs we detailed what you need to do to start your business. Do not start with a “big bang” where your enterprise is completely built and structured. Start with the first transaction and build upon this. Focus on these first transactions and do not take any risks. Only “wager” what you are prepared to lose. When you fail in selling or recruiting a customer, do not despair, but see what you can learn from this failure. There will be many failures and you need to be resilient and be able to learn from each failure. Remember that you cannot predict the future and the future is inherently uncertain. Rather aim to influence the future and people’s future behaviour.
Your business is the unbroken chain of transactions that takes place through you as the entrepreneur and through your creation, the organisation that is your enterprise. This unbroken chain of transactions is what you need to safeguard and build by adopting new production patterns, new technology, new products and services and new engagement means.
Below are a set of suggestions on how to build your business and expand your organisation. These are offered as suggestions, and please do come back to iZindaba Zokudla after you have experimented with these and share your experience. In this way we can move the whole sector forward and build a new food system.
Product positioning: The most important aspect of a product is its price. Often, interesting features will be overlooked due to price, and an urban farmer is likely to have to experience a lot of pressure on prices. Your price “positions” your product vis-à-vis other products in the market. This is a key consideration if you want to penetrate or create e new market. Think about the price that you charge, as everything depends on it.
Price: To be competitive, you have to think in “bulk” about sales. Sales are driven by price. You as an urban farmer need to aim at a price lower than supermarkets, and lower than informal traders. This price – I recommend advertising at 5% “discount- needs to be advertised to have an effect on the customer. This will increase volumes of sales, and this is how you make up the difference in price.
Such a lower price needs to be maintained, and it will be “made up” for by your food waste harvesting system, and customer loyalty. There are a lot of aspects to maintain in doing so, and this is the work of enterprise development.
What do you sell? You need to link your farm and your business, and your farm needs to be responsive to the sales of the shop. Your record keeping should indicate what sells most in your farm. You should concentrate on growing produce that grows fastest and sells the most. We will discuss this in a later chapter, but this is an important part of record keeping.
1/2/3/ grade foods: If you grade your produce, you will be differentiating your products. You want to do this to give your customers a bit of choice, and they can increase the value they receive by making choices.
1st grade produce should be sold at highest possible price – the 5% discount over competitors. You want to sell this as your highest quality produce. This will appeal to those who want to cook a great meal and you should market this as a high value product.
2nd grade produce is as healthy, if not more, than 1st grade produce. 2nd grade produce should still be edible but with some blemishes on it. This is the kind of food you want to exchange with your food for waste and food for recyclables programmes. This will ensure you do not lose out too much on this exchange, and that you can safeguard your 1st grade produce for high value sales.
3rd grade produce will be important in feeding animals. Kale for instance is good for chickens, and all human food can be given to animals. Animals will process the 3rd grade food to manure, and this is very valuable. Think of a chicken as a manure making machine.
This system of classifying produce will ensure that you are able to make the most of your produce and that you do not lose value as some of it declines in quality. The circles that are created here are important for future production, as the manure that animals produce is good for the soil. Here you will want to showcase your systems and use this as a way to educate your customers on what is good food.
Food for waste, labour, education: The food for waste exchange programmes are an important part of your enterprise, and it is here that you have created the Unique Value Proposition of your enterprise. You want to spend some time on setting up these systems and time in ensuring this pays for you. You can also exchange food for labour and for educating people about farming.
You need to set up a collection point for the waste and recyclables. The composting needs to be integrated with the food for food waste exchange programme and set it up in such a way that you can use it to educate your customers on the benefits of food waste for food exchange. Experiment a lot until you find the right system.
For the exchange of recyclables, you could partner with a reclaimer. Such a reclaimer will give you good information on what kinds of plastics etc. are highest value and how to collect and sort them. Sorting them into different kinds of plastics, metals, and glass is important as the mere separation can increase the value of the recyclables. Paper is best if composted and it will directly enhance the soil.
The recycling system needs to look very good as some people may find this strange and unfamiliar. You want to separate the plastics as much as possible as there are many different kinds of plastics. It is possible to find information on the internet about these plastics, but it may be best to interact directly with a reclaimer to get this right. You should also talk about prices and demand for these recyclables so you are on top of the value this can bring in. When you start exchanging food for wate, record how much recyclables you receive, and see how much the “discounts” cost you. Then work out how much you would receive when you sell on the woolsack with the recyclables. Be careful in making these calculations so you do not short yourself. It will be important to establish if this is viable and if this adds value to your enterprise. You need to find value from as many sources as possible in setting up this urban agricultural enterprise.
With the wastes that you gather, note the following:
Plastic: there are many kinds, and it would be best to partner with a reclaimer in setting up this facility. Separating the different kinds increases their value.
Paper: go to composting. Brown cardboard cannot be recycled much more and note that every time we recycle something, its quality declines. Things can be down-cycled and other things can be up-cycled. Brown cardboard is at the end of its life and it may have more value if fed to worms or composted than if sold.
White A4 paper, if sorted together, is very much recyclable, and you may get more for A4 white paper if sold as recyclable material than composted.
Metal: Metals are infinitely recyclable and can immediately be sold on. Check the metal for useful pieces, like pipes, as you may want to use them in your technology designs.
Glass: Glass is infinitely recyclable, and this can immediately be sold on. Separate the glass into colours as they are sold on according to colour.
Biowaste: Certain kinds of biowaste is very valuable on their own. Old cooking oil can be converted to Biodiesel (there are several individuals on YouTube who readily convert old cooking oil to biodiesel and use it to fuel expensive cars). If you are able to collect this and keep it separate in a container, you may be able to sell this on. Many people do produce such old cooking oil, spaza shops and caterers, and this could be an important revenue stream. There may be other valuable biological wastes that you could access and look around for them. Even if you are able to gather fresh green grass clippings, you could use it to start a liquid manure business on your farm.
Batteries: Batteries are an important and high value form of waste. Batteries are mostly metal and many metal recyclers will accept batteries. If you can collect and keep separate batteries, you may find a buyer if you can collect in bulk. The same could go for old cell phones and electrical appliances. These contain rare metals and have a high price on the recyclables market.
Old electrical appliances. Think about setting up your farm as depot where people can bring old appliances or exchange or repair. Partner with someone who can repair these and give them a little space in your shop. Now you are offering an additional service at the farm, and this will attract people. These people can become new customers. Now your farm is a community centre!
Biowaste: You will gather a lot of food waste through the exchange programme. Note that you need to find and process a very very large amount of biowaste if you want your farm to be sustainable. You need to find a source of abundance. Biological waste is your future earnings. Look around and see if you can secure a source of biowaste. Your city’s parks and recreation department may be able to give you all their biowaste. A nearby cattle farmer may be able to give or sell to you her kraal manure. You want to be able to source waste from a factory that say, produces fruit juice. They may have a lot of biowaste that they pay to get rid of. Restaurants always have food waste – we call it swirl – and this can be used to feed pigs or chickens. If you secure such a source of biowaste, and you have the systems to process it, you will be doing very well.
Selling and the customer experience This may be one of the most important aspects of your business. Customers need to enjoy the time spent at the farm. You can enhance the experience by making it look neat and tidy and presentable. You need to look like a decent shop and use the space available to maximum effect.
You are a farmer and what you sell is very different than what we may expect a normal shop would do. The experience of buying retail from the farmer, in an urban setting is unusual, but we want to find a way to institutionalise this. You thus need to make the most of the beauty and appearance of the farm.
You will also be hosting events where you sell in bulk, and educate the community on the benefits of local food production and the nutritional advantages of eating fresh produce. This needs to be integrated with the customer experience. When people buy, let them learn a little bit about the plants and animals that supplies them, Let them see the beauty of the flowers and produce that you grow. Let them understand the intentions of the urban farm: to deliver good food, and bring additional benefits to the community.
Integrate the customer experience with how the plants grow, how the waste is processed, and with the impacts the farm makes on the community. Develop a little tour of your farm so customers know what they get from you, and how they can contribute to lowering their own food purchase costs.
Shop: The presentation and experience of your shop is important, and you will get the customers back if they enjoy spending time with you. Organise activities at the shop, from food education days to bulk selling opportunities. Your shop must become a place of celebration and good food.
Signage: Very few farmers give their farm a name and even fewer have a beautiful sign advertising the farm. Remember that you all are brand ambassadors for urban agriculture, and you all are custodians of this brand. Emphasise your position in the community as a farmer and as a food provider. This leadership position you occupy is what would set the tone at your farm/shop.
Packaging and presentation – even with nothing. Why? This is an important feature of your business and even if you simply tie bunches of spinach with a string the reason why must be clear. It is good to sell without packaging but the reason for this must be clear. This will lower pollution and waste, and this must be emphasised together with the impact the enterprise aims at. This enterprise must put the community’s health and well-being at centre, and this is a unique selling point.
Database of customers. When you are selling to a small number of local customers, the nature of your communications changes. You are primarily interested in contacting and communicating with people who live close to your farm, and who live closer to your farm than to any other farm. In the future, we may see many new urban farms emerge, and you want to keep your customers. You need to develop a database of these customers, and this is best done electronically.
WhatsApp and SMS systems limit the number of people you can contact and message. In these cases, you simply have to develop more than one distribution list and the database of all your customers is the consolidated distribution list. Note that if you keep only someone’s phone number without a name does not incur any compliance with the POPIA (Protection of Personal Information Act) and you are free to keep people’s phone numbers without names. However, if you keep names and phone numbers together you incur compliance with the POPIA act. Two things are important: You can keep information if it serves the purpose to which you will use the information. Hence if someone gives proper POPIA compliant permission to keep this information, then you are free to do so. If you record sales, what people buy etc without any identifying details, then you are also free to do so.
Social media, business accounts and record analysis
WhatsApp and SMS systems themselves do not record analytics, but if you have a business account on WhatsApp, then the account will allow you to analyse the information from those who have contacted you and with whom you are dealing on WhatsApp.
However, you can do very well with paper-based records, and you should always have this as a primary register of transactions and as a back-up if you transfer all to electronic records. If you are a registered company you need to keep records, and simple income and expenditure records will be sufficient. If you can add details on these records, it will be better, but if you use a registered auditor for this, she will be able to tell you what she needs you to do, to do your books for you.
When you make sales, try to, in addition to recording this on your income sheet, record the following:
Date, Day (week or weekend).
The person (a description would be sufficient – like a child, woman/man etc).
Did they exchange food waste and/or recyclables?
Are they on the loyalty programme (if you have one).
Are they on the database?
What did they buy?
Volume or weight of produce.
Take a look at your records every day, every week, and every month. You need to take a look at these to see if any trends or patterns emerge. This is important for your sales strategy. For instance, you will probably notice that you get lots of people buying right after the Social Grants payday on the 1st of every month. You will notice an uptake also on the 15th and onwards when government employees receive wages. The last week of the month is when wage earners will normally receive their wages and you can expect sales to pick up on these days. This can enable you to adapt your planting and other calendars, and you will see what days sales will be low, and on these days, you need to double up and work in the garden.
If you have a business account on WhatsApp, and if you use a Facebook account to contact your customers and stakeholders, you can analyse the data that this generates on the analytics feature of these computer programmes. This will be very useful, and you can gain a lot of insight into this. Play around and see what you can learn and see how you can react to this in your business operations and systems.
Loyalty programme: A loyalty programme is an interesting exercise to play with when you have a large database of customers. Only some of your customers will be interested in a loyalty programme, depending also on what you can offer. After a year of farming, you may identify times when you could not sell all your produce. You could make such produce available to loyal customers, for instance. You could also link a loyalty programme to bulk selling days, where you buy staples in bulk and sell it at low markup to customers. Use your imagination and find such an opportunity. If you can pull this off, you will succeed in bringing good value to your customers.
There are many things to consider when developing a loyalty programme, including: what will you offer? Will this pay for you? Who will be a “loyal” customer? How will you integrate it with the other special that you will offer?
Events: Make space around the shop to host community events. Here you can host workshops on your farm, nutrition, the retail specials you offer, and your food for waste programme, to name the basics.
Bulk selling days: If you establish a retail presence by developing a shop, you have a base to work from. From this base, a lot is possible and can build on and be combined with the events that you host.
Consider hosting a bulk selling day where you sell staples in bulk at a low mark-up in order to attract customers to your own produce. Try to sequence it with a harvest day when you may have a surplus of a staple. You can build clientele and loyalty, and market the day as a “food for the community” day.
To organise this, you need space and perhaps other amenities like tables and chairs. You would need money to buy the staples in bulk, but if you do not, consider this as an exercise in finding a way to host such a day without money. Below are a few options to consider when planning this:
If you do not have money, do not despair, as you will never have enough money to expand unlimitedly.
Some of the many alternatives include:
1. Partner with a bakkie trader to get the staple delivered. You could, as an experiment, offer him to sell this at his price at your event. This will be market related price, but could build customers.
2. Partner with a bakkie trader, after you have built up enough customers. Now you can negotiate a reduced price from the bakkie trader and offer real good value to your customers.
3. When you have enough capital, negotiate with a bakkie trader and buy a whole load outright at a highly reduced price. Now you can start playing with prices to see at what price you could sell the staples to your customers, and if this arrangement pays.
4. If you can, you could partner with a farmer instead of a bakkie trader. Farmers would be reluctant to do so, but you may find the right one at the right time. Try this with green mielies, maize meal, potatoes, or any other crop. It may be that farmers have surplus to sell, and you may get it at a very low price.
School Tuck Shops: There is a large opportunity to engage with school tuck shops. Most of these tuck shops do not sell healthy food to learners and this is a real problem. This is an opportunity to influence food choices in the right direction and this can also create new opportunities to sell. You should be able to engage with tuck shop owners to deliver more healthy food to learners. Here many different kinds of partnerships are possible, and this can enable real impacts on society.
A lot of business is done by bluffing or “fluking” people’s perceptions. This will never lead to lasting business in the urban agricultural space. Only if we deliver real value and do so with integrity will this sector succeed in establishing a new food system. This is easier to do than to fool people with tall stories about foods.
Urban farmers can only deliver real, hard value. This is a strength and is the basis of creating value in communities and it is this value that will ensure sustainability into the future.
Stakeholder engagement: In this chapter we have spoken mostly about customers. Customers are direct stakeholders to your business and farm, but there may be very many important indirect stakeholders. These indirect stakeholders could include your “landlord” from whom you gain access to land, the teachers at the school where you rent land, the Ward Councillor, or a farmer who supplies bulk staples. It is important that you cultivate good relationships with these stakeholders. They will influence your business significantly, as they talk to others in circles that are outside your local area. This will build general societal support for your urban farm, and for urban agriculture in general.
This is a first delivery of a chapter that details the interesting and “strategic tactics” an urban farmer can follow to build their urban agricultural enterprise. Only a few of these suggestions have been tested in real life, and some may or may not work. What is more important than these suggestions is that we actively try these out and come back to iZindaba Zokudla to share our experiences. Success cannot be fixed on a set of recommendations. These have to be tried in real life and adjusted as we go along. Please do come back, and share your experiences in the People’s Announcement Hour at iZindaba Zokudla.