Market Potential Index and Supply Analysis of Improved Maize Seeds

in MexicoLaura Donnet, Ciro Dominguez, Dámaris Lopez y Jon Hellin

Advanced Wheat Improvement Course 2012September 27, 2012

CIMMYT, Texcoco

Objectives for today

Discuss about work of SEPDiscuss about MasAgroNote: this is work in progress

IMIC, objectivesFocus is on rainfed production

areas in Mexico1. Raise average maize yield from 2.2 to

3.7 t/ha2. Increase maize production from 13 to

20 million tones3. Increase adoption of improved

materials in 1.5 to 3 million additional hectares

4. Production and distribution of additional 70,000 t of high quality seed

5. Increase the competitiveness of national companies that target small producers

Maize yield in Mexico

2004 2005 2006 2007 2008 2009 20100123456789

10

Maíz amarillo riego Maíz amarillo temporalMaíz blanco riego Maíz blanco temporal

Mai

ze y

ield

(t/

ha)

4

IMIC, approachFocus is on seed deliveryo The diversity of maize production

conditions determines specific demands for improved seeds that can be served by the IMIC consortium / network / supply chain

o Success depends on involving seed companies in the delivery and distribution of seed innovations

o The interaction is in the field of public-private partnerships through agreements between CIMMYT and seed companies

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IMIC, conceptualIMIC is a supply chain moving both germplasm and information about performance and remuneration

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Public R&D(Cimmyt, Inifap, ColPos)

Inbread lines and basic seed

Germplasm performance in trials

R&D remmuneration

Seed firms(El Trébol, Bidasem, El Caudillo)

Maize producers

Commercial seeds

Germplasm performance on producer’s fields

Firms’ remmuneration

IMIC, market studies

Initial assessment of the market demand for improved seeds

Initial assessment of the market supply

Identification of quick impact areas

A market potential index for improved seeds A representation of the market size

and market profiles of improved maize seedso Preliminary assessment of the market demand

for improved seedso Identification of quick impact areas

Based on five key dimensions of the market demand for improved seeds.

A marketing management tool for MasAgro stakeholders

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Research questions

1. What is the market potential for improved seeds in Mexico in the different production areas?

2. How much improved seed needs to be produced?

3. What are the different market profiles in Mexico?

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Framework Market potential

Market potential indexes:o Systematic approach to quantifying and ranking market

potentialo Used by managers to determining which markets to enter

and which marketing strategies to useo Examples:

• Market Potential Index (MPI) of emergent countries: Cavusgil, 1997; Business Center of Michigan State University, 2011

• Market Potential Value (MPV) of a town: RK Swamy BBDO Guide to Marketing Planning, 2008; Bijapukar, 2004

o Limitations: initial assessment, variables selection, data, algorithm

Market demand

Marketing effortObserved marketing effort

Market po-tential

Market forecast

Market minimum

Framework, con’t

Source: Based on Kotler and Keller (2011); GlobalEdge (2011) and RK Swamy BBDO Guide to Marketing Planning (2008)

Major concept in demand measurement

Market potential dimension Market potential indicator Description

Market maximum Size (Log of) maize area

Maximum number of bags of improved seeds that can be sold

Product penetration percentage Penetration Percentage use of improved seed

Number of consumers who are not yet part of the market

Market environment

Capacity

Combined of farm size, farm productivity and socioeconomic level

Accessibility, acceptability and affordability resistance and improved seed

Intensity Percentage area with high production potential

Feature of the market situation or increasing-intensity-demand

Receptivity Differential profitability with improved seed

Responding to change and willingness to adopt improved seed

Market potential for improved seeds: Upper limit as marketing expenditures in a given marketing environment cannot further increase demand

Methods

Where xij is the value of the indicator i for the unit of analysis j

And x1, x2 , x3, x4 and x5 are the five indicators of the index, as follows:

Indicator 1: Maize area Indicator 2: Percentage use of improved seed Indicator 3: Producer capacity is a combined of farm

size, farm productivity and socioeconomic level Indicator 4: Production potential Indicator 5: Change in profitability with improved seed

𝑀𝑃𝐼 ሺ𝑥1,𝑥2,𝑥3,𝑥4,𝑥5ሻ= 15 𝑥𝑖5

𝑖=1

Methods, con’t

Methods, con’tMarket potential dimension

Market potential indicator

Data Source

Market size (Log of) maize area Area planted to maize (ha)

Agrifood and Fishery Information Service (SIAP)

Market penetration

Percentage use of improved seed

Sales of improved seed (bags)

Seed firms

Market capacity Combined of farm size, farm productivity and socioeconomic level

Index of social backwardness

National Council for Evaluation of Social Development Policy (CONEVAL)

Farm size supported by government program Procampo (ha)

Support and Services for Agricultural Marketing (ASERCA)

Maize yield (t/ha) SIAP Market intensity Percentage area with

high maize production potential

Maize production potential (ha)

National Institute for Forestry, Agriculture and Livestock (INIFAP)

Market receptivity

Change in profitability with improved seed

Revenue and costs of production with improved seeds and with criollos

Strategic Support Program for Producers in the Maize and Bean Chains (PROMAF)

ResultsMPI for improved seeds and ranking of

maize production regions in Mexico

Regions / Dimension Size Penetration Capacity Intensity Receptivity MPI Ranking

High Valleys 4.3 4.7 2.0 1.2 4.0 3.2 3

Bajio 3.2 1.7 3.8 3.9 3.4 3.2 4

Central Valleys 2.5 5.0 1.4 2.3 1.0 2.4 10

Pacific Lowland Tropics 4.6 3.3 2.3 3.4 4.2 3.6 1

Atlantic Lowland Tropics 3.7 5.0 1.6 3.8 1.0 3.0 6

Humid Tropics 3.7 4.6 1.5 2.1 3.5 3.1 5

Middle Input 3.6 5.0 2.9 1.6 3.4 3.3 2

Northern Pacific 3.1 0.0 4.6 1.1 4.5 2.7 8

Chihuahua 2.5 1.5 3.8 1.1 4.0 2.6 9

North Central 2.0 2.7 2.6 1.1 1.0 1.9 11

Northern Gulf 1.8 1.5 2.7 4.3 4.5 3.0 7

Results, con’tPotential and current market size of

maize production regions in Mexico (bags) Regions / Bags Potential Current

High Valleys 954,197 120,000

Bajio* 337,233 400,000

Central Valleys 122,712 0 Pacific Lowland Tropics 1,485,272 750,000

Atlantic Lowland Tropics 518,473 0

Humid Tropics 534,279 80,000

Middle Input 513,886 0 Northern Pacific* 260,101 900,000 Chihuahua* 127,772 210,000

North Central* 58,039 80,000

Northern Gulf* 76,072 120,000

Total 4,988,034 2,660,000

Results, con’tMarket profiles of maize production

regions in Mexico

Size

Penetration

Consumption capacityIntensity

Receptivity

0

2

4

High ValleysSize

Penetration

Consumption capacityIntensity

Receptivity

0

2

4

BajioSize

Penetration

Consumption capacityIntensity

Receptivity

0

2

4

Central Valleys

Size

Penetration

Consumption capacityIntensity

Receptivity

0

2

4

Pacific Lowland Tropics

Size

Penetration

Consumption capacityIntensity

Receptivity

0

2

4

Atlantic Lowland Tropics

Size

Penetration

Consumption capacityIntensity

Receptivity

0

2

4

Humid Tropics

Results, con’tAreas of greatest immediate potential

Region Municipality Size Penetra

tion Capacit

y Intensit

y Recepti

vity MPI

Ranking

High Valleys Yecapixtla 3.1 4.7 2.3 5.0 4.0 3.8 17

High Valleys Atlatlahucan 2.6 4.7 2.5 5.0 4.0 3.8 33

Bajio Arandas 3.6 1.7 3.8 5.0 3.4 3.5 148

Bajio Jesús María 3.8 1.7 3.4 5.0 3.4 3.5 166

Central Valleys Miahuatlán de Porfirio Díaz

3.5 5.0 2.1 5.0 1.0 3.3 244

Central Valleys Ejutla de Crespo

3.3 5.0 2.1 5.0 1.0 3.3 274

Pacific Lowland Tropics

Atotonilco el Alto

3.9 3.3 4.0 5.0 4.2 4.1 1

Pacific Lowland Tropics

Tepatitlán de Morelos

3.9 3.3 3.9 5.0 4.2 4.1 2

Atlantic Lowland Tropics

Papantla 4.1 5.0 2.1 5.0 1.0 3.4 181

Atlantic Lowland Tropics

Acayucan 3.6 5.0 2.4 5.0 1.0 3.4 203

Humid Tropics Hueyapan de Ocampo

3.9 4.6 2.2 5.0 3.5 3.8 14

Humid Tropics Santiago Tuxtla

3.6 4.6 2.3 5.0 3.5 3.8 21

Middle Input Mocorito 4.0 5.0 3.8 3.2 3.4 3.9 9

Middle Input Ciudad del Maíz

3.6 5.0 2.2 5.0 3.4 3.8 16

MPI Features and Managerial Implications

Allows comparative evaluation of potential markets:o Reduce complexityo Understand trade-offs involvedo Help choice: self-select into serving specific

markets To develop over time:

o As market information platform: share data, analyzing scenarios, assessing collective performance

o As a marketing management toolo For policy analysis: public-private joint analysis:

testing opinions and hypothesis, exploring alternative viewpoints

Maize seed market in México

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Source: Interviews with seed firms

Maize seed market in México, cont’d

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Multinational companies: 2.2 million bags

Source: Interviews with seed firms; SNICS 2010

National companies:0.7 million bags

Total seed market: 2.9 million bags

24%

Concluding remarks

Our supply and demand studies need to become more specific in order to deliver useful information for:o Identifying niches and help develop

business plans to target themo Helping the promotion of improved seeds

based on information on performance and impact on profitability

o Helping coordinate consistent supply of basic seed and parental inbred lines

o Developing new tools and relations for germoplasm development and access 

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Thank you for your attention

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