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Recently the government of Ethiopia mandated that all of the navy bean trade is to done through the new commodity exchange. But the new business models for sustainable trading relationships team has been working on this crop in Ethiopia since 2008 to develop direct and transparent trading relationship to the final buyer. What are the implications? What is the potential for the commodity exchange to benefit small scale producers?
To gain insight into how the project might work with the new commodity exchange and still benefit small scale producers, the project commission a study of the 5 working country level exchanges in Africa. The results are provocative -- while commodity exchanges have the potential to benefit producers through clear prices signals and uniform and regulated warehousing and trading system, none of these exchanges to date have made the investments infrastructure that would allow the small scale producers to achieve the potential benefits.
A New Business Model for Sustainable Trading Relationships publication
Author: Peter Robbins July 2010.
Small-scale farmers, who form the bedrock for global agrifood supply, are faced with agrifood markets in an unprecedented state of flux. Domestic markets are undergoing rapid but uneven modernization, and higher value and export markets are increasingly the preserve of larger scale suppliers.
Inclusive business models as those which do not leave behind small- scale farmers and in which the voices and needs of those actors in rural areas in developing countries are recognised. This paper describes a range of business models for inclusive market development within the context of agrifood restructuring and modernization. It focuses specifically on models that improve the inclusiveness, fairness, durability and financial sustainability of trading relationships between small farmers on one hand and downstream agribusiness (processors, exporters and retailers) on the other. While the authors do address what producers need to do to compete in modern dynamic markets, and the role of facilitating public policy, the focus is more on the buyers and their role as partners in development.
Authors: Mark Lundy, Bill Vorley, and James MacGregor, July 2008.
Contract farming can be understood as a firm lending “inputs” — such as seed, fertilizer, credit or extension — to a farmer in exchange for exclusive purchasing rights over the specified crop. It is a form of vertical integration within agricultural commodity chains so that the firm has greater control over the production process and final product. Contract farming is attracting considerable academic and policy attention. For example, while academic work in the 1980s and 1990s offered a mixed assessment of the extent to which contract farming engaged with and benefited smallholders, recent literature offers a much more positive interpretation of smallholder participation. Moreover, recent high-level policy reports, such as the World Development Report 2008 on Agriculture for Development, and UNCTAD’s World Investment Report 2009 on Transnational Corporations, Agricultural Production and Development, offer optimistic appraisals of this form of institutional innovation.
This review screened the Food and Agricultural Organisation’s (FAO) online contract farming database, conducted bibliographic searches using Agricola, Econlit, JSTOR, the Web of Science and Eldis, to compile 100 papers on contract farming, the majority of which have been published since 2007 (see Appendices 3 - 5); included in this group were 12 additional studies pinpointed by the author and the client (AFD).
Using these studies as a base, this review discusses the global and regional trends that are driving contract farming in developing countries, and describes meso- and micro-level conceptual and theoretical perspectives – from transaction-cost approaches to value-chain governance – that help to explain why contract farming is increasingly preferred to other forms of exchange.
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Understanding the benefits, costs, and risks when connecting small scale producers to formal markets is critical to supporting informed decision making by companies, farmers, NGOs, and donors about investing in supply chain opportunities. Key questions include: Who are the rural poor? Under what conditions do they benefit? What are implications of these lessons for our strategies in setting up “pro-development” value chains? What do we most need to understand next? This Executive Summary, and the longer paper it reflects, seek to inform these questions from not only a review of literature, but also from experience with a cluster of value chain projects by development organizations and businesses in Africa and Latin America.
Author: Sustainable Food Lab January 2011
In the coming decades, the food world is facing a daunting challenge to meet the needs of 9.3 billion people by 2050. Agriculture is not only expected to produce more food, but also more raw materials for biofuels, biochemicals and fibres. Nearly doubling current agricultural production with less resources (land, water and phosphate resources) in a manner that is both socially acceptable and environmentally sustainable seems to be a gargantuan task.
Stakeholders around the world are considering the crucial elements of a more holistic approach that meets the challenges of food security and responsible management of resources within a framework of inclusive business models. Resolving the current and future imbalances in food supply is virtually impossible without tapping into the underused agricultural production potentials of small-scale farms at the bottom of the pyramid. Taking this as a point of departure, many questions arise with respect to the way the transformation of smallholder agriculture can be realised and financed.
This study aims to address these questions and elaborates on approaches and tools to unleash these underexploited food production potentials.
Author: Rabobank Group
Growing Business with Smallholders: A guide to inclusive agribusiness
BMZ, Federal Ministry for Economic Cooperation and Development
Published by: giz
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ABSTRACT
This guide is aimed at helping companies interested in developing business relationships with smallholders. It provides a framework that identities common challenges, highlights solutions and shows how these can be implemented through cooperation at different levels. In this way, the guide aims to support company representatives engaging in inclusive agribusiness practices with practical tools and a comprehensive overview of potential solutions and collaborative approaches.
Practitioners from development agencies, non-governmental organisations (NGOs), intermediaries and other organisations working to develop and support inclusive agribusiness will also and useful insights here. Based on 40 case studies, 40 expert interviews and in-depth sector research, the guide showcases existing experiences and lessons related to inclusive agribusiness, and distills them into a hands-on guide for practitioners.
Inclusive agribusinesses create mutually beneficial business partnerships with smallholders in developing countries.
The guide addresses the full agribusiness spectrum, from farming to forestry to animal husbandry and farming, in which companies can collaborate with smallholders along the value chain. Companies may source cash crops, staple crops or high-value crops from smallholders.
Companies may also sell inputs such as seed, feed, fertiliser, irrigation systems or machinery to smallholders in such a way as to increase production and incomes and thus stimulate further demand. Indeed, many businesses participate in various stages of the value chain. Moreover, inclusive agribusinesses create opportunities for employment, entrepreneurship, and the creation of micro-, small and medium-sized enterprises.
The guide can also prove useful for those in related businesses.
Agribusiness companies that own land and lease it to smallholders, or which themselves farm the land of smallholders, can also learn about core challenges, organisational models and options for strategic action. Companies offering services to smallholders, including financial, advisory, information or communication services can use the guide to identify how their offers complement other business models.
Even small farms typically employ workers during labour-intensive planting or harvesting periods. Although not the focus of this guide, several case studies show how recognising the needs and advancing the health and well-being of these workers adds to the sustainability of inclusive agribusinesses.
Key tool 3 - The New Business Model Principles.pdfABSTRACT
Agriculture is a source of livelihoods for an estimated 2.5 billion people globally, provides jobs for 1.3 billion smallholders and landless workers and, as a result, has enormous potential to reduce rural poverty.
Yet agribusinesses are usually built around a small number of large-scale suppliers, ignoring that small-scale producers manage 85% of the world’s farms. Smallholders are excluded from modern agribusiness channels due to a lack of access to services, high transaction costs and poor infrastructure which combine to increase the perceived risks and costs associated with purchasing from large numbers of dispersed producers. While successful examples of smallholder inclusion into modern supply chains can be found, these remain the exception rather than the norm. Facilitating more of these successful partnerships is the goal of the LINK methodology.
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The development case (potential for reducing poverty) for including smallscale producers in global supply chains is clear. Companies are increasing willing to invest in incorporating smallholders into their supply chains -- to access new supplies, create product lines for ethical shoppers, and be part of achieving the millennium development goals.
But successfully including poorer smallscale producers into formal value chains in ways that supply consistent, quality production and stable terms of trade and help farmers build capacity over time isn't straightforward.
The linking worlds paper outlines a set of principles for businesses to consider when adapting their supply chain business model to the more effectively bridge the world of diverse smallscale producers and modern market requirements.
Authors: Bill Vorley (IIED), Shaun Ferris (CRS), Don Seville (SFL), and Mark Lundy (CIAT). February 2009
NGO's know there’s a development case that improvement in small scale farming is directly associated with a reduction in poverty and hunger. For retail buyers there can be a business case about differentiation, managing reputational risk through engagement and securing new efficient sources of raw materials.
This paper is intended to support building successful relationships between NGOs and retailers with benefits for international development and for business. The NGO reader will find out how modern retailing works. There’s a range of commercial models that will be described and recommendations for good practice in relationships.
A New Business Model for Sustainable Trading Relationships publication.
Author: Chris Anstey, based on an MIT L-Lab Student Research Project, July 2010
Food and beverage companies are facing a rapidly changing world. Consumers everywhere are growing more knowledgeable and concerned about the ethics of where and how their food and drink are produced. At the same time, development organizations are increasingly seeing the critical role of the private sector in creating sustainable economic opportunities for small scale farmers. Two-thirds of the worlds rural households - many of whom live in poverty - depend on smallholder agriculture for their food and incomes.
This briefing paper lays out the case for companies and development organizations to partner together to create more supply chains that are inclusive of smallholders. The paper further lays out principles and strategies for increasing the impact on development by adapting supply chain business models to the needs and context of smallholders and by public co-investment in farmers, farmer organizations, and needed infrastructure.
This paper is a New Business Model for Sustainable Trading Relationships publication and written for Oxfam's briefing for business series.
Authors: David Bright (Oxfam GB), Don Seville (Sustainable Food Lab) and Lea Borkenhagen (Oxfam GB). May 2010
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Authors: Caroline Ashley, Director Inclusive Business Results & Carolin Schramm, Monitoring and Evaluation Manager
Embarking on an agroenterprise development project starts with selecting an entry point into the complex dynamics of a value chain. Key decisions include the level of challenge or risk to take on, and where in the process the project should begin; key factors to consider include the capabilities of the development team and of the farmers. Teams with less experience might choose a lower-risk project, while more skilled teams could take advantage of opportunities involving a riskier product or market. This publication describes several different entry strategies, and provides guidance on when each may be appropriate given different project circumstances.
Authors: Shaun Ferris, 2009
The agroenterprise approach developed by CRS is a means of refocusing production-based efforts within a market-based framework. It does not replace traditional agricultural development, but it does require a new way of thinking about agriculture: one that recognizes the market as the driver in the system and requires that investments be aligned with market needs and evaluated against market performance. This resource describes the rationale behind the agroenterprise approach, offers eight “key messages” on agroenterprise development, and walks the reader through detailed step-by-step guidance for the implementation of agroenterprise projects across a variety of contexts. Sample report outlines, selection criteria, questionnaires, and checklists are provided.
Authors: Terry Tuason, Amrut Kumar Prusty, Joan Uy, Rupert Best and Shaun Ferris, 2009
Agroenterprise development can result in greater gender equality by involving women in the facilitation and encouraging them to contribute at various stages in the analysis, planning and engagement of the supply chain. Involving women in discussions can also make the contributions of women in production and marketing more visible, so that more men recognize them and other women copy them. However, agroenterprise programs cannot solve all the problems of gender inequality. Barriers to women’s involvement may be so entrenched that they will take a long time, and sustained effort, to overcome. Agroenterprise activities should therefore be part of a more comprehensive program. This resource provides definitions, support and guidance for the integration of gender issues into agricultural development programs.
Authors: Jennifer Overton and Dina Brick, 2009
Transforming value chains is a complex undertaking that begins with understanding the social and environmental contexts in which we are trying to create efficient supply chains for high quality products. The kind of understanding that leads to improvement is greatly enhanced by partnerships that enable us to work beyond our traditional boundaries by bringing together the perspectives of both civil society and business throughout the chain.
These partnerships, in turn, are most effective when we use strategies that enable us to see the system in ways that can reveal both current reality and opportunities to create economic, environmental, and social improvement. New insight allows us to implement improvements in the value chain and learn from that experience, so that we can eventually institutionalize the successful innovations as changes in infrastructure.
This toolkit is a beginning – an introduction to what some companies and NGOs have tried in order to achieve a variety of goals: to address poverty in producer communities, for example, as Green Mountain Coffee Roasters did, or re-build a brand based on third party certification of its product, as Unilever is attempting with its Lipton Tea.
We hope to build on this body of knowledge over time so that what we learn can benefit all of us doing business in an increasingly complex environment.
Editors: Jason Jay MIT Sloan School of Management, Hal Hamilton, Chris Landry, Daniella Malin, Don Seville, Susan Sweitzer, Sustainable Food Lab, Andrew Murphy WWF, May 2008
Another in a series of good practice guides describing the components of the participatory and area-based approach to rural agroenterprise development. Participatory Market Chain Analysis is based on the principles of developing market-led interventions that go beyond single intervention projects. The aim of this guide is to enable service providers to work with a range of actors in selected market chains and design interventions that initiate systemic changes in the marketplace. It leads practitioners to select market chains, conduct rapid market surveys, create business plans, conduct participatory market chain analyses, and negotiate strategies to increase competitiveness.
Authors: Mark Lundy, María Verónica Gottret, Carlos Ostertag, Rupert Best, and Shaun Ferris, May 2007
Practical Action's Markets and Livelihoods Program has been evolving an approach to market development for the poor that is both systemic and participatory. This paper shares some of its learning and experience from past and current projects in Africa, South Asia and Latin America.
Taking a systemic perspective has influenced the decision-making processes of program teams, particularly in the vision for market change and the scale and impact that can be achieved. As the dairy subsector in Nepal illustrates, an analytical framework (the Market Map) is useful to understand market systems. The Market Map guides a process of engagement and interaction between market system actors.
Participatory workshops can promote dialogue and improve understanding between actors. The process needs careful facilitation as the case of coir in Sri Lanka demonstrates. These workshops aim to lead to actions and ultimately to transformations in the market system.
The role of multi-stakeholder forums in taking forward issues for action is discussed with examples from Sudan and Peru. Transforming relationships between market actors is crucial to increasing competitiveness, a key issue for the poor in market chains. The case of livestock in Zimbabwe shows what is possible in an extreme context if market actors have the incentive and desire to work together.
In the final section, the challenges for practitioners to become effective facilitators of market system development are explored, sharing tips from Practical Action’s team leaders. In addition to changing organizational mindset and culture, the paper highlights the future challenge of dialogue with donors and others on the pro-poor impacts of market system development and the need for a more flexible and less controlling approach.
Authors: Alison Griffith and Luis Osorio, 2008
This field guide provides pointers for program managers and field staff on how to foster several crucial skill sets for preparing groups of poor farmers who are at a very early stage of engaging with markets and who aspire to successful agroenterprise development. The five key skill sets considered in this field guide include: group organization and management; internal savings and lending; experimentation and innovation (knowing how to access and apply new technology); basic marketing skills; and sustainable production (including improved natural resource management).
Authors: CRS and RII-CIAT Agroenterprise Study Tour Group, July 2007
How do you assess the development potential of a value chain opportunity? For practitioners working with farmers to identify value chains to participate in, or for companies deciding which types value chains might have more impact as part of smallholder sourcing programs, being able to identify the potential of value chains to reach and benefit the poor is critical. This paper shares a theoretical but useable framework to help practitioners determine how pro-poor a value chain is. The functionality of the framework is demonstrated by examining the cut flower industry in Kenya.
Author: Chad Hamre, August 2008
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Designing trading relationships that reach and benefit small-scale producers in a sustainable way can be a challenge for practitioners who engage directly with women in agriculture. In agriculture, women constitute the majority of farmers and producers and thus a significant part of the supply base. Yet women suffer many gender-specific constraints when participating in market-based activities. Long hours, poor nutrition, lack of hygiene and sanitation facilities, and the strains of child rearing can negatively affect women’s productivity. Limited access to education and credit facilities restricts women’s ability to absorb new labor-saving technologies or move into new value-adding activities. As such, women also find it difficult to take on managerial and supervisory positions. Creativity in approaches to investing in women can address power and access issues to train women in food production and build their capabilities as service providers. This actually means maximizing productivity across the whole workforce and all along the value chain and increasing the impact of agricultural supply chains in reducing poverty. This paper is part of a series of topic briefs from the New Business Models for Sustainable Trading Relationships (NBMSTR) project.
Author: Anoushka Boodhna, 2011
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In 2007 and 2008 CATIE led the development and testing of an assessment methodology appropriate for when changes in rural poverty are the major concern. The methodology presented in this paper focuses on identifying changes in livelihood asset endowments, which are made up of natural, human, social, physical and financial capitals, as a result of participation in value chains for certified products.
This case study applied this new methodology to evaluate the experiences of the second-tier coffee cooperative Soppexcca and its individual members in value chains for organic and fair trade certified coffee and how these experiences were shaped by long-term relations with civil society and buyers over the span of nearly seven years. Interventions by civil society and buyers have been critical both for Soppexcca, allowing it to build strong links with hundreds of smallholder coffee producers that has been critical for its long-term positioning in organic and fair trade coffee markets as well as for Soppexcca’s members, enabling them to expand production, convert to organic production and improve the overall productivity and quality of coffee production.
Author: Jason Donovan CATIE Turrialba, March 2010
Several Food Lab member companies have joined forces in order to gain a better understanding of the realities faced by small-scale sugar cane farmers. The effort—led by Food Lab staff—is collecting farm level data from certified fair trade, organic smallholder farmers in Paraguay.
This project is designed to accomplish two goals:
1) provide greater insight on the livelihood and challenges of cane farmers; and
2) test the concept of a lightweight, cost effective set of core metrics for smallholders.
An initial baseline survey of 45 farmers in 3 organic, fair trade certified cooperatives was completed in April 2012 by SFL and local experts in collaboration with Fairtrade International’s Paraguay staff. Initial findings showed fairly low food insecurity. The farmers’ average income was over $10/day, yet only 50% of farmers were earning over the national poverty line of $4900/year. The average area planted in cane was 5 hectares within a wide range of farm sizes (from 2 to 63 hectares). Average yields were only 70% of potential yields, despite very high levels of training and best practice adoption.
In a series of focus groups, farmer organization leaders emphasized that better access to training on farming best practices, improved seed and affordable, high-quality, organic inputs were key to improving productivity and livelihood for their members.
Interviews with the processing mill and exporting company revealed that access to efficient transport to move the cane from the remote smallholder farms to the mill was a significant barrier to sustainability in the system.
Additional surveys will be completed in early 2013 with generous support from the Ford Foundation. These surveys will reach a larger number of farmers and include interviews with hired cane workers to understand the livelihood profile of this group—as workers are often the most vulnerable population in an agricultural system.
Companies are learning from this project via the Food Lab's Values Based Sourcing peer learning group which includes Annie's Inc., Ben & Jerry's, Clif Bar & Co, Theo Chocolate, Stonyfield Farm, Green Mountain Coffee Roasters, Sodexo and Unilever. This effort is part of a larger body of work to research and support the development of core performance metrics that can be embedded into supply chains to track livelihood performance of smallholders over time. Results will be shared with other companies and organizations conducting this work at an event in December as well as at the Sustainable Food Lab Annual Leadership Summit, April 2013.
To meet rising industry commitments to source certified cocoa, Rainforest Alliance (RA) needed to rapidly scale its network of certified farmers in the cocoa-producing countries of Ghana and Côte d’Ivoire. After initially planning to work primarily with farmer organizations, soaring demand for certified cocoa pushed RA to reach out to the vast majority of cocoa farmers who were unorganized. By working with supply chain companies and trader networks, reducing the costs of certification to farmers, and finding ways to increase potential benefits, RA was able to certify tens of thousands of small farmers in just three years. Political instability in the Côte d’Ivoire, however, disrupted global supply chains and revealed the importance of geographic diversification in minimizing risk.
Principal Authors: Don Seville, Melissa Paschall, May 2012
Plenty Foods operates a network of around 9,000 out-growers across Sri Lanka, to whom it provides technical, business, and market access. It has also reached out to farmers in other provinces through its procurement practices and extension services. This case study illustrates how Plenty Foods is growing its business and adapting its business model to develop a stronger and more reliable supply base through working with multiple stakeholders, including government, NGOs, and farmer groups, as well as with other businesses.
Author: Oxfam GB, April 2009
In 2007, Catholic Relief Services (CRS) teamed up with by the Sustainable Food Laboratory (SFL), the International Institute of Environmental Development (IIED), Rainforest Alliance (RA) and the International Center for Tropical Agriculture (CIAT) to find ways of linking poor smallholder farmers in Africa with modern commercial markets in Europe. This case study describes the team’s efforts in Ethiopia, where they worked with approximately 15,000 farmers to improve the trade of white beans into retail markets in the United Kingdom. Activities were facilitated by CRS, which had a long-term field presence in Ethiopia; SFL and IIED provided technical support for interactions with formal private sector partners; RA provided technical support to the monitoring and evaluation process.
Principal Authors: Shaun Ferris, Melissa Paschall and Don Seville, June 2012
This case study both shares ground breaking research on the impact business can have on poverty reduction and the story of the rich and challenging partnership between Oxfam GB and Unilever – two organisations with very different aims and perspectives. This research explores to what extent, and how, the wealth generated by the local operating company of a multinational company in a developing country is translated into poverty impacts in one particular country, in this case Indonesia. The research focuses on Unilever Indonesia, the local operating company of Unilever, one of the world’s leading fast-moving consumer-goods (FMCG) companies.
Principal Author: Jason Clay, 2005
This case study focuses on the effort to scale-up development impact through the introduction of new business models – specifically, through Fair Trade certification. CRS is interested in such models because they can operate in mainstream markets and hold the promise of an exit strategy; as trading relationships become self-sustaining, development staff can disengage and transfer resources to new areas. Fair Trade is a scheme where retailers and other chain actors aim to ensure that disadvantaged farmers, organized into cooperatives, get a fair share of the profits from their produce. It fosters the provision of market information credit and technical assistance to farmers. Farmers receive a guaranteed minimum price, plus “social premiums.” The case finds, however, that the real benefit of fair trade may not be in the additional income that it generates, but in the way it induces farmers to organize themselves to supply a particular market. This case study is one in a series that describes how CRS and its partners work with farmer groups and other stakeholders to develop agroenterprises. CRS and its partners created the series to share what they learned from their experience, what new skills were developed, and what team members discovered in reviewing their approaches. The series draws from a range of value chains and across a range of countries; each one focuses on a particular stage in the agroenterprise development process.
Principal Author: Michael Sheridan, 2009
Rural farmers in the Philippines were able to access a high-value domestic market for their produce by joining together in clusters and upgrading the quality of their product. In this case study, Catholic Relief Services describes how it facilitated this outcome through the use of market analysis, negotiation training, a Farmer Field School, microlending, post-harvest processing, and new storage and delivery practices. There were unexpected challenges along the way, but soon the farmers were successfully selling large volumes of bulb onions at a premium price, and expanding into other crops as well. This case study provides details on project planning, implementation, results, and lessons learned.
Principal Authors: Ador Mariano, Joan Uy, Lionel Mendoza, Pedro Terry Tuason III, Ones Cuyco, Victoria Torres, Gisela Tiongson, May 2011
In 2008 it was estimated that cocoa producing households in Ghana had a mean per capita daily income from cocoa of US$0.42 out of a total income of US$ 0.63. Fine flavor cocoa production has the potential to raise farmer incomes substantially, but requires specialized skills and technology and direct market linkages. This case describes a collaboration among international NGOs, Ghanaian government agencies, and the chocolate industry to: 1) increase growers’ capacity to grow high-quality, fine flavor cocoa, 2) develop a super-premium brand of cocoa that is recognized worldwide, and 3) to work with buyers to develop a transparent supply chain that delivers much of the premium back to the growers. Over the course of the project, the team must overcome key technological and organizational challenges.
Principal Authors: Stephanie Daniels, Peter Laderach, and Melissa Paschall, May 2012
Even after a farmer group has been organized and is marketing its products, it needs to continually upgrade its activities in order to remain competitive and to retain and expand its markets. Essential tasks include gathering information about market changes; learning about, testing and implementing new technologies; controlling quality; expanding membership; developing new business relationships and markets; and strengthening the group’s entrepreneurial skills and self-management capacity. One way to organize these tasks is through the establishment of an independent “agribusiness development center.” This case study describes how such centers were established in El Salvador, and provides guidance for how other development agencies can facilitate the development of similar organizations. This case is one in a series that describes how CRS and its partners work with farmer groups and other stakeholders to develop agroenterprises. CRS and its partners created the series to share what they learned from their experience, what new skills were developed, and what team members discovered in reviewing their approaches. The series draws from a range of value chains and across a range of countries; each one focuses on a particular stage in the agroenterprise development process.
Principal Author: José Angel Cruz, 2009
Presented here is a case study of ethical agents which, although supported by development project funds, can offer a commercial model for aligning the business models of smallholders, SME suppliers, and demanding modern retailers. In this project to bring Kenyan smallholder flowers into the supermarkets of the UK and US, two ethical agents intervened at multiple levels of the chain, creating new market opportunities, building capacity of the Kenyan SME aggregator/supplier, negotiating the terms of supply (representing the Kenyan intermediary whilst respecting the demands of the retailer), and enabling some flexibility at the retailer end. The agents also contributed to the development of a more smallholder-friendly environmental standard.
Principal Authors: Abbi Buxton, Bill Vorley, Steve Homer, and William Van Bragt, May 2012
Comercializadora Aj Ticonel (the Aj Ticonel Trading Company) was formed in 1999 and today trades with 2,500 smallholders, working with co-operatives of small-scale vegetable producers in the largely poor Central and Western Highland regions of Guatemala. This case study provides an example of how a specialised trading company for smallholders has been developed in tandem with a supporting NGO to help scale up the business model and access the domestic supermarkets.
Published by Oxfam GB, May 2009
It is important that farmers participate in the market opportunity identification process so they become aware of the dynamics of the market. It helps open their eyes to new production and marketing opportunities. This case study follows a CRS team as they work with five farmer communities in Burkina Faso to identify broad market opportunities, and to narrow in on the best fit. The rigorous and participatory process involves interviewing buyers, creating a matrix of potential market opportunities, and holding a series of community meetings with men and women farmers. Checklists are provided, including sample survey questions and an example of tabulated data. This case study is one in a series that describes how CRS and its partners work with farmer groups and other stakeholders to develop agroenterprises. CRS and its partners created the series to share what they learned from their experience, what new skills were developed, and what team members discovered in reviewing their approaches. The series draws from a range of value chains and across a range of countries; each one focuses on a particular stage in the agroenterprise development process.
Principal Author: Justin Ilboudo, 2009
HIVOS is working to achieve sustainable development and poverty reduction using a simplified generic management system as a tool. This effort has been closely monitored in pilot projects involving groups of smallholders in coffee and vegetable production in Kenya and South Africa. This book reflects on HIVOS’s experiences and summarizes its successes and challenges. It argues that a sufficient basis has been found for continuation and possibly scaling up of the efforts, and it proposes a stylized interaction model as the way forward.
Authors: Coen Van Beuningen and Peter Knorringa
Full Text and Video HERE
Despite the importance of cocoa cultivation in Indonesia’s economy, productivity, bean quality and farm profitability have declined in recent decades due to aging tree stocks and unsustainable farming practices. Efforts to reverse these trends through on-farm investments in tree rejuvenation, replanting and sustainable practices have lagged due to farmers' limited knowledge and access to capital, and poor transmission of quality price signals. VECO’s experience working in Sulawesi in partnership with the global cocoa trader Armajaro illustrates how partnering with the private sector can optimize our impact, improve smallholder farmers' livelihoods, and increase the likely sustainability of farmers' gains. A case study of NGO-private sector cooperation on Sulawesi island, Indonesia.
Principal Author: VECO, July 2011
When Green Mountain Coffee Roasters decided to measure the impact of their CSR programs, they asked the Sustainable Food Lab and the International Center for Tropical Agriculture (CIAT) for help. Together, they went into producer communities to identify useful indicators (in partnership with the growers themselves) that would enable the company to assess the ability of coffee growers to make a living. What they didn’t expect was to confront los meses flacos, the thin months, the three or four months every year when many coffee growers and their families experience hunger. The case presents the approach the project team used to develop the indicators, and discusses the challenge of addressing poverty and hunger within something as large as the global coffee market.
Since the research project on indicators, GMCR has initiated a series of innovative projects with coffee growing communities to help address food security based on local priorities and strategies. For more on this project:
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Authors: Sam Fujisaka, Thomas Oberthur, Raul Rosales, Herman Usma, and German Escobar. October 18, 2006
Participatory Market Mapping (PMM) Workshops are at the core of participatory market system development. Using a visual representation of the market system – the Market Map – facilitators in the field use PMM workshops to bring public and private market actors together to address blockages and exploit opportunities through increased coordination and collaboration. However, for the PMM process to unleash the resources and creativity of public and private market actors, several conditions must be met. This paper gathers and analyses experiences, challenges, tips and insights from PMM workshops mainly in Nepal. Two case studies are described, one from the dairy subsector and one from the vegetable subsector in Nepal. Insights are drawn from these two cases relating to planning, implementing and following up on PMM workshops.
November 2010
“How are we doing?” is a simple question – but answering it can be surprisingly complicated. This case study chronicles the development of Farmer Group Space, a web-based system for the information sharing that creates a foundation for effective project monitoring. Special attention is paid to identifying the data that is important to key stakeholders (farmers, partners, development agencies) and to overcoming common challenges to data collection and analysis. The case discusses the use of laptop computers and mobile phones in data collection, and describes a series of useful toolkits. This case is one in a series that describes how CRS and its partners work with farmer groups and other stakeholders to develop agroenterprises. CRS and its partners created the series to share what they learned from their experience, what new skills were developed, and what team members discovered in reviewing their approaches. The series draws from a range of value chains and across a range of countries; each one focuses on a particular stage in the agroenterprise development process.
Principal Author: Ben Watkins, Rob Rose and Margaret Mwangi, 2009
By working in partnership with business and across a diversity of crop types and market requirements, the collaboration aims to synthesize knowledge about how to increase access, benefits and stability for small-scale producers while generating consistent and reliable supplies for buyers.
Some KEY LESSONS from the project about business model innovation with smallholders:
1. Certification can reach farmers at scale with measured income benefits (43,000+ farmers were reached) when it is coupled with strong demand and training. There remains ample opportunity to 1) explore ways to increase the effectiveness of practices intended to boost productivity and smallholder benefits, and 2) better measure impact over time.
2. The dried bean value chain in Ethiopia showed that pulses can be a valuable source of income when they are part of a diverse farm system at scale (15,000 farmers reached directly by the project, an additional 45,000 reached through private sector seed loans as part of the partnership). Yet high levels of disruption in weather and the market system made direct and consistent trading relationships very challenging. The project team concluded that continued investment in seed systems, market information systems to build buyer confidence, and information systems—to track technology adoption and impact at the farm level—are considered worthwhile.
3. Our work in smallholder flowers from Kenya demonstrated the crop’s potential to add considerable value and market share through direct service to retail. The project clearly underscored the high level of capacity needed to succeed in direct retail sales. A commercially sophisticated "ethical agent" was key to facilitating these relationships and building supplier business capacity. Flowers are continuing to sell well Sam’s Club. Additional UK-based retailers are exploring sales potential as well.
4. The fine flavor cocoa project successfully engaged the industry and the Ghanaian government and introduced new practices around cultivation, grafting, and quality management. The project illustrated the fundamental challenge of development projects with a significant research component. It took much longer than anticipated to identify cocoa varieties, propagate them, and create a successful market test. The critical next step is to support the farmers through to a commercial harvest (when traders can take over). We must also focus on scaling this work up to bring the benefits of the new technology and practices to Ghana’s mainstream cocoa sector.
5. The central concept of developing a consistent set of New Business Model principles proved to be a useful framework for engagement and organization. Supply chain coordination, service provision (technical assistance, credit, inputs, seed), and effective market linkages were clearly critical to the success of the projects.
The work which this project kicked-off continues in Food Lab community. The primary focus at this point is on measuring impact, testing ways to link small holders to markets and collecting cases, tools and methods. The new case study reports will be announced over the next few weeks, the first of which can be found in a blog by Abbi Buxton: How Markets Can Bloom for Africa's smalholder farmers. Other similar resources including a practitioners guide developed by Mark Lundy at CIAT are available on this website.
Other papers in the series are:
Branding Agricultural Commodities: The development case for adding value through branding
Information and communication technologies for development
Commodity exchanges and smallholders in Africa
Sourcing gender: gender productivity and sustainable sourcing strategies
Under what conditions are value chains effective tools for pro-poor development?
Think Big, Go Small
Project Goals:
Led by the International Institute for Environment and Development, this project has built on ASDA's commitment to increase sourcing from Africa by developing the world's first smallholder outdoor flower supply chain to be certified by Rainforest Alliance. Rainforest Alliance certification both ensures sustainable production practices and helps communicate the positive story to customers.
Project Partners: ASDA, Rainforest Alliance, Wilmar Naturegrown, IIED, SFL
Publications about this project
Guardian Sustainable Business Blog: How Markets Can Bloom for Africa's Smallholder Farmers ASDA Press release READ PROJECT INFORMATION HERE
Project Goal: to increase growers’ capacity to grow high-quality, fine flavor cocoa and develop a super-premium brand of cocoa that is recognized worldwide and to work with buyers to develop a transparent supply chain that delivers much of the premium back to the growers. “Ghanaian cacao farmers are some of the best growers in Africa. By bringing superior cacao clones to Ghana, and teaching Ghanaian farmers to grow them, they will increase their income with a sustainable crop, while we will get a reliable supply of excellent cacao. Everybody wins.” John Scharffenberger
Project Partners: Scharffen Berger Chocolate Maker, now a brand of The Hershey Company, Agroeco-Louis Bolk Institute, CIAT, Sustainable Food Lab, Cocoa REsearch Inst of Ghana (CRIG).
Additional expertise has been provided by Ed Seguine, Mars Chocolate and the ICCO Fine Flavour Committee Chair, Dr Darin Sukha of the Cocoa Research Unit at the University of the West Indies, Trinidad & Tobago, Gary Guittard, Guittard Chocolate, John Kehoe of Tcho Chocolate and Chloe Doutre- Rousel, Chloe Chocolat, France
Project Timeline: 2007-2011
Publications about this Project:
Project Goal: to increase demand and supply in West Africa for Rainforest Alliance certified cocoa and to test whether voluntary certification with sustainable practices provides a net benefit to small holder cocoa farmers that can be sustained by the value chain without ongoing subsidy. This project has assisted over 17,000 farmers in West Africa to achieve certification to date.
Rainforest Alliance is innovating new business models through this project to increase the access of farmers to the certified market while piloting group certification through traders and rural input stores. These innovations are focused on reaching the non-organized farmers who do not belong to an operating cooperative. These farmers comprise a large percentage of the cocoa farmers in West Africa. Project Partners: Rainforest Alliance, AgroEco-Louis Bolk Institute, Sustainable Food Lab Project Timeline: 2007-2011
Guardian Sustainable Business blog: New Cocoa Business Model Catching On READ MORE HERE
Project Goal: The new business model supports smallholder producers and is focusing on a flexible approach to chain-wide development that improves relationships among value chain actors. In addition to facilitation in linking producers with buyers, the project supports upgrading of the bean value chain through interventions aimed at increasing productivity and improving quality of product and trade relationships. White pea beans (navy beans) have long been an export crop from Ethiopia.
The project has closely partnered with ACOS, the largest exporter with a significant processing facility in country, to invest in new varieties and training to improve productivity and quality, to improve links between farmers and intermediary traders and to develop a chain wide support system that enables communication, traceability and builds confidence from end-to-end in the chain.
Project Partners: ACOS, Catholic Relief Services, Sustainable Food Lab
Pea Beans In Ethiopia: Challenges of Creating New Business Models for Sustainable Livelihoods. Seville, Systems Thinker, Vol. 19, April 2008.
Review of the role of commodity exchanges in supporting smallholder farmer market linkages and income benefits. Peter Robbins, July 2010.
READ THE LATEST DEVELOPMENTS HERE READ A REPORT OF THE PROJECT HERE
Governments, donors and NGOs have promoted environmental and social certification schemes for coffee producers as certified market channels are assumed to offer higher prices and better incomes. Additionally, it is presumed that these certifications contribute to poverty reduction of smallholders. Yet, gross margins, profits and poverty levels of certified smallholder coffee producers have not yet been quantitatively analyzed applying random sampling techniques. Our quantitative household survey of 327 randomly selected members of conventional, organic and organic-fairtrade certified cooperatives in Nicaragua is complemented by over a hundred qualitative in-depth interviews. The results show that although farm-gate prices of certified coffees are higher than of conventional coffees, the profitability of certified coffee production and its subsequent effect on poverty levels is not clear-cut. Per capita net coffee incomes are insufficient to cover basic needs of all coffee producing households. Certified producers are more often found below the absolute poverty line than conventional producers. Over a period of ten years, our analysis shows that organic and organic-fairtrade farmers have become poorer relative to conventional producers. We conclude that coffee yield levels, profitability and efficiency need to be increased, because prices for certified coffee cannot compensate for low productivity, land or labor constraints.
Principal Authors: Tina D. Beuchelt and Manfred Zelle, 2011
Full text HERE
A case study on the cooperation between Beninese farmers’ organisations, the Belgian retailer Colruyt and Vredeseilanden/VECO. Vredeseilanden/VECO started the rice programme in 2002 to boost the capacities of farmers and their organisations to produce high quality rice that can successfully compete with imported Asian rice on the domestic market, and eventually enter the export market. The central goal is to increase farmers' incomes through improved cultivation and access to modern, dynamic markets. Stimulating local production and deployment of an effective local value chain will also help cope with future food crises. The programme has resulted in significant outcomes, including local self-sufficiency for households in the Collines, a 50% increase in per hectare productivity, professionalized farmers’ organisations that have developed the ability to export, and international Fair Trade certification, and a positive relationship forged between producers and the Belgian supermarket chain,Colruyt.
Principal Author: VECO November 2011
If agriculture is to increase a community’s food security and incomes, farmers need financial services to buy inputs, hire workers, rent storage and pay for marketing. Although some can borrow from local lenders and traders, such loans are typically expensive and not aligned with crop calendars or the needs of value chain development. One promising approach being tested by CRS is “savings and internal lending communities” in which groups of farmers pay a small sum each week into a common pool, and can borrow from it if they wish to cover short-term expenses. This case study describes the formation of such a savings group in the Lake Zone of Tanzania, and how several savings communities affiliated to form larger “marketing associations” that were able to pool produce and negotiate higher prices. This case is one in a series that describes how CRS and its partners work with farmer groups and other stakeholders to develop agroenterprises. CRS and its partners created the series to share what they learned from their experience, what new skills were developed, and what team members discovered in reviewing their approaches. The series draws from a range of value chains and across a range of countries; each one focuses on a particular stage in the agroenterprise development process.
Principal Author: Edward Charles, 2009
Scaling up production and marketing is a demanding task: it involves working with many more farmers and organizations, and undertaking different activities from a pilot project. The responsibilities for supplying inputs, providing extension services, managing production and marketing, quality control, etc., lie with different institutions. Cooperation and networking among stakeholders is vital for effective coordination and implementation. This case study demonstrates strategies for scaling up in the context of navy bean production in Ethiopia, and discusses both challenges encountered and lessons learned. This case is one in a series that describes how CRS and its partners work with farmer groups and other stakeholders to develop agroenterprises. CRS and its partners created the series to share what they learned from their experience, what new skills were developed, and what team members discovered in reviewing their approaches. The series draws from a range of value chains and across a range of countries; each one focuses on a particular stage in the agroenterprise development process.
Principal Author: Legesse Dadi and Shane Lennon, 2009
Sodexo Madagascar is part of the Remote Sites division of the Sodexo Group, a global leader in Food and Facilities Management services, and has contracts to provide food and services to remote mines. Sodexo has aimed to source as much of its fruit and vegetables as possible from local communities: in accordance with its sustainable development policy, it has wanted to become a partner in development, creating local employment, building up local production, and promoting the creation of businesses. This case study shares the story of how Sodexho increased supply through community supply chains by working with local partners.
Published by Oxfam GB, April 2009
This case about Body Shop's Community trade program provides an example of a retailer adapting procurement and production strategies to include capacity building for smallholders. Through Community Trade, a ‘three-way win’ is effected by The Body Shop: suppliers benefit from the fair deal offered by the company (fair pricing, forecasting, and predictable demand); The Body Shop brand benefits from sustainable, traceable access to agricultural expertise and quality ingredients; and customers benefit from products that meet their expectations of ethical sourcing and demanding quality standards. The case study focuses on the example of ethanol production from sugar cane in Ecuador.
French-style green beans flow every day from remote farmers in Guatemala to Costco stores throughout North America. They pass through the Cuatro Pinos Cooperative and the Los Angeles Salad Company, who provide technical assistance to farmers and prepare the beans for sale to North American consumers. A Costco executive, through her participation in the Sustainable Food Lab, began to wonder whether farmers in value chains like this one were getting a fair price, and whether their families got the care and services they needed. Conducting this inquiry required transparency among all the players in the chain, in order to understand how profits from green bean sales were being distributed. Engaging with an external, non-profit research center, CIAT, was critical to building trust, thus providing a neutral observer of value chain activities. Through CIAT's extensive value chain analysis, and a skillfully conducted supply chain summit in Guatemala, it became possible for participants from each of the supply chain companies to see and feel the system of which they were a part. They made a decision to invest in sustaining and upgrading the existing commitments to alleviating rural poverty, through the establishment of a Foundation in Guatemala, funded by green bean revenues. The case study describes this process, and some of the challenges involved in institutionalizing the experiences and insights of the Project.
Author: Mark Lundy, CIAT. October 2007
This case study provides an example of a company, Unilever, working with smallholder farmers through enterprise development to secure local supplies of raw materials and to build its own brand, while benefiting farmers in terms of improved incomes and a guaranteed market for their produce. The Black Soy Bean Farmers Development Program is still growing. To date it has involved, via the farmer-owned co-operatives, the participation of some 6,600 smallholder farmers, who now grow approximately 25–30 per cent of the black soy beans used to produce Unilever's local Bango brand.
Value chain analysis is a central tool in agroenterprise development. It determines the most appropriate market and sales channel for the farmers’ product. It identifies critical constraints in the production-to-sales chain, and forms the basis for consolidating the farmers’ relations with the various chain actors. This case study shows how, beginning in 2002, CRS and its partners analyzed the market chain for potatoes in eastern Ethiopia, formulated a plan to increase the volume, frequency of supply and the quality of potatoes produced, and found ways to improve post-harvest handling and linkages to buyers. This case is one in a series that describes how CRS and its partners work with farmer groups and other stakeholders to develop agroenterprises. CRS and its partners created the series to share what they learned from their experience, what new skills were developed, and what team members discovered in reviewing their approaches. The series draws from a range of value chains and across a range of countries; each one focuses on a particular stage in the agroenterprise development process.
Principal Authors: Zemede Abebe and Mesfin Alemayehu, 2009
