Scaling Productivity Improvement Seas of Change Conference

David Rosenberg

Ecom Group Sustainability Advisor

April 2012

• Ecom

• Strategic intent

• How to get productivity gains

• Business models

• Keys and limits

• Optimism

Ecom Agroindustrial Corp, Ltd.

• Family-owned, 6th generation

• Coffee, cotton, cocoa, sugar

• 30+ countries

• “Origin integrated”

= physical trader, first buyer

= buying and primary processing in origin

= risk management

Strategic intent of

inclusive business model

Profitability throughout supply chain higher yields,

better quality,

lower costs

higher farmer income

Preferred buyer from better farmers

Preferred supplier = differentiated products, solutions

New barriers to entry for competitors

= sustainability of our own business

Productivity

Increasing yields, quality, farmer income – Create more and better product, profitable farmers

Similar approaches world-wide – Farmer engagement, organization

– Training certification to UTZ, Rainforest, … ….

– Access to inputs, finance

– Better genetics, technologies

Unconventional partnerships – NGO’s, Banks, Clients

Why Certification?

Why Certification?

Demand-driven

‘Organizing principle’

- Organize un-organized farmers

- Improve farming practices

- Buyers reward farmers for good practices

- Communicate throughout the whole supply chain

First step to capture farmers’ attention

Certifying poverty or driving productivity??

“Sustainable Management Services”

• Within company, separate business unit or NGO

• Farmer Training

Agronomy and business practices

+ Weather and price data

+ Access to inputs, equipment, services

• Keys:

– Year-round up-country presence

– Link agronomy, finance, procurement

– Develop in-house expertise

– Transparency

Farmer training model

• Keys:

– Frequent farmer contact

– Maximum possible responsibility

at farmer organization

• Limitations

– 50 farmers per trainer

– Training methods, low tech

– “Telephone game”

= declining quality of message

– High cost of reaching farmers

– Who is responsible for what?

SMS Field

Manager

SMS Production

Officers

Smallholders

Quality teams

Auditor

SMS

Promoter

Farmers

Achieving productivity gains

Training

Inputs

Genetics

Finance

Business skills

Farmer Field School

= 50 farmers per trainer

Expensive, needs finance

Expensive,

needs multi-year finance

+ investment R&D

Risky, needs risk-sharing

Some data

• Kenya

85,000 coffee farmers via our trainers

165,000 farmers sell through SMS

• Uganda 31,000

• Tanzania 5,000

• Mexico 8,000

• Ivory Coast

11,000 cocoa farmers, 20 cooperatives,

• Latest Total: about 175,000 farmers

SMS Training in Kenya

Innovation in Kenya

Composting Biodigester

Ecom-IFC-Nespresso Central America

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Farmers Reached - IFC-Ecom projects, Jun-07 to Dec-13

Actuals Targets

-

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

Sales Revenue Generated (million US$) - IFC-Ecom projects, Jun-07 to Dec-13

Actuals Targets

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Sustainably Used Land (hectares) - IFC-Ecom projects, Jun-07 to Dec-13

Actuals Targets

-

5,000

10,000

15,000

20,000

Farmers Certified - IFC-Ecom projects, Jun-07 to Dec-13

Actuals Targets

Genetics: breeding partnership with CIRAD

Ecom Tajik Agronomy Team

Seed innovation

Challenges to productivity

• Which sustainable ag model to scale?!

• Expensive to reach farmers

– Who pays?

– Who does?

– How can we innovate? Radio, phones, ipads?

• How to build human capital

– Expensive and scarce

– Easy to steal New business model

• Difficult countries

– High risk Risk sharing ?

• Measuring productivity

Reasons for optimism

• Business training

• Training women

• “Sum of parts” approach

– Multiple income streams

– Integrated farming

• Technology getting cheaper

– Phones, hand-helds

– Information systems