Value chains and rural development bio - cc 140710
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Transcript of Value chains and rural development bio - cc 140710
Value Chains & Inclusive Business
Chris ClaesBIO workshop on investing in sustainable agriculture10/07/2014 – BBL2MEET, Tweekerkenstraat 47, 1000
Brussels
Terminology01
table of contents
The Impact We Pursue, Systems and Complexity0
2 Investing in Collective Farmer Enterprises0
3
Investing in Relationships Between Collective Farmer Enterprises and Buyers
04 Practice of
Vredeseilanden/VECO Working Towards Inclusive Supply Chains
05
1. Terminology
What we talk about when we talk about market chains
farmer co-operative
trader processor retailer
Value added at each level
cocoa fermented cocoa chocolate paste pralines café experience
https://www.youtube.com/watch?v=mu9TWlcjNKk
The movement of materials
sugar sugar ice cream supermarket
08/07/2014
Our value chain
| 708/07/2014
upstream downstreamOwn operations
Ben Davies, Delhaize, powerpoint presentation, Vredeseilanden General Council, October 2012
Pro-Poor Value Chains (VC4D)
• Value chains that have a positive impact on the livelihood of poor people through: Creating good rural jobs (often the most poor are laborers) Supporting small scale enterprises Investment in communities / taxes payed to governments etc. Buying from smallholders
Inclusive Supply Chains• Supply chains that include smallholder farmers (and their
organisations) as suppliers of agricultural products
Why focus on smallholders?
• Agriculture has great potential to help with rural poverty• Most of the world’s food insecure live in rural communities• Agriculture is proven path out of poverty• Smallholders produce between 50 to 70 % of the world’s food, we will
be 9 billion by 2050, 70 % will live in cities• Links to markets are a critical part of creating agricultural
opportunities
Value chains, services and enabling environment
Chain Wide Learning Guide IIED/CDI Wageningen http://pubs.iied.org/16502IIED.html
David Bright, Oxfam UK, powerpoint presentation, General Council Vredeseilanden, October 2012
2. The Impact We Pursue, Systems and Complexity
The impact we pursue
http://www.fastinternational.org/files/FAST%20SIAMT%201.0%20Full%20Report%20_0.pdf
Systems Thinking: Actions have to take into account the whole system Poverty reduction only posible when global sustainability addressed:
economic, social, environmental (long term) Multi-actor engagement, differing perspectives Added complexity prototyping, short feedback loops
http://policy-practice.oxfam.org.uk/publications/making-markets-empower-the-poor-programme-perspectives-on-using-markets-to-empo-188950
Livelihood strategy
upgrading strategy
Trading relationships
Product value proposition
• Interventions in a particular system affect the whole system
• It’s not about adding up scores, one critical factor undermines sustainability
http://www.apsa.am/images/RISEIndicatorsE_RDN1_2009.pdf
http://en.wikipedia.org/wiki/Cynefin
Intervention areas for upgrading ordeveloping market chains
• Investing in smallholder farmers (capacity, farm infrastructure, materials,…)
• Investing in collective farmer enterprises (cooperatives etc.)
• Investing in service provision• Investing in SME’s buying from smallholders• Investing in relationships between buyers – collective
farmer enterprises• Investing in enabling environment (legislation,
government incentives..)• …
3. Investing in Collective Farmer Enterprises
chain co-owner
chain partner
chain activity integrator
chain segment
Farmer Organizations Development Paths
Investing in cooperatives /collective enterprises
• Being a trustworthy business partner for other chain actors and for own members Comply with demand (quality, food safety, good agricultural
practices, sustainability, label requirements, continuous supply, scale…)
Services to members, internal control systems to guarantee compliance with demand,
Run the business professionally (management) Perform to be an added value for the smallholder members
(negotiation capacities, power, but also economic efficiency)
Collective Selling
Processing • Add value
4. Investing in Relationships Between Collective Farmer Enterprises and
Buyers
Business Models that engage smallholder farmers
• Centralized model: a company provides support to smallholder production, purchases the crop, and then processes it, closely controlling its quality (cotton, sugar cane, tea, banana, palmheart…).
• Nucleus estate model: the company also manages a plantation in order to supplement smallholder production and provide minimum throughput for the processing plant (oil palm, rubber, mango, …).
• Multipartite model: involves a partnership between private companies and farmers ( and often government bodies).
• Intermediary model: subcontracting by companies to intermediaries who have their own (informal) arrangements with farmers (groundnuts…).
• Informal model: SMEs who make simple contracts with farmers on a seasonal basis, often repeated annually.
http://www.fao.org/docrep/014/y0937e/y0937e00.pdf
Possible investment alternatives to landgrabbing
Principles Inclusive Business Models• Chain-wide collaboration with shared goals
Alignment of goals/vision, regular information flow processes, identified champions in lead firms
• New market linkagesAbility to aggregate and reach high value markets, steady and durable market,
complementary markets for seconds and other products, ability to function without subsidy
• Equitable and transparent chain governancetransparancy (price structure, grades, standards, incentives), traceability to farm level,
risk sharing, governance mechanisms, shared equity, contracts• Equitable access to services
Input supplier models, high-quality planting materials, technical support, provision of credit
• Inclusive innovation (vertical co-innovation, process and product)Mechanisms for getting farmer input, continuous renewal of product, diversification
• Measurement of outcomesFeedback mechanisms along the chain, regular assessment process, decisions based on
assessment, assess environmental results
http://www.veco-ngo.org/blog/canned-asparagus-peru-finds-its-way-belgian-supermarket-chain-colruyt
5. Practice of Vredeseilanden/VECO Working Towards Inclusive Supply
Chains
Cases on www.veco-ngo.org
• Cocoa: Armajaro/Mars Indonesia
• Fresh Vegetables: Walmart Nicaragua, Honduras
• Tea: Unilever & local SME, Vietnam
• Dessert banana: Colruyt, Agrofair, Senegal
• Organic rice: Indonesia, Biofresh
• Passion fruit & avocado: Tanzania, Special Fruit nv.
• Organic plantain chips: Ecuador, Ethiquable.
http://dapa.ciat.cgiar.org/wp-content/uploads/big-files/2012/LINK_Methodology.pdf
CANNED ASPARAGUS
SUPERMARKETIMPORTERAGRO INDUSTRY
Farmer Organization
PRINCIPLE OF INCLUSIVENESS
• Common goals of collaboration.
• Identification of leaders.
• Interdependence between actors.
• Stable market
• Expansion of market
• Diversification of market
• Quality standards.
• Volumes,.
• Prices
• Risk Management
• Risk sharing
Coordination or provision of financial and non-financial services, technology, certification, etc.
Innovation in product or service that generated actors according to farmers needs
Evaluation of the business relationship and inclusiveness (indicators)
Making sense of complex realities
Using Sensemaker® to measure, learn and communicate about smallholder farmer inclusion
http://www.veco-ngo.org/blog/using-sensemaker-measure-learn-and-communicate-about-smallholder-farmer-inclusion
http://www.sensemaker-suite.com/smsite/index.gsp
Thank You
Chris [email protected]
www.veco-ngo.orgwww.vredeseilanden.be
Blijde Inkomststraat 503000 LeuvenBelgium