Source: Seville, Don. Sustainable Food Lab for Linking World Conference.

LINKING WORLDS: EXISTING FRAMEWORKS

“OUR GOAL is not to link the poorest farmers to the most demand market but to invest in moving farmers up and to make markets more accessible?

1-2% are the commercial farmers(2% of farmers account for 50% of maize sales)

3-15% are regularly selling into markets

20-30% are occasionally connected to markets and are food buyers

40-50% are subsistence producers, buy in food, get most cash from off farm work.

Low barrier cash crops, transition strategies, basic agronomic

improvements?

Can benefits trickle down?

Can they compete with commercial?

Can we integrate VC with food security and local markets?

Can we help farmers move up a level?

Source: Seville, Don. Sustainable Food Lab for Linking World Conference.

Can we help companies source down a level?

Capable farmers (skills, capacity &

organization)

Willing buyers (private sector

policies)

Enabling environment (public / donor policies)

ELEMENTS FOR INCLUSIVE BUSINESS MODELS

NEW BUSINESS MODELS FOR SUSTAINED TRADING RELATIONSHIPS

Adapted from www.regoverningmarkets.org by CIAT

THIS TOOLKIT IS DESIGNED TO help a group of market chain actors and stakeholders:

Discover opportunities for innovation.

Implement, validate and evaluate interventions that are inclusive of small-holders.

Produce results that are equitable, viable, feasible, durable and inclusive. Facilitate a systematic learning process.

the market chain

on critical points in the chain

the existing business model

the change strategy

the innovation prototype

test, adjust, improve the interventions

and measure results and impacts

THE PRODUCTION SIDE: comprises the set of activities, mechanisms and relationships for providing a good or service, in other words for creating value. The partner network -- the supply chain and its coordination – is a vitally important source of competitive advantage.

THE MARKETING SIDE comprises the set of

activities, mechanisms and relationships for

selling that good or service, or in other

words for capturing value. Broadly speaking,

the production side is associated with costs

while the marketing side generates revenues,

though marketing also entails costs.

ANALYZE THE EXISTING BUSINESS MODEL

The resolution of problems, in both the commercial and social performance of new business models requires all or most chain actors set shared goalsfor collaboration. The development of a systemic view of the chain recognizes and values the interdependence ofthe actors. Reaching and implementingagreement often involves identifying one or more champions to lead the process.

For farmers and their organizations, market linkages should provide a stable market with clear quality, volume and price signals as well as access to key services (Principle 4). These linkages must contribution to improved livelihoods. For buyers, solutions must provide a consistent supply of safe, quality products at a competitive price.The achievement of both producer and buyer goals in practice requires the delivering social and commercial value up and down the chain.

Fair and transparentgovernance refers to the establishment and enforcement of clear and consistent grades and standards, clear commitments to buy and sell certain volumes of certain grade products at certain times, and equitable processes of risk management. Mutually recognized interdependency between chain actors is key. Sharedcommercial risk and insurance against failure are frequently cited as the cement of successful relationships.

One of the special challenges faced by small-scale producers is the lack of access to services such as finance, market information, and best agronomic practices that could improve quality, yields, food safety, and environment performance.  Successful solutions enable smallholders to access credit, knowledge, technology, and develop incentives thatencourage producers to invest in their own production based on market needs.

New business models promote innovation by multiple actors along the chain in products and services as well as the processes that underpin both. Innovations should be done ‘with’ smallholder farmers, rather than ‘for’ them. Inclusive access to innovation provides a means to remaincompetitive in dynamic markets, build the commercial value of goods and services; and, share innovation gains among partners all of which builds business durability.

The business axiom states that you cannot manage what you do not measure. Our sixth new business model principle is to incorporate tailored indicators and monitoring plans to assess the health of the on-going trading relationship as a for-profit business and also its effectiveness as a vehicle for community development.  Constant monitoring of the health of the trading relationship reduces the risk the minor problems will destroy the business.