Value chains and rural development bio - cc 140710


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Value chains and rural development bio - cc 140710

  1. 1. Value Chains & Inclusive Business Chris Claes BIO workshop on investing in sustainable agriculture 10/07/2014 – BBL2MEET, Tweekerkenstraat 47, 1000 Brussels
  2. 2. Terminology 01 table of contents The Impact We Pursue, Systems and Complexity 02 Investing in Collective Farmer Enterprises 03 Investing in Relationships Between Collective Farmer Enterprises and Buyers 04 Practice of Vredeseilanden/VECO Working Towards Inclusive Supply Chains 05
  3. 3. 1. Terminology
  4. 4. 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 The movement of materials sugar  sugar  ice cream  supermarket
  5. 5. Ben Davies, Delhaize, powerpoint presentation, Vredeseilanden General Council, October 2012
  6. 6. 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
  7. 7. 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
  8. 8. Value chains, services and enabling environment Chain Wide Learning Guide IIED/CDI Wageningen
  9. 9. David Bright, Oxfam UK, powerpoint presentation, General Council Vredeseilanden, October 2012
  10. 10. 2. The Impact We Pursue, Systems and Complexity
  11. 11. The impact we pursue
  12. 12.  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 Livelihood strategy upgrading strategy Trading relationships Product value proposition
  13. 13. • Interventions in a particular system affect the whole system • It’s not about adding up scores, one critical factor undermines sustainability ndicatorsE_RDN1_2009.pdf
  14. 14.
  15. 15. Intervention areas for upgrading or developing 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..) • …
  16. 16. 3. Investing in Collective Farmer Enterprises
  17. 17. chain co-owner chain partner chain activity integrator chain segment Farmer Organizations Development Paths
  18. 18. 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
  19. 19. 4. Investing in Relationships Between Collective Farmer Enterprises and Buyers
  20. 20. 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. Possible investment alternatives to landgrabbing
  21. 21. 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 linkages Ability 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 governance transparancy (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 outcomes Feedback mechanisms along the chain, regular assessment process, decisions based on assessment, assess environmental results
  22. 22. 5. Practice of Vredeseilanden/VECO Working Towards Inclusive Supply Chains
  23. 23. Cases on • 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.
  24. 24.
  26. 26. 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)
  27. 27. Making sense of complex realities Using Sensemaker® to measure, learn and communicate about smallholder farmer inclusion
  28. 28.
  29. 29. Thank You Chris Claes Blijde Inkomststraat 50 3000 Leuven Belgium