1. UHBDP
Український проект бізнес-розвитку плодоовочівництва
What Client Experience?
Aggregation: Trading and Business Development
Direction Forward
Sergii Potapov , Ukraine
Value Chain Developer | UHBDP
17 April 2016
2. UHBDP Client Experience
UHBDP Clients
• Audience: Who are we speaking to?
• What do we want them to do?
– What change are we asking them to
do?
– Why is the change important?
• What do they need to know?
• How do we need to interact with
them?
– What information to share?
– What activities to perform?
2
3. Lead Firm Out-Grower /
Off-Taker Supply Chain
Rationale
- Offers access to profitable market opportunities for
small farmers
- Business success for Lead Firms depends on
establishing a predictable, consistent, and quality
supply of agriculture commodities grown by small
farmers
- Business prospects and success are
interdependent:
- The more successful the Lead Firm, the greater its
capacity to support and buy from its Out-Growers;
- Increasing Out-Grower capacities expands the
business opportunity for the Lead Firm
- Out-Grower Supply Chain creates competitive
advantage for the participants in relation to current
alternative
- Alternative: opportunistic, spot trading between small
farmers and traders/buyers based solely on price
Lead
Farmer
Lead
Farmer
End Customers
Small Farmers
allied to
Lead Farmer
Small Farmers
allied to
Lead Farmer
Lead
Firm
Embedded
“Sales
Agent”
(Organizer)
4. W
2
W 1
W 3
W 5
W 4
Aggregation across Trading
Embedded
“Sales Agent”
(Organizer)
Dynamic personalized trade,
direct communication with the
customer, rapid price control
W 4W 1
W 3 W 5
W
2
logistics batch, involved in the supply chain
Real process of the people, involved in the supply chain
Real process of the price, involved in the supply chain
W
2
W 1
W 3
W 5
W 4
W 4W 1
W 3 W 5
W
2
logistics batch, involved in the supply chain
Price 5
Price 4
Price 3
Price 2
Price 1
quality1
quality3
quality2
quality4
quality5Spec1Spec2
Spec4
Spec3
Spec5
pays the price
corresponding
to the goods
X
Price ?
purchase
amount
Ø Spec Σ
*Spec= specification
Ø Quality Σ !
Price to the final
consumer
≠ Ø Price Σ
No concept of "raw" . Product "at the input" is equal Product «to the output!» UHBDP
5. «Aggregation across Trading»
*Spec= specification
Life example
Embedded
“Sales Agent”
(Organizer)
ALLSALESCHANNELS
Embedded
“Sales Agent”
(Organizer)
6. + B
UHBDP
«B for Business»
• MEDA anticipates that small farmers
assisted by UHBDP will have collectively
expanded their horticulture sales to
50,000 metric tons valued
at $ 40 million annually
by the end of the Project.
!
7. ~W 1 ~W 1
~W 1 ~W 1
Aggregation across Business Development
~W 1
*Spec= specification for RAW
~W 1 ~W 1
~W 1
~W 1
~W 1 Business Development
~W 1 ~W 1
~W 1 ~W 1
~W 1 ~W 1
~W 1 ~W 1
~W 1 ~W 1
~W 1 ~W 1
~W 1 ~W 1
~W 1 ~W 1
transformation process
W1 W1
W1 W1
W1 W1
W1 W1
W1 W1
W1 W1
W1 W1
W1 W1
W2 W2
W2 W2
W2 W2
W2 W2
W3
W3
W3
W3
Aggregation RAW at RAW Spec
Production
fullunderstanding
ofsaleschannels
andtheirneeds
Grade 1, Q1, Price 1
Grade 2, Q2, Price 2
Grade 3, Q3, Price 3
Grade 1, Q1, Price 1
Grade 1, Q1, Price 1
open air markets
processing
Grade 3, Q3, Price 3
MarketDevelopment
8. Aggregation across Business Development (Price Side)
~W 1
~W 1
~W 1
~W 1
W1 W1
W1 W1
W1 W1
W1 W1
W1 W1
W1 W1
W1 W1
W1 W1
W2 W2
W2 W2
W2 W2
W2 W2
Grade 1, Q1, Price 1
Grade 2, Q2, Price 2
W3
W3
W3
W3
Grade 3, Q3, Price 3
open air markets
processing
~W 1
~W 1
Production
~W1~W1
~W1~W1
~W1~W1
~W1~W1
~W1~W1
~W1~W1
~W1~W1
~W1~W1
Specification for RAW
Tough price
for raw material
specification
Fixed-price Zone, include the costs of production, it depends entirely on the specification for Grade
Free Price Zone,
for any quality has its own customer
The buyer is fully knows
what the quality of product
he gets behind own money
…
…can plan production
…what the price will be fixed
at the price tag for fixed quality
Background for fresh F&V
Market Development
aggregate
volume
UHBDP
9. • MEDA anticipates that small farmers assisted by UHBDP will have collectively expanded their
horticulture sales to 50,000 metric tons valued at $ 40 million annually by the end of the Project.
• MEDA aims to establish 10,000-15,000 small private farmers in clusters and, in total, achieve 50,000 metric
tons of consolidated horticulture sales of valued at $40 million annual by the end of UHBDP. The Project will
benefit a total of 30,000 small private farmers with other services.
One of the Project objectives. A significant role VCD in this task.
«Working with Smallholders. A Handbook for Firms Building. Sustainable Supply Chains.» IFC, July 2013 UHBDP
10. • Aggregation - merging of equal set of parameters (type, grade, size, dry matter
content, degree of maturity and etc.) production of raw materials to the products of
farmers level, which later receives the added value chain and moves to the end
consumer ( e.g rice, cotton, coffee, cashew nuts, palm oil, more ...).
• For horticultural sector, it is important to have a source (farmer leader, cooperative,
trade company, etc.), which forms the specification for cultivation and subsequent
aggregation of raw material (fresh fruits and vegetables & other horticultural
products).
• It is crucial to create an array of businesses, that will be involved in its work SME`s,
who can provide these activity with raw materials for Aggregation.
Not a single the company,
which was involved in the
process,
should not be the LOST !!!
UHBDP
11. Responsible:
• VCD specialist
• Field Team ( recipients comp)
Key Factors:
• Real farming or trade business in F&V
• SME`s have a Management Team
• Firm capability
UHBDP Matching Grant, offered Logical Process scheme for Applicants:
Source: Matching Grant Guidelines & Lesson Learn from VCD side
SME`s from
horticulture
business
Normal annual
cycle for own
farm ore trade
Do your
have a
Business
Plan?
Signed memorandum about
cooperation with UHBDP
GO!
Business Plan
implementation!
NoEnough own
finance
recourses?
Decision:
• In this case SME`s only
with own working
capital have possibilities
for own development
• UHBDP provide for
SME`s another service
(education, training,
etc.)
• UHBDP help for him
make first step
• Revenue from this client
can be added to UHBDP
reference points
Field visit with full assessment
situation. Rough values of
Turnover & Budget BP
Clear determinate of
needed investment size for
BP, involved equipment
suppliers & building
company ( full Budget
process)
Yes
Matching Grants Program
(MPG):
Investment
Competitive
Awards
yes
No
SME`s clear determinate of
needed investment size for
rough BP
SME`s clear determinate of
own finance capital available
for this BP
Formalization 1 stage Business
Plan – make a Concept Note
Fundable
Concept
Note in
principle?
Receive &
Evaluate
Concept Notes
No
Finance
Diligence
Receive clear for ANY
investors finance figure:
P&L, Cash Flow ,EBITDA,
GM, CM, Net Rev, IRR, etc.
Proposaldirectionforsearchfinancesupport
MGP
Private Loan
Bank Loan
Internal &
external
investors
Foreign Project
Foreign
Support
Programs
VCD zone Finance zone
Investment Competitive Awards
Assets
Money
1:2; 1:3
~50-200 k USD
1:1
~10-50 k USD ~less 10 k USD
Yes
CLEARE DETERMINATE MATCH
OWN INVEST : FIN SUPPORT
Determinate & make full description
of mutual obligations & milestones for
Business Plan Development
Enough
own
finance
recourses?
Final Due
Diligence
Yes
No
Preparation & description of money
transaction procedures ( reimbursement
principle, stage in time, etc.)
TAX ANALIZE !!!
Contract
Signed
Determinate type of
Awards
UHBDP
Recipients
Legal & Accounting
specialist zone
Develop full
Business Plan
X
12. Documents, that generate information about Trade Turnover (client side)
Signed memorandum about
cooperation with UHBDP
Formalization 1 stage
Business Plan – make a
Concept Note
Receive clear for ANY
investors finance figure: P&L,
Cash Flow ,EBITDA,
GM, CM, Net Rev, IRR, etc.
Determinate & make full
description of mutual
obligations & milestones for
Business Plan Development
VCDzoneFinancezoneLegal&Accounting
specialistzone
level verification
LOW 50%,
60% info
Medium 65%,
30% info
HI! 100%,
10% info
Name doc Quantity/forecast
Turnover now
MT/ USD
Turnover FC
MT/ USD
Memo
Concept Note
Business Plan
Fin Model
Agreement
Contract
13. Priority areas to provide their own (UHBDP) Matching Grants.
#1
Lead Farmer
#3
Products for export
#2
Niche & experimental crops with high added value
