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LINKING WORLDS: EXISTING FRAMEWORKS




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

        Can we help companies                                          Can we help farmers
        source down a level?                                              move up a level?


        Can benefits trickle down?              1-2% are the commercial farmers
                                                (2% of farmers account for 50% of maize sales)

            Can they compete with                         3-15% are regularly selling into markets
                     commercial?
   Can we integrate VC with food                                       20-30% are occasionally connected to
     security and local markets?                                       markets and are food buyers

Low barrier cash crops, transition                                                 40-50% are subsistence
     strategies, basic agronomic                                                   producers, buy in food,
                  improvements?                                                    get most cash from off
                                                                                   farm work.
Source: Seville, Don. Sustainable Food Lab for Linking World Conference.
ELEMENTS FOR INCLUSIVE
                  BUSINESS MODELS

  Capable farmers                                              Willing buyers
 (skills, capacity &                                           (private sector
       organization)                                                  policies)



      Enabling environment
      (public / donor policies)


                                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
                          Implement, validate        Produce results that are
for innovation.
                          and evaluate               equitable, viable,
                          interventions that are     feasible, durable and
                          inclusive of small-        inclusive.
                          holders.
                                                     Facilitate a systematic
                                                     learning process.
the market   on critical   the existing   the change   the innovation   test, adjust,   and measure
chain        points in     business       strategy     prototype        improve the     results and
             the chain     model                                        interventions   impacts
THE PRODUCTION SIDE:           THE MARKETING
comprises the set of             comprises the
activities, mechanisms        activities, mecha
and relationships for           and relationshi
providing a good or               selling that go
 ervice, in other words            service, or in
 or creating value. The           words for cap
partner network -- the                  value. Br
 upply chain and its                     speakin
coordination – is a vitally         production s
 mportant source of             associated with
competitive advantage.           while the mar
                                        side gene
                                    revenues, th
                               marketing also e
ANALYZE THE EXISTING BUSINESS MODEL
The resolution of      For farmers and         Fair and               One of the special      New business          The business
problems, in both      their organizations,    transparent            challenges faced        models promote        axiom states that
the commercial and     market                  governance refers      by small-scale          innovation by         you cannot manage
social performance     linkages should         to the                 producers is the        multiple actors       what you do not
of new business        provide a stable        establishment and      lack of access to       along the chain in    measure. Our sixth
models requires all    market with clear       enforcement of         services such as        products and          new business
or most chain          quality, volume and     clear and              finance, market         services as well as   model principle is
actors set shared      price signals as        consistent grades      information, and        the processes that    to incorporate
goals                  well as access to       and                    best agronomic          underpin both.        tailored indicators
for collaboration.     key services            standards, clear       practices that could                          and monitoring
The development        (Principle 4). These    commitments to         improve                 Innovations should    plans to assess the
of a systemic view     linkages must           buy and sell certain   quality, yields, food   be done ‘with’        health of the on-
of the chain           contribution to         volumes of certain     safety, and             smallholder           going trading
recognizes and         improved                grade products at      environment             farmers, rather       relationship as a
values the             livelihoods. For        certain times, and     performance.            than ‘for’ them.      for-profit business
interdependence of     buyers, solutions       equitable                                      Inclusive access to   and also its
the actors.            must provide a          processes of risk      Successful              innovation provides   effectiveness as a
Reaching and           consistent supply       management.            solutions enable        a means to remain     vehicle for
implementing           of safe, quality                               smallholders to         competitive in        community
agreement often        products at a           Mutually               access                  dynamic markets,      development.
involves               competitive price.      recognized             credit, knowledge,      build the
identifying one or     The achievement of      interdependency         technology, and        commercial value      Constant
more champions         both producer and       between chain          develop incentives      of goods and          monitoring of the
to lead the process.   buyer goals in          actors is key.         that                    services; and,        health of the
                       practice requires       Shared                 encourage               share innovation      trading relationship
                       the delivering social   commercial risk        producers to invest     gains among           reduces the risk the
                       and commercial          and insurance          in their own            partners all of       minor problems will
                       value up and down       against failure are    production based        which builds          destroy the

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Ensuring greater local spin off from global value chains, CIAT

  • 1.
  • 2. LINKING WORLDS: EXISTING FRAMEWORKS Source: Seville, Don. Sustainable Food Lab for Linking World Conference.
  • 3. “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? Can we help companies Can we help farmers source down a level? move up a level? Can benefits trickle down? 1-2% are the commercial farmers (2% of farmers account for 50% of maize sales) Can they compete with 3-15% are regularly selling into markets commercial? Can we integrate VC with food 20-30% are occasionally connected to security and local markets? markets and are food buyers Low barrier cash crops, transition 40-50% are subsistence strategies, basic agronomic producers, buy in food, improvements? get most cash from off farm work. Source: Seville, Don. Sustainable Food Lab for Linking World Conference.
  • 4. ELEMENTS FOR INCLUSIVE BUSINESS MODELS Capable farmers Willing buyers (skills, capacity & (private sector organization) policies) Enabling environment (public / donor policies) NEW BUSINESS MODELS FOR SUSTAINED TRADING RELATIONSHIPS Adapted from www.regoverningmarkets.org by CIAT
  • 5. THIS TOOLKIT IS DESIGNED TO help a group of market chain actors and stakeholders: Discover opportunities Implement, validate Produce results that are for innovation. and evaluate equitable, viable, interventions that are feasible, durable and inclusive of small- inclusive. holders. Facilitate a systematic learning process.
  • 6. the market on critical the existing the change the innovation test, adjust, and measure chain points in business strategy prototype improve the results and the chain model interventions impacts
  • 7.
  • 8. THE PRODUCTION SIDE: THE MARKETING comprises the set of comprises the activities, mechanisms activities, mecha and relationships for and relationshi providing a good or selling that go ervice, in other words service, or in or creating value. The words for cap partner network -- the value. Br upply chain and its speakin coordination – is a vitally production s mportant source of associated with competitive advantage. while the mar side gene revenues, th marketing also e
  • 9. ANALYZE THE EXISTING BUSINESS MODEL
  • 10.
  • 11. The resolution of For farmers and Fair and One of the special New business The business problems, in both their organizations, transparent challenges faced models promote axiom states that the commercial and market governance refers by small-scale innovation by you cannot manage social performance linkages should to the producers is the multiple actors what you do not of new business provide a stable establishment and lack of access to along the chain in measure. Our sixth models requires all market with clear enforcement of services such as products and new business or most chain quality, volume and clear and finance, market services as well as model principle is actors set shared price signals as consistent grades information, and the processes that to incorporate goals well as access to and best agronomic underpin both. tailored indicators for collaboration. key services standards, clear practices that could and monitoring The development (Principle 4). These commitments to improve Innovations should plans to assess the of a systemic view linkages must buy and sell certain quality, yields, food be done ‘with’ health of the on- of the chain contribution to volumes of certain safety, and smallholder going trading recognizes and improved grade products at environment farmers, rather relationship as a values the livelihoods. For certain times, and performance. than ‘for’ them. for-profit business interdependence of buyers, solutions equitable Inclusive access to and also its the actors. must provide a processes of risk Successful innovation provides effectiveness as a Reaching and consistent supply management. solutions enable a means to remain vehicle for implementing of safe, quality smallholders to competitive in community agreement often products at a Mutually access dynamic markets, development. involves competitive price. recognized credit, knowledge, build the identifying one or The achievement of interdependency technology, and commercial value Constant more champions both producer and between chain develop incentives of goods and monitoring of the to lead the process. buyer goals in actors is key. that services; and, health of the practice requires Shared encourage share innovation trading relationship the delivering social commercial risk producers to invest gains among reduces the risk the and commercial and insurance in their own partners all of minor problems will value up and down against failure are production based which builds destroy the

Editor's Notes

  1. For projects that work with private sector partners, we often work at the value chain level to promote trade between groups of producers needing new or improved trade and companies needing more or improved supplyWhen working in value chains, it is important to understand the actors and how the create assets for your work or challenges. Who are your key partners? What are their goals and constraints? Who do we need to recruit as a partner? Who is neutral that just needs to be informed? Who is a blocker that needs to be managed?There are many different entry points – starting with farmers and looking for a buyer. Starting a with new intermediary. Starting with a lead firm. In the cases of working with a business partner, a good first step is to really understand what the product opportunity is. What are the requirements – cost, quality, etc – that the farmers need to meet to be successful? Is the farmer story important to the product proposition?Next is understanding the capacity gap between the current farming and processing performance and what would be needed to be successful. What investments are needed? Is this a reasonable and achievable gap? How can the partners work together on this?Next is the structure of the trading relationships. It is not just about a sourcing opportunity – but an inclusive, durable, and fair one. Looking to the business model principles, are there needs and opportunities around collaboration? Market linkages? Transparency and risk sharing? What services are needed by the farmers and the intermediary?A typical weak point in inclusive business models is the “specialized intermediary” – the business that is sourcing from small scale producers and having to meet the souring requirements of modern fast moving supply chains. Understanding whether the requirements can be met, and whether the basica business model -- including he costs of services to promote and sustainable inclusive – can be carried by the value proposition is critical.Finally to increase impact and reduce risk means investment at the household level. A single value chain should be one of a number fo strategies…
  2. NEED SLIDE: Objective_ buildsustainabletradingrelationships. How: Discover, design do. (use photo)
  3. descriptions and outcomes.