1. Scaling Productivity Improvement
Seas of Change Conference
David Rosenberg
Ecom Group Sustainability Advisor
April 2012

2. • Ecom
• Strategic intent
• How to get productivity gains
• Business models
• Keys and limits
• Optimism

3. Ecom Agroindustrial Corp, Ltd.
• Family-owned, 6th generation
• Coffee, cotton, cocoa, sugar
• 30+ countries
• “Origin integrated”
= physical trader, first buyer
= buying and primary processing in origin
= risk management

4. Strategic intent of
inclusive business model
Profitability throughout supply chain
 higher yields,
 better quality,
 lower costs
 higher farmer income
Preferred buyer from better farmers
Preferred supplier = differentiated products,
solutions
New barriers to entry for competitors
= sustainability of our own business

5. Productivity
Increasing yields, quality, farmer income
– Create more and better product, profitable farmers
Similar approaches world-wide
– Farmer engagement, organization
– Training  certification to UTZ, Rainforest, … ….
– Access to inputs, finance
– Better genetics, technologies
Unconventional partnerships
– NGO’s, Banks, Clients

6. Why Certification?
Why Certification?
 Demand-driven
 ‘Organizing principle’
- Organize un-organized farmers
- Improve farming practices
- Buyers reward farmers for good practices
- Communicate throughout the whole supply chain
First step to capture farmers’ attention
Certifying poverty or driving productivity??

7. “Sustainable Management Services”
• Within company, separate business unit or NGO
• Farmer Training
 Agronomy and business practices
+ Weather and price data
+ Access to inputs, equipment, services
• Keys:
– Year-round up-country presence
– Link agronomy, finance, procurement
– Develop in-house expertise
– Transparency

8. Farmer training model
• Keys: SMS
– Frequent farmer contact
– Maximum possible responsibility SMS Field
Manager
at farmer organization
SMS Production
Officers
• Limitations
– 50 farmers per trainer Promoter
Farmers
– Training methods, low tech
– “Telephone game”
= declining quality of message
Smallholders
– High cost of reaching farmers
– Who is responsible for what? Quality teams
Auditor

9. Achieving productivity gains
Training  Business skills
Inputs  Farmer Field School
= 50 farmers per trainer
Genetics
Finance
 Expensive, needs finance
 Expensive,
 needs multi-year finance
+ investment R&D
 Risky, needs risk-sharing

10. Some data
• Kenya
85,000 coffee farmers via our trainers
165,000 farmers sell through SMS
• Uganda 31,000
• Tanzania 5,000
• Mexico 8,000
• Ivory Coast
11,000 cocoa farmers, 20 cooperatives,
• Latest Total: about 175,000 farmers

11. SMS Training in Kenya

12. Innovation in Kenya
Composting Biodigester

13. Ecom-IFC-Nespresso Central America
Farmers Reached - IFC-Ecom projects, Jun-07 to Dec-13 Sales Revenue Generated (million US$) - IFC-Ecom projects, Jun-07 to Dec-13
40,000 16.00
35,000 14.00
30,000 12.00
25,000 10.00
20,000 8.00
15,000 6.00
10,000 4.00
5,000 2.00
- -
Actuals Targets Actuals Targets
Sustainably Used Land (hectares) - IFC-Ecom projects, Jun-07 to Dec-13 Farmers Certified - IFC-Ecom projects, Jun-07 to Dec-13
35,000 20,000
30,000
15,000
25,000
20,000
10,000
15,000
10,000 5,000
5,000
- -
Actuals Targets Actuals Targets

14. Genetics: breeding partnership with CIRAD

15. Ecom Tajik Agronomy Team

16. Seed innovation

17. Challenges to productivity
• Which sustainable ag model to scale?!
• Expensive to reach farmers
– Who pays?
– Who does?
– How can we innovate? Radio, phones, ipads?
• How to build human capital
– Expensive and scarce
– Easy to steal New business model
• Difficult countries
– High risk Risk sharing ?
• Measuring productivity

18. Reasons for optimism
• Business training
• Training women
• “Sum of parts” approach
– Multiple income streams
– Integrated farming
• Technology getting cheaper
– Phones, hand-helds
– Information systems