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Building Your Inclusive Agribusiness
Publicado el: 14 - agosto - 2017
How partnering and technical innovation create value locally and help you to build a profitable and inclusive agribusiness.
In 2016, 2SCALE organized its first bootcamp on inclusive business marketing. At the bootcamp participants learned how to establish inclusive small and medium enterprises (SMEs) that increase profit and have a positive impact on communities at the base of the pyramid. In the next bootcamp 2SCALE will share practical tools and methodologies so farmers can improve their technical operations and strengthen their business relationships with local business actors.
Farming as a business: technical innovation requires interactive learning
“Where to obtain quality seeds? Which fertilizer to use? What pest management to apply? How to access and apply mechanisation equipment X?” At first, these important questions that smallholder farmers ask themselves when they aim to create value for a market seem simple and straightforward. However, the answers are far from simple. They might also be less ‘technical’ than they might first appear to be.
These questions deal with relational and organizational matters and specific soft skills, like: How do I access and apply fertilizers in a cost-efficient way? How do I negotiate better prices for these quality seeds, fertiliser and for my produce that has improved in quality with the help of technology Y? Or, how do I arrange viable interest rates on my agro-input credits at local banks? The answers to these questions involve collective rather than individual action: joint organisation, coordination and interactive learning. As long as smallholder farmers do not jointly learn-by-doing and are not collectively organized and coached on relational capacities, the implementation of technical improvements alone will not make business sense.
Take Sylvie, for example, she manages a pineapple farm of about 7 ha in Benin. At the start she faced two challenges common to pineapple producers: (1) the high cost of farm labour for jobs such as weeding and (2) the high cost of fertilization of her pineapple plots. In response to these challenges, 2SCALE introduced learning plots and involved Sylvie and 1,903 other pineapple producers in a collective learning exercise. Lead producers were responsible for the daily monitoring of the learning plots. To facilitate dissemination of technical innovations to other producers, guided tours were organized at significant stages of the production cycle.
Regarding fertilizer application, the learning plots showed that while high doses of NPK fertilizers obviously produce significant higher yields, they alsoaffect the quality of fruits resulting in sugar levels below the standards required by the main buyer Promo Fruits. Economic analysis showed that this practice of fertilization was very expensive and barely compensates for the investments that were made. However, an alternative was introduced. With the use of this substitute – a combination of pineapple residue, neem cake, sulphate of potash and urea super-granules – yields increased by up to 85% and at a lower cost. It also resulted in high quality fruits that meet the requirements of Promo Fruits in terms of sugar rates and aromas.
How technical and relational innovation creates value for all
Many of the key issues in inclusive value chains are related to business relationships between farmers and their local business partners rather than technical matters, like: price and contract negotiations, payment arrangements etc. Therefore, market driven value creation not only requires technical improvements but, even more importantly, better coordination and collaboration at different stages of the value chain.
In 2SCALE’s bootcamp we will elaborate on this and explain how Agribusiness Clusters (ABCs) play an instrumental role in the brokering of business relationships, the coordination of local actor networks, trust building, coaching on negotiation skills but also the strengthening of (new) competitive strategies. You will learn how ‘ABC coaches’ are in charge of the overall coordination of such support services and play a central role in different forms of capacity development at the local level.
The formation of ABCs and the business services of ABC coaches have been essential for pineapple producers like Sylvie in Benin. They worked together to improve weed control and jointly experimented on with plastic film on learning plots. This experiment resulted in an increase in pineapple yield by more than 50%, and saved on labour costs for weeding.
Although plastic foil is a rather simple technological improvement to implement, most farmers did not adopt it until they through the coaching provided by 2SCALE learned (1) to collectively purchase the foil and new type of fertilizer and (2) to negotiate better prices for their higher-quality pineapples. Consequently, their relationship with the off-taker Promo Fruits improved and interest rates at local banks on loans for inputs and credit services dropped from 22% to 9%. The combination of technical and relational innovations has resulted in profitable pineapple businesses for the farmers and the pineapple juice processing company Promo Fruits.
At the heart of 2SCALE
Business relationships between farmers, value chain actors (input supplier s, farmers, processors or traders) and business services (banks or local transporters) require active support and facilitation. This lies at the heart of 2SCALE’s work. Building these relationships are not the goal itself, but they provide the conditions necessary for farmers to (i) innovate through joint learning, (ii) access new services and finance, (iii) develop capacity to monitor market trends and anticipate on them through competitive strategies and (iv) engage in realistic negotiations with larger processors or aggregators. Practical examples from 2SCALE partnerships from the nine different program countries will be used in the upcoming bootcamp to illustrate how this has worked in the 2SCALE context.
Structure of the bootcamp
The following topics will be addressed in 4 interrelated modules that you can follow at your own convenience over a 4-week period from September 4th until October 1st.
- Value Creation: learn about the technical and relational implications for smallholder farmers, as well as the network they operate in, when striving to meet market demand;
- Innovations in Farming: learn how to strengthen your supply chains and increase returns to local farmers and SMEs by introducing innovations, based on needs assessment;
- Access to Finance: learn how to secure access to finance in your value chains by building innovative financing solutions at farmer and SME level;
- Agribusiness Clusters: learn how to maximize local value creation by effectively organising local farmers, ensuring innovation and competitiveness and empowering agribusiness cluster actors.
Each module consists of videos, background reading material and an assignment. During each module there is as room to interact with other course participants. Experts are also active on the forum and will provide feedback on assignments.
- Entrepreneurs in developing countries who would like to expand or improve their business for and with low-income communities;
- Representatives of farmer organizations;
- Staff of intermediary organisations working with local entrepreneurs, such as NGOs, business development services or investors;
- Students in business related fields who would like to learn about the potential and practicalities of being inclusive business entrepreneurs.
You can register at: https://iba.ventures/building-your-inclusive-agribusiness/