Recently Vredeseilanden has become a member of the Sustainable Food Lab (SFL), a network that has the mission to accelerate the shift of sustainable food from niche to mainstream. More information can be found on their website.
One of the flagship programs of the Sustainable Food Lab and a program that is very complementary with the Vredeseilanden programs is the 'New Business Models for Sustainable Trading Relationships' program.
In his 2009 World Food Prize speech, American business magnate and philanthropist Bill Gates said that, “Helping the poorest smallholder farmers grow more crops and get them to market is the world’s single most powerful lever for reducing hunger and poverty.” Indeed, he is right. Small-scale farmers—whose output supports a population of roughly 2.2 billion people—manage roughly 85% of the world’s farms. Agriculture provides livelihoods for an estimated 86% of rural people and creates jobs for 1.3 billion smallholders and landless workers.
Linking these smallholders to markets provides benefits far beyond the increased income they so badly need. Participation in new markets means investments in rural infrastructure, increased productivity, and enhanced trading relationships that create stable social and economic networks that many of the world’s rural poor are lacking.
Engaging small-scale farmers goes against market trends. No doubt it is simpler for a company to purchase from a few large producers rather than hundreds of individual smallholders. Yet smallholders present companies with many opportunities to strengthen their business practices.
By incorporating rural smallholders into the supply chain, companies can diversify their sourcing, thereby increasing the stability of their supply. If we are to prepare to feed the world’s 9 billion inhabitants by 2050, we must consider smallholders as alternate sources of supply.
Likewise, sustainability practices and commitment to social accountability strengthen a company’s brand. More than ever, consumers are demanding sustainable business models and supply chain transparency.
Funded by the Bill and Melinda Gates Foundation, the New Business Models for Sustainable Trading Relationships project—a collaboration between The Sustainable Food Lab, Catholic Relief Services, the International Institute for Environment and Development (IIED), Rainforest Alliance and the International Center for Tropical Agriculture (CIAT)— set out to determine the most successful models for connecting rural, smallholders to stable markets.
The four-year project (2008-2012) provided some key learning about business model innovation with smallholders. These include: The idea that certification—when coupled with strong demand and capacity building—can bring income benefits to farmers at scale. There remains ample opportunity to explore ways to increase the effectiveness of practices intended to boost productivity and smallholder benefits, and to better measure impact over time.
Our dried bean value chain project in Ethiopia showed that pulses can be a valuable source of income when they are part of a diverse farm system at scale. (We reached 15,000 farmers directly through the project, and an additional 45,000 through private sector seed loans.) Yet volatile weather and the complex market system made direct and consistent trading relationships very challenging. The project team concluded that continued investment in seed systems, market information systems to build buyer confidence, and information systems to track technology adoption and impact at the farm level, are worthwhile.
Our work in smallholder flowers from Kenya demonstrated the crop’s potential to add considerable value and market share through direct service to retail. The project clearly underscored the high level of capacity needed to succeed in direct retail sales. A commercially sophisticated "ethical agent" was key to facilitating these relationships and building supplier business capacity. Flowers are continuing to sell well at Sam’s Club. Additional UK-based retailers are exploring sales potential as well.
The fine flavor cocoa project successfully engaged the industry and the Ghanaian government and introduced new practices around cultivation, grafting, and quality management. The project illustrated the fundamental challenge of development projects with a significant research component. It took much longer than anticipated to identify cocoa varieties, propagate them, and create a successful market test. The critical next step is to support the farmers through to a commercial harvest (when traders can take over). We must also focus on scaling this work up to bring the benefits of the new technology and practices to Ghana’s mainstream cocoa sector.
The central concept of developing a consistent set of New Business Model principles proved to be a useful framework for engagement and organization. Supply chain coordination, service provision (technical assistance, credit, inputs, seed), and effective market linkages were clearly critical to the success of the projects.
The work that the New Business Models for Sustainable Trading Relationships project kicked-off continues in Sustainable Food Lab community. The primary focus at this point is on measuring impact, testing ways to link smallholders to markets and collecting cases, tools and methods. The new case study reports will be announced over the next few weeks, the first of which can be found in a blog post by IIED’s Abbi Buxton: How Markets Can Bloom for Smallholder Farmers. Other similar resources, including a practitioners guide developed by Mark Lundy at CIAT, are available at the Linking Worlds website.
Other papers in the series are:
- Branding Agricultural Commodities: The development case for adding value through branding
- Information and Communication Technologies for Development
- Commodity Exchanges and Smallholders in Africa
- Sourcing Gender: Gender productivity and sustainable sourcing strategies
- Under What Conditions Are Value Chains Effective Tools for Pro-Poor Development?
- Think Big, Go Small: Adapting Business Models to Incorporate Smallholders into Supply Chains