Vredeseilanden/VECO puts inclusive business on the agenda in Nicaragua

Vredeseilanden/VECO puts inclusive business on the agenda in Nicaragua

Chris Claes
Chris Claes
Executive Director of Rikolto (International)

On 25 and 26 September I had the unaccustomed honour of giving a presentation at the annual conference of APEN, the Association of Nicaraguan Exporters and Producers, on what we at Vredeseilanden/VECO mean by the phrase ‘inclusive business’. Why do we think it is so important for food companies to ensure that their business model includes small-scale or family farmers? Held annually during the APEN trade fair, the conference took ‘green marketing’ as its theme this year. VECO Mesoamérica, our Central American country office, had got together with a few partners to organise a half-day session on the subject of inclusive business.

All participants in the supply chain needed

Some 120 professionals from the Nicaraguan business world and civil society and representatives of farmers’ organisations gathered at the conference to learn how cooperation in the supply chain might work in practice. Because it’s not just about inclusion of farmers – that’s only one aspect of the cooperation that’s needed within the chain. You have to constantly adapt your products to rapidly changing consumer preferences, to food safety requirements and increasingly also to sustainability demands. To do this while remaining competitive, you need to have all of the participants in your supply chain pulling together – and that includes the people who actually grow the raw materials. As part of Vredeseilanden’s programmes in Africa, Asia and Latin America, in recent years we have worked with partners such as the international research centre CIAT on developing methods and tools to help structure that cooperation. It is then a question of how you as a company can organise your business model, or more specifically your purchasing policy or purchasing practices, so that you can forge long-term relationships with producers. In this way, you give farmers the opportunity to invest in sustainability, quality and productivity and you involve them in the process of product development. Building trust between agricultural producers and companies is the key here. Companies rely on a steady supply, high productivity, top quality and sustainable production. Agricultural producers rely on such things as long-term agreements, fair prices and a dialogue about terms and conditions.

Direct relations

The APEN conference also featured two panel discussions about how this kind of cooperation plays out in practice. Ritter Sport, a German chocolate maker, buys its A-quality cocoa in Nicaragua from 19 local farmers’ cooperatives. Our country office supports the collaborative venture between Ritter Sport and the 200+ members of the Cacaonica cooperative. Ritter Sport has adjusted its business model and now, for example, pre-finances up to 40% of purchases and supports the cooperative in fermenting and drying the cocoa in its own facilities. Manfred, Ritter Sport’s General Manager in Nicaragua, says that Ritter Sport buys 90% of its cocoa on the world market, and only 10% directly from farmers’ cooperatives. ‘But the way we work with the cooperatives in Nicaragua points the way for us to gradually increase the percentage of cocoa supplied by farmers’ cooperatives.’

Steady supply guaranteed

The second panel discussion brought representatives from Walmart Nicaragua, farmers’ cooperative Coosmprojin and Vredeseilanden/VECO together on the stage. They explained to the audience how the business models of both the supermarket chain and the farmers’ cooperative changed so much over just a few years that it became possible for the cooperative to provide Walmart with a steady supply of top-quality vegetables. Contracts are in place, Walmart has given technical assistance to the cooperative and the cooperative has developed cropping plans that are better tailored to the supermarket chain’s requirements. The cooperative now supplies better-quality vegetables in greater quantities on a continuous basis. This is a major step forward, according to Marlon, the Walmart representative: ‘We used to import nearly all our fresh vegetables from Guatemala. More than 80% of the produce we now sell is locally sourced from Nicaraguan farmers, and we want to make it 100%. That’s a bit more difficult to achieve in a cooperative arrangement with small farmers, but we’re determined to go for it.’ I have to say I felt really proud sitting there listening to all this. Proud to hear and see how my colleagues are managing to put inclusive business firmly on the agenda of the Nicaraguan food industry.

(Photo credits: VECO Mesoamérica and APEN)