The document provides an overview of tools and methodologies for building inclusive and sustainable trading relationships between small-scale producers and modern markets. It introduces the LINK methodology, which uses participatory tools like value chain mapping and business model canvassing to understand market systems and design innovations. The goal is to bridge the disparate worlds of smallholder farming and emerging market opportunities in a way that promotes fairness, transparency and access to services while reducing risks for producers.
2. THE GOAL OF THIS TOOLKIT
is to build inclusive and sustainable
TRADING
RELATIONSHIPS
linking small-scale producers to modern markets
The LINK methodology will help you understand the current functioning of the market chain and key business
models, design innovations that empower producer groups to engage more effectively and buyers to act in ways more
amenable to small holder farmers. At the end of the day, this method seeks to build bridges between the often disparate
worlds of small holder farming in the developing world and emerging market opportunities both in the global south as well
as developed economies.
2
3. MAPPING BUSINESS MODELS AMONGST OTHER DEVELOPMENT APPROACHES
PRODUCT VALUE PROPOSITION?
What are the key elements of the
product value proposition?
Variety, quality, ethical story, etc.
LIVELIHOOD STARTEGY UPGRADING STRATEGY BUSINESS MODEL INCLUSIVE AND DURABLE
What is needed at the What is needed at the farm Is there a viable TRADING RELATIONSHIPS?
household level and and processing level to business model for the Can we improve supply chain
agriculture system level meet the product intermediary that coordination? Market
to increase gains and requirements and to include supports the services linkages? Fairness
reduce risks? asset poor farmers? needed for inclusive , transparency and risk?
sourcing? Access to services?
3
Source: Seville, Don. Sustainable Food Lab for Linking World Conference.
5. Our goal is NOT to link the poorest farmers to the most demanding
markets but to invest in moving farmers up and make markets more
accessible
1-2% are the commercial farmers
(2% of farmers account for 50% of maize sales)
3-15% are regularly
selling into markets
20-30% are occasionally connected to
markers and are food buyers
40-50% are subsistence farmer (e.g. maize), buy in food, and get
most cash from off farm work.
5
Source: Nicholas Sitko, Michigan State University. Study presented at the Agro-Enterprise Learning Alliance for Southern and Eastern Africa.
6. THE PATH TO
INCLUSIVE INNOVATION
uncertainty/patters/insights clarity/focus
Solicit input Analyze Focus Plan Design & test
This toolkit will walk you through an innovation process based on a set of participatory tools adapted from
value chain analysis, business model assessment, prototyping and related fields. The methodology is
grounded in a set of emergent principles that have shown to be effective in supporting long-term sustainable
trading relationships between small-holder farmers and formal markets. At the end of the process you will
have succeeded in understanding the relationships between specific business models and the overall value
chain; identified critical areas for improvement; designed, implemented, evaluated and improved innovation
prototypes; built an improved business model; and, evaluated the effects of these changes on smallholder
farm families and the business itself. 6
7. 3 PERSPECTIVES
“I have a mission
“I am seeking to
to support small-
expand my supply
farmers through
chain to include
service provision
small-holder
and coordination
“I am looking farmers”
with buyers”
to sell my
product better
to buyers”
NGO BUYER
FARMER
7
8. Sources of inclusive innovation
PARTNER NETWORK
CHAIN ACTORS
Market Value Chain
System
UPGRADING
STRATEGY Farmers Aggregation/ Markets
Processing
External
Environment Feedback/Adjustment
TRADING LEAD FIRM MODEL
MODEL
9. WHAT TOOLS CAN WE USE
TO DETERMINE AREAS OF INNOVATION WITHIN MARKET CHAINS?
Business Model
Value Chain 2
Map 1 Canvas
New Business
3 Model
Prototype Principles
4
Cycle
9
10. Roadmap “I am just looking for a baseline to
business is happening
Understand the basic
(2) Framework for a snapshot of today’s
identify bottlenecks and opportunities’’
context in which the
(1) Analyze functioning of a specific
‘’I am looking for a participatory
situation and tomorrow’s vision.
toolkit to enhance inclusiveness for KEY TOOL # 1:
organization including up and
Purpose:
small holder farmers.’’ Value Chain “I want to zoom in and
downstream connections
Map focus on one important
business link”
Key questions: KEY TOOL # 2:
Who are key actors and what are their roles?
Purpose:
How do products, services and information Business
flow through the chain?
Who are (potential) partners?
Model Canvas
ADD-ON # 1: Key questions:
How can I understand the functioning of a
Drivers, trends and key implications specific link in the value chain?
“I need help in identifying critical points and opportunities’’
‘’I don’t know where to focus the BM Analysis’’
“I have got an inclusive innovation idea and just
need help with the implementation’’
ADD-ON # 2:
the inclusiveness of
“I want to measure
NBM Typologies
my business’’
‘’ I want to understand typical
through rotative up-scaling
Improve inclusiveness and performance
Purpose:
KEY TOOL # 4: characteristics of inclusive businesses’’
Prototype “I want to improve
Cycle inclusiveness through
innovation ”
Key questions:
a wider social context
Enhance efficiency within
Purpose:
KEY TOOL # 3:
How can I move from theory to action?
How can I incorporate innovation ideas in a NBM
work plan?
PRINCIPLES “I want to design a new
business under inclusivity
aspects’’
Key questions:
How inclusive is the business?
How to identify areas for change?
12. THREE LEVELS OF VALUE CHAIN MAPPING
Understand how the
different business links
function together as a
system
Identify and assess the
relationship, leverage points, capacities
and resources of partners including
Understand the context in which the system operates support services and stakeholders
12
14. Or like this...
STRAWBERRY CHAIN, MEXICO
Adapted from “Chain-Wide learning for Inclusive Agrifood Market Development: A guide to multi-stakeholder processes for linking small-scale producers to 14
modern markets.” Sonja Vermeulen, Jim Woodhill, Felicity Proctor, Rik Delnoye. IIED, Wageningen International and Regoverning Markets, 2008
15. Or even like this one!
INPUT STRAWBERRY MARKET CONSUMER
SUPPLIERS STRAWBERRY GROWERS PROCESSORS
US external market
High Technology Export • Driscoll mainly
PLANTAS Large Producers 23-28%
• Between 12 to 50 acres of land • Window of 80 to 90 days Importation
MADRES • 150 to 225 MT acres 4,760 a 5,950 MT Nov to Feb.
• Production technology::
• Imported from • $ 5 a 7.5 k • 44 to 5,000 k/daily
- Traditional 2%
U.S. • 67% export.
- Medium13%
• Royalties paid in • 33% Industry
- High 85% National distributors
cash from parent Fresh Formal National
• Large landowners • Gaitan, Gutiérrez
plants. 28-42%
• Do not depend on each harvest for their 30% • 65,000 to 97,500 k/day
• Formal Importers- 5,850 a 8,775 MT Informal
Eurosemillas, S.A.
living. 20% 21,037 MT
• They hire a lot of workers 35%
, la Unión Agrícola
• The majority applies BPA
14,024 MT 7,312 a MT
Regional de
• 5% of the total population are large Industry leader
Productores de
producers Flow • Agrana, Frexport y Wholesale markets
Fresas y
• Informal Market Profusa. • CEDA México
Hortalizas del
• Undifferentialted • Products: IQF, bases for • Other states across
Valle de Medium Technology product, not yogurt y jams. the country
Zamora, processin Medium-scale Producers • 85 to 100 MT acres. sanitized(water). • Process between 10 and
g companies. • Between 5 to 10 acres of land • $ 3.75 a 4.29 k • Cash 12,000 MT/ ano for each.
• Applied production technology: • 10% export. • 130,000 kilo/day
-Traditional 80% • 90% Industry
- Medium 20% Processors in
Production of strawberry (70,122 ton, 2005)
Purchase Price
US$ 220 / box of 1.000 - Farmers and their families are involved Irapuato
Leaders
plants (royalty US$ in the work, plus additional external • Congelador El Niño
53-61% Large-scale fruit
150/box) labor force is contracted. • Congelador del Río
26 a 30 MT processors
Needs: 1 box per acre of - Important income source to sustain 50% • Duarte
strawberry. • 5 companies • Agriamericana
livelihood but farmer have other income 35,061 MT
Including freight and • Work closely with industry • Mexfruit.
nursery, cost. US$ sources.
leader
1.000/Ha. - Few application of BPA, for those who
do not have problems with water quality Industry Supermercados
- 60% of the total population are medium 70% Costs
scale producers . • 0.69 p/kilo
Other inputs - There numbers are stable. 49,085 MT • 1 p/k admin.
Group GYC
• Agrochemical • 0.15 a 0.30 earned/k
stores National industrial
• Inputs include: Traditional Technology customers
Medium industry
- Fertilizers • 50 to 60 MT acres • Yogurt
dynamic • Cookies
- Pesticides • $ 5.6 a 7 k • 9 companies
Small-Scale Producers Dynamic • Jam
- Foliar • 10% export. • Mainly family capital
• Between 0.8 to 5 acres of land 19-21% • Jugos
• Technology • 90% Industry • Frozen strawberries in
• 100% of traditional production 9.5 a 10 MT • Paleterias
- Drip irrigation various forms
technology
systems, fertigat • Develop new products and
• Family work, but hire labor for harvest.
ion, plastic markets International clients
• Highly dependent on each harvest for
mulch
sustaining their livelihood. • Fruit bases
greehouses
• Very few apply BPA, b/c of rolling water • Frozen fruit
30% Costs
hole or river water quality problems.
• Represent 35 % of total population
21,036 MT • 4.47 /k processing
• Final costs 11.01/k Other clients US
Medium industry
Brokers US
traditional
• Interamerican
• 11 empresas
Tradicional • Capital principally from
80% Quality Foods
18-28% • JSO Associates
ejidal
9 a 14 MT • Rigby Foods
• Frozen strawberries in
Adapted from Lundy, M. “Análisis del Sistema Producto Fresa en el Valle de various presentations
Zamora, Michoacán, México”, in Berdegué, J.A., Sanclemente, X. (eds). 2008. La Fresa en
• Traditional products and
markets 100%
15
Michoacan: Los Retos del Mercado. SAGARPA, Michoacán, Mexico.
18. THE BUSINESS MODEL CANVAS
4 AREAS
9 BLOCKS
HOW? WHAT? WHO?
HOW MUCH?
18
Osterwalder, 2010 Adapted from: www.businessmodelgeneracion.com
19. THE BUSINESS MODEL CANVAS
4 AREAS
Key activities Customer 9 BLOCKS
relationship
Value
Partners proposition Customers
Key Resources Channels
Cost structure Revenue Streams
19
Osterwalder, 2010 Adapted from: www.businessmodelgeneracion.com
20. ADAPTING BUSINESS MODELS
THE PRODUCTION THE MARKETING
SIDE: SIDE:
comprises the set of comprises the set of
activities, mechanism activities, mechanism
s and relationships s and relationships
for providing a good for selling that good
or service, in other or service, or in other
words for creating words for capturing
value. The partner value. Broadly
network -- the supply speaking, the
chain and its production side is
coordination – is a associated with costs
vitally important while the marketing
source of competitive side generates
advantage. revenues, though
marketing also entails
costs.
20
22. DOUBLE-FACING
VALUE PROPOSITION
FOR INCLUSIVE BUSINESS MODELS
CLIENT-FACING FARMER-FACING
Is there assurance of supply, safety What
and quality? Do the products tell a products, strategies, activities or
story? Support the brand? purchasing practices can promote
Differentiate your client in the smallholder inclusion? Are we a
marketplace? preferred buyer?
23. From Value Chains to the Business Models
“The value chain map
is the high level view
on the system and the
business model canvas
the close-up on one
organization with a
360 view.”
23
25. TWO STAGE BUSINESS MODEL
A two stages business model can represent
direct trade from producer to retailer Business Model B
Key Customer Key Customer
activities R/ships activities R/ships
Value Suppliers Value
Partners Proposition Proposition Customers
Customers
Key Channels Key Channels
resources resources
Cost Revenue Cost Revenue
structure stream c structure stream
Business Model A
25
26. MUTLI STAGE BUSINESS MODEL
Business Model B
KA CR C KA CR C KA CR C
P VP VP VP
KR CH P KR CH P KR CH P
c CS RS c CS RS c CS RS c
Business Model C
Business Model A
26
31. Business Model of APROCA, Ecuador
Key activities Value Relations Clients
Partners proposition Clients pay an
appropriate price for
Technical assistance for the product
producers APROCA support Without contracts
associated farmers in Payments do not always happen
Project management with improving their on the due date Pacari
partner of international livelihood Cacaoyere
cooperation Cofina
Intense customer care
APROCA= Registered brand
Marketing
With contracts
Unique characteristics in
Key resources terms of Cocoa quality and Channels Transmar
environmental conditions
Process transparency and International and national What do clients
product traceability
Partners provide Technical equipment and Chocolate fairs demand?
support for: infrastructure High Quality
Constant quantity
Production Existing clients visit
Know-how Certifications
Infrastructure APROCA “headquarter” Fixed prices
Organization
Marketing Communication via mobile
Financial phone and internet page
Cost for human
resources is partly
assumed by partners
Cost structure
Raw material
Transport
Fermentation
Drying process
>
Break even point:
2500 cwt/year
Revenue structure
Sales margin on Cocoa
Grants by partners
31
33. THE NBM PRINCIPLES - AN OVERVIEW
3. FAIR AND 4. EQUITABLE
1. CHAIN WIDE 2. NEW MARKET TRANSPARENT ACCESS TO 5. INCLUSIVE 6. MEASUREMENT
COLLABORATION LINKAGES GOVERNANCE SERVICES INNOVATION OF OUTCOMES
______________ _______________ ______________ ______________ ______________ _______________
The resolution of For farmers and their Fair and transparent One of the special New business The business axiom
problems, in both organizations, market governance refers to challenges faced by models PROMOTE states that you cannot
the commercial and linkages should the establishment and small-scale INNOVATION by manage what you do
social performance provide a STABLE enforcement of CLEAR producers is access multiple actors along not measure. Our sixth
of new business MARKET with clear AND CONSISTENT to services such as the chain in principle is to
models requires all quality, volume and GRADES AND finance, market PRODUCTS and incorporate TAILORED
or most chain actors price signals as well as STANDARDS, CLEAR information, and SERVICES as well as INDICATORS AND
SET SHARED GOALS access to key services COMMITMENTS to best agronomic the PROCESSES that MONITORING PLANS
FOR (Principle 4). These buy and sell certain practices that could underpin both. to assess the health of
COLLABORATION. linkages must volumes of certain improve quality, Innovations should the on-going trading
The development of contribution to grade products at yields, food safety, be done ‘WITH’ relationship as a for-
a systemic view of improved livelihoods. certain times, and and environment SMALLHOLDER profit business and
the chain recognizes For buyers, solutions equitable processes of performance. FARMERS, rather also its effectiveness
and values the must provide A RISK MANAGEMENT. Successful solutions than ‘for’ them. as a vehicle for
interdependence of CONSISTENT SUPPLY Mutually enable smallholders Inclusive access to community
the actors. Reaching of safe, quality RECOGNIZED to ACCESS CREDIT, innovation provides a development.
and implementing products at a INTERDEPENDENCY KNOWLEDGE, means to remain Constant monitoring
agreement often competitive price. between chain actors TECHNOLOGY, and competitive in of the health of the
involves is a key criteria. develop incentives dynamic markets; trading relationship
The achievement of
IDENTIFYING one or Shared commercial that encourage build the commercial reduces the risk the
both producer and
more CHAMPIONS risk and insurance producers to invest value of goods and minor problems will
buyer goals in
along the chain to against failure are in their own services; and, share destroy the business.
practice requires the
lead the process. frequently cited as the production based on innovation gains
delivering social and
commercial value up cement of successful market needs. among partners all of
and down the chain. relationships. which builds business
durability.
34. THE NBM PRINCIPLES - KEY QUESTIONS
3. FAIR AND 4. EQUITABLE
1. CHAIN WIDE 2. NEW MARKET TRANSPARENT ACCESS TO 5. INCLUSIVE 6. MEASUREMENT
COLLABORATION LINKAGES GOVERNANCE SERVICES INNOVATION OF OUTCOMES
______________ _______________ ______________ ______________ ______________ _______________
Are the goals to clear How easy or difficult is Are Do all actors have Is there evidence of Are economic and
to all actors in the it to buy (find product) standards, processes, timely access to product or process developmental goals
chain? and sell (find buyer) in prices clear and market information? innovation? and indicators known
this chain? consistent across the and shared along the
Is there opportunity chain? Do all actors have If so, who chain?
for co-investment or How are sellers linked access to financial participates and
shared decision to buyers? Are Are risks and technical why? What systems are in
making in the chain? linkages stable or (production, commer support services? place to effectively
constantly changing? cial, financial) If innovation is measure or analyze
Are there structures understood and evident, who gains indicators?
in place for Do buyers know shared Are there examples from the results? Are
collaboration or where their product proportionately of service provision there profit-sharing How does the chain
shared problem comes from? along the chain? that goes beyond mechanisms in deal with difficulties
solving? basic production place? and crisis
Do farmers know Do all actors have services? management?
Are there one or where their product is access to information Is innovation
more champions consumed? on quality standards? encouraged among Are there feedback
who will lead the all actors in the loops in place to
process of co- Is there evidence of chain? guarantee effective
innovation? formal or informal chain-wide
contract adherence? What are the management and
If so, why? If incentives? decision-making?
not, under what
conditions do
contracts break
down?
35. New Business Model Principles SCORECARD
Principle 1: Chain Principle 2: Effective
wide collaboration market linkages
# Scoring criteria Does not Fully # Scoring criteria Does not Fully
apply at all applies apply at all applies
1 Formal or informal flow processes between 1 Trading relations are stable
actors are defined
2 The trading relationships are profitable for all
2 Actors along the chain have the same vision actors
and follow the corresponding goals
3 Each link adds (social or commercial) value to
3 Commercial goals are aligned among the the product
actors
4 Producers generate a stable income from their
4 Social goals are aligned among the actors products
5 Actors have the capacity to identify new market
5 The chain can be described as a collaborative opportunities
partner network
6 Actors rapidly react to changing market
6 Problems along the chain are easily identified conditions
7 Chain actors are able to react rapidly to 7 Intermediaries respond to needs of both,
upcoming problems suppliers and buyers, through a tailored double
value proposition
8 Interdependencies of actors along the chain
are recognized and valued 8 Up-stream actors are familiar with the product
delivered to the final customer
9 Processes are set chain-wide and are not
restricted on one individual actors 9 Down-stream actors are familiar with the
production system
10 Chain wide incentives are created to enhance
collaborative behavior 10 Intermediaries deliver social and commercial
value to suppliers and buyers
11 Champions, leading the collaboration process
are identified in different parts of the chain or 11 Farmers are formally or informally organized
business model are identified
12 The procurement system is stable
12 It is possible for the actors in the chain to
participate in decision making processes 13 Complementary markets are reached for 2nd
and other products
Average Score
P. # 1: Chain wide collaboration Average Score
P. # 2: Effective market linkages
36. New Business Model Principles SCORECARD
Principle 3: Fair and Principle 4: Equitable
transparent governance access to services
# Scoring criteria Does not Fully # Scoring criteria Does not Fully
apply at all applies apply at all applies
1 Grades and production standards are 1 Technical assistance for production is
consistent and known by all actors available
2 The price formation in each link of the chain 2 Production and post-harvest technology is
is known by all actors available
3 Producers know the quality requirements to 3 Transportation services are accessible
receive top prices
4 Small holders have access to financial
4 Incentives are transparent and aligned with services
outcomes
5 Financial services are used by small holder
5 There are clear commitments to buy and farmers
sell certain volumes, of certain grade, at
certain times 6 Financial services are affordable for small
holders
6 Risk sharing models include formal and
informal insurance schemes 7 Input supply and dealer models are
established
7 Equitable processes of production risk
sharing are established 8 Services are provided by double specialized
intermediaries
8 Equitable processes of commercial risk
sharing are established 9 Production related credit providers take
into account soft collateral (contract,
9 Risks do not fall disproportionately on one organization, potential)
actor or group of actors
10 All producers have timely access to market
10 Trading terms are clear to all actors information
11 Buying conditions are clear to all actors 11 All producers have access to information on
quality standards
12 Formal or informal contracts are concluded
Average Score
with producers
P. # 4: Equitable access to services
13 Mechanisms are in place to ensure that fair
prices are established
Average Score
P. # 3: Fair & transparent governance
37. New Business Model Principles SCORECARD
Principle 5 : Principle 6:
Inclusive Innovation Measurements of outcomes
# Scoring criteria Does not Fully # Scoring criteria Does not Fully
apply at all applies apply at all applies
1 Innovation is promoted by multiple actors 1 Formal and informal feedback mechanisms
including producers are established within and in-between
(groups of) actors
2 Innovations are clearly aligned with market
opportunities 2 Decisions are based on assessment
3 Continued product and process 3 Measurements are as simple and cost-neutral
improvement takes place as possible
4 The value chain actors are able to responds 4 Measurements are designed and tested jointly
to market tendencies
5 The perspective and needs of smallholder 5 The end user and the purpose of the measured
farmers is incorporated in the innovation information is clear to all
process 6 Participants have a role in guiding what
6 Farmers led innovation processes are information is collected
encouraged 7 The generated information is shared and
7 Innovation happens regularly and in a discussed along the chain
systemic approach 8 Key economic and performance indicators are
8 Plans to upgrade product quality and known and shared along the chain
quantity are developed jointly 9 Measurements lead to rapid action
9 Returns from innovation are shared fairly
10 Regular and consistent evaluation and
among actors
feedback processes are set in place
10 Development interventions are rather done
11 Tailored indicators and monitoring plans are
with smallholder farmers, than for them
established to assess the trading
11 The value chain is characterized by the relationships
development of a differentiated value
12 Market trends and market position are jointly
proposition
reviewed on a regular base
Average Score
13 Social and environmental factors are included
P. # 5: Inclusive innovation in the evaluation
Average Score
P. # 6: Measurement of outcomes
38. GRAPH SCORE ON RADAR DIAGRAM
IDENTIFY AND PRIORITIZE AREAS FOR INNOVATION
Chain-wide
Collaboration
Measurement of
Outcomes
Effective
Market
Linkages
Inclusive
Innovation
Access to Transparent
Services Governance
39. CASE EXAMPLE: Cuatro Pinos, Guatemala
Two Producer Cuatro Pinos LA SALAD
Wholesaler
organizations Cooperative
Exporter of fresh vegetable
Product flow Product flow
• Founded in 1979
• Co-owned by 562 families
• Sales volume in 2008: 14
Agronomist support mio. US$ Investment
• 1200 women in packing
and sorting
Cooperative c
members Technical assistance
562 families Technical assistance
Business Mission:
• Increase family incomes
• Organize small producers
Fixed price contracts into cooperative model Product development
• Provide programs of social
service to rural families
Non-
Cooperative
members Health and education Risk sharing fund
> 5000 services
families
39
40. Principle # 1: Chain-wide collaboration
Supply chain coordination, based principally on sales projections and actual sales data, flows from buyers back to the
Cooperative and from there to diverse farmer organizations. In the US, the wholesaler LA Salad also plays a role. Based on
projected sales, Cuatro Pinos develops production plans with partner organizations.
This system functions in a relatively informal manner with market information relayed to Cuatro Pinos either via e-mail or
fax but often via phone calls (with LA Salad for example). From there Cuatro Pinos formalizes the process with the
0 1 2 3
development of production plans and contracts with associated producers and producer associations.
Principle # 2: Effective market linkages
Cuatro pinos is the aggregating and contracting agent with the international buyers. It provides key systemic services both
to buyers (i.e. quality and consistency guarantees) as well as to farmer organizations.
Effective mechanism to recruit additional growers (clear value proposition) combined with willingness to work with broad
range of farmer organizations has enabled them to provide market access for a large number of farmers.
0 1 2 3
Principle # 3: Fair and transparent governance
Chain governance from Cuatro Pinos back to producer organizations and individual producers is clear, based on production
plans and backed with formal contracts. Recently these contracts have included weather-insurance coverage subsidized
partially by the Guatemalan State.
Discussions regarding product quality are still relatively common (suggesting clarity is still an issue)
Full transition to GlobalGAP is driven through the provision of price incentives to farmers who gain and maintain certification
Shared risk fund (between Cuatro Pinos and LA Salad) that allows the Cooperative to guarantee payment to farmers even
0 1 2 3 when product is not sold due to problems at the port of entry or logistics.
Principle # 4: Equitable access to services
Access to inputs on credit. The cooperative secures loans from commercial banks. Once the loan is received, the
Cooperative provides credit to producers based on the production schedule (planting and harvest times) and projected
volumes. The credit is discounted from the product received and the producer receives the balance.
Provision offer technical assistance through training and support of local extension agents and/or lead farmers linked to
producer associations
0 1 2 3
40
41. Agricultural insurance to cover the weather risks that farmers face (purchased as a block, invisible to the farmer)
Partner in development: During the 2005-2006 production season, the Cooperative successfully accessed 1.5m US in public
sector funds for investment in supplier organizations including packing sheds, irrigation facilities and rural housing
Currently the coop is developing a food security and nutrition program
Extensive social services for members (health, education, etc)
New foundation to support social services to non-members funded by a small percentage of the profits of each member of
the French bean supply chain which during its first full year of operation (2008) generated US $ 60,000
Principle # 5: Inclusive innovation
The central point of innovation in this case is the nexus between Cuatro Pinos, LA Salad and Wegman’s in the US.
Wegman’s and LA Salad identify potential niches for new products and/or new presentations of existing products and
transmit this information to Cuatro Pinos. Cuatro Pinos then employs field staff to engage with smallholder farmers to test
and adapt production systems to the market needs. Once the production systems are capable of meeting market needs in
terms of quality, the systems are rolled out to a wider number of farmers based on the sales projections received from the
final client.
0 1 2 3
chain wide
collaboration
Principle # 6: Measurement of outcomes
Measurement of outcomes occurs within
Cuatro Pinos following the cooperative model measurement new market
(yearly meetings, internal accounting and of outcomes linkages
collective decision-making). The system works
well for cooperative members and is
complemented with informal feedback
0 1 2 3 activities – basically on-going visits and phone
calls – with non-cooperative member
Fair and
organizations. inclusive
transparent
innovation
Recent household nutrition surveys show goverance
troubling rates of malnourishment in 20% of
coop member families who are relatively
better off than non-member suppliers so equitable
clearly market linkages (including credit) are access to
not enough to solve poverty on their own. services
41
42. CASE EXAMPLE: Intelligentsia Coffee, US
“A direct trade Intelligentsia Coffee
Two Supplier
model“ Coffee roasting company
Groups
with own coffee shops in
40% are small scale
three cities
farmers Green coffee
• Started in 1995
• 30 m US$ sales/year
Coops with
processing Transparency contract and quality pricing
premium Buying philosophy is driven
capacity
by intrinsic quality. They
believes that to get such
coffees they need to work
On farm quality assessment closely with
Farms with producers, Farmers that
individual don’t get paid well for their
processing work don’t change
capacity management, and those
who don’t respect their land
and the people who work
on the farm face a constant
uphill battle to produce
quality.
42
43. Principle # 1: Chain-wide collaboration
The principal mechanism is direct travel by Intelligentsia staff for face to face strategy meetings two or three months before
the harvest to outline the business goals with all partners. Besides the pre-harvest strategy meeting, Intelligentsia staff
attempts to also visit source during the harvest to monitor quality, and post-harvest to review, evaluate and celebrate
success
A new mechanism that is being implemented is the annual "Extraordinary Coffee Workshop” in which Intelligentsia brings
0 1 2 3
together farmers from different coffee origins to discuss issues related to quality, market trends and other relevant issues.
Principle # 2: Effective market linkages
Intelligentsia provides direct links to the final customer and directly identifies high quality producers. The quality based
business model requires Intelligentsia to make considerable up front investment to identify marketable products
Intelligentsia's quality based business model requires consumer integration for its success. Consumer education about
coffee production and sourcing processes and about coffee quality has a high priority for the firm.
0 1 2 3
Principle # 3: Fair and transparent governance
Transparency contract that defines and documents pricing, responsibilities, costs and profit across the chain of custody.
All the trade participants must agree to transparent disclosure of financial deliveries back to the individual farmers
Long term contracts: Contracts in the first and second year of the business relationship are for one year. In the third
year, given measurable success and tangible confidence, multiple year contracts (up to 3 years) are designed.
Pricing premium and clear pricing structure: The verifiable price in the Direct Trade Model to the grower or the local
coop, not simply the exporter, must be at least 25% above the Fairtrade price. The Intelligentsia Tiered Pricing System
0 1 2 3 establishes a sustainable base price and ensures there is a clear, tangible link between cup quality and coffee value.
The entire payments are made at the time of export.
Quality is measured through cupping. Cupping results are communicated to and discussed with farmers during the
post harvest field visits. Producers are often able to double their income within a few harvests. A number of actual
examples show base prices that have grown threefold.
Information management: Intelligentsia has created a system that allows producers access to the same information as the
millers and exporters (see www.cropster.org)
43
44. Principle # 4: Equitable access to services
chain wide
Access to expert taste collaboration
testing and access to results
database .
Support on obtaining pre- measurement of new market
harvest financing (through outcomes linkages
root capital).
0 1 2 3
Fair and
Principle # 5: Inclusive innovation inclusive
transparent
innovation
Interestingly, Intelligentsia observes that goverance
the incentive structures of the Tiered
Pricing System triggers innovations, mainly
based on the understanding by growers equitable access
that they can influence quality. Most to services
innovations tend to come out of medium
sized farms.
0 1 2 3 Intelligentsia actively engages farmers in discussions about how
they might improve cup quality. In some cases experiments in
fermentation or drying are conducted with growers to assess
their effects on cup quality. When successful, Intelligentsia may
offer the coffee as a micro-lot and share the additional profits
with the farmer or cooperative involved.
Principle # 6: Measurement of outcomes
Intelligentsia has implemented an interesting way to ensure that the premiums paid are actually reaching producers.
Individual growers are deploying a peer control system: during the pre-harvest meetings it is clarified what individual
farmers will receive. Then, communication channels between Intelligentsia and individual farmers are set up. Producers
use these channels in case that their cooperative or the intermediary is not disbursing premiums as agreed upon I the
contract.
In some cases where coops are much larger, Intelligentsia also makes use of certification schemes such as Rainforest
0 1 2 3 Alliance and UTZ to track payments. Interestingly these certifications are not communicated to the final clients.
44
45. CASE EXAMPLE: Hariyali Kisaan Bazaar – India
“specialized
SMALL intermediary hub”
HOLDER
FARMERS DSCL
HARIYALI KISAAN Fertilizer and input
HKB procures
from 10,000 Grains delivered direct to hub BAZAAR company
farmers and 2000
dairy farms “ prosperity in
(2009). HKB
Technical assistance agriculture and
selects the
farmers it wants farmers market”
Commodity
to work with.
Farmers also Inputs Chain of 75 stores set up in markets, specialt
approach HKB 2007, now 300 stores. y buyers, etc
directly
themselves. Produce & Dairy pick up service Mission: affordable inputs
and links to market with
buyback scheme
LARGE
Seed purchases
FARMERS
45
46. Principle # 1: Chain-wide collaboration
Problems are voiced mainly through farmers’ visits to the outlets and their communications with agronomists.
The IT system logs farmers’ enquiries, so that problems are stored and can be fed back to centre. Rajesh
Gupta, president of Hariyali Kisaan Bazaar explains that “we always try and understand problems from the
farmer’s side – through our agronomists and the questions farmers ask in our retail stores”
0 1 2 3
Principle # 2: Effective market linkages
HKB has a ‘buy-back’ scheme that serves as a link between small-scale farmers and markets. HKB also procures
grains and basic crops from small-scale farmers in order to “move them up the value chain”. Farmers produce
seeds for HKB, which HKB then sells at its outlet. HKB processes the seeds and sell them under its own label.
HKB aggregate the produce for the farmers. It is collected from the farm level or from approximately 500
metres away from farmers’ fields at the village level.
0 1 2 3
Principle # 3: Fair and transparent governance
Pricing, information about pricing and timely payment are all vital for establishing trust. If farmers are offered
lower buy-back they will go elsewhere. Information is provided to farmers at a number of outlets. Mobile
phones are also used to announce bonuses and premiums to farmers for good quality seed, for example, pre-
season. Farmers are also made aware of the support price, which allows them to plan ahead and make decisions
more effectively. Written agreements are in place for farmers but “contracts are not enforceable”. A mutual
understanding or agreement is far more powerful
0 1 2 3
46
47. Principle # 4: Equitable access to services
Inputs/retailing/household goods
Technical advisory available at hub and through targeted group seminars (not one on one at field)
Credit or facilitation of credit (through partner bank)
Insurance – crop insurance and life insurance (need to probe more about crop insurance).
Market linkages – seed production (which has now expanded significantly), dairy, grain.
0 1 2 3
Fuelling stations with transparent pricing (cooking gas) are also at the outlets, as are demonstration plots for
training purposes.
Principle # 5: Inclusive innovation
HKB prides itself on high quality seed production. There is a degree of collaboration in order to ensure this high
quality is met. Farmers, for example, are given foundation seed to maximise quality and HKB has control of the
input material they give to farmers to ensure that genetic purity is maintained. Because of this, rejection rates of
seeds sold to HKB by farmers are very low. Gupta approximates that 90-95% of seeds are bought back from the
farmers. For seed HKB offers tech services to farmers to help them meet quality standards and have a continuous
engagement and dialogue with farmers.
0 1 2 3
Collaboration
Market
Measurement
Linkages
Principle # 6: Measurement of outcomes
In general, Gupta and Chhabra (head of retail
operations) , evaluated an outlet’s success
based on the percentage of total agri-input
market that HKB was able to capture in each Innovation Governance
outlet’s catchment area.
Services
0 1 2 3 47
48. CASE EXAMPLE: Sustainable Harvest, US
Sustainable Harvest is a specialty coffee importer that uses the Relationship Coffee model to bring
partners together in a sustainable supply chain that serves everyone involved — from the farmer
to the final consumer. This approach builds direct, transparent market linkages for coffee growers
while investing in training and management systems to improve their ability to produce high
quality coffee.
Sustainable Harvest’s
Let’s Talk Coffee is an annual event hold by
Sustainable harvest and its partners along the value chain
annually organized
that brings together hundreds of coffee roasters and growers gathering of value
for direct conversations in an innovative and transparent chain actors is an
forum. example on how a
In an industry where it is often difficult for partners to meet lead-firm fosters
face-to-face, Let’s Talk Coffee provides a unique platform for direct
business partners to create and maintain open lines of communication, facilit
communication, humanizing their business relationships and
ates negotiation
bringing the Relationship Coffee model to life.
between distant chain
Participants gather to gain an understanding of actors, provides
collective, practical actions that can be taken to ensure a access to critical
future of specialty coffee. This years program focused on
price risk management, quality calibration, and farmer
information that
income diversification. matters especially to
In 2012 the event counted 379 participants including small coffee growers
producer organizations, coffee roasters, non-profit and encourages chain
organizations and financial institutions from 22 countries. actors to take mutual
action.
A direct result and benefit of the Let’s talk coffee forum are http://www.sustainableharves
11 million pounds of coffee sales that were t.com/relationship-coffee/let/
negotiated during meetings at the event.
48
50. NOW WHAT?
HOW DO WE NAVIGATE THROUGH
UNCLEAR TERRITORY AND OBSTACLES?
50
51. THE RAPID PROTOTYPE CYCLE
THE PROTOTYPE CYCLE METHODOLOGY
ADDRESSES THESE CHALLENGES:
MISSION AND VALUE PROPOSITION 3-6 month
Why we are here? cycles
What do we offer and do well?
STRATEGY AND GOAL
Where we are going?
What are we aiming for?
MEANS
What do we need to get the work done?
MEASUREMENT
How do we tell we are doing well?
CORRECTION
How do we remediate, repair and improve? 51
52. BUILD A VISUAL CHANGE MODEL
MACRO-LEVEL STRATEGY
Where will we start? What do we want to
What existing factors do we wish achieve?
to change/ improve?
How will we know we’ve What actions do we need to
achieved our goals? take to reach our desired
What key elements will change? outcome? Who is involved?
What are the expected results? What obstacles need to first be
removed?
53. PRIORITIZE PROTOTYPE CYCLES
FOR EACH INNOVATION AREA IN THE BUSINESS MODEL
What action is required?
Where to innovate What are the desired process
within existing Business characteristics and metrics?
Model?
How will the proposed
innovations effect our
business model?
How do these elements connect? Which are How will key elements change? How
prerequisites for others? Which function in will we know we’ve achieved our
parallel? goals?
56. PM&E PLANNING WORKSHEET
Sources: Cramb, R. and Purcell, T. “How to Monitor and Evaluate Impacts of Participatory Research Projects: A case study of the Forages for
Smallholders Project.”. CIAT Working Document. Oct 2001. And Sartorius, Rolf. “Participatory Monitoring and Evaluation Systems.”
57. Implementation
NOW, TAKE A At this stage in the process the diagnose and planning is complete and the groups need
to take the plunge into their new business ventures. As with all
STEP! planning, implementation often leads to the arrival of unexpected challenges that need
to be dealt with by the group and the facilitator as they arise. Success at this stage will
depend in the leadership of the group and the commitment of the team to take on
It matters more that these new challenges and deal with them pragmatically.
you take a step
rather than trying to
determine what is
“the right” first step
to take.
As you move forward
the learning process
begins and you will
see further.
The trick improving
processes step by
step towards an
appropriate target
condition so you can
reach your desired
outcome.
57
59. EVALUATION – ASSESS THE EFFECTIVENESS OF THE STRATEGY
After one prototype
cycle including its
various innovation
pathways, has come to
an end, it is important to
find out how the wider
context has changed.
PLAN
Evaluation can happen
on different levels. At
DESIGN
this stage we suggest to TEST
translate the achieved
results back onto the CHECK
VALUE CHAIN MAP, and
BUSINESS MODEL
ADJUST
CANVAS and conduct a IMPLEMENT
rapid analysis of the
impact on LIVELIHOODS MEASURE RESULTS
of small holder
producers.
EVALUATE
DOCUMENT
REFLECT ON CHANGES
EXPAND?
TEST A NEW
PROTOTYPE
59
Notas del editor
Relatedtotypology. Intermediary.
I like the look of this slide but (1) why do we introduce again another process flow and do not stick the one before and (2) what is the key message of this slide? Is the idea to transmit Key questions?People will get lost as this slide and the one before are not in line with each other.Suggestions: Combine 3 and 4 and call it Impact pathway (or logical path) with Indicators and Steps (what) as subsections (note: in order to be consistent we also have to mention Responsibilities (Who?))
Progress markers: A set of progress markers represents a change model for the boundary partner that illuminates the depth and complexity of change being sought. May indicate reactive par Expect to see: early response to program’s basic activities. (reactive participation) Like to see - active learning and engagementLove to see (profound change) Who? is doing what? How? Individually progress markers can be considered as sample indicators of behavorial change- but their strength rests in their utility as a set. Cumulatively- they illustrate the complexity and logic of the change process.
Source: “How to Monitor and Evaluate Impacts of Participatory Research Projects: A case study of the Forages for Smallholders Project.” Cramb, R. and Purcell, T. CIAT Working Document. Oct 2001.Source. Sartorius, Rolf, Participatory Monitoring and Evaluation Systems:Improving the Performance of Poverty Reduction Programsand Building Capacity of Local Partners
Key principleMental modlesOwning assumptions
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 supplyNext 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… DB - To develop the market linkages, we critically need an effective intermediary to play the role of linking the informal world of multiple smallholders into the commercial world of modern markets. Aggregation, but critically the right services to meet quality standards, e.g. Mali women carts? Too often NGO’s or lead firms build services as part of development or sustainability project that is not publically funded or funded through the business model. Always ask the question whose role is it and if it is a service who will pay on-going for this? DS – To make this work we need to create a new business model, this is primarily between processor and farmers or their group enterprises. But also a new business model may be needed at lead firm level. We have five principles we work by etc.. Think Big Go SmallDB – Facilitate or broker the market system out of catalytic opportunity