Inclusive Business Models in Agri-Food Value Chains What Safeguards for Whom? Wytse Vellema, PhD
Of the 570 million farms worldwide ..
Claude Ménard Professor (Emeritus) of Economics, Centre d’Economie de la Sorbonne Organizational Economics
Five countries, ten case studies
• Sorghum • Passion fruit • Teff, wheat, maize • Sesame • Dairy • Cassava • Fresh Eggs • Broiler chickens • Sugar cane • Vines and wines Twelve products
Small farmer meets big business 8
1. Contract production Highlight 2. Full-service cooperative three cases 3. Land-lease cooperative
Basis: promise to deliver 1. Contract Seeds, fertilizer, .. Technical Inputs support, production harvesting, planting, .. Pre-financing repaid via price discount
Cooperative collects and sells milk And provides services, such as veterinarians 2. Full-service cooperative Services are deducted from milk deliveries Farmers share in cooperative profits
Farmers lease land to cooperative 3. Land-lease Cooperative becomes the farmer cooperatives Farmers receive rent, profit, and wage
Conclusions • The more a firm needs to invest, the higher the risk, thus more control • High investment results in higher income, but lower autonomy • Co-investment shows mutual commitment and lowers firm risk
Thank you! Scan for LinkedIn Wytse Vellema
Country Product General description Outreach Burundi Sorghum Sorghum, a local crop, is bought for beer production, through 28,000 farmers, farmer associations, model farmers, and formal contracts. 660 employees Ethiopia Passion fruit Fruit processing plant with own plantation and the ambition to Full production: source 50% from smallholder cooperatives with shareholding. 700 farmers, 2000 employees Ethiopia Teff, wheat, Seed production on own farm and from smallholders, with full- 1,000 farmers, maize service provision. Formal contracts are signed. 100 employees, Ethiopia Sesame Hulling and export company, ‘legally - binding’ contracts with 3 cooperatives, smallholder cooperatives which receive pre-planting credit. 3,500 farmers, 20 employees Kenya Dairy Dairy business hubs bring farmer services and collection / 4 cooperatives, bulking together. Services are deducted from milk payments. 20,000-22,000 farmers Mozambique Cassava Mobile cassava processing unit buys at fixed price, offers 4,600 farmers have supplied transport services, and sells to local beer company. fresh cassava at least once Mozambique Fresh eggs Joint venture of rearing and selling company, providing services 20-30 out-growers and inputs for fresh egg production to local farmers. Mozambique Broiler Chicken breeding, hatchery, feed-mill and slaughterhouse 200 out-growers, chickens operation has local out-growers rearing the broiler chickens. 300 employees South Africa Sugarcane Land is leased to farmer-owned cooperatives, which become 2,500 farmers production centers, using contractors for field management. South Africa Vines and Equity share scheme, where former employees became 260 employees
(1) (4) (5) Dispute (2) Embeddedness in (3) Social Behavioral Case resolution trading network Price setting Association monitoring Kenya, dairy DM Farmer investment Market Yes Mozambique, Fixed cassava Burundi, sorghum Fixed Yes Ethiopia, sesame IS Market + premium Yes + Ethiopia, IS Market * + Seeds SA, sugar cane IS Market Yes + Ethiopia, IS Market + minimum ++ passion fruit Mozambique, fresh IS Farmer investment Performance eggs ++ Mozambique, IS Farmer investment Performance broilers ++ SA, vines and wines DM Farmer investment Internal ++
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