Adapting business models to incorporate smallholders into supply chains  

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Food and beverage companies are facing a rapidly changing world. Consumers everywhere are growing more knowledgeable and concerned about the ethics of where and how their food and drink are produced.  At the same time, development organizations are increasingly seeing the critical role of the private sector in creating sustainable economic opportunities for small scale farmers.  Two-thirds of the worlds rural households - many of whom live in poverty - depend on smallholder agriculture for their food and incomes.

This briefing paper lays out the case for companies and development organizations to partner together to create more supply chains that are inclusive of smallholders.  The paper further lays out principles and strategies for increasing the impact on development by adapting supply chain business models to the needs and context of smallholders and by public co-investment in farmers, farmer organizations, and needed infrastructure.

This paper is a New Business Model for Sustainable Trading Relationships publication and written for Oxfam's briefing for business series.

Authors: David Bright (Oxfam GB), Don Seville (Sustainable Food Lab) and Lea Borkenhagen (Oxfam GB).  May 2010

Review of the role of commodity exchanges in supporting smallholder farmer market linkages and income benefits

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Recently the government of Ethiopia mandated that all of the navy bean trade is to done through the new commodity exchange.  But the new business models for sustainable trading relationships team has been working on this crop in Ethiopia since 2008 to develop direct and transparent trading relationship to the final buyer.  What are the implications?  What is the potential for the commodity exchange to benefit small scale producers?

To gain insight into how the project might work with the new commodity exchange and still benefit small scale producers, the project commission a study of the 5 working country level exchanges in Africa. The results are provocative -- while commodity exchanges have the potential to benefit producers through clear prices signals and uniform and regulated warehousing and trading system, none of these exchanges to date have made the investments infrastructure that would allow the small scale producers to achieve the potential benefits.

A New Business Model for Sustainable Trading Relationships publication

Author: Peter Robbins July 2010.

How new relationships between NGOs and Retailers can help build trade to benefit the developing world's small scale farmers

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NGO's know there’s a development case that improvement in small scale farming is directly associated with a reduction in poverty and hunger. For retail buyers there can be a business case about differentiation, managing reputational risk through engagement and securing new efficient sources of raw materials. 

This paper is intended to support building successful relationships between NGOs and retailers with benefits for international development and for business.  The NGO reader will find out how modern retailing works. There’s a range of commercial models that will be described and recommendations for good practice in relationships.

A New Business Model for Sustainable Trading Relationships publication.

Author:  Chris Anstey, based on an MIT L-Lab Student Research Project, July 2010

New Business Models for Sustainable Trading Relationships

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The development case (potential for reducing poverty) for including smallscale producers in global supply chains is clear. Companies are increasing willing to invest in incorporating smallholders into their supply chains -- to access new supplies, create product lines for ethical shoppers, and be part of achieving the millennium development goals. 

But successfully including poorer smallscale producers into formal value chains in ways that supply consistent, quality production and stable terms of trade and help farmers build capacity over time isn't straightforward.  

The linking worlds paper outlines a set of principles for businesses to consider when adapting their supply chain business model to the more effectively bridge the world of diverse smallscale producers and modern market requirements.

Authors:  Bill Vorley (IIED), Shaun Ferris (CRS), Don Seville (SFL), and Mark Lundy (CIAT).  February 2009

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Small-scale farmers, who form the bedrock for global agrifood supply, are faced with agrifood markets in an unprecedented state of flux. Domestic markets are undergoing rapid but uneven modernization, and higher value and export markets are increasingly the preserve of larger scale suppliers.

Inclusive business models as those which do not leave behind small- scale farmers and in which the voices and needs of those actors in rural areas in developing countries are recognised.  This paper describes a range of business models for inclusive market development within the context of agrifood restructuring and modernization. It focuses specifically on models that improve the inclusiveness, fairness, durability and financial sustainability of trading relationships between small farmers on one hand and downstream agribusiness (processors, exporters and retailers) on the other. While the authors do address what producers need to do to compete in modern dynamic markets, and the role of facilitating public policy, the focus is more on the buyers and their role as partners in development.

A New Business Model for Sustainable Trading Relationships publication

Authors: Mark Lundy, Bill Vorley, and James MacGregor, July 2008.