New Business Models for Africa

An African farmer
An African farmer

An internationally-funded project provides insights into how African small time farmers can build a sustainable trading relationship with international businesses in the food industry

|  By Maureen Chigbo  |  Dec. 2, 2012 @ 12:11 GMT

AFRICAN farmers who are scratching their heads on how to export their products abroad can now heave a sigh of relief. A major international project has provided insights into how small-scale farmers in Africa can improve their livelihoods by building sustainable trading relations with international businesses in the food industry. This project, funded by the Gates Foundation and led by the Sustainable Food Lab, involves a collaboration between Catholic Relief Services, Rainforest Alliance, CIAT, and the International Institute for Environment and Development.

The final four reports, the last of which was published recently, reveal ways to break down barriers that usually prevent African farmers from reaching lucrative markets in the West. Millions of small-scale farmers in Africa depend on export markets for their livelihoods. But while they have the skills and soils to provide high-quality products for the food industry, their entry into these markets is constrained by increasingly stringent standards, volatile prices and lack of credit, amongst other things.

 For more than four years, the New Business Models for Sustainable Trading Relationships project investigated how supply chains can be adapted to include and benefit small-scale producers. “The project has shown how even poor and marginalised farmers can engage with and supply major international corporations, and gain a stable, sustainable source of income,” says Abbi Buxton, IIED researcher . “This requires commitment and action throughout the entire length of supply chains, and by all stakeholders – from farmers and retailers to government agencies and civil society organisations.”

The new reports, which focus on cocoa in Ghana and Côte d’Ivoire, flowers in Kenya and beans in Ethiopia, follow five earlier reports on other aspects of efforts to link smallholder farmers to modern markets (links to all nine reports below).

In Ghana, the project identified the steps needed to enable cocoa farmers to produce fine flavour beans that carry a substantial market premium. This was an effort to emulate the experience of farmers in Latin America, who produce such beans and have reaped 3-4 times the market value of normal beans.  Also in Ghana and Côte d’Ivoire, the project assessed how the Rainforest Alliance managed, in just three years, to certify over 15,000 farmers as producers of environmentally-friendly cocoa.

 In Kenya, project members acted as “ethical agents” who helped to reshape supply chains at each link to better serve the needs of small-holder flower farmers and enable them to sell directly to major retailers in the United States and Europe. The project team thinks large food companies with strong development targets would benefit from adopting this strategy to employ ethical agents to engage with each node of the supply chain.

In Ethiopia, the project team linked thousands of bean farmers to canning factories and retailers in the United Kingdom while improving their productivity and product quality. “The project has shown that it is possible to develop new business models that link small-scale farmers to modern markets,” says Don Seville of the Sustainable Food Lab. “These new models are fairer, more inclusive schemes that share the risks and rewards across the value chain.

Overcoming the challenges typical of small scale producers such as lack of credit, poor transportation, lack of technical assistance, among others, does take time, patience, and creativity but the rewards are there for companies and farmers that commit to work together.”

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