Agri-Food Value Chains What Safeguards for Whom? Wytse Vellema, PhD - - PowerPoint PPT Presentation

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

Twelve products

• Sorghum
• Passion fruit
• Teff, wheat, maize
• Sesame
• Dairy
• Cassava
• Fresh Eggs
• Broiler chickens
• Sugar cane
• Vines and wines

Small farmer meets big business

8

Highlight three cases

• 1. Contract production
• 2. Full-service cooperative
• 3. Land-lease cooperative

• 1. Contract

production

Basis: promise to deliver Inputs

Seeds, fertilizer, .. Technical support, harvesting, planting, ..

Pre-financing repaid via price discount

• 2. Full-service

cooperative

Cooperative collects and sells milk And provides services, such as veterinarians Services are deducted from milk deliveries Farmers share in cooperative profits

• 3. Land-lease

cooperatives

Farmers lease land to cooperative Cooperative becomes the farmer 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!

Wytse Vellema

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Country Product General description Outreach Burundi Sorghum Sorghum, a local crop, is bought for beer production, through farmer associations, model farmers, and formal contracts. 28,000 farmers, 660 employees Ethiopia Passion fruit Fruit processing plant with own plantation and the ambition to source 50% from smallholder cooperatives with shareholding. Full production: 700 farmers, 2000 employees Ethiopia Teff, wheat, maize Seed production on own farm and from smallholders, with full- service provision. Formal contracts are signed. 1,000 farmers, 100 employees, Ethiopia Sesame Hulling and export company, ‘legally-binding’ contracts with smallholder cooperatives which receive pre-planting credit. 3 cooperatives, 3,500 farmers, 20 employees Kenya Dairy Dairy business hubs bring farmer services and collection / bulking together. Services are deducted from milk payments. 4 cooperatives, 20,000-22,000 farmers Mozambique Cassava Mobile cassava processing unit buys at fixed price, offers transport services, and sells to local beer company. 4,600 farmers have supplied fresh cassava at least once Mozambique Fresh eggs Joint venture of rearing and selling company, providing services and inputs for fresh egg production to local farmers. 20-30 out-growers Mozambique Broiler chickens Chicken breeding, hatchery, feed-mill and slaughterhouse

• peration has local out-growers rearing the broiler chickens.

200 out-growers, 300 employees South Africa Sugarcane Land is leased to farmer-owned cooperatives, which become production centers, using contractors for field management. 2,500 farmers South Africa Vines and Equity share scheme, where former employees became 260 employees

Case (1) Dispute resolution (2) Embeddedness in trading network (3) Price setting (4) Social Association (5) Behavioral monitoring Kenya, dairy DM Farmer investment Market Yes Mozambique, cassava Fixed Burundi, sorghum Fixed Yes Ethiopia, sesame IS Market + premium Yes + Ethiopia, Seeds IS Market * + SA, sugar cane IS Market Yes + Ethiopia, passion fruit IS Market + minimum ++ Mozambique, fresh eggs IS Farmer investment Performance ++ Mozambique, broilers IS Farmer investment Performance ++ SA, vines and wines DM Farmer investment Internal ++