Small holder business development sales system
Abstract : Supermarkets, specialized wholesalers, processors, and agro-exporters are transforming the marketing channels into which smallholder farmers sell produce in low-income economies. We develop a conceptual framework with which to study contracting between smallholders and a commodity-processing firm. We then synthesize results from empirical studies of contract farming arrangements in five countries (Ghana, India, Madagascar, Mozambique, and Nicaragua). The resulting meta-narrative documents patterns of participation, the welfare gains associated with participation, reasons for nonparticipation, the significant extent of contract noncompliance, and the considerable dynamism of these value chains as farmers and firms enter and exit frequently.
? A decade of experimentation has produced valuable lessons in how to integrate people at the base of the global economic pyramid into existing value chains, with a correspondingly better understanding of how to create successful inclusive business models.
? Based on these structures, companies can leverage the personal relationships and existing structures and processes used by smallholders to implement solutions.
? Alongside smallholders and their organisations, existing intermediaries can be part of this process, and can potentially serve as an element of the solution as well.
? Companies often adapt existing products rather than starting from scratch, perhaps by changing the product’s size, packaging, or available functions.
? Capitalization and access to finance is always an issue with few commercial banking options to choose from and unreasonable high interest rates and loan criteria.
? The issues of access to finance need to be tackled from a value-chain position, with a view to long-term sustainability, rather than being resolved through punctual and isolated subsidies in the form of agriculture inputs, equipment, revolving funds, grants, etc.
? The success and failures of many of these initiatives have been well documented, but the fact still remains that for most cases, the producer-first buyer point of sale continues to be the most inefficient linkage, impacting on the overall chances of a successful smallholder-based chain.
• The same analysis can be conducted for any inclusive agribusiness relationship, including links with partner organisations and even with entities within the broader business environment. In this latter case, the company might ask itself how partners in collective action initiatives or government bodies bene"t from the current business activities or proposed actions.
• Even though micro"nance services have expanded quickly in recent years, these institutions are primarily focused on providing short-term loans for non-agricultural purposes, and often offer no savings, money transfer or insurance products
• When building a partnership, companies should think of an exit plan, or at least provide for a future partnership evaluation in order to ensure the partnership is serving its purpose.
? The approach provides a framework for analysing the inter-organizational linkages between producers and buyers to understand the potential for coordination and partnership, and to identify where value can be added, costs reduced and efficiency improved.
? That small-scale institutional innovations focused on reducing inefficiencies in supplier to buyer commercial transactions, are more effective than macrotrade and price policy initiatives, which are often far removed from the realities and needs of district level businesses.
? This argument is reinforced by international corporate strategic management thinking that growth and wealth creation do not necessarily transpire at the level of a sector or industry but in the ability of firms to create valuable goods and services using efficient methods.
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