COLOMBIA
Cape gooseberries in the Department of Cundinamarca
The farmers. There are 250 cape gooseberry growers
in the Municipalities of Silvania and Granada, Cundinamarca.
Of these, about 10 percent cultivate more than 10 000 plants,
while the majority (70 percent) have fewer than than 5 000
plants. Seventy percent of the producers are regular suppliers
of exporters.
The markets. The cape gooseberry has a very small
domestic market. Recently, demand has strengthened, and countries
such as Canada, Germany, Israel, Japan and the US have shown
interest in the fruit. At present there about 300 producers
of gooseberries in Colombia, two large exporters, ten small-scale
exporters, about ten intermediaries who buy for the domestic
market, and at least 30 small-scale retail traders (some of
whom are producers) who take the fruit to markets. The producing
area is well-placed near Bogotá airport and the Corabastos
wholesale market, and transport to other cities is easy along
the Pan-American Highway.
The linkages. Large exporters handle about 95 percent
of the production in the area. At first, the export companies
formed societies with the land-owning producers but changed
their strategy after realizing that it is risky to participate
directly in a business where production is subject to weather,
pests and diseases. As a result, exporters have developed
informal mechanisms that allow them to link farmers to their
businesses in order to ensure a permanent supply of fruit
according to market requirements. Agreements are not written,
but everyone understands and accepts them. Farmers wishing
to supply a major exporting company must sell them all of
their production during the year, starting in the high season.
The exporters emphasize quality and recommend that their suppliers
plant less, so that they will have enough money to take care
of all crop requirements and obtain a greater percentage of
export-quality fruit. The exporters are committed to pay in
cash or by cheque 15 days after delivery. Additionally, they
buy the entire yearly production according to the pre-established
parameters of quality and quantity. In recent years, small
and medium-scale producers have begun forming partnerships
with sources of capital for inputs. The cost of rent is shared,
and the production is divided equally. The investing partners
are usually landowners, traders, exporters or simply farmers
who want to share the responsibility of the business with
a working partner.
The results. Currently, the production of cape gooseberries
generates 250 direct jobs in the production area and numerous
direct and indirect jobs in commercialization.
Lessons and distinct features. Owing to the increase
in agricultural and commercial activity, rural workers, attracted
by the good prices obtained for fruit in the high season,
form societies with other farmers in order to participate
in the business.
Source: "Alternatives to improve negotiation
and market access capabilities of small-scale rural entrepreneurs
in Latin America" - AGSF Working Document (FAO, 2004)
ECUADOR
Cassava processing, Manabi Province
The processors. Some 230 starch factories in Manabí
Province are engaged in cassava starch production, using mainly
semi-mechanized or traditional processing systems. Cassava
is grown in marginal areas, where other crops do not grow,
and most cassava producers are small-scale farmers who plant
on hillsides without irrigation.
The markets. About 80 percent of starch produced in
Manabi is sold in neighboring Colombia. A smaller part of
production is sold to national traders, who sell it wholesale
to agro-industrial warehouses in the cities of Quito, Guayaquil
and Cuenca, and to bakeries, confectioner's shops and agro-enterprises
in the province.
The linkages. Farmers make verbal agreements with
the starch factories and deliver their production in situ.
Sometimes the factories pay farmers in cash at the moment
of sale, and other times the producer must wait until the
processor sells the starch. Colombian intermediaries go to
the area with their own transport, contact agents familiar
with the zone and negotiate with the different starch factories.
Verbal agreements are made and in many cases the intermediary
pays an advance, either in money or raw materials before the
cassava is processed. The export process is not formal - rather,
it crosses the border unofficially. The verbal agreement between
these two agents of the chain is based on trust. The intermediary
buys all or part of the cassava starch production from the
processor in exchange for the processor's commitment to deliver
a quality product. This agreement is made before the starch
is processed, which enables the processor to plan production.
Training and support services. Since aid institutions
have largely abandoned the zones where cassava is produced
and processed, no public or private institution has supported
or promoted this activity. The dynamics of this production
have developed spontaneously due to market demand, particularly
in Colombia.
The results. It is estimated that the Manabí
starch factories provide permanent employment to 1 380 individuals.
Starch processors have acquired negotiation skills and are
capable of negotiating prices owing to the linkages they maintain
with the different actors in the chain. Processors' earnings
have increased and a large number have improved their processing
infrastructure.
Lessons and distinct features. A factor of success
in business linkages between the cassava processors and intermediaries
is the generation of mutual trust through the fulfillment
of verbal agreements.
Source: "Alternatives to improve negotiation
and market access capabilities of small-scale rural entrepreneurs
in Latin America" - AGSF Working Document (FAO, 2004)
INDONESIA (1)
Bimandiri company
The company. The Bimandiri company was established
in 1994 and by 1998 was supplying four supermarket chains.
Initially it purchased from local traders and individual farmers.
In 2000 the company decided to become a dedicated wholesale
supplier only to Carrefour (Indonesia) and to develop a sustainable
procurement system. Bimandiri does not produce its own vegetables,
but rather has organized production agreements with different
smallholder farmer groups in the Lembang region of West Java.
The markets. Bimandiri supplies a range of products
to Carrefour. It has created an exclusive product, the individual-sized
Baby Black Watermelon, which is planned to be marketed to
other Carrefour stores in SE Asia in the coming years, and
is collaborating closely with Carrefour on broccoli and chili
production, aiming to produce standardized products.
The linkages. Bimandiri's procurement system encourages
farmers to work in groups and to deal with Bimandiri through
partnership arrangements. Such arrangements now form around
30 percent of the company's purchases. It works with farmer
groups on the basis of agreed quantities. Bimandiri supplies
a range of inputs (seeds, pesticides, fertilizer), undertakes
postharvest handling operations (selection, preparation, packaging,
transport to Jakarta), provides training and associated activities,
and arranges planting and harvesting schedules to ensure continuity
of supply and consistent quality, to meet Carrefour standards.
The cost of these additional services to growers is covered
through the margin that Bimandiri receives from Carrefour.
Prices are either fixed in advance or related to returns within
a floor/ceiling price range. The company's margins are said
to be fully transparent.
Training and support services. Under Bimandiri's
Partnership Pattern Scheme, both the company and Carrefour
provide growers with supervision and technical assistance.
Specific projects for broccoli and chili production involve
advice on product standardization and best farming practices.
The results. Birmandiri's gross sales increased from
less than $US 850,000 in 2001 to more than $US 1 million in
2004.
Lessons and distinct features. Problems faced by
Bimandiri include the level of commitment of farmers, seasonality
of production and price volatility, and the occasional inability
of Carrefour to fully absorb the supply, resulting in loss-making
sales to traditional markets. However, prospects are encouraging,
as supermarkets in Indonesia expand and demand for horticultural
produce increases.
Source: "Organizing the Supply of Fresh Product
for Carrefour in Indonesia", by A. Rivani and Sandredo
(Bimandiri, 2005)
MYANMAR
Jujube growers in Patheingyi Township
The growers. Jujube growers in Patheingyi township,
the main jujube producing area in Myanmar's Mandalay Division,
have farms varying in size from 0.5 to 5 acres. Some large
growers have up to three farms. Growers in other towns in
Mandalay Division mainly sell to large-scale wholesalers in
Yangon and Mandalay, and over-supply often leads to falling
prices and reduced profit margins.
The markets. The Patheingyi growers sell their produce
mainly at Muse Town, 300 km away on the Myanmar-China border.
The Muse market was first tapped by traders in mango and watermelon.
Demand for jujube in China increases in the weeks before the
Chinese New Year. Buyers prefer the green matured fruit, which
is suitable for long-distance transportation to markets in
Yunnan province, China.
The linkages. Jujube is packed in cardboard boxes
purchased from factories in Mandalay City. The Patheingyi
growers usually ship their fruit to intermediaries in Muse
using their own trucks or hired vehicles. If the marketed
volume justifies a pick-up truck, the driver comes directly
to the farm to load the consignment. The fruit is transported
in consignments ranging up to 500 boxes, across mountain roads
and through security and taxation checkpoints. In Muse, the
drivers deliver to intermediaries, who contact Chinese buyers
and negotiate prices. The drivers usually bring the sales
revenue back to the growers with a voucher signed by intermediaries
(if the sale value is high, the intermediaries send cash to
their suppliers through a private bank, and pay bank charges).
Payment is in yuan, which can be exchanged for local currency
at a money changer in Muse. Five percent of the sale value
goes to the intermediary. Before sending fruit to Muse, some
growers contact their trading partners in order to have market
information on prices, supply and exchange rates. Other growers
gather information from truck drivers returning from Muse
Town.
Training and support services. The Mandalay City to
Muse road was constructed and is maintained by a private company.
At Muse, Myanmar's Ministry of Trade operates an office to
develop and facilitate border trade. Jujube farmers received
training in techniques of grafting or budding from the Myanmar
Agriculture Service, which also provides grafted seedlings
at a reasonable price. Some farmers sell grafted seedlings
to other farmers in the main surplus-producing areas.
The results. Generally speaking, profit margins on
jujube are higher in Muse Town, compared to those in Myanmar's
urban wholesale markets, in part because intermediaries' commissions
are lower. However, margins are at times squeezed by over-supply,
rejections by buyers, and exchange rate fluctuations.
Lessons and distinct features. The jujube trade with
China presents an example of a linkage developed by farmers
and traders without significant external support. The potential
for sustainability appears to be high. At present, the Patheingyi
growers lack refrigerated transport and Muse lacks cool storage
facilities. If these were available, along with more reliable
market information, growers' profit margins could increase.
Source: Kyaw Myint
THAILAND
A vegetable trader
The supplier. Mr. Thee, a professional vegetable supplier
in Chiang Mai, specializes in chemical residue-free (CRF)
vegetables. He assembles produce, such as head lettuce, cos
lettuce, Chinese cabbage, Japanese cucumber and Japanese pumpkin,
from 40 farmers.
The markets. Mr. Thee delivers his produce to three
buyers in Bangkok, two of whom are companies, and one an independent
businessman. These buyers are all suppliers to the TOPS and
Lotus supermarket chains, while one of them also exports fresh
produce. From past experience, he finds it advantageous to
deal with these companies since the market is assured and
his revenue is reasonably certain.
The linkages. The supply chain upstream is a modified
form of contract farming, based on mutual trust and without
a written contract. In order to obtain CRF vegetables, Mr.
Thee conducts residue tests 20 days prior to harvesting. To
prevent growers from delivering non-member's vegetables, Mr.
Thee visits growers' plots before harvesting to estimate production
and observe chemical applications. He is responsible for quality
inspection, grading, dressing, and packaging. The buyers do
not provide him with exact product standards or grades, except
for head lettuce. After grading, vegetables are kept in cold
storage, normally for one day, before consignment to Bangkok.
Payments are made seven to 15 days after delivery. Mr. Thee
is responsible to his growers for financial, production and
price problems, as well as for late payments.
Training and support services. Capital investment
for Mr Thee's business consisted of a five-year loan from
the Bank of Agriculture and Agricultural Cooperative (BAAC)
at a low interest rate of 12 percent per year, a small short-term
credit from the Residual-Free Vegetable Fund, and his own
funds. Mr. Thee provides his members with farm manure and
installed sprinklers, with costs deducted from gross revenue
without charging interest. He designed sampling methods for
his growers to guide them in collecting sample vegetables
which are forwarded to the collection centre for CRF testing.
Government agencies provided technical training to farmers.
Lessons and distinct features. This case study shows
that relatively small-scale traders can overcome farmer suspicion
(and the hostility that some government officials have towards
the private sector) to develop long-term trusting arrangements.
A precondition for such a linkage is the availability of markets
for quality produce, in this case provided by two supermarket
chains.
Source: "Regoverning markets: Securing Small
Producer Participation In Restructured National And Regional
Agri-Food Systems In Thailand", by Aree Wiboonpongse
and Songsak Sriboonchitta, Chiang Mai University, Thailand
(2004)
SYRIA
Caper market in desert areas of Syria
The collectors Caper collection from wild shrubs
is a relatively new occupation and source of additional income
for the resource-poor nomadic communities living in the Syrian
desert areas, in particular in eastern and northern Aleppo
province, Al Salamie and Al Jazira areas. Collectors are mainly
children (6-14 years old) and women. The estimated yearly
harvest in Syria is about 4,000 tonnes.
The markets Caper (Capparis spinosa L.), a
spiny, heat resistant shrub is not cultivated in Syria as
in other Mediterranean countries, where it is the source of
a well-known condiment in the Mediterranean cuisine. The flower
buds are collected by Syrian communities for foreign trade
and consumption. The product is processed mainly in Turkey
and consumed in Europe and the local market is almost non-existent.
The amount of capers collected, the price and number of people
involved in the collection depend on the yearly demand of
foreign traders, which fluctuates greatly.
The linkages A collector chief is responsible for
a group of caper collectors in each area. The collector chiefs
liaise with a manager of a company, who defines the price.
Part of the money is used to pay the collectors and, sometimes,
the rent of the premises where the handling takes place. Handling
the caper buds involves entire families working, mainly in
their homesteads, without any value-adding activities. The
caper buds are only sorted by size, with a rudimental tool,
mixed with salt and stored in plastic containers. After that,
they are collected and stored by the manager of the company,
who will then sell the capers to foreign traders. Finally,
the foreign factories further process and bottle the capers.
After being branded, the product is sold on the European market
with a high mark up.
Training and support services A pilot market chain
analysis involved collectors, processors and traders, policymakers
and cultivation specialists in order to identify ways to generate
market value and reorganize the chain to generate income for
the resource poor. A multi-stakeholder meeting with the market
actors was organized in the collection area of Jabal al Hoss.
The meeting brought together the market actors to discuss
means of further developing the caper market.
The results The participatory pilot study highlighted
the fact that collection contributes about 20 percent of the
yearly income of the collectors and represents an unexploited
economic potential if the identified commercial barriers could
be overcome. The major constraints recognized in consultation
with the various market actors were (i) the lack of cultivation
practices, (ii) harsh working conditions, (iii) lack of training
or machinery for value-addition, (iv) high fluctuation of
demand and price with unstable supply, and (v) lack of control
of the marketing chain by the suppliers, poor market transparency
and little trust among the actors. Considering these constraints,
some opportunities to enhance the market were identified by
the market chain actors during the multi-stakeholder meeting,
as follows: (i) horizontal integration through cooperatives
of collectors to increase their benefits, (ii) vertical integration
of collectors and traders through the involvement of the business
sector to benefit the rural communities, and (iii) development
of caper cultivation practices supported by the government
and local institutions. Through the process of the multi-stakeholder
meeting, some collectors, collector chiefs and traders discussed
quite openly the reasons for the mistrust among them. The
Government officials and the national researcher could also
get the insights of the collectors of what it is missing to
improve the supply (in terms of quality and quantity) and
gain traders' trust.
Lessons and distinct features More attention should
be paid to products offered as a result of local biodiversity.
These are often easily accessible to the resource poor. However,
to improve the livelihoods of the poor communities managing
these resources and to exploit the economic value of the diversity,
market values have to be enhanced by engaging chain actors
to reorganize the market chain and increase the trust in one
another. Actions towards this achievement imply a high level
of commitment and joint actions by research, development agencies
and local institutions.
Source: Alessandra Giuliani, IPGRI (2006): "The
caper in Syria: nature's gift to Syria's resource poor",
IPGRI (2005)
BANGLADESH (1)
Market Extension Training of Community Based Organizations/
Farmer Groups in North West
The farmers. Marketing training has been provided
to some 80 community-based organizations/farmer groups in
the districts of Rajshahi, Bogra and Dinijapur through the
Swiss-funded Livelihoods, Empowerment and Agro-Forestry (LEAF)
project and 12 locally based NGOs. Most of the groups are
female and consist, on average, of 28% small farmers, 35%
marginal farmers and 37% extreme poor. In the first stage
of a six-step marketing course, the farmer groups carry out
a resource audit to identify marketing problems, select two
to four products for analysis, and appoint a marketing task
force of four to six people. The task force carries out its
own in-depth market research, and presents recommendations
to the group, which then draws up a marketing strategy and
an action plan allocating tasks and responsibilities.
The markets. Before the marketing education, most
of the farmers sold their surplus individually to local traders
who visited their villages. About 90% of output is consumed
within 10 km of production.
The linkages. In carrying out market research, farmers
were able to establish linkages with larger-scale traders.
For example, they used mobile telephones to call in wholesalers
when their consolidated production reached a specific critical
mass, e.g. 50 chickens for a traveling chicken trader. Very
often, they developed a partnership approach, adapting production
to meet their new trading contacts' recommendations, e.g.
value-added products such as jute mats, improved varieties,
introduction of hybrid chickens, and creation of a milk collection
centre in order to be included in a dairy processor's milk
round. Potato farmers collectively rented cold storage space
which reduced costs and enabled them to sell during the off-season
at higher prices. Through discussions with traders, they learned
how to adapt their vegetable production to match demand, e.g.
early and late season crops, higher priced niche products
and the use of preferred cultivars.
Training and support services. The individual training
courses are spread over a period of about four weeks, each
individual step lasting no more than 2 hours (except for market
research, which may take up to a full day). When new products
are being developed, local service providers and NGOs provide
some subsequent training, e.g. bag manufacture, embroidery
and sari painting. By May 2005, some 80 courses have been
given, of which about 50 have been in place for sufficient
time to show measurable results, i.e. between three and 14
months. Some 75% of the 2000 groups in the project have now
requested marketing training as part of their annual plans.
Farmers are provided with their training courses free, although
they tend to cover 50% of the costs of service providers.
The results. Farmers found improved ways of working
with local traders or took their product to a higher level
in the marketing chain. Because farmers identified their own
markets and niches, about 75% of groups have diversified into
new products, thus avoiding over-supply. Results show an average
increase in additional value added (a measure of the additional
cash income less costs) typically in the range of $ 2 000
to $ 7 000 with an average of $4 300 per year per group. The
ME course has lifted individual family incomes for participating
members by 32%.
Lessons and distinctive features. The six-step training
course is highly practical and is focused on providing farmers
with the tools to carry out their own market research, develop
an action plan, negotiate with traders, develop new products
and to organize themselves. They are now seeking assistance
in linking to larger traders, developing new skills and, to
a lesser extent, managing funds.
Source: Grahame Dixie
BANGLADESH (2)
Mushroom contract farming in an urban agriculture
setting
The farmers. Twenty poor households grow
oyster mushroom in Mymensingh city. These households are beneficiaries
of the FAO component on sustainable livelihood development
of the Local Partnerships for Urban Poverty Alleviation Project
(LPUPAP). They have access to small plots of land next to
their houses. Mushroom production does not require much space:
a clean, dark and ventilated room with shelves is all that
is needed. The inputs into the production process are mushroom
spores, bamboo shelves, water to pour onto the mushroom cultivars,
and formaldehyde to clean the production room. The mushroom
is grown out of plastic bags containing spores and the nutrient
base. Up to 200 bags can fit in a space as small as 2 m²
. Harvest starts seven days after the start of the culture
and can last four months; each bag of spores can produce a
minimum of 2 kg of mushroom.
The market. Abdul Kader, based in Mymensingh,
also produces mushroom himself but collaborates with the project
to source more produce which he then sells. He supplies the
spore bags to the farmers and buys the fresh mushroom from
them four months later. He travels the two-hour drive to the
capital, Dhaka to buy the mushroom spore bags which he sells
to the farmers, making a gross profit of Tk4/bag which covers
the transport costs of Tk1.5/bag. He also makes a profit on
the sales of the mushroom. Oyster mushroom is not a traditional
food product in Bangladesh . Therefore his market is still
a niche of educated urban households, Chinese restaurants
or expatriates in Dhaka.
The linkages. An agricultural extension
officer of the LPUPAP in Mymensingh knew Abdul Kader. He asked
him to collaborate with the LPUPAP by training the project
beneficiaries while enabling him to enlarge his production
base. The project also negotiated the purchasing price.
Training and support services. Both the
project and the trader provide training on production techniques.
The LPUPAP provides some inputs to the producers in order
to start up their mushroom production system: plastic hand
gloves to wear when cleaning the production room and the sealing
machine to seal the mushrooms into plastic bags. The project
also provides signs and prints out leaflets to advertise oyster
mushroom to local consumers to develop the local market for
mushroom.
The results. With a selling price worth
Tk100/kg of produce, a minimum of 2 kg of mushroom per bag
of spore, a maximum of 200 bags on 2 m² , and production
costs estimated at Tk9/kg of produce, oyster mushroom producers
can make a minimum profit of Tk182 for every bag of spores
they purchased at Tk14 per bag. The maximum profit for this
production system can reach Tk40 000 (or around US$615)
over a period of four months. This is not negligible for income-poor
urban dwellers with some land to dedicate to agricultural
production.
Lessons and distinct features. The model
implemented by the LPUPAP appears to be sustainable in the
fact that it uses a trader as an intermediary between farmers
and markets. As long as the trader finds a market for his
mushroom, he is encouraged to collaborate with the farmers.
The project is helping to enlarge his market by advertising
the mushroom production to local consumers and by printing
leaflets on how to cook them. This model is thus an example
of mutual benefit between extremely small landholders and
a trader through the catalytic effect of a development project.
With a micro-credit scheme due to be implemented in the next
phase of the project, it can be envisaged that the small investments
currently borne by the LPUPAP may be handed onto the producers;
this will increase further the sustainability of this micro-enterprise
development model.
Source: Jean-Joseph Cadilhon, FAO and Md. Farhad
Zamil, LPUPAP–FAO
EL SALVADOR
Association of Indigo Producers of El Salvador (AZULES)
The producers. Members of the Association of Indigo
Producers plant approximately 22.4 hectares of indigo, a natural
dye. Automated and manual practices are used in production,
depending on the size of the plot and the slope of the land.
Producers plant between 0.5 and 2.0 hectares each. One hectare
of indigo production requires 185 workdays during the useful
life of the crop (three years).
The markets. In recent years, demand for indigo (which
had largely been replaced by artificial dyes) has increased
in markets that favour preservation of the environment and
human health. The indigo produced by AZULES is sold
on the international market, mainly in Germany.
The linkages. Primary producers, processors and agents
are members of AZULES and all have clearly defined roles in
the production chain. Primary producers are responsible for
agricultural production, while processors are responsible
for processing the raw material to obtain the final product.
The product is placed on consignment at the association's
marketing unit, which employs members who have marketing experience.
International clients place orders for indigo powder with
the marketing unit which is, in turn, responsible for collecting,
packaging and transporting the product to the loading dock.
The relationship between producers and the marketing unit
is through a formal agreement. The marketing unit does not
pay cash for the product - producers receive payment when
clients have paid. The producer also gives the marketing unit
a percentage of his production as samples. A small percentage
of production is sold at different prices on the domestic
market.
Training and support services. Thanks to the linkages
with a GTZ agro-industrial project, an agreement was made
with a laboratory to develop a method to determine indican
content, the substance that becomes indigotin when the raw
material is processed. With this technological advance, some
steps of the process will be shorter. Support has been received
from IICA and PRODAR in legal, organizational, training and
marketing aspects.
The results. The value of indigo exports was US$4,025
in 2001 and US$18,039 in 2002. Some members plan to double
their production.
Lessons and distinct features. Homogenization of the
product has reduced variations in quality of the indigo from
different producers. The Association lacks liaison with support
organizations and institutions at the national and international
levels. As a result, opportunities to establish funding agreements
have been lost, leading to a continued dependency on GTZ and
IICA, since the association still does not have the economic
resources to cover its needs.
Source: "Alternatives to improve negotiation
and market access capabilities of small-scale rural entrepreneurs
in Latin America" - AGSF Working Document (FAO, 2004)
INDONESIA (2)
Nanggung tree garden farmers
The farmers In Nanggung, Java farmers live on or
below the poverty line, with access to less than one hectare
of land, consisting of irrigated rice fields (0.3 ha.) and
tree gardens (0.5ha.). Tree garden products are for both family
consumption and local market sale. Lacking clear market
opportunities farmers had previously paid little attention
to crop management issues.
The markets Proximity to Jakarta offered Nanggung
farmers the opportunity to target production to meet rising
demand for fruits and vegetables. However, farmers were poorly
linked to commercial markets. Banana held particularly high
potential, with market demand far exceeding supply and growing
conditions being ideal. Farmers were interested in intensifying
their farming activities but hesitated because they were not
sure where to focus their efforts.
The linkages Assistance to the farmers was provided
by the World Agroforestry Centre (ICRAF), Winrock International,
and the Indonesian Institute for Forest and Environment (RMI),
with financial support from USAID. With community participation,
farmer leaders were identified in ten villages and these organized
farmer groups who were provided with training under the programme,
which also carried out surveys to identify existing marketing
channels, marketing problems faced by armers, traders willing
to work with the farmers, and product specifications. Visits
to markets and traders were also held so that farmers could
get to know traders and their needs. At the same time, production
and post-harvest support was provided to the farmers to enable
them to better meet product specifications.
The results Farmers have begun to organize themselves
for collective marketing and have linked proactively with
traders. They now arrange harvest close to the scheduled arrival
of the traders and this and other improved post-harvest practices
have resulted in 85 percent of production meeting market specifications,
compared with 50-60 percent before. Traders now offer a price
differential for bananas meeting specified grades. Traders
have adopted the plastic crates introduced by the programme
and these are now used to transport bananas up to the retail
stage, resulted in losses being reduced from ten percent to
three percent. As a result of lower losses, increased sales
(+ 38 percent) and higher prices the gross income achieved
by farmers has been doubled, without the farmers incurring
extra costs. Farmers in other villages are now trying to replicate
their achievements.
Lessons and distinct features Traders often decry
the absence of supply even when there is potential for production
relatively close to them. This case study gives a good example
of where external interventions can link farmers with traders
where they may not otherwise have established linkages. Working
with traders it has also been possible to raise quality to
market specifications.
Source: Joel Tukan, James Roshetko, Suseno Budidarsono
and Gerhard Manurung, "Banana market chain improvement
- Enhancing farmers' market linkages in West Java, Indonesia"
ICRAF, Bogor, Indonesia.
PHILIPPINES
NGO creates independent enterprise to distribute poor
farmers’ organic rice
The farmers. A group of 25 smallholder farmers
in Nueva Ecija Province in the Philippines have formed a cooperative
under the guidance of an NGO named Gratia Plena Social Action
Center. The group has a total of 78 ha of community-certified
organic rice and a further 42 ha of land is currently under
conversion to organic agriculture. The farmers use organic
fertilizers and pesticide botanical extracts.
The market. The organic rice is sold to niche
markets in the Philippines. Organic sales are growing in the
Philippines among higher-income consumers who are worried
about food safety. The rice produced by the farmers’
cooperative is also sold to supermarket chains under the brand
name “Full of Grace”.
The linkages. Gratia Plena is an NGO has
created Full of Grace Organic, which specializes in providing
agroenterprise services to the farmers’ cooperatives.
Full of Grace markets inputs to farmers and processes and
sells their produce, among other support services. All staff
members of Full of Grace are paid by the enterprise. The mother
NGO started promoting organic rice production to the Llanera
farmers in 1995 but there was no local organic market for
their rice. Gratia Plena, thus initially invested around US$20
000 to create a central marketing centre to market organic
rice and another centre to market organic vegetables. The
marketing centre receives all the organic production from
farmers and pays the farmers in cash through their cooperative,
following the rules of an informal supply contract. It then
finds markets for the produce while bearing the cash flow
burden of supermarkets’ delayed payment conditions.
Training and support services. Full of Grace
trains the farmers of the group and new farmers entering the
cooperative to use organic inputs. It also provides support
services in enterprise development and diversification, credit,
and bookkeeping. Full of Grace has also devised a community
certification scheme whereby rice growers from another cooperative
will audit the practices of the Llanera rice growers. Full
of Grace has prepared a simple preformatted record keeping
form to help farmers keep the records needed for better traceability
of their farming practices.
The results. Halved yields and a limited
30 percent farmgate price premium over conventional paddy
production does not make organic rice production profitable
compared with conventional production methods. However, farmers
are satisfied as the quality of their plots and of their paddy
has improved. More importantly, organic paddy farmers also
grow organic vegetables on their rice plots during the dry
season. As the price premium for organic okra or aubergine
is double the price of the conventional produce, the combined
cropping system of irrigated organic rice and organic vegetables
can produce a net income of at least US$860 more per ha than
an equivalent conventional system. To repay the initial investment
by Gratia Plena into the marketing arm of Full of Grace, the
NGO deducts 25 Philippine centavos per kg of paddy sold by
the farmers. It is hoped that, in the long term, the farmers
will become co-owners of the marketing centre.
Lessons and distinct features. The model
shows how an NGO can help farmers through a sustainable mechanism
whereby farmers slowly become independent from the initial
benefactor through a profit-making business venture. Full
of Grace is run more as an enterprise than an NGO and the
marketing arm is meant to become the shared property of the
farmers who are using its services. Further, consumers recognize
the brand name and trust it although its suppliers have not
yet obtained independent organic certification.
Source: Jean-Joseph Cadilhon, FAO, Ross O. Quin and
Edna C. Pena, Full of Grace
VIET NAM
The lettuce trader Mr Van
The supplier. Ms Mai specializes in the
collection of lettuces around her district in Lam Dong Province
. She buys an average of 4 tonnes of lettuces every day and,
year round. She has five regular customers: three in the wholesale
markets of Ho Chi Minh City (HCMC), and two other wholesalers
in another city of southern Viet Nam . The wholesalers in
HCM City usually buy 80% of her product every day. Ms Mai
has been doing business with Mr Van for six years. Ms Mai
actively looks for farmers with plots of well-tended lettuce
to supply her regular customers. She has a pool of 15 regular
suppliers whom she has selected for their good quality produce.
The markets. Mr Van is a lettuce wholesaler
in HCMC selling to a large number of retailers. Mr Van has
five regular suppliers for his lettuce, most of them in Lam
Dong Province , located 250km Northeast of HCMC. Because he
has a special interest in getting good quality produce from
his suppliers, Mr Van himself made the trip to Lam Dong to
find suppliers who would be capable of delivering the product
he needed to his high quality requirements. This is how he
found Ms Mai.
The linkages. The relationship between the
rural collector and the urban wholesaler is based on mutual
trust, with no written contract. However, it places particular
emphasis on coordination between stakeholders and relationship-specific
investment, and is thus different to other traditional supply
chains in Viet Nam . Coordination between the stakeholders
of this supply chain involves a high degree of advanced planning.
Unlike the daily orders made by most wholesalers, Mr Van orders
lettuce through a telephone call to his regular collectors
five days in advance of the expected delivery. This advanced
ordering enables his suppliers to take their time in finding
the appropriate farmer plots to satisfy Mr Van's high quality
orders. The lettuce suppliers of Mr Van also coordinate their
activity with their own farmer-suppliers.
Training and support services. In tune with
the high level of co-ordination between stakeholders in this
supply chain, relationship-specific investments have also
been made by Mr Van as a means of managing the risk of poor
quality. Mr Van lent money to his longest-serving regular
supplier without any interest when the latter needed to buy
a new motorbike that would enable him to look for vegetable
plots that were ready for harvest, and also when he wanted
to build a new house. However, the most visible example of
relationship-investment is the training that Mr Van offers
suppliers in lettuce harvesting, processing and packing to
ensure that produce arrives in HCMC in prime condition and
with an extended shelf-life. Lettuces are packed neatly, upside
down in wicker baskets to protect them from transit damage.
Moreover, packers are instructed not to overfill baskets so
that they can be stacked one on top of another without causing
damage to the contents.
The results. Mr Van claims to have lower
levels of waste, at 3% of unsold product every day, than his
direct lettuce-selling competitors who experience up to 10%
of unsold product. He is also one of the biggest lettuce wholesalers
on the market in terms of quantities sold, with average daily
sales of 5 tonnes. Mr Van further has a good reputation in
HCMC retail markets to have constantly some of the best produce
in town. The market orientation of Mr Van's business partners
helps them predict future market conditions in order to plan
orders and sales activities together. Moreover, joint agreements
on prices between farmer and collector prior to sale as well
as deposit payments by the collector are directly linked to
greater satisfaction of business partners in this supply chain.
Lessons and distinct features. This case
study shows that traditional traders can help improve quality
in the fruit and vegetable supply chain through market orientation,
quality focus, supplier training, specific investments, collaboration
and joint planning. Mr Van distributes value throughout his
supply chain while making a profit himself. It is also an
example of privatization of extension work to farmers.
Source: Jean-Joseph Cadilhon, FAO |
