Smallholder business models for agribusiness

FAO piloted a number of microeconomic and firm-level analyses (smallholder supplier to buyer) to identify countryspecific, industry-specific, time-specific and mostly institution-specific solutions across local contexts and commodity markets dependent on smallholder supplies. In this regard, in collaboration with local service providers, activities were carried out across 14 countries, linking approximately 42 farmer groups to 30 small, medium and large agroenterprises for a selection of cash and food crops3 between September 2008 and December 2011. While policy guidance for broad value chain development encompasses an array of strategic entry points ranging from enhancing agricultural productivity to upgrading national infrastructure and investing in research and development, these activities, as a result of focusing on one core linkage within the value chain (producer-first buyer), have enabled the development of four strategic policy areas. An appraisal of these areas has subsequently led to the identification of a number of success factors and policy guidance for fostering smallholder-buyer business models and their role in value chains for agribusinessled development. As such, this paper covers: 1. Easing the cost and risk of doing business with smallholders for SMAEs. 2. Supporting smallholder competitive advantage for agribusiness-led development. 3. Smallholder organizational models for improved bargaining power and value-chain governance. 4. Institutional innovations and strategic value addition for sustained value capture. 5. Success factors and policy guidance for strengthening smallholder-buyer business models within value chains.

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