Markets and trade

Pilot testing of the business model approach

There are many models of business linkages, some driven by producers, some by buyers and some supported by intermediaries including NGOs. The business model critically impacts on how value is created, captured or shared by farmers and other chain actors. Factors which influence sustained and equitable inclusion of smaller scale farmers and small and medium scale enterprises (SMEs) are producer organization, market coordination and intermediation, business support and financial services, buyer behaviour, and enabling policies and infrastructure.

An Inclusive Business Model approach has been developed to enable farmer organizations to appraise how they are doing business and interact with buyers and agro-processors, and to identify upgrading strategies to improve market linkages. The general objective is to assist in the conversion of farmer organizations into more formal business entities that operate on a cost recovery basis and provide business support services and advice on farm management and marketing to member farmers. These interventions will aim to strengthen farmer organizations’ ability to capture value from innovation and introduce value adding activities at the interface between the smallholders and the buyers.

A short paper outlines the rationale behind the approach that FAO will adopt when supporting small farmer groups, producer organizations, and local service providers under the AAACP:

The business model approach is being implemented in all regions.

Business models