New business models for sustainable trade

Millions of farmers in Africa depend on export markets for their livelihoods. But recent market trends, including increasingly stringent standards, continued concentration of the retail sector, volatile prices, and poor access to credit have led to declining small farmer participation and income in these markets. Yet, these farmers have the skill and soil to provide the high-quality products the food industry seeks. This four-year project will bring leading food companies, respected NGOs, and farmers’ associations together to develop new business models that build the enduring relationships that benefit all.

The increased global demand for a wide range of higher-value food products has opened up new opportunities for farmers in sub-Saharan Africa, whose strengths include suitable soils and climate, low labor costs, and proximity to European markets.

Many smallholders, even those with quite modest levels of output, can be at least as efficient as larger farms. But the formalised markets require higher levels of capitalisation, supply chain management around product scheduling, higher quality, and closer supply chain collaboration. Helping farms access these opportunities requires early and active participation of buyers.

Our approach

IIED is working on a collaborative initiative to engage research, civil society and private sector partners to develop and implement new business models that enable smallholders to participate in sustainable trading relationships with international businesses and thereby improve their livelihoods.

We envisage new business models that will include practical mechanisms for smallholders  — such as longer and more direct relationships, better payment terms and information flow, and fair implementation of standards — while delivering the better quality and more consistent volumes needed by business.

These new business models will address persistent obstacles that marginalise or exclude small farmers from profitable export markets. They will be applied within specific value chain projects in partnership with the commercial parties in four strategic products:

• cocoa
• bananas
• vegetables
• dried beans