New business models can spell success for African farmers

A major international project has provided insights into how small-scale farmers in Africa can improve their livelihoods by building sustainable trading relations with international businesses in the food industry.

News, 19 November 2012
People spread cocoa beans on a drying table in Ghana.

Mariama Zachary, 44, and Akua Azaiz, 20, spread drying cocoa beans on a table in Sawuah, Ghana. Photo: Flickr/Gates Foundation 

This project — funded by the Gates Foundation and led by the Sustainable Food Lab — involved a collaboration between Catholic Relief Services, Rainforest Alliance, the International Centre for Tropcial Agriculture (CIAT) and the International Institute for Environment and Development.

The final four reports, the last of which is published today, reveal ways to break down barriers that usually prevent African farmers from reaching lucrative markets in the West.

Millions of small-scale farmers in Africa depend on export markets for their livelihoods. But while they have the skills and soils to provide high-quality products for the food industry, their entry into these markets is constrained by increasingly stringent standards, volatile prices and lack of credit, amongst other things.

Over four years, the New Business Models for Sustainable Trading Relationships project investigated how supply chains can be adapted to include and benefit small-scale producers.

"The project has shown how even poor and marginalised farmers can engage with and supply major international corporations, and gain a stable, sustainable source of income," says IIED researcher Abbi Buxton. "This requires commitment and action throughout the entire length of supply chains, and by all stakeholders – from farmers and retailers to government agencies and civil society organisations."

The new reports — which focus on cocoa in Ghana and Côte d’Ivoire, flowers in Kenya and beans in Ethiopia — follow five earlier reports on other aspects of efforts to link smallholder farmers to modern markets (links to all nine reports below).

  • In Ghana, the project identified the steps needed to enable cocoa farmers to produce fine flavour beans that carry a substantial market premium. This was an effort to emulate the experience of farmers in Latin America, who produce such beans and have reaped 3-4 times the market value of normal beans.
  • Also in Ghana, and in Côte d’Ivoire, the project assessed how the Rainforest Alliance managed, in just three years, to certify over 15,000 farmers as producers of environmentally-friendly cocoa.
  • In Kenya, project members acted as "ethical agents" who helped to reshape supply chains at each link to better serve the needs of small-holder flower farmers and enable them to sell directly to major retailers in the United States and Europe. The project team thinks large food companies with strong development targets would benefit from adopting this strategy to employ ethical agents to engage with each node of the supply chain.
  • In Ethiopia, the project team linked thousands of bean farmers to canning factories and retailers in the United Kingdom while improving their productivity and product quality.

"The project has shown that it is possible to develop new business models that link small-scale farmers to modern markets," says Don Seville of the Sustainable Food Lab. "These new models are fairer, more inclusive schemes that share the risks and rewards across the value chain. Overcoming the challenges typical to small scale producers – lack of credit, poor transportation, lack of technical assistance, etc., – does take time, patience, and creativity but the rewards are there for companies and farmers that commit to work together."

Links to the new reports

Smallholder flowers from Kenya: the role of ethical agents

Certified cocoa: scaling up farmer participation in West Africa

Fine flavour cocoa in Ghana: reaching high value supermarkets

Dried beans in Ethiopia: increasing food security through trade


Links to associated blog posts

How markets can bloom for Africa's smallholder farmers

New cocoa business model catching on

Quality control helps Ghana's fine cocoa producers go global

Other papers in the series are:

Branding Agricultural Commodities: The development case for adding value through branding

Information and communication technologies for development

Commodity exchanges and smallholders in Africa

Sourcing gender: gender productivity and sustainable sourcing strategies

Under what conditions are value chains effective tools for pro-poor development?

The project has also produced a practical toolkit, "Linking Smallholders: A guide on inclusive business models", to help facilitators of market linkage work understand conceptual frameworks, cases, and practical processes for linking small scale producers to modern markets.  

English version [PDF]

Spanish version [PDF]