Food industry: Small producers, big markets

Small-scale ACP farmers are challenging the stereotype of subsistence producers and demonstrating their capacities as reliable food industry suppliers.

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For any small-scale producer in ACP countries, being able to supply a big industry requires many conditions. These range from access to finance and technology, to the presence of other actors willing to ‘pull’ small-scale producers along.

The case of the Haitian mango sector illustrates how small-scale farmers contribute to sustainable sourcing in an ACP food industry. The Haitian Association of Fruit Producers and Sellers of the South organises the picking, sorting and washing of its 750 members’ production. High quality fruits are sold to one of the larger local exporters of fresh mangoes. Fruits that do not make export grade are bought by a local processing plant which dries them for the domestic market, thereby adding value to what would normally be rejected. The driver of strengthening the value chain here is primarily the organisation of farmers into a single association that manages harvesting and postharvest operations with professional acumen. The exporter’s contribution also plays a role in driving up quality. It helps too that working capital requirements are low and can be met by farmers themselves.

In Vanuatu, the Farmers Support Agency linked isolated village farmers to a processing and marketing firm, while providing training and technical support. The linkage generated higher value for all actors of the value chain. After training, technical support and organisation, smallholders proved they could produce export quality products. Vanuatu vanilla extracts are now sold to ice cream companies in New Zealand, while extracts and paste are exported to Australia. The involvement of a proactive processor-come-exporter has been a major ‘pull factor’ in the value chain.

The pull-factor

In West Africa, Unilever is developing an inclusive supply model involving small-scale palm oil producers, enabling them to meet household socio-economic objectives by guaranteeing markets in return for adherence to certain production standards. The integration of small-scale producers in the palm oil value chain generates income that lifts households out of poverty and enables children to attend school.

Similarly, a major actor in the maize value chain in Ghana, where maize is a staple food, provides small-scale farmers with inputs (high yielding seeds, chemicals, farm equipment) and services (training, loans) against the pledge to be their preferred sales channel. The strengthening of links within the value chain results in increased and secured supplies for the marketing company, alongside higher outputs and margins for farmers.

Such arrangements are not without downsides. The business relationship is often skewed in favour of the buyer who may use its bargaining power to lower prices or dictate a technology that is not the most appropriate. On the other hand, side-selling by farmers may also endanger the relationship.

Drivers and triggers

Grouping smallholders in producer organisations and favouring the operation of market forces, for instance through a strong procurement actor within the industry, are both clear drivers for strong value chains.

Other factors that strengthen small-scale famers range from support in accessing finance and technology, to providing a proper market environment that promotes small holder development. These conditions are well reflected in the recently launched CaFAN Regional Value Chain Alliance Project which emphasises capacity-building, organisational development, technical training, regional learning exchanges, market visits, multi-stakeholder collaboration, and private sector engagement, among others.

Jethro Greene, chief coordinator says: “CaFAN aims to build capacity among farmer leaders by sharpening these [value chain] tools and strategising how value chains can be upgraded and implemented for specific crops.”

Article Source: http://www.spore.cta.int/en/article/small-producers-big-markets.html

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