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Posts Tagged ‘agriculture’
Q&A with Tram Nguyen-Stevenin, author of MDI Betterday Fairtrade Products case study in Vietnam

Tram Nguyen-Stevenin was born and raised in Vietnam. She graduated from ESSEC MBA with a focus in Marketing & Sales, and has 13 years of international management experience acquired in both the association sector and private sector. She effectively managed Sales & Marketing for the largest European and American multinationals operating in Telecommunications and e-commerce & Online Financial Services. For over 2 years, she has been the Executive Director of a Business Organization (European Chamber of Commerce) in the developing and exciting country of Vietnam. She accepted this appointment which is somehow different in her corporate career path as a key opportunity to promote and facilitate trade and investment activities between the EU, her welcome mainland, and Vietnam, her born country. After her term at EuroCham, she is now back to the business world as the Marketing & PR Director at K+, the first media joint-venture ever in Vietnam between the Canal Plus group (Vivendi) and the national broadcaster Vietnamese Television VTV.

MDI is a SME specialized in equitable trade of agricultural products, including coffee, green tea, jasmine tea, snow mountain tea and cashews grown in eight provinces across Vietnam. MDI works in partnership with groups of smallholder farmers, mostly from ethnic minority groups in poorer and remote areas of Vietnam.

To download the MDI Betterday case study from the GIM database, please click here.

What is MDI’s basic value proposition and what makes its financial model sustainable?

MDI works in partnership with groups of smallholder farmers, mostly from ethnic minority groups in poorer and remote areas of Vietnam. The company is committed to the development of the rural sector in Vietnam and believes that the best way to accomplish sustainable development is by doing business in a fair and ethical way with people in the sector: by engaging producers as trading partners, MDI can improve their livelihoods, increase their incomes and assist them in linking with markets on terms that are beneficial for them.

With their motto “Development through pro-poor business” MDI has a “double bottom line” meaning that in addition to being a “for-profit” their success is also measured by the social impact that they can achieve.

What are the main challenges for scaling up the business?

- Physical Infrastructure: in order to grow and reach to new farmer groups, MDI needs to invest and recruit local staff in the mountains to collect and check the quality of the crops.

Besides, in terms of organization, as a small structure with limited human resources, the company has to undertake many tasks, from providing support to farmer groups right through to marketing their products internationally. Furthermore, MDI does not have a big budget for marketing and advertising their brand.

What has the involvement of MDI done for ethnic minorities in the country?

MDI works with farmer groups to help improve quality of production, achieve Fairtrade certification and organic certification. MDI is currently working with around 1000 farmers, representing total household size about 4500-5500 people. All of the farmers they work with live below the international poverty line of US$1 day; most are ethnic minority people; and many live in remote mountainous regions.

Because MDI only started recently, the impact on income is still quite modest. However, the tea farmers were able to double their income from tea this year – tea is about 1/3 of their overall “income” but represents almost all of their cash income.

It can also be noted that the farmers feel more pride in their products and are excited to see that their tea and cashew is being sold in the international market but still retaining the identity of the producer groups.

“We are proud to know that our products are sold in many foreign countries and…I cannot believe that my picture is in fact appearing on tea boxes to many people!” explains a young Mong lady.

For MDI, what were the main benefits of the fair trade certification?

The FAIRTRADE Certification Mark is a registered trademark of Fairtrade Labelling Organizations International (FLO). It certifies that products meet the social, economic and environmental standards set by Fairtrade. The Mark certifies products not companies. It does not cover the companies or organizations selling the products.

For producers Fairtrade uniquely offers four major benefits

  1. Stable Prices
  2. A Fairtrade Premium
  3. Partnership
  4. Empowerment of farmers and workers

What would you say was critical about the actor ecosystem that enabled this business to be successful?

Oxfam Hong Kong has played a critical role in providing contacts, linkages and assistance on international markets to MDI.

Oxfam International is a confederation of 14 like-minded organizations working together and with partners and allies around the world to bring about lasting change. Oxfam International works directly with communities and seeks to influence the powerful to ensure that poor people can improve their lives and livelihoods and have a say in decisions that affect them.

Oxfam Hong Kong helped MDI with the launch of Betterday Fairtrade products into Vietnamese supermarkets in December 2007 and also introduced their products in Hong Kong. In 2008, Oxfam subsidized MDI paying 50% of their trip to exhibit their Fairtrade products at the Hong Kong Food Expo. Oxfam also supported a trip to meet tea farmers in Nghe An, Central Vietnam, where Oxfam has been working for over a decade.

Q&A with Winifred Karugu, author of KACE case study in Kenya

Winifred Karugu is currently the Managing Director (MD) of Jomo Kenyatta University of Agriculture and Technology (JKUAT) Enterprises (JKUATES), a company that is 100% owned by the University. She is based in the University’s Main Campus at Juja, in Kenya. The Company is the commercial wing of JKUAT and engages in direct linkages with industry through training, consultancy and related activities. She had also served as a director of the JKUATES for three years before her appointment as MD. Prior to this appointment, which took place in February 2008, Winifred was the Director of the School for Human Resources Development, which houses Business and Humanities at the University, a position that she held for four years. Winifred also lectures in economics and marketing courses units at the university. She also engages in research and consultancy. She has published several articles in refereed journals and written several business cases both teaching and analytical. Her research interests include pro-poor business models, SME growth strategies in emerging markets and gender & technology transfer. Winifred is a member of: Academy of Management (AoM), International Association of Agricultural Economists (IAAE), African Association of Agricultural Economists (AAAE), Africa Technology and Policy Studies Network (ATPS) and Kenya Association of Business and Management Professionals (KABMAP). Find below selected publications of her work.

Kenya Agricultural Commodity Exchange (KACE) is the first and only national agricultural commodity exchange in Kenya, and it differentiates itself by dealing with a variety of commodities of which maize and beans are the most heavily traded. KACE acting as an intermediary further empowers rural farmers with market information and provides capacity enhancement, business training and technical assistance.

To download the KACE case study from the GIM database, please click here.

What is KACE’s basic value proposition and what makes its financial model sustainable?

KACE’s main value proposition is the inclusion of previously hapless small scale farmers into the mainstream economy. Small scale farmers have long been exploited or unable to sell and/or obtain fair prices for their produce. The net result is that they tended to sink deeper into poverty and despair. KACE’s activities be they radio-based, mobile phone-based, internet-based or the warehouse scheme have resulted in farmers receiving better prices and being able to negotiate in the market place. Their standards of living have risen and they are able to plan for the longer term rather than living from day to day. Greater availability has meant greater food security in a region where hunger stress was common.

Access to markets has clearly improved the livelihoods of many farmers; though what are the remaining challenges for the growth of this business model?

The main constraints to growth include missing or incomplete output and input markets, high transaction costs and low levels of technology.

How important is new technology, as used by KACE, in improving the lives of poor in Kenya?

The mobile phone has had tremendous uptake in developing countries for example in Kenya with a population of 40 million people 24 million now own mobile phones. The applications and technology for the mobile has also grown tremendously with internet connectivity, money transfer, banking and hundreds of applications now routinely available. For example current Central bank figures show that Kenyans now move in excess of a billion USD through mobile phones every month. Mobile phones have enabled millions of the unbanked to have bank accounts and to trade. The possibilities of what can be done with this are huge.

What are the success factors that need to be in place for this commodity exchange model to be replicated elsewhere?

The fact that small scale farmers and traders can be more in control of their destiny has led to several African countries studying the KACE model and adopting it. The model is useful in the fight against poverty on the continent.

What would you say was critical about the actor ecosystem that enabled this business to be successful?

The CEO of KACE had wide experience in this field and a passion for trying to uplift vulnerable farmers who were sinking deeper into poverty through exploitation and ignorance. Also several things disturbed him such as the facts that certain areas in Kenya would have overproduction and waste, while other areas would be experiencing drought at the same time. He wanted to level the field so that all poor farmers were included in the wider economy and able to participate on a more equitable level.

What has been your personal experience going through the GIM training and case research process?

My experience in the GIM training and research of cases has been invaluable to me in that I gained knowledge and deeper insight into models that positively influence the poor.

Q&A with Oluwemimo Oluwasola, author of Olam Nigeria case study

Oluwemimo Oluwasola is a graduate of the Obafemi Awolowo University, Ile-Ife, Nigeria where he obtained B.Sc. (Social Science) with a Second Class Upper Division in Geography. He also holds M.Sc. and PhD Degrees in Agricultural Economics from the same University. He is a lecturer in the Department of Agricultural Economics of the Obafemi Awolowo University, Ile-Ife, Nigeria. His areas of specialization include: agricultural development and policy analysis, environmental resource economics and poverty reduction. He also teaches economic theory at the undergraduate and graduate levels. Until he joined the Faculty, he was a Research Fellow at the Development Policy Centre, Ibadan. Dr. Oluwasola is an international scholar, development expert and consultant in agricultural development and policy analysis, sustainable environmental resource management, and rural development and urban poverty reduction. He has worked with several development partners including the Urban Management Programme (UMP), UN-Habitat, UN Volunteers, African Network of Urban Management Institutions and UNDP. He has also collaborated with the Brookings Institute in Washington, D.C. He is a fellow of the Leadership for Environment and Development (LEAD) International, New York; Foundation for Environmental Development and Education in Nigeria (FEDEN); and Foundation for Development and Environmental Initiatives (FDI), Nigeria. He is an American International Visitor on Poverty in an Expanding World Economy: A Multi-Regional Project.

Olam Nigeria, a supplier of raw and processed agricultural commodities, engages smallholder farmers by supplying farm inputs and providing ready markets for their products.

To download the Olam Nigeria case study from the GIM database, please click here.

What is Olam Nigeria’s basic value proposition and what makes its financial model sustainable?

Olam International Limited is an international and integrated supplier of both raw and processed agricultural commodities. The company is involved in varying degrees across the total product supply chain, which include procurement of farm products as close to the farm-gate as possible, primary processing, inland transport, warehousing, marine transport, and distribution – using a network of local buying agents, primary processing facilities and logistics. Olam’s flexible business model enables it to achieve rapid and cost-effective organic growth as it pursues growth strategies that enable it to exploit adjacent and peripheral opportunities. The business model enables the company to compete favourably with other interests by ensuring growth through product diversification and increased turnover; cost sharing which reduces cost of doing business and integrating expertise across products, geographic markets, and supply chain activities to create a diversified portfolio of products and services. As an international market player, it seeks to service the market that yields highest returns for its products hence, financial sustainability is ensured.

How has Olam Nigeria improved the livelihood for farmers in Nigeria?

Olam Nigeria has succeeded in improving the lot of the Nigerian farmers in several ways. It makes available critical inputs like improved seedlings, chemicals, fertilizer and credit free and/or at market cost to farmers and on time. This has been a major problem in the nation where bureaucratic problems hinders the timely delivery of such inputs to farmers on time or get them delivered to rent seekers who pretend to be farmers. It also provides the necessary market for the products of the farmers and pays farm gate prices which are competitive. It is also in close link with the farmers to offer advisory and extension services at no cost. Finally, it has organized the farmers into cooperative groups for the farmers to have an administrative voice in the way they are managed.

Why did Olam Nigeria encourage the formation of farmer groups?

The main reason is to make it easy to deal with the farmers. Farming in Nigeria is dominated by small scale farmers and run into millions as 60% of the nations labour force are involved in agriculture. Organizing the farmers into cooperatives enable Olam to reach them in their groups. When they are given loan, the cooperative societies serve as collateral and ensures members repay their loans as well as sell their products to Olam. It is always easy to reach out to the farmers in terms of input supply or extension services through their groups.

What are the main benefits of Olam Nigeria being part of a global multi-national company?

The main benefits are in terms of access to large resources of funds to do business, provide facilities, and engage in forward as well as backward linkages to manage a product from the farm gate to the final consumer. In addition, Olam has a wider and bigger market and can be very flexible. For example, when rice is harvested in Nigeria, there will be a glut in the local market. Olam, packages this and then sell to other countries where demand and prices are high. When the product is in short supply and costly in Nigeria, it imports from other countries where prices are low and sell in Nigeria. It is also able to benefit from highly skillful pool of experts that it can move around to ensure organizational goals and targets are met. It is also able to transfer best practices across national boundaries.

What would you say was critical about the actor ecosystem that enabled this business to be successful?

Olam does not go into established and big businesses. It looks for the small, unattended to and probably unpopular products and invests its resources to turn it into a much sort after business. Before others will come in to it, Olam has established itself as a clear leader. The strength of Olam is its ability to see opportunities and act before others will even think.