Guest author

Creating prospect for all in the agri-food sector

In partnership with Seas of Change
24. Apr 2017

Inclusive agribusiness is a conscious attempt to build up the critical role the private sector – from small local businesses through to large international corporations – can play in contributing sustainable food systems and rural transformation.

There are many different inclusive agribusiness models – some focus on increasing productivity of smallholder farming, whether through inputs, finance, information or extension. Others focus on sourcing from farmers and providing them market access. Some focus on a specific input or sale, while other initiatives work up and down the value chain. It is not easy: an unresolved question is how can business models and relationships be modified to ensure that risks, resources and rewards are shared to create enticing value propositions for all engaged? But it is essential: the agriculture and food sector underpins global food and nutrition security, provides livelihoods for many of the poorest and is key to creating prosperity in rural areas. Currently one billion people are dependent on farming, yet, for many, agriculture does not offer a prospect for decent, stable livelihoods. So how can it become a sector of choice, rather than default? There is now a vast array of initiatives that target more inclusive ways of doing agribusiness, driven variously by the private sector, donors, NGOs and international organisations. They include value chain development programmes, public private partnerships, company sustainability initiatives, sector roundtables, knowledge networks and standard setting.

No one argues against inclusiveness, but few know how to make it work. Some of the key unresolved challenges are:

  • We need to learn much more effectively from what is being tried. There is little reliable data on the costs and outcomes of most inclusive business models, making it hard to use evidence to inform and influence others. Evidence that is available needs to be more accessible, and applicable.
  • A lack of access to key resources such as finance, infrastructure and markets structurally hampers inclusive agribusiness efforts.
  • Structuring margins, prices, and risk in a way that provides incentives for all players is hard.
  • Inclusive agribusiness is often about building long-term commitments to replace immediate spot transactions, but it’s often not clear how to navigate that shift.
  • And a great deal more sophistication is needed in putting in place enabling and encouraging policies, that create both a push and a pull to mainstream inclusive ways of working.

This series of articles brings together a range of perspectives that helps us understand the current state of the inclusive agribusiness sector and gives some insight into whether, and how inclusive agribusiness approaches can be mainstreamed.

Learning from Practitioners

The Practitioner Hub has done a number of interviews with people working in agri-businesses at the BoP. These businesses range from small SMEs working in one country to big multi-national companies. Key interviews include: Krishi Star in India, that is giving farmers greater ownership of the value chain through farmer-owned processing units. AACE Foods, that has successfully developed a local supply chain in India. BASF India, that is helping farmers improve their yield and income through a dedicated sales team. L’OCCITANE EN PROVENCE, that is improving the lives of women in Burkina Faso.

Businesses sourcing from smallholders and providing agricultural inputs

Companies have to adopt innovative strategies to succeed in both benefiting the farmers their working with and making the business commercially successful. In our Case Study Series, we look at the nuts and bolts of the business models of four agri-businesses that were supported by the Business Innovation Facility.