The AOFF Agribusiness Development Model
It is clear that private agribusiness must drive rural development and increase agricultural productivity to meet social goals of poverty reduction, economic growth, and environmental conservation in Southern Africa. Specifically needed in the region’s rural areas are labor-intensive, sustainable agricultural and agro-enterprise development strategies that halt the disintegration of rural economic and social conditions.
However, rural based farmers and entrepreneurs face numerous barriers that prevent them from taking full advantage of these marketing opportunities. Poor women and men, working in their fields, households and small workshops, depend for their livelihoods upon their own assets, skills and enterprise. Usually, economic models and policies do not favor them; they have to deal with trade distorting policies. Many developing countries face major obstacles to selling manufacturing exports to rich countries - high tariffs, quotas, specific duties and barriers that discourage value-adding. These people have little business experience, no organization and lack information on technologies, markets, and prices upon which to plan a market-oriented production system; and receive little support in terms of technical advice, training, and credit.
The
AOFF Agribusiness Development Model does not evolve exclusively from the
people-hunger perspective associated with rural Africa but rather from
a market-led perspective. The most important challenge addressed in the
model is the persistent inability of poor rural farmer to make the necessary
move up the value chain. Such diversification is of primary importance
to achieve sustainable development and the major hurdle is the lack of
trade-related capacity.
The World organic market is growing and in US, Europe and South Africa
there is an under-supply of organic fruits and vegetables. The model works
with these market dynamics and in addition to agricultural production
it includes raw product processing, trade, and the necessary support services.
It aims to identify opportunities for specific interventions for organic
agri-enterprise development and proposes market-driven options for spurring
indigenous private economic growth by promoting small and medium-scale
agribusinesses in the Southern African region. It proposes a model for
analyzing the market situation, including pre-production, production,
marketing constraints and promoting private sector partnerships to support
specific trade capacity building needs and develop links between developing
country producers, suppliers and international buyers.
In designing the project Participatory Extension Approaches (PEA) are
emphasized. PEA consists of several phases: mobilizing members of the
community, planning and implementing activities at community level, experimentation,
and monitoring the process through self-evaluation and sharing experiences.
It further aims to deliver a project design and feasibility that can test
the model for rural organic vegetable and fruit production and marketing.
In this way rural communities are given a central role in shaping and
driving the process; identifying problems and developing and testing a
range of solutions.
Most importantly it is also an agro-ecological model that emphasizes biodiversity, nutrient recycling, synergy among crops, animals, soils, and other biological components, as well as regeneration and conservation of resources
The intervention portion of the model deviates from conventional approaches in that its capacity-building components aim to empower rural –based individual growers, house-holds, local communities and small Black Emerging Entrepreneur (BEE) groups to find sustainable solutions to their problems such as limited arable land, infertile soils, a fragile ecosystem, and erratic rainfall. The AOFF’s model’s interventions also stress the potential for grassroots-led and managed rural cooperatives to spur black empowerment in the agribusiness sector. The functional nature of the AOFF’s model - that includes planning, organizing, directing/managing, monitoring and evaluation - is essential to achieving performance levels in line with pre-project forecasts.
The Model’s 4 Stages
With goal of having Southern African rural communities participate in the growing organic market, the FIRST STEP in the model is a market situation analysis which assesses demand for a range of organic produce and works backwards to the grower or production point. Analysis is undertaken of the market chains for key opportunities, such organic fresh fruits and vegetables. It then targets technical assistance to address weaknesses in the production-processing-marketing process.
Sample
Market Analysis Report Outline
Executive Summary & Introduction
Dynamics in the Organic Sector
Opportunities and Constraints
Recommendations for Project Actions
I. Overview of Organic Production
II. Markets and Consumer Demand
III. Structure of the Sector and Sub-sectors
IV. Market Environment
V. Driving Forces and Points of Leverage
VI. Opportunities and Constraints
VII. Conclusions, Recommendations & Opportunities for
Intervention
This exercise is critical since effective demand determines the production
levels that can be anticipated, the types of produce required, distribution
needs and project economics (pricing, profit margins etc). This market
analysis leads to the identification of agro-enterprise opportunities.
The SECOND STEP in the model is to audit and analyze
pre-production constraints focusing on problem identification and solution
processes. Sector experts will undertake post-harvest system analysis
with a view to improving market efficiency, infrastructure and supply
chain management. This phase enables the growers and participating BEEs
to identify constraints, interventions and resources needed and to plan,
organize and determine which strategies and plans of action are needed
for sustainable business operation. These would include aspects like price
policies, marketing institutions, post-harvest loss reduction, expansion
of processing capabilities to add value, and the ability to produce products
that meet international standards for quality and safety and thus merit
price premiums.
For example the quality of labor and management in rural regions would require specialized hands-on training.
Another challenge for the program is that rural farmers’ primary marketing restraints are due to their inability to consistently supply large quantities of high quality produce for the market.
Transportation is one of the major constraints to rural communities during the peak periods. Because farms in the rural regions are dispersed and feeder roads are usually in poor conditions, especially in the rainy season, the movement of produce becomes a major problem. Most horticultural produce is highly perishable and is mostly transported in open (non-refrigerated) trucks. They are usually left exposed to sun or covered with wet cloth. This practice leads to the deterioration of quality and creates serious problems for export markets.
Transportation problems which serve as constraints to marketing are threefold: (a) the quality of the network, (b) the availability and adequacy of vehicles, and (c) transport cost of produce. The inadequate road networks force farmers to transport their produce over long distances to the nearest road. The rough roads cause bruising and crushing of perishable produce. There is also high lorry operating cost, due to excessive vehicle wear. The combined effects of the above constraints has led to high transportation charges borne by the farmer, which translates to high cost per unit of commodity sold. Such costs can only be lowered through investment in improved transportation infrastructure and marketing facilities.
Another limiting factor is access to and ability to use marketing information. The rural communities’ ability to access and utilize market information is compounded by low educational levels, poor road networks, and underdeveloped electricity and telecommunications infrastructures.
The THIRD STEP involves the operational activities such as research, (eg. research into specific crops and farming technologies determines which are practical and profitable for small-scale farmers), training, growing, crop nutrition, crop disease, pest management and record-keeping.
The
FOURTH STEP of the model involves post-harvest, processing,
logistics and marketing issues. Included in this phase are issues like
sales, quality control, processing, packaging, distribution, transportation
and business administration (pricing, customer payments and grower disbursements).
Potential opportunities for marketing and processing activities that could
add value to the commodities produced by small-scale rural farmers need
to be investigated. These opportunities could be realized through short/medium-term
development of emergent black entrepreneurs or marketing cooperatives
of rural farmers participating in primary processing and other marketing
activities (storage, grading, packaging, etc). Therefore, there is a potential
for small-scale drying and preservation and expansion opportunities like
canning, bottling, juicing, dehydrating, and freezing need to be evaluated.
Most importantly this phase will seek to implement Shared Equity Partnerships
(SEM developed by Weatherly Consulting), that re-invents the Fair Trade
concept. Fair Trade arrangements really only offers growers/producers
a marginal farm-gate premium while SEM delivers the farm-gate premium
plus equity participation in the trading and marketing companies that
sell their produce or processed products or brands containing their products.
Conclusion
AOFF’s Agribusiness Development Model is sustainable because it is market-oriented and based on business interest. It is demand-driven and jointly developed by all stakeholders, i.e. rural farmers, AOFF, Government agricultural institutions, NGOs and private sector investors, exporters and importers. The model will have a particular focus on womens’ roles in rural agriculture and actively involves women in project identification, implementation and monitoring. It builds on indigenous know-how, integrates existing institutions and most importantly has a multiplier effect because it is entirely scalable and replicable.
Specifically, all stakeholders will be involved in identifying the problems, deciding how to solve them, and then implementing the solutions. Other characteristics of the AOFF Agribusiness Development Model are transparency, strategic planning, institutional capacity building, ongoing information sharing, and establishing clear, defined indicators that permit assessment of the social and economic impacts.
By building local capacity to plan, manage, produce, and sell high value organic products, the AOFF Agribusiness Development Model strengthens the rural business sector and assists rural women and men farmers to increase their household income.
African Organic Farming Foundation is a 501(c)(3) nonprofit organization