Adapting business models to incorporate
smallholders into Global Value chains.
Presentation by
Apollo Owuor – Kenya Horticultural Exporters Limited
To the Multi Year Expert Meeting on Investment, Innovation and Entrepreneurship
for Productive Capacity Building and Sustainable Development
Geneva 19th to 21 March 2014
Challenges of integrating Small Holder Farmers in GVC
•Productivity
•Access to input & service financing/credit facilities
•Quality
•Economies of Scale
•Inadequate access to infrastructure development
•Standards Compliance•Transaction Costs
•Global Economic Status
CURRENT EXPORTER-SHG MODEL
Inputs
Production
Packing & logistics
Distribution &
Marketing
Supermarket
s
Seeds
Small Holders
Fertilizers
Food services
Agrochemical
s
Medium
Farms
Farm
equipment
Exporter
Importer
Wholesales
Large farms
Irrigation
equipment
Discounters
Integrating Small Holder Farmers in Global Supply Chains
Farmer
Identification
and Mobilization
Competitiveness
Capacity Building
Aligned
and shared
Values
Ethics and
Sustainability
Management
Control
Investment
Planning
Integrating Small Holder Farmers in Global Supply
Chains
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Farmer Identification
Capacity Building
Management Control
Aligned and Strategic linkages
Market Access
Sustainable Production
Ethical Trading
Competitiveness
The KHE model
•Input Linkages
•Access to Finance (credit Availability)
•Market Access
•Equipment
•Inputs
•Infrastructure
•Third Party Certification
•Financial Literacy
•Technical Standards (SPS)
•Business Skills
•Management Controls
•Mobilizations
•Social Skills
Access to
Finance
Capacity
Building
Market
Access
Technology
•Transaction Costs
•Marketing
•Post Harvest storage facilities
•Bargaining Power
•Competitiveness
•Infrastructure
•Post Harvest
•GAPS
Commercial Sustainability
Kenyan Small Growers Case
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Gives small scale farmers to access the market.
Organised into Manageable Groups of between 25-35 Members.
Operate under GAP accreditation.
Acreage range typically from 0.5 to 5 acres per farmer
Provides a vital sustainable income (approx 4 x national average).
Schemes supported through community initiatives.
On the ground management teams implement systems /controls.
Centralized Management
Developing the model – wider stakeholder engagement – bringing financial institutions
and corporates into the mix
To provide the financial architecture to drive long term sustainability
Development of social and environmental component
Mobile phone technology to drive production capability
Crop insurance
Aligned and Strategic Partnerships -Public and Private Sector for Capacity Building
Opportunities for Public, Private Partnerships
• Promote partnerships btwn SHG & financial credit facilities
• Promote partnerships between SHG and agro-businesses
for input supply models
• Support SHG to comply with market standards and
customer requirements
• Stimulate production and market information systems –
Robust ICT Platforms
• Enhance the management capacities of SHG –Financing
training & Capacity building
• Improve infrastructure devt- structural and financial
• Promote technology transfer - Productivity & Value
addition
• Integrate SHG in research
• Align and minimize private retailer standards
Business sustainability
Sustainability is no longer CSR driven but central to business strategy ensuring
delivery of products on time to required volume and driving profitability
People- labour
available when
needed/ skills/
commitment
Carbon/ Climate
change- driving
efficiency/ longer
term mitigation
Crop Protectionreduce use/ meet
MRLs/ avoid
resistance
Waste- crop
utilisation/ reuse/
recycle
Water- reduce
use/ maintain
continuity
Sustainable
supply
chains
Commercial Sustainability
Soil- correct
rotations/
increasing soil
organic matter
The big Qns
• Development of STI capabilities and innovation systems for
integration or upgrading within GVCs, How can this be done?
• Determinants of the Impact of GVCs on developing Country Firms
technology learning &STI capabilities, Which are they?
• Policy makers can leverage firms participation in GVCs to improve
Firms Technological Learning & STI capability devt, How?