Think big. Go small.
Adapting business models to incorporate smallholders into supply chains
Published: May 20, 2010
Food and beverage companies are facing a rapidly changing world. Global demand is rising as the world’s population grows. Yet the planet’s ability to meet this demand is threatened by factors such as droughts and other expected consequences of climate change, together with land degradation and biofuel production. At the same time consumers everywhere are growing more knowledgeable and concerned about the ethics of where and how their food and drink are produced.
A number of innovative companies have begun integrating smallholders into their supply chains. There is evidence that this strategy can attract customers and manage supply risks. The investment by a company can be relatively modest if the company collaborates with farmers’ organisations, government, and other non-commercial actors. This approach to investment can have broader impacts on the rural sector, ensuring that trade benefits men and women farmers who are normally marginalised from wealth creation.
Ensuring a smallholder sourcing programme can deliver both commercially viable products and value to the smallholder, requires a number of structural challenges to be overcome. An increasing number of new business models are emerging of global and domestic companies that have adapted to overcome these challenges.