Archive for the ‘Agriculture’ Category
Enhacing Food Value Chains
Agricultural practices have a direct bearing on how an economy feeds itself and the general quality of life of a population. Adopting sound agricultural practices is therefore crucial for any economy. Agri-businesses no doubt, play a strong role in enhancing agriculture value chains.
According to a recent report by the World Economic Forum, “Next Billions: Business Strategies to Enhance Food Value Chains and Empower the Poor,” more than 70% of the bottom of the pyramid depends on agriculture value chains for their income. The benefits of enhancing these value chains through new business models is no doubt huge.
Tapping in on this opportunity, the report takes a look at the several business models that can be employed to enhance value for the several actors in play. The report presents solutions to producers, consumers and solutions to empower entrepreneurs.
It also makes recommendations for stakeholder engagement, such as strengthening incentives for business engagement, providing complementary funding and capacity, facilitating corporate engagement.
The report offers business models that have the potential to create substantial value for the poor consumers, producers and entrepreneurs as well as for companies. It hopes to provide a roadmap for companies seeking a win-win approach in emerging markets, and those that wish to establish a workable, profitable and scalable business model.
Read the complete WEF report here.
How Innovation Really Works (and 10 ways to recognize an innovative enterprise)
Think for a minute of the following: the jet plane, the television, the Internet, and the cell phone. What do each of these have in common?
Now, think about this. The jet plane effectively shrunk the world, making travel between Singapore and New York only 22 hours. The Internet allows a passenger wishing to travel between Singapore and New York to book his ticket from the comfort of his home. The cell phone allows him to check-in for his flight while driving to the airport, or to simply use his cell phone to access the airline-generated bar code that acts as a boarding pass. And the television (or an adapted version of it) entertains him while he travels the 16,000 km to his destination.
In short, each of these are or have been path-breaking. They, among countless other technology, have changed the course of the everyday life in several ways. Would we consider them innovative? Almost certainly so, I would think.
The term ‘innovation’ however is often used loosely. Often, it refers to simply anything new. The Monitor Group in India recently released a study it jointly conducted with leading business publication, Business Today titled, “How Innovation Really Works.” The report takes on the notion of innovation as simply “launching new products.” Through examples based on an Indian context, the report frames innovation against a proprietary framework — the Montior Group’s Ten Types of Innovation.
The frameworks defines (business) innovation as being “path-breaking, disruptive, and sustainable.” It divides the ten types of innovation into four broad categories: Finance, Process, Offering and Delivery.
Further, it lists out particular types of innovation under each of the category. Let’s take a look at what these types of innovation are, and the enterprises used to illustrate them.
Finance innovation involves Re-inventing Business Models and Creating Extended Networks. An example of the former can be found in Gyan Shala, a no-frills schooling project in Gujarat and Bihar. An example of the later can be found in FabIndia, which created an extended network of 17 community-owned companies that supply its products.
Process innovation involves two kinds of innovation — an Enabling Process and Core Process. An enabling process is one which supports an enterprise’s primary work, while a core process are capabilities that others can’t duplicate. An example of an enabling process is the Gujarati newspaper Dainik Bhaskar, which uses an external network to get news input through potential consumers. Thus indirectly building its own subscriber base. Core processing innovation can be seen in the working of Moser Baer, a CD/DVD manufacturing firm which diversified its operationg to the home-movie market.
Offering innovation can be found in three ways — Product Performance, Product System and Service. The report refers to TCS’s software product BaNCS as an example of a product performance innovation. Recognizing the benefits of using technology to make banking services more accessible to rural markets, TCS developed the “cloud computing” based software to provide branchless banking services to the State Bank of India. A product system innovation creates ways in which individual products can connect with each other to create a larger system. Case in point, ITC’s e-choupal. The system developed by ITC enables farmers to connect via village kiosks, creating a agri-commodity procurement platform. And lastly, a product service innovation is where companies create value in engaging with the customer once the core product has been purchased. An example of product service innovation mentioned in the report is TCS.
The last category of innovation accroding to the framework is Delivery Innovation. Delivery innovation can be in three ways — through an innovative channel, a distinct brand, and creating value through a unique customer experience. Moser Baer rapidly expanded through the Indian market by creating a distribution channel that banked on widespread, targeted outreach. Being able to release a home movie within a window period of 10 days to six months created a unique customer experience, which has contributed significantly to its growth. ITC’s e-choupal, beyond creating an innovative system has also been able to innovate further via leveraging the e-choupal brand to build its network.
The examples used in the study are not necessarily a reflection of the kinds of companies that might fit the bill. However breakthrough innovation almost always include multiple types of innovation, atleast 3-4 of the 10 within the Monitor Framework (the study selected eight organizations that fulfilled this criteria).
Clearly the framework might not lend itself to all models that exist. Still it is a useful way to recognize where greatest value lies, and to help build a business with lasting impact. Investors, incubators and other enablers interested in creating lasting social value too can use this framework as guideline towards assessing which enterprises to back.
Read more about the BT-Monitor study here, and tell us what you think about it. Also, have you come across a social enterprise that fits into this framework?
Towards Greater Inclusion of Small Holder Farmers
Last week Villgro held its annual Learning Week for its 2010 Fellows. Among the various issue-areas, we took a look at how businesses models can successfully engage with small holder farmers. We looked particularly at two models – contract farming, and deep procurement. In both models large agri-businesses engage with farmers directly to source raw material and products for consumer consumption. Both models seek to cut out the middle men, and create a more direct, uninterrupted line of supply. However, both models also tend to work with medium and large-scale farmers, rather than ones with smaller land holdings.
Traditionally these farmers have been shielded from interacting directly with retailers. Previous legislation in India that ostensibly sought to protect these farmers from unfair prices have now been lifted, allowing wholesale retailers to directly interact with farmers, rather than go through government-regulated mandis where middlemen acted as procurement brokers. This, combined with growing urbanizatio nand changing consumer patterns has allowed both large agri-businesses and farmers new opportunities to work together, and promises to change the way agriculture is done in India.
But where does the small farmer fit into this? Several examples have pointed to their incorporation under contract farming arrangements for food giants such as McCain, and Pepsi, and domestic agri-business firms such as Calypso Food and Suguna Poultry. Others have been engaged as sourcing channels for Indian retailers such as ITC, and Reliance Fresh. However, studies such as the Monitor Groups Emerging Markets, Emerging Models have shown that less than 50% of the farmers engaged currently are small holder farmers.
So how, can businesses move to being more inclusive of small farmers? Bill Vorley, Mark Lundy and James MacGregor in their paper, “Business Models that are Inclusive of Small Farmers” describe a range of business models for inclusive market development. The papers focuses specifically on models that improve inclusiveness, fairness, and financial sustainability of trading relationships between farmers and agri-businesses, whether processors, exporters or retailers.
The paper identifies three broad models through which this is possible.
- Producer-driven: This model is driven by small-scale producers or large farmers. The aims to create new markets, higher market prices and stabilize market positions for small producers, and large supply volumes for large farmers. An example of this model is the work of Cuatro Pinos, in Guatemala.
- Buyer-driven: This model is lead by processors, exporters and retailers who are looking for regular, reliable and quality supply to meet their supply-chain needs.
- Intermediary-driven: This model is driven by traders, wholesalers, and other traditional market actors, or by NGOs and allied support agencies, or as in the case of China, national and local government bodies. The objective of these actors are varied. trader and wholesale driven models tend to target discerning customers, while NGOs traditionally champion the cause of the poor farmers, and governments regional development.
The examples of several organizations are used throughout the paper to highlight these models. Cuatro Pinos, for example, is a cooperative that identifies existing farmer groups, associations and “lead farmers,” and works with them to test production schemes and provide production support to promising farmers. Credit and assistance is later discounted from the initial product deliveries.
MA Tropical Food Processing is a Sri Lankan firm that operates on the producer-driven model, providing extension services to farmers for production, record keeping, and post-harvest practices. It also acts as an intermediary for commercial credit from banks.
Impact
The authors also present a table compiling the impact on these farmers, using MA Tropical Food Processing as an example. The figures show an almost two-fold income level among farmers part of the MA chain as against those outside of it. Among common crops, farmers tend to receive a higher price per kilogram on average, when compared to other village traders.
Limitations
The models are not without their limitations though. In the buyer-driven model benefits can be limited by high transport charges and delayed payments. Also, producers also demand exclusivity in supply. Suppliers consequently also face the probability of side selling by producers, among other limitations.
The paper proceeds to lay out how small farmers can be prepared to join mainstream agricultural production and what businesses should consider in order to work successfully with small farmers. It also takes an in-depth look at the role of the public sector and donor organizations in supporting the greater inclusion of small-scale farmers.
To read more about the models suggested by the authors, click here.
Agri-biotechnology in India
Biotechnology has been in the news recently for not the best reasons. The proposed introduction on Bt Brinjal raked up much controversy across the country. Agri biotechnology is not new, however. In 2002, the Government of India approved the commerical cultivation of Bt cotton. This lead to the growth of agri biotech among biotechnology firms.
Recent increase in government support – through dedicated R&D laboratories, regulatory framework and policies – has contributed to this growth. Private participation is also on the increase.
The potential is however met with its own share of challenges. India has perhaps gained notoriety for stemming several international patents filed for agricultural produce that has been indeginous to this part of the world for years – basmati rice and turmeric powder to name a few. The need for stonger laws is one such challenge.
A 2007 study by Rabobank delves into these future of agri-biotechnology and addresses some key issues and challenges. For more on the report, visit www.rabobank.com/far
Drip Irrigation: A New Way Forward?
For farmers across the globe, a regular supply of irrigation is perhaps his most important concern. Nations often dispute the flow of down-stream water because of repercussions on their farmlands. Ironically, despite rise in global levels of food production, several millions of people still remain hungry. And part of the reason for this is the lack of resources – including irrigation to grow their own crop.
Drip irrigation provides a simple solution. Innovation in this space is fast growing, and could mean significant increase in output for poor farmers in sub-Saharan Africa, Asia and Latin America. In their article, Drip Irrigation for Small Farmers: A New Initiative to Alleviate Hunger and Poverty, authors Sandra Postel, Paul Polak, Fernando Gonzales and Jack Keller describe their experience with affordable drip irrigation, including its use in India and Nepal. The authors advocate a global initiative to spread low-cost drip irrigation through private microenterprises, with the aim of reducing hunger and increasing incomes.
Read the original article here.
Barriers to Household Risk Management: Evidence from India
Microinsurance is fast emerging as an important component to comprehensive financial service offerings to the BoP. Recognizing that often the poor fall back into poverty due to financial setbacks caused by illness, accident, death or natural destruction, several organizations are introducing policies that will help mitigate risk better – for example XAC Bank in Mongolia (where the population is nomadic and heavily dependent on the cattle trade), offers farmers livestock insurance.
This paper analyzes the risk mitigation strategies employed among farmers in India. In particular the team at the Institute for Financial Management and Research (IFMR) Center for Microinsurance (CMF), looks at the adoption of rainfall insurance products designed to compensate low-income Indian farmers in case of poor rainfall during the monsoon season. The study compares patterns between Andhra Pradesh and Gujarat, and offers lessons based on their findings.
Read the entire article here.
How Knowledge and Innovation Can Advance Agriculture in Developing Countries
Agriculture remains crucial to developing countries; yet agricultural development in these countries is often constrained by issues of access to appropriate technologies; immense “institutional weaknesses”; and deep problems with the organization and management of research, education, and extension systems. The Food Policy Research Institute (IFPRI) addressed these issues through the international consultative conference entitled “Advancing Agriculture in Developing Countries through Knowledge and Innovation.” The major focus of the conference was the recognition of the critical importance of knowledge and innovation in the pursuit of agricultural development for growth and poverty reduction. The papers explored the interplay of technologies, organizations, policies, institutions, and system dynamics in innovation processes, without advocating a particular paradigm. This document is a synopsis of the conference presentations, discussions and outcomes related to partnerships, platforms, coalitions, and linkages through which knowledge and innovation among different innovation agents (including public, private, and civil sectors) could be shared.
Read the Conference Synopsis here.
Energy-Efficient Grain Drying Resources
The following is an abstract of an original publication by authors Jeff Schaahczenski, Katherine Adam and Mike Morris, specialists at the National Sustainable Agriculture Information Services.
The ambient air system for grain drying recommended for the United States by The Ohio State University and other grain belt research institutions, as well as the Saskatchewan Ministry of Agriculture, is now state of the art and slowly replacing systems using fossil fuels, chiefly natural gas. Although not as much recent research has focused on solar technology for grain drying, solar was shown by University of Maryland studies to be feasible for small- and medium-size facilities for drying grain for on-farm use. Payback time for installing a solar system varies with the cost of fossil fuels and the costs of labor and materials for a solar installation. Resources for evaluating these two systems include links to key sources and a condensation of two reports from the University of Maryland.
Read the full article here.
The Agricultural Resources Information System
The following is the abstract to the full article published by Madaswamy Moni, of the National Informatics Center, Department of Information Technology, Government of India.
Since the Rio Earth Summit in 1992, agriculture remains high on the international agenda because it brings together critical issues like water, poverty, hunger, and health. There have been both national and international efforts (DOT Force of the UN, the UN/ESCAP Committee on Poverty Reduction, the Millennium Development Goals, PovertyNet of the World Bank, etc) to improve information flows and communication services to eliminate poverty (ICT for Poverty Reduction), which are a necessary but not sufficient condition. In poor rural areas, where agricultural productivity is low and unreliable and there is food insecurity, better information and knowledge-exchange can be important in lessening poverty.
This Paper deals with the Government’s Digital Initiatives and Agenda (viz., AGRISNET, AgRIS, AGMARKNET, DACNET, VISTARNET, APHNET, FISHNET, HORTNET, SeedNET, PPIN, COOPNET, FERTNET, ARISNET, AFPINET, ARINET, NDMNET, etc), as a step towards “reaching” agricultural knowledge and technology to the Small Holders (Resource-Poor-Farmers) of the Country. To usher in “agricultural governance” in the country, the establishment of AGRISNET as the “national information infrastructure” is emerging as a pre-requisite. As “resources application and agronomic practices” are to match with soil attributes and crop requirements, the Agricultural Resources Information System (AgRIS) is a “way-forward” to improve agricultural productivity in rural areas, and a much “needed domestic strategy” for sustainable rural livelihoods.
Development and Use of ICT in Agriculture has a promise in ushering agricultural growth, “but miles to go”. This digital opportunity is becoming a positive force for fostering Agricultural Growth, Poverty Reduction and Sustainable Resource Use in India. What was a “technology push” in 1990s is taking the shape of “consumer pull” at grass-root level in India to usher in agricultural governance in the country. This is a step towards establishing a location-specific e-Government model for the Poor in India.
Read the full paper here.