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Market Facilitation Initiative (MAFI) Image

MaFI (The Market Facilitation Initiative)

Market Facilitation Clinic 2: Case Study

 Business Models for the Last Mile

Market Facilitation Clinic 2: Case Study
 

SEEP BEAM Exchange


Developing a Learning Agenda
 Initial Participant Challenges
Participant Case Studies Expert Voice

 This group explored how to facilitate win-win business models for reaching customers and farmers in remote, rural areas - the ‘last mile.’ Members explored how to identify the right partners and how to co-design business models while ensuring ownership by the market actors. Individual group members are looking at how to support agents in remote villages, how to invest in cold chain storage where there is no electricity, and how to transport tomatoes from dispersed rural farmers to a central processing plant. This group’s focus on partner identification and selection is indicative of interventions and program strategies that are in an earlier stage of development.


Developing a Learning Agenda

In the first group call, the group got to know one another, and upon hearing about their individual contexts (and with some framing provided by the facilitator), they converged around the question they wanted to address together through this group.

 

Learning Agenda:

 

Learning Agenda: How can we identify and engage partners with the mindset, capacity and incentives to design & operationalize win-win business models that reach farmers and customers in rural areas?
      • Partners: either public or private actors.
      • Mindset: business-driven and willing to take risks in order to reap long-term rewards. (“Foot Soldiers”
Win-win business models: align incentives and benefits between business, farmers and any intermediary actors. Sustained because of profit/benefit sharing.

 

Given this shared learning agenda, each of the group members then prepared and share with the rest of the group a "live case study." Fellow group members were given the opportunity to ask clarifying questions and make suggestions on possible strategies their colleague might test out. The cases are described in the sections that follow: 

Participant 1: Indiana Baseden

Consultant
Engineers Without Borders
Seconded to MRI-Syngenta (Zambia) 

Indiana's Challenge:

  • Syngenta’s core business is to service large customers (bigger channels, towns, large farmers) but has been working directly with much smaller community agro-dealers in recent years.
  • Realizing that while small rural farmers are an interesting market segment, it is inefficient to work directly with small scale agro-dealers. Want to transition those communty dealers to being sourced by larger wholesalers in towns.
  • Question of how best to do this in a way that the relationship is built between agents/dealers and the wholesalers? What trade discounts to offer, how to track the relationship without being intrusive?

Sample Group Questions for Indiana:

  • How are the large agro-dealers distributed?
  • Are they franchised or independent?
  • What are the incentives for town-based dealers to participate?
  • What risks are minimized through this model?

Indiana's Key Insights:

  • How to best leverage development actors who are all approaching Syngenta looking for ideas on what to fund.
  • Need to think carefully about a possible ICT platform that would track the activity of the actors
  • Keep thinking about the internal buy-in and change management between sales reps and other staff. (a rare insight given market facilitators are usually outside of big firms like this).

 Decisions, Actions, and Follow-Up:

  • Quantifying the cash flows as a way to demonstrate the business viability
  • “I certainly plan to go back and digest the information gathered from these PLG calls and take back learnings to my organization - particularly in terms of how to manage/facilitate partnerships and consortiums.”
Participant 2: Kudakwashe Ndoro

Chief of Party
Fintrac (Zimbabwe)

Kuda's Challenge:

  • Supporting dairy markets to reach small farmers: How to operationalize a model that sees small scale processors investing in relocation to be closer to farmers to firmly establish their supply channels.
  • Challenge #1 - how to manage the expectations of processor, farmers and other stakeholders (especially local government)
  • Challenge #2 - Get the processor to commit pen-to-paper with a firm plan (including financials) to formalize the partnership.

Sample Group Questions for Kuda:

  • What are the plans for capital and financing expansion?
  • How viable is the processor currently?
  • Who owns the business, and what is your relationship like with those individuals?

Kuda's Key Insights:

  • Need to move forward with getting a firm plan, in numbers, from the promising processor, to further determine whether there is a capacity issue, or a risk aversion issue.
  • May need to expand call for proposals to other actors as well.

 Decisions, Actions, and Follow-Up:

  • Central challenge remains unsolved: identifying private sector companies willing to go the last mile and how to motivate them without giving grants.
Participant 3: Kate Reott

Program Manager
Village Enterprise (Kenya and Uganda)

Kate's Challenge:

  • Village Enterprise works with extremely poor women to help them start businesses, and puts them in groups, provides training and a start-up grant to start a business.
  • In a new pilot project in Uganda, starting business cooperatives that bring together savings groups to conduct business at larger volumes. To support this, VE is trying to conduct comprehensive market research to start mapping out value chains, to understand the wider set of actors, to provide better information to cooperatives.
  • Challenges:
    • (1) Knowing how to do the market research - is the approach of starting small and working our way up good? Will that get us interviews with the right people?
    • (2) Bigger buyers don't always know how to explain their growth - didn't share complete information about how they got to where they are. How to uncover this tacit knowledge given the different experience level of different business owners.
    • (3) Geography and infrastructure/transport. Running all over rural Uganda to track down buyers/suppliers. Huge transport cost (organizationally) - pulls into question… cost of reaching the last mile. How do we know if we have interviewed the right people?

Sample Group Questions for Kate:

  • What kind of businesses are women starting?
  • How can you start with the end market and work backwards, rather than being supply-driven?
  • How to move beyond start-up grants towards more market-based mechanisms?

Kate's Key Insights:

  • There is a balance between an ideal market systems approach and working with existing programs and assets (i.e. small women entrepreneurs).
  • Taking a behaviour change lens to thinking about training can expand the notion of what might influence the success of businesses/cooperatives.
  • Leveraging existing government actors can be helpful, but their incentives are not always aligned with those of private sector actors or your specific project.

 Decisions, Actions, and Follow-Up:

  • "Methods for identifying and selecting lead firms" helped Kate select an implementing partner for the business cooperatives project.
  • Operationalizing learning from this pilot project would likely mean taking a demand-driven approach to pairing business owners with buyers.
Participant 4: Erwin Simangunsong

Operations and Grants Manager
World Vision (Timor Leste)

Erwin's Challenge:

  • Looking to develop business case for farmers and urban supermarkets to jointly invest in greenhouses for rural vegetable production by small-scale farmers.
  • World Vision has community presence and relationships with ~100 villages and has established 50 farmers groups
  • Challenge is to structure the "offer" in such a way that it is commercially viable for supermarkets, farmers and World Vision without distorting the market too much.
  • Erwin sent a slide deck with the business case in advance to other group members to get feedback on the presentation.

Sample Group Questions for Erwin:

  • What do you see as the role for World Vision in 2-4 years? How can you set this up so you get yourselves out of a job?
  • In your 5-year financial projections, did you consider all of the costs, including those borne by donors?
  • How can you ensure farmers are reinvesting their profits so the supply chain is maintained with the supermarket?
  • What metrics are you using to define success?

Erwin's Key Insights:

  • Trying to overcome a culture of everything being given for free - how to get farmers to invest, in technology (greenhouses) and in training?
  • Goal is to reduce the intensity of support over time as the model proves its value/worth.

 Decisions, Actions, and Follow-Up:

  • Need to pay careful attention to what happens after the first year - price, side-selling, farmer trust and follow through is key.
  • Trying to track the profit for the farmers groups and be aware of the oversupply of a given crop that leads to price deflation. (linked to recent experience of this with banana chips in Dili.
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