creating sustainable agro supply … sustainable agro supply chain & ensuring better market...

CREATING SUSTAINABLE AGRO SUPPLY

CHAIN & ENSURING BETTER MARKET

ACCESS FOR AGRO PRODUCTS

Dhaka, 18th – 19th June 2012Tom Harrison

2

Cross Sector Partnering

for a Sustainable Supply

Chain Performance

Day 1

2

Agenda

Introductions

Welcome!

• Name and organisation

• Experience of agricultural supply chains

• What you hope to get from the workshop

5

Why Businesses and

NGOs Partner:

Background

Section one

5

Global context

• The complexity of the issues and the web of

interconnections between government, business and civil

society mean that the world has:

‘become too complex and interdependent for any one

institution or sector to effectively respond to today’s

business or wider challenges and opportunities’

• No one sector on its own has simultaneously the mandate

and resources to tackle some of the most difficult societal

issues.

James Wolfensohn, ex World Bank

A Definition of Partnership

A CROSS-SECTOR PARTNERSHIP is...

• An ongoing working relationship between

organisations from different sectors

• Combining their resources and competencies

• And sharing risks

• Towards achieving agreed common objectives

• While each achieving their own individual objectives

TPI: www.thepartneringinitiative.org

Partnerships: A response to

failure?

Partnerships for sustainable development are a response

to ineffectiveness and inefficiencies in the ability of the

state, market and/or voluntary sector to:

–eradicate poverty;

–create long term, sustainable business;

–provide appropriate goods and services to the poor;

–achieve and sustain equitable economic growth;

–protect ecological resources and achieve

environmentally sustainable development;

–deliver basic services; and/or

–achieve effective and accountable (primarily public or

corporate) governance.

The Bangladesh Context

• Increasing business awareness of the need to give

back to society and commercial value of a healthy

educated society

• Increasing NGO need for sustainable solutions to

development solutions

• Precedent of market-led solutions

• Large untapped populations with neither access to

basic needs nor access to the market economy

Key area: 20th century 21st century

International

relationships

Few and mostly formal Complex with ascendancy of

the informal (courtesy of

internet and comparatively

cheap travel)

Global initiatives Few – mostly government

sponsored

Many – private, public or civil

society driven

Context More predictable and

stable

More unpredictable and

turbulent

World View Western Christian Pluralist with ascendancy of

Islam

Economy Local autonomy in

economic

organisational form

Dominance of global markets

Sustainability Of concern locally or

regionally

Global sustainability a major

international concern

Organisational

response

Prepare, plan and control

(inflexible response)

Partner for change (flexible

response)

Milestones

Rio Earth Summit 1992

• first global UN gathering to formally invite business as well

as NGOs alongside governments

• Participants acknowledged cross-sector partnering as one

of the key mechanisms towards achieving sustainable

development targets

Johannesburg World Summit on Sustainable Development

2002

• over 200 „Type II‟ (cross-sector) partnerships registered

• Business Action for Sustainable Development (BASD)

tabled hundreds of examples of cross-sector partnerships

involving business

WFP & TNT: Transport Workers & HIV

13

20121999

New opportunities

Earned reputation

Pro-active behaviour

Core business/strategic investment

Values-driven

Forced into it

Quick-fix image making

Reactive behaviour

Philanthropy

Top-down driven

Developing CSR trends

CSR circa1979

Pyramid of opportunities

Phil-anthropy

Enabling environment

Direct benefits to business operations

Product / market / supply opportunity

INCLUSIVE BUSINESS MODELS

17

Inclusive business models improve the livelihoods and

wellbeing of poor people by including them in the

business value chain

On the supply side as

producers, employees and

distributors

On the demand

side as clients and

customers

Comparative attributes of the sectors

Public Sector Private Sector Civil Society Sector

Primary concern Political systems Economic systems Social systems

Accountability Voters/rulers Owners Members

Primary power form Laws, police, fines Money Traditions, values

Primary goals Societal order Wealth creation Healthy communities

Assessment frame Legality Profitability Justice

Goods produced Public Private Group

Dominant

organizational form

Governmental For profit Non-profit

Operating frame Administrative Managerial Developmental

Traditional

relationship basis

Rules Transactions Values

Temporal

Framework

Election cycles Profit-reporting/

business cycles

Sustainability/

regeneration cycles

Source: Waddell, S. (2005). Societal Learning and Change: How Governments, Business and Civil Society are

Creating Solutions to Complex Multi-Stakeholder Problems. Sheffield, UK, Greenleaf Publishing. P. 83

• Efficiency – through shared costs and better delivery

systems

• Innovation – through developing new ways to address

issues and complex challenges

• Effectiveness – by creating more appropriate products

and services

• Mitigated risk – by sharing risk and responsibility

• Enhanced reputation and credibility – by expanding the

organizational markets and networks

• Access to information & knowledge

• Capacity building /development of staff

Possible Benefits of partnering to

organisations involved

(All sectors)

RELATING PARTNERSHIP’S TO NGO’s ROLE IN

DEVELOPMENT

„NGOs operate in open systems. They are not islands themselves but are

part of a much longer aid „chain‟ by which aid flows from individuals in the

North (to governments) to international NGO donors to local NGOs to

communities.‟

Rick James, INTRAC

Attract and

consolidate

resources

as inputs to

their

programmes

Organisational capability to:

• Mobilise resources

• Attract and retain talented

staff

• Manage staff and

resources

• Design programmes

• Manage programmes

• Monitor outcomes

Undertake

activities that

lead to

change at

individual,

societal or

systemic

levels

EXAMPLES OF COLLABORATION

Inputs:

•Grants

•Donations of products

in-kind

•Cause related marketing

•Product licensing

•Employee fundraising

•Employee volunteering

– community projects

Throughputs:

•Advisory services;

•Consulting

•Employee volunteering –

professional skills

Outputs:

•Mobilisation around a development theme (e.g.

education, water and sanitation, health etc)

• Bottom-of-the-pyramid products / services

•Application of new technology

•Campaigns / lobbying

Attract and consolidate

resources as inputs to

their programmes

Organisational capability to:• Mobilise and control resources

• Attract and retain talented staff

• Manage staff and resources




Undertake activities that

lead

to change at individual,

organisational or systemic

level

WHY DO NGOs PARTNER WITH BUSINESS?

•To increase the income of the

NGO (sponsorship)

•To help the NGO to reach new

supporters and / or

communicate the NGO‟s key

messages to a different

audience (marketing)

•To make the NGO and / or its civil-society partners more effective (capacity building)

•To co-create a new service, product or technology that addresses a sustainable development challenge

(business)

•To influence the business and / or a third party to change its

behaviour (advocacy)

Attract and

consolidate

resources as inputs

to their

programmes


• Mobilise and control resources






Undertake activities

that lead to change at

individual,

organisational or

systemic level

Types of NGO-business partnership:

Input Focus Throughput

FocusOutput Focus

WHY DOES BUSINESS PARTNER WITH

NGOs?

•To support its „license to

operate‟ through social

investment

•To help the business to reach

new customers

•To communicate brand values

to new audience

•To leverage company core business skills in place of /

addition to social investments (and thereby achieve license

to operate)

•To attract, engage and motivate its staff

•To create a market opportunity

•To co-create a new service, product or technology that addresses a sustainable development challenge

•To influence the business and / or a third party to change its

behaviour – to support business sustainability

Attract and

consolidate

resources as inputs

to their programmes









lead to change at

individual,

organisational or

systemic level

Input Focus Throughput

FocusOutput Focus

EXAMPLE: INPUT FOCUS

Attract and

consolidate

resources

as inputs to

their

programmes


• Mobilise and control

resources

• Attract and retain

talented staff

• Manage staff and

resources




Undertake

activities that lead

to change at

individual,

organisational or

systemic level

• ActionAid and The Co-operative Bank

credit card affinity marketing

partnership has raised £160k

• Generates income for ActionAid and

supports the bank‟s brand values

• Also the bank has made donations to

an ActionAid campaign and sponsored

a newspaper supplement

• No direct engagement by the bank in

ActionAid‟s work – or vice versa

EXAMPLE: THROUGHPUT FOCUS

Attract and

consolidate

resources as

inputs to their

programmes


• Mobilise and control

resources

• Attract and retain talented

staff






lead

to change at individual,

organisational or

systemic level

“The Boston Consulting Group (BCG) has worked

with Save the Children for 20 years to address

strategic and organizational development issues,

enabling us to perform more effectively and

efficiently across the 110 countries in which we

work.

Secondments of BCG personnel allow us to deepen

the relationship and understand each other in

greater depth..”

Barry Clarke , Chair of the International Save the

Children Alliance , December 2007 in The Global

Compact Quarterly

EXAMPLE: OUTPUT FOCUS

Attract and

consolidate

resources as

inputs to their

programmes








Undertake

activities that lead

to change at

individual,

organisational or

systemic level

• The partnership has so far resulted in:

–A domestic water filtration unit aimed at a low-income market (above)

–A village-level water filtration enterprise that removes harmful dissolved

solids that were causing many health issues

• “Before we started this activity I never left the home and my husband did

not listen to me” Self Help Group member from the pilot community

• “Because of their [World Vision] dedication we are slowly becoming

dedicated to these poor villages.” Eureka Forbes staff member

• World Vision has a partnership with Eureka Forbes, an Indian company that supplies water filtration equipment to the growing middle-income market

27

Agricultural Supply

Chains: Unlocking

Sustainability through

Cross Sector

Partnership

Section two

27

INCLUSIVE BUSINESS MODELS

28

Inclusive business models improve the livelihoods and

wellbeing of poor people by including them in the

business value chain

On the supply side as

producers, employees and

distributors

On the demand

side as clients and

customers

Agora Supply Chain for domestically

sourced fruits and vegetables

29

Agricultural Extension

Officer (AEO)

$

Land

owner

Farmer

1

2

3

Middle

man

Local/ Regional

market / bazaar /

cold storage

Trader

$$$

$$$Dhaka: Wholesale

market

Farmers’

Association

Middle

man

Bazaars / Street

vendors

4

SME

supplier

$$$

Test kits

1

SME supplier

as a farmer

Supplier sources from wholesale market

Supplier sources directly from farmer

Supplier conducts (some) farming

Supplier sources directly from middle man

Science

Lab

4

2

3 Samples / test

results

Service

Product flow

Potential

malpractice

$$$$

Low income

Not low income

5

5 Agora sources directly from Farmers‟ Association(s)

Value

added

processes

Value

added

processes

30

Issues in the Supply Chain

• Make notes in your group as to the issues that

you can see in this Supply Chain that are

preventing this supply chain from working well

• Think about:

• What are the key characteristics of the issue?

• What are the possible causes?

• What are the obstacles and challenge?

31

Issues in the Supply Chain – business

brainstorm

• Market is not organised

• Transport problems

• Supply sources are disparate / wide spread / multiple sources

• Lack of single line distribution system

• Malpractice in the supply chain

• Too many middle men

• Lack of product quality

• Cost inefficiency

• Uneconomic quantity of each product for a container

• Lack of product processing

• Timeline – too long

• Poor infrastructure/roads

• Financial problems that the

farmers have to supply in time –

lack of finance

• Complex procedures

• Lack of information

• Middle men squeeze the price

• Lack of skilled manpower

• Seasonal availability

• Lack of training

• Poor product handling

• Lack of forecasting

32

Issues in the Supply Chain – business II

• Lack of crop insurance

• Pesticide over use

• Crop zones – specilialisation

• Lack of crop diversity

• Packaging

• Lack of cool chain

• Payment – lack of means of safe payment

• Lack of local storage

33

Issues in the Supply Chain – NGO

brainstorm

• Products are not being produced

according to demand

• Farmers associations not

functioning properly

• No govt policy to support farmer

assocns

• Partnership between stakeholders

not legally or ethically bonded

• Highly dominated by middle men

• No infrastructure to preserve

product at farmer level

• Supply chain not well managed /

coordinated

• Suppliers can form cartel –

especially during peak demand

periods

• Slow payment by larger players

• Lack of information for production

planning

• Insecure supply chain at all stages

• Farmers not getting fair price

• MM getting too high a value

• Strong scope for market distortion -

on price

• Limited scope for knowledge and

skills provision – affordable and

timely

• Lack of initiatives to motivate

farmers

• Lack of local investment

• Role of women not recognized

• Lack of business orientation

• Small farmer‟s role not recognised

• Lack of trust among market actors

Actual findings from the Agora supply

chain – supplier perspective

• Multiple echelon supply chain

• Many routes for products to reach destination

• No market transparency

• Lack long term contracting or vertical integration

• Corruption common

• Impact on supply stability & on shelf availability

Supply chain complexity

34

Significant issue

Medium issue

Small issue

No issue

Unable to assess



• Limited sources of information for farmers

• Farmers are poor and may not get a fair price for

their products

• SME employees and temp labor may not get a fair

salary or have an official employment contract

• Farmers are vulnerable to land owners

• Few farmers‟ associations / lacking collaboration

between farmers

• Minimal basic education for example literacy

• Marginalization based on distance from Dhaka

Imbalance of market information

35

Significant issue

Medium issue

Small issue

No issue

Unable to assess



• Harmful chemicals & preservatives (over-) used at all

levels of supply chain e.g. Formalin in fish, Calcium

Carbide and ethylene in fruit

• Lack of policy control to prevent distribution & use of

chemicals

• No education on impacts of using these chemicals

• Insufficient quality control in the supply chain e.g.

Science Lab

Malpractice in supply chain

36

Significant issue

Medium issue

Small issue

No issue

Unable to assess



• Imbalance between ability to supply & consumer

demand

• Demand drivers: Special occasions; (e.g. Eid /

Ramadan), constant demand for seasonally grown

products, proximity to Dhaka

• Supply (seasonality, weather, political unrest, MRP,

fuel price, varying lead time for foreign products)

• Price peaks compromising supplier loyalty

Price fluctuation

37

Significant issue

Medium issue

Small issue

No issue

Unable to assess



• Lacking infrastructure for harvesting, transportation & storage

• Limited (cold) storage & lacking electricity

• Deteriorating road & rail networks

• Little awareness of supply chain / best practices resulting in

waste

• Vocational education is limited e.g. management skills,

finance, HR, long term strategy & customer relationships

• Inadequate professionalism

• Little investment in up-skilling & motivating staff

Lacking infrastructure & training

38

Significant issue

Medium issue

Small issue

No issue

Unable to assess



• Limited sources of information for farmers

• Farmers are poor and may not get a fair price for

their products

• SME employees and temp labor may not get a fair

salary or have an official employment contract

• Farmers are vulnerable to land owners

• Few farmers‟ associations / lacking collaboration

between farmers

• Minimal basic education for example literacy

• Marginalization based on distance from Dhaka

Imbalance of power & market information

39

Significant issue

Medium issue

Small issue

No issue

Unable to assess



• Harmful chemicals & preservatives (over-) used at all

levels of supply chain e.g. Formalin in fish, Calcium

Carbide and ethylene in fruit

• Lack of policy control to prevent distribution & use of

chemicals

• No education on impacts of using these chemicals

• Insufficient quality control in the supply chain e.g.

Science Lab

Malpractice

40

Significant issue

Medium issue

Small issue

No issue

Unable to assess



• Lacking infrastructure for harvesting, transportation & storage

• Limited (cold) storage & lacking electricity

• Deteriorating road & rail networks

• Little awareness of supply chain / best practices resulting in

waste

• Vocational education is limited e.g. management skills,

finance, HR, long term strategy & customer relationships

• Inadequate professionalism

• Little investment in up-skilling & motivating staff

Lacking infrastructure & education/training

41

Significant issue

Medium issue

Small issue

No issue

Unable to assess



•Multiple echelon supply chain

•Many routes for products to reach destination

•No market transparency

•Lack long term contracting or vertical

integration

•Corruption common

• Impact on supply stability & on shelf

availability


42

Significant issue

Medium issue

Small issue

No issue

Unable to assess



• Imbalance between ability to supply &

consumer demand

•Demand drivers: Special occasions; (e.g. Eid

/ Ramadan), constant demand for seasonally

grown products, proximity to Dhaka

•Supply (seasonality, weather, political unrest,

MRP, fuel price, varying lead time for foreign

products)

•Price peaks compromising supplier loyalty

Price fluctuation

43

Significant issue

Medium issue

Small issue

No issue

Unable to assess

Issues in the Supply Chain

Imbalance of market information

44

Significant issue

Medium issue

Small issue

No issue

Unable to assess


Malpractice in supply chain

Price fluctuation

Lacking infrastructure & training

Lacking consumer pressure

Absence of regulatory control

Additions suggested by NGO group:

Stakeholder mapping: supply chain

complexity (NGO)Stakeholder Causing

issueAffected

by issue

Skills / knowledge

in issue

Instruments to address

issue

Farmer

SME Supplier

Middleman/trader

Retailer

Non supply chain actor/faciltators

Consumer

Stakeholder mapping: imbalance of

market information (business)Stakeholder Causing

issueAffected

by issue

Skills / knowledge

in issue


issue

Farmer

SME Supplier

Middleman/trader

Retailer

NGO/market facilitator/govt

Stakeholder mapping: price

fluctuations (NGO)Stakeholder Causing

issueAffected

by issue

Skills / knowledge

in issue


issue

Farmer

SME Supplier

Middleman/trader

Retailer

Faciltators

Consumer

Influence/interest matrix: supply chain

complexity (NGO)

High

Low

HighLow

Low

priority

Interest

Potential to

promote or

impede

Critical

group

Interested,

but currently

unable to

helpInfl

uen

ce

/ im

po

rta

nce /

em

po

werm

en

t

Farmer

Trader/MM

Retailer

SME Supplier

SP Facilitators

Consumers

Influence/interest matrix: imbalance of

market information (business)

High

Low

HighLow

Low

priority

Interest

Potential to

promote or

impede

Critical

group

Interested,

but currently

unable to

helpInfl

uen

ce

/ im

po

rta

nce /

em

po

werm

en

t

Farmer

Trader/MM

Retailer

SME Supplier

Input

provider

NGO/facilitator

Influence/interest matrix: price

fluctuations (NGO)

High

Low

HighLow

Low

priority

Interest

Potential to

promote or

impede

Critical

group

Interested,

but currently

unable to

helpInfl

uen

ce

/ im

po

rta

nce /

em

po

werm

en

t

Farmer

Trader/MM

RetailerSME SupplierFacilitators

Input

provider

51

How to Partner

Effectively

Section three

51

A partnering mindset...

• Requires an openness to move from your own individual needs /

constraints / issues towards consideration from the perspective of the

partnership as a whole

A partnering mindset...

• Flexibility and a willingness to compromise where

possible (while being clear about boundaries).

• A willingness to work outside „business as usual‟ and

open to more innovative ideas

• Ability to be transparent about real interests, needs, and

constraints

• Openness to self-reflection and to change as well as

questioning your own assumptions and expectations

• A humility that others may have better answers than you

• Being comfortable to give up autonomous decision-

making

A partnering skill set...

• Ability to listen actively, put yourself into other people‟s

shoes, and understand the real interests, needs, and

constraints of the others

• Ability to communicate your organisation‟s own

interests, needs, and constraints

• Relationship-building and trust-building ability

• Ability to distil and synthesize views

• Achieving balance between your organisation‟s own

interests and the furtherment of the partnership

• Negotiation

• Mediation

• Good record keeping

• Others??

Finding a common language

The way in which partners use language can make or break a

partnership - building consensus or reinforcing divisions

• Avoid incomprehensible and alienating jargon from each sector is

– e.g., “market analysis”, “participatory appraisal”, “social needs analysis”

• Confirm understanding of key terms to avoid divergence of views

– e.g., “project”, “partnership”, “community”, “sustainable”, “development”

Profit Benefit

Common objectives Complementary objectives

Contract Agreement

Business plan Action plan

Committee Focus / Working / Task group

Funding Resourcing

Consultation Participation

Evaluation Review

Customer/beneficiary Target group

Principles of partnering

• PARTNERSHIP is the group of people and

organisations who deliver a project together

• PARTNERING is a way of delivering a project

• There are certain basic inhibitors which will

prevent partnerships from working

• These lead to some core principles that are

universal, transferable and „non-negotiable‟ at the

heart of effective partnerships

Is this ‘partnership’?

Power imbalances...

Core principle:

Equity

Hidden agendas...

Core principle:

Transparency

Partners ‘winning’ at the

expense of others...

Core principle:

Mutual benefit

61

Exercise

Day 2

61

Understanding value

)

Discuss your:

• Strengths (i.e. what do we bring to a supply

chain)

• Weaknesses (i.e. what do we need from

others in the supply chain)

• Potential benefits from partnering

63

A checklist for producers (and

organisations that support farmers)

Additional resources

63

64

The end consumer

• How well do I know the end consumer - the

person who goes into the supermarket and buys

my end product, either as an ingredient to another

product, or in its original form?

• Should I talk to these consumers directly?

• How might I survey them?

• Could I look at research done by others?

65

The supermarket

• Do I know the products that the supermarket is retailing –

and does my product fit within this list?

• Do my products meet the retailers‟ quality standards?

Can I prove that they do?

• Is my production safe for consumers and produced in a

hygienic way?

• Do I have the flexibility and ability to scale up if the

supermarket wants to buy in larger volume or change their

request at the last minute?

• How does the supermarket choose its suppliers? Is there

an organised group of farmers that is able to sell direct to

the supermarket that I could be part of?

66

The supplier to the supermarket

• Do I know who the supermarket‟s suppliers are, where

they are located and understand what other organisations

are also active in the supermarket‟s supply chain?

• Do I understand the challenges the suppliers faces doing

business with the supermarket? How will buying from me

help them with these challenges?

• How do I develop a strong relationship with the supplier?

• Can I have a bigger say in the price of my product which

is negotiated between the supplier and the supermarket?

67

The market place

• How well do I understand trends in the market and how

they will impact on me?

• Are retailers increasingly looking for „organic‟ produce or

any other kind of produce that I am well placed to supply?

• Are consumers shopping more in supermarkets rather

than bazaars for the product that I sell?

• Are retailers interested in contract farming and how could I

benefit from that?

creating sustainable agro supply … sustainable agro supply chain & ensuring better market...

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