Multiple Crops & Local Distribution Models

Tracy van der Heijden

25 January 2008

Presenter:

Date:

Conventional Approaches to Agricultural Development -1

Projects focusing on agricultural development for commercial purposes tend to focus on: Integrating the beneficiaries into a conventional

agricultural value chain; Selecting one potentially high-value cash crop

In the context of vulnerable communities this is not always the optimum solution

Conventional Approaches to Agricultural Development 2

The main problems with this approach are: Traditional agricultural value chains in most

products and in most markets are strongly loaded against producers

The powerful retailers insist on standardised quality and volume supply to benefit their SCM requirements, which small producers are unable to meet

A single-crop strategy is a high-risk solution for a poor community

A viable alternative

We accept that poor rural communities need to access commercial markets

BUT: We do not believe that the conventional approach is the only one

This alternative approach has two main components: An alternative market access model, based on

local markets; and An alternative production model, based on mixed

agriculture and sustainable methods

Producing for local markets

The separation of producer and consumer in agricultural markets has been made commonplace by the rise of the Super Retailer

This is now seen as the only commercially viable agricultural value chain, but it is biaised against poor and/or inexperienced producers

The alternative strategy is to produce exclusively for consumers within a radius of less than 50kms.

DIRECT selling to consumers is the key component in a local market approach

Benefits of local markets1. Reduced logistics management2. Narrowing the value chain between producer and

consumer can increase the price received by up to 100%, and the gross margin by even more. Thus lower levels of production become viable.

3. Given produce of a reasonable quality and variety, local consumers will be more forgiving of aesthetic flaws

4. It is easier for producers to anticipate demand5. In addition to being a viable alternative, local markets

provide an “incubator” opportunity6. “Local” food is a rapidly growing market around the

world

Sustainable & Mixed Production Methods 1

“Sustainable” has a wide range of meanings, but generally encompasses a mixed/organic approach

The potential of organic production is generally accepted, but less well accepted is that it represents a low-cost production method for the rural poor in South Africa

Leaving aside labour, inputs and capital expenditure are far lower

Customers do not expect “perfect” produce Price premiums are significant, particularly for meat and

unusual varieties. This supports lower-volume producers

Sustainable & Mixed Production Methods 2

Mixed production (across animals and plants and within these categories) has two key benefits: Further reduction of inputs costs Reduces seasonal and market risk

In a conventional value chain mixed production is generally not viable because of volumes

In a local production model, mixed production is optimal

Sustainable production for local markets can “mentor” future large-scale organic producers

How can poor rural communities benefit from the theory?

Several factors will maximise the potential of this opportunity: Identifying the beneficiary “profile” that is most

likely to benefit from the alternative approach Facilitating acceptance of an additional (rather

than subsitute) value chain by the controlling distributors

Increasing consumer awareness of “fair trade for local farmers”

What is the “profile” of the optimum beneficiary community?

There are many poor rural communities where agriculture represents the best development hope.

However, not all of them are suited to this alternative market.

Those communities most likely to succeed in this market are: Proximity to a “suitable” market Access to resources to produce an optimum range of

products Some farming experience & an existing communal

development forum

What is a suitable market?

1. A high enough level of spend to support the project

2. Limited competition from other food sources

3. Some portion of the market places a premium on organic/local food

The ideal situation is one that combines a low-income and higher-income set of consumers into one market

There are several examples, due to the rural revival across much of South Africa

The key is DIRECT access to consumers

Assessing resources

Access to land is clearly key, but a mixed operation able to support around 75 people would generally not require more than 150ha

The location of the farm is critical Infrastructure must facilitate a direct link

between the producer and the consumer Climate, water and soil must facilitate a range

of products around the year The ability to produce unusual varieties and

crops is a benefit

Current pilot projects

Prins Albert The local authority has purchased a farm just outside

the town Initial feasibility study has shown excellent potential

markets and production capacity for organic produce Limited farming experience of the participants is

balanced by a committed development committee of local farmers

Detailed feasibility study to be completed by April

Current pilot projects

Rosendal The market potential is excellent The area is very well suited to a variety of high-value

products The local community is organised, committed and has

some farming experience The key issue is access to land, which is expensive We are developing a proposal around utilising a small

(less than 20ha) of the 630ha commonage.