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Business Models in depth
The New Business Models for Sustainable Trade project is a four-year collaboration between the Sustainable Food Laboratory, Rainforest Alliance, the International Institute for Environment and Development, Counterpart International, the International Center for Tropical Agriculture, Ecoagriculture Partners, and Catholic Relief Services, supported by the Bill and Melinda Gates Foundation. The vision of the project is to develop and implement new business models that enable smallholders to participate in sustainable trading relationships with international businesses and thereby improve their livelihoods.
These new business models will be applied in partnership with buyers in four specific value chains: fine flavor cocoa in Ghana, certified cocoa in Ghana and Côte d’Ivoire, horticulture in Kenya (starting with flowers), and dried beans in Ethiopia. Each value chain project will develop and implement new business models in which risks, responsibilities, and benefits are shared in a more balanced way among chain actors. These models will comprise business practices designed to promote longer trading relationships, improved payment terms and flows of information, and reduced costs of complying with new standards. The business practices will also be more responsive to the economic realities of smallholder production while not compromising on quality, food safety, or risk to buyers. Designing and implementing these models in partnership with suppliers and buyers will benefit smallholders by (a) securing market access, (b) increasing benefits, and (c) expanding their volume of trade. The ultimate aim of these four discrete chain projects is to test new business models, which can then be applied elsewhere and up-scaled for maximum impact. Is it also hoped that this project can link to other initiatives on inclusive business to gather momentum and minimise duplicated efforts.
The project aims to benefit 160,000 smallholders and 300,000 labourers and, once dependents of these smallholders and labourers are included, total beneficiaries have the potential to total almost 3 million - with cumulative gains of $45 million. However, its long-term benefits have the potential to run much deeper by being applied to a broad range of products and regions through the extensive corporate partners that make up the Sustainable Food Laboratory and the Sustainable Agriculture Initiative.
Methodology
The project works with the entire length of the value chain. By partnering with buyers, the project aims to bring investments in production together with clear market demand and innovation in trading relationships.
The project has begun by identifying six core principles through reflecting on current practices and goals. These will serve as a framework for diagnosing and improving trading relationships when moving from value chain upgrading to a scaleable business model.
This framework is intended to be a starting point for further learning, discussion and development. It is expected that the framework will evolve as our understanding of how best to engage smallholders in dynamic markets advances. More detail on these principles can be found in a separate summary within this pack. These principles are:
Principle 1: Chain-wide collaboration with shared goals and identified champions
Principle 2: New market linkages
Principle 3: Transparent chain governance
Principle 4: Equitable access to services
Principle 5: Inclusive innovation
Principle 6: Measurement of outcomes and acting on them.
