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1 Business Services Market Development Agro Trading Principles.

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Presentation on theme: "1 Business Services Market Development Agro Trading Principles."— Presentation transcript:

1 1 Business Services Market Development Agro Trading Principles

2 2 A set of guiding principles or rules for businesses in the agro sector on how to better collaborate and trade with each other to reduce costs and create value. Goes hand in hand with contracts What are agro-trading principles?

3 3 Reduce the risk and cost of doing business Build trust and stability between trading partners Allows cooperation, share information, knowledge and technologies Enhance interface with smallholders Work together to improve productivity and quality Improve organisation, management and planning Enhance chances of market access Foster innovation Encourage clusters to evolve Raise competitiveness of whole industry What do they do for our sector?

4 4 To avoid negative influences of not having them: Sabotage we believe our competitor arranged for contaminated consignments to be delivered to our warehouse Undermine arrangements Our former employee set up own company, solicits business from our customers / suppliers International market outlets closed due to quality issues in fish and grain 2 examples of dominant players in a sector abusing their position by flouting rules on input distribution Why would I invest in innovation when I know I cannot protect my own innovation? Why have trading principles?

5 5 Key Findings from Ugandan Research Ugandan agribusiness dominated by one-off transactions with smallholders & brokers – risky, costly, unsustainable Widespread interest in creating a set of business to business trading principles that foster collaboration increase profits. A sub-sectoral or sector wide code of conduct is not an appropriate measure; prefer adoption by individual industries Trading principles should address issues of loyalty, trust, fair practices and honesty, fairness and ethical conduct

6 6 Key Findings from International Research Codes of conduct are voluntary initiatives, must have a business case Codes not a substitute for strong national legislation Producers prefer local industry codes Buyers purchasing practices are often part of the problem and are not specifically addressed by many of the codes of conduct in existence, which deal purely with suppliers responsibilities. Partnership is key

7 7 Examples from international research Export horticulture for Kenya, Zimbabwe, South Africa, Zambia, Egypt. Tanzania, Uganda and Ghana coming up. Three local multi-stakeholder code initiatives Zimbabwe -Agricultural Ethics Association of Zimbabwe. South Africa - Wine Industry Ethical Trade Association (WIETA) in 2002. Kenya -Kenya Flower Council has a Code of Practice Zambian -ZEGA code. Horticultural export sector has benefited from codes Increased and sustained market access Long-term relationships have been set up Access to technical and marketing information Benefits for workers

8 8 Agro Trading Principles

9 9 Principle 1 Businesses should adhere to good trading practices and honour all their commitments to their trading partners Clauses: Do not make false commitments to sell or buyDo not make false commitments to sell or buy Demonstrate commitment through written contracts or advance payments Demonstrate commitment through written contracts or advance payments

10 10 Principle 2 Businesses should put quality at the forefront of their operations and strive to reward quality at all times Clauses : Strive to meet industry standardsStrive to meet industry standards Avoid trading practices that encourage poor quality production, poor harvesting practices, handling and processingAvoid trading practices that encourage poor quality production, poor harvesting practices, handling and processing Link high quality products to higher pricesLink high quality products to higher prices

11 11 Principle 3 Businesses should deal honestly and openly with each other at all times Clauses: Disclose the correct information, include perceived and known risksDisclose the correct information, include perceived and known risks Provide timely information regarding operational problemsProvide timely information regarding operational problems Be transparent about your capacityBe transparent about your capacity Give ample notice of major changes to your operationsGive ample notice of major changes to your operations

12 12 Principle 4 Businesses should not undermine others trading arrangements or engage in unfair practices Businesses should not undermine others trading arrangements or engage in unfair practicesClauses: –Do not poach suppliers and buyers –Regularly review your contracts with partners –Honour obligations to partners who have supported you with inputs –Do not disclose partners confidential information –If supported in your initial investment by particular buyers, inform them of any decision you make to sell to another –If you are a new entrant to the industry, familiarize yourself with, and respect, existing norms

13 13 Principle 5 Businesses should not engage in fraudulent practices of any kind Clauses: –Be transparent about quality of your products –Refrain from the adulteration of your product –Be transparent about the quantity you are able to supply –Refrain from tampering with established measurements and standards –Refrain from fraudulent practices such as air supply –Honour payment commitments

14 14 Principle 6 Businesses should refrain from all forms of exploitation and abuse of dominant positions that fall outside of healthy, competitive behaviour Businesses should refrain from all forms of exploitation and abuse of dominant positions that fall outside of healthy, competitive behaviourClauses: Endeavour to respect initially agreed prices as much as possible.Endeavour to respect initially agreed prices as much as possible. Communicate unavoidable changes early, give reasonCommunicate unavoidable changes early, give reason Ensure fair negotiations on pricesEnsure fair negotiations on prices Prepare to justify your price and costsPrepare to justify your price and costs

15 15 Principle 7 Businesses should at all times, work with responsible trading partners who respect these principles; avoid dealing with businesses they know to be guilty of malpractice Clauses: Be informed about your suppliers; seek and check referencesBe informed about your suppliers; seek and check references Disclose your full contact details to trading partners in all business dealingsDisclose your full contact details to trading partners in all business dealings Keep records, provide receipts and document all transactions with trading partnersKeep records, provide receipts and document all transactions with trading partners Provide references to buyers on requestProvide references to buyers on request Commit to only buying from good, reputable trading partnersCommit to only buying from good, reputable trading partners De-list unethical trading partnersDe-list unethical trading partners

16 16 Principle 8 Respect all Ugandan Legislation and its intentions, especially: Respect all Ugandan Legislation and its intentions, especially: Companies ActCompanies Act Sale of goods ActSale of goods Act Registration of Business ActRegistration of Business Act Trade Marks ActTrade Marks Act UNBS standardsUNBS standards

17 17 Next Steps Adaptation and adoption –Printed materials provided Agro Trading Principles Research Report Workshops –4 afternoons PSFU has Private Sector Competitive Project II –BUDS component cost share –Capacity building component Supportive agencies and projects –SCOPE, BSMD, UNBS, CottonDO, DairyDA/ LOL, MTCS, APEP Private Service Providers

18 18 ACKNOWLEDGEMENTS 1.Amfri Farms Ltd 2.Agricultural Productivity Enhancement Programme - APEP 3.Appropriate Technology Uganda 4.British American Tobacco 5.Cotton Development Organisation 6.Dairy Development Authority 7.Dairy Traders Association 8.Danida 9.Interafrica Law Associates 10.Jakana Foods 11.Land OLakes 12.Medium Term Competitive Strategy 13.National Agriculture Advisory Service 14.Namifarm Ltd 15.National Council of Uganda Small Scale Business Organisations 16.National Union of Coffee Agribusiness and Farm Enterprises 17.Paramount Diaries Ltd 18.Strengthening the Competitiveness of Private Enterprise - SCOPE 19.Star Café Ltd 20.Uganda Coffee Traders Federation 21.Uganda Fish Processor and Exporters Association 22.Uganda Floricultural Association 23.Uganda Flowers Exporters Association 24.Uganda Gatsby Trust 25.Uganda Grain Traders Ltd 26.Uganda National Bureau of Standards 27.Uganda National Farmers Federation 29.Uganda National Bureau of Standards 30.Uganda National Farmers Federation 31.Uganda Oil Seed Producers and Processors Association 32.Uganda Tea Development Agency 33.Uganda Womens Finance Trust Ltd 34.United States Agency for International Development 35.World Wide Sires

19 19 ACKNOWLEDGEMENTS Research and Publication Team 1. Claire McGuigan 2. James Ssemwanga 3. Fred Zake 4. Paschal Nyabuntu 5. David Kibanda 6. Sanjay Kumar 7. Peter van Bussel 8. Michael Kairumba


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