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 markets 1.Reduced logistics management 2.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 demand 5.In addition to being a viable alternative, local markets provide an “incubator” opportunity 6.“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.