A Fair Price for Fresh Food: How to source fresh food inclusively
Been there, done that
Those of us working in the agricultural value chain in emerging markets know that many smallholder farmers in Latin America are characterized by low productivity, asymmetric information in prices and selling opportunities, and limited market access. So many of these farmers sold their produce in markets that were less demanding but also less rewarding, such as village open-air markets. Or they sold their commodities to intermediaries because of the high transaction costs involved in reaching more distant markets and their inability to comply with the stringent requirements relating to volume, quality, and timely delivery demanded by modern agricultural value chains.
Similarly, international companies struggle with finding agribusiness partners who are professional enough to understand and comply with the quality, volume, and sustainability requirements. The lack of transparency into the agricultural value chain puts companies who source produce and commodities at risk.
We can change this
Frontrunners like Rikoto demonstrate how to bridge the gap between smallholder farmers and market players like Subway. Through using an inclusive business model (which includes farmer professionalism as an approach), Rikolto brokered a business relationship in which all partners benefit equally. For Subway, this means food safety certification, quality guarantees, punctual delivery, and a stable supply of correctly shaped vegetables to 24 Subway outlets in Nicaragua. For the vegetable farmers, this means fair prices, shared risks, long-term income security, and stable demand.