Inclusive markets

What’s at stake

Family farms produce the majority of the the world’s food, yet small-scale farmers are often cut out of the trade, ending up in poverty and leaving their huge potential untapped. For women, young people, and indigenous populations, this holds even more true while they are still directly involved in food production.  To ensure sustainable supply chains and self-sustaining farming businesses, smallholder farmers must be offered a fair deal.

Even before COVID-19, there was a need for a holistic food system enabling food security and nutrition while promoting sustainability. Now, a paradigm shift to more resilient forms of agriculture is more urgent than ever to address food-chain disruptions. Food prices have been rising significantly, in some cases up to 65% since the start of the pandemic.

The role of local authorities in creating a favourable environment for local healthy and sustainable food chains to blossom is increasingly being documented. However, they cannot do this alone. While they can create strong incentives for change through obligations, restrictions, taxes and subsidies, economic actors such as retailers, institutional buyers and other food companies also have powerful cards to play, thanks to the power of their purses. For healthier and more sustainable food to reach urban markets, there need to be incentives for all actors in the chain to modify their behaviour. Without a good and profitable business model that works for everyone, especially smallholder farmers and buyers, sustainable food chains are unlikely to be scaled up. As such, inclusive business relationships involving buyers, processors and rural, peri-urban and urban producers can be a powerful enabling factor in the transition towards sustainable food systems.

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Our approach

“Inclusive markets” is one of the three strategic pillars of our programme, next to sustainable production and enabling environments. It is a notion that, for us, covers several facets that are equally important within our food system. It refers to:

1. Fair, inclusive business relationships that fulfil the needs of farmers and buyers alike.
2. An inclusive food environment, in which women, young people and vulnerable populations can also tap into their full potential.
3. Nutritious, healthy food that is available, accessible and affordable for all consumers

Inclusive business is our core business

When we talk about inclusive business, we mean serious business. It’s all about doing business with a long-term outlook, fulfilling the needs of farmers and buyers alike. With this kind of forward-looking strategy, they can plan ahead more carefully, resulting in stronger businesses. Our work on Inclusive Business starts with a market assessment to help figure out what is stopping farmer businesses from being competitive and getting private sector investment. After that, we co-design solutions with farmer organisations and buyers, and use tools to address the gaps we have identified.

Listen to our colleagues around the globe defining inclusive business.

At Rikolto, we use the LINK methodology developed by the International Centre for Tropical Agriculture (now Alliance Bioversity & CIAT) and other organisations within the Sustainable Food Lab to guide our efforts to foster more inclusive food chains and business models. The methodology is usually applied by all chain actors with the support of an external facilitator and is underpinned by six principles:

1. Chain-wide collaboration: cooperation between all chain actors with a common goal. To be successful, there needs to be added value for everyone. In many cases, a good price is considered one of the most important values, but it is not the only one: stability and market security are sometimes as attractive as money.
2. Effective market linkages: new relationships between all the chain actors leading to a stable and profitable market for farmers and a reliable supply for buyers. These relationships must be underpinned by strong feelings of trust and can sometimes be translated through formal agreements. In any event, there should be a commitment to solve problems together. As side-selling is often a major hurdle, this requires strong local actors (such as a farmer organisation, a company or a government-sponsored food hub) to establish an attractive business offer that farmers will accept. In addition to price, a strong offer can include direct payments, training or access to capital.
3. A fair and transparent sourcing policy: defining and applying clear and consistent quality standards to meet consumers’ increasingly high expectations and making commitments to buy and sell set quantities at certain times. Recognising the mutual interdependency between chain actors, inclusive business requires an equitable risk management process.
4. Equitable access to services including credit, technical support, business development support and market information. These are essential to boost productivity, quality and food safety and to reduce the negative impacts on the environment. This is especially critical when local banking systems do not offer affordable loans to farmers and other small chain actors. These services can be provided by the buyer directly, or by an actor from the wider environment (such as government or civil society).
5. Inclusive innovation: not “for” but “with” farmers so that they remain competitive and improve the commercial value of their produce. For example, young people can be supported to set up business units arounds the innovative techniques or practices developed in the chain such as organic fertiliser or digital data management for traceability and quality assurance. The process itself can also be innovative such as by developing step-by-step plans to make the chain more inclusive.
6. Measurable results: the incorporation of tailor-made indicators and monitoring plans to measure the effectiveness of the business model on an ongoing basis and share the results openly with chain actors. Decisions on how to improve should be made cooperatively. This can inspire others to follow suit.

Indonesia

As long ago as 2016, Rikolto, Mars Food, and the AMANAH farmers' cooperative facilitated improvements in quality, traceability, and collective selling for about 7,500 cocoa farmers in Sulawesi. Mars supported young cocoa farmers in becoming professional service providers in their communities. Rikolto provided business coaching to the cooperatives, and farmers set up a mobile communication system to receive information on world market prices. Meanwhile, Mars has been replicating this model worldwide.

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Vietnam

In 2018, Rikolto started working with the An Hoa Agricultural Service Cooperative, Vinh Phuc province to improve sustainable production practices and enhance market access. By 2023, approximately 2,000 smallholder farmers including ethnic minorities in Tuyen Quang, have participated in the cucumber production and market linkage, thereby improving their income and livelihoods. Farmers’ organisations have received support to enhance their access to services, secure better deals, and increase resilience in supplying urban markets.