ADKN

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ADKN
Best Practice Marketing for Communities in
Mountainous and/or Drug-Crop Producing Regions
Final Project Workshop
The Alternative Development Knowledge Network
Project Output 4 Strengthening Development
Oriented Rural Enterprises
Workshop Presentation
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DOCUMENT OVERVIEW
INTRODUCTION MANAGING ACQUIRING
SERVICES QUALITY CERTIFICATION MARKET
INFORMATION SYSTEMS PROFITABLE GROWTH GROUP
ACTIVITY
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INTRODUCTION
Once a Development-Oriented Rural Enterprise has
been established
There is still a lot of work to do to make it
healthy and sustainable

• A full intermediary type DORE will
• Buy farmers produce
• Pack, sort and process it
• Sell produce in the market
• Have some infrastructure
• Have a management team
• Have some basic organization and performance
  management

• But at first it might not
• Have consistent and reliable sources of
  extension, credit, etc
• Have good enough quality to serve best customers
• Have proper market information
• Be profitable or growing as quickly as it could

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DOCUMENT OVERVIEW
INTRODUCTION MANAGING ACQUIRING
SERVICES QUALITY CERTIFICATION MARKET
INFORMATION SYSTEMS PROFITABLE GROWTH GROUP
ACTIVITY
5
ACQUIRING AND MANAGING SERVICE PROVIDERS
What to use?
What for?
Where to get it?

• Agricultural extension

• To get reliable source of technical support

• Internal staff, government agencies, researchers

• To finance working capital

• Donor finance, bank loans, government credit

• Credit

• Inputs

• To ensure inputs at the early stages

• DORE supplies inputs uder contract farming or
  independentrly

• Research

• To avoid productivity decreases and human
  problems

• Research institutes, universities, internal staff

• Management support

• Agencies, research organizations, private sector
  partner, consultancies

• To advice managers and support decision-making
  process

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ACQUIRING AND MANAGING SERVICE PROVIDERS
Emsolmec
Cocoa
Coffee
Ecotourism

• Ministry of Industry, Trade and Tourism

Extension and technical assistance

• National Coffee Federation

• PADF / Social Action

• Ministry of Agriculture
• Emsolmecs rotating fund

• Emsolmecs microcredit service

• Emsolmecs rotating fund

Credit

• Colombia forestal program

• National Coffee Federation

• Social Action - UNODC

Inputs
Management support

• Dansocial /Social Action

• Compañía Nacional de Chocolates

• Aviatur / UNODC

• Cafimag

Marketing
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DOCUMENT OVERVIEW
INTRODUCTION MANAGING ACQUIRING
SERVICES QUALITY CERTIFICATION MARKET
INFORMATION PROFITABLE GROWTH GROUP ACTIVITY
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INSTITUTIONAL QUALITY CONTROL
Feedback on production problems
Technical support to solve problems identified by
Q.C.
Extension Staff
Q.C. Lab
Information on customer preferences
Tested produce
Farmers
Customers
Produce for testing and distribution
Sales Marketing
Feedback on quality
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CERTIFICATION SYSTEMS
Considerations
Impacts

• Alter the agricultural systems productivity and
  price inputs

• Increase cost production

• Stenghten management systems and institutional
  capabilities

• Production must be separated and classified

• Target consumers and guaranteed market

• Develop best agricultural skills
• Improve technical knowlege

Strategy and branding benefits

• Generate resource for supporting social projects
  and introduce social responsibility in the
  organisations culture

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CERTIFICATION SYSTEMS (II)
ORGANIC PRODUCTION

• Prohibition of agricultural chemicals
• Control of post-harvest handling
• Conversion period
• Farmer's record-keeping and traceability of
  produce
• Certification agencies must be paid
• Multiple standards to comply with

• Price premium
• Growing market
• Substitution of labour for agricultural inputs
• Improved soil quality and farm biodiversity

• Decrease income during the conversion period
• Cost of certification and burden of compliance
• Increase cost of production and reduce
  productivity

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CERTIFICATION SYSTEMS (II)
FAIR TRADE

• Price premium for individual farmers and their
  organization
• Promotes farmer organizations
• Supports social initiatives

• Production under non-exploitative conditions
• Organizational scheme needed
• Economic return guaranteed
• Income distribution model benefits organization
  as well as individual farmers

• Certification cost
• Market limited to commodities
• Increasing need to combine with other types of
  certification

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CERTIFICATION SYSTEMS (II)
GOOD AGRICULTURAL PRACTICES

• Production growth under safe conditions
• Develop best agricutlural skills
• Differentiated production

• Dangerous agricultural chemical forbidden
• Control of chemical use, post-harcest handling
  and packing
• Random testing
• Certification agency

• Record keeping requires
• Certification cost
• Increase production cost

ECO-CERTIFICATION

• Price premium
• Rule out chemicals use is not required

• Limited market- wood and coffee

• Environmentally-friendly production

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RED ECOLSIERRA - CERTIFICATION BENEFITS
Price market Us 1.07 pound
FLO Price Us 1.24 (arábica)
Organic coffee price 0.15
Overprice
20 goes to finance social projects of the
organization 25 Equity 75 administrative and
operation costs
80 returns to producers income increase
Social Fund 5 cents/ per pound goes to social
projects
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DOCUMENT OVERVIEW
INTRODUCTION MANAGING ACQUIRING
SERVICES QUALITY CERTIFICATION MARKET
INFORMATION PROFITABLE GROWTH GROUP ACTIVITY
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MARKET INFORMATION SYSTEM TYPES
Narrow
Broad
Price information only
Price information and also other- market news,
marketing information, etc
Formal
Informal
Created for purpose, e.g. government price lists
Not created for purpose, e.g. calling personal
contacts
IT-driven
Non-IT driven
Uses computers, telecoms and electronic media,
e.g. SMS services
Doesnt use computers, telecoms and electronic
media- e.g. hand-delivered price lists
Non-continuous
Continuous
Comprises regularly updated information, e.g.
weather, prices
Comprises one-off information, like contact
details for traders or agricultural information
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MARKET INFORMATION INFORMATION TYPES
Marketing Information
Market Information

• Current prices
• Bids and offers
• Transaction volumes
• Future prices
• Historical prices

• Market-relevant current affairs
• Weather forecasts
• Market structure and dynamics

• Contact details for traders and service
  providers
• Packing and grading standards
• National regulations
• Market locations
• Agricultural extension information
• Export requirements

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MARKET INFORMATION BEST PRACTICES

• Provide only what users need
• Use what is already available if possible
• Ensure distribution mechanism is appropriate for
  user
• Assess the needed and actual reliability
• Ensure system sustainability

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DOCUMENT OVERVIEW
INTRODUCTION MANAGING ACQUIRING
SERVICES QUALITY CERTIFICATION MARKET
INFORMATION PROFITABLE GROWTH GROUP ACTIVITY
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OVERCOMING BOTTLE NECKS TO GROWTH
Common barriers
Solution
Producer productivity

• Use of traditional and participatory
  agricultural research

Low supplier cultivated areas

• Increase cultivation areas

Low number of producers

• Get technical and financial support to bring up
  new suppliers to market

Shortage of processing capacity

• Increase labor productivity (training),
  equipment investment

Low number of producers
Transportation and storage

• Improve logistical management

Lack of demand or customer

• Strengthen customer relations and develop
  marketing strategies

Lack of working capital

• Improve management of working capital or get cash

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DOCUMENT OVERVIEW
INTRODUCTION MANAGING ACQUIRING
SERVICES QUALITY CERTIFICATION MARKET
INFORMATION PROFITABLE GROWTH GROUP ACTIVITY
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BREAKOUT GROUP ACTIVITY
Group
Activity

• Make a list of the kinds of quality controlled
  outputs that DOREs might want to produce (e.g.
  organic, non-certified high quality)
• For each kind of production-controlled output,
  identify the needs for implementation, including
  Human Resources, Systems and Infrastructure) and
  when it might be appropriate

1. Quality Certification

• Make a list of the kinds of services that a DORE
  will need
• Make a list of possible sources for each service
• For each service, identify strengths, weaknesses
  and a management approach

2. Service Providers

• Identify the most important kinds of information
  DOREs might need
• For each kind of information, identify possible
  methods for getting it and the strengths and
  weakness of each method

3. Market Information

• Make a list of possible barriers to growth
  Suggest management strategies to overcome each
  barrier

4. Barriers to Growth
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EXAMPLE BREAKOUT GROUP ACTIVITY
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Thank you