The market for high value, imported specialty ingredients in the EU and US is a large and growing niche, often led by chefs. Chefs demand quality, functional and culturally-diverse ingredients from all over the world to exercise their creativity and wide knowledge base. As local opinion leaders, these chefs also drive demand among consumers by demonstrating how best to use these ingredients.
Example high value agricultural product (HVAP) ingredients include saffron; vanilla; various sea salts, peppers, and spices; varieties of honey; and even some specialty fruits, nuts and seeds which can be produced on a small scale for high value and profitable export.
Providing East African smallholder farmers with contracts for these types of locally-specific products at a fixed quantity, quality and price removes most market risk and offers clear guidance for production.
Moreover, the contractor/buyer, in the interest of developing her high-value market, can assist the producers by providing advice and credit for inputs and technology, based on the promised delivery value of the product. Assistance with grading, quality and health certification would also be in the contractor's interest.
Exporting local "origin-linked" products leverages smallholder farmers' local know-how, biodiversity, cultural and social traditions as well as geographic specificity and gives them a comparative advantage in the competitive global food system. Partnering directly with an outside buyer who commits to a certain purchase volume and assists in attaining standards further gives these producers a competitive advantage.
Local origin ingredients create value, and we intend for smallholder producers to also capture this value. Contract buying shortens the link between production and consumption, reduces transaction costs, integrates the producer into the value chain, and makes visible downstream demand. Opportunities for processing and other value additions appear. Contract farming offers a source of credit, insurance, and information for the contracted farmers, and removes a number of constraints - increasing yields, mitigating risks, building capacity and resilience. Among various business models, market-driven contract farming also ensures the buyer a steady supply of raw materials meeting certain quality standards, usually destined to high-income consumers willing to pay a premium for quality. Such stability reinforces the perceived value of the origin-linked brand, creating more value for producers.
Having purveyed these items for nearly a decade in Europe, where food trends have been exploding, I see great opportunity in the market for origin-linked ingredients, having sold dozens of them, many from Africa, some coming from larger estate farms, others from smallholder cooperatives. My company continues to seek exceptional new ingredients and regularly evaluates SlowFood, FAO, EU and other origin-linked product lists. However, we remain most interested in YOUR product ideas.
There is a precedence for small scale production of high value, origin-linked goods. We believe that by delivering demand, offering high margin incentives to produce, as well as directly assisting smallholders, we can help a certain segment of farmer to be profitable, productive and fulfilled.
This project is viable because of strong international demand, high margin of safety from premium pricing, local protected knowledge and comparative advantage, clear information flow between buyer and producer, support from experienced actors in smallholder development, careful contracting and support from the contractor/buyer, and general belief in perceived trends in the market and improved production efficiencies.
Naturally, we seek to work with local partners to assist with the various challenges and constraints that smallholder farmers undoubtedly face:
- Local-led development groups (AGRA, MATF/Farm Africa, and local AfDB, DFID, USAID Feed the Future projects) can share lessons and advice;
- International observers (CGIAR, IFPRI) and market-oriented programs (Gates and Acumen foundations) can offer data and best practice;
- Crucial micro-level support in the form of inputs, credit and advice (akin to the One Acre Fund); connections to affordable technology companies; and value chain advisory (Technoserve, KIT).
- YOUR PROJECTS: Most importantly! We would be happy to discuss further: Please CONTACT US.