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How to contract farm high value ingredients for export to leading chefs

Contracting and supporting entrepreneurially-minded smallholders to grow origin-linked high value ingredients for export to Europe and US.

Photo of Jonathan Gifford
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EXPLAIN YOUR IDEA

Demand-led support for production of high value, local origin products ensures little/no waste and high margin for farmers. (Abbreviated) process: Select potential product categories based on perceived market dem and > look at local capabilities > sample product with chefs > evaluate producer capacity, needs > attack constraints > gather orders from chefs > gradually build capacity > give firm order including date, quantity, price, quality standard > allow for discrepancies > simultaneously assist producers with inputs, technology, advice > recursively attacking constraints at local, regional and national level > promoting the products among the professional chef network > repeat.

What I think I know: market trends and demand; my customers; availability of support from various partners in the rural smallholder ecosystem

What I do not know: situation on the ground with potential producers (depends on product, location, people); constraints at that location - can't wait to get there!

Scalable?: Most certainly. By product, market, producer, region of production. Broad product selection of quality + potential economies of scale encourage scaling on contract buyer side. Improvements, capital accumulation and hopefully increasing contract size encourages scale on the producer side.

Team and commitment: Our experience/market knowledge/customer relationships/network, existing networks among community oriented projects in Eastern, Southern Africa, openness to partnership

WHO BENEFITS?

• Smallholders gain incentives to produce high-margin, high-return products that play to their local strengths (know-how, geography, biodiversity, systems), offering comparative market advantage and diversification plus contractor support.
• Contract buyers gain stable product quality, quantity and price for their high value market niche by assisting their producer partners.
• Local community benefits from employment and income growth.
• Chefs and customers get great specialty product!

WHERE WILL YOUR IDEA BE IMPLEMENTED?

We are looking at locations in East Africa (Kenya, Rwanda, Tanzania and Uganda) based on product, inspirations coming from products found in the SlowFood Ark of Taste, Presidia, and most importantly your ideas! > http://goo.gl/forms/DAlVUJjj3W

ARE YOU IMPLEMENTING IN AN ELIGIBLE COUNTRY?

  • Yes

EXPERTISE IN SECTOR

  • I’ve worked in a sector related to my idea for over a year

EXPERIENCE IN IMPLEMENTATION COUNTRY(IES)

  • Yes, for one year or less.

TELL US MORE ABOUT YOU!

Experienced food entrepreneur, importer, distributor of high quality ingredients to Europe - with a love for Africa. Strengths in marketing, finance, and value chains but also SME development and microfinance. Current d.school student, Bay Area-based global citizen - looking for collaborators!

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.

A diverse dry goods marketplace. Courtesy NEPAD.

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.

A thriving smallholder family farm. Courtesy FAO.

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.

A bean field organized and more productive via affordable drip irrigation technology. Courtesy USAID Feed the Future Partnering for Innovation

Naturally, we seek to work with local partners to assist with the various challenges and constraints that smallholder farmers undoubtedly face:

  1. Local-led development groups (AGRA, MATF/Farm Africa, and local AfDB, DFID, USAID Feed the Future projects) can share lessons and advice;
  2. International observers (CGIAR, IFPRI) and market-oriented programs (Gates and Acumen foundations) can offer data and best practice;
  3. 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).
  4. YOUR PROJECTS: Most importantly! We would be happy to discuss further: Please CONTACT US.
Creative chefs ready for your quality ingredients. Courtesy The Slow Food Chefs’ Alliance.

4 comments

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Photo of Kasule Ronald
Team

Jonathan, I love what I read here. I think we can do business as we support Smallholder farmers improve livelihoods. Looking forward to further discussions.
Ronald

Photo of Jonathan Gifford
Team

Yes, me too, Ronald. Please pass on any relevant research you think I should be reading, as well as any partners in the field that you particularly recommend.

Best,
Jon

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