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THE CO-CREATION OF BUSINESS MODELS WITHIN LFSP WHAT IS A BUSINESS MODEL? A business model describes how a business seeks to create, deliver & capture value. WHAT IS AN INCLUSIVE BUSINESS MODEL? Inclusive business models are those which create both financial & social returns, & in which agri-businesses & smallholders are involved in close working relationships. Inclusive business models seek to create net positive returns for smallholders. www.lfspzim.com @LFSPZim facebook.com/lfspzim thepalladiumgroup.com @palladiumImpact facebook.com/palladiumimpact The market development component of LFSP (LFSP-MD) seeks to nurture inclusive agri-business models with potential for financial & social returns to market actors and smallholder households. LFSP MARKET DEVELOPMENT CONCEPT & GOALS Undertaking market diagnostics & value chain appraisals. Promoting viable business models & liaising with government about the policy environment. Engaging with market actors about business models & promoting adaptation where required. Identifying value chain constraints that are causing inefficiencies. Facilitating linkages between businesses & informal enterprises. Building capacity of market actors - to benefit from the business models & the changing market environment. Buying down initial risk & addressing high start-up costs associated with innovation, e.g. cost-sharing grants. Co-creating & trialling different business models with a range of different market actors. BUSINESS MODELS CO-CREATED & TESTED BY LFSP-MD Output market development (crops and livestock) • Contract feedlotting of cattle for single market off-take • Pen fattening • Feed & veterinary drugs provided on credit by contractor or self-financed by smallholder • Extension services from contractor • Contract production of broilers for single market off-take • Day-old chicks provided by the off-taker • Feed & veterinary drugs provided on credit by contractor or self-financed by smallholder • Extension services from contractor Off-taker provides farmers with input credits and/or services. Where credit is not provided farmers may self-finance or access third party financing through financial institutions. CONTRACT FARMING (CROPS) OBJECTIVE: • To provide producers with high yield production framework and profitable market • To provide off-taker with guaranteed supply CONTRACT FARMING (LIVESTOCK) OBJECTIVES: • To provide producers with high yield production framework and profitable market • To provide off-taker with guaranteed supply AGGREGATION OBJECTIVE: • Provide smallholder farmers with primary output markets with the intention that aggregated commodities are offloaded in bulk to commercial off-takers ICT-BASED MARKET PLATFORM MODEL OBJECTIVE: • Provide the off-take of produce with use of internet & cell phone-based market channels OFF-TAKER MODELS OBJECTIVE: • Increase volumes of commodities purchased by national-level off-takers in targeted districts Input market development (crops and livestock) LAST MILE INPUT DISTRIBUTION MODELS OBJECTIVE: • Enhance timely access to affordable & quality inputs by bringing sales outlets closer to smallholder farmers Smallholders are expected to purchase inputs or to aggregate orders (e.g. in the case of van deliveries). The model assumes agri-businesses recognise the untapped market potential in under-served, rural areas. SHIPPING CONTAINER MODEL • Low cost sales outlets • Pre-fabricated shipping containers in rural farming communities • Directly owned & managed by a national input supply company VAN-BASED DELIVERY MODEL • Mobile sales outlets • Operated, owned & managed by a national supply company MARKET-BASED EXCHANGE MODELS • Inferior, less productive breeds exchanged for superior breeds by commercial off-takers on a ratio basis, e.g. 3:1 DIRECT DELIVERY OF PRODUCTIVE BREEDS MODEL • Private investment in productive & superior breeds (bulls, bucks) by smallholder farmers through subsidy mechanisms This may be done by Farmer Group Enterprises or Individual Entrepreneurs. Potential income streams include the multiplication can be done in a number of ways, e.g. by farmers conducting ‘toll hatching’, by farmers buying fertilised eggs for hatching & onward sale of chicks. LOCAL AGRO-DEALER AGENT MODEL • Independent agro-dealers or general stockists • Supplied with consignments on credit • Managed remotely by a national supply company using an innovative ICT package BREED IMPROVEMENT MODEL OBJECTIVES: • Stimulate market-based mechanisms • Improve gene pool of goats & cattle held by smallholder farmers COMMUNITY-BASED HATCHING MODEL OBJECTIVE: • Multiplication of more productive chicken breeds by smallholder farmers Contract farming (crops and livestock) The model has a range of variants, e.g. agri-hubs, mobile buying stations, satellite aggregation centres and buying days. The Zimbabwe Livelihoods and Food Security Programme (LFSP) is improving the food security, nutrition and productivity of smallholder farmers and rural communities in Zimbabwe by co-creating and testing a range of inclusive business models with farmers, agribusinesses and other market actors PERFORMANCE QUADRANT Financially viable business model but which is not creating dividends for the targeted smallholder population, e.g. in terms of numbers reached, value received Financially unviable business model but which is creating dividends for the targeted smallholder population, e.g. in terms of numbers reached, value received The model generates neither financial nor social returns Should the model be dropped? Can the model be replicated? The model generates both financial & social returns LOW SOCIAL RETURN FINANCIAL RETURN LOW HIGH HIGH Can the model be amended to become financially viable? Can the model be amended to generate social returns? MECHANISED FARM PRODUCTION MODEL OBJECTIVES: • Promote access to, uptake & utilisation of mechanised land preparation equipment • Reduce cost of farm operations improving efficiency • Increase area under cultivation MECHANISED POST-HARVEST MODELS OBJECTIVES: • Promote access to, uptake & utilisation of, post-harvest handling/processing equipment • Generate time & labour savings • Increase production areas by removing post-harvest labour intensive operations Mechanisation Typically pursued through cost sharing arrangements Equipment may include that associated with shelling, pulping, and storage processes. Typically pursued via subsidised grant mechanisms.
