About the event
On November 29-30th IDH Farmfit hosted a 2-day event to introduce and validate a new data-driven paradigm for investing in inclusive smallholder business models. Through the two days we shared insights derived from our aggregated analyses using 100+ business models and from working concretely with companies in improving their business models. The result reflected a step-change in what is possible when you apply a standardized methodology to understand the performance and drivers of business models serving and / or sourcing from smallholder farmers.
Convening over 130 business leaders, the event sessions were organized in a highly collaborative and interactive manner, allowing the audience to provide honest feedback on our insights and approach, share thoughts on how they think these insights can improve outcomes for farmers and companies, exchange learnings on what they are seeing in their own organizations, reflect on how we can better organize data as a sector, and much more. The conference was bursting with rich and inspiring conversations, critical reflections and many group discussions.
Key take-aways
#1 Time is up: we need more and smarter investment to reach and accelerate transformational outcomes in smallholder markets
Global food systems are under high pressure and smallholder farmers are particularly at risk. More and better investment is needed to realize lasting transformational outcomes for farmers, rural communities and the businesses that engage with them. The private sector should and can play a key role beyond traditional sustainability commitments, to address systemic issues and better distribute value. However, engaging the private sector will require breaking long anchored perceptions around the commercial viability of serving smallholder farmers. It is time for new investment approaches in smallholder markets that can achieve impact at scale.
#2 Data and intelligence on what defines and what drives successful service delivery to smallholder farmers allow us to start benchmarking performance, challenging perceptions, and deploying capital more efficiently and effectively
Our database, of over 2 million data points across 100 inclusive businesses, 20 countries and 25 value chains, allows us to reach much more rigorous analytical insights that what we - as IDH and probably as a sector - have often relied on in the past.
This data allows for more objective comparison and benchmarking of performance. For instance, the cost to serve a farmer can range widely from USD 2.5 per farmer per annum to USD 4,400 per farmer per annum, with the median cost being USD 74 per farmer per annum. Stand-alone insights into the costs structures of business models are not sufficient to understand whether a business model is successful or not, but they are a key piece of information to start learning how and how much we need to invest on farmer to drive and improve impact while being commercially viable.
Our insights also help to verify our perceptions. For instance, challenging the deeply-held perception that service provision to SHFs is inherently unsustainable and requires subsidies, our data suggests that most business models that are investing more per farmer also tend to recover more of those costs by charging farmers for these services.
We also shared how local and regional food crops in loose value chains - traditionally perceived as harder to invest in - are associated with more investment per farmer, greater recovery of those costs from farmer payments for services and even higher farmer income uplifts.
The data and qualitative insights that we have gathered by working closely with companies, allow us to identify a range of potential explanations for these differences. For instance, there are often more opportunities for cross-subsidization of sustainability activities in tighter, often cash crop value chains (e.g., sustainability premiums), and we frequently see much closer integration of commercial and sustainability teams in companies active in (often regionally-traded) food crop value chains.
These data points can serve as a strong basis to engage in honest discussions with private sector actors and other stakeholders on the market opportunity and how market-based models can optimize benefits for farmers', rural communities and businesses’. For investors, our business model analyses offer a different methodology to assess investment opportunities. It allows them to go beyond their financial due diligence to look into the economic business case.
More broadly, these analyses can also allow us to understand in what instances there is a limited or no positive business case at all for private sector actors – and what role public and private capital partnerships play to, for example, grow farmers into commercially viable customers and / or enable alternative (non-farming) sources of income.
#3 To design and scale business models that are inclusive and commercially viable for both businesses and farmers you need both aggregated data insights and practical, context specific insights on the “how”
Our database, of over 2 million data points across 100 inclusive businesses, 20 countries and 25 value chains, allows us to reach much more rigorous analytical insights that what we - as IDH and probably as a sector - have often relied on in the past.
This data allows for more objective comparison and benchmarking of performance. For instance, the cost to serve a farmer can range widely from USD 2.5 per farmer per annum to USD 4,400 per farmer per annum, with the median cost being USD 74 per farmer per annum. Stand-alone insights into the costs structures of business models are not sufficient to understand whether a business model is successful or not, but they are a key piece of information to start learning how and how much we need to invest on farmer to drive and improve impact while being commercially viable.
Our insights also help to verify our perceptions. For instance, challenging the deeply-held perception that service provision to SHFs is inherently unsustainable and requires subsidies, our data suggests that most business models that are investing more per farmer also tend to recover more of those costs by charging farmers for these services.
We also shared how local and regional food crops in loose value chains - traditionally perceived as harder to invest in - are associated with more investment per farmer, greater recovery of those costs from farmer payments for services and even higher farmer income uplifts.
The data and qualitative insights that we have gathered by working closely with companies, allow us to identify a range of potential explanations for these differences. For instance, there are often more opportunities for cross-subsidization of sustainability activities in tighter, often cash crop value chains
(e.g., sustainability premiums), and we frequently see much closer integration of commercial and sustainability teams in companies active in (often regionally-traded) food crop value chains.
These data points can serve as a strong basis to engage in honest discussions with private sector actors and other stakeholders on the market opportunity and how market-based models can optimize benefits for farmers', rural communities and businesses’.
For investors, our business model analyses offer a different methodology to assess investment opportunities. It allows them to go beyond their financial due diligence to look into the economic business case.
More broadly, these analyses can also allow us to understand in what instances there is a limited or no positive business case at all for private sector actors – and what role public and private capital partnerships play to, for example, grow farmers into commercially viable customers and / or enable alternative (non-farming) sources of income.
Inspired by the collaborative energy in the room, and the recognition of common, sector-wide pain points, participants and organizers alike opened their hearts for collaboration with peers (sometimes competitors) and drafted their wish lists of what needs to happen to catalyze inclusive agricultural development.
Most action points anchored around the need to increase access to data and accelerate peer to peer learning.
Some were admittedly longer-term aspirations and inherently complex to implement, despite the common agreement on their value. For instance, the plea for a sector-wide, publicly accessible platform aggregating harmonized farmer and business level data from all organizations serving and / or sourcing from smallholder farmers. A platform where each organization using its services also generates data for the benefit of everyone else? Count us in!
But here comes the good news. Most of the action points were, relatively speaking, “quick wins” that we can already start working on together.
These include:
- Finetuning the “basics” - who will use what data, for what and how?
- Experimenting with leaner data collection methodologies – how can we bring down the cost of accessing farmer and business level data?
- Collectively reflecting on a broader use of outcome metrics that define successful engagement with smallholder farmers – how do we account for risk, environmental outcomes and / or other hidden sources of value?
- Engaging on smaller, more frequent to peer-to-peer discussions that allow for experience sharing and problem solving around common challenges
- Raising farmers’ voices in both data and peer to peer learning efforts – how can we get data back to farmers and better learn from their own experiences and needs?
What's next?
In early 2023 we will reflect on the feedback we have received during and after the event and review our approaches, analytics and insights accordingly.
We will also be working hard on our analytics and intelligence to publish an interactive knowledge product summarizing our insights and allowing readers to engage with our data and case studies. Make sure to keep up-to-date on future events and our latest publications by subscribing to our newsletter.
Next in line will be a series of webinars sharing a summary of the insights presented at the event, for those that couldn’t attend and some smaller in-person learning sessions diving into specific value chains and themes.
In case you would like to revisit the content of our event, you can find our presentations and key publications here.
Explore our insights
Knowledge hub
At IDH we use business and sector level intelligence, to identify key challenges in smallholder supply chains, assess and benchmark performance at business and farm level, share evidence-based insights on proven business models, and convene key stakeholders around how smallholder value chains can become more efficient, effective and impactful. Below you can find some of our latest knowledge products.
