Call for new African smallholder product proposals

Product proposals for the project “New Business Models for Sustainable Trade” should be submitted by 28 February 2010 for first evaluation.

The International Institute for Environment and Development (IIED) has been working with the Sustainable Food Lab (SFL) over the last two years to support food companies to expand procurement from small-scale producers in Africa via innovative business models. This project “New Business Models for Sustainable Trade” is a four-year collaboration supported by the Bill and Melinda Gates Foundation. The vision of the project is to develop and implement new business models that enable smallholders to participate in sustainable trading relationships with international businesses and thereby improve their livelihoods. 

An opportunity exists via a partnership between this project and the UK ’s second ranked supermarket chain Asda, part of the Wal-Mart group and with annual sales of GBP 18.6 billion (USD 31 billion), to make new supplier introductions. The retailer is opening a communication channel designed to bring new suppliers based in sub-Saharan Africa to the attention of the senior category buyers. Asda have agreed to test an Africa Farmers Market concept in early 2010. If the first Farmers Market is successful, it could turn into a regular quarterly event. IIED and Asda have partnered with Steve Homer (www.biospartners.co.uk ) to facilitate this process.

The Africa Farmers Market initiative is part of a commitment to African development, in which Asda’s President & CEO Andy Bond has pledged the company to generate at least GBP30million of new business for African products by 2013. The idea is to get beyond niche marketing, and get African smallholder products onto the shelves and into multi-ingredient processed products based on [their quality and commercial merits].

The project does not guarantee a commercial contract or a business relationship with the food retailer but it does provide an opportunity to introduce emerging groups and company products direct to the buyers through a guided commercial proposition.

The introductions that will be facilitated by IIED under the new business models program are being made as fully commercial and sustainable propositions and not as pilot or test projects. Support and guidance on the type of information required to build a suitable business case will be given by IIED and chosen applicants will be supported through the process.

In order to clarify the types of applicant groups that would be suitable the following terms of reference should used to filter ideas and projects before submission to IIED.

A downloadable guide and application template are available at www.africanmarketplace.net and should be submitted by 28 February 2010 for first evaluation.

• Geographical location - Sub Saharan Africa excluding RSA
• Organisations - Farmer groups, cooperatives or companies that facilitate farmers to equitably enter the supply chain. The groups or companies must be recognised legal entities or have formal legally recognised structures within the country of origin and should ideally have a trading history but not necessarily export. Groups formed specifically for this project are unlikely to have the track record to meet the more demanding criteria of the project. Preference is for smallholder-based rather than plantation production.
• Donor organisations and support- IIED recognise that many emerging farmer groups are initially convened or supported by donors it is important that the applicants are not wholly dependent on donor support. This process is scoped as a commercial project and to that end the groups will need to be financially viable. This project is designed to enhance and extend market opportunity for commercially active groups, not to be the initiator.
• Product Type - Agricultural products of non animal origin. The products offered may be fresh, preserved or processed and may be suitable for immediate retail sale or as ingredients for other Asda own brand processed products. Products should ideally not be signature export products where the market is already either commoditised or oversubscribed. Product innovation will be as important to the chances of success as the commercial nature of the entity that makes the supply proposition.
• Capacity and volumes - Volumes of product required will be dependent on the type of product offered. However it should be assumed that volumes will be significant if the product is successfully introduced. The retailer has made provision to build volumes from a smaller introductory base. IIED will give guidance on entry level volumes on request to those projects that meet the basis of the other criteria. If products are seasonal the product should be made available for the longest possible period and not just during times when the product is in over supply or prices are low.
• Timing - All projects forwarded should be capable of delivering the first commercial orders within 8 months of the proposal being submitted or the next seasonal window. Upgrades of production volumes, famer numbers or attaining certification requirements as a result of interest from the supermarket would be activities that can be delivered in a reasonable and mapped period after acceptance. However product quality, food safety and recognised best practice would not be regarded as upgrades to be made after application but prerequisites for application.
• Exclusivity - The retailer is not asking for exclusivity or any other condition except commitment and energy to develop any potential relationship to its fullest extent.
• Relationship Management - Depending on the product and the type of enterprise the retailer may not enter into a direct relationship with the applicant. The retailer may manage the relationship through a current supplier that acts as the category champion. However the nature of this project means that the retailer will still actively monitor and occasionally engage with the successful projects to develop a sustainable business relationship.
• Verification, Certification and sub-brands - IIED will provide guidance on this subject to individual applicants but there is no particular requirement for sub brands such as Fair-trade and organic. However the value of these types of systems (of either a national or international nature) may be considered as part of the proposition.

There will be a requirement to meet all of the legal phytosanitary requirements for export in the normal way.  Acceptance by the retailer may involve third party verification or product testing. Certification to applicable food safety or private standards may be required by the retailer. Applicants should know if the proposed supply chain would technically meet these needs for the appropriate export sector before application. Costs and logistical matters associated with additional requests for third party private certification will be discussed by IIED with the applicant after receipt of the application. Verification of reasonable equity distribution through the project and proven probity of the commercial entity with regard to gender and good social practice may be a requirement before trading. Discussions on a sensitive and mutually acceptable methodology will take place at that time but applicants should be aware that this subject will be raised.

First steps

If you have a product or products which you think may be of interest, download the form at www.africanmarketplace.net and follow the simple instructions. Any associated queries should be sent to apply@africanmarketplace.net. Please feel free to forward this to other potential interested parties.

The deadline for applications for this round is 28 February 2010. Proposals made after that date will not be handled for this round.