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Can Social Enterprises improve the agriculture value chain for farmers

Elaine Tinsley's picture
E-soko provides mobile farming tips, pricing and weather alerts to subscribers at a low monthly fee. The photo captures the crop performance difference between an E-soko user (left) and non- E-soko farmer (right) in Kenya. 
Photographer: Elaine Tinsley, World Bank


What are the key pain points smallholder farmers face? Gaps across the agriculture value chain—lack of access to affordable financial products, limited knowledge of high-quality inputs, low usage of technology and market data, and poor market links. Social enterprises (SEs) in the agriculture sector are successfully closing these gaps, believing that the cost of their services or products will be recuperated by the benefits and income gains that smallholders will achieve.
 
For example, SEs implement innovative solutions through information and communications technology (ICT) platforms. Esoko’s text alerts on weather conditions and crop market prices saves smallholders in Ghana both time and money. Shamba Shape Up is a “makeover” style farming reality show that gives advice on improving farms and increasing yields to Kenyan farmers. Digital Green recruits local, established farmers to share their farming techniques—from pest-control to seed treatment—in over 3,500 videos for peer smallholders in Africa and India.

 
Why studying social enterprise agriculture models matters
Improving agricultural prosperity can improve the lives of millions of farmers and their families. Of the world’s more than one billion poor, 75 percent live in rural areas. Private sector, market-based solutions could help smallholders address challenges to their productivity, growth, and sustainability, and they need to be studied for their innovations and potential.
 

Using reality shows, such as Shamba Shape-Up and Don’t Lose the Plot, to teach good farming practices and encourage youth into agribusiness. Photographer: Elaine Tinsley, World Bank


Our new book, Private Sector Solutions to Helping Smallholders Succeed: Social Enterprise Models in the Agriculture Sector, catalogues more than 100 SEs, categorized into nine business models, that were proven effective at supporting smallholders’ integration in the formal agriculture value chain. We defined SEs as private for-profit, nonprofit, or hybrid organizations that use business methods to advance their social mission.
 
By providing insights into context, we hope other entrepreneurs, development practitioners, social entrepreneur enablers, and policy makers can learn from the existing models and encourage or design similar business solutions in their countries. Agriculture-focused organizations can find relevant models that inform their development operations, particularly for those wishing to continue beyond a project cycle to create a sustainable business model.
 
How we categorized social enterprises by value chain gap
We divided the book into four sections to categorize the SEs and show the specific problems they address:

  1. Accessing Finance: SEs devise more efficient, cost-effective, and customized financial solutions to unlock credit and manage risk. Models in this section focus on alternative finance providers, specialized financial intermediaries, and index-based agricultural microinsurance.
  2.  Improving Productivity: SEs introduce user-friendly ICT applications, non-ICT extensions (such as advisory and consulting services), and capacity building services to use yield-enhancing solutions more effectively.
  3. Increasing Post-Harvest Value: SEs offer processing and packaging solutions to increase shelf life, and general or sector-specific storage solutions that target different types of agricultural produce.
  4. Creating Value Chain and Market Linkages: SEs remove middlemen from the distribution chain and provide multi-stakeholder platforms that facilitate information flows and business transactions between suppliers and buyers. 

To promote replication and adaptation of these models into new countries, we present an overview of each section that compares the models’ ease of implementation, effectiveness, financial viability, scalability, and need for government support. We also detail the technological services--whether mobile banking, e-commerce, or mobile-based platforms—that are critical components for helping SEs lower their costs and reach a vast number of clients.
 
Ways to explore the potential of social enterprise activities
The demonstrated results and future opportunities of these models show immense potential for improving financial services, best practices, and long-term success for smallholder farmers. Scaling will depend on the support of government and other partners, who can strengthen SE activities and thus generate better economic, social, and environmental results for these farmers and their families and communities.
 
If you are interested in finding out more about other social enterprise business models, and supporting the SE agenda, we have produced additional documents on this sector, such as Reaching the Last Mile: Social Enterprise Models for Inclusive Development, and the weblink for the individual models.

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