Tag Archives: Development model

The Biofuels Situation

Just a short comment, when the biofuels debate reaches the front page of Time magazine, it is surely significant.

TIME Magazine Cover_ The Clean Energy Myth - Apr. 7, 2008 - Energy - Oil - Global Warming.jpg

from: Time

(click image for full story online)

Although the contradictors are already at work, I feel we should all acknowledge that very massive and rapid change is happening that could have extremely serious consequences. If we do this it should be obvious that we should be striving for full and balanced understanding, rather than just promoting our particular perceptions and interests.

Remember that behind all this sits a very distorted system of politics/governance that drives subsidies and ridiculous practices such as “splash & dash” – if that doesn’t drive particular interests?

Demands for crackdown on biofuels scam | Environment | The Guardian.jpg

from: The Guardian

(click image for full story online)

Believe it or not 10% of the imports of biodiesel to Europe from USA are funded by a scheme where biodiesel exported to the US and blended with a “dash” of petrol attracts almost a dollar a gallon subsidy which makes the scheme profitable.

See an article from The Independent of almost a year ago and a blog of a day or two agofor some confirmation.

PS The Guardian story has internal links that give some simple information and great images on Biofuels.

Global Agro-Industries Forum (GAIF)

India will host the first global conference on agro-industries, to be held in New Delhi from 8-11 April 2008.

from: GAIF Website
(click image for full story online)

The website defines the reasons for the forum as:

Why the Global Forum

The development of competitive agro-industries is crucial for creating employment and income opportunities and for enhancing the demand for farm products.

Agro-industry development has the potential to provide employment for the rural poor in off-farm activities such as handling, packaging, processing, transporting, and marketing of food and agricultural produce.

There are also risks and trade-offs in agro-industrial development often affecting the most vulnerable countries and people.

It is thus important to build on experiences and understandings of trends, in order to formulate sound policies and strategies for fostering agro-industries.

The forum will be attended by a limited number of representatives from the agro-industry, governments, technical and financing institutions, civil society and UN agencies.

For those of us not positioned to attend there is an e-forum where we should be able to make inputs and hopefully follow the proceedings.More on this in a future link.

Can we please share around this forum to try and get value out of it for everyone – please leave your comments either at the top of the message if you are browsing the SAFPP Blog or at the end of blog if you are reading an individual blogs.

Bottom of the Pyramid

I said I would be discussing the Bottom of the Pyramid model and how it can apply to poverty alleviation in Africa. I am writing what I have come to understand from some reading and browsing and do it because I suspect we are not yet using the international learning in this area in Africa.

A GOOGLE search for “Bottom of the Pyramid” yields 160 000 links internationally but only 550 in South Africa, 5 in Uganda and 4 in Botswana.

Basically the concept is based on the fact that the total buying power of the poor still represents a large total value mainly because of the large numbers. Women and children can apply for the WIC program, here is a wic food list on what you can get with WIC. This large turnover can be addressed as a new market by business looking to expand its turnover. However, novel products and novel approaches are necessary to penetrate this market.

A recent report by the World Resources Institute has provided new quanittaive information in this market and elaborated on the BOP business Model in a number of sectors including Food & Agriculture.

 

The Next 4 Billion_ Market Size and Business Strategy at the Base of the Pyramid | World Resources Institute.jpg

 

from: World Resources Institute
(click image for full story online)

 

The report notes that

the 4 billion people at the base of the economic pyramid (BOP)—all those with incomes below $3,000 in local purchasing power—live in relative poverty. Their incomes in current U.S. dollars are less than $3.35 a day in Brazil, $2.11 in China, $1.89 in Ghana, and $1.56 in India. Yet together constitutes a $5 trillion global consumer market.
The wealthier mid-market population segment, the 1.4 billion people with per capita incomes between $3,000 and $20,000, represents a $12.5 trillion market globally. This market is largely urban, already relatively well served, and extremely competitive.

There are four processes that are necessary to be able to address the BOP market

• Focusing on the BOP with unique products, unique services, or unique technologies that are appropriate to BOP needs and that require completely reimagining the business. Examples portion packaging, healthier products, local tastes
• Localizing value creation through franchising, through agent strategies that involve building local ecosystems of vendors or suppliers.
• Enabling access to goods or services—financially (through single-use or other packaging strategies that lower purchase barriers, prepaid or other innovative business models that achieve the same result, or financing approaches) or physically (through novel distribution strategies or deployment of low-cost technologies).
• Unconventional partnering with governments, NGOs, or groups of multiple stakeholders to bring the necessary capabilities to the table.

These are not all unique and different and show that the essence lies very simply in fully understanding the needs of the market and developing products and services that really suit this particular consumer.

This is presumably where the difficulty lies – just as one can simply say “a business depends on generating more income than it spends” but still see many business failures, the difference between words and actions is enormous. My feeling is that the biggest difficulty is to really and truly understand the circumstance and needs of the BOP consumer and be prepared to start from scratch rather than modify existing approaches.

The full report is available online at http://archive.wri.org/publication_detail.cfm?pubid=4142 in low and high resolution versions, divided into chapters and in presentations.

I would be interested to hear from anyone who has views on this – I will be following up with further comments and maybe some comments on what I have done at the BOP without knowing.

some links:

How to do Business at the BoP

Taking a BoP Venture to Scale, Part 1

World Bank’s Private Sector Development Blog

Indigenous Fruit Use – Tanzania

Following on my previous blog on the the potential of indigenous fruits in AfricaI today read an article on progress that has been made in Tanzania.

The Daily Fruit Wine_ Incentive Program in Africa is turning indigenous Fruit into Wine..jpg

 

This article lists four trees that are being planted and five, including the baobab, tamirand and marula which are harvested from the wild, that are the focus of increased attention. It identifies the following benefits that have been achieved:

  • regional sale of jams and juices generates income
  • using fruit to replaces staples such as maize in local brews has improved nutrition
  • the use of fruit wine in place of dangerous illicit brews has improved safety

The work has been supported/funded by FARM-Africa and Government agencies which started the work as poverty alleviation and nutritional interventions.

The two difficulties identified are the short harvests and the inability to store unprocessed fruit and the availability of packaging material.

I think this is very promising and am trying to follow up where I can, to try and develop a complete picture of how and what has been achieved. This will help others to benefit from their natural resources. I will also add information on marula from South Africa with time.

I will be looking at what process to use to share the information – in the mean time please leave a comment or contact me with any ideas, thought or information you may have.

Establishing Businesses by Donating the Means of Production

I have come across three similar business models being talked about in agribusiness related development in the last few weeks. I talk about them here but don’t claim to cover there whole operation but rather the Means of Production part and am not commenting at all on their impact or outputs as I think they are very different in many respects.

Hefer International (I first heard of them some years ago) originally donated hefers (or more recently other livestock big and small) which allow the household to produce milk and to start a herd.

End World Hunger | Charity Gifts for Sustainability & Self-Reliance.jpg

Hefer International backs the donation with agricultural, nutritional and social support. The project replicates itself through the donation of offspring of the original animal by the recipient.

The Full Belly Project

Full Belly Project.jpg

donates the support to entrepreneurs to manufacture agricultural produce processing equipment. At this time the focus is on groundnuts, but this is probably because of their history.

Looking at the design and the instructions for construction of the peanut shelling machine they appear to be comprehensive and implementable.

Kick Start (previously Approtec) designs, develops and facilitates the production and marketing of small scale equipment for small agribusinesses, who buy the equipment at an affordable price which is below the price that would be required to cover all Approtec’s costs.

KickStart_ The Tools to End Poverty.jpg

Currently the technologies include oil presses, water pumps, block making machines etc. A bit like what has been going on for some time in many organisations but Kick Start aim to add to their range and seem to still be successful although similar organisations have had donor funding stopped which resulted in their closure.

So effectively the entrepreneur receives Means of Production at a subsidised cost and Kick Start need to source donor funds to carry out their role.

It seems to me that while economically sustainable enterprises are the end goal this approach of finding a way to get enterprises going through the donation of the means of production is a clever approach that puts value on the donors input and therefore protects it.

I would really be interested to hear from those who know these organisations and also of what you think of my feeling that this may be an approach that could be more widely used. You can simply submit your ideas by using the comment form at the end of the blog or by clicking comment in the blog heading if you are browsing all blogs.

Biofuels & the Bottom of the Pyramid

Having recently spent lot of time scouring the INTERNET I have been struck by the focus that there is now on two issues that impact on development in Africa – Biofuels and BOP enterprise models.

Biofuels

As Europe and the USA see the effect expanding refining is having on their agriculture and understand the overall efficiencies there seems to be a move towards looking at sourcing inputs from countries with more tropical climates where higher agricultural production efficiencies are possible. This in turn means that land, hopefully not that currently used for feeding ourselves, is cultivated – possibly clearing forests (palm oil), risking the spread of alien species (jatropha) or using other resources (eg sugar irrigation) on behalf of those countries who can’t achieve efficiencies make production economically sustainable.

BOP

Bottom of the Pyramid (BOP) is an approach/model based on a view advanced by CJ Prahad that the 4 billion people who live on less than a dollar a day, are ignored by multinationals, although in sum they represent a large market. He, therefore, promoted the opportunity offered by this market, improving the supply to the poor and spinning off other opportunities through the supply chain.

Google Image Result for http___images.pearsoned-ema.com_jpeg_large_9780131877290.jpg.jpg

Others have challenged this approach questioning whether the market is large enough to interest multinationals and proposing instead that efforts at alleviating poverty should be based on establishing business in or partnerships with enterprises at he bottom of the pyramid.

Both of these of course impact on food processing, in particular when considering it as a development tool for Africa. I will therefore blog on them as much as personal learning (BOP) and staying abreast excercises at www.agribusiness.wordpress.com and maybe http://digivu2nd.blogspot.com/

I would be very interested to get your ideas, concerns and feedback on these issues.