Business Strategies to Enhance Food Value Chains and Empower the Poor

Source
World Economic Forum
Publisher
World Economic Forum
Publication date
January 2011
Type
Reports
Industry
Consumer Goods
Agriculture
Category
Social Entrepreneurship
Responsible Business in Emerging Markets
Language
English
Free/Pay for content
Free
 
The report documents a series of commercially viable business models that have proven effective at trengthening food value chains in developing countries, and offers recommendations for scaling them up. It presents examples of specific business approaches that can engage poor producers, consumers and entrepreneurs along the food value chain. It outlines design principles for companies interested in developing such initiatives, and suggests actions that all stakeholders can take to facilitate expansion of these business approaches.
Globally, 3.7 billion people are largely excluded from formal markets. This group, earning US$ 8 a per day or less, comprises the “base of the pyramid” (BOP) in terms of income levels. With an annual income of US$ 2.3 trillion a year that has grown at 8% in ecent years, this market spends US$ 1.3 trillion a year on food. Around 70% of the BOP (2.5 billion people) depends on the foodvalue chain for their  incomes, either directly as small-scale farmers and farm labourers, or indirectly as small-scale entrepreneurs.

While it is highly diversified, much of the BOP represents a fast-growing consumer market, an underutilized farming sector, and a source of untapped entrepreneurial energy. Engaging the BOP as producers, consumers and entrepreneurs is therefore key to both reducing poverty and driving broader economic growth along the food value chain
 
Business actions to strengthen food value chains in developing countries fulfil two vital goals. For the private sector, they open up opportunities in a growing, profitable and largely untapped market. For poor communities, innovative approaches can improve livelihoods. Challenges in the business operating environment have historically limited business incentives to engage in poor regions. But many companies are discovering new approaches which can overcome such challenges and even ransform them into opportunities.
 
This report focuses on business models that are proving effective along the food value chain in poor regions. It presents an array of specific examples, outlines design principles that companies and partners can use to guide new initiatives, and recommends actions that all stakeholders can take to scale up effective models. 
 
The business models discussed in this report have the potential to create substantial value for poor consumers, producers and entrepreneurs as well as for companies. They represent a roadmap for organizations seeking to take a win-win approach in emerging markets. Companies that establish workable, profitable and scalable business models to include the BOP will secure a strong advantage, both commercially and in terms of community and partner relationships. Success in the end will require new thinking, close coordination and alliances among unconventional partners – governments, civil society organizations and the BOP communities themselves.