LINK methodology: changing relations between business partners
It´s all about relationships
Besides supporting and strenghtening farmers organisations, VECO encourages food companies and retailers to make their procurement policy ‘inclusive’ for small-scale farmers and their organisations. In an ‘inclusive’ business model, farmers are respected and viewed as fully fledged players in the chain.
This shows in:
cooperation between the all actors in the chain with a common goal;
new relations between all chain actors, leading to a stable market and constant supply;
a fair and transparent policy (labour conditions, fair prices, good working conditions) and equal access to fertilizers, seeds, credit and market information;
inclusive innovation (not ‘for’, but ‘with’ farmers);
and measurable results (indicators and concrete tailored monitoring programmes or follow-up plans).
So, inclusiveness is mainly about strong relations. Relations between farmers organisations and companies, negotiating positions and so on. In order to try to understand and describe this complex reality, we are using the LINK methodology, developed by the Centre for Tropical Agriculture. Based on a questionnaire and consultation moments between the different players in an agricultural chain, the bottlenecks and strengths of their commercial relationship can be uncovered according to the five principles above. The purpose is to link chain actors more effectively and to improve their relationship step by step.
The LINK Methodology is a participatory method created by the International Centre for Tropical Agriculture (CIAT) and other organisations within the Sustainable Food Lab to foster inclusive commercial relationships between smallholder producers and modern markets. The purpose is to link chain actors more effectively and improve their relationship step by step, using a toolkit as a process to move forward.
As facilitator of this methodology, VECO engages with farmer organisations and companies to build up long-lasting business relationships. We do so by building trust and transparency throughout the chain, enhancing learning processes and discovering new opportunities for innovation.
How does LINK work?
The LINK methodology is designed around four main tools:
VECO brings all value chain actors together and guides them through each step. We co-identify critical areas for improvement; and accompany food companies in the design and implementation of inclusive business strategies and the evaluation of the effects of these changes on smallholder farmers and on the business itself.
A brief version of the LINK toolkit can be found here.
A commitment to inclusion in Honduras
Although the business relationship between the smallholder producers, represented by ASOFAIL, and the giant retailer Walmart was going well, this business was missing an innovative methodological component that would allow farmers to have a secure market, and consumers to have a high-quality product on time. A true marketing agreement. That's where LINK came in.
LINK-ing smallholders with modern markets: three success stories
Learning lessons for inclusive business models with Belgian retailer Colruyt
VECO is collaborating with the Belgian retailer Colruyt to explore possibilities for sourcing from smallholders in its reflection process ‘sustainability in food chains and inclusiveness for family farmers’. In 2009, a collaboration was set up to explore a pilot project with canned asparagus from Peru. Together, the actors decided to take a closer look at this product on Colruyt’s shelf: Where is it procured from; are small-scale farmers involved in the production; are quality requirements a limitation for smallscale farmers to participate in this chain?
In August 2013 a case study was published to document the lessons learned.
The LINK toolkit has been implemented in Africa, Latin America and Asia since 2011 and VECO has been one of the leading organisations to pilot and improve the methodology.
VECO started as one of the first NGOs piloting LINK cases in 2011 and by today we have successfully implemented the toolkit in 15 agri food chains throughout Honduras, Nicaragua, Peru, Ecuador, Indonesia and Tanzania within 6 commodities: cocoa, coffee, vegetables, banana, asparagus, passion fruit and corn.
Our partners involve:
- the German and Ecuadorian chocolate companies Ritter Sport and Pacari chocolates
- multinational retail corporation Walmart and La Colonia, the second largest supermarket chain in Nicaragua
- Colruyt Group N.V., the biggest retail company in Belgium and Grupo Hualtaco, Peru’s third largest banana exporter, amongst others.
Some of our most remarkable results:
In Honduras and Nicaragua, supermarket giants such as Walmart and La Colonia have built a stable supply of high-quality vegetables, produced according to Good Agricultural Practices. Twelve local farmers’ organisations now operate with much greater business acumen in their negotiations, thanks to VECO’s support in strengthening collective marketing and sales practices. The LINK methodology, enabled chain actors to understand the challenges faced from the other´s perspective and to work towards a more efficient, inclusive and competitive chain.
In Peru we established one of the first modern examples of Public Private Partnerships by using the LINK Methodology. In august 2015 we launched the “Link Fund” together with Universidad del Pacífico, Peru´s most renowned business university, the Belgian Embassy and APCI, the Peruvian International Cooperation Agency. 14 inclusive business proposals were evaluated and as a result, CENBANOR, Peru´s third largest banana exporter is generating an innovative business model, making farmer organization Hualtaco partially shareholder of the company. Additionally, they agreed upon a joint management on plastic packaging, helping them to reduce the negative environmental impact and generating a better position in the market.
Engaging small holder farmers is a marathon and not a sprint. It requires medium to long-term investments and a step by step growth: the LINK methodology was used in a passion fruit chain, set up with the support of VECO East Aftica, to launch discussions with Tanzanian vegetable export companies, on whether they could become a worthy business partner for belgian importer Special Fruit and retailer Colruyt.
REOPA´s Peruvian canned asparagus found its way to Belgian retailer Colruyt , generating a surplus value to their production not suited for the fresh market which was of 21%. 7% of REOPA’s total income in 2012 originated from the project in partnership with processor Gandules, Belgian importer Scana Noliko and Colruyt, keeping up with high quality standards. The chain approach has proved itself to be useful:
What is special about this chain approach, is that it goes beyond looking at commercial relations. It unravels and connects the way of working of all the actors in the chain
Application of the LINK and FAO’s (Inclusive Business Models guidelines) methodologies intensified the collaboration between Supermercados La Colonia and The Consorcio Agrocomercial of Honduras. As a result, the consortium was able to increase its negotiating position and diversify its product offer. A good agricultural practices strategy was designed and implemented, achieving a 97% compliance rate with buyers’ standards and contributing to a 14% increase in sales in 2014. This case was part of a project financed by FAO implemented by VECO Mesoamerica with CIAT’s support. (source: CIAT)
Collaboration between cocoa organization CACAONICA and Ritter SPORT led to a better communication and service flow. Social and environmental objectives were set, 2 pilot farms were implemented by Ritter for the application of new technologies to improve quality and, moreover, the company is implementing all identified improvements in the business model in the other 18 organizations of small holder producers that provide them with cocoa in Nicaragua.
Ecuadorian award winning chocolate brand PACARI established a 5-year fixed contract with farmer association APROCA after evaluating inclusivity in the cocoa chain through LINK. The contract established a fixed volume and a domestic price above international price levels.
The Honduran cocoa from APROSACAO gained recognition in Switzerland and 85% of their cocoa sold to Chocolats Halba meets premium quality standards. The farming families (who were not previously involved in cocoa production) increased their annual income by $169. Halba also provides technical assistance to farmers for postharvest technics, commercialization, financing, and organic certification. Women are involved in the production of hand-made chocolates and postharvest activities, and young people have set up an organic fertilizer plant. The case was part of a project funded by FAO and implemented by VECO Mesoamerica and CIAT. The LINK Methodology was applied jointly with the FAO’s Inclusive Business Models guidelines in this case. (source: CIAT)