Start of “Fit-to-Purpose” approach in Agro-food Value Chains
The Fit-to-Purpose programme is an initiative by Pure Birds and the Postharvest Network and is supported by the Food & Business Knowledge Platform. The objective of this programme is to stimulate entrepreneurship and innovation of Dutch companies in agro-food value chains in developing countries. The approach is aimed at the development of simple and sustainable solutions that have the potential to create new market opportunities for companies ranging from large multinationals to SMEs and start-ups.
The essence of this programme’s approach lies in the exchange of strategy development between companies operating in agro-food business, and their strategic orientation in creating more business in developing countries as based on local demands and needs. Societal impact, reducing postharvest losses, improving food security, operating more efficiently in agro-food processes – all of these focus points are considered in the strategy development of products and services within this approach.
Key questions for the programme’s approach include:
- How to realize an effective strategy?
- How can you support each other?
- What can you learn from each other?
The Fit-to-Purpose strategy is a newly founded viewpoint in agro-food chains where creating added value in development countries, markets and target groups is key. Most companies are only partly executing a strategy, while others are orientating from it; yet only a few companies see it as a vast opportunity to have a total and integrated strategy approach for their products and future development of products and services.
Companies working in agro-food chains can become inspired by frugal innovation strategies in “doing more and better with less” with successful examples as seen in non-food and consumer markets. Take for instance the automotive company and the strategic partnership Renault-Nissan. With a CMF-A platform, this French-Japanese alliance is developing affordable high-standard energy-efficient cars for the growing demand of consumers in developing countries.
The Fit-to-Purpose approach aims to gain inspiration and learn from other companies about how to develop and execute an effective strategy to stimulate innovation in agro-food value chains in developing countries.
During the first Fit-to-Purpose kick-off session on August 27, 2015 at the New World Campus in The Hague, experiences were shared from various companies including the Cofounder of the Dutch Agricultural Development and Trading Company (DADTCO). DADTCO’s specific business strategy and strategic choices were shared as that they made a breakthrough development in the cassava food chain in Africa, which led to an eventual sustainable and profitable business model. Firstly, their strategic focus was to develop a decentralized production approach in rural countryside areas with the processing technology Autonomous Mobile Processing Units (AMPU) created by DADTCO. Their second strategic focus point was to create an intensive collaboration between local African farmers by developing common product development and a shared earning model with sales in local markets. Please see the textbox below about DADTCO and a soon to be released flyer.
The company Geerlofs also provided interesting insights at the kick-off session, about their strategy orientation in developing cooling technical systems for international markets. They see a growing evolution in the maturity of markets in developing regions in Africa, Latin America and Asia, yet this will require a different approach with a more local mind-set and collaboration with partners. Geerlofs showed some interest in other companies’ approaches in the agro-food chains in the local markets and their business experiences in collaborations and local business contacts.
An innovative entrepreneur in the agro-food value chains is Yellow Pallet, a company building its roots in Latin America, specifically in Costa Rica, with local partners converting banana stems into pallets. The stems are left over after harvest and the pallets are then used in transportation of the banana boxes to the Western food retail market. Yellow Pallet shared their experiences in Latin America and is interested in setting up local partnerships as witnessed successfully in India with local markets in banana production.
Additional issues that were raised by other companies and entrepreneurs included:
- What are the experiences of developing and executing a strategy in countries of Latin America (such as Costa Rica), Africa (as Ghana, Mozambique, Nigeria) and Asia (India)?
- What are meaningful sustainable strategic choices? What is the meaning of a CSR approach?
- How do you select reliable business partners in the countries having a common undertaking? Who is willing to invest?
- Who are right finance parties? How do you deal with policymaking and development aid initiatives?
The next session with interested companies will be held at the end of 2015. In the upcoming session, the focus will be on companies and entrepreneurs who are eager to learn about developing effective strategies in developing countries. Sharing strategic choices, experiences and contacts with others will also be included in the session.
Short introduction to the Dutch Agricultural Development and Trading Company
DADTCO, the Dutch Agricultural Development and Trading Company, wants a breakthrough in the underdeveloped cassava agro-food supply chain regarding the way cassava is seen, grown and processed into high-quality products, and its later contribution to the increasing demand for food and the local employment need in Africa.
In the treatment of cassavas, there are many inefficiencies. Cassavas must be treated within 36 hours or the quality of the product reduces significantly. Due to infrastructure complications in developing countries, treatment of the product on the short-term is not easy or sometimes not possible. This then results in production taking place in a centrally situated manufactory.
DADTCO has developed a mobile treatment unit called Autonomous Mobile Processing Unit (AMPU) where cassava can now be processed into a paste or cake on the original land in rural areas. With this, the local farmers receive a guaranteed demand and DADTCO takes on the responsibility for further sales in the market. AMPU is actually an existing technology from the Dutch potato industry and can easily be operated by local workers.
Cassava is then made into flour and starch, which can be used for brewing beer. SAB Miller in Mozambique is a buyer of these cassava product and uses them to brew beer. DADTCO has the ambition to create new products such as bread with cassava flour. Nestlé’s new food applications are also exploring the use of cassava in maggi-blocks. An arrangement with food multinationals operating in African food markets still needs to be agreed upon. Although the possibilities of cassava products are large, companies hardly market and make use of cassava products in their production processes. The hesitation of these companies is because the unknown application possibilities of cassava products, as well as (trade-)system barriers such as internal price calculations of multinational and tax benefits.
DADTCO operates in several countries in Africa. For more information, visit www.dadtco.nl.
Are you interested or want to know more about this topic? Please contact Pure Birds (Coen Faber) or Postharvest Network (Michael Jurriaans) for more information.