LINK methodology: Four years successfully linking farmers to markets
The scenario was set for researcher Matthias Jäger, from CIAT’s Linking Farmers to Markets unit, and Chris Claes, representative of the Belgian NGO Vredeseilanden (VECO), to present the LINK methodology – a powerful tool that has taught valuable lessons to many.
The scenario could not be better: the IV Congress on Marketing and Innovation “Towards Green Markets,” within the framework of the 15th ExpoApen Fair, Nicaragua’s most important export fair, held in Managua, the country’s capital, on 25 and 26 September 2015.
The fair, organized by the Association of Producers and Exporters of Nicaragua (APEN), brought together importers, exporters, producers, wholesalers, distributors, retailers, and association representatives from Europe, USA, Dominican Republic, Puerto Rico, Chile, Panama, and other Central American countries.
Jäger and Claes presented the participatory methodology, which aims to construct inclusive marketing relationships between formal or informal producer groups and buyers. These relationships are not only inclusive but are also economically profitable and socially responsible. Jäger and Claes also highlighted two Nicaraguan examples of successful relationships: CACAONICA and RITTER SPORT (Germany), and COOSMPROJIN and ICI–Walmart. These cases proved, once more, that inclusion is good business.
A tastier cacao for all
The first international shipment that the Cooperative for Agroforestry Services and Cacao Marketing (CACAONICA, its Spanish acronym) made was to Germany, 15 years ago, through RITTER SPORT, a major marketer of chocolate bars in Europe.
More than 170 tonnes of cacao are estimated to leave Nicaragua each year through the Cooperative. Of this amount, 100 tonnes are sold to RITTER SPORT and the remaining marketed through Ethiquable (France).
CACAONICA has 215 active members, distributed in 49 communities in the Waslala and Siuna Municipalities of the North Caribbean Coast Autonomous Region (RACCN, its Spanish acronym). All cacao produced is organic and certified as such by Bio Latina Certificadora S.A.C. and Fairtrade International. It also is certified for good manufacturing practices.
RITTER SPORT buys more than 90% of its cacao requirements through international intermediaries based at the New York Stock Exchange. It is the leading exporter of the highest quality cacao from Nicaragua, the only country where the company has invested in facilities for buying cacao. RITTER SPORT has policies of support, particularly finance for pre-buying (i.e., before harvest) a given percentage of cacao (to as much as 40%) and support in patio drying and fermentation at its facilities in Sébaco, Department of Matagalpa.
In this case, the LINK methodology, developed by CIAT, was applied within the framework of VECO-MA’s “Inclusive Modern Markets” program. VECO-MA is a regional program of Vredeseilanden in Mesoamerica, which has operated in Nicaragua since the 1980s, and has facilitated the application of LINK. Inclusive Modern Markets is aligned with VECO–MA’s mission to help small-scale producers play a role in feeding a growing population, reducing pressure on the planet, and leading their own progress.
The use of LINK enabled the development of a participatory process to identify and characterize the actors in the cacao value chain, the exchange flows among them, business models that underlie their operation, the level of inclusion present in relationships, and the joint identification of ways to improve.
Moreover, RITTER SPORT liked the experience of applying LINK to its trade relationships with CACAONICA. On seeing the positive results with the Cooperative, RITTER SPORT decided to replicate the experience with another 18 cooperatives.
Two jets of clean water fall over giant white baskets, blocking out the voices of workers in the collection center of the Cooperative of Multiple Services Producers of Jinotega (COOSMPROJIN), Nicaragua. This place is located in Sasle Community, 20 km from the municipal seat of Jinotega. Every day, numerous baskets of beetroot, carrot, tomato, cabbage, and the star product – iceberg lettuce – arrive at the center.
Domingo Hernández is one of 29 members who sell their products to the Integrated Meat Industries of Nicaragua (ICI, its Spanish acronym), owned by the chain Walmart–Mexico and Central America (ICI–Walmart). His farm is planted with leafy green lettuces that must later pass through a rigorous process of washing, classification, and packing at the Cooperative’s collection center before going directly to ICI’s storage warehouse.
The Cooperative’s entire marketing operation is related to cultivating vegetables, a major product in the area and which directly impacts the socioeconomic conditions of the Communities of Sisle 1 and 2, Sasle, San Antonio, and El Mojón.
The marketing relationship between COOSMPROJIN and ICI–Walmart, which began in 2013 as a pilot project, is also framed by the LINK methodology.
LINK was applied within the framework of the Program for Rural Business Management, Health, and the Environment (PROGRESA, its Spanish acronym). This program aims to provide tools for smallholder farmers, and is implemented by Catholic Relief Services (CRS) and eight national organizations. Goals are to guarantee secure sales that meet market demands; and to supply, on a timely basis, ICI–Walmart with quality products produced according to good manufacturing practices.
Progress in commercial relationships
- The commercial relationship between COOSMPROJIN and ICI–Walmart was formalized at the end of the pilot project’s first year through the signing of a trade contract.
- Activities to improve COOSMPROJIN’s performance were directed at strengthening producers’ capacities to guarantee quality standards and improve loyalty in producers.
- Appreciation of inclusion in this commercial relationship improved as volumes and product quality become assured, encouraging ICI–Walmart to provide COOSMPROJIN with opportunities to increase supplies to the extent they surpassed contracted targets.
- ICI–Walmart has supported the Cooperative in conducting training events for the collection center’s operators, including themes such as product handling, food safety, and good manufacturing practices.
- Relationships and partnerships were more formally established with input suppliers, thus increasing the volumes of seedling production.
LINK is not a static tool; it is infinite. It guides us in a logical way, helping to develop capacities from producer to buyer. It allows us to identify problems and possible solutions.Gerardo López
LINK method for smallholder friendly business models available LINKing Smallholders http://t.co/9aS7uKFV #CIAT_DAPA— Mark Lundy (@markincolombia) November 14, 2012
This initiative, implemented by CIAT since 2003, aims to foster collaboration among international non-governmental organizations, research organizations, and development organizations. The idea is that the exchange of knowledge among them, through joint initiatives, would contribute to the design of more effective development strategies, more appropriate policies, and research that would respond to the demands of the rural sector.
Today, to conduct this work, CIAT receives support from the CGIAR Research Program on Policies, Institutions and Markets (PIM), led by the International Food Policy Research Institute (IFPRI).
This initiative has been successfully developed in more than 25 studies with small-scale farmers in Colombia, Panama, Ecuador, Nicaragua, Honduras, Peru, and some African countries.
It receives support from Swisscontact, CATIE, CRS, Heifer International, the Foundation for Rural Business Development (FUNDER, its Spanish acronym), Lutheran World Relief, OXFAM, VECO–MA, the COMRURAL and SEDUCA projects of the Honduran Secretariat of Agriculture and Livestock (SAG), and SAG’s PRONAGRO and EMPRENDESUR programs.