Thandi fruit and wine

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By , April 13, 2012 1:48 pm

The Context
Thandi has established a business model where farm workers have been included as newly established landowners and shareholders through partnerships with existing growers, retailers (both domestic and overseas) and established export firms in both the fruit and wine industries. The government’s market driven land reform policy has not been a great success. Although it does provide financial assistance in the form of a land grant, even the biggest grant in a multi-tiered system is not sufficient to establish a sustainable wine or fruit operation in industries where economies of scale matter and where cooperative entities are to be avoided.

The Mechanism
To mitigate a lack of development support, Thandi sought financial support from the UK government’s Department for International Development (DFID). DFID supported Thandi Fairtrade wine to the amount of ₤400,000 over a three-year period (from 2006), with the idea of creating a self-sustaining business model thereafter

The Outcome
Support through public funding has contributed significantly to empowering farm workers. It has strengethened their position in  existing supply chains and included them in the marketing network of established businesses in the South African wine and fruit export industries. Also it has enhanced their ability to build brands.

Evaluation
The Thandi project is a success in the sense that it has been able to grow and sustain itself for ten years – in a domestic and international environment where a skewed trade regime and unforgiving competition alone decide whether a venture survives or not. Although the future sustainability of Thandi fruit (sold under the Thandi label) is less secure, Thandi wine has been going from strength to strength and seems set to gain access to new international markets.

Paradoxically, the strength of the Thandi project is also its weakness. The partnerships and overlapping shareholding arrangements are complex and not easy to grasp – especially for workers and communities who are not highly educated, and often lack the confidence to participate in decision-making, even when offered the opportunity.

Reference

NAWARO biofuels cooperative

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By , March 31, 2012 12:58 pm

The Context
The NAWARO initiative („Hessische Erzeugergemeinschaft für nachwachsende Rohstoffe w.V.“) was founded in the Hessian district of Wetterau in 1994. Farmers are involved in the production and marketing of crops used in the manufacture renewable energy, specifically rapeseed and biodiesel. Starting off with 150 members cover an acreage of 500 ha of rape from set-aside-areas, it grew up to more than 1.500 members, a hectarage of 10.800 ha of rape, 1.300 ha crops for Biogas und ethyl alcohol and a sales volume of biodiesel of 45 Mio. litres in 2006. In order to command a premium in the market for the rapeseed bulk commodity, producers need to deliver consistently on strict quality specifications

The Mechanism
Members are obliged to follow the rules of production and quality and therefore admit inspections by the NAWARO initiative. Furthermore, they have to observe the common marketing rules and meet the agreed deliveries. Unless the general meeting provides exemptions, farmers have to deliver all their products to the NAWARO initiative.

The Outcome
Because of the premium placed on quality assurance, NAWARO has been able to capture a premium in the market for its’ members and has been a very successful cooperative

Evaluation
According to all actors, there have been no internal crises within the NAWARO initiative: “The right persons have come together”. It has constructed a strong business model for the biofuels sector. Today, the NAWARO initiative unites 1650 farmers and advises 40 biogas plants. It has grown beyond Hessen and includes farmers from the bordering federal states. 50 lorries of the sugar beet alliance are powered by biodiesel. The NAWARO initiative is entirely accepted and recognised by the farmers. The percentage of members with big farms is increasing – as economical profit plays a major role in their decisions.

Reference

Preili Organic Farmers Network

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By , March 29, 2012 7:42 pm

The Context
Preili organic farmers’ network unites organic farmers from Preili district, Eastern part of Latvia. It has been initiated in mid 1990s, when soon after the establishment of the first organic farms in the area, Preili organic farmers NGO was founded. The network functioned as the main driver of organic production development and promotion in the district by disseminating knowledge and stimulating local producers to adopt environmentally friendly methods. The cooperative organises collective sales, negotiate remunerative prices and provide services such as accounting and logistic services to the members.

The cooperative faces difficulties and constraints to manage the organization and to convince the members to market their produce within cooperative instead of relying on their individual marketing channels.

The Mechanism
The cooperative provides a contract to producers to market their produce, thereby structuring sales for the niche organic market channel. This allows farmers to receive price premium.

The Outcome
There are comparatively few farmers engaged in the cooperative as of yet, but it has served its’ purpose in to creating a special market niche, which can be expanded in future.

Evaluation
Although farmers witness that they have not gained financially a lot from selling products through the cooperative, some market costs have been reduced – transportation, publicity, supplies of organic fertilizers. As there are no established common codes of practice within the cooperative, both farmers and the cooperative leaders are afraid to take risk. The lack of definition of mutual responsibilities makes the relation between the farmers and the cooperative less secure. So, farmers continue with individual market strategies and often are supplying to conventional processors where certain regularity and stability of purchase and price are guaranteed.

Reference