Category: Quality Assurance

Alito Joint Christian Farmers’ Group (AJOCFG): oil seed marketing

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By , October 24, 2012 9:20 am

Context
The Alito Joint Christian Farmers’ Group (AJOCFG) in Uganda, was founded in 1998, consisting of 5 members. Their joint interest was to market high quality oil seed production (predominantly sunflower seeds). In 2004 the organization registered as Community Based Organization to expand its function to input provision for production, and extension. By then the core group had expanded to 58 members. In 2005 the group started growing, because there was demand from other regions to benefit from the services. In all the AJOCFG grew to a constituency of 62 cluster sub groups, totaling a number of 1860 members by 2010. These sub-groups are organized as a second tier of producers. Collection of seeds takes place at the sub-groups level. Marketing is done at the level of AJOCFG. In order to manage the growth of the producer group, the AJOCFG installed a governance system for fair and transparent treatment of both incumbent, as well as new-coming members in terms of contribution, access to services, and pricing of their produce..

Mechanisms
The governance system to manage growth comprises of a set of complementary mechanisms:

Differentiating services between members and non-members.
For new member groups AJOFCG applies an admission fees to select for the most motivated of farmers. On top of that an annual membership fee is put in place for all members for rendered marketing services. Every member sub group thus contributes more or less the same in proportion to used services . Non-members may sell their seed to AJOFCG, but will not profit form the added value which is created in sales after bulking.

Anticipating side selling
AJOFCG applies two mechanisms to aid in anticipating side selling. First and foremost they encourage delivery commitment by farmers through providing credit to the farmer subgroups, or support farmer groups to banking institutions for credit indirectly. This credit can be used to finance farming activities during the planting, and growing season. The farmers can repay their loan at harvest time, when they come to sell their produce. Repayment is strictly enforced. In case of side-selling, producer groups as a whole are reprimanded, with the ultimate sanction of barring them from membership at AJOCFG.

Secondly, AJOFCG always makes sure that the price for seeds offered to member-farmers is always set higher than the market price. This provides and fosters loyalty towards selling produce through the AJOCFG channel.

Quality assurance
To guarantee quality of supply each individual farmer has record of his or her supply provided at the subgroup (second tier) level. When the bulked produce is collected by AJOCG the average quality of the bulk is used to determine price levels. The farmer groups are thus remunerated for their average quality, providing an incentive to the group to maintain and control the quality levels of the produce they supply.

Outcome
Fair terms, and clear rules ensure that supply is tightly arranged and free riding is prevented. This results in stable and predictable quality and volumes of oil seed, which provides AJOCFG with a credible proposition to their buyers’ market.

Reference

(Español) Control de calidad en miel

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By , October 11, 2012 12:35 pm

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(Español) Planifación de la producción contra el sobre-estockamiento

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By , October 11, 2012 12:22 pm

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Qualiy control in handicraft marketing

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By , October 11, 2012 12:01 pm

Sorry, this entry is only available in European Spanish.

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