Working models for inclusive agricultural business

Inclusive business models that integrate previously disadvantaged individuals into agricultural value chains in a commercially viable way have mixed success in South Africa.

Determining what works is critical in informing model refinement, replication and scaling up for international donor organisation Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ). They would like to adopt a facilitation role in supporting successful IBMs (inclusive business models).

In this assignment, we applied our experience in value chain analysis to determine which South African agricultural value chains presented the highest potential inclusive business models for deeper analysis. The sunflower oil, potato and essential oil value chains were selected, and their inclusive business model design investigated to identify what type of facilitation efforts GIZ could adopt to support model replication and scaling.

Across the value chains, the recommendations focused on strengthening the commercial viability of the model through improving smallholder farmers’ productivity. In sunflower oil, this requires strengthening the model’s training and mentoring component. The potato IBM required more stringent smallholder farmer selection criteria and a technical and mechanical assistance facility. While in essential oils, farm-level distillation technology and skills transfers should be explored.

For GIZ, critical to success will be capacitating firms to ensure that productivity upgrading remains intrinsic to the inclusive business model.