NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

This post introduces a series focused on new business models for sustainable trading relationships. This series will discuss emerging enterprise solutions for small farmer inclusion, the corresponding impact on livelihoods of the rural poor, and the expanding market for sustainable business development for the public and private sectors.

Following the money often leads to interesting insights. If you work in international development, you’ve likely noticed a good deal of money being channeled to the hands of social entrepreneurs. Backed by social impact banks and foundations, social investors are zeroing in on enterprises committed to both financial returns and impact, addressing everything from rural water access , eye care services and surgery, affordable housing and sustainable sourcing, some of the most pressing issues of the world today.

Social Investment and Rural Enterprise Development

At CIAT’s Linking Farmers to Market Program an explosion of new partnerships and learning alliances are occurring across the public/private aisle. Learning from the business models we’ve seen in the last few decades, we’ve joined up with a network of organizations (New Business Modes for Sustainable Trading Relationships) committed to capitalizing on a budding framework for enterprise-based inclusion of small growers in the developing world.

This international consortium of organizations is housed at the International Institute for Economic Development (IIED) in partnership with Catholic Relief Services, Rainforest Alliance, CIAT, Sustainable Food Lab, and the Bill and Melinda Gates Foundation.

Principles of New Business Models

From examining the literature on value chains, following discussions with the private sector and drawing on our own experience through pilot projects, we have identified as set of principles that can serve as a framework for diagnosing and improving trading relationship when moving to a scalable business model. This framework continues to evolve as global advances are made and smallholders are creatively engaged in dynamic markets. We have seen consistent evidence that supply chains are most robust for smallholders where there is a structure in the value chain for:

1. Chain-wide collaboration on shared goals and identified champions for these goals;
2. New market linkages;
3. Fair and transparent chain governance;
4. Equitable access to services;
5. Inclusive innovations in the chain; and
6. Measurement of outcomes throughout the chain, with those measures shared between chain actors and used for continual commercial and social improvement.

This series will focus on our research around these issues, discussing the tenets of what our consortium has denoted as hallmarks of sustainable trading partnerships, recognizing that pro-poor development is in the interest of both the public and the private sector.