A brief synthesis

1. A brief synthesis

2. Classic Form of Intermediation Seller sale Intermediary sale Buyer/consumer Intermediary buys from seller(s) and resells to buyer(s)

3. Classic Form of Intermediation New and Classic Form of Intermediation Two-sided platform One-sided platform Seller Seller sale affiliation sale Intermediary Intermediary sale affiliation Buyer Consumer

4. Classic Form of Intermediation Intermediary buys from farmers and resell products to a buyer at a profit $$$ profit _ _ Farmer(s) Intermediary Buyer/consumer sale sale

5. a) Intermediation by Product Distribution b) Buying and Selling: Product Consolidation by financing production c) Supply Contracting d) Market Facilitation with organizing and agricultural extension Interventions e) Store/Shop Operation f) Many Others (in developed economies)

6. a) Intermediation in Product Distribution • Distribution of products to a network of market outlets. • Now includes repacking, branding. • Terms of Payments 30, 45 or 60 and even a 90 day-terms. • This model is supported by the presence of an NGO at • the base/ grassroots level assisting small farmers in value • adding, processing. • The marketing intervention mechanism earns revenues • through profit margins on the products being distributed.

7. a) Intermediation in Product Distribution • Major Constraints: • Consignment (deferred payments) were envisioned in the • beginning but farmers demand payments upon delivery of • products. Intermediation is constrained by the size of its • working capital. • this type of mediation is limited to non-perishable processed • products especially food products such as fruit jam, jellies, • muscovado sugar, organic rice, juice concentrates, etc.

8. b) Buying and Selling: Product Consolidation by financing production • largely exemplified by rural cooperatives • financing production is key to product consolidation & • achieve economic scale • in some cases, drying, milling, sorting and grading, packaging • are included • earn revenues from profit margins on financing, trading, and • also from processing, sorting and grading, packaging.

9. b) Buying and Selling: Product Consolidation by financing production • Key Requirements: • very capable management personnel and set up; • large working capital/ credit access; and • effective monitoring system and technical agricultural services

10. b) Buying and Selling: Product Consolidation by financing production • Major Problems • Default loan payments • Pole-vaulting

11. c) Supply Contracting • Intermediation mechanism enters into contract • w/ a buyer • consolidate products through sub-contracting • earns revenues by defining profit margins from • the contracted price or a certain percentage from • the net sales

12. c) Supply Contracting Limitations: • There are still a very few successful supply contracting experiences by NGOS. • 2. Negative experiences were largely on the failure to • deliver contracted volume, agreed product specs (quality) and prompt delivery.

13. d) Market Facilitation with organizing and agricultural extension Interventions • Organizing small farmers along crop/product to ensure economy of scale (volume) • Agri -extension – to achieve periodic production volume & product quality • Capability-building – product quality & quality management, production management, business planning, etc.

14. d) Market Facilitation with organizing and agricultural extension Interventions • Small farmers are paid when the buyer remits the payment • Earns revenues by a fixed percentage from the net or gross sales as service fee (depending on agreement with farmers)

15. d) Market Facilitation with organizing and agricultural extension Interventions • Major Constraint: • Need for a start-up funds to finance the formation of small farmers groups (producer associations), capacity-building, agricultural extension and other technical assistance.

16. e) Store/Shop Operation • Small farmers supplies goods and products to a store/shop • Store/Shop advertises agricultural products to consumers • Earns revenues from profits of sold goods & products.

17. e) Store/Shop Operation • Limitation: • Caters mostly to walk-in customers

18. Emerging and Classic Form of Intermediation Two-sided platform One-sided platform Seller Seller sale affiliation sale Intermediary Intermediary sale affiliation Buyer Consumer

19. Emerging and Classic Form of Intermediation Two-sided platform Formation of small farmers producer associations Specialized agricultural-extension Specialized training Seller-Farmers affiliation Business sector, CSO, small farmers/producer association partnerships sale Intermediary affiliation Corporate social responsibility (CSR)/ Consumer Education Buyer

20. Challenges in Market Intermediation • Intermediation mechanism that can move larger volume of products (economic scale), affecting larger sections of small farmers; • 2. A mechanism that is sustainable, earning revenues either from profits, marketing fees or from specific percentage of sales as management fees.

21. Challenges in Market Intermediation 4. Mechanism that can reduce the highest possible transaction costs in the supply chain. 5. A mechanism that is grounded: - engaged not only in marketing but also proactively in production and other services. - where farmers and buyers have a stake as part- owners or shareholders

22. Other Marketing Servicescan otherwise be assumed as part of the services along with intermediation) • 1. Product Development • 2. Product Packaging • 3. Product Exposure • 4. Micro-financing agricultural production?

23. Thank you