Upload
mahola
View
44
Download
4
Embed Size (px)
DESCRIPTION
A brief synthesis. Classic Form of Intermediation. Seller. sale. Intermediary. sale. Buyer/consumer. Intermediary buys from seller(s) and resells to buyer(s). Classic Form of Intermediation. New and Classic Form of Intermediation. Two-sided platform. One-sided platform. Seller. - PowerPoint PPT Presentation
Citation preview
A brief synthesis
Intermediary buys from seller(s) andresells to buyer(s)
Classic Form of Intermediation
Intermediary
Seller
Buyer/consumer
sale
sale
Classic Form of Intermediation
New and Classic Form of Intermediation
Intermediary
Seller
Consumer
sale
sale
Seller
Intermediary
Buyer
One-sided platform
Two-sided platform
sale
affiliation
affiliation
Intermediary buys from farmers andresell products to a buyer at a profit
Classic Form of Intermediation
Intermediary
Farmer(s)
Buyer/consumer
sale
sale
$$$ profit
a) Intermediation by Product Distribution
b) Buying and Selling: Product Consolidation by
financing productionc) Supply Contracting
d) Market Facilitation with organizing and agricultural extension Interventions e) Store/Shop Operationf) Many Others (in developed economies)
• 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.
a) a) Intermediation in Product Distribution
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.
• 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.
b) Buying and Selling: Product Consolidation by
financing production
Key Requirements:
1)very capable management personnel and set up;
2)large working capital/ credit access; and
3)effective monitoring system and technical agricultural services
b) Buying and Selling: Product Consolidation by
financing production
Major Problems
• Default loan payments
• Pole-vaulting
b) Buying and Selling: Product Consolidation by
financing production
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
c) Supply Contracting
1.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.
Limitations:
• 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.
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)
d) Market Facilitation with organizing and agricultural extension Interventions
Major Constraint:
a)Need for a start-up funds to finance the formation of small farmers groups (producer associations), capacity-building, agricultural extension and other technical assistance.
d) Market Facilitation with organizing and agricultural extension Interventions
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.
e) Store/Shop Operation
Limitation:
•Caters mostly to walk-in customers
Emerging and Classic Form of Intermediation
Intermediary
Seller
Consumer
sale
sale
Seller
Intermediary
Buyer
One-sided platform
Two-sided platform
sale
affiliation
affiliation
Emerging and Classic Form of Intermediation
Seller-Farmers
Intermediary
Buyer
Two-sided platform
sale
affiliation
affiliation
Formation of small farmers producer associations
Specialized agricultural-extension
Specialized training
Corporate social responsibility (CSR)/ Consumer Education
Business sector, CSO, small farmers/producer association partnerships
1.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.
Challenges in Market Intermediation
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
Other Marketing Services can 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?
Thank you