A brief synthesis
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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.

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A brief synthesis

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A brief synthesis

A brief synthesis


A brief synthesis

Classic Form of Intermediation

Seller

sale

Intermediary

sale

Buyer/consumer

Intermediary buys from seller(s) and

resells to buyer(s)


A brief synthesis

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


A brief synthesis

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


A brief synthesis

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)


A brief synthesis

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.


A brief synthesis

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.


A brief synthesis

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.


A brief synthesis

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


A brief synthesis

b) Buying and Selling: Product Consolidation by

financing production

  • Major Problems

  • Default loan payments

  • Pole-vaulting


A brief synthesis

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


A brief synthesis

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.


A brief synthesis

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.


A brief synthesis

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)


A brief synthesis

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.


A brief synthesis

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.


A brief synthesis

e) Store/Shop Operation

  • Limitation:

  • Caters mostly to walk-in customers


A brief synthesis

Emerging and Classic Form of Intermediation

Two-sided platform

One-sided platform

Seller

Seller

sale

affiliation

sale

Intermediary

Intermediary

sale

affiliation

Buyer

Consumer


A brief synthesis

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


A brief synthesis

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.


A brief synthesis

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


A brief synthesis

  • 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?


A brief synthesis

Thank you


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