Sector-wide approaches to inclusive business
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policymakers who could tweak development schemes to include them Box 3.8. Whereas a traditional intermediary
adds value by handling the product aggregating, grading, transporting, processing andor marketing, for example
and takes a large cut from the value chain, an ethical agent can add value by offering business expertise, introducing
contacts and aligning business models along the chain to better share the value among participants.
A Nicaraguan case from Falguni Guharay in the Learning Network offers another example of small-scale farmers
entering a demanding organic value chain that delivers higher prices. But in this case, the chain’s strict requirements
are being met largely at the expense of producer agency. Starting in 2007, cocoa growers in the Bosawas area
were organised to produce organic cocoa for the German chocolate company Ritter Sport, which initiated the project
together with Germany’s development agency GIZ and the Nicaraguan NGO ADDAC. The farmers succeeded in
growing more cocoa of higher quality, and saw prices spike. But Ritter Sport is the only company buying this quality
cocoa and offering these prices — meaning that producers have gained no negotiating power in the value chain. And
the company has changed the local supply chain from beginning to end; collection, processing and post-harvest
management systems have all been reshaped to Ritter Sport’s speciications. Guharay described this value chain as
resembling ‘a benevolent feudal relationship’.
Whether a value-chain initiative offers more or less scope for small producers to exercise agency, it will often make up
only one part of farmers’ chosen portfolio of activities. In the big picture, it is important not to overlook what farmers are
doing simultaneously to root themselves in other markets. In the case of palm sugar growers in Indonesia, for example, the
same producers who formed a cooperative to gain organic certiication and connect with an international buyer were
also marketing an array of other crops, either individually with traditional middlemen or through different farmer groups
or traditional middlemen. This is also true for many larger and older cooperatives, such the national coffee growers’
organisation in Peru.