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Business Model For Smallholder Service Delivery

Smallholders in developing countries typically face problems of low productivity, low quality crops, poor sustainability performance, and low incomes. A key factor in making a successful transition to viable and sustainable farming is ensuring they have access to quality extension services, inputs, and finance. For different clients Aidenvironment is developing business models for commercial and semi-commercial service provision. These business models provide essential information for developing a sustainable solution for both smallholders and service providers.

Service delivery is a key success factor for smallholders when making the transition to sustainable production and improving their livelihoods. However, the services they need are often absent, of low quality, or heavily dependent on subsidies from national governments, foreign donors or the CSR budgets of supply chain actors. This is not a sustainable or scalable situation. Fortunately, there are many examples of high quality service delivery resulting in significant improvements in smallholders’ incomes. These examples show that there are opportunities to use part of this increased income to pay for the services. Farmers may not be able to pay for services on delivery, but they may be able to pay for them after harvest.

A more entrepreneurial service sector would provide high quality services to farmers and treat them as clients rather than beneficiaries. This requires a valid business case for individual service providers and farmers, plus an appropriate financing model. Aidenvironment is currently assisting two clients with compiling business models for smallholder service delivery. We help them to understand cash flow at the farm and service provider level and use this information to define relevant scenarios, build financial models, and structure their financing. With this advice, they will be able to define better service packages and delivery models and convince entrepreneurs to engage in service delivery. It also allows our clients to develop investment or finance proposals.

For more information contact Jan Willem Molenaar.