UNCTAD Expert Meeting. "Enabling small commodity producers in developing countries to reach global markets"

Transcription

1 UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT UNCTAD Expert Meeting "Enabling small commodity producers in developing countries to reach global markets" Organized by UNCTAD Commodities Branch Web: December 2006 Enabling small commodity producers in developing countries to reach global markets by Mr. Steve Homer Corporate Responsibility Manager, Flamingo Holdings The views expressed are those of the author and do not necessarily reflect the views of the UNCTAD Secretariat, nor do they imply the expression of any opinion whatsoever on the part of the secretariat of UNCTAD concerning the legal status of any country, territory, city or area, or of its authorities or concerning the definition of its frontiers or boundaries.

2 Steve Homer : CR Manager Flamingo Enabling small commodity producers in developing countries to reach global markets?

3 Or from here to here....in 72 Hours

4 The Flamingo Group Flamingo Holdings Ltd Homegrown Kenya Flamingo UK Dudutech Kenya Flower Plus UK Flamingo Flowers S Africa Zwetsloots Flamingo Flowers b.v. Lingarden 500M turnover 1M packs of vegetables per week 1.5M bouquets of flowers per week

5 Flamingo Operations Established in Kenya for 23 years Investment in Kenya in excess of $100m over last 20 year Totally vertically integrated between Kenya and the UK from growing to airfreight to marketing to distribution. Geographically diverse land bank of over 2,700ha, 97% of the land is owned and only 20% of which is cropped at any one time Trained workforce of over 7,000 people, of which 88% are permanent employees.

6 Flamingo Logistics Kenya JK Airport Depot Nairobi 2.4 ha of land located in the specialised freight area immediately adjacent to the airport. Vegetable processing 4,500 m2 of fully temperature controlled high and low care vegetable processing facilities Vehicle workshops 500 lorries, staff buses, tractors Road, bridge and construction equipment Irrigation and farm machinery

7 Flamingo Produce Sourcing Map United Kingdom Cobrey Farms Ltd Jordan Modern Valley Farm Spain Midifruit Guatemala Siesa Peru Beta Thailand P. Prime KC Fresh Zimbabwe Mitchell & Mitchell South Africa Fruit Salad Health Kenya Homegrown Vegpro AAA Vitacress

8 Flamingo Vegetables A purpose built facility at Stevenage UK 100,000 Sq ft state of the art temperature controlled space for import, handling and despatch This is the Flamingo main base in UK including Flamingo Holdings Directors offices and Flamingo Europe Headquarters

9 Why am I telling you this? All of this infrastructure, organisation and logistics is required to bring a fresh product to the UK supermarkets in less than 72 hours. Variable demand on a daily basis Global competition Food safety and traceability requirements Fast moving and dynamic market

10 Why am I telling you this? To study smallholder chain best practice in isolation is missing the big picture Any smallholder project must have a logistical route to market. Too many smallholder projects do not have sight of a retailer partner Developing smallholder horticulture without a sustainable stable marketplace or logistics partner is pointless

11 Smallholder Grower Cooperative Field staff & management Capital investm ent in buildings & packhouses. Packer Processor Exporter Inform al M erchant %age of product not suitable for export C ertification charges & staff costs and wages Distribution Air Freight Freight charges dependent on availability & exchange rate C hilled distribution so expensive running costs UK Break Bulk Freight Distribution Customs & Health Inspections Freight Distribution Expensive levy charges applied to transport Q C inspections grade out & rejections UK Packer Importer Inspections, delays, fees & rejections UK Packer Importer Supermarket Distribution Hub UK Market Wholesaler Product wasted if not sold Q C inspections specifications & more potential rejections Regional Distribution Centre C apital, rates, staff and running costs R etailer / C aterer Trader If product is not sold then wasted Supermarket Retail Store Consumer looking for best value for money Customer Consumer Consumer looking for best value for money

12 Flamingo Outgrowers & Smallholders Outgrower program established for over 15 years in Kenya fully compliant with EU technical, traceability and social standards. Homegrown now has over 1000 Outgrowers in Kenya and last year paid them over $5M for produce Programs now replicated in Thailand and Guatemala bringing total smallholder numbers to around 2500 Technical field managers provide free access to unique IPM solutions developed in-house through Dudutech, agricultural best practice and direct communication.

13 Licence to trade? National International Private Standards Standards Ministry MRL EUREPGAP RESIDUES of Labour ( as per ILO ) 91/414/EEC Department MARKETING BRC STANDARDS of Health and Safety 1148/2001 (DOHS) TRACEABILITY Kenya Fair Trade Bureau Organisation of Standards (KEBS) 178/2002 National HARMFUL ETI smallholder Environmental ORGANISMS Management 29/2000 Agency Tesco Horticultural NATIONAL Natures CONTROL Ethical Choice Business Initiative 882/2004 (HEBI) ( FOOD SAFETY ) Fresh Marks Produce & Spencer Exporters - Field to Association Fork of Kenya

14 Flamingo Services Provide seed from bulk purchased first grade stock Advice, support and a market for rotational crops 100 technical field assistants visiting farms training, advising and coaching small farmers Services to form legal producer marketing groups to access micro credit and group certification IPM, health and safety, personal hygiene and agronomy training

15 The Missing Link? Not here.. Supermarket Technical managers Industry trained Frequent visitors Aware of codes & standards Wider Industry debate Stakeholder consultation starting Consumer awareness rising Media interest Known industry solutions to; Private labels National codes of practice

16 The Missing Link - Uncovered Good Business Practice What does that look like commercially? Stability of business demand Removal of supplier uncertainty Longer term mutual plans Better communications More equal share of risk The missing parts are at the top of the chain

17 What have we learned in 10 years? There is an increasing number of small farmers being brought into the supply chain without any stability of demand for commodity based goods Changing the form of commodity goods into added value items like stir fry packs or mixed packs reduces the volatility of global competition Smallholders can compete on merit with plantations if they have the right products to grow.

18 Possible improvements. Supermarkets commit to map supply chains with smallholders using self declaration by main suppliers. Most supermarkets only map to first tier and only see the exporter Products from smallholders have written service level agreements detailing period of supply and minimum notice period. There are few written contracts with Supermarkets or exporters and none that connect all. All products that contain smallholders are marked on the buying systems and cannot be arbitrarily changed without one step up approval CSR teams never know until it is too late to implement corporate policy

19 Possible improvements. Open discussion at all levels including smallholders about ownership of commercial risk and management of expectation This will allow players like Flamingo to invest in : More training for smallholders Better infrastructure Possible micro-finance This will allow capacity building agencies to : Develop and embed new sustainable supply chains Increase confidence of un-adopted growers Increase independence of Smallholders

20 In Summary The 2500 Flamingo smallholders and outgrowers compete in the Flamingo supply chain on merit The Flamingo smallholders and outgrowers have met and often exceeded all of the standards placed before them without the need to reduce standards Flamingo have fifteen years of stable proven activity that meets most of the needs of the players in the chain and provide an income for around smallholder dependents worldwide All of this is done without distorting the commercial or technical picture in favour of the smallholders

21 How can we make this traditional model

22 Into this Genuine added value

23 Thank you.