Lucas Simons’ company, SCOPEInsight, evaluates the professionalism of farmers’ organisations for prospective investors © Rachel Schraven
What are the primary challenges for farmers in creating sustainable businesses and how can these be overcome?
Most of the time, farmers’ organisations are not good at managing their finance or implementing strong business planning. Also, their leadership is weak and their access to inputs limited. In most cases, these organisations are doing better at the operation level. Some sectors are better organised than others. Often, farmers need to be better organised and require strong leadership to know their costs and how to deal with money.
How can the efficiency and professionalism of farmers’ organisations in emerging economies be improved, and how will this contribute to food security?
If we want to make agriculture sustainable, to increase productivity and to improve farmers’ livelihoods, we have to help farmers to run their businesses in a professional way. If you run your farm or your cooperative as a business – meaning you are managing it well, you measure your successes, your profits – chances are that you are able to produce more food, you have a good income, you create jobs, and you are an attractive business case for banks. This is not new but the truth is that I don’t know many organisations that work on farmers’ professionalism as a means to develop agriculture. Yet, professionalism is the key to make any lasting change in agriculture.
How does SCOPEInsight bridge the gap between professional farmer organisations, input and output markets, and financial service providers?
SCOPEInsight has developed a unique assessment tool that measures the level of farmers groups’ professionalism on eight dimensions. At the internal level, those are: financial management, sustainability, internal management, and operations. At the external level, the dimensions are: supply, market, enablers (capacity builders, government, service providers), and external risks. This methodology is designed to measure and compare good management but also, once the assessment is done, provide very detailed insights of an organisation’s weaknesses and strengths. The problem often is that farmers are not helped to run their business properly. Most, if not all NGOs, for instance, don’t know how to train farmers to manage their internal finances. Farmers need to build an ecosystem with good suppliers and external service providers.
Our model also captures lots of information that banks are looking for. Suppose we assess 100 businesses with the intention to work on internal and external management as well as capacity building. Maybe 25 would show signs of professionalism. While they are trained to become better organisations, we can link them to financial institutions and make it more attractive to work with them, knowing we have a lot of data and insights about these organisations. In short, the steps are: assessment, capacity building, reassessment, selection of the most professional organisations, and linking them with financial institutions and investors. That way, we are building better businesses, targeting their needs, lowering costs and risks, and creating linkages with the banks or markets.
Your book, Changing the Food Game, explains that in order to feed the global population by 2050 the food market must be radically transformed to support sustainable agriculture; how can this be achieved?
Every sector seems to go through the same four maturity phases: it starts with the sector in crisis and denial of this fact; then, when the crisis is acknowledged, NGOs, donors and governments start training farmers, building schools and distributing seeds, which does not solve the problem. Secondly, one figures out how to link the problem to competitive advantages of companies: one creates new labels, certifications or standards to differentiate oneself on the market until there are too many labels that do not offer any marketing advantages or that farmers can’t comply with. Thirdly, sectors are coming together to look at their real sustainability and reflect on their desired achievements. Then, finally, governments adopt these changes as their new norms or pass new laws to create an enabling environment.
Some sectors like the coffee, sugar, cotton or the seafood sectors are showing promising signs of moving from the second phase (competition on labels) to the third phase (collaboration and working on a shared strategy).
This said, I don’t think there is any country or any sector that is truly sustainable yet. It is always a process of continuous improvement and getting better organised.