Field report: El Salvador
An agribusiness in El Salvador is transforming the lives of local communities by providing jobs, training and access to formal markets for farmers and farm workers in the agricultural sector.
For small-scale farmers living in remote areas around the world, access to finance, inputs and markets present a major challenge, which often prevent them from achieving sustainable growth in productivity. These difficulties are as prevalent for farmers in El Salvador as they are for farmers in rural areas of sub-Saharan Africa. To provide a sustainable and scalable solution, the Clinton Giustra Enterprise Partnership (CGEP) has established a social enterprise, Acceso Oferta Local – Productos de El Salvador, that bridges the gap between rural farmers and large buyers, and helps smallholders increase the productivity and quality of their crops.
“Through years of testing various approaches, we learned that building agribusinesses that directly link marginalised farmers to buyers is a more sustainable, scalable, and replicable solution than traditional programmes,” explains Frank Giustra, who co-founded CGEP with former US President Bill Clinton in 2007. CGEP has established locally managed agribusinesses in the Caribbean, Latin America and Southeast Asia, which have generated over €16.4 million in farmer income and benefitted more than 10,000 farmers and farm workers. To ensure development interventions achieve impact at scale it is essential that they can become financially self-sufficient. CGEP’s goal is therefore to build profitable agribusinesses that satisfy the needs of market buyers and attract support from minority impact investors – private sector individuals or institutions who are aligned on financial and social goals.
Enhancing farmers’ capacities
In El Salvador, smallholder farmers not only have limited access to formal markets, but also have difficulty knowing which crops are in demand and the price they can achieve. Consequently, farmers often end up selling their produce to middlemen at prices that are much lower than the market value. However, since Acceso was established in 2013, the enterprise has become the country’s leading company for sourcing produce directly from smallholders, over 1,000 farmers supply Acceso with more than 60 types of fruits, vegetables and seafood. Acceso sells these products to national and international buyers, such as Super Selectos (the largest national supermarket, which has 96 stores across El Salvador) and Subway’s 84 restaurants in the country.
“Acceso… plays an incredible role, not only in bringing the products to our stores on time, at excellent quality and good prices, but also in developing the capacity of farmers to grow and develop the value of their produce,” says Carlos Calleja, vice president of Grupo Calleja, which owns Super Selectos. To ensure farmers are able to meet the quantity and quality demands of large buyers, Acceso provides training in good agricultural practices (GAPs), such as the proper use and storage of fertiliser, and the best control mechanisms for pests and diseases. By partnering with Asociación de Proveedores Agricolas – an agrotechnology and food security organisation – and the agribusiness trade association, CropLife Latin America, the company is able to assign each farmer an agricultural technician and scale out GAP training to its entire network of farmers. “The goal is to improve crop handling techniques so [farmers] can finally achieve higher yields,” explains Jaime Torres, Acceso’s lead agronomist.
Attracting private sector buy-in
In 2016, Acceso became the first business in Central America to pass a GAP audit of farmers’ plots by Yum! Brands. By ensuring that farmers are able to consistently produce crops according to strict quality standards, Acceso has been able to reliably supply agricultural products to large buyers on the scale that they require. This approach has helped the company to gain buyers’ trust and establish long-term partnerships, which is integral to allow the enterprise to grow and achieve impact on a large scale.
When Acceso approaches a new client, the enterprise’s local team of experts assesses the buyer’s crop specifications and volume demand to help identify gaps in local supply that their smallholders could fill. Andres Baiza, Acceso’s general manager, explains that the company identified that some of their clients “were importing certain products like broccoli and lettuce… from Guatemala.” Given that the conditions in El Salvador are also suitable for the production of these cash crops, the company trained their farmers to produce the vegetables locally.
By advising and training an association of 14 women to produce cash crops such as cucumbers, tomatoes and green peppers – which are in local demand – Acceso guaranteed these smallholders a profitable market. “The nice thing has been the experience of being competitive in a formal market,” says one of the women in the association. Before linking up with Acceso, the women were selling in informal markets where the prices varied substantially from week to week. They now receive a steady income for their produce, which – even when sold for a premium due to its high quality – undercuts the price buyers would have to pay for imported goods.
Providing ease of access and jobs
Beyond meeting buyers’ demands in terms of the variety, quality and quantity of crops they need, at a competitive price, Acceso also manages the aggregation, packaging and delivery of smallholder goods. “Our buyers can buy from our network of farmers through us. They don’t need to go to each farmer and see what they’re producing, we do that for them,” boasts Baiza. The aggregation services not only ensure Acceso is able to source and distribute produce on the scale required by buyers, but also benefit the farmers, for whom “we are a single solution because we… classify their products to be delivered to formal markets,” he says.
Acceso operates four collection centres in Chalatenango and Ahuachapan, which conduct quality control and basic processing (washing and packaging) of 750,000 units of produce per month. Around 300 producers supply the collection centre in Los Planes, Chalatenango, with about 58 different products. “Before, we spent more time delivering. It took us 5 hours to drop produce at the market and we weren’t sure if they’d accept it or not. Today the advantage is that it’s just a 5 minute drive [to the collection centre] and everything is organised. It’s certain that they’ll purchase everything,” says one farmer.
The collection centres have not only improved the incomes of more than 3,200 farmers and farm workers in the surrounding communities, but also created 114 jobs for local collection and processing workers, as well as agricultural technicians. One woman who works at Los Planes collection centre says, “My life has changed. I come to work, I spend time with my co-workers, I learn new things…. The important thing is that I have a salary; I have resources to support myself and get ahead.”
Profit-driven value chain approach
The agribusiness solution that CGEP has developed benefits actors along the entire value chain, from the smallholder farmers whose productivity and incomes have significantly improved, to large buyers who save time and money with Acceso’s reliable supply of quality produce. By ensuring all stakeholders have something to gain from its activities, Acceso was able to achieve profitability within 15 months and has ensured that its revenue continues to grow, reaching almost €5 million in 2017. Giustra explains, “We look to create a win-win situation for both farmers and buyers. It’s not easy; however, with persistence it is possible to build viable businesses, and these types of investments are highly impactful in terms of social return on capital.”In El Salvador, this approach has enabled CGEP to deliver successful, sustainable impact at scale.
See also our field report from Benin: Stimulating Production through Public-Private Partnerships