Can farmers actually DO business? A proposition on building smallholder-level livelihoods using a business approach
Can farmers actually DO business? A proposition on building smallholder-level livelihoods using a business approachwca2014-1860 Aulia Perdana 1,* 1Trees, AF Management and Marketing Unit, World Agroforestry Centre, Bogor, Indonesia
Businesses in agriculture and forestry are usually built around large-scale suppliers ignoring that most of the world’s farms are managed by small-scale producers. Smallholders are often excluded from modern business channels due to a lack of access to services and information, high transaction costs, and poor infrastructure. For supply chain actors, this may increase the perceived risks and costs associated with purchasing from dispersed producers. While successful examples of smallholder inclusion into modern supply chains can be found, these do not reflect the overall value created and profit distribution are in favour of farmers. Building farmers’ capacity to become better business partners in supply chains may not be the only necessity. This paper raises the question on whether farmers can actually do business and, therefore, highlights a proposition on how to build livelihoods using a business approach at the smallholder level based on scientific observations of tree products utilization conducted in Sulawesi, Indonesia. The proposition include business plans, village-based service providers who can deliver support, community managed institutions, and a community-led business model to sustain benefits. This paper also observed that the private sector is required to adjust its business practices to smallholders’ needs and conditions to promote sustainable business relationships. Capable farmers and keen buyers, together with an enabling environment, such as consistent government incentives, can establish durable and profitable business relationships.