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Inclusive Business Models for Sorghum and Millets: Three Case Studies, Socioeconomics Discussion Paper Series Number 5

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Title Inclusive Business Models for Sorghum and Millets: Three Case Studies, Socioeconomics Discussion Paper Series Number 5
 
Creator Orr, A
Mwema, C
 
Subject Millets
Sorghum
 
Description Inclusive business models combine profitability with the potential for poverty reduction by
linking smallholders with markets. This report analyses three business models relevant for
sorghum and millets in east and southern Africa. These are: The Warehouse Receipt
System operated by Lesiolo Grain Handlers Limited (LGHL) (Kenya), the contract sorghum
grower model operated by Smart Logistics Solutions Ltd (SLS) (Kenya), and the contract
finger millet grower system operated by the LEAD Project (Uganda). The performance of
these business models was evaluated in terms of their design, profitability, and
inclusiveness. The WRS is a producer-driven model that depends on the willingness and
ability of producers to store grain until prices rise. The case-study of the WRS operated by
LGHL showed low uptake by maize growers due to constraints imposed by low awareness
among growers, a minimum 10 t threshold of grain accepted for storage, and the distance to
the store. In 2011, only 600t of maize entered the WRS from five farmer groups. Although
the WRS was profitable for maize growers, the seasonal rise in prices was much lower for
sorghum and millets, which greatly reduced the potential benefits of WRS for these crops. A
recent survey of participants showed that the WRS was inclusive, with high rates of
participation from small maize producers and from women. The Smart Logistics business
model is a buyer-driven model driven by the growing market for clear sorghum beer. Smart
Logistics acts as an intermediary for the brewery industry, supplying seed to producer
groups, monitoring quality, and offering higher prices than local brokers. The model is
profitable for growers, intermediary, and buyer. Volumes supplied to the industry have grown
but are still not sufficient to meet demand. The model is inclusive with the majority of
producers belonging to all-female groups, and collective farming to reduce unit costs. Of the
three models studied, this has the greatest potential. The LEAD business model was
designed to provide Unga Millers Ltd in Nairobi with an annual supply of 6,000 t of finger
millet. However, the model proved unworkable. No finger millet was ever delivered. The
business model was profitable for Ugandan growers and for the buyer. The model was also
inclusive, with finger millet supplied smallholders organized in producer organizations, where
almost half the members were women. However, the model failed because it was
intermediary-driven. Changes to the original design by the LEAD management team delayed
the start of the project while the small company appointed to bulk, clean, and ship finger
millet to Nairobi was unfit for this role.
 
Publisher International Crops Research Institute for the Semi-Arid Tropics
 
Date 2013
 
Type Socioeconomics Discussion Paper Series
NonPeerReviewed
 
Format application/pdf
 
Language en
 
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Identifier http://oar.icrisat.org/6993/1/A_Orr_et_al_2013_ISEDPS_005.pdf
Orr, A and Mwema, C (2013) Inclusive Business Models for Sorghum and Millets: Three Case Studies, Socioeconomics Discussion Paper Series Number 5. [Socioeconomics Discussion Paper Series]