The LINK Methodology

A participatory guide to link smallholders to markets

Publication by the International Center for Tropical Agriculture (CIAT)

Inclusive business models, understood as those businesses in which smallholding producers are involved as providers (or sellers), represent opportunities for economic and social development for both producers and private actors (or buyers). These models possess the virtue of linking actors more effectively, coherently and transparently when a basic business principle is adhered to: both sides (sellers and buyers) must win.

Agriculture is a source of livelihood for an estimated 86% of the rural population (2.5 billion people) and provides employment to 1.3 billion smallholders and landless workers. A more dynamic and inclusive agricultural sector could dramatically reduce rural poverty, helping countries meet the Millennium Development Goal of halving poverty and hunger by 2015. Crosscountry econometric estimates show that overall GDP growth originating in agriculture is, on average, at least twice as effective in benefiting the poorest half of a country’s population as growth generated in nonagricultural sectors.

Beyond its direct contribution to growth, linking smallholder farmers to dynamic markets provides an opportunity to reduce poverty more quickly, as well as ensuring the generation of commercially viable products, all of which will help smallholders to take on board the structural challenges of their environment.

Decades of underinvestment mean that small-scale producers in low- and middle-income countries often operate under supremely difficult conditions, including inadequate infrastructure (roads, power, irrigation and wholesale markets), little opportunity to develop skills, lack of access to services (training, credit, supplies) and high dependence on favourable weather conditions.

Given these challenges, and the high procurement costs associated with collecting, grading and bulking products from dispersed suppliers, buyers have preferred to opt for the structural strength of large-scale agricultural providers.

However, markets are shifting from being buyer-driven to being supply-constrained. In an era of tightening global supplies and natural resource limitations, the authors of this guide believe that inclusive business is simply good business. On the one hand, sustainable development is increasingly being integrated into business practices to improve the quality and security of raw material supply and to contribute to the Millennium Development Goals (MDGs).

On the other hand, making business more inclusive for small-scale suppliers is a way of enhancing corporate reputations, gaining legitimacy in local markets and creating “ethical” products. Connecting the two disparate worlds of smallholder farmers and emerging markets requires creative solutions so that both sides gain. Farmers need to gain access to markets, knowledge, technology and income, while buyers will need to adapt to a supply-constrained market where they are better able to source key raw materials to their specifications at a competitive cost and even access higher quality products.

Faced with this great challenge, LINK’s methodology builds bridges between the two.

LINK Methodology aims to promote the engagement of smallholder producers with markets by guiding a multi-stakeholder process of shaping or upgrading inclusive trading relationships with the potential to create a win-win situation for all actors involved.

LINK can help your organisation facilitate a systematic learning process between actors from a selected value chain, and discover new opportunities for innovation, based on the application of a participatory toolkit, with four main tools:

  1. The value chain map:
    used to understand the macro context of markets and businesses which link rural producers with buyers.
  1. The business model canvas:
    used to understand in more detail each business which links rural producers with buyers.
  1. The New Business Model principles:
    used to determine whether each business which links rural producers with buyers is truly inclusive.
  1. The prototype cycle:
    used to continuously improve the inclusivity of every business which links rural producers with buyers.

You can access the publication here.

 

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