The chain is governed by Cargill, which is a supermarket chain with considerable interest in securing quality supplies and improving chain efficiency to remain competitive in the retail markets.
Coordinated delivery of services
The approach has allowed farmers to increase production and improve quality.
The intervention has contributed towards reduction of post-harvest losses and quality improvement. Direct linkages between Cargills and the producers, which implies the elimination of intermediaries and shortening of the chain, led to improved chain efficiency.
Farmers have been exposed to new information and technologies through Cargills’ extension staff, and its collaboration with agricultural departments and research institutions.
Cargills developed farmer confidence by offering competitive prices and increased trust by also offering a minimum guaranteed price.
Even though this is not strictly a PPP, Cargills worked with agricultural departments and research institutions to assist the farmers.
The project beneficiaries were encouraged to diversify into passion fruit production.
Cargills Extension Officers trained farmers on appropriate production and harvesting methods, thereby contributing to improved product quality.
Cargills has increased efficiency by eliminating all the middlemen from the system. The company invested on plastic crates for the collection centers, and post-harvest losses (especially during transportation) were reduced from 40% to 3%. Since Cargills was able to assess the cultivation condition and forecast the harvest before-hand, the stable and timely supply of fruits improved processing plant efficiency by 25%. The product was placed in Cargills’ supermarket stores and the consumer price was reported to be lower than in other supermarkets.
Seeds were provided free of charge.
Cargills’ extension service transferred improved production technologies to producers.
The intervention provides an example of farmers’ direct linkage to buyers.
Sustainability will be assured as long as Cargills remains profitable. This intervention provides an example of a win-win situation between producers and buyers, in which producers have increased production, quality and profitability, and buyers have generated higher margins by shortening the chain and reducing their operating costs.
With the increase of fruit production, Cargills as well as producers experienced the following problems:
- During the peak harvesting period machine capacity was unable to absorb production volumes. Farmers could only sell Cargills about 60% of their production
- During the lean harvesting period, the plant operated below potential capacity
- The intervention did not specifically focus on targeting the poorer segments and women