Simple Guideline for Developing a Corporate Business Model in the Agro-Based Post-Harvest Sector
The agro-based post-harvest sector is ideal for entrepreneurs, as it offers the potential to reduce food loss, improve value, and create market opportunities. Here’s a step-by-step guide to building a corporate business model with examples.
1. Identify Market Needs and Gaps
- Research Local Demands: Understand what products are in high demand and frequently processed (e.g., fruits, grains, vegetables). Identify what’s lacking in your region, like adequate cold storage or packaging solutions.
- Example: In India, companies like Ninjacart help solve distribution gaps by connecting farmers directly with retailers, ensuring that fresh produce reaches markets efficiently and at better prices for farmers.
2. Define a Clear Value Proposition
- Focus on Quality, Shelf-Life, and Accessibility: Highlight how your business will improve product quality, extend shelf-life, or make fresh products more accessible to consumers.
- Example: Twiga Foods in Kenya combines technology and logistics to deliver fresh produce to urban centers within 24 hours, reducing waste and improving freshness, which appeals to both farmers and urban consumers.
3. Select a Suitable Business Model
Processing & Value Addition: Add value by processing raw agricultural goods into products like dried fruits, canned vegetables, or packaged grains. This can lead to higher profits and less dependency on fresh market prices.
- Example: Del Monte produces a variety of canned fruits and vegetables, allowing longer shelf-life and easier access to off-season produce.
Storage Solutions: Offer temperature-controlled storage facilities on a pay-as-you-go basis or subscription, especially for perishable goods.
- Example: Ecozen Solutions in India provides cold storage solutions powered by solar energy, making it accessible and sustainable for rural farmers.
Logistics and Distribution: Build a distribution model that minimizes food loss during transit and ensures that products reach the end consumer as quickly as possible.
- Example: AgroFresh in the U.S. focuses on extending the freshness of produce during transit, allowing fruits and vegetables to be shipped across long distances without spoilage.
4. Form Key Partnerships
Farmer and Cooperative Partnerships: Secure a steady supply chain by partnering with local farmers and cooperatives.
- Example: AgroAmerica works with smallholder farmers in Central America, ensuring a steady supply chain and providing technical support to improve yields.
Research and Development Partnerships: Collaborate with research institutions for advancements in processing and preservation.
- Example: Cargill collaborates with universities and research centers to improve post-harvest technology, enabling longer storage and better processing techniques.
5. Integrate Technology and Innovation
Cold Chain Technology: For perishable items, use cold chain systems to maintain product quality from harvest to consumer.
- Example: FruitDay, a Chinese company, uses cold storage and logistics to deliver imported fruits and vegetables to Chinese consumers, ensuring product quality.
Smart Packaging and Data Analytics: Implement packaging that prolongs shelf-life and use data analytics to monitor and optimize supply chain efficiency.
- Example: Hazel Technologies produces packaging sachets that slow the ripening process of fruits, increasing shelf life and reducing spoilage in transit.
6. Financial Planning and Funding Sources
Detailed Financial Plan: Outline revenue streams, pricing, and expenses.
Funding Opportunities: Look for government subsidies, grants, and impact investors that support agro-based ventures.
- Example: Farmcrowdy in Nigeria raised funding by connecting investors with small-scale farmers, creating a profitable and sustainable model for all parties.
Seasonal Cash Flow Management: Plan around agricultural cycles to keep up with seasonal fluctuations.
- Example: Many grain storage businesses charge fees based on peak harvest seasons, creating a financial model that matches cash flow to demand.
7. Sales and Marketing Strategy
Educational Campaigns: Highlight the benefits of your value-added products, such as health benefits or environmental advantages.
Direct-to-Consumer (DTC) Channels: Use online platforms and farmer’s markets to sell directly, reducing intermediaries and boosting profit margins.
- Example: Farm Fresh in Malaysia runs an online platform for dairy products, connecting directly with consumers and reducing the middlemen.
Digital Marketing: Reach consumers via social media, email marketing, and digital content.
- Example: HelloFresh combines digital marketing with a subscription-based model, delivering fresh, pre-packaged meal kits that appeal to health-conscious urban consumers.
8. Quality Control and Compliance
- Implement Quality Standards: Maintain quality at every stage to ensure product safety and reliability.
- Regulatory Compliance: Follow food safety and environmental regulations to avoid legal issues.
- Example: Blue Apron follows strict quality controls, ensuring that the ingredients in their meal kits are fresh, sustainably sourced, and safe for consumption.
9. Measure Impact and Plan for Scale-Up
- Track Performance Metrics: Focus on key indicators like waste reduction, customer satisfaction, and market reach.
- Scalability: Expand operations by adding new products or entering new regions when you achieve success in the initial market.
- Example: Olam International scaled from a small cocoa trader to a global agri-business by diversifying into spices, nuts, and other commodities.
By following these guidelines and using real-world examples, aspiring entrepreneurs can create profitable and impactful businesses in the agro-based post-harvest sector. This approach not only addresses food loss but also adds value to agricultural supply chains, benefitting both producers and consumers.
Written By:
Dr. Mahinda Herath