1. SCALING OF INCLUSIVE BUSINESS IN AGRICULTURE Wytske Chamberlain & Ward Anseeuw Washington DC, The World Bank, « Land and Poverty » conference 14-18 March 2016

2. Overview  Methodology  Scaling concepts  Scaling in, out and up  Conclusion

3. Definition & Methodology A profit oriented partnership between a commercial agribusiness and low-income communities or individual, in which the low-income community or individual is integrated in the commercial agricultural supply chain as suppliers of land, produce or value-sharing employment with a particular aim to develop its beneficiaries.  Governance structure: unique hybrid organisations  Combination of instruments: collective organisation, supply contracts, mentorship, equity, lease/management contracts  Level of Inclusiveness  Dimensions: ownership, voice, risks, rewards

4. Scaling concepts  Scaling out  Increase number of beneficiaries within existing IB structure. Scaling out includes internal growth of the IB and replication of IB structure  Scaling up  Enhances the complexity of the IB through the application of additional instruments and stakeholders  Scaling in  Increases the level of inclusiveness for existing beneficiaries by intensifying dimensions of inclusiveness without changing overall IB structure

5. Status quo Benefic iaries Land ownerOperationOwner ship VoiceRiskRewardAver age Benoni1IndividualFarmer99677.75 Winterveld145IndividualFarmer77687 TNS/MM87IndividualFarmer86676.75 Mphiwe Siyalima1IndividualFarmer87576.75 Seven Stars36IndividualAg partner46686 Gxulu Berries200CommunityCommunity + partner 47565.5 New Dawn/ Dinaledi 1,615CommunityAg partner44575 Mondi420CommunityAg partner34574.75 BMB69IB 33554 THS3,000IndividualAg partner34533.75 Katmakoep5IBAg partner22543.25 Richmond1,615CommunityAg partner23332.75

6. Status quo  No direct relation between scale of IB and level of inclusiveness  Inclusiveness rather impacted by  Land ownership  Operational activity of beneficiaries  Highest potential for individual, active smallholders

7. Scaling in  Voice  Collective organisation can increase voice but at expense of individual  Equity = representation in BoD  Contracts/lease agreements compromise short-term decision making  In practice limited by  Entrenched power disparity  Lack of financial capacity leads to dependency on commercial partners  Capacity and capacity development

8. Scaling in  Rewards  Mentorship + equity increase skills  Collective organisation allow market access threshold volume  Contract and lease stabilise financial rewards  In practice limited by  Individual share of shared rewards small  Required investment into IB  Commercial partner not driven by inclusiveness

9. Scaling in  Ownership High for active smallholders  In practice limited by Lack of financing for individual smallholders Collective ownership does not stretch beyond land  Risks Alleviated by IB participation Indicates lack of inclusiveness  In practice Collective organisation: internal & external management Grant funding manages financial risk

10. Scaling out  Organic growth  Visible through: land under production, asset accumulation, turnover, number of beneficiaries  Limited by: financing, commercial viability, value proposition for smallholders  Replicability  Unique hybrids limit exact replication  Essence of models have been duplicated  Reluctance by commercial partners

11. Scaling up  Drivers for multi-instrumental IBs:  To overcome limits of individual instruments  Experience of previous IBs  Evolution of existing partnership  Contractual end-date  Capacity development/financial independence  Increases complexity but not necessarily inclusiveness  In practice development towards less inclusiveness

12. Conclusion  Impact of IBs depends on scale and level of inclusiveness  Outcomes highly diverse  Highest inclusiveness potential for IBs working with individual smallholder farmers, but hardest to reach size  IBs to be part of wider strategy for structural transformation

13. Thank you! Wytske Chamberlain & Ward Anseeuw University of Pretoria / CIRAD Email: Wytske.chamberlain@up.ac.za Ward.anseeuw@up.ac.za