Transforming

Agricultural
Supply Chains
Lessons learned in unlocking long-term value – from farmer to retailer
 Contents
This report was written by Alison Rodwell with input from the following contributors to whom we are most grateful:

Abbi Buxton, Andrew Wanliss-Orlebar, Anuradha Bhavnani, Bill Vorley, Chris West, David Bent, David Carrington, Fiona Gooch,
Jeroen Blum, Jo Chandler, Katie Critchlow, LaRhea Pepper, Larry Bush, Mark Sumner, Mike Barry, Pauline Burrows, Phil Chamberlain,
Richard Gomes, Roger Ong, Rosanne Gray, Sean Allam, Steve Wormald, Victoria Morton.

We would also like to thank Shell’s Creative Services team for the design and creation of this report.

Executive Summary i

1 Introduction 1

2 The Problem 2

3 The Need for New Enterprises 7

Case Study: The Better Trading Company 11
Case Study: CottonConnect14

4 Role of Shell Foundation 18

5 Learnings and Challenges 21

Case Study: Bright Futures at Haygrove Heaven 26
Case Study: Flowers29

6 Where Next?31

Shell Foundation is an independent charitable foundation which was established in 2000 and is funded by Royal Dutch Shell PLC*.
The views and opinions set out in this paper are those of Shell Foundation and not of any other person including Royal Dutch Shell PLC.

*The companies in which Royal Dutch Petroleum Company and the ‘Shell’ Transport and Trading Company, p.l.c, directly or indirectly own
investments are separate and distinct entities. But in this paper the collective expression ‘Shell’ is used for convenience in contexts where
reference is made to the companies of Royal Dutch Shell PLC. Those expressions are also used where no useful purpose is served by
identifying a particular company or companies.

© Shell Foundation 2012

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2

Executive Summary
Forty per cent of the world – over 2.8 billion people – make their living
through agriculture, a figure that rises to 80% in some parts of Africa
and Asia. Issues of poverty, economic growth, urbanisation, climate
change and food security are intrinsically linked to this sector, and are set
to become ever more pressing as the world’s population rises. This means
agriculture embodies some of the most urgent and significant challenges
to sustainable development of our time.
One of the greatest challenges faced by
developing world farmers is that of accessing
markets. For over 10 years, Shell Foundation has
been working to improve the livelihoods of farmers
at scale by applying market-based thinking to the
mechanics of global supply chains. Like many
organisations, our early interventions focused solely
on providing support to the farmers themselves; an
approach that offered little opportunity to generate
social or environmental outcomes on a global
level. But by working in partnership with farmers,
retailers and intermediary organisations across
supply chains, and by learning from successes and
failures over that time, we believe a holistic model
built on genuine business drivers has emerged
that can deliver large-scale benefits to developing
world producers in ways that are ultimately
independent of grant funding.
This report charts that journey, the key lessons
from our partnerships over this time and how this
learning has led to the creation of a new type of
enterprise that we refer to as a ‘Supply Chain
Connector’ – to catalyse more sustainable retail
supply chains and deliver widespread change
on the ground. We will review the common
characteristics of these new entities and consider
the impacts that they generate, the challenges they
face and how these models might be applied to
new markets and taken to scale for global impact.
i ii
A new approach
Back in 2002, Shell Foundation set out to catalyse
sustainable solutions to global development
challenges that could deliver outcomes at scale.
Like most, we started by thinking about the issue
from a farmer point of view and supporting
programmes designed to meet their needs – for
example addressing the agricultural skills gaps
(i.e. growing a high quality product reliably) which
prevent entry to markets and keep subsistence
farmers trapped in the poverty cycle.
In the three years that followed, these partnerships
across different markets and geographies delivered
some positive local benefits. But it became clear that
backing time-specific individual projects was never
going to achieve change at the scale we desired,
no matter how many we supported. We were
forced to think through our experience and come
up with a new way to understand the challenge.
Turning the problem on its head, we decided to
initiate a series of long-term strategic partnerships
between 2005 and 2008 with major retailers such
as Marks and Spencer (M&S), Woolworths South
Africa and European retailer, C&A, to understand
their business drivers and the challenges they face to
make their product supply chains more sustainable.
This work led to the first of two pivotal moments in
our journey: the realisation that major market failures
exist across agricultural supply chains. Retailers
themselves face significant challenges in mitigating
social and environmental risk, securing supply and
sourcing new products for their customers; and
typical supply chains are large, complex
and difficult to trace (at the most complex they
can involve a mix of farmers, aggregators, traders,
processors, manufacturers, import agents and high
street retailers, across several countries).
In this context, any sustainable market-based solution
would need to respond to commercial drivers at
every level. This meant analysing the problem from
the perspective of the whole supply chain, working
backwards down to the farmer and establishing
strong supply chain partnerships in the process.
Limitations in the current landscape
Impressive work from a range of actors including
NGOs, governments, trade bodies and retailers
themselves has led to many improvements in
agricultural supply chains, particularly over the last
three to four years – with several industry initiatives
and pilot projects to establish pre-competitive
collaboration, standards and certification across
a range of agricultural markets.
However our experience, and those of our partners,
suggest that two critical challenges to addressing
these market failures at scale remain: how to
connect fragmented supply chains and implement
best practice to deliver change on the ground;
and how to meet the needs of the retailer and
the supply chain, not just of the farmer, in order to
create sustainable change.
Shell Foundation began to explore ways to tackle
these problems alongside retailers, starting with a
three-year strategic partnership with M&S in 2005.
Having committed US$1 million to design and
implement programmes to support producers in the
M&S supply chain, we unearthed several win-win
solutions. M&S became the first UK retailer to sell
products made from Fairtrade cotton (mitigating
risks and serving ethically-minded customers) and
sourced new products such as Fynbos flowers from
disadvantaged communities in South Africa that are
still on the shelves today.
A similar partnership with C&A and Textile
Exchange (formerly Organic Exchange) to
understand the European retailer’s cotton supply
chain and develop capacity-building programmes
in local producer countries helped them sell over
32 million organic cotton garments in 2011 (from
zero in 2005) benefiting many thousands of Indian
farmers in the process.
Yet these types of one-to-one engagements were
also restricted in scope. Individual retailers and
donors were unable to establish the capacity
needed to implement programmes at scale after the
initial partnership had ended – or to replicate them
for the benefit of others in the industry.
This resulted in a second realisation: that dedicated
enterprises were required to take the lead in
connecting the chain on an ongoing basis,
as a prerequisite to implementation at scale
over the long-term.
Supply Chain Connectors – a new
type of business
Specialist organisations were needed to build
supply chain linkages where they previously didn’t
exist. They would play a key role to design and
deliver market-based supply chain solutions for
retailers that simultaneously improve the livelihoods
of developing world farmers.
■■ For the retailer, this solution helps to
mitigate risk, secure supply, deliver
efficiency gains, innovate and differentiate
to stay competitive through creating
transparency and direct relationships
■■ For the farmer, it helps to remove barriers
to entry into international markets and
create jobs and improve livelihoods by
developing the technical, business and life
skills to secure contracts, increase yields
and reduce costs
To do this, these organisations would need to
play a connecting role, linking markets to farmers
by creating strong partnerships throughout the
supply chain. They would also need to build the
infrastructure and capability to replicate pilot projects,
expand and operate at scale in multiple countries.
 In 2008 we called these innovative new
enterprises ‘ethical agents’. However, perhaps
a better description is ’Supply Chain
Connectors’ as they unlock long-term value
by connecting the chain from retailer to farmer.
There may be others in the supply chain who can
fulfil this role, at least in part, but in our experience,
in many cases – especially those chains with high
complexity and large numbers of actors − these
services are best offered by a separate enterprise
whose sole focus is the task of delivering this change
at scale in the most efficient way. The new enterprise
would target financial viability through earned
income to break a long-term reliance on subsidy.
From 2007 to date, Shell Foundation has co-
created several Supply Chain Connectors to
demonstrate the potential impacts that these
models can deliver. These reflect a broad range
of crops and structures in agricultural supply chains.
While clearly there is no one-size-fits-all solution,
the same model can be modified to benefit
smallholder growers of commodity crops, or high
value/low volume crops, or workers on commercial
farms who are arguably more vulnerable.
Chillis grown by smallholder farmers in Zimbabwe for use
in Tabasco® sauce
iii
Over this time SF has worked with several partners to
design solutions to reflect this diversity of crops and
structures in agricultural supply chains. These include:
■■ CottonConnect, a social business that
works with leading retailers and brands
to enable them to create more sustainable
cotton supply chains. Established in 2009,
CottonConnect has already improved over
250,000 livelihoods in India and China
through its work with several high-street
brands including C&A and John Lewis.
www.cottonconnect.org
■■ The Better Trading Company, an
enterprise that nurtures horticultural and
agricultural entrepreneurs in southern and
east Africa, providing training and business
support, and brokers supply contracts
with leading retailers and international
markets. Established in 2007, The Better
Trading Company has improved 24,000
livelihoods and has secured contracts
with major European supermarkets and
McIlhenny Company, the makers of
Tabasco® sauce.
www.thebettertradingcompany.com
■■ Haygrove Heaven’s Bright
Futures programme, a pilot
Programme to enable farm labourers
at a South African berry farm to learn
entrepreneurial skills and spin-off their own
businesses (while increasing supply of a
high-value product for local and export
markets). Still in its infancy, the multi-year
programme has delivered life-changing
training to 50 participants, several of
whom now run their own business.
www.haygrove.co.uk/haygrove-
development/current-projects/bright-futures
A farmer training session conducted by CottonConnect in India
Two of the three solutions have now been taken
to the stage of forming dedicated Supply Chain
Connectors and are now operating across many
countries and delivering impact at scale. While
each model is different, we see three important
common characteristics:
i) Supply Chain Connectors design and deliver a
new package of services to the existing supply
chain which are designed to meet the needs of
both farmer and retailer;
ii) Supply Chain Connectors connect the chain
from retailer to farmer, building strong supply
chain partnerships and linkages to facilitate
implementation; and
iii) Supply Chain Connectors provide tailored
services to meet the changing needs of the
supply chain over of a period of several years.
This is a key element to unlocking long-term
value – too many interventions are short-term
and lack the continuity of support that is
required for farmers to be successful. There are
no quick fixes to these complex challenges.
Building global Supply Chain
Connectors
Organisations that can meet all these requirements
do not typically exist, and cannot easily be
retrofitted within existing organisations. We
found ourselves having to co-create entirely new
businesses that target environmental and social
return in addition to the financial return necessary
to fund their operations and growth.
Our partnerships are still ongoing, with many
challenges still to be overcome, but we have noted
several common lessons from building Supply
Chain Connectors that may be relevant for others
in the sector. These resonate with our experience in
creating and growing social enterprises in a range
of different sectors.
1) Partner selection is key. The new enterprise
is designed to be capable of operating at scale
over time, expanding operations to multiple
customers, geographical locations and/or
products. In order for all this to be achieved,
both entrepreneurs and their early-stage
supporters must share the same vision for scale,
blended returns and financial viability –
plus complementary skillsets to deliver
this successfully.
2) It takes considerable time and levels of
funding to create a Supply Chain Connector.
Co-creating new business models that operate
in difficult, unchartered territory is a high-risk,
high-reward process. It requires sustained
financial support over a number of years, to trial
new models, refine them, start a business and
then to reach viability – after which additional
sources of finance will be more readily
available. Shell Foundation has invested over
US$13 million in seeking to transform agricultural
and craft supply chains over the last 10 years.
3) A wide range of business support is
required to build the necessary capacity to
operate at scale. We have had to take a
very active hands-on role to provide this. This
includes helping our partners develop sound
business plans and performance metrics to
target financial sustainability and scale of
impact; building the capacity to operate across
multiple regions (e.g. recruiting high calibre
talent, creating back office systems and risk
controls); supporting the transition from grant to
earned income; helping to secure commercial
financing when appropriate and continuing to
play a governance role long after any grant
relationship has ended.
iv
 4) The pathway to scale and sustainability is
not linear or predictable. In short, this work
is not easy. Any new enterprise is fragile and
vulnerable in the early years – and our partners
often meet obstacles that take considerable
effort and collaboration to overcome. Again this
illustrates the high risks associated with this work
– even if you make all the right decisions things
may not go as planned.
With regard to this last point, we discuss several of
these challenges and failures in this report for two
reasons. First, we see failure as integral to learning
and continuous improvement. Second, we see
risk as a natural feature of a disruptive, catalytic
approach – and we believe this approach is
necessary to pursue impact on a global scale.
We take every step possible to mitigate these risks
(and have a high success rate as a consequence)
but sometimes failure is unavoidable.
For example, one partner, The Better Flower
Company (TBFC), an independent Supply Chain
Connector for the flower industry that we co-
created between 2007 and 2011 exemplifies this.
TBFC was established on the back of the successful
sale of South African Fynbos flowers to M&S and
UK-retailer Waitrose – a specialist international
broker that would offer a range of training and
expertise to flower farmers across Asia and Africa.
Over the course of four years, Shell Foundation
helped TBFC to steadily grow its business. In 2011,
with a need for working capital to expand the
UK import agent handling capabilities to pave the
way for higher volumes and new products (such as
gerbera and roses from India) to meet a big new
retailer order that would take them to break-even,
TBFC sought a US$700,000 loan from Charity
Bank (with Shell Foundation acting as guarantor).
However, just months after this, a number of factors
such as delays in new customers placing orders,
operational challenges with taking on a new supply
base on a new continent and intense competition
with existing suppliers, meant that TBFC encountered
major cashflow issues and were forced to liquidate
the business.
From this we learned that there are inherent
risks involved when small entities sell direct to
multinational retailers – exposing them to significant
and unpredictable fluctuations in price, quantity of
v vi
orders and delays. We would, with the benefit of
hindsight, suggest choosing a lower risk business
model initially, (without the high overheads of a
UK-based import facility), such as partnering with an
aligned existing import agent. That said, we believe
that TBFC was the right business to back to test a
direct selling model in order to increase benefits to
producers, as they had the right product and strong
market demand. If these variables had gone slightly
differently, or had not all occurred at once, TBFC
may have reached break-even and secured
a permanent place in the market.
But while there can be limitations of this kind with
a market-based approach applied to agricultural
supply chains (i.e. where significant environmental
or social externalities exist or if prices of agricultural
products are artificially kept low with subsidies),
we still find compelling evidence for the impact that
Supply Chain Connectors can generate. When
these models work you have a vehicle
with the capacity to deliver substantial
social and environmental benefits on
a global level, and in a way that is
financially viable over the long-term.
Transforming agricultural supply chains:
three routes to scale
Through our partnerships and experiences we see
three distinct models of Supply Chain Connectors
emerging which can be adapted or even blended
depending on the principal characteristics of the
supply chain, be it commodity, high-value crop or
contracted labour. In 2011, Shell Foundation and
Forum for the Future launched a comprehensive
review to see if any of these models could have
applicability in other supply chains and to identify
these sectors. The exercise revealed three potential
routes to achieve scale:
i) Grow existing Supply Chain Connectors.
ii) Replicate Supply Chain Connectors in other
industries or geographies or situations with
common social/cultural challenges.
iii) Engage enablers of scale i.e. entrepreneurs
(e.g. through business schools), organisations
that could support them (industry bodies or
development organisations) and potential early
adopters (retailer/brand customers).
Together we established a series of tests to
determine if a Supply Chain Connector would
be well suited to a particular agricultural sector,
and these are described in the report. Using this
methodology we identified several sectors that could
potentially benefit from this approach, for example:
■■ The commodity model illustrated by
CottonConnect could be applied to other
products with long supply chains with a
lack of transparency, many smallholders,
high risk sustainability issues and difficulty
implementing standards at scale
(e.g. cocoa, tea or even palm oil).
■■ The high value crop model illustrated by
TBTC might be attractive for brands needing
traceability and a ’story of origin’ for one of
their key products or for markets struggling to
source sufficient volume of product.
■■ The contracted labour model illustrated by
Bright Futures could be applied to other
commercial farms growing high value
export crops with expanding markets
(such as certain vegetables, flowers or wine).
We also identified several sectors outside
agriculture that faced similar challenges. For
example, the commodity model could be
applicable to mining or electronics where supply
chains are long and the sustainability issues are
predominantly at the start of the chain.
Greater collaboration
Our experience suggests a need for multiple Supply
Chain Connectors in different sectors to set up the
necessary infrastructure to transform supply chains
at scale. Yet very few of these organisations exist.
In order to create them, we will need a far deeper
interaction and longer-term collaboration between
three sets of partners:
1. Entrepreneurs with a vision for
scale and blended financial, social and
environmental return.
2. Donors, investors, governments
and philanthropists who can share
risk and provide finance and critical
business support over the long-term.
3. Early-mover retailers or high
street brands that are prepared to
become initial anchor customers in order
to build momentum.
These would be supported by key intermediary
and implementation partners, build on the relevant
industry initiatives and use established accreditations
where appropriate.
Our experience has shown that Supply Chain
Connectors are complex to create but – with no
quick fix at hand – we need to think differently to
create hundreds of these organisations and to help
them deliver impact at scale.
If we are serious about moving beyond successful
pilot projects, about unlocking long-term value
from farmer to retailer and about reaching billions,
not millions, of people then we need catalytic
organisations to refine, incubate and scale these
models. Shell Foundation stands ready to work with
and learn from others to try to make this happen.
 Introduction
Shell Foundation’s objective when it was founded in 2000 was
to catalyse scaleable and sustainable solutions to global development
challenges.
We have pioneered an enterprise-based approach
which was new at the time and several aspects
of this approach emerged from a review of
success and failure which are equally applicable
to our work in agricultural supply chains.1 This is
essential as a market-based approach is the route
to achieving scale and sustainability, given limited
availability of grant funding.
To highlight the most significant, Shell Foundation
(SF) firstly selects a development issue where a
market-based approach can have an impact,
before selecting a new partner who shares an
aligned vision of scale. We then work to support
this partner to create an enterprise with a business
model which has the potential to become
sustainable itself e.g. pioneering a new package
of services which haven’t been combined before
in that sector. A strong market-based approach
underpins the design of the business model
which targets earning income and reduces grant
dependency in order to become financially viable
over time. Our experience showed that it might be
5-7 years before financial viability is reached and
SF continues to play an active role supporting the
enterprise both with considerable investment and
what we refer to as ’more than money’2 assistance
during this period.
However, one individual enterprise reaching scale
is not in itself enough – we need wider industry
replication before we can have a significant impact
on the particular development issue in question
and we have taken some tentative steps in this
direction. Our approach in itself is evolving as we
1 2
1 The Problem
are learning how we can best act as a catalyst in
a range of development sectors.
This report is an in-depth study of how we
applied this approach to one global development
challenge in particular – the challenges faced by
developing world farmers accessing global markets
Why agriculture?
We selected agriculture given its pre-eminence
as a global development issue both socially and
environmentally. 40% of the world makes their
living through agriculture, rising to up to 80% in
parts of Africa and Asia, and 13.5%3 of global
greenhouse gas emissions (GHGs) are attributable
to agriculture. It also significantly impacts the
nitrogen cycle and is an area of increasing
importance given the interconnected challenges
of land, energy and water use. In addition, a
rising global population and increasing middle
class consumption aspirations further increase
the demands on agriculture. It was also seen as
an opportunity for SF to apply a market-based
approach using its understanding of global supply
chains to address market failures affecting one of
the most significant development issues.
1 This review was shared in detail in our 10th Anniversary
Report in 2010 ‘Enterprise Solutions to Scale – Lessons
learned in catalysing sustainable solutions to global
development challenges’ available at
www.shellfoundation.org
2 See Section 4 for further information about our ‘more than
money’ approach
3 IPCC Report http://www.ipcc.ch/pdf/assessment-report/
ar4/wg3/ar4-wg3-ts.pdf
2
Agricultural challenges came to our attention very early on. In common
with many development organisations, we started by analysing the
problems from a farmer point of view and funding solutions designed
to meet their needs. This traditional development approach could be
described as a ‘farmer-facing approach’.
Challenges from a In addition there are external factors (like climate
change) which are especially important, as due
farmer perspective
to lack of access to irrigation systems, many
As we funded these projects, the broader
farmers are dependent on rain fed agriculture.
challenges faced by developing world farmers As well as this, common industry practices such
became clearer. They are often excluded from as not procuring with contracts, lead to farmers
organised markets, mainly due to a significant skills
often taking a disproportionate share of the risk
gap which prevents them delivering the product
for poor financial rewards. Coupled with the fact
the market wants reliably, timely and in the right
that landholdings are often very small (less than
quantity. The skills gap is threefold:
one hectare) because of the division of land over
the generations, they are potentially not financially
viable. This can often result in the disillusionment of
1. Agricultural skills, i.e. how to grow a
the next generation who tend to view agriculture as
quality product reliably, with the most cost-
effective inputs, using less pesticides and an unattractive career and choose to move to cities,
water and the latest farming expertise, which in turn contributes to rapid urbanisation.
that will result in the best yield possible
given their soil and climate conditions.
2. Business skills, i.e. an in-depth
understanding of what the market values,
such as a reliable, timely, quality product
with certain technical attributes (which
will command a higher price) and the
relevant accreditations. As well as an
ability to plan and financially analyse
the alternative opportunities such as local
versus export markets.
3. Life skills ranging from soft skills such as
negotiation and communication, to hard
skills such as computing.
Once sown, cotton seeds take two years to arrive on shelf
 Challenges of a
project-based approach
Despite some individual project successes4 and
gaining a deeper understanding of the challenges
faced by farmers, we realised that funding
individual projects was not going to achieve the
change at scale that we were targeting, no matter
how many projects we funded. We would remain
in ‘project mentality’ with benefits limited to the
initial beneficiaries and the projects themselves at
pilot stage with no means of replication once the
initial funding had run out. There was also the risk
of distorting the market.
Therefore in 2005 SF began to analyse the
problem from the perspective of the whole supply
chain, rather than simply that of the farmer.
The number of steps in each supply chain varies
and may span several countries, but as an example
typically farmers may sell to aggregators who may
sell to a trader. The trader then sells to a processor
or manufacturer before exporting to an import
agent who in turn sells to the high street brand or
retailer. Any solutions designed at farm level need
to take this into account, ensuring the sustainability
of the supply chain as a whole. SF’s next step was
to understand the challenges at the consumer facing
end of the supply chain – the retail market − and
then work backwards down the supply chain to the
farmer, establishing strong supply chain partnerships
in the process.
Challenges from a
retailer perspective
By working in partnership over 3-4 years with
several retailers including M&S, Woolworths
South Africa and C&A, the environmental and
social challenges from their perspective also
became clearer. Retailers buy products from their
manufacturers but there are often environmental
and social issues at the start of the supply chain
at farm level. These range from the incorrect
use of pesticides and fertilisers, to what is often
culturally accepted child labour. This then creates
a reputational risk which is difficult to mitigate, in
addition to actually working towards the necessary
4 During this time we worked with some excellent organisations in Africa and India such as Agrocel, the Indian farm services provider
(who we continued to work with) and Fruits of the Nile, the Ugandan dried fruit supplier in partnership with Tropical Wholefoods.
3 4
also significant environmental and social externalities Having considered the challenges faced by
resulting in artificially low prices of agricultural farmers, retailers and the broader supply chain
“For me it was a fundamental products, a lack of sustainability and unsustainable context, it is also helpful to consider the response
consumption (this is discussed further in Section 5). from others to these challenges.
turning point when we
decided to start working with
retailers and understanding
their challenges in order Diagram 1
Supply Chain Structure in Europe
to design solutions to best
support their producers.”
Chris West, Director Shell Foundation. 160,000,000 Consumers: 160,000,000
Customers: 89,000,000
improvements on-the-ground. External factors such
as climate change and water scarcity in a context Outlets: 170,000
of growing global demand for products also mean
there will be challenges to secure supply of some Supermarket formats: 600
key crops in future − crops that are critical to the
ongoing viability of their business. 110 Buying desks: 110
In addition, when the retailer tries to intervene, Manufacturers: 8,600
this opens up a further set of challenges for them
and their supply chain partners operating in very Semi-manufacturers: 80,000
different contexts and cultures (these are discussed
further in Section 3). These challenges do however
Suppliers: 160,000
also provide opportunities to innovate and
differentiate from the competition. 3,200,000 Farmers/producers: 3,200,000
The supply chain context Source: H Grievink (2003), The Supply Chain ‘Bottleneck’ in Europe
If you look closely at the middle of the supply chain
it is often fragmented in addition to the defining
features of length and complexity which vary
by product. This results in a lack of visibility and
transparency and makes the origins of the agricultural “The most significant challenges faced by M&S sourcing agricultural
product unknown, resulting in communication
products from the developing world are firstly traceability, i.e. making
challenges along the chain. As Diagram 1 illustrates,
power is often in the hands of a few buyers and sure you know what you are buying from where; secondly the need
traders. This often results in an inequitable sharing for one common sustainability standard for each product; thirdly,
of financial rewards which do not reflect the risks
taken by each player. The farmer often takes a
the challenge of practically working on-the-ground with hundreds
disproportionate amount of risk – such as operating of thousands of smallholders to help them all achieve best practice;
with no contracts and therefore having to plant crops and lastly the structure of the supply chains themselves e.g. the more
months in advance without knowing what the market
will want and pay at the time of harvest − which
middle men in the chain the harder it is to achieve a sustainability
he is the least best placed to manage. There are outcome at farm level.”
Mike Barry, Head of Sustainable Business, Marks & Spencer.

“What retailers want is a
supply chain they can trust
with products they can trust,
information they can trust, and
a story they are proud of, at
low cost.”
Andrew Wanliss-Orlebar,
Sustainability Innovation Expert.
Supply Chain Initiatives
This gives some examples of the most significant
types of initiatives which have been led or strongly
supported by the supply chain itself. As discussed
in Section 2, each has brought its own unique
contribution and they are important to include in
any gap analysis.
Pre-competitive collaboration has
■■
an important role to play such as roundtables
and industry bodies (e.g. Textile Exchange,
Sustainable Apparel Coalition, Sustainability
Consortium, Global Social Compliance
Programme (GSCP)). These have enabled
brands to come together to agree priorities.
For example, the Nike-developed Sustainability
Index has been adopted by the Sustainable
Apparel Coalition which already represents an
estimated 30% of the global apparel market.
This enables a common supply base to have
clarity as to where they should focus their efforts.
■■ Setting standards: industry initiatives
generally focus on setting baseline standards
− e.g. BCI (Better Cotton Initiative) and RSPO
(Round Table on Sustainable Palm Oil).
5 http://www.msc.org/business-support/key-facts-about-msc
5 6
How have others responded?
There have been many initiatives which have
particularly gathered pace in the last 3-4 years.
The ‘Supply Chain Initiatives’ box gives examples
of the most significant of these. Pre-competitive
collaboration leading to standards and voluntary
indices have helped to define what best practice
actually is both environmentally and socially.
Whilst individual brand targets and third party
certification with on-product labels have helped
communicate with the consumer and raise
awareness of the issues, in addition to contributing
to the momentum for change.
■■ Certification systems such as Organic,
Fairtrade, and Rainforest Alliance are typically more
stringent and focus on addressing a particular
issue such as “a better deal for developing world
farmers” (Fairtrade). These have often been created
with donor grants, and certification costs are
subsidised for the poorest farmers. The challenge
is to achieve sufficient market penetration for a
tipping point to be reached within the industry.
Examples of Product Certification systems with
good market penetration are wood, with over
40% Forest Stewardship Council (FSC) certified in
Europe and North America, and Fish, with over
11% Marine Stewardship Council5 (MSC) certified
or in full assessment worldwide.
■■ Individual retailers and brands have set
their own internal targets such as M&S’s Plan A
and Unilever’s Sustainable Living Plan combined
with a range of supporting pilots. In addition,
brands have made specific commitments to
smallholder inclusion in their supply chains, such
as Unilever and Walmart. Individual brands
have also set up their initiatives, often where the
commodity is key to the success of the brand
e.g. Starbucks’ CAFÉ practices which enable
the farmer to improve quality and hence also
income. These targets and initiatives increase
competition and help to increase the momentum
for change at an industry level.
Looking outside the supply chain, donors have
typically focused on funding farmer training
(’extension work’), creating co-operatives to empower
farmers and supporting certification systems such as
Fairtrade or Organic.
NGOs such as WWF have spearheaded roundtables
to promote pre-competitive collaboration, and networks
such as The Global Forest and Trade Network
(GFTN) 6 in order to make the necessary market
linkages to implement the agreed standards. Others
have focused on advocacy and lobbied governments
for appropriate regulation for the standards to become
mandatory. There have also been UK Department for
International Development (DFID) challenge funds such
as the Food Retail Industry Challenge Fund (FRICH)7,
which are more opportunistic in nature, matching
funding of projects by retail and supply chain partners.
Other approaches include use of intellectual property,
branding and farmer ownership in order to re-distribute
more value to the farmer e.g. Divine Chocolate.
Common obstacles
Many of these responses have hit common obstacles
in implementation at scale. Who actually connect
the supply chains from retailer to farmer and then
Broader challenges the industry faces
There are many trends and issues, often at global
level, which impact upon agricultural supply
chains. Any solutions we support need to take
these issues into account in order to address the
long-term sustainability of the supply chains, whilst
at the same time focusing on those factors which
are actually within the control of the supply
chain – where we can have a measurable impact.
So solutions supported by our partners may focus
on one aspect of an issue. For example, access
to crop insurance or drip irrigation as a means of
mitigating climate change, or improving the income
and future prospects of farmers to ensure a living
wage and reduce the drive to urbanisation.
6 http://gftn.panda.org
7 http://www.dfid.gov.uk/work-with-us/funding-opportunities/business/frich/
8 See ‘Fair Miles – Recharting the Food Miles Map’, an IIED Publication in association with Oxfam, Kelly Rae Chi, James
MacGregor and Richard King for a discussion of one of the related sustainable consumption issues of transporting product from
Africa http://pubs.iied.org/15516IIED.html?k=fair miles
implements the standard with the farmers once
it has been set? Who creates infrastructure to
do this recognising that each supply chain may
touch millions of farmers? We will consider these
questions in the next section.
We recognise that we are viewing the problem
through a particular lens – the supply chain lens
– with the primary goal of improving the lives
of the farmers. There are many broader global
challenges which impact on, and are impacted
by, agricultural supply chains that we are not able
to address fully, for example those associated with
climate change. Broader challengers the industry
faces box outlines these further.
“the biggest challenge is youth
turning their back on growing
food staples...”
Bill Vorley, Principal Researcher, IIED.
These are some examples of the broader issues:
■■ Increasing urbanisation: the young are
leaving the land which is resulting in greater
food insecurity;
■■ Climate change;
■■ Country-specific legal issues such as
land rights;
■■ Government subsidies distorting markets;
■■ Legislated labour rights, for example
ensuring a living wage for contracted and
seasonal labour and childcare for women;
■■ Sustainable consumption, given context
of a growing global population with aspirations
of a more resource-intensive diet and purchase
patterns8.

The Need for
New Enterprises
Developments in transforming agricultural supply chains have moved on
very quickly over the last 3-4 years, with pre-competitive collaboration,
standard setting and successful pilots all contributing significantly.
However, two key challenges remain. How to actually implement change
on-the-ground at scale connecting the often disconnected supply chain
process and how to bring sustainable change that meets the needs of the
retailer and the supply chain, not just of the farmer.
SF started funding pilots in order to gain
understanding of what works in practice, starting
with farmer focused projects (2000-2005) and then
progressing to retailer focused pilots (2005-2008).
These were then evaluated in terms of social and
environmental impact, financial sustainability,
replicability and potential for scale. Win-win
supply chain solutions were found, for example as
a result of the SF/M&S Partnership. This was the
first SF retailer partnership launched in 2005 after
a rigorous selection process, with SF committing
US$1m to invest in producers in the retailer’s supply
chain. For SF it was part of its vision to see global
development challenges successfully tackled through
the widespread application of business thinking
and business approaches. For M&S, it was an
opportunity to support developing country producers
and deliver exciting, new products to its customers.
9 The Fresh Report, a joint SF–M&S publication – outlined
the learnings of the three year partnership. It can be
downloaded from www.shellfoundation.org. The
partnership also identified eight key practical lessons
which were tailored and applied to different players –
donors and NGOs, retailers and commercial agents,
developing world producers and ‘Ethical Agents’.
7 8
3
Connecting the chain
In each case we identified a need for a separate
dedicated enterprise in order for this to be
replicated. That is to establish the necessary
capacity to both replicate and implement at
scale, long after the initial partnership had ended,
temporary teams had been disbanded and key
individuals had moved on. It was also necessary
to replicate the changes in the next retailer’s
supply chains or with a different product.
This was reinforced by learnings from our other
retailer partnerships and we will shortly look at
some examples.
We realised that building the supply chain linkages
where they previously didn’t exist and creating new
on-the-ground partnerships was key, so too was
developing understanding of the issues amongst
the supply chain partners. To illustrate, some buyers
had been purchasing for 10, 20 even 30 years
yet had never visited the farmers growing the raw
materials. This meant they were not able to gain
insights into their own challenges whilst farmers
didn’t understand why quality was so important
because they didn’t know what happened to
Through the three year partnership, M&S became
their crop after the middleman purchased it. We
the first major UK retailer to sell products made
recognised the need for someone to take the lead
from Fairtrade cotton, improving the livelihoods
in connecting the chain on an ongoing basis as a
of more than 1500 Indian farmers by 2008.
prerequisite to implementation at scale.
This was in partnership with India farm services
provider Agrocel and existing M&S textile supply
chain players. A new product – in partnership with
Flower Valley Conservation Trust and its newly
created commercial arm Fynsa − was also brought
to M&S’s customers via a new supply chain.
More than a million bouquets of flowers, harvested
and packed by workers from poor communities in
South Africa, were sold by 2008, creating more than
135 sustainable jobs and helping to protect 30,000
hectares of biodiversity-rich land. This product is still
on the shelves today.9
In each case the new enterprise may look
significantly different but has a similar role:
■■ Firstly designing and delivering market-
based supply chain solutions for
the retailer, which also improves the
livelihoods of developing world farmers.
For the retailer this solution may help to
mitigate risk, secure supply and innovate
and differentiate to stay competitive
through creating transparency and direct
relationships. Whilst for the farmer it
may help to remove barriers to entry into
international markets and create jobs and
improve livelihoods through developing
technical, business and life skills.
■■ Secondly playing a connecting role,
by linking markets to farmers through
creating strong partnerships throughout
the supply chain.
■■ Lastly it has the infrastructure and capability
to replicate pilot projects, expand and
operate at scale in multiple countries.
Who can play this role?
There may be others in the supply chain who can
fulfil this role, at least in part, but in our experience
– especially in cases of high complexity − these
services are best offered by a separate enterprise
whose sole focus is the task of delivering this
change at scale, in the most efficient way.
Retailers and high street brands can commit
significant time to ensure pilots can be successful,
given the business case, but often do not have
the in-house resources to do this at scale.
There are also a range of challenges unique
to implementation which one is faced with –
traceability, language, cultural differences such
as timeliness of communication − that require
much time and patience, which is often not
possible with the tight deadlines of running a
retail business. As well as this, retailers may not
want to become involved so closely in the lives
of farmers, committing to purchase product which
they then may not be able to source due to
market fluctuations.
 Also, farmer-facing support organisations may
decide to retain the focus of their expertise in
specifically meeting the farmers’ needs and not
aspire to recruit the skill-sets to build the necessary
strong relationships further up the chain (like sales,
marketing, planning and finance). Similarly, donor
funded extension services primary focus is also at
the farm level and usually has a project focus with
a contracted timeline.
Those in the middle of the chain are usually profit
maximising enterprises and not best placed to
consider the long-term needs of the farmers, which
is what charities typically focus on without the
broader remit to consider the markets needs.
‘Supply Chain Connectors’
At the time of the SF/M&S Partnership report
‘Fresh’ in 2008, SF called these innovative new
enterprises ‘Ethical Agents’. We are aware it is
an imperfect term, which can be confused with
a traditional supply chain agent, but some find it
useful nonetheless. Other descriptions could include
social enterprises as they typically maximise social
and environmental impact whilst targeting sufficient
earned income to become financially viable over
time. However perhaps a better description is
’Supply Chain Connectors’, as they design
and deliver market-based supply chain solutions to
unlock long-term value, connecting the chain from
retailer to farmer.
Designed for a range of
agricultural supply chains
Agriculture is diverse, with development solutions
often focusing on smallholder growers of
commodity crops, but there are many opportunities
in high value-low volume crops as well as
challenges for workers on commercial farms.
“If you outsource it to specialists
who don’t have competing
demands on their time you are
more likely to get it done.”
David Bent, Forum for the Future.
9 10
Wage labour on commercial farms arguably is Defining features of the We will discuss Shell Foundation’s role in detail in
more vulnerable, has fewer opportunities than Supply Chain Connectors the next section, but would highlight here that we
smallholders and is predominantly women. They target the initial grant money to put foundations
are often only offered seasonal work and migrate The case studies of CottonConnect and TBTC in place for financial sustainability and scale e.g.
for harvest. Commercial farms are easier to identify case studies that follow, illustrate some of the recruiting the necessary high calibre talent, creating
in retailers’ supply chains, hence there are many defining features of these new enterprises. For the back office infrastructure (i.e. finance, legal,
opportunities to work with wage labour. example they design and deliver a new package HR etc). The enterprise’s business model targets
of services to the existing supply chain (which earned income which enables it to reduce
typically hadn’t been combined before) which dependence on grant and become financially
are designed to meet the needs of both farmer sustainable over time. Alongside the financial
“Wage labourers are and retailer, creating a market-based supply chain return, an environmental and social return is similarly
often more marginalised solution. They connect the chain from retailer to targeted, most importantly at farm level. The new
farmer, building strong supply chain partnerships enterprise is designed to be capable of operating
than smallholder farmers and linkages to facilitate implementation. The
at scale over time, expanding operations to multiple
(particularly female labourers) services offered are tailored to meet the needs customers, multiple geographical locations and/
of the supply chain as they change and progress
and yet are rarely the focus or products. In order for all this to be achieved, the
over of a period of several years as there are no enterprise must be run by entrepreneurs with aligned
of agriculture development quick fixes to these complex challenges. This is vision of scale and social and environmental impact
interventions.” one of the keys to unlocking long-term value, as so in addition to the skill set to deliver this successfully.
often interventions are short-term and there isn’t the
Abbi Buxton, Researcher, IIED. continuity of support that is required for the farmers
to be successful.
Similarly there are opportunities in high value crops
which have sometimes been overlooked, given the
focus on finding solutions for commodities. High Diagram 2
value crops are however more complex. They often Range of Agricultural Supply Chains
need investments in irrigation and cold chains, and
require very specific inputs but often require less
land to be economically viable. They also require Smallholders
a more highly skilled workforce, but there is higher
potential income for farmers with opportunities for
processing and further value addition at source.
Additionally, they may provide opportunities for rural
youth to find a more aspirational career in farming.
SF has now developed three models to illustrate
how Supply Chain Connectors can work in very
different parts of the agriculture sector. In Section 5 High Value Crops Bulk Commodity Crops
we will consider two case studies of Supply Chain
Connectors – CottonConnect (creating sustainable
cotton supply chains in the commodity sector) and
The Better Trading Company (TBTC) (connecting
retailers with agricultural entrepreneurs growing
high value crops) − and consider Bright Futures Bright
(based on a commercial farm) which is still at Futures
pilot level. These have been developed from our
learnings post 2008 and have been designed to
reflect the diversity of crops and structures in the
agricultural supply chains. Diagram 2 illustrates
Commercial Farms
their relative positioning.
 CASE STUDY:
The Better Trading Company

The Better Trading Company (TBTC) aims to create a dynamic enterprise

to connect leading retailers and markets with exceptional horticultural
and agricultural entrepreneurs in southern and east Africa.
BUSINESS MODEL
TBTC10 partner with the market to identify their
product requirements, which is the starting point.
Using their local and agricultural knowledge they
then identify suitable sourcing areas and producers,
both small-scale and commercial. For small-scale
farmers they provide extensive agricultural training
− from planting to harvesting and access to
high quality inputs − and build their capacity to
develop their farming as a business, rather than
subsistence farming.
Diagram 3
Business Model
From field... ...to factory... ...to kitchen.
TBTC provide a guaranteed market at a price
agreed upfront to the producers with complete
CRITICAL SUCCESS FACTORS SF grantees provide quarterly reporting which
transparency in costings and on how the margin mirrors that required to run their business, including
These include TBTC’s market driven model, i.e.
is shared. They also conduct a baseline study with financials, Key Performance Indicators and traffic
starting with demand and then matching supply. In
interviews to identify farmers’ needs and put in light style reporting against action plans with key
this way there is a clear value proposition to both
place action plans. These help to identify simple milestones. The emphasis of SF’s role has changed
the market and the farmers. It is also critical to form
actions like helping to open bank accounts to over time towards a governance role, specifically
strong partnerships with aligned developed world
ensure women’s earnings are safe. TBTC also seek supporting longer-term financial planning and
sourcing and import agents to connect the chain.
out value addition opportunities like drying and helping TBTC progress to the next phase of
packshed facilities, to ensure the right quality for financing – post grant.
The team has extensive export business, agriculture
export. Diagram 3 illustrates further how it works.
and on-the-ground African experience. This enables
them to target holistic and effective intervention
throughout the supply chain, from production to AMOUNT INVESTED:
harvesting and exporting. There is also a continuity US$3.3m over 5–6 years
of support from season to season.

RESULTS:

Identifies potential sourcing
areas and producers
Processor/
Aggregator
Value Addition
Agrees price and volume
upfront with farmer
Conducts a baseline study
to identify needs
Provides agricultural and
business support
10 www.thebettertradingcompany.com
Partners with import agents
and identifies demand
Export Agent Import Agent
Performs quality control
(& outsources value addition)
and export
Provides feedback to
The Better Trading Company
SHELL FOUNDATION’S ROLE ■■ 4750 people with direct increased
incomes; 24,000 livelihoods improved.
SF’s role is discussed in-depth in Section 4.
Aspects to highlight here include: ■■ Over US$1.1m of co-funding leveraged
Retailer/ including a Technoserve Prize, DFID-FRICH
Consumers
Brand fund award, a USAID award, a Root
■■ SF’s initial support for the development of Capital loan and a customer loan.
the business plan and financial projections
■■ Products in a range of supermarkets
which are required as the main part of
including ASDA, Albert Heijn, Carrefour,
grant application process;
Dansk Supermarked, REWE and ICA.
■■ linkages to potential partners, financiers
■■ Strong partnership developed with
and retailers, for example through the
SafariFresh, a European sourcing agent
M&S partnership; and
with an aligned vision.
■■ input to strategy − for example hosting
■■ Chilli peppers sourced from Zimbabwe for
a Business Plan Challenge Session with
Tabasco® sauce.
external business experts to help refine the
business model as it evolved over a 2-3
year period.

11 12

“Introductions to M&S, that’s
more than money, networks,
connections, personal input
by SF people, it wasn’t “here’s
your money and I need a
report relationship”, far from it!.”
Steve Wormald, TBTC Managing Director.
WHERE NEXT?
TBTC plan to grow to sustainable levels of volumes
with existing customers, continuing to demonstrate
added value to both customers and farmers,
seeking out new markets and sourcing other high
value crops. For example, as a component of
TBTC’s strategy to develop new key accounts this
coming agricultural season TBTC will be supplying
Nandos with African Birdseye Chillies. Should the
2013 season prove successful, both TBTC and
Nandos will look to explore additional smallholder
sourcing opportunities that may exist within the
Nandos’ supply chain.
There is also the potential for the model to be
replicated in other high value crops in other
geographies. The challenge is finding opportunities
that both generate net gross margin and realise an
impact with smallholder farmers. In practice, TBTC
have needed to balance product from commercial
farmers with smallholders in order to create a
financially viable business as there is insufficient
margin in the chain to pay for the necessary
smallholder training and support. Co-funding can
play a role. The question remains as to whether this
is available long-term and if donors processes can
match agricultural planting timescales in order not
to miss market opportunities.
13
“Farmers in Nyakomba are
very excited with the amount of
money that they are realising
from the sale of the Tabasco®
chilli. Some are already buying
agricultural implements using
the income. Sheila Mupanga
who received a net income of
US$268. 47 purchased an
ox-drawn plough which cost
US$185.00 The purchase was
made from a local hardware
shop so the impact of our
project is already beginning
to be felt by the community
– through employment
creation and reviving the local
economy through promoting
local businesses through
purchase of agricultural inputs
and groceries etc as the
farmers have more disposable
income.”
Priscilla Dembetembe, Economic Recovery
and Development Coordinator, International
Rescue Committee, Zimbabwe.
CASE STUDY:
CottonConnect
CottonConnect11 aims to create a pioneering company with a social
purpose, delivering business benefits to retailers and brands by creating
more sustainable cotton supply chains.
WHY COTTON?
Overall, 16% of the world’s pesticides are used in growing cotton; it can take up to 2600
litres of water to make one t-shirt and hazardous chemicals used can cause adverse effects
such as acute poisoning. In India there are over four million smallholder farmers who produce
cotton on less than one hectare, and farmers often run up huge debts to purchase pesticides
and fertilisers in order to protect their crops.
In addition to the issues at farm level, the complexity of the cotton supply chain itself and lack
of transparency means much of the risk remains invisible to the retailer. It is a long supply
chain – farmer, ginner, spinner, weaver, dyer, manufacturer, retailer, consumer – with retailers
typically purchasing from the manufacturer.
CottonConnect was created in 2009 by a unique
collaboration between leading European retailer C&A,
Textile Exchange (formerly Organic Exchange) and
Shell Foundation.
BUSINESS MODEL The next step is to build farmer capacity through
specially designed training, delivered by the farm
CottonConnect firstly develop and build cotton
team in partnership with quality local service
strategies with the retailer/apparel brand, who
providers. The farmers apply their learning and
purchase finished garments and often do not
grow cotton more sustainably during the next
know how much cotton they actually procure.
season. CottonConnect then works in partnership
This is the starting point to set targets. They map
to connect the whole supply chain. Finally they
their customer’s cotton supply chain in country to
monitor and evaluate the social and environmental
understand where the cotton they source actually
impacts, enabling the retailers to tell the story of
comes from and identify farmers in their supply
their cotton and the farmers who grew it. They also
chain (see Diagram 4 overleaf).
develop community investment programmes for
retailers, such as C&A’s drip irrigation programme.
11 www.cottonconnect.org
14
 Diagram 4
Business Model
CONSUMERS

1 4c Social, economic & environmental

impacts are monitored and
CottonConnect is contracted by evaluated enabling the retailer to
retailers/brands to work with them tell their story
RETAILERS
on their sustainable cotton journey

Photo courtesy of CottonConnect.

Photo courtesy of CottonConnect.

MANUFACTURERS

2 CottonConnect can then map DESIGN

supply chains in country and
DYERS 4b CottonConnect provides
identify farmers/ginners/spinners
procurement support and connects
in their supply chains, or engage
WEAVERS stakeholders to create connected
new ones in required areas
and committed supply chains
SPINNERS
From training... ...to sowing...
GINNERS

3 On-the-ground teams build

farmer capacity in partnership 4a Enrolled farmers create more
with other local organisations sustainable cotton fibre
FARMERS

Photo courtesy of CottonConnect.

CRITICAL SUCCESS FACTORS
CottonConnect works across the entire supply
chain and all the cotton standards with on-the-
ground implementation capacity in south Asia
and China − the two key cotton growing and
manufacturing regions. They have expertise across
the whole supply chain: farm experts, textile
“CottonConnect has definitely
enabled us to increase the
transparency in the early
parts of our cotton supply
chain. They have helped us
to identify how to get the
fibre into our supply chain,
and to track it throughout
our supply chain.”
Phil Chamberlain, Head of Sustainable
Development, C&A.
experts, brand management experts, business
experts and social and environmental experts. This
is essential in such a long complex non-transparent
chain. Finally CottonConnect works to benefit both
the retailers/brands and the farmers, as well as
operating as a sustainable business itself.
“Because of the training
provided by CottonConnect
I have learnt to use the
waste produced on my farm,
reducing the costs of my
inputs as well as the amount
of fertiliser I use. The health
of my crop is even improving
slowly!.”
Dinesh Bhai, Morbi district,
Gujarat.
...ready to start processing... ...before the long journey to shelf.
SHELL FOUNDATION’S ROLE bono support from Shell Group in areas such as
strategic human resources, intellectual property and
SF’s role is discussed in-depth in Section 4. Aspects
expert input to design fit-for-purpose management
to highlight here include SF’s initial strategic input
information. We hosted a Business Challenge
to the business model design and linkages to the
founding partners Textile Exchange and C&A, and
Session with external experts to help to refine the
business model as it evolves over time – moving
support for the initial recruitment process to find the
from grant dependence to earned income.
entrepreneurs. SF supported the development of
the initial business plan and financial projections
– which are required as the main part of grant
application process – and quarterly reporting “CottonConnect has done a
which mirrors that required to run the business,
including financials, Key Performance Indicators great job. Finding credible and
and traffic light reporting against action plans with competent partners around the
key milestones.
world is critical and they’ve
SF’s role always evolves over time, with an
ticked that box for us.”
increasing focus on governance matters, but in
this case we took a more active governance role Sean Allam, Director of Commercial
from the start, including chairing the Board with Operations, John Lewis.
the other founding partners. SF also leveraged pro

15 16

“Having the start up investment
from Shell Foundation enabled
us to bring in the right resources
and expertise at a senior level
in our team before we had
the customer revenues to cover
these costs. SF’s investment is a
huge benefit and important for
our scale up.”
Rosanne Gray, CEO, CottonConnect.
AMOUNT INVESTED:
US$3.4m globally over 6-7 years
RESULTS
■■ CottonConnect has rapidly established
an excellent organisation on-the-ground
in India and China, able to deliver farm
training to global brands.
■■ Over 250,000 livelihoods improved; 140
million of garments made from sustainable
cotton; US$2.5m of funds leveraged.
■■ Stories from farmers illustrate the impacts
on-the-ground: Dinesh Bhai from Gujarat
attended CottonConnect’s training and
learnt about the necessity of micronutrients
for his crop as well as for the soil.
CottonConnect not only educated him
about the benefits of micronutrients, but
also helped him source them for his field.
His crop has now become an example to
others in his village because of the improved
quality of the cotton and Dinesh intends
to continue applying micronutrients and
decrease his consumption of other fertilisers.
■■ CottonConnect is now working with over
15 brands, including C&A, John Lewis,
Marks (of Canada) and Inditex.
17
WHERE NEXT?
CottonConnect will continue to expand in China
and south Asia. They have 2015 targets of one
million acres of land under sustainable cotton
cultivation, working with 500,000 farmers and
their families and creating 500 million sustainable
cotton garments.
The CottonConnect model is potentially the most
widely applicable of the models both within and
outside agriculture, where ever there is a long
complex supply chain with lack of transparency
and social/environmental sustainability issues
and difficulty in implementation at scale due to
fragmentation of the supply chain. (This is discussed
further in Sections 5 & 6).
Role of
Shell Foundation
The financial investment is still important (SF has committed US$8.7m
over the last six years) but so too is the longevity of support, with
financial and business support sustained over many years. We have
recognised this need through our experience working with entrepreneurs
across all sectors, not only agricultural supply chains.
Shell Foundation plays a very active role in
supporting these new enterprises. In our experience,
both within and outside of the agricultural sector,
building pioneers takes considerable time, much
patience, investment and more than grant money.
Firstly we select an entrepreneur with an aligned
vision and aspiration of scale. These individuals are
frequently found through our networks, less frequently
through recruitment agents. They need to have
the right skill set which are predominantly business
skills combined with a strong desire to address the
environmental and social issues at hand. This is one
of the most critical and also difficult steps.
“SF’s flexible investment-led
approach to working with
us has meant we can have
open discussions about
how grant money is used as
circumstances change over
3-4 years.”
Rosanne Gray, CEO, CottonConnect.
4
The initial business idea is developed into a
business plan with full financials which form the
start up proposal to SF for funding. This plan
outlines the new market-based business model
which will be tested to allow the enterprise to
move from grant income to earned income over
time, whilst also achieving the environmental and
social aims. SF target the initial grant money to
put foundations in place for financial sustainability
and scale e.g. recruiting the necessary high calibre
talent, creating the back office infrastructure (i.e.
finance, legal, HR etc). Once approved, reporting
to SF is the same reporting that one would need
to manage the business, i.e. typically quarterly
financials combined with reporting against Key
Performance Indicators and business milestones.
“What does SF bring?
Commercial oversight, a real
focus on impact, ability to scale,
realism around big business
challenges and experience in
doing this in other sectors.”
Andrew Wanliss-Orlebar,
Sustainability Innovation expert.
18
 Given we start with unproven business models,
then these will be refined by the enterprise over Diagram 5
time with the benefit of operating experience. SF “The SF brand has been Shell Foundation’s typical partner life-cycle
also sponsor Business Plan Challenge Sessions
at critical points in business model development,
massive as we were nobodies
bringing in external business and venture capital and we told people were in 1 2
Revenue
experts. This allows for a rigorous review of
partnership with you which DISRUPTIVE
CATALYST
BUILDING ‘SOCIAL ENTERPRISE’ PARTNERS
business skills
the business model both incorporating initial ■

learnings and adapting to any changes in the allowed us to box above our ■
■
smart (patient) grant funding
access to market linkages
external business environment in order to support weight and gave us credibility”. Expense
the transition from grant to earned income and
commercial financing as appropriate. The Monitor Steve Wormald, MD, TBTC.
Report ’From Blueprint to Scale: The Case for
Philanthropy in Impact Investing’12 refers to a similar
four step model − Blueprint, Validate, Prepare, Sustained non-financial support is a critical $
Scale − by which this process of preparation for success factor as timescales are long, 5-7 3
scale takes place. years, with support required well after grant LEVERAGING
INVESTMENT
The businesses typically start with a Shell funding is disbursed (See Diagram 5). TBTC and
Foundation grant for initial operating costs with CottonConnect are no different to other SF strategic
SF supporting other applications for co-funding. partners in this respect and we are only four years
In terms of longer-term financial planning, other into that journey. SF continue to play a governance
instruments such as guarantees can act as a role long after any grant relationship has ended.
stepping stone towards loan finance and financial For example SF may take a non-executive board
position with a governance relationship more like
independence as the proportion of earned income Incubate Pilot Scale-up Global
grows. (The ‘Flowers’ Case Study in the next that of an investor rather than a donor.
section gives an example of a guarantee being
7-10 years
used in this way.)

Business Directors at SF (themselves from business

backgrounds) provided tailored support for
example in the areas of strategy, planning,
communications, financial planning, legal and However when it does work,
HR, leveraging support through networks including
access to Shell’s top talent. Other examples you have created a vehicle
of SF’s ’more than money’ approach including that has the capacity to bring
access to networks, introductions to markets
(for example retailer partnerships), and the credibility
about change at scale over
of SF brand, has been found to be helpful for the long-term, in a financially
small start-up enterprises in establishing their own
viable way no longer
brand. The role of SF and the Business Director
can be seen as akin to that of an ‘Angel Investor’ dependent on short-term
initially providing finance, business input, networks grant funding.
and challenge. This relationship moves towards
governance and strategic support as time passes.

12 The Monitor Report ‘From Blueprint to Scale: The Case for Philanthropy in Impact Investing’, Harvey Koh, Ashish Karamchandani,
Robert Katz, April 2012. http://www.mim.monitor.com/blueprinttoscale.html

19 20
 5
If the answer to these is “yes” the next step is to If not, a new Supply Chain Connector may be the
consider what supply chain initiatives are already answer, working in collaboration with supply chain

Learnings and
in place and whether you can you meet your long- partners, existing standards and industry initiatives.
term sustainability goals through these.

Challenges
Comparison of the Three Business Models

Model Commodity High Value Crop Contracted Labour

Case Study CottonConnect TBTC, (see also Craft Bright Futures Pilot
and Flowers)

Key Issues Long complex supply chains Retailer/brand unable to Pool of under developed
access product talent
We would like to share some of our learnings from taking what we have Lack of supply chain
transparency Farmer unable to access Industry needs to create
described as a market-based ’supply chain approach’. We discuss what market information or entrepreneurs of the future
Environmental and social
has worked across different supply chains and hence has the potential for challenges
market

replication as well as some of the challenges we are still working on. Complex crop to grow
Standards exist but difficult
We have found that understanding the challenges We see three distinct models emerging which can for brands and retailers to
of the retailer in addition to those of the farmer be adapted or even blended depending on the implement at scale
and analysing the supply chain as a whole principal characteristics of the supply chain, be it
Commercial or Predominantly smallholder Smallholder or Commercial Commercial
has enabled us to focus on finding and funding commodity, high value crop or contracted labour.
Smallholder?
solutions which will be sustainable in the long-term. In order to identify if any of these models may
CottonConnect is now working with multiple high have applicability in other supply chains, Shell
street brands and retailers with operations on-the- Foundation worked together with Forum for the
Crops Commodity or High Value High Value High Value
ground in India and China, whilst TBTC is working Future to analyse the business models and identify
with multiple products and producers from Africa. the features and critical success factors of each.
The table overleaf – Comparison of the Three
One size doesn’t fit all Business Models − shows some of the results of
agricultural supply chains Critical Success Expertise across the entire On-the-ground Owners & managers
this analysis. We also developed a Toolkit13 to
Factors supply chain implementation capability commitment
It has also led us to consider a broader range of help explore these questions further and identify
agricultural supply chains than simply smallholders opportunities for replication within Forum for the On-the-ground Supply chain partnerships Dedicated (part-time)
Future’s own network (see Section 6). implementation capability project resource
(as illustrated earlier in Diagram 4 in Section 3)
and also pilot solutions to the challenges faced In order to decide if there is a need for a new Supply chain partnerships
by labourers on commercial farms. SF funded a Supply Chain Connector we have found it helpful
pilot project called Bright Futures with a leading to ask certain key questions to begin with, such as: Facilitated by? Geographical concentration Growing demand and/ Growing demand
commercial farm, Haygrove Heaven, in South of sourcing as well as or requirement for goods
Africa growing a high value crop (fresh berries) as ability to operate globally of known origin
part of the SF/M&S Partnership. This has enabled ■■ Is this crop critical to your business in some
Opportunities for value
farm workers to make the immense transition to way or will it provide a new business addition
becoming successful entrepreneurs in their own opportunity?
right, co-owning their own berry business four ■■ Is the supply chain fragmented/is there a Results Greater transparency and (New) products on shelf Individuals become
years later (see Case Study later in report). traceability of fibre with story of origin entrepreneurs
disconnect between retailer and farmer?
■■ Are there challenges with on-the-ground Risk mitigation Incomes improved Independent businesses
13 The Toolkit can be downloaded from http://www. implementation at scale within the industry? & jobs created created around a central
forumforthefuture.org/project/scaling-success/more/ Environmental improvements hub
ethical-agents-new and the accompanying video from
http://www.youtube.com/watch?v=kD7sCaQm1- Farmer livelihoods improved
U&feature=player_embedded

21 22
 For those interested in exploring other organisations
who play a similar connection and implementation
role in other sectors, listed below are several. For
example, Tropical Wholefoods, an intermediary
whose Ugandan supplier Fruits of the Nile was
a former Shell Foundation grantee and has
Organisation Sector
Suminter Organics Organic produce
TFT Forestry
Traidcraft Exchange Food and craft
and Traidcraft PLC
Tropical Wholefoods Dried fruit, nuts and snacks
Lessons from the craft sector
SF tried to replicate the Supply Chain Connector
model in handmade products or ’craft’ − another
area of potential to improve livelihoods in the
developing world, (especially those of women)
where we had also worked since our inception.
The aim was to create an enterprise to enable
access to the mainstream high street market for
small-scale producers of craft. However in our
experience, (after working in seven countries
with different partners over a period of eight
years in total), the earned income potential of the
enterprises were insufficient to become financially
viable over time. This was due to the high cost
associated with preparing a comparatively low
volume product for market and incorporating fast
changing trends and seasonality. In addition,
margins for the sale of the product itself in the high
street were not feasible as competing with cheap
replica goods from countries such as China and
using grant money to subsidise commercial margins
is not appropriate or sustainable.
similarities with TBTC. Another example is found
in the IIED-Asda flowers project report ’The Ethical
Agent: Fresh Flowers in Kenya’14, with industry and
development experts coming together to play this
role on a temporary basis.
Website
http://www.suminterindiaorganics.com
http://www.tft-forests.org
http://www.traidcraft.co.uk
http://www.tropicalwholefoods.com
We did see success of individual projects. For
example our grantee L’Afrique Authentique has a
very high end, quality product with a financially
viable margin and supply chain. This unfortunately
didn’t meet SF’s criteria for scale but clearly had
good potential to replicate if combined with
charitable producer support and design.15
We also can also see the potential for a hybrid
model illustrated by the success of organisations
such as Traidcraft Exchange (a not-for-profit) and
Traidcraft PLC working in partnership, providing
additional support to small and marginalised
producers combined with their own direct
sales channels.
SF tried to replicate the Supply Chain Connector model
in craft products
Competition in the private sector
Experience has also shown pioneering new
business models and creating for-profit enterprises
is complex and high risk. Some of these challenges
are due to creating fledgling for-profit enterprises
who must, in some circumstances, compete with
established players who are heavily capitalised.
The ‘Flowers’ Case Study illustrates the challenges
of quickly gaining scale to cover significant start-up
investments in a highly competitive market.
The new business models we are testing can
challenge vested interests along the supply chain
and bring a level of transparency that some
players are not yet ready for. Aligning interests,
assessing intent and having clear partner selection
criteria are also critical when dealing with social
enterprises which are for-profits to ensure that the
social and environmental aims are reached.
Limitations of a market-based
approach when there are
externalities
We also saw limitations of a market-based
approach applied to agricultural supply chains
where significant environmental or social
externalities exist or in subsidised markets, where
prices of agricultural products are currently
artificially low.
As discussed in Section 2, there are many
voluntary supply chain initiatives to address some
of these environmental and social problems,
however aid can distort the market further.
If donor money usually pays for supply chain
improvements whilst at pilot stage, these costs
are not incorporated into the supply chain in a
systemic manner. This makes it difficult to finance
the move from pilot to scale as costs are often
front loaded (e.g. smallholder training) whilst
business benefits are not necessarily monetary and
immediate as they are social and environmental –
and often long-term. Coupled with this, mainstream
consumers often won’t pay extra for sustainability
and increases, especially in food prices, are also
politically difficult. So we are left with the issue
of how do you incorporate it into the margin
particularly in economically difficult times?
“...externalities are not priced
in so people have got used
to cheap food and campaign
to their governments if prices
go up, hence there is a
misallocation of resources,
but it is politically difficult to
incorporate them.”16
David Bent, Deputy Director,
Sustainable Business, Forum for the Future.
If voluntary mechanisms to incorporate these
externalities are struggling to succeed at scale
we have to ask the question is regulation a way
forward to create a level playing field so that
all manufacturers and retailers incorporate the
same standards into their supply chains with their
associated costs? (see ‘Regulation’ box overleaf).
However some forward thinking businesses do see
incorporating sustainability into their supply chain
as an opportunity for innovation rather than a
cost, and essential for long-term security of supply.
(Typically the raw material cost is a fraction of the
final product price and sustainable practices and
increased supply chain understanding can bring
about their own efficiencies). And we still have the
challenge of implementing the change at scale
on-the-ground, whether the change is brought
about through voluntary or regulatory mechanisms,
which brings us back to where the Supply Chain
Connectors can play a role and the question of
who might incubate these.

14 ‘The Ethical Agent: Fresh Flowers in Kenya’, Abbi Buxton and Bill Vorley http://pubs.iied.org/16037IIED.html
15 We are pleased to report that L’Afrique Authentique went on to secure further funding from Comic Relief to continue to develop 16 See Forum for the Future’s website for more information on their work e.g. http://www.forumforthefuture.org/our-work/what-we-
their organisation. work/food/more-about-our-work-food-system

23 24
 How does regulation play a role?
Whilst SF partners comply with the relevant
regulations, most of the supply chain improvements
they work on are on a voluntary basis. SF is not
an expert in the area of regulation and we are
grateful for input to this section from our networks.
Social issues and environmental Issues are quite
different in nature, and this is reflected in the
regulatory approach. Environmental issues are more
quantitative and measurable, whilst with social
issues the key is to enable the people affected
to be empowered − to be active in any process,
knowing their rights and able to access them.
There are two different approaches to improving
corporate accountability:
■■ to focus on a specific environmental or social
‘good’ and put legislation in place specifically
to cover this (an example would be chemical
effluent levels in discharge water or banning
the use of child labour); or
■■ to take a generic approach to accountability
(e.g. under UK Company Law there is currently
a Directors’ duty requirement which also covers
consideration of a company’s impact on the
environment, employees, community and
supply chain).
There is an intention to update legislation to
ensure environmental and social issues are
addressed in a more strategic manner and
require more detailed reporting in the annual
accounting and reporting cycle.
“Be inspired, focus on innovation and on implementation, set long-
terms goals and maintain the commitment. You have to know what
you believe in, and where you plan to be years from now.”
Phil Chamberlain,
Head of Sustainable Business, C&A.
17 http://www.competition-commission.org.uk
25
The recently adopted UN guiding principles on
business and human rights developed by John
Ruggie, identified a gap in the access to justice
for victims. We currently operate in a global legal
context where victims are often unable to access
justice in their own country where the violation
occurs. Therefore even if a Code of Practice is
in place at UK/European level there is no legal
mechanism for the people affected to raise issues
themselves or to gain recompense. A UK or
European level mechanism is needed so that those
impacted further down the chain by decisions
made by UK/EU companies can raise a complaint.
There is also regulation which is sector specific.
For example in the UK The Groceries Supply Code
of Practice (GSCOP) came into effect in February
2010 and incorporates the principle that supply
chain partners act with each other on the basis
of ’fair dealing’ so the partners further down the
chain are able to plan.17 This code will be more
proactively enforced once a Groceries Code
Adjudicator is established in 2012/2013 to receive
anonymous complaints, undertake investigations,
and enforce the code through a range of measures.
There is similar process underway in Europe.
We see developments in both regulation and
voluntary standards as a means to incentivise
change at scale in the supply chain. Supply Chain
Connectors are a way of implementing this change.
CASE STUDY:
Bright Futures at
Haygrove Heaven
The Bright Futures Programme at Haygrove Heaven aims to enable farm
labourers to become successful entrepreneurs and spin off their own
business whilst expanding production to meet market demand.
This pilot is designed specifically for high value crops in a commercial
farm environment. Haygrove Heaven is a berry farm, located in South
Africa, growing berries for both the local markets and export markets
such as M&S.
BUSINESS MODEL CRITICAL SUCCESS FACTORS
Bright Futures provides a unique mix of structured The success of Bright Futures depends on the
business, agriculture and life skills training provided owners and farm manager putting their full
by experienced training partners and Haygrove commitment behind the project and on finding a
farm managers. This part-time training is carried dedicated (part-time) project manager and mentor
out alongside on-the-job agricultural training. with the right skill set. The crop also needs to be
The teams are allocated their own dedicated fields profitable enough to make it a financially viable
which they learn to farm from field preparation business on a small plot of land in order for access
right through to harvest. They also have access to land not to become a limiting factor.
to a guaranteed market for their produce.
The task to train farm labourers to become
Haygrove staff apply to enrol in Bright Futures, entrepreneurs in their own right cannot be
initially at a Bronze level. Staff expectations are underestimated and the right mix of training over
carefully managed in order to maintain motivation. 3-4 years is critical. In-depth life skills training from
There is a clear candidate selection process with soft skills such as conflict management and work
transparent criteria upfront and then some immediate discipline, to tangible skills such as driving and
rewards such as clothing or insurance linked to initial computing, are all essential. Similarly, business
performance. They then receive longer-term rewards training is key – from financial planning and
linked to yield at harvest and financial performance creating spreadsheet budget forecasts to how to
of their fields. This leads on to a structured ladder set up a co-operative, run an organisation and
of progress and rewards at Silver level, depending make money.
on proven ability at Bronze, and increasing
responsibility and autonomy through Gold level,
until they are ready to launch their own business at
Platinum level. This business then effectively acts as
an independent grower selling their berries into the
commercial hub, Haygrove Heaven.
26
 SHELL FOUNDATION’S ROLE
This pilot was part of the SF/M&S Partnership,
which ensured a guaranteed market for the
produce and support for the project within M&S
and the supply chain partners. For Bright Futures,
SF provided strategic input to the design of the
training programme and the overall business
model, acting as a ’critical friend’.
SF INVESTMENT:
US$250,000 over 3-4 years
RESULTS
■■ 56 total participants, 52 graduated at
Bronze level, 24 started Silver training,
15 have graduated Silver, eight will be
starting Gold level early in 2013 and most
significantly, four years on, the first seven
Platinum graduates are now running their
own business ’Haygrove Valley Berries’.
The second cohort already have plans
for a processing business in addition to
growing the berries.
The results are not adequately reflected
■■
in numbers as the pilot is designed to
go deep into lives of a few, unleashing
potential and resulting in a paradigm shift
in thinking, with a ripple effect into the
local community.
■■ Another change has been seen amongst
participants children who now see the
importance of education and have
new role models to emulate, raising the
aspirations of young people to become
entrepreneurial and see that there is a
future in farming.
■■ For Haygrove this is a potentially lower risk
mechanism of expanding business. It has
increased staff motivation and loyalty and
they have seen higher yields on the Bright
Futures fields.
■■ For M&S this is a great source of berries
that their customers want.
27
“[SF] were there as a sounding
board when I needed
you... non bureaucratic,
minimal reporting was
really appreciated.”
Pauline Burrows, Bright Futures.
WHERE NEXT?
Following the successful pilot, the model will be From learning...
replicated on other local farms, without the need
for further donor funds. In the future there is also
the potential for a new dedicated entity which
specialises in rolling out Bright Futures but they are
“Bright Futures is taking
currently at the stage of localised replication. This people from scratch, as farm
model is particularly relevant in the South African
workers, then teaching them
context where there are incentives for ’Black
Economic Empowerment’ (BEE) and companies new skills, opening minds,
are scored depending on certain factors. What is giving understanding about
exciting about Bright Futures is that it really does
provide the tools, skills and context to empower the business. I have worked
people to become entrepreneurs and business so hard, feel proud of myself,
owners in their own right. It is still however relevant
outside South Africa, wherever there is a pool of
now can go and do my own
under-developed talent. business... We used to work ...to growing...
and get paid, go to town,
spend all the money and wait
for the next salary. Now we
have a little bit of knowledge
we now understand how to
do a budget so we can now
apply this at home, so achieve
a lot of things at home too.”
Witness Kayise, co-owner of
Haygrove Valley Berries.
Fields dedicated to the Bright Futures project
at Haygrove Heaven ...to graduation.
28

CASE STUDY:
Flowers
The aims were to create an independent enterprise (The Better Flower
Company – TBFC) dedicated to the flower business, to create more jobs
and build on the success of South African Fynbos flower sales to M&S
(see Section 3 and the overview of the ’Fresh’ Report) and Waitrose.
BUSINESS MODEL
TBFC sourced other unique African and Indian
flowers and expanded to new supermarkets in
order to reach a critical volume to break even.
They first identified products needed by the
market and then provided technical, agricultural
and marketing support to the developing
world producers. In addition they acted as an
import agent to ensure a direct relationship with
the retailer and provide a better service and
information flow to farmers on-the-ground. Given
expected commerciality of the expansion, SF and
the enterprise decided a further grant was not
appropriate and it was time for TBFC to progress to
debt finance. SF partnered with Charity Bank and
provided a partial guarantee to back their loan.
CRITICAL SUCCESS FACTORS
From the commercial perspective, these included
breaking into new markets quickly in order to
reach the volume of flowers required to break
even given high fixed costs of a UK import facility.
Also, they needed to successfully compete in a
highly competitive market against existing import
agents with deep pockets.
SF INVESTMENT:
US$1.3m grant plus a US$480,000
SF Guarantee against a US$700,000
(£450,000) Charity Bank loan.
29
LEARNINGS
There are inherent risks involved when small entities That said, we believe that TBFC was the right
sell direct to multinational retailers – exposing them
to significant and unpredictable fluctuations in
business to back to test a direct selling model in
order to increase benefits to producers, as they
price, quantity of orders and delays. We would, had the right product and strong market demand.
with the benefit of hindsight, suggest choosing If these variables had gone slightly differently, or
a lower risk business model initially, (without the had not all occurred at once, TBFC may have
high overheads of a UK based import facility), reached break-even and secured a permanent
such as partnering with an aligned existing import place in the market.
agent. This is the strategy which The Better Trading
Company have successfully employed, as did
We would still recommend considering financial
guarantees as the next step in an enterprise
SF’s former grantee Fynsa who supply M&S with
progressing from grants to debt finance, thus
Fynbos. Similarly the IIED-ASDA flowers project
took this approach with their ’ethical agent’
building their own financing track record and
moving from grant dependence to earned income.
standing outside the supply chain and partnering
with existing import agents.
SHELL FOUNDATION’S ROLE
SF’s aim was to see the enterprise move towards
financial independence, both of earned income
and finance provision. Banks generally will not
provide loans to enterprises without sufficient
collateral and track record so SF provided a partial
guarantee to Charity Bank to enable TBFC to
access a loan to enable scale-up, thus transitioning
from grant dependence to earned income and
commercial finance. (NB This role as a guarantor
is in addition to the broader SF role discussed in
Section 4).
RESULTS
■■ After a promising start, delays in new
customers placing orders, challenges with
taking on a new unproven supply base on
a new continent, intense competition with
existing suppliers and unrealistic financial
forecasts led to cashflow difficulties and
sadly, finally, liquidation.
■■ The SF guarantee was called upon and
paid in full to Charity Bank.
■■ Existing suppliers have successfully Change at scale has still been achieved: our former grantee Flower Valley Conservation Trust has
transferred to other import agents. successfully championed sustainable harvesting of wild Fynbos across the wider South African flower
For example South African flower suppliers industry (www.flowervalley.org.za)
have continued to supply Waitrose through
a new agent and thus jobs were saved.
30

Where Next?
We are faced with the challenge of connecting and simplifying fragmented
supply chains and implementing change at scale on-the-ground in
agricultural supply chains in order to sustainably achieve the social and
environmental transformation − something we are all working towards.
By analysing the agricultural challenges from the
perspective of the whole supply chain, not just
the farmer, and understanding the drivers of value
starting at the retail end, we have arrived at solutions
which can deliver scale and sustainability. Our
work over the last five years has led us to identify
the need for a separate enterprise that can focus
on delivering the services needed to achieve this
at scale, in the most efficient way. We have called
these new enterprises Supply Chain Connectors as
they connect the chain from retailer to farmer.
By doing this we have also created vehicles that
have the capacity to bring about change at scale
over the long-term, in a financially viable way, no
longer dependent on short-term grant funding. We
have seen three distinct models emerging which can
be adapted or even blended depending on the
principal characteristics of the supply chain, be it
commodity, high value crops or contracted labour.
In line with our wider approach, SF will continue to
provide strategic and governance support to TBTC
and CottonConnect, after the current funding is
drawn down, to ensure that they continue to grow
to scale and complete the transition from grant to
earned income.
However we recognise that achieving scale is
not enough. Industry replication is the target as no
individual enterprise can shift a market sufficiently
for widespread change. Our experience has shown
the need for multiple Supply Chain Connectors in
different supply chains if we are to reach the tipping
31
6
point and see sustainable practice incorporated
at scale, resulting in widespread transformation.
For this reason we think it is important to share our
successes and learnings with the wider industry and
invite others to apply these business models in other
contexts in order to achieve wide scale impact.
We invite those readers who focus on promoting
change to add this model to their wider toolkit of
supply chain solutions.
Routes to scale
As discussed in Section 5, SF partnered with Forum
for the Future to analyse the business models of the
Supply Chain Connectors and identify potential
routes to scale. Three routes were identified:
■■ Grow the Supply Chain Connectors that
already exist.
■■ Replicate Supply Chain Connectors in other
industries, or geographies or situations with
common social/cultural challenges.
■■ Engage enablers of scale − for example
share the model with business schools,
industry bodies and development
organisations and target potential
early adopters.
Identifying other supply chains
We identified some initial sectors that could
potentially benefit from a dedicated enterprise.
For example:
■■ The commodity model illustrated by
CottonConnect could be applied to other
products with long supply chains with a
lack of transparency, many smallholders,
high risk sustainability issues and difficulty
implementing standards at scale
(e.g. cocoa, tea, even palm oil).
■■ The high value crop model illustrated
by TBTC might be attractive for brands
needing traceability and a ’story of origin’
for one of their key products or markets
struggling to source sufficient product.
■■ The contracted labour model illustrated by
Bright Futures could be applied to other
commercial farms growing high value
export crops with expanding markets (such
as certain vegetables, flowers or wine).
We also identified sectors outside agriculture which
faced similar challenges. The commodity model
could be applied where supply chains are long
and the sustainability issues are predominantly at
the start of supply chain. Also if it is high risk due
to lack of transparency and difficult to implement
changes at scale, such as mining (e.g. gold) or
electronics (including both components and end
products such as mobile phones).
The contracted labour model could be applied
where there is significant untapped potential in the
low qualified workforce and potential to outsource
segments of the business. It is also helpful where
there is uncertainty as to the long-term sustainability
of the business itself and hence additional value in
creating a more resilient workforce of entrepreneurs
who can apply their skills to other business
opportunities when necessary. Examples could
include tourism (large resorts), mining or, thinking
out of the box, applying the model to a business
opportunity for offenders nearing release from prison.
The three critical partners
If new Supply Chain Connectors are to be created
to achieve our goals of transforming supply chains,
in our experience it is essential for three key
partners to come together:
■■ The entrepreneur with an aligned vision
of scale and the blended financial, social
and environmental return.
■■ The enterprise philanthropist and donor
who will support both financially and with
more than money in the long-term.
■■ The first anchor customer − the retailer or
high street brand or supply chain partner.
The should be supported by key supply chain and
on-the-ground implementation partners building on
the relevant industry initiatives, using established
accreditations where appropriate. This is illustrated
in Diagram 6.
Our partners and networks have a critical role
to play, working together to incubate these
enterprises. Our experience has shown that they
are complex to create but there is no quick fix to
transforming supply chains at the scale needed.
Enterprise philanthropists have a catalytic role in
making this happen and funding and incubating
the enterprises.
32
 Diagram 6
The Three Critical Partners

1
ENTREPRENEUR
Establishes business & designs
business model to meet market
need and achieve social &
environmental impact

ENABLING
ENVIRONMENT
■ Supply chain partners
SUPPLY ■ On the ground
implementation partners
CHAIN
CONNECTOR ■ Industry bodies/initiatives
■ Third party standards
2 ENTERPRISE ANCHOR 3
PHILANTHROPIST RETAILER
& DONOR Industry leader who commits
Provides the structure to incubate to be the first customer willing
the new supply chain connector. to share learnings with wider
Provides funding, “more than industry to accelerate
money” support business benefits

If we are serious about moving beyond successful pilot projects to social

and environmental change at scale then we all need to work together to
incubate the Supply Chain Connectors that are needed to meet today’s
challenge and unlock long-term value from farmer to retailer.

33