fintrac business development services – a cda … 5-8.pdf · fintrac business development...

FintracFintracBusiness Development Business Development Services Services ––a CDA Case a CDA Case StudyStudy

BDS Seminar, ITCBDS Seminar, ITC--ILOILOTurin, ItalyTurin, Italy

Presented by Antonio Coello, Fintrac BDS Presented by Antonio Coello, Fintrac BDS SpecialistSpecialist

September 2003September 2003

22Fintrac/CDA Project HondurasFintrac/CDA Project Honduras

Fintrac Inc.Fintrac Inc.Fintrac is a US based company Fintrac is a US based company specializing in agribusiness specializing in agribusiness development development –– we do not have we do not have separate BDS projects separate BDS projects –– BDS BDS activities are incorporated into our activities are incorporated into our technical assistance programs. technical assistance programs.

BDS interventions are based strictly BDS interventions are based strictly on the needs for specific services on the needs for specific services that agribusinesses identify that agribusinesses identify themselves themselves –– Fintrac does not preFintrac does not pre--identify any specific services.identify any specific services.


Fintrac Inc.Fintrac Inc.Fintrac assists in adding value in the Fintrac assists in adding value in the farm to market chain, improving the farm to market chain, improving the availability, competitiveness and availability, competitiveness and quality of products and services quality of products and services within the sector. within the sector. Technical assistance provided by Technical assistance provided by Fintrac helps farmers increase their Fintrac helps farmers increase their sales, generating capital so that sales, generating capital so that investment in BDS increases.investment in BDS increases.Fintrac’s technical support to both Fintrac’s technical support to both farmers and BDS providers ensures farmers and BDS providers ensures that final products that final products sustainablysustainably meet meet market requirements and demand. market requirements and demand.


Examples of BDS in the Examples of BDS in the Agribusiness SectorAgribusiness Sector

ServicesServicesInputs & technical use Inputs & technical use directionsdirectionsExtension and trainingExtension and trainingMarket development and Market development and market accessmarket accessMarket informationMarket informationBusiness supportBusiness supportTransportTransportSupport for agricultural Support for agricultural productionproduction

ProvidersProvidersLarger producers and Larger producers and processorsprocessorsExportersExportersBrokersBrokersInput and equipment Input and equipment supplierssuppliersTruckersTruckersInstitutionsInstitutionsAccountants & lawyersAccountants & lawyersOther Other SMEsSMEs


Case #1 Case #1 -- Development of a Broker Development of a Broker for Small Rural Processorsfor Small Rural Processors

Background:Background:CDA initially hired a processing specialist to assist rural CDA initially hired a processing specialist to assist rural microprocessors in building capacity to improve processes and microprocessors in building capacity to improve processes and product quality.product quality.The microprocessors under the program all agreed that one of theThe microprocessors under the program all agreed that one of their ir main problems was accessing new markets in order to achieve main problems was accessing new markets in order to achieve increased sales.increased sales.With the TA program, CDA assisted the processors in overcoming With the TA program, CDA assisted the processors in overcoming the problems of poor quality, inefficiency, and legal requirementhe problems of poor quality, inefficiency, and legal requirements. ts. To overcome their market limitations, CDA facilitated a transactTo overcome their market limitations, CDA facilitated a transaction ion between a BDS provider (broker) andbetween a BDS provider (broker) and microprocessorsmicroprocessors..

In Honduras, In Honduras, FintracFintrac provides technical support provides technical support through the CDA, which is funded by USAID.through the CDA, which is funded by USAID.


Case #1 Case #1 -- Development of a Broker for Development of a Broker for Small Rural ProcessorsSmall Rural Processors

Demand-Side Constraints:• SMEs in rural areas are unable to establish direct contacts with supermarkets/markets in the main cities. • They do not have or cannot afford to buy their own trucks. • They lack sufficient volume and product diversity. • SMEs usually lack attractive labels for potential buyers.• They do not meet the legal requirements (registered brands, licenses, etc)

Supply-Side Constraints:• Brokers are not interested in distributing products of small (rural) companies due to poor presentation, low volumes, low product diversity and high transportation costs.• Small companies are usually informal and have fluctuations in production (irregular delivery and quality of product). • Small brokers have limited access to mainstream markets.


Case #1 Case #1 -- Development of a Broker for Development of a Broker for Small Rural ProcessorsSmall Rural Processors

Facilitator Interventions Facilitator Interventions Establishment of contacts with new supermarkets for a Establishment of contacts with new supermarkets for a pilot distributor.pilot distributor.Linkages between a distributor and 20 microprocessors.Linkages between a distributor and 20 microprocessors.Provided assistance in the development of products and Provided assistance in the development of products and quality for processors. quality for processors. Support to Support to SMEsSMEs to comply with legal regulations. to comply with legal regulations.

ResultsResultsThe distributor grew from 3 to 7 new product lines.The distributor grew from 3 to 7 new product lines.The distributor has new accounts with the supermarkets.The distributor has new accounts with the supermarkets.The distributor doubled his sales from $50,322 in The distributor doubled his sales from $50,322 in 2001 to $99,393 for 2002 (and purchased an additional 2001 to $99,393 for 2002 (and purchased an additional truck for distribution).truck for distribution).SMEsSMEs have new packaging and improved labeling.have new packaging and improved labeling.SMEsSMEs increased their combined sales for 20 increased their combined sales for 20 microprocessors in 60%, from $88,000 for 2001, to microprocessors in 60%, from $88,000 for 2001, to $141,000 for 2002.$141,000 for 2002.Service growth: in 2003 there are five new distributors Service growth: in 2003 there are five new distributors looking to work with products from the looking to work with products from the SMEsSMEs..


Case #2 Case #2 –– Customs Agents/ Freight Customs Agents/ Freight for Regional Exportsfor Regional Exports

Demand Side:Demand Side:Many Many jalapejalapeññoo growers wanted to start selling their products to customers in growers wanted to start selling their products to customers in neighboring countries.neighboring countries.Several permits and papers need to be completed in order to be aSeveral permits and papers need to be completed in order to be able to sell ble to sell products in the regional markets. Most do not have contacts withproducts in the regional markets. Most do not have contacts with truckers for truckers for freight to other countries.freight to other countries.Growers needed the services of customs agents to help them meet Growers needed the services of customs agents to help them meet all of the all of the conditions for the legal entry of their products to those countrconditions for the legal entry of their products to those countries.ies.

Supply Side:Supply Side:There are few truckers with experience in transportation of periThere are few truckers with experience in transportation of perishable products shable products to other countries.to other countries.Few customs agents want to deal with many different clients who Few customs agents want to deal with many different clients who send product send product occasionally to the regional markets.occasionally to the regional markets.Agents generally provide a deficient service and might take too Agents generally provide a deficient service and might take too long to get the long to get the documentation for shipments. Shipments would have to wait for lodocumentation for shipments. Shipments would have to wait for long periods of ng periods of time in the borders. time in the borders.

OpportunityOpportunity: : Strong demand side, providers available, but there was insufficiStrong demand side, providers available, but there was insufficient information ent information on who provides and who needs the service.on who provides and who needs the service.


Case #2 Case #2 –– Customs Agents/Freight Customs Agents/Freight for Regional Exportsfor Regional Exports

FACILITATOR INTERVENTIONS :

Provide TA to growers

Include truckers in post harvest handling procedures

Link growers with BDS providers and BDS providers with regional buyers

Contact new regional buyers

Create a formal delivery program

Establish contracts between producers and processors


Case #2 Case #2 –– Customs Agents/Freight Customs Agents/Freight for Regional Exportsfor Regional Exports

ResultsResultsBetween 8 and 12 new truckloads per month sent to Between 8 and 12 new truckloads per month sent to regional markets during 2002.regional markets during 2002.A total of 25 growers in different regions of the country A total of 25 growers in different regions of the country have entered the Guatemalan market for the first time have entered the Guatemalan market for the first time during the past 18 months.during the past 18 months.During 2002, the BDS provider (customs agent ) During 2002, the BDS provider (customs agent ) assisted in the export of more than 820,000 pounds of assisted in the export of more than 820,000 pounds of jalapejalapeñño peppers, equivalent to 45 truckloads worth o peppers, equivalent to 45 truckloads worth more than US$170 thousand. During the first 7 more than US$170 thousand. During the first 7 months of 2003, a total of 1.1 million pounds of months of 2003, a total of 1.1 million pounds of jalapejalapeñño peppers have been sold to Guatemalan o peppers have been sold to Guatemalan processors. The number of large buyers in Guatemala processors. The number of large buyers in Guatemala has increased from 2 to 5 processing companies.has increased from 2 to 5 processing companies.The Guatemalan companies have now offered to buy The Guatemalan companies have now offered to buy 2.5 million pounds of jalape2.5 million pounds of jalapeñños from Honduran os from Honduran growers for 2003 growers for 2003 -- contracts worth more than US$500 contracts worth more than US$500 thousand.thousand.


Lessons LearnedLessons LearnedIncreased sales lead to increased investment in BDS, both Increased sales lead to increased investment in BDS, both embedded and feeembedded and fee--forfor--service.service.New BDS providers enter the market once it starts expanding.New BDS providers enter the market once it starts expanding.Direct technical support in initial project phases can jumpstartDirect technical support in initial project phases can jumpstartcommercial transactions, commercial transactions, andand demonstrate the utility of BDS. demonstrate the utility of BDS. Access to basic technologies and ability to meet market Access to basic technologies and ability to meet market specifications are critical to a successful agribusiness sector,specifications are critical to a successful agribusiness sector, and and BDS should reflect these priorities.BDS should reflect these priorities.A successful donor project exit strategy dictates that a BDS A successful donor project exit strategy dictates that a BDS component be built into horticultural projects from inception, ocomponent be built into horticultural projects from inception, or as r as early into implementation as possible, because last minute early into implementation as possible, because last minute transitions from facilitator to local provider undermine the whotransitions from facilitator to local provider undermine the whole le process and will not succeed.process and will not succeed.


Lessons LearnedLessons LearnedSustainabilitySustainability

ProvidersProvidersBusiness Development Services must help agribusinesses Business Development Services must help agribusinesses meet both product and market requirements. meet both product and market requirements. Business Development Services must help agribusinesses Business Development Services must help agribusinesses adapt to the dynamic changes of the markets they are adapt to the dynamic changes of the markets they are targeting.targeting.

Facilitators Facilitators Facilitator interventions should be focused and finite, taking Facilitator interventions should be focused and finite, taking into consideration variables such as region, product, into consideration variables such as region, product, technology level, and specific needs. technology level, and specific needs. The success of BDS depends on a viable commercial The success of BDS depends on a viable commercial sector.sector.

fintrac business development services – a cda … 5-8.pdf · fintrac business development...

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