The opportunity is open for trade partners and platforms to serve as a gateway to export for small to medium farmers. This is the view of Hoshik Shin, the founder and CEO of Tridge, a food and agriculture intelligence provider.
To this day, small- to medium-sized farms in developing countries have limited access to the global export market due to a few obstacles. They could be language barriers, lack of knowledge in export quality management and so on.
This often leads to farmers in emergent nations facing a lack of choice when it comes to selling their products. They may be pressured to compromise on their sale prices with this low diversity of destination pools.
One way these farmers could improve their choices is through knowledge about proper quality management and certifications as well as resources to develop their sales channels and find new buyers.
Deficiencies in these areas serve as obstacles to the global export market, which means many farmers continue to lack access.
The income gap between those who have access to foreign markets and those who do not is significant.
According to David Atkin, a professor of economics at MIT, along with Adam Osman and co-author Amit K. Khandelwal, Egyptian rug producers that had access to foreign markets reported 26% higher monthly profits than those who had no access reported.
Furthermore, they showed larger improvements in quality and productivity than the others. The opportunity is open for trade partners and platforms to serve as a gateway to export for small to medium farmers.
I have seen this first-hand in my company as we work with our own platform to connect producers with global markets. An association for a specific crop struggled to help the suppliers they served build long-term relationships with buyers. Farmers often faced difficulties managing the quality of their products.
The combination of bad weather and poor storage techniques deteriorated the quality of the crop and led many importers, buyers from abroad, to hesitate in signing new sales contracts with the farmers.
Moreover, logistics delays, such as unpredictable port management, resulted in delayed shipping timelines, adding another layer of concern for buyers.
Overcoming these obstacles required engagement with the farmers and close analysis on-site of local farms, packaging, as well as loading processes and sites. Regular checks and inspections before product shipments are exported helped continue high standards for quality.
Lessons in connection
For business development leaders working to broaden supply options and build partners across the globe, there are a few key lessons to help reach your goals. First, in the process of forging a relationship with suppliers, meticulous validation is key to build a sustainable business model.
When building your own validation process, it’s important to define your standards upfront. You want a network of verified suppliers in your network.
A buyer profile screening and buyer’s inquiry vetting are both important actions to take in your process.
A local expert on the ground can allow for direct communication with suppliers. This, paired with a review of business registration, production showcase, facilities and certifications, helps the vetting process.
My company will also sometimes ask for additional documents including any records of exhibition participation, shipping documents and official company brochures.
However you structure your process, make sure it’s more than simply a company’s registration documentation and telephone bill from the last three months. For example, a random site visit can be a key technique to building a long-term relationship.
Delivering certainty is another key pillar that supports a global network. The traditional food and agriculture industry, where trust is essential for business practices, is accustomed to relying on old networks.
In fact, Tridge’s initial growth had also experienced hindrances from such market characteristics, as many transactions on the marketplace platform fell through when contractual parties had to digitally sign the dotted line.
Therefore, it’s important to constantly assure your partners that our global network delivers the “next deal.” When we successfully give them a sense of certainty deal sizes have grown more than twice.
Trade is recovering robustly alongside the upticks in growth in major economies. The World Trade Organisation expects the volume of global trade to increase by 8% in 2021, more than offsetting last year’s 5.3% decline. Small- to medium-sized farmers in developing countries will have more opportunities to sell their products.
Powering globalisation with partnerships is a key factor to facilitate the enjoyment of a post-pandemic recovery for farmers across the world.
- Hoshik Shin is the founder and CEO of Tridge, a food and agriculture intelligence provider.