Business models for engaging smallholder farmers in high-value markets: empirical evidence from vegetable value chains
DOI:
https://doi.org/10.51599/are.2024.10.04.08Keywords:
business model canvas, governance structure, value chain, vegetables, smallholders, Indonesia.Abstract
Purpose. This study explores the business models adopted by smallholder farmers in three different market channels – traditional, modern retail, and export markets. Furthermore, it evaluates and upgrades the smallholder business model in the traditional market to link and enhance inclusivity in high-value markets.
Methodology / approach. We use a qualitative approach by exploring three case studies of business models. The business models in this study elaborate how smallholders managing their business in terms of managing resources, meeting quality standards, and establishing partnership to link and serve the specific markets using business model canvas (BMC) analysis. To evaluate, make strategies and create a new business model to increase small farmers’ access to high-value markets, we use strength, weakness, opportunities, and threats (SWOT) analysis integrated with business model canvas analysis.
Results. The business model of smallholders in traditional markets lacks added value, economic activity, and quality standard compliance and has poor coordination with vertical (buyers) and horizontal (farmer group) actors in the value chains, as well as lack of support from the government compared to the business models in high-value markets (modern retail and export markets). Therefore, to link and improve the inclusivity of smallholders with high-value markets, their business model should be re-designed such as creating value propositions to be more concerned with producing vegetables with high-quality standards; conducting post-harvest handling activities and adopting food safety standards in their key activities; strengthening horizontal collaboration among farmers as key resources; building vertical coordination with suppliers in high-value markets and partnership with the government; adding market channels to sell to specialised wholesalers and exporters, and investing in the knowledge and facilities to produce vegetables of high-quality and safety standards.
Originality / scientific novelty. While many studies focus on specific markets, this study examines business models across three market channels. This study is among the first combine the BMC framework with SWOT analysis for smallholder business model evaluation and development. The result of this study bridges the gap between theory and practices in smallholder market inclusion, offering a novel framework for improvement business models of smallholders by integrates on economic, managerial and institutions perceptive.
Practical value / implications. This study is useful for policymakers to address the business constraints of small businesses when linking to high-value markets. Management implications for upgrading business models are also elaborated in this study for the inclusion of smallholders in high-value markets. This study also contributes to the literature on the inclusiveness of business models for smallholder farmers.
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