Design and Analysis of new business models to support Value chain Development
Task 1.4 of InnoFoodAfrica (IFA) Work Package (WP)1
Interventions under Work package 1 of IFA are designed to contribute to strategic objective #1 (SO1) whose dual focus is characterised in two broad areas, one, development of resource-efficient, safe and sustainable food production value chains (VCs) by empowering small-holder farmers, processors, producers and consumers via co-creation process with African and European experts and, two catalyzing new local and international business and market opportunities in the cereal-pulse-root crop-fruit food and packaging VCs by engaging VC actors and investigating new business models. The work package is divided into five task areas that include validation and application of instruments to quantify consumer attitudes (task 1.1), measurement of consumer attitudes (task 1.2), market survey and value chain assessments (task 1.3), design and analysis of new business models (task 1.4) and empowering farmers and value chain actors (Task 1.5). These tasks are designed to be done in close cooperation and partnership with other work packages to ensure a seamless implementation strategy, synergies and complementarities required to achieve the overall economic impact estimated to be 7.5 billion Euros
The design and analysis of new business models to support VC development under Task 1.4 was planned to be informed by findings of the market surveys and value chain assessments (task 1.3) in the 4 target countries were completed. The market surveys and value chain assessment helped to map the target value chains; from production to market, to help assess their status, identify challenges faced by value chain actors and existing opportunities for leveraging. A major outcome of the assessment was to help align interventions aimed at addressing the barriers and bottlenecks limiting the ability of actors in achieving the full potential of the target value chains. The value chain assessments were further intended to help enhance interventions being carried out within WP3, through the farmer participatory research trials with specific interest in seed, production and productivity and market systems.
A business model describes how an organization creates, delivers and captures value in economic, social and cultural or other contexts. In other words, a business model is the plan a company/enterprise has to make money with its products, services or both in a target market. Therefore, developing a business model is akin to building a bridge between supply and demand to fulfilling market need(s) through creation of sustainable value exchanges for all actors involved in the process. Business models facilitate trade off in marketplace and help ensure the most economic use of scarce resources while maximizing return on investment.
The design and roll out of appropriate business models will be critical to the InnoFoodAfrica project’s success especially as it relates to tackling the four major African food system challenges identified in the project proposal namely, 1) nutrition and healthy dietary habits, 2) non-resilient farmer and food processor capabilities, and 3) inefficient supply chains and 4) information flow. The project is addressing these challenges through work done in the 6 implementation-based work packages (WP 1 to WP 6) and supported by the project management work package (WP7) and WP 8 which ensures compliance with the ethics requirements across the project.
The main output of Task 1.4 is the design of 8 business plans, 2 per each IFA implementation countries namely Ethiopia, Uganda, Kenya and South Africa. One of the business models is expected to address malnutrition while the other should address obesity challenges. It is expected that the business plans will help address both supply side and demand side challenges identified in the respective value chains while providing a clear way to market for the novel technologies, products and approaches being developed by the various work packages in the InnoFoodAfrica project. On the demand side, the business models will be based on novel technologies and food products being development in Work Package 4 and the development of side streams in Work package 5. These new technologies, food products and side streams are based on the target value chains and meant to provide a market pull for the production outputs from interventions being undertaken in Work Package 3 on improved farming systems. In addition, the business plans will benefit from studies being carried out in Tasks 1.2 of WP1 on consumer attitudes as well as the results of the food consumption surveys under WP2.
Development of business models under Task 1.4 is led by Africa Harvest scientists who are utilizing a number of tools in the modelling exercise. Some of the tools to be used include Feature/Advantage/Benefit (FAB), Segmentation/Targeting and Positioning (STP), Porter’s five forces, and Blue Ocean strategy as the team seeks to ensure that the most appropriate models are developed. The process of business modelling has various facets to it including selection of the most promising technologies, conducting techno economic analysis to assess the economic viability of the selected technologies and food products and developing marketing, branding, manufacturing and financing plans. In addition, the team will also assess industry dynamics to further inform the development of the business models, which will be done using the Business model canvas. The Business model canvas helps to map on a single page the key success factor that a business should address when going to market with a product, a service or both.
The Business model canvas.
Task 1.4 outputs will be shared with the target stakeholders identified at the beginning of the project implementation activities through task 6.1 on stakeholder mapping for wide scale adoption and roll out in the target countries. The handoff process will be overseen by the team involved in commercializing technologies and products developed through activities planned in the InnoFoodAfrica project. This process is guided by the Innovation Commercialization plan (ICP) whose draft was developed at the beginning of the project, by Month 6, viz 31st January 2021 and which is being refined and updated as the project progresses. In addition, these business plans will be showcased in the Innovation platform being developed under task 6.4 of Work package 6.
In conclusion, scientists working on Task 1.4 have embarked on the process of collecting inputs from the various consortium members working on tasks whose outputs are required to inform various facets of the business modelling process. This is an iterative process and shall continue to be undertaking as the team works to ensure the timely attainment of Deliverable D1.3: Report on the country-specific business models with logistical distribution networks and techno-economic feasibility of the project solutions by M30/ January 2023.