This value web illustrates the last mile of the farm to fork agricultural value chain in the state of Maharashtra, India. We’d mapped it during our project/s for the Dutch government back in mid 2013, where we’d introduced human centered design thinking for sustainable agricultural value chain development. Subsequently, I led a multidisciplinary team conducting fieldwork in rural Kenya, in order to compare and contrast the last mile in the African context.
As mentioned previously, while the details of seasonality and crops may change due to geography, the essential foundation and framework of the farm’s financial management behaviour remained the same. And, while the actors and roles in the value web may shift and change between rural India and rural Kenya, the essence, here, too, remains the same. There are intermediaries and brokers, transporters and aggregators, and wholesalers and retailers, along with agrovets and extension agents. Everyone has a part to play in the interdependent web of value exchange, based on trusted relationships for the most part.
Therefore, their cash flows and income streams too, are closely linked to the harvest seasons and the crops, just like the farmers‘. In fact, Indian business magazines go as far as to assess the health of each year’s monsoon season in order to attempt forecasts on the annual peak of consumer activity – the post harvest festival season in the October-November period. They recognize the linkages and networks that connect the rural and urban markets, and the ripple effects of the quality of the year’s harvest. It would not be inaccurate to say that the degree of impact and influence is proportional to two related factors – the proportion of GDP from agriculture and related activities; and, the percentage of the country’s population dependent on agriculture and related activities.
Market town finances
In addition to the linkage, we have observed financial management behaviours among traders, and not just those dealing in agricultural commodities or fresh produce, that resemble those on the farm.
The factors that impact the management of working capital and income streams – uncertainty of amount and the timing of its arrival – remain the same, as do the majority of the characteristics of the operating environment, such as infrastructure and systems. A trader dealing in new clothes also sees seasonal differences in her sales, and, unlike a trader in foodstuffs, is also more likely to see greater impact of a low season as people go without the discretionary purchase of a new shirt. Thus, traders must also manage the volatility, uncertainty, and seasonality of their addressable market, and their customer base, and their cash flows and income streams accordingly. We see the impact of this in their business development strategies, and that will be the subject of the next post.
Furthermore, in market towns and border markets, unlike urban metros with a myriad of occupations, the health of the agricultural season will impact everyone in the ecosystem not just the traders themselves. The internetworked last mile of the farm to fork value web closely links the health of the harvests with that of the rural and peri-urban economies.