Supporting small farmers by promoting sustainable agriculture in Bangladesh
Bangladesh-based Direct Fresh Ltd. has joined the Business Call to Action (BCtA) with a pledge to integrate 2,000 small-scale vegetable farmers into its vegetable supply chain by 2018. The company’s inclusive business model involves training farmers in sustainable agricultural practices and sourcing fresh produce from them for direct sale.
Like in most developing countries, small farmers in Bangladesh have a very challenging existence. The income they generate from even bountiful harvests is barely enough to sustain them and their families. If harvests are poor or market prices drop, their lives are severely impacted. However, the opposite is also true: even the slightest improvement in farmers’ yields or the prices they receive for their crops greatly improve their families’ lives.
Most food retailers in Bangladesh source fresh produce via third party traders, who in turn buy from major wholesale markets. This system exerts pressure on farmers to keep their prices low, which means they often do not receive the fair market value of their harvest. In order to maximize their yields in this challenging market, farmers use fertilizers and pesticides, but many lack technical knowledge about what kind and how much to use. The overuse of chemicals often leads to sharp declines in yields after a few years, contaminates the soil and can make produce unsafe for human consumption.
Launched in 2013, Direct Fresh supplies fresh produce directly to households and other businesses through Internet sales. This unique initiative is disrupting the traditional vegetable business in Bangladesh by bringing sustainably farmed products to market without the need for middlemen. As part of its BCtA commitment, the company aims to provide adulteration-free vegetables and fish to 25,000 consumers in Bangladesh’s capital, Dhaka, by 2019.
Support to farmers is incorporated into the Direct Fresh core business model. This includes training in sustainable farming techniques, such as safe pest-control measures, helping farmers to decrease input costs and maximize profits. The company also supplies high-quality seeds and other inputs through trusted partners in order to ensure that harvests remain strong over the long term – without the overuse of chemicals.
In order to ensure that farmers’ produce meets quality standards, Direct Fresh provides free soil testing and continuous monitoring. The company then purchases crops directly from farmers at above-market prices. Eliminating middlemen allows Direct Fresh to share its margins with its partner farmers – ensuring that the business is profitable while improving farmers’ livelihoods.
One of Direct Fresh’s most successful partnerships during the formative stage of the company’s inclusive business model was with Swisscontact’s Katalyst, a market development project to increase the competitiveness of farmers and small enterprises in Bangladesh. Katalyst supported the company’s pilot model to establish and promote a sustainable supply chain for safe produce in Dhaka. The successful cooperation allowed Direct Fresh to grow and scale its initiative to be able to custom-farm for large businesses including hotels, retails, restaurants.
Direct Fresh sources close to 80 different types of vegetables from 900 farms. With its inclusive value chain firmly established, the company plans to expand both the volume and variety of produce it sources from smallholders, with a goal of taking its model nationwide. It is also facilitating loans for farming families to diversity their incomes through the purchase of dairy cows through a partnership with microfinance institutions.