Integrating small scale farmers into international value chain for fresh avocado, edible and cosmetic grade oils
Social enterprise Olivado Group, a major supplier of avocado and other edible oils, has joined the Business Call to Action (BCtA) with a commitment to purchase avocados and other produce from 7,000 smallholder farmers in Kenya and Tanzania by 2021, establishing strong local supply chain and increasing each farming family’s income.
Agriculture dominates Kenya’s economy and almost three quarters of the country’s workers make their living by farming. But nearly one half of its agricultural output is for farmers’ own subsistence: Kenya’s small farmers have difficulty selling their products because there are few reliable markets. While in some years, brokers turn up with offers to buy smallholders’ produce, in others their crops simply fall on the ground and their trees wither. Without the ability to sustainably market their produce, many small farmers are trapped in a cycle of poverty.
New Zealand-based Olivado Group – the world’s major producer of Organic avocado oil –expanded into Kenya in 2007 in order to purchase avocados directly from small farmers to meet the fast-growing demand for its oil. In the process, the company created a unique inclusive business model involving a Fair Trade and Organic out-grower scheme of 1,500 Kenyan farmers – more than half of them women.
Olivado establishes relationships with farmers by agreeing to buy at least 95 percent of their yearly avocado crop. It also provides agricultural training and support in obtaining Organic and Fair Trade certifications. While farmers are free to sell their products to other buyers, their consistent sale to Olivado increases the price they are paid for their fruit. As these farmers sell more of their produce to Olivado, they use their additional income to plant new avocado trees as well as purchase cows, new houses, electricity, wells and water tanks.
Increased demand for its products has indeed encouraged the company to scale up beyond Kenya and reach out to small farmers in Tanzania.