Entrepreneurship Zone: 12 February 2021: How this company sells the produce of Ethiopian small-scale farmers to consumers in Europe

Fri Feb 12 16:01:22 CAT 2021

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Entrepreneurship Zone: 12 February  2021: How this company sells the produce of Ethiopian small-scale farmers to consumers in Europe

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We speak to Jacie Jones, the managing director of Perennial Foods Group, a company that produces a range of food products in Ethiopia in partnership with smallholder farmers. The products are exported mainly to the UK, EU and the UAE. The company’s fresh fruits and vegetables are sold under the GreenPath Food brand while the herbs are dried to produce the Kib brand of herbal teas.

1. How did you come up with the idea to start Perennial Foods Group?

The Perennial Foods Group was started by a group of friends and colleagues working in agriculture across East Africa. Through our respective roles, each of us had the opportunity to meet countless hardworking, capable smallholder farmers and came to our own versions of two key insights:

·         The world tends to focus on what African smallholders don’t have and can’t do, rather than what they do have and can do. We all saw tremendous opportunity in the diverse agro ecologies, diligent and inexpensive labour, organic land availability and extraordinary work ethic across the hundreds of small farms we visited. We wanted to find ways to support farmers to leverage those competitive advantages at scale.

·         Industrial agriculture models are rapidly taking over farmland across the world, despite growing global awareness of how destructive they can be for the planet and for small farming communities. While aware of the need to increase food production, we believe there must be better, more sustainable ways to achieve the same goals, and we felt a sense of urgency to help identify and demonstrate them.

With this in mind, we set out to make it lucrative for thousands of growers to continue small-scale farming in an environmentally sustainable way; thus protecting and regenerating thousands of hectares of forests and farmland.

As inspiration, we borrowed wisdom from Eliot Coleman (a prominent organic farming advocate) and others who had proven it is possible to see incredibly productive yields on small plots of land by harnessing natural fertility and feeding the soil, not the plants. We’ve since been working for years to apply this to the smallholder context in Ethiopia and are excited to now be growing and expanding around the continent; ultimately, aiming to serve millions of consumers who care about how their food is grown and recognise the impact their purchasing decisions can have on the planet.

2. Tell us about your products.

Most of our partner farms grow a multi-tiered range of intercropped trees, shrubs and ground crops, rather than fields full of a single crop. The result is mini ‘food forests’ of dense and diversely sewn fruits, vegetables and herbs.

This growing model provides countless benefits to soil and micro-ecosystems, and it unlocks year-round revenue potential for farmers who may otherwise harvest only a handful of times per year or less.

The fresh fruits and vegetables from our farms are sold via our organic produce brand, GreenPath Food. The herbs go on to be dried and sold via our herbal tea brand, Kib.

3. You source your produce through partnerships with smallholder farmers. What type of partnership do you have with them?

We have two types of partnerships. In southern Ethiopia, where we have our own established facilities and operations, we engage several hundred small farms in direct partnerships. We call these ‘partner farms’. Each partner farm has an individual agreement with the company that commits us to providing the input and technical support they need and to guaranteeing a market for everything that meets our quality specifications. It simultaneously commits them to adopt key practices, uphold our certification standards, and sell their resulting yields to us.

Beyond our direct partner farm network, we also partner with other smallholder-based businesses and organic growers. We call these ‘partner suppliers’. For example, we buy select herbs and spices for Kib from a handful of independent smallholder co-operatives, and we supplement our partner farms’ production of avocados and vegetables with produce grown by outgrowers across the continent. While this is a relatively new part of the business, growing it will be a core area of focus in the coming years.

4. Take us through the criteria you use to select the farmers you work with.

We designed our model expressly to leverage the competitive advantages of small farms, so the vast majority of our growers have less than a hectare of land. We look for farmers for whom we have a clear value proposition. In most cases, this means we’re not selecting the most successful or well-off farms or farming communities but, rather, those with more limited resources and market access. As a result, they stand to gain more from our partnership, are more open to recommendations, show more commitment and, generally, are more productive and reliable business partners. Critically, this selection strategy, in turn, translates to greater impact in terms of income increases and soil improvements.

5. How do you support the partner farmers?

For our partner farms in Ethiopia, we help farmers transition their land, providing all the training and technical support they need to adopt the regenerative practices we promote. We also lead the certification of their farms under EU Organic, GlobalGAP, GRASP and other major global standards. We provide quality organic inputs and farm assets (i.e. seeds, compost, irrigation) on credit. Each 25–35 farms have a dedicated field officer who visits them bi-weekly to monitor quality and compliance and provide support. Critically, we agree to buy all products that meet our quality standards.

For other partner suppliers, depending on the needs of the partner, we can provide a range of support – technical advisory to certification to quality control – and, in the future, financing. This is a more recent business line for us, so it will continue to grow and evolve in 2021 and beyond.

6. What challenges do you face working with smallholder farmers?

By far, the hardest part of working with smallholder farms is the unpredictability. It’s extremely complex to succession plan effective crop rotation across hundreds of small plots. It’s also really difficult to effectively forecast – on any given day or week, and in the face of countless influencing variables – how much quality product will come back to us. Given we work in fresh perishables, planning and forecasting are critical for us to effectively match products with buyer demand each week. We’re constantly implementing systems to help us get better as we grow but it isn’t easy and has required a lot of flexibility and understanding from our buyers over the years.

We know this particular challenge is one of many reasons why very few companies opt to do what we do; however, this is precisely why we are committed to proving it can be done.

7. Where do you sell your products and what has been the most successful retail channel?

GreenPath Food currently exports organic produce to wholesale and retail buyers in the EU, UK and UAE. Kib sells its herbal teas via both retail and e-commerce platforms in the UK but they can also be shipped to the US, Canada and elsewhere when ordered from our website.

Our most successful sales have less to do with the channel and more to do with the buyer. We have several early buyers who have been with us since the beginning and have grown substantially with us over time. The commonality between them is that they each share our values, are excited by what we are creating, and see opportunity in what we stand for. Not only does this mean they are more likely to find tangible value in our products, but it puts us in a position of real partnership; where we are committed to each other’s long-term success and loyal to each other’s business.

8. What do you feel has led to your success in business?

It is through the sheer dedication of our incredible team that we’ve reached this stage, despite operating in a tough sector and business environment. For me, the key is to adopt a commitment that no matter what happens, we will not let this fail. If you convince yourself and others of this and you genuinely mean it, the fear of going under disappears and everything else becomes an exercise of grit, persistence and resourcefulness.

All that said, having good investors also helps. In particular, it has proven invaluable to have backing from the likes of Novastar Ventures, which not only committed to the company as multi-round investors, but also share our values, treat us fairly, and can always be counted on for support and sound counsel. We’ve been incredibly fortunate in this regard, as they have no doubt contributed to us getting to where we are today.

Most of Perennial Foods Group’s partner farmers grow a multi-tiered range of intercropped trees, shrubs and ground crops, rather than fields full of a single crop.

9. Tell us about one of the toughest situations you’ve found yourself in as a business owner.

In Q2 of 2020, we found ourselves in a perfect storm of catastrophic conditions. We were recovering lingering damages from flooding and frost on fields; Ethiopia was facing acute political unrest in multiple regions; Covid-19 was throwing the world into disarray; a plague of locusts was looming in neighbouring zones; and we had to completely halt our active fundraising efforts, with only 20% of our targeted close in-hand.

This was easily one of the toughest quarters we’d ever experienced and, as a business owner, there was good reason to be tempted to hold onto every cent we could and wait for the storm to pass. However, we simultaneously had an unexpected flush of product and a brief window of opportunity to sell it to buyers struggling with supply disruptions in the pandemic. After a thorough assessment of our options, we decided to lean in by adding shifts, setting up overflow processing space and allocating a substantial share of available funds to selling every kilogramme we could.

Because we honed in on the opportunity, took a calculated risk and then mobilised all the resources we could to take advantage, we ended our toughest quarter in history at 150% of our sales target.

10. If you had to start the business again, what would you do differently?

We approached the business with a bootstrap mentality from the very beginning. We borrowed space, rented vehicles, built our own DIY cold stores, reused materials from other farms, used crates for furniture, and generally did everything we could to get by with as little as possible. We’d seen this approach work for dozens of other startups; forcing leanness, allowing for rapid failure and iteration and sparing capital as you go up the learning curve.

However, at some point, we learnt the hard way that bootstrapping in agriculture may not have been the best approach. Because you only get one season per year for many crops, the experimentation and iteration phase is slow and unforgiving, and no amount of hard work and man-hours can change the fact that not putting adequate resources into the ground has a tangible impact on yield. Moreover, we operate a vertically integrated supply chain, so we have a lot of links to invest in to get it right.

Even though there are substantial commercial benefits to our end-to-end approach, if we were to start over, I would pick a narrower starting point and I’d focus resources there, ensuring we do that one thing really well before tackling more.-Howemadeitinafrica

Under its GreenPath brand, Perennial Foods Group sells fresh fruits and vegetables to the EU, UK and UAE.

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