Business for Development’s creation of the Long-term INclusive Commercial (LINC) enterprise model was driven by the market dynamic of growing demand for smallholder farmer produced commodities. This has necessitated companies engaging directly with farmers to lift and secure their supply of critical ingredients. A LINC structure facilitates these objectives by aggregating fragmented groups of smallholder farmers and addressing the needs of both farmers and the related company.
Business for Development believes that solving smallholder farmer poverty will require equitably connecting those farmers with local and global value chains. Otherwise the four impediments that keep these farmers trapped in subsistence will continue. To connect farmers to markets on an equitable basis will require trusted intermediaries as well as sustainable and scalable business models that generate sufficient wealth amongst these farmers to enable a pathway out of poverty. If such connections can be made, farmers can exit poverty on a long-term, inclusive and commercially sustainable basis.
The LINC structure recognises that farmers and food companies have mutual benefit in growing their businesses together. The LINC model seeks to achieve this through creating an independent, financially sustainable social business that can grow to scale over time.
A LINC trades commodities from a group of farmers to a Company. The LINC either pays dividends in profits to the farmers and/or reinvests into farm development and community programs. The model is scalable and grows through engaging new farmers. New farmers are free to join the LINC as providers with the same rights as existing farmer suppliers. The model is also designed to be sustainable, with a LINC securing its funding through a margin on sales, negating the need for ongoing benevolent funding.
The governance of a LINC ensures business growth for both the farmer and the food company. A LINC is typically structured as a company with shares (non-dividend paying) held by a trustee or custodian on behalf of the community and has a constitution requiring all surplus profits generated to be deployed in social and community programs.
A LINC Board comprises farmer representatives, to facilitate farmer voice in decision-making, commercial experts from the food company, who bring the skills need to build a sustainable business, agricultural advisors, who oversee the LINCs effort to address farm productivity and NGO representatives, who bring cultural, social and gender expertise.
There are around 450 million smallholder farmers on earth who are currently close to the point of general subsistence. They live on less than US$2 per day and farm on about 1-1.5 hectares of land where they generate enough income and food to meet their basic needs. With this […]