Outgrower Schemes: enhancing profitability
This brief presents a synthesis of key findings from a review of global experiences in developing and manag-ing outgrower programmes. The purpose of the re-view, commissioned by IFAD, was to identify:
- key factors (crop type, institutional arrangements, management structure, technology, geography, culture, regulatory environment etc.) that influence a programme‘s success or failure; and
- how to design replicable, scalable outgrower programmes with broad impact.
- The findings suggest that no universal approach guaran-tees success; rather, success depends on a range of factors. Chief among these are:
- having direct access to a viable market (local, regional, global) for the end product;
- maintaining a clear, transparent pricing mechanism, a price that is attractive to farmers, or both;
- avoiding monocropping systems (especially low-value, high-volume annuals);
- avoiding overreliance on credit to purchase inputs;
- leveraging a competitive advantage in production, product attributes (e.g. brand, certifications) and/or proximity to the end market;
- building/sustaining credibility of the buyer and trust among farmers via regular direct interaction between the buyer and the farmers.
The evidence also suggests that ad hoc, opportunistic investments that do not pursue and sustain an integrat-ed and comprehensive farm-to-market approach are likely to fail.