How to set up a business deal

Each month, we’ll feature a business advisor of a different country to show how you can benefit from working with Agriterra.

 

Richard van der Maden is the business advisor of December for the Small Farmers, Big Deal – campaign! This week he tells how Agriterra can help to set up a business deal with a farmer cooperative in a developing country.

 

Local Presence

Richard: “Let say you’re a Dutch food company who wants to get involved in Indonesian boemboes (spice paste). How would you go about sourcing these products in Indonesia? How would you find a partner who is willing to provide you with this commodity? And how would you audit and evaluate if this is the right partner for you? That’s what Agriterra is for. For each of our cooperative partners, we have done a full company assessment where we’ve dug deep in the books and daily practice to evaluate the governance, finance and production structure. If there are still gaps in the organizational structure we go to work with the cooperative to improve their practices. Usually this revolves around improving the bookkeeping and administration of the cooperative. We’ve got a year round local presence and we make sure we visit the premises often often to safeguard organizational and commodity quality.”

 

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Coaching for certification

Richard: “For instance; we’re currently working on a business deal for MAAS, a Dutch coffee machine business. Indonesia can provide many types of sugar; palm sugar and coconut sugar are examples. My role in this matter is of an intermediary: I know which of farmer cooperative clients can produce the quality and amount of sugar asked. For a company like MAAS it would probably be impossible to arrange a business deal on their own. Agriterra has got the lay of the land, and also knows the language and cultural norms. Agriterra works with these local sugar cooperatives to prepare them for doing business with companies like MAAS. Many international partners have more stringent demands and standards than Indonesian trading partners. We coach and guide the cooperatives on how to improve their commodities and practices to obtain the necessary certifications.

 

Recently I received a call from a Dutch coffee business. They want to get rid of the middlemen, the commodity traders and build a sustainable relation with their sourcing partners. Directly sourcing from farmers will also make sure that more added value will stay in the hands of de farmers. Farmer cooperatives are excellent partners to reach these business goals, so we’ll gladly help them to help set up a business deal. Whether it is nutmeg, cinnamon or tea, we can usually help to set up a business deal with farmer cooperatives.”

 

How to set up a business deal

“How does a business deal with a farmer cooperative work? Well, if a Dutch company is interested in finding new primary sourcing partners, the first step would be to get in touch with our Dutch office. We would discuss what kind of commodities the company is looking for and the amount and quality needed. Maybe there are also specific countries in which the company is interested in. We get in touch with our local teams to check our network and availability. If we find a potential partner, we usually arrange a business trip. It is extremely important that a Dutch company goes on the ground to get a sense of what the company and market situation locally is. We facilitate and plan these business trips.

 

Agriterra also facilitates the next steps in the process. Who does the packaging of the commodities? What part of it do we do locally or in the Netherlands? How do we handle logistics from the interior of these countries to the local harbor? We can help to find out what kind of export licenses or customs permits are necessary and arrange for a local customs partner. The next step would be to arrange a test shipment with a limited amount of commodity: half a container of tea, for instance. We get to test the procedures and the quality of the product once it has arrived in the Netherlands. We evaluate with our Dutch partner every step of the way, because pioneering will always be a part of these kind of deals. If everything works according to plan we can set up the business deal. Afterwards, Agriterra will usually keep on coaching and guiding the farmer cooperative. We’re always looking for ways to strengthen the relationship between Dutch food companies and farmer cooperatives in developing countries.“

 
Next week, Richard will share some background and tips on doing business in Indonesia.