Bulk sales approach for farmer apex organisations (FaAO) (Mali)

Improve the income of family farms by setting up an organized trade mechanism that factors in market price fluctuations.

The objective of the practice is to improve the income of family farms by setting up an organized trade mechanism that factors in market price fluctuations. Structuring trade in this way puts producers in a stronger position in their value chains.
The FaAOs’ approach to trade is based, on the one hand, on purchase agreements for preservable produce (cereals, sesame, etc.) between the FaAO and its producers and, on the other, on sales contracts with one or several market operators/suppliers. The practice enables producers to sell their produce after the harvest at an attractive price, depending on market fluctuations. For the operator, it means a large quantity can be purchased over time, without the need for mobilising major pre-financing resources. As the intermediary, the FaAO benefits from a profit margin and charges levied on transactions.
Stages of implementation: 1) Estimating the areas of family farms that are members of the FaAO: Together with its producers, the FaAO calculates sown areas (of rice, for example) fairly speculatively, providing the first estimates of future outputs. 2) Estimating outputs: Prior to harvesting, the initial estimates made in stage 1 are further refined through crop inspections. 3) Evaluating the quantities for home consumption and for sale: After the harvest, FaAO producers assess what part of their output will be retained for home consumption and what will be sold. 4) Contracting between the family farms and FaAO: The FaAO enters into a contract with the producers for the part to be sold. 5) Contracting between the economic operator and FaAO: Research into economic operators; At a consultation day involving producers, FaAO and operators, a contract is negotiated between FaAO and the operators, who will factor in price increases up to the lean period. Operation: Introducing this approach requires a robust FaAO or family farm, a market analysis and good quality produce. The portion of the output for sale is transferred to the FaAO storage facility. The operator draws down this produce over an extended period. The price for each consignment varies according to the market rate prevailing at the time the produce is drawn down.
Producers provide, process and pack the produce, and enter into a contract with FaAO. The apex organisation researches economic operators, negotiates the sales contract on behalf of the economic operators, stores the produce, monitors sales and manages rebates. Operators draw down produce in line with the terms of the sales contract, and make payments accordingly. Support partners deliver training, provide advisory support and foster contacts.