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May 21, 2010  Today Asda exclusively launches the world’s first Rainforest Alliance Certified bouquet, guaranteeing that the flowers have been grown according to the organization’s strict principles on environmental protection and workers rights. By stocking the bouquets, the supermarket is helping small-scale and family run Kenyan farms ensure they are environmentally and socially responsible, while offering them the opportunity to enter the British flower market.

This type of collaboration is exceptionally rare, more often existing within tea, coffee and cocoa and Asda’s commitment highlights how the certification can work for small scale producers as well as big plantations. As part of the Rainforest Alliance certification, farmers commit to growing their flowers in a way that improves the productivity of their soil, while protecting rivers and ensuring their farms also provide habitats for wildlife. With the exclusive launch of the new bouquet, the farmers are developing the skills, access and resources required to sell their flowers in these luxury bouquets. Thanks to support from the Rainforest Alliance and Asda, the livelihoods of these small farmers will be significantly improved.

Chris Brown, head of ethical and sustainable sourcing at Asda says, “Asda is proud to be able to offer this bunch of flowers. To have Kenyan smallholder farmers growing flowers to Rainforest Alliance sustainability standards in collaboration with ourselves shows what can be done. The flowers look fantastic.”


Background

This pilot project differs slightly from the other New Business Model Pilot chains in that the smallholders involved were already exporting successfully to modern markets through the business Wilmar Naturegrown in Kenya. Yet, the product was bought as undifferentiated bouquet filler at the Dutch flower auctions, and missed any potential added-value from its provenance or the upstream benefits of its production by relatively poor smallholders. This pilot aimed to upgrade the offer and find ways to expand both demand for an added-value product through a relationship with a major retailer and production to include more smallholders in this opportunity. 

Modern markets involving fresh produce, both international and domestic, offer great economic development potential for those who can participate in the value chains that offer routes to these markets. However, the ability to capture the benefits from these market opportunities is unequally distributed, with many smallholders experiencing significant barriers to access. These include imperfect information and a lack of support, particularly in relation to technology, agricultural services and access to credit and financing.

Wilmar Naturegrown is a flower-growing business established by Wilfred Kamani in 1995. It is now the largest exporter of smallholder flowers in Kenya, currently air-freighting to The Netherlands five days per week into four auctions. The business relies on thousands of small holders spread over a 250km radius of the headquarters on the outskirts of Thika town. They grow a variety of flowers that already meet European phytosanitary and quality standards – one of the biggest challenges faced by smallholders. 

In May 2008 Andy Bond, President and CEO of Asda, pledged to source an additional £30 million worth of fresh produce from African farmers over the next five years. This was announced at Africa Millennium Goals Summit hosted by Prime Minister, Gordon Brown.  

As part of its pledge, the retailer increased the amount of Kenyan flowers it sourced by 20% by the end of 2008. It also purchased significantly more bananas, citrus fruits, mangoes, and avocadoes from African farms.

Bond commented that “We are integrating Africa more and more into our business plans in order to increase trade with the continent. Our pledge of an extra £30 million investment in fresh produce will help cement long-term relationships with African farmers and growers. 

We don't claim to have all the answers, but we believe signing the Millennium Development Pledge is an important step. Whilst the vast majority of our produce will always be sourced locally, as a major UK retailer we can help address poverty in Africa through the procurement of more of its goods. This in turn will provide much needed jobs and opportunities for thousands of people across the Continent." ASDA PRESS CENTRE Tuesday 6th May, 2008

This pledge provides real potential for partnerships to be forged that that are both commercially viable and help to achieve the Millennium Development Goals (MDGs). 

Wilmar provides both a route to market for smallholders’ flowers and the support they need to grow flowers. He gives them free technical advice and seeds on the basis that they agree to market their produce through him. These smallholders then earn an extra $250 a year, on average.  It provides a key service to various non governmental organizations (NGOs) who create farmer groups, for example AfricaNow, United States Agency for International Development (USAID) and the Horticultural Crops Development Authority (HCDA) in Kenya. When these farmers’ groups are formed, with fully elected chairmen and with the relevant structures in place, they are passed onto Wilmar to work with. Wilmar provides scheduling and cropping advice and provides opportunities for a much needed route to market.  

The relationship between Wilmar Naturegrown and ASDA functions through Intergreen, a flower exporter ASDA currently uses, to reduce the transaction costs involved in creating new market links and different exporters. 

What are the benefits to ASDA of this relationship?

The benefits of ASDA of this relationship are substantial. This pilot project provides an ideal opportunity for both producers and buyers. For the buyer it provides an introduction into sourcing from smallholders based on an existing commercial model. Despite the business already being successful, it still has the ability to reach many more smallholders, who as yet are not selling into modern markets. If market opportunities are realized through these ‘smallholder flowers’, then the number of Kenyan smallholders included in these high-value supply chains can also be significantly up-scaled. The sourcing of flowers from smallholders (creating smallholder-only bunches of flowers as complete products) would be a unique value proposition for ASDA and its customers. It would allow the supermarket to make a unique statement – that it sources it flowers from smallholders and is honoring its pledge to make efforts to help meet the MDGs.

Not only is the relationship valuable from a development point of view, it is also valuable to ASDA’s bottom line. The relationship will inevitably improve ASDA’s corporate social responsibility (CSR) profile and reputation. Re-structuring their supply chain could also enable innovations to be brought about in the form of new products and new supply chain organisation, bringing about new efficiency improvements.   

What are the potential problems? 

As well as demonstrating the potential for commercially viable and development-significant relationships to be forged between large retailers and dispersed smallholders, this project also highlights some of the potential problems that can be faced when trying to link small-scale farmers to modern export markets. 

There were concerns around volumes of flowers wanted by ASDA. The UK demand for flowers is variable and the flower market is very seasonal, with peaks at Christmas, Valentines and Mothers’ Day. Owing to perishability, this can expose the smallholders to potential risks if they become too reliant on selling to ASDA. Similarly the purchase of smallholder-only flowers is likely to peak when first introduced into stores because of the novelty factor, but could drop-off as customers become used to the concept and look for more variation in the content of bunches. There is a potential solution to this problem: rather than stocking the smallholder bouquets in all ASDA stores they could be rotated between sets of stores (served by the same depot) to ensure that purchasing peaks and troughs are lessened, or removed altogether. This would provide the farmers with a 27-month market for the same bouquet of flowers, in which time smallholder incomes will have risen and farmers will be able to diversify into new and more sophisticated flowers – improving variation and product offering for customers – adding more value to the smallholder offering to ASDA and its customers.

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