Organisation
Zameen Organic
Country
India
Product
Cotton and textiles
Best practice
Marketing and value chain coordination
progreso
network
connecting producer organizations
The stor y of Zameen Organic: Strengthening capacit y to access global markets
This document has been realised with suppor t from Progreso Network and Solidaridad Netherlands Visit for more information the website w w w.progresonetwork.org
Table of content
2
Summar y
3
1
Zameen’s realit y
5
2
How it all star ted
6
3
On the way!
8
4
What was achieved
13
5
Useful lessons
17
Zameen Organic - India
Summary
Country: India Organisation: Zameen Organic Contact details for more information: www.zameen.org Product: Cotton and textiles Best practice: Marketing and value chain coordination Organisation Model: Farmer company This report lays out the steps in the process of value chain building along with pointers and pitfalls for other producer organisations. We did our best to document our experience but we do not claim it is a tried and tested model that can be copy-pasted into different regions.
The reality of Zameen Organic Zameen Organic is an Indian farmer owned marketing company that aims to build platforms to connect small farmers to big brands in global markets. The areas of Vidarbha and Telangana in South India are known for farmer suicides and have a large percentage of indigenous people. Due to the high risk environment and high cost of credit, agriculture systems with expensive inputs are not viable and the dominance of such systems has been one of the major causes for the spate of suicides (170,000 deaths between 1997 and 2007). Zameen is a trading company of which 50% of the shares are blocked for small farmer organisations. Currently the membership consists of 4,000 families. Besides selling cotton the company sells processed textiles and is starting a food division shortly as well as input supply.
How it all started The people behind Zameen come from different backgrounds like: development, agriculture, academics and commerce. The development sector was represented by an NGO called Agriculture and Organic Farming Group (AOFG), the organic agriculture and quality control expertise was brought in by Ashoka fellow Gijs Spoor, and the commercial expertise was brought in by long time textile enterprensue Satish Chukkupalli. Together they founded the company in 2006 with support from Stichting het Groene Woudt and Cordaid Netherlands. Aim was to combine the best of these worlds and offer an alternative development model: an example that could inspire change to the system that keeps creating poverty in rural India.
On the way The team of promoters liaised with local government departments to find willing groups of small farmers and used their professional networks to rope in textile companies. This was a complex process because few brands go deep enough into their supply base to facilitate smooth interaction between trading partners (i.e. spinners, fabric mills and garment factories). In the textiles industry, agents and middle men often form a part of the problem rather than the solution because it is part of their business model to prevent direct contact. Zameen pioneered a model for fairtrade supply chain coordination and co-branding with a large textile mill called ALOK Industries –uniquely positioned to shorten the chain because it is 100% vertically integrated.
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Meanwhile, in Europe a network of supply chain ambassadors was set up, directly representing the farmers and factories to generate business.
What was achieved Zameen managed to build a value chain that generates power and money for small marginalised farmers. Critical elements are a well oiled network of organic certified small farmers organisations, long term partnerships with textile factories including funds to roll out joint marketing campaigns, and a model to make farmers voices heard among buyers through direct presentation in Europe. Various long term trading relations have been developed and the model is being documented to prepare for replication in value chains based on other commodities such as coffee, rubber, fruits and grains.
Useful lessons In the process the team discovered that what they were going through can be summarised in five steps in the process, defined as:
1. consolidating production of fairtrade, pesticide free cotton 2. building an ethical Indian supply chain in India 3. recruiting supply chain representatives in Europe 4. generating initial orders from brands in Europe 5. deepening the relationship with the brands for the future The first step of consolidating production of fairtrade, pesticide free cotton is a “regular” rural development process including organisation development, technical assistance and internal quality control to enable international certification. Zameen grew from 200 farmers to 4,000 in three years. The second step of building an ethical Indian supply chain in India is less common in development and even in mainstream business. It requires heavy investment in relationship building. The third step - to find partners to help with sales support- implies intensive networking within the ethical textile sector, combining both social and commercial expertise. The fourth step of bringing in trial orders with brands is the real test of the supply chain and the relationships. Zameen is still perfecting this part of the process – among other ways through establishing a systematic Customer Relationship Management tool. The fifth and final step of deepening relations with brands to secure long term visibility for the farmers is the most innovative and potentially the most lucrative. There are many of opportunities to generate value through long term relationships but very few companies have experience with this type of trade and are therefore quite resistant and lack confidence to experiment. Finally, the Zameen team realised it could grow because it was able to generate support from all sections of society: the market, the government and civil society. Keeping the cross cultural sensitivity required to attract people from these different spheres while growing into a more structured business is one of the biggest challenges the company faces today.
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1
Z ameen’s realit y
The organisation is situated in Southern India with farmers spread over the two states of Andhra Pradesh and Maharastra. This is an area known for farmer suicides and has a large percentage of indigenous people. The population consists mainly of dryland farmers growing small grains (millet, sorghum) pulses (soya, lentils) and cotton. People live of a single season called kharif (July-February) and increasingly look for off farm work in the summer (March-May). Their main problems are unreliable rainfall, bad soil fertility and lack of basic services such as education, healthcare, credit and information to make informed decisions. Due to the high risk environment and high cost of credit, agriculture systems with expensive inputs are not viable and the dominance of such systems has been one of
Field visit by ALOK staff with US sportswear company
the major causes for the spate of suicides. In India cotton is mainly produced by small dryland farmers (only 30% of the cotton is irrigated). Zameen is a federation of a large number of groups representing more than 4000 families. After harvest they usually sell to the same trader that provides credit and inputs and dominates the informal economy. Many members have been developing alternatives for high cost chemical farming using local inputs. A group of farmers decided some 3 years ago to join forces and register a company to get access to the most powerful players in the value chain namely Indian textile industry and international fashion brands. This is the story of that journey from the Indian village to the catwalks and high street shops of Paris, London and New York
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2
How it all started
2.1
Challenging context The challenges that the members of Zameen were facing when they started building the organisation in 2006 were plenty. There are high levels of distrust in rural India as well as in the textile industry, with many factions competing for power and money. International trade is also a quagmire of distrust exacerbated by people making a living from the lack of interaction –so called middlemen that do not add value (also called “smokescreens”).
Back home Challenges in the villages itself were mainly around transparent leadership, accountability and governance. Who is a good farmer leader? What are the responsibilities of members when holding the leadership to account? What should members do themselves and for which tasks do they employ staff? How to involve women, illiterate members and landless labourers? The starting point, was that nobody collaborated with anybody else and all were competing for favours from powerful people such as traders and government officials. Zameen had to tread a fine line between ensuring short term benefits, to keep up motivation and long term vision, to ensure the company stayed on track. In three years the organisations grew from 200 farmers to over 4,000.
At Zameen headquarters Zameen was promoted by three people: Mr Koshy, Mr Spoor and Mr Chukkupalli. Mr Koshy represented the promoting NGO called Agriculture & Organic Farming Group India (AOFG), Mr Spoor is a social enterpreneur while Ashoka Fellow and Mr Chukkupalli are textile entrepreneur’s. They formed the board that interacted intensely with the farmer leadership and the outside world. The challenge was to bring various cultures together into a single operational structure: Asian & European, rural and urban, agri-based and industry based, commercial and non profit. The situation at the outset was that all three had their own agendas, networks, values and identities and did not want to give these up without clear benefit from the synergy. It was hard to recruit likeminded professionals who were willing to stay in remote areas and earn less than their peers in corporate jobs or with international donor funded projects. Zameen had to survive during hard years with very little support. Though farmer representation at board level was an ambition from the start it was realised that strategic decision making required intensive training for which the promoters had no time. Hence till date there are no farmer directors.
Within the value chain Zameen started working with small fairtrade factories in India that were FLO certified, but were all protecting their clients and networks. Despite being a pioneer sector there was little or no sharing of knowledge which held back learning and allowed larger players to catch up and sometimes out-compete the pioneers. At the begining people did not know each other and did not want to know. The value chain looks complex and daunting and when there is a deadline or target to meet one does not prioritise building a new relationship with someone who’s not directly involved in your core business. Zameen had to forge new relationships and build a lot of trust amongst all of the value chain partners.
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2.2
Main steps in the process There were many parallel developments over the past three years, including structuring of operations, improving corporate governance, developing a model for rural service delivery, etc. but in the process of generating access to international markets there were 5 main steps: 1. consolidating production of fairtrade, pesticide free cotton 2. building an ethical Indian supply chain in India 3. recruiting supply chain representatives in Europe 4. generating initial orders from brands in Europe 5. deepening the relationship with the brands for the future The table below lists the expectations from various stakeholders involved in the process: Background
Expectations/ Hopes
Fears
Farmers
History of exploitation and resigning tofate. History of infighting and lack of solidarity: cooperatives have failed and politics mired in corruption
Market access means recognition and respect as well as reduced risk and stability for farm planning
Risk of bad rains omnipresent means aim is always to maximise income – fear is that others get higher price. Also fear is being exploited as usual”
Farmer leaders
Leadership means corruption and selfishness
In line with the past leaders expect personal benefits
Fear is loss of face –e.g. if organisation does not deliver
AOFG (NGO) staff
Service to farmers in government mode: give them what they ask for
Staff hope for long term security within farmer organisation
Relationship with farmers damaged in case of bad sales
Zameen board
Very different backgrounds for each member
Hope is to reach a common goal that allows each member to realise their dreams
Farmers not being reasonable about price and quality
Zameen investors
Commercial returns ventures are the norm
from
Zameen may generate a model that can be replicated in other value chains
Experimentation is always risky: will it succeed commercially?
Supply chain partners incl ALOK Industries
Bulk fabric sales to large brands and retailers, compete with Cheap China.
Increase market share in Europe by good PR.
Lack of market support for real change leading to loss making investment in Zameen stock.
Did not know where cotton came from and could not answer buyers if they asked.
Adoption of project by strong retailer / brand to take over leading role within 3 years.
Felt bad about suicides in their own region and sector. Always looking for opportunities and thinking in terms of solutions. International ambassadors
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Zameen
Various, mainly small ethical brands
Power to reach mainstream with strong back end support, allowing them to focus on sales
Being left in the lurch by the Indian team, loss of reputation
Brands
Building and defending reputation among consumers
Reliable supply of goods that allow them to focus on sales
Good stuff will be too expensive
Consumer
Everything is always available
No worries about history of products they buy
Complex stories are confusing: are they doing the right thing?
Zameen Organic - India
3
On the way!
This section will present the “5 easy steps Zameen took to conquer the world ”. As mentioned in the previous section they are: farmer mobilisation, supply chain building, sales rep recruitment, trial orders and deepening of brand relations. How easy were these steps actually? What had to happen to achieve the end goal of farmers faces on the shelves in Europe? Which partners were taken on board on the way and what roles did they play? Let us start by stating the vision and mission the initial Zameen team had defined:
Mission Zameen’s mission is to build profitable supply-demand partnerships between strong organizations of small farmers in India and ethical brands worldwide.
Vision Zameen’s vision is to create a different kind of market where the promise of organic farming and fairtrade can be realized. A market where farmers are known and celebrated, where innovative design, social equity and stewardship of the land go hand in hand, and where fair returns are shared by all partners in the value supply chain.
As you can see the aim of the company is to link farmers and brands as well as generate wider change within the sector. These are objectives beyond the direct reach of the farmers and their professional management. This is a typical feature of value chain initiatives: they are cross border, interdisciplinary, complex and holistic in nature. To simplify analysis we broke down the overall process in five separate steps / phases. In actual reality all phases happen simultaneously and chain integration only emerges if all actors are identified and willing to commit.
3.1
Consolidating production of fairtrade pesticide free cotton The project started with 200 farmers mobilised by Mr Koshy’s NGO AOFG and funded by Stichting Het Groene Woud (SHGW) and Cordaid, from the Netherlands. The project team had strong networks in technical support as well as voluntary labels –one of which was the Ford Foundation funded network run by Centre for Sustainable Agriculture (CSA) in Hyderabad which functioned as a hub for Non Pesticide Management (NPM) –from where they recently launched a separate NPM label called ZERO. Other networks were the local liaison officers from the Fairtrade Labelling Organisation (FLO) and their National Initiatives (the sales people from European fairtrade organisations who maintain relationships with brands and label license holders). Finally, visits to and from textile factories and brands were crucial to build confidence in market potential. The local government played an important role in introducing the Zameen team to fledgling farmer organisations and rural grassroots organisations. The district administrations actively promoted contract farmer schemes and supported farmers with subsidies on organic inputs which made it less risky to experiment with NPM cultivation techniques.
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Zameen Organic - India
Finally, the international volunteer network with hubs such as Intellecap – a Hyderabad based microfinance consultancy- was critical in providing initial manpower to run field operations. The structure of the farmer organisations has four tiers:
Groups (less than 20 members) federate into Clusters (around 200 members) each with their own registration, board and monthly meetings, which federate into
Regional associations –again with separate registration, board and monthly meetings. Finally, at apex level there are two bodies representing clusters for different purposes: a. The Producer Executive Body (PEB) is registered as a society and coordinates fairtarde premium collection and investments. b. The Mutual benefit trust (MBT) looks after communication with the Zameen board –preparing board meetings, collecting member views, etc.- , investment of shares into the company by members and distribution of dividend.
3.2
Building an ethical Indian supply chain Again, networking was the key –with Organic Exchange being an important platform to get to know factories and their management. Besides, there is a very active visiting circuit wherein brands, researchers, donors, and certification inspectors see factories at work and exchange observations. They play a very important role as cross pollinators – the bees of the value chain! Various supply chains were explored, all with their own distinct intricacies and dynamics. One partnership between a brand and a factory that used Zameen cotton was KSI Textilestation India. German baby wear company Sense Organics and Mr Chukkupalli formed an Indo-German joint venture with high stakes from both sides. The promoters had very strong technical backing, but could not manage both the Indian supply chain as well as the European sales and hence had to separate again and focus as two companies: the brand and he factory. Zameen continues to work closely and successfully with both.
An almost successful supply chain… The first factory Zameen started working with was PREMAS Exports who were supplying EPONA in the UK: the promoter had invested in an integrated value chain in cluster form – he had expanded his garment factory with a knitting and dyeing unit and even bought a second hand semi mechanised spinning machine all on the basis of orders from a single customer. Unfortunately he did not manage to control social practices in this quickly built empire and once he lost his FLO certification the game was over…
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Zameen Organic - India
The biggest and most talked about partnership is with ALOK Industries. Zameen signed a 3 year MoU covering both raw cotton sales and joint promotion in the international market. This was never done before anywhere in the world and it shows the potential for innovation in India. Zameen organised a workshop at ALOK’s Mumbai offices to train mainstream industry professionals on fairtrade and stimulate management involvement. A dedicated staff member was appointed to coordinate Zameen enquiries and orders with ALOK’s marketing department which is made up if 300 (!!) merchandisers. Zameen included ALOK in its 2009 “triple bottom line” report -planting a seed for value chain wide ambitions on social and ecological value creation. Frequent exchange visits between factory and field helped to consolidate the relationship and joint presentations were made at international trade fairs in Paris, London, Mumbai and Frankfurt. It is a very heavy task to ensure a happy marriage between a midget and a giant, but initial experience is positive and the opportunities are amazing. Imagine farmers with less than a dollar a day being represented directly among global corporate leaders: if that is not inclusive growth ?…
3.3
Recruiting representatives in Europe With investment from two social impact venture capital funds Aavishkaar and Rianta Capital Zameen was able to create confidence among potential sales representatives in Europe. The investment was raised through a series of business plan competitions facilitated by New Ventures India1 and BID (Business In Development 2) that offered highly useful business plan formats and coaching support. A great help was Zameen’s CFO at the time: Mr Leeder, an ex Wall street investment banker who turned idealist and decided to use his corporate skills to make a difference in peoples lives rather than on paper. This trend of professionals making otherwise unreachable skills accessible for Small Farmer Organisations is rapidly growing and Zameen profited immensely from friends in business, banking, accounting and law. For more information on professional services for social enterprises see the resources section in Annex 1.
Frankfurt 2008: the birth of Zameen Europe “To be in the same room with a group of dedicated fairtrade supporters and two of the most powerful people in one of Asia’s leading textile industries was exhilarating: we were walking the talk! Many people talk about value chain integration and multi-stakeholder platforms but we were actually building one. Everyone was excited to be part of this unique process.” - Gijs Spoor, founder director Zameen Organic
1 New Ventures India: http://www.newventuresindia.org/nvi/newdesign/index.jsp 2 Business In Development: http://www.bidnetwork.org/
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Zameen Organic - India
The European sales team started taking form through a meeting in Frankfurt hosted by Sense Organics. ALOK CEO Mr Jiwrajka attended along with his Vice President Mr Lerner and there was a genuine excitement. ALOK agreed to charge no extra fees for processing Zameen cotton which meant that fabrics were available at affordable prices for those who could meet ALOK’s minimum volumes. And textile professionals from France, Netherlands, Gemany and the UK offered to open up their networks and pitch on behalf of the supply chain to generate large scale business. A textile designer from UK who had spent 6 months with Zameen setting up a fibre sales system- was supported by ALOK to run a European secretariat for the international Zameen consortium. This proved too expensive however and orders took longer to materialise so the model was changed.
3.4
Renerating initial orders from brands in Europe With the sales force in place to start generating orders the real challenge started: convincing brands to place their purchasing power behind the Zameen story. The first major order came from ALOK’s sister concern: a retail chain called Store21 (because you feel like 21 years old when you leave the store). They were in the process of revamping their brand and rolling out new outlets across the UK and this idea came just in time. The company joined the Ethical Trading Initiative3 and the staff underwent a training on fairtrade concepts. The marketing department worked closely with Zameen sales representatives in the UK to get the collection in store in time and on target, along with all the labelling requirements from the Fairtrade Foundation – each communication where a brand uses the Fairtrade mark needs to be authorised by FLO. The collection sold well and even had a special swing tag featuring the Zameen farmers story (more about this in section 3.5). A second order came from France for carry bags for a major grocery stores chain. It took over 12 months of presentations and follow up to confirm this order due to frequent changes in management and general slow pace of decisions in large companies. A third positive experience was an order for sleeping bag liners from a Dutch outdoor company. The buyer even visited the farmers and the factory and took a professional photographer along to create marketing material featuring the producers. There were also some bad experiences – for example with a major UK retail chain where the road seemed to turn into a dead end with the garment factories in Sri Lanka – an element in the marketing strategy that Zameen and ALOK had planned to include but never came round to. Another major European fashion chain decided not to use the Fairtrade mark as it is not recognised evenly across Europe – besides the UK, France and Netherlands not many markets have a strong preference for FLO certified products.
3 Ethical Trading Initiative : http://www.ethicaltrade.org/
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3.5
Deepening the relationship with the brands for the future The “Store21” collection swingtag (see image) looks simple, but was the product of a radical thinking process. If farmers get recognition – “a face”- in the market, consumers are stimulated to question the brand about their suppliers. Once a brand starts communicating about its suppliers it is very hard to stop. It becomes part of the brand identity and the associated shopping experience. You don’t just buy an anonymous interchangeable commodity anymore, rather you buy a product from someone with a life story. “Pants to Poverty”, is a very special brand that takes consumer producers linkages to yet another level. Their marketing campaigns including photo shoots prominently feature the value chain. Consumers are invited to become brand ambassadors through a network marketing scheme and they can win a trip to meet the cotton farmers to celebrate traditional Indian festivals that again generate novel branding images. Cutting edge viral media campaigns also involve the farming community –as can be seen from this farmer in a “Panteater sighting”4 video posted on Youtube and a life size puppet acting as panteater on a festival in the UK.
4 Ethical Trading Initiative : http://www.ethicaltrade.org/
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4
What was achieved
4.1
At production level The first and foremost performance metric is income of the members. Though not all farmers are surveyed every year, a study done in 2009 showed that most farmers experienced small increases. Some outlier cases demonstrate up to 300% increase in income through a multiplier effect of lower input cost, less debt, higher yield and higher farmgate prices. To assess whether farmers are actually better off it will be important to set up a more elaborate impact monitoring system. The farmer organisation grew from 200 members to a size varying between 4000 and 6000 members. The exact number changes based on varying interest in joint trading and is a sign of instability at the base of the groups. But participation in monthly meetings and elections is regular. An internal control system (ICS) catering to international certifications for organic and fair-trade as well as for domestic certifications for NPM, organic and fairtrade. Volume of production increased from 200 tons of lint to 1500 in 3 years time. Side selling remains a challenge with the company able to buy only 30 – 60 % of the members harvest. This is the result of mutual interdependence in the system: if sales are slow so is procurement and vice versa.5 Contracts are signed every year for procurement outlining the division of responsibilities for each step in the process of collection, transport, processing and quality control between groups, clusters, regions and company staff. Not everybody understands these contracts and the importance of written agreements and dealing with the large amount of required paperwork to run a complex enterprise remains a challenge. Responsibilities can not be handed over too fast nor too slowly making the model extra sensitive to senior management assessments. Such an experimental adventure is not possible without strong Business Development Services and Zameen relies heavily on AOFG backing. A process of organisational assessment at regular intervals to make the handing over decisions more transparent and systematic has started but this is still in its nascent stages. Communication materials and channels have been set up to enable engagement with the wider world of trading, branding and value chain integration: the website carries a short video about the history of the company and its supply chain, and is currently being expanded to include E-commerce functionalities; a blog was started but regular content generation is still a challenge; a Facebook page and a Flickr site are also up and running showcasing the farmers’ story to social networks online.
4.2
At Indian supply chain level As mentioned earlier the PREMAS supply chain was a dead end. The Textilestation supply chain is still operational and caters to niche markets of high value low volumes designer brands. The coordination with spinners and fabric mills is rudimentary but this is inherent to the small volumes. You can not dictate terms if your orders represent less than 10% of someone’s business. The ALOK supply chain offers immense opportunities for true value chain integration. However, the complexity is vast and without hard commitment from big buyers Zameen will not be able to focus on anything more than business as usual and compliance with basic standards (i.e. organic and fairtrade).
5 In 2008-09, the company had actually taken more risk than the farmers by investing in stock, paying premiums upfront and having to sell at a loss. In 2009-10 conventional prices were so high that there was hardly an incentive to sell to Zameen.
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The video showcased on the Zameen website and the joint Zameen-ALOK marketing pack was a success. It took intense communication to get the two organisations on one page but the result was satisfying for both. Finally, buyers visits are the cement that keeps the partnership alive. ALOK do not have an internal belief in the ethical market so their scepticism can only be overcome through experience of an actual trend in buyers making ethics a core factor in their buying decisions. Until they do the supply chain integration is doomed to smoulder as pilot light without catching fire.
4.3
At level of representatives in Europe UK The Pants to Poverty team supported Zameen-ALOK with design of case studies and a very attractive marketing pack to bring across the human element of Zameen’s story and the hard core industry credentials of ALOK. They also brought in a world leading advertising company to re-design the Zameen logo from an agriculture image to a value chain concept. On the sales side there have been serious outputs in the form of market research in home textiles and high level pitches and introductions. One buyer became a voluntary rep himself and is spreading the word in the sector about Zameen’s industry friendly model. The UK team has a large collection of swatches (fabric samples) to allow buyers to touch and feel the end product.
FR The experience with the first order in France taught that focusing on a specific market segment is crucial if the sales representative has limited time. In this case carry bags were the entry point.
NL The Dutch rep had also mapped the market in great detail and generated sales within a few months after joining, through sharp focus on a small target segment. A second rep showed interest to turn her studio in Amsterdam into a showroom for Zameen fabrics.
America A potential rep at a Canadian University is setting up a system to generate sales within the education sector. The ex CFO who helped secure commercial funding for the company was so inspired by Zameen that he decided to start a fairtrade fashion brand –one of the first in the USA. Orders have been slow partly due to the absence of fairtrade labeling on textiles in the USA till date.
4.4
At level of brands in Europe UK Besides the direct procurement for its own brand the Pants to Poverty team launched a charity called the Pi Foundation to invest in value chain projects that are too risky, too innovative to generate mainstream funding and too textile specific for conventional donors to initiate. The charity trustees are recruited from within the textile industry and social enterprise sector and bring vast networks to multiply the lessons learnt from working with value chains like Zameen’s.
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There are plans to register yet another associated entity to be called Pi Fashion which will focus on the role of supply chain ambassador for Zameen and associated production networks along with a physical showroom for customers to “touch and feel” the fabrics. The branding team aims to share equity in this company with the farmers and factory workers indicating the passion underlying their work and the potential depth of the relationships. Finally they launched a radical campaign involving the entire value chain to ban the use of carcinogenic pesticides such as Endosulfan. Many more such cross chain events could be envisioned in the future, unleashing a new power – a hybrid of private and NGO sector.
FR In France the grocery stores piloted direct reporting on fairtrade projects to end users of their carry bags creating a link between farmers and consumers that never existed before. Zameen had to change its administration of premium projects to make it 100% transparent and allow brands to follow the entire process from project selection to monitoring and evaluation.
NL In Holland the Zameen ambassadors are drafting the Value Chain Community Manifesto – a set of key values that aims to keep everyone’s eyes on the prize while trading together. A special wholesale unit catering to small scale fabric orders for fashion colleges and young designers is being launched. And finally a flagship brand Zameen staff and farmers (up) as part of a consumer facing branding campaign (below)
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with Zameen cotton, processed with herbal dyes is being developed, to have its own retail location in Amsterdam.
Zameen Organic - India
America The Canada Zameen rep is directly investing time to develop a Fairtrade PLUS supply chain with earmarked gender projects, while the business model of the ex CFO in the USA includes direct profit sharing of up to 25% between the brand and the farmers – again a radical and unique model.
Zameen as part of the wider strategy of underwear brand Pants to Poverty referred to as “Trading Co” in the graphic
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5
Useful lessons
5.1
Do’s an don’ts for the 5 steps in the Zameen model Step in the process
DO’s
DONT’s
Production
Include frequent member services such as weekly Farmer Field Schools or SMS subscription to relevant agricultural data.
Go too fast. It raises expectations to unrealistic levels and creates space for corruption which –once initiated is impossible to wipe out.
Supply chain development
Build personal relationships with manufacturers. Learn what their issues are and address these when dealing with brands who are often more open to farmers than factories. Help keep up inspiration and motivation among likeminded processors –they are a very rare asset!
Intrude too much on internal social issues. There may be many gaps in the working conditions but scope for excellence is limited in the manufacturing industry until buyers put their money where their mouth is
Challenge factory owners to be more proactive in dealing with buyers. Brands may be arrogant but they need to be told that ethical chains require investment and discussions on trading terms are often held with factories, not farmers.
Assume that technical details are too hard to grasp. All manufacturing is man made so can be understood, but insiders prefer to mystify technology to boost their sense of importance.
Raise money to pay for professional marketing materials. This is the basic service any sales rep will need to sell your product. Involve your networks in the target market in the design and copy writing because these are very culturally sensitive.
Leave unclarity on remuneration. People need to have cash backup to act as agent (travel, tradefairs, etc) and it can take a long time before sales generate cashflow (up to 12 months!)
Combine both ethical skills and knowledge with technical and commercial. You need both
Forget to inspire and motivate your reps. You owe it to them
Use the human element of your fairtrade / rural development story. Gandhi gave the world a moral talisman with words: judge your action by the impact it leaves on the poorest person you have seen. You can help brands do what is right and that is worth a lot!
Get sentimental. Issues that may be top of your mind have to compete with local issues in the mind of the buyers. If they do not understand it’s their loss. It does not help to get angry at them…
Produce samples that showcase the skills of your supply chain. It is a team building exercise as well as a good sales tool.
Spread yourself too thin. The world market is so big it’s easy to get lost. Focus on well researched buyers
Invest in a strong CRM system. Reliability and confidence are key to build and maintain trust. Trade is a social process and partners needs constant re-assurance.
Accept delays from your supply chain/ sales reps. Keep an eye on the enquiries to make sure you don’t miss any opportunity for your farmers
International sales reps
Brand / buyer relations
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5.2
General recommendations Key factors to take into account when implementing international marketing initiatives: Promoters from different backgrounds ensured Zameen could balance various aspects of the hybrid business model. Businesses depend heavily on the people at the top –their character, their ambition, their personal interest, but especially their networks and culture can make or break the company. For companies operating across sectors and continents the diversity in leadership is crucial. As was seen with the question “to hire or not to hire” regarding a full time rep in Europe: it is a continuing journey to find the right balance between risk and returns. One year after she was fired, again a full time staff is being proposed to set up shop in the UK and Zameen is looking at showrooms where buyers can touch and feel the end product and complain when they are unhappy. To achieve synergy investment is required whereas returns are shared by all partners. It is crucial to be flexible in trying out different ways to finance innovation and ensure interests are aligned. It is simply not enough to have a supplier in far away India –or Africa or Latin America for that matter. People want to be able to pick up the phone and talk to someone in their own language. This is the key to the entire process: translation of supply and demand in services and product – across vast cultural gaps and under heavy pressure to deliver trade goods on time and as good as the competition. This means that any model for global market access needs to have a component of local sector specialists in the target markets.
What the Zameen team would do different if they would do it again?
Focus on small segment of the market to start with, in stead of a single strategy across segments that involves too many people and areas of expertise. The fashion industry and the home textiles industry have their own buyers, trade fairs and networks and if you want to cater with a single raw material (cotton) to all of these you need very heavy investment in manpower. Other projects started with simple knitwear (T-shirts, hoodies, yoga wear) and maybe it was too ambitious trying to aim for new products (woven fabrics) in a new market;
Maybe work with two /more parallel companies to generate internal competition and keep the sales teams on their toes? When asked, Zameen staff were not sure if that would work in such early stage innovations but it’s worth to consider when setting up a similar project;
Include organic inputs and credit in the farmer services portfolio. Farmer members have been continuously asking for this, but the Zameen team were just too busy looking for markets. If you broaden the basis for the relationship with the farmers you can take more risks without fear of losing member support along the way;
Start with a stronger gender policy. The non profit manager says: “We had too much on our plate to begin with so could not juggle the extra demands posed by positive discrimination. But inserting it half way also takes a lot of energy…”
Structure the business development services (BDS) in a company format so that the trainers are more easily held accountable to the trading company and the members. Currently it is organised as an NGO which is an inherently unaccountable structure.
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Zameen Organic - India