Table 26. Business Context – Agri-business

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standards and certifications. In Japan, for example, there is high demand for special agricultural products and, for example, the Japanese consumer is willing to pay high prices for better quality products such as organic, eco-friendly and fair trade products. Japan constitutes a key buyer and the Association represents the second most important supplier of this agricultural product in Japan (Roldán, 2011).

The regulation to these agricultural activities in Colombia has mainly focused on the control of foreign trade, quality of products and taxes but not specifically concerning environmental issues. Nevertheless, any industrial activity in Colombia must comply with water use, air emissions and the management of residues. From interviews and sustainability reports, there is evidence of a general legal framework in which the environmental management of any industrial activity must be kept in compliance with water use, air emissions and residual management.

No evidence was found of community pressure for the adoption of environmental strategies. Currently, the surrounding communities of the agricultural farms benefit from the projects developed by the Association for its associates, who also belong to the influenced communities.

Table 26. Business Context – Agri-business.

Esa factor Categories Main features

Business context

Coercive General legal framework for water use, air emissions and residual management. Neither environmental license nor hearing process requests apply to this industrial sector. Mimetic Main competitor’s practices associated to climate change adaptation and best practices. Normative Industry standards such as ISO 14001, Rainforest Alliance, UTZ and 4C certification among other sustainability protocols.

b) Business model

Agri-business runs a dynamic business model focused on the improvement of the productive chain, in order to generate revenues for its associates, reduce environmental impacts by the use of cleaner technologies, adopt best productive agricultural practices and strengthen the social tissue of farmer communities.

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The business model is deployed through the financial, technological, organizational and strategic capabilities of the firm.

The financial capabilities constituted a mechanism to perform R&D investments for the development of organic products, in order to access new and mature markets and develop technological solutions to support sustainable practices.

The Association has used its financial capabilities to produce certified organic products to get access to mature markets. Certified organic products imply that the “product has been produced and processed in an ecologically sound manner” (FAO, 2018).

Besides, R&D investments have been focused in the development of technological solutions for water consumption reduction and the use of enzymes in the fermentation process to avoid the leaching of wastewater (Agricultural-Research-Center, 2016).

Strategic capabilities have constituted a mechanism for brand positioning by offering an organic agricultural product, incorporating social projects with marketing activities and establishing a constructive dialogue with stakeholders. Strategic capabilities have supported the Association in representing more than 500.000 farmers and achieve an important level of acceptance and remembrance among consumers and the agricultural product industry.

Additionally, strategic capabilities have been present in the Association in order to obtain resources from government cooperation funds (in addition to revenues from their own sales), resources from royalties for the use of its brand and resources from the contributions of the associates. Finally, by using this capability, the associates have gotten access to rural electrification, waterways, and the improvement of local roads (Farmers-the Association, 2017).

Besides, regarding the environmental strategy focus (i.e. green products) and the relation with its business model, the Association has stated:

“… Since 2009, the Association established a line of action towards sustainable agriculture to promote a good living among farmers, and to make a long-term profitable activity from the agricultural business, that contributes to economic and social development, while protecting natural resources … “(Proclama, 2021)

Along with this statement, Association has adopted, since its foundation high quality product standards to create a brand differentiation in the international market. For example, the Protected Designation of Origin (PDO) in

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the European Union and Switzerland has recognized the quality of the agricultural product in relation to its origin since 2005 and 2013, respectively (El Tiempo Newspaper, 2017). Denomination of Origin is understood as “being the name of a region, which is used to designate an agricultural product that has qualities or characteristics that obey fundamentally or exclusively to the geographical medium with its natural and human factors, the production, transformation and manufacture being carried out in the geographical area in question” (European Commission, 2017). Organizational capabilities included the managerial ability and organizational learning for dealing with changes and external demands and maintain the competitive advantage of the firm. For example, in the 70´s the Association used to manage the commercialization of their products mainly through brokers and international distributors. Due to a low international commodity price, in the 90´s, the company decided to implement a new commercial strategy in order to add value at the end of its chain by processing in Colombia and perceiving higher returns for the farmers (Ramírez & Villegas, 2002). The company established a market and commercial format trough own and franchised retail stores in more than 13 countries and more than 300 stores (Farmers-the Association, 2017).

Association has used its organizational learning capabilities as a mechanism to achieve pollution reduction. The main sources of organizational learning have been related to R&D activities, farmers’ involvement and the adoption of best agricultural practices.

Association encourages farmers to adopt and implement improvements in environmental conservation and water and energy management, relying on best practices based on the experience and knowledge from their Agricultural Research Center (Farfán, 2011).

Additional practices include the transformation of productive systems to make them resilient to climate change through shadow management for crops, reforestation and protection of soil and water systems (Agricultural the Association, 2017).

Additional capabilities have included the faculty of leveraging the business through technical know-how and R&D on new products and sustainable practices. Technical know-how have also supported sustainable practices including a dry depulping process, through mechanical removal techniques, to reduce water consumption and the amount of wastewater disposal (Agricultural-Research-Center, 2016).