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Organic Business Guide/Annexes

< Organic Business Guide

Annexes

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Some of these annexes can be downloaded as "ready-to-use" tools in Word and Excel format. Click here to go to the download page.


Useful references and websites

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Organic agriculture
Organisations and websites


Publications


Organic certification
Publications

  • Standards and regulations: see Annex A5.1
  • EPOPA/CTA/FAO, 2006: Regulations, standards and certification for agricultural exports.

http://www.fao.org/docrep/010/a0791e/a0791e00.HTM


Fair trade
Organisations and websites


Value chain facilitation
Organisations and websites


Publications

  • UNEP/UNCTAD, 2008. Best practices for Organic Policy. What developing country governments can do to promote the organic sector.


Agricultural extension
Organizations and websites


Publications

  • Agridea, 2002. Innovative Approaches to Financing Extension for Agriculture and Natural Resource Management. Conceptual considerations and analysis of experience. http://www.agridea-international.ch
  • CIP-UPWARD/IDRC, 2005. Participatory Research and Development for Sustainable Agriculture and Natural Resources Management: A Sourcebook. http://www.idrc.ca
  • Helvetas, 2005. You Pay for What You Get. From budget financing to result based payments. http://www.helvetas.org


Gender issues in value chains
Organisations and websites


Publications

http://www.ifoam.org → Growing Organic → Training Platform

  • Pyburn & Verhart (forthcoming). Strategies for Addressing Gender in Certified Coffee Chains. KIT, Amsterdam.


Business planning and management
Organisations and websites

Publications

http://www.kitpublishers.nl/smartsite.shtml?&id=33740&ItemID=2764&ch=FAB

  • MATCOM Cooperative Training Manuals, available from COOP@ilo.org.


Markets and marketing
Organisations and websites


Publications


Value chain facilitation

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                                          Consultancy for developing organic value chains
Organisations Comments Further information
IFOAM Forum of Consultants Consultancy companies and individuals with a common code of conduct supporting the organic movement

 http://www.ifoam.org/about_ifoam/professional/consultants.html
ITC platform Database of business contacts for importers and exporters of organic products

 http://www.intracen.org/dbms/organics/index.asp
UNEP List of resource persons

 http://www.unep.fr/scp/rpanel/members.htm
UNIDO Providing trade related development services, consultancy in agro-value chain development and a value chain analysis tool kit

 http://www.unido.org/index.php?id=7395
AgroEco LB Consultancy in linking partners in organic food supply chains

 http://www.agroeco.nl
Bioherb Consultancy on all aspects of organic agriculture and essential oils, spices, herbs and medicinal plants

 http://www.bioherb.de
FiBL Consultancy in market development, certification

 http://www.fibl.org
FLO producer support unit Supporting producers by facilitating relationships with buyers and by helping to gain access to new markets

 http://www.fairtrade.net/services_and_relations.html
Greennet Support to organic initiatives in East and South-East Asia

 http://www.greennet.or.th
Grolink Assistance in development projects, training, and marketing of organic products

 http://www.grolink.se
Helvetas Organic & Fair trade Competence Centre OFTCC Supporting development of organic and Fair Trade value chains

 http://www.organicandfair.org
Intercooperation Consultancy services and project implementation on organic value chains

 http://www.intercooperation.org
Organic Exchange Supporting farmers in increasing their access to markets for organically grown cotton and food crops

 http://www.organicexchange.org
Traidcraft Support in building supply chains and in developing market access programms

 http://www.traidcraft.co.uk




Donors and development agencies supporting organic value chains

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The following table lists important organisations that are or have been active in supporting organic value chain projects. Please note that the list is not complete, and that priorities may change over time.


Organisations Weblink
AECF - Africa Enterprise Challenge Fund http://www.aecfafrica.org

BTC - Belgian Development Cooperation Agency http://www.btcctb.org

Danida, Denmark http://www.danidadevforum.um.dk

DED - German Development Service http://www.ded.de

GTZ - Deutsche Gesellschaft für Technische Zusammenarbeit, Germany http://www.gtz.de

Hivos - Humanist Institute for Development Cooperation, The Netherlands http://www.hivos.nl

ICCO - Interchurch Organisation for Development Cooperation, The Netherlands http://www.icco.nl

ITC - International Trade Centre http://www.intracen.org

Oxfam http://www.oxfam.org

Pro Invest (EU) http://www.proinvest-eu.org

SECO - Swiss State Secretariat for Economic Affairs http://www.seco.admin.ch

Shell Foundation http://www.shellfoundation.org

SIDA - Swedish http://www.sida.se




Business planning

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Outline of a business plan for an organic business

Executive Summary

  • A very important part of your business plan, especially if you want to convince investors! Provide on max. 2-3 pages a precise summary of the main aspects of your organic business.
  • Cover at least the following: Scope of your business (production, processing, trade etc.), description of products, certifications, target markets, organisational set-up, management team, financing sources, finance requirements.
  • Keep it short; details on each of these points should be explained in the body of the business plan. The executive summary is meant to give a short, to the point, overview of your business, your financial needs and the unique selling points of your business.


Description of the company or organisation

  • Explain who you are (legal organisation) and what is your motivation for organic farming, the envisaged development impact, your guiding principles in working with farmers etc.
  • Describe your business history; include historical data on volumes, turnover, number of farmers and employees etc.
  • Outline how you are organized (organisational chart), especially how you involve farmers in your business, how you are linked with processors, traders or service providers.
  • Describe the current status of your business and your future plans (growth, product diversification, vertical integration).


Business environment

  • Describe the political, social and economic environment in which your business operates. What are the main obstacles and threats for an organic business? What opportunities can be used? What is the attitude of the government towards organic businesses; are there supportive policies?
  • Describe the situation of other organic businesses operating in your country. Do they collaborate or participate in networks?


Products and services

  • Describe the products you are planning to offer, the degree of processing, and the quality specifications. Explain which certifications you envisage.
  • Analyze how your products compete in the market.
  • Describe the purpose of your products. Describe any specific features or benefits of your products, i.e. the competitive advantage (or disadvantage) of your product.


Industry and value chain analysis

  • Describe the organic industry you are in (volumes, revenue, trends). Describe the opportunities and threats of the industry to your company.
  • Describe the value chain(s) in which you are involved (value chain map). Analyse and describe any bottle necks, critical links, opportunities and threats in the value chain.


Marketing plan

  • Describe your target markets (at local, regional and international level) and the respective clients (processing industry, wholesalers, retailers etc.). Indicate the market size and average sales price of each target market.
  • Identify the trends of your target markets concerning market growth and preferences and how these trends form an opportunity or threat for your business.
  • Outline how you will reach your target market (sales price, marketing activities, marketing channels and material).


Competitive analysis

  • Identify your main competitors. Describe the strength and weaknesses of the competitors, including product quality and sales price.
  • Clarify your competitive (dis)advantages.
  • Define the market share you envisage to achieve and motivate how you will achieve this.


Operations Plan

  • Describe the location of your office and production area, the facilities and equipment needed. Indicate the planned number of associated farmers, production figures, number of staff etc.
  • Describe the activities from input supply up to sales, including the arrangements for bulking, storing, transporting and processing of the produce.
  • Describe the extension and internal control system, the system to manage information, and the measures taken to ensure product quality.
  • Calculate the variable and fixed costs of the production (cost price).


Financial Plan

  • Demonstrate the feasibility of your business (break-even). Calculate and comment your expected profit or loss over the next 3-5 years (including worst case - best case scenarios). Include an income statement and balance sheet with the results of the past 3 years (for existing businesses) and the planned results of the coming 3 to 5 years.
  • Calculate the expected cash flow and the need for (trade) finance for the first two years on a monthly basis.
  • Describe the sources of funds (own capital, investments, loans, advance payments by clients, grants), and how they are used.


Management Plan

  • Describe the management structures and how decisions are taken. Describe the profiles of the individual members of the management team.
  • Describe the Advisory Board, the supporting organisation or the consultants assisting you.
  • Describe which competencies are still missing and how you plan to get them.


Risk analysis

  • Demonstrate your ability to understand potential problems that could occur to your business. Explain how you plan to reduce and manage these risks.


Production planning tool - example

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Download the corresponding excel file here

 



Examples of cost price calculations

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                                            Example of organic pineapple processing
 



                                            Example of organic cotton fibre production
 



Financing institutions providing loans for organic and Fair Trade businesses

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Name of the bank Services Web link
Triodos Trade finance loans to organic and Fair Trade producers Microfinance

 http://www.triodos.org
Oikocredit Microfinance Loans Guarantees Credit lines Equity investments

 http://www.oikocredit.org
ResponsAbility SME finance microfinance Fair Trade Finance of independent media Private equity

 http://www.responsability.com
Rabobank Trade finance Farm finance, Sustainable Agriculture Guarantee Fund Infrastructure finance for food & agribusiness industries Finance of clean technology / renewable energy

 http://www.rabobank.com
Shared Interest Trade finance and longer term loans for Fair Trade producer groups Credit to Fair Trade buyers to provide advance payments to producers

 http://www.shared-interest.com
Etimos Finance for micro-credit institutions and trade finance for producer groups

 http://www.etimos.it




Organisational set-up and processes

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                                        Roles and responsibilities in extension and ICS


Download the corresponding word file here

Actors Responsibility of extension service Responsibility of ICS
Approval committee
  • Approval of list of non-conformities and sanctions
  • Approval of organic status of producers, based on recommendations in inspection reports
  • Decision on exclusion of producers due to non-compliance with internal standards
  • Handling appeals of producers against decisions of the internal inspectors or ICS manager

Head of extension / ICS
  • Development, management and revision of the extension system (curricula, training material)
  • Training of extension staff on extension methodology
  • Coordination of participatory research activities
  • Supervision of training activities, technical advice and exchange activities (including visits to at least 1-2% of the farmers)
  • Coordination of input supply and distribution
  • Development, management and revision of the ICS (procedures, forms etc.)
  • Training of extension staff on ICS aspects
  • Update and analysis of central database
  • Supervision of internal inspection activities (including re-inspection of 1-2% of the farms)
  • Decision on sanctions for minor non-compliances
Field officer / internal inspector
  • Technical advice to lead farmers and farmers
  • Training of producers
  • Visit to each farm at least twice per season
  • Monitoring of implementation of recommended production practices
  • Identification of problems in the field, and developing appropriate solutions
  • Facilitating the exchange between farmers
  • Follow-up on the distribution of inputs and equipments
  • Supervision of the work of lead farmers
  • Registration of producers (farm characteristics, location of plots, plot size)
  • Supervision of record keeping at farmer group level
  • Transfer of data and information to the head of ICS
  • Internal inspection of each farm (check records, physical inspection of farm, yield estimates)
  • Inspection of storage facilities
  • Supervision of buying the produce
  • Cross-checking data of each farm
Lead farmer
  • Regular visit to farmers; technical advice
  • Monitoring of implementation of recommended production practices
  • Identification of problems in the field, and developing appropriate solutions
  • Facilitating the exchange between farmers
  • Support farmers in keeping records
  • Registering farmers interested to join
  • Transfer of data and information to the field officer


Job description for Field Officer - example

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Download the corresponding word file here

Team and responsibilities
The Field Officer (FO) functions in a team comprising of other Field Officers and a Documentation Officer (DO), all managed by the Field Supervisor (FS). The FO reports to the Field Supervisor. The team works from the field office. The FO attends monthly team meetings in the organic field office. Progress and any problems are reported and a plan made how to solve them.

The FO is assigned to a certain area, a locality, a group of farmers for whom he/she is responsible. The FO is expected to live in that area. The FO is not expected to be a farmer unless it is a model farm. During the time of internal inspection (2 months of the year), the FO may be transferred to the locality of a fellow FO.

The FO shall be a good representative of the exporter. This includes that the right information from the exporter is communicated to the farmers, and that important information from the farmers is fed back to the exporter (via the Field Supervisor). Good communication normally means through contact farmers.


Assistance to farmers
The FO shall be responsible for correctly informing the farmers (men and women) of the standards of organic production as laid down in the internal regulation. This means that regularly, awareness and training workshops are held on demonstration farms, or otherwise. The FO shall assist the farmers (men and women) in improving agricultural production in a sustainable organic way. This may involve some experimentation on the demonstration farms or on individual farms. The strategy for farm improvements is decided every year in the team. The FO is to implement that strategy. The FO shall work with the farmers to produce predominantly Grade 1 produce; picked at the right time in the right way, properly fermented, washed and dried.


Responsibilities within the ICS
The FO shall implement the Internal Control System as described in the ICS manual. This means that the FO is responsible that for each farm under his/her responsibility

  • correct information is available, updated from the Farm Entrance Form
  • producer contracts are signed
  • a proper yield estimate is done prior to harvest
  • an annual internal inspection is done
  • non-compliances from the internal inspection are followed-up
  • areas for improvements indicated during the internal inspection are addressed
  • Corrective Action Requests from the certification body are implemented

The documents under the FO’s control are always kept dry and in a secure place. Documents gone missing are reported instantly to the FS. The FO guards the organic integrity of the farmers under his/her control. Failure to maintain organic status is a reason for summary dismissal.


Responsibilities during marketing
During marketing, the FO shall

  • communicate prices and buying times to the farmers
  • monitor prices paid by the competition and report to the FS
  • advise farmers on logistics (storage, delivery)
  • confirm the identity of delivering farmers
  • assist the buying agent in establishing the quality grade
  • address substandard quality
  • investigate suspicions of over delivery and contamination

Equipment
Every three years, the FO is given a bicycle as means of transport. The FO is responsible for maintenance of the bicycle. Breakdown of the bicycle is not an acceptable excuse for work not done. The FO is given gumboots and a cap to identify him/her as the internal inspector.


Targets
Every year specific targets are set by the FS (number of farmers, yield, new practices implemented, ICS work done on time). When achieved, the FO receives a bonus.


Confidentiality
All documents are confidential and should not be shared with any person without the consent of the Field Supervisor. Information requests from outsiders are forwarded to the FS. The FO shall assist buyers and/or inspectors of the certification body when they are visiting the farmers. At that time, the FO shall answer questions, share information, show documents etc. to facilitate the visit.


Further conditions
The Field Officer is not allowed to work for one year for another organic operator after termination of his/her job, regardless who is to blame for the discontinuation of the employment.

Date:

Signature of FO
Signature of Employer

Content of an Operating Manual

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Use and update of the manual

  • Objectives, how to use, distribution
  • Revision and up-dating of the manual

The organic production and Fair Trade system

  • The organic farming system, production methods
  • The Fair Trade system, handling of minimum price and premiums

Organisational set-up

  • Organigramme, roles and responsibilities
  • Selecting and organizing the producers

The extension system

  • Roles, processes and tools
  • Training of staff
  • Training of farmers
  • Extension visits
  • Facilitating farmer-to-farmer exchange
  • Supply of inputs

The Internal Control System (ICS)

  • Roles, processes and tools
  • Training of staff
  • Risk management
  • Documentation
  • Internal inspection visits
  • Internal approval procedure

Post-harvest operations

  • Storage, bulking, transport
  • Processing
  • Marketing, payments

Quality management and monitoring

  • Data management
  • Sampling, cross-checking
  • Product quality management
  • Impact monitoring

Annexes

  • Reference documents
  • Forms and templates


Annual operational plan

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Download the corresponding excel file here

 



Checklist: What you may need for an organic business

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Category Details
Personnel
  • management
  • accountant
  • extension staff, internal inspectors
  • marketing staff
  • labour for processing, packaging, transport
Buildings (owned or on rent)
  • office buildings
  • processing facilities
  • storage facilities
Processing equipment
  • cleaning / sorting / grading equipment
  • processing equipment and machinery
  • packaging equipment
Transport equipment
  • motorbikes for field staff
  • trucks for transport of goods
IT & communication equipment
  • computers, internet equipment
  • printer, copier etc.
  • communication equipment
Other technical equipment
  • scales to weigh goods
  • GPS to position / measure fields
External services
  • input providers
  • technical advisory services
  • certification services
  • business advisory services
  • transport services (if outsourced),
  • processing services (if outsourced)
  • auditing services
  • financial services
Certificates / Permits
  • organic certificates
  • Fair Trade certificates
  • phytosanitary declaration
  • (non) fumigation declaration
  • export permits
Finance
  • own capital (equity)
  • credits
  • trade loans



Certification and ICS

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                                       Overview of important organic standards and labels
Standards / labels Comments Further information
Official organic regulations
EU-organic regulation Council Regulation (EC) No 834/2007 came into force on January 1, 2009

 http://ec.europa.eu/agriculture/organic
US-NOP Production and labelling standards for organic agricultural products in the USA

 http://www.ams.usda.gov/AMSv1.0/NOP
Japan JAS Standards for production and processing of organic products in the Japanese market

 http://www.maff.go.jp/e/jas/specific/organic.html
Private organic labels
Naturland German label for organic agricultural production and processing, organic aquaculture, textile production, cosmetics, forest management, bio + fair

 http://www.naturland.de
Soil Association UK standards for organic production and processing of food, but also of textiles and cosmetics, ethical trade standard

 http://www.soilassociation.org
Swiss bud ("Knospe") Swiss label for organic food products, known for prohibiting air freight

 http://www.bio-suisse.ch
Demeter Biodynamic agriculture method, requiring specific measures to strengthen the life processes in soil and foodstuffs

 http://www.demeter.net
Product-specific organic standards
Global Organic Textile Standard-GOTS Covering the entire process from (organic) fibre to finished product

 http://www.global-standard.org
Cosmetics-COSMOS A number of private initiatives have merged into one European standard

 http://www.cosmos-standard.org




Sustainability and industry standards that can be combined with organics

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Standards / labels Comments Further information
Sustainability standards
Fair trade Food, wine, flowers, sport balls

http://www.fairtrade.net
FairWild Standard for wild-collected natural ingredients

 http://www.fairwild.org
FairForLife Combination of social and fair-trade standards for agricultural, manufacturing and trading operations

 http://www.fairforlife.net
Rainforest Alliance Conserving biodiversity, standard for agricultural and forest products as well as tourism http://www.rainforest-alliance.org
Utz Certified Coffee, cocoa and tea certification programs http://www.utzcertified.org/
CmiA - Cotton made in Africa Enhancing competitiveness of African cotton http://www.cotton-made-in-africa.com
BCI Approach to minimize harmful impacts in cotton production, no formal certification but self assessment and learning exercise http://www.bettercotton.org
4C Producers, trade, industry and civil society work together for more sustainability in the coffee sector http://www.4c-coffeeassociation.org
Quality and social standards
GLOBALGAP Key reference for Good Agricultural Practices (G.A.P.), is a single integrated supermarket standard with modular applications for different product groups, mainly known in the fruit and vegetables sector

 http://www.globalgap.org
SA 8000 Standard for improving working conditions, based on international human rights conventions. Was first auditable social standard

 http://www.sa-intl.org
Child labour Certification showing that agricultural products are not produced by forced labour or child labour

 http://www.www.laborrights.org/stop-child-labor/child-labor-free-certification-initiative
International Food Standard Food safety standard used by many supermarkets in Germany and France

 http://www.food-care.info
BRC Food Standard Food safety standard of the British Retail Consortium

 http://www.www.brcglobalstandards.com/standards/food
ISO 9000 Quality management standard

 http://www.iso.org/iso/iso_catalogue/management_standards/iso_9000_iso_14000.htm
HACCP Hazard Analysis & Critical Control Point, a systematic preventive approach used in the food industry
 http://www.haccpalliance.org
Product-specific organic standards
Global Organic Textile Standard-GOTS Covering the entire process from (organic) fibre to finished product

 http://www.global-standard.org
Cosmetics-COSMOS A number of private initiatives have merged into one European standard

 http://www.cosmos-standard.org




Farmer agreement - example

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Download the corresponding word file here

 



Internal regulations – example

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Download the corresponding word file here


 



List of non-conformities and sanctions – example

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                                            Sanctions and the levels of decisions


Download the corresponding word file here

 
                                 Non conformities according to internal standards / internal control
 

Marketing tools

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                                  Product description sheet - example of cotton from Burkina Faso


Download the corresponding word file here

 
A template is available on www.organiccotton.org --> library --> Product description sheet template.



                                         Contract between seller and buyer - example


Download the corresponding word file here

 

General tools

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                                            Typical pitfalls, and how to avoid them
 




Checklist: What makes a successful organic business

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  • Your farmers are loyal to you. More farmers want to join. The farmers appreciate the support of the field officers; both production and quality increase. The farmers have a farm with a future.
  • An organisation with head office, grading, processing and packing facilities, stores, field office and buying stations is in place. Quality assurance has been developed. You work with the same, reliable transport company year after year.
  • The company is well-managed, the staff is well trained, there is low staff rotation. The company can always be reached by email, phone, and fax, and it responds rapidly. There are clear arrangements for decision making when key staff members are travelling.
  • There is proper organic certification for the target markets. The contact with the certifier is pleasant. There are only few corrective action requests after the annual inspection.
  • You have a sizeable volume of a number of products of a quality demanded in the market. Every three years there is a new product. A unique selling proposition has been developed, one that is recognised by your buyers and competitors. You improve your business by asking feedback from customers.
  • Every year the marketing plan is rehearsed and confirmed. A number of markets and buyers have been tested. You operate in 2-3 different markets. Longer term agreements have been made with 2-3 selected buyers. You see each other every year. You have visited each other.
  • There are clear and efficient procedures on how to define prices (in buying and selling). There is a consistent policy on handling price and exchange risks. The company is in touch with the latest market and price developments.
  • A continuous analysis of costs and benefits shows that normally there is a 15-20% margin. This margin is used to expand the business.
  • Your health and that of the family is well.
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