Market System Development Assessment for Milkfish and Horticulture
Background:
The ‘Zurich Flood Resilience Alliance’ (ZFRA) is an alliance of ten organisations including international NGOs, private sector and research institutions that joined forces to support the Zurich Foundation in driving policy and good practice to reduce the negative impacts of flooding on the ability of individuals and communities to cope. The Alliance has been in operation for six years and is now in the third phase (Alliance 2.0) of its work programme. Within the Alliance, Mercy Corps plays a leading role in the advocacy component, including shaping the strategy for partnering and working with policy makers and disseminating the advocacy agenda, as well as coordinating the policy component.
BACKGROUND
Following on from the results of the pilot project implemented from 2022 to 2023, the Resilient Livelihood (RL) initiative under ZFRA project will endeavor to develop Resilient Business Models (RBM) by introducing more innovative and resilient business activities to support the livelihoods of communities most affected by flood risk in the coastal and upstream area. As part of the investment strategy, Mercy Corps Indonesia through the ZFRA programme is expected to intervene in market system development (MSD) with the Closed Loop approach in building the RBM in horticulture and aquaculture sectors. The Closed-loop agriculture principle focusing in fostering partnership to build a sustainable and integrated upstream to downstream agriculture ecosystem that in the end could create a resilient agriculture practice with improved productivity, that subsequently will be able to propel local income from the agriculture sector. The similar approaches and principles should also be contextually adopted for our aquaculture context.
CONTRIBUTION TO MC AND ZFRA PROGRAM
The climate-resilient livelihood practice across watersheds is intended to enhance communities’ climate adaptive capacity, reduce loss and damage, and reduce flood risks from better ecosystem management; which will subsequently increase community’s resilience to climate change. The implementation of Closed Loop business model is expected to ensure that the farmer will have improved capacity to implement climate-smart cultivation practice, availability of quality products that meets the market needs, reduce supply and price uncertainty, and improve the welfare of farmers and consumers. Closed-loop business model can only be successful and sustainable if the roles played by the involved actors within the system are tied to their actual business process. So that the system would not only support the farmers by improving their productivity, but also serve the business value propositions of each actor involved. Thus searching for actors that are interested to play these roles in the system and work towards a sustainable closed-loop agriculture system is of important for ZFRA. A successfully implemented closed loop business model will create an evidence for farmers on the economic benefit of the model and subsequently drive them to continue the implementation, while at the same time guarantee the availability of market off-takers and private sector involvement for current and future implementation.
The results of this assessment can provide detailed information on how market systems in milkfish (including its fishery product) and carrots value chains currently work, and identify needs, constraints, and gaps of the two sectors (milkfish and carrots). It can also provide solutions that can be used by the ZFRA programme to strengthen the performance of these sectors, especially in the development of closed loop schemes for the milkfish value chain (providing specific recommendations for downstream businesses related to fresh milkfish or pressure-cooked milkfish businesses) and carrots value chain to ensure the sustainability of climate resilient livelihood models, including the inclusion of conservation principles.
Purpose / Project Description:
The Close-loop business model requires the involved actors to take up specific roles and responsibilities within the closed-loop system, where there are 6 (six) main roles within the system: a) Coordination and facilitation of network of actors; b) Technical advisory service in Good Agriculture Practice; c) Market provider including offtaker; d) Financial services provider; e) Agriculture input provider; and f) Digital tools provider.
With the provision of bundled service scheme that combines financial access to the engaged financial institution as well as technical advisory service and production input access (for both agriculture and aquaculture activities) from private sectors and universities, the project enables the farmers and fishfarmers to strengthen their technical and financial capacity to improve their business. Added with our market network improvement that opens up an access to new and larger market with higher potential (compared to the current traditional market channel with minimal economic reward), the project will serve the community with modality to be self-sufficient in running a long-term business once the project is completed; and simultaneously provides an avenue for other actors to replicate the resilient livelihood scheme.
Further, cooperation scheme between financial service providers and the local government (in the form of rules, standard procedures and other potential enablers) will enable continuation of the business model. The link with technical service providers that are also part of the market value chain will also provide a sustained improvement for the community farmer and fisherman group to meet the certain criteria and standard quality from the market
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