Meeting Theo de Jager

Meeting with Theo de Jager, president of the World Farmer’s Organization (WFO) and executive director at Southern African Agri Initiative.

This is the second time I have had the chance to meet and listen to Theo, a highly charismatic leader, passionate about the present and the future of farming and representing more than 100 million farmers worldwide. It all happened this week while I was representing Globalpraxis in Zurich during the Global Food and Agribusiness Network forum.

Theo again stressed the critical importance of farming for humanity and its role: Basic, simple nourishment while preserving the planet at the same time. What is also very clear about his message is that farming is and will be the key to the future for Africa and the developing world. “Africa is blessed by its nature, its soils, its climate…”

So what will it take to make it happen? Theo would say technology. If African farmers had access to the same technology that other farmers of the world enjoy, most of the problems they have today would disappear. They know what to do; they know how to do it.

However, when I listen to his passionate pleading another dimension of the challenge comes to mind. What would the situation of farmers (and farming) worldwide be if they all had access to the techniques used by industrial companies and retailers for maximizing their revenues and margins? How much of the value chain that they rightly deserve would they claim? This is something that big cooperatives are currently focusing on and it is a good beginning but it is not enough.

Re-balancing the share of revenues is something that consumers view very positively. Farming and farmers evolve in a very low-margin environment. Their products need time and significant work before going to market. Food production is subject to many unforeseen circumstances, such as climate issues, disease… – the farmer’s work can vanish in a matter of hours. In addition, in most countries there are no subsidies or official help.

Working on the route-to-market value chain means looking at all its components: Production, logistics, distribution, sales, and marketing. In each of these elements, there are ways to be more effective and more efficient. “Doing the right things and doing the things right,” as Michael Porter would say. Understanding and working the value chain means looking at cents more than dollars, and requires a critical analysis, access to the facts, and data.

At the other end of the chain, retailers are developing extraordinary tools to maximize their margins and revenues: Predictive consumer behavior, price modeling, promotion effectiveness… And these benefits, clearly, do not go to the farmers. There must be a way to introduce more balance into this unfair equation – for the benefit of all.

This touches on a fundamental side of business today: Revenue growth management. “Briefly it is a process of decision-making that includes planning, implementation and monitoring the farm as a business. This assumes an objective of making profits. Central to the process is an analysis of farmers’ resources and markets.” – UN Food and Agriculture Organization.

Introducing RGM (revenue growth management) into farming requires at least 4 key dimensions, as mentioned in the UN report:

• Market-oriented production; in other words, understanding the current demand – as retailers would for future consumer behavior
• A clear understanding of business economics, at all levels
• A rigorous and critical risk-management strategy
• Finally, as in all business planning, a good set of KPIs in order to relentlessly control and follow up on progress

It is in everyone’s interest that farmers and farming get their fair share: For our survival, the protection of our environment, the preservation of our habitat, and the quality of our food. There must be a way. It should start by getting the facts, the data, the financials, and analyzing them fairly. We manage to deeply transform the situation of companies when we look at the details of their route-to-market and RGM. I can only wonder what the results would be for millions of farmers.

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