Digitalization offers a wide range of opportunities for Small Producer organizations to enhance their competitiveness, spur innovation, and enhance productivity, on a more even footing with larger firms. In the wave of digitalization sweeping the world, SPOs’ future growth and even survival, to a large extent, depend on the understanding of their advantages/disadvantages, as well as their ability to respond quickly to seize the latest trends and opportunities and find appropriate strategies for digital transformation despite all hurdles.
Considering the great heterogeneity of the SPOs population and the diversity of their business ecosystems, it is imperative to equip the management (or decision-makers) of SPOs with the visions of and insights into digital technologies so that they can have the right, digital-savvy leaders in place.
This will not only allow the management of SPOs to form a digital way of thinking but also take data as the core to build or reconstruct the organizational structure and business process by aligning it with the way values are created and the sectors in which they operate and develop the overall understanding and macro-control ability of the digital ecosystem necessary during the digital transformation process.
To introduce the fundamentals of digitalization to SPOs, training on digital transformation was organized by Fairtrade NAPP for 27 representatives from 24 SPOs of China in Shanghai. As the growth and development of FinTech services continue to expand, for SPOs, alignment between access to FinTech products and digital transformation strategies will become more important and attractive. Such alignment will help build the momentum of SPOs and ensure that concrete actions can be implemented consistently to facilitate SPOs’ digital transformation on a result-oriented basis and promote greater collaboration among a wider set of stakeholders to achieve scale.
The training helped the producers to get an insight into the arrival of the digital era in agriculture and the scale of agricultural digitalization development in China, the driving factors of the digital transformation in the agri-food sector such as policies, industries, markets, pandemic etc.
The participants were also introduced to new forms of digitalization in agriculture such as innovating marketing methods to enable omnichannel marketing, reforming the production model into smart and flexible production, reforming enterprise operations to improve operational efficiency and reduce costs, etc.
The successful case stories of food companies and the digital innovations and technologies across agri businesses and smart supply chain helped them understand the future direction of the agricultural industry in the digital era.
The training supported by NAPP has been very thought-provoking. Digitalization is crucial to integrate small producers into modern supply chains and enable them to survive and stay competitive.
Xinrong Zhao, SHAOXING SHANGYU GRAHAM TEA FARMERS ASSOCIATION
An E-commerce platform was also set up for the producers in partnership with Chunbo- China’s lead e-commerce player for food. The platform will directly benefit around 650 producers in 8 SPOs, 5,000 producers of 27 SPOs can access knowledge on products, e.g., case studies, good practices, data analysis, and training.
- SPOs rely on traders and are locked in a traditional business model: export produce in bulk with lower profit margin; with the number of SPOs increasing and homogenous produces (e.g. tea); more internal price competition among SPOs; and undermining the solidarity of the national producers network;
- E-commerce helps SPOs increase customer and supplier base, and reach markets beyond traditional boundaries, in regions and/or abroad;
- The COVID-19 crisis accelerated an expansion of e-commerce towards new firms, customers and types of products. It has provided customers with access to a significant variety of products from the convenience and safety of their homes, and has enabled firms to continue operation in spite of contact restrictions and other confinement measure;
- Build a partnership with Chunbo, a lead e-commerce platform in China, which has a reasonable understanding of the Fairtrade movement;
- The partnership helps remove entry barriers of e-commerce for individual SPO, e.g., minimum business volume requirement, lab testing fees, registration fees, promotion fees, and long settlement period;
- Chunbo can provide customized technical assistance to each partner SPO, e.g., design/improvement of retail packaging, application for permit and license, and food labelling requirements;
- SPOs have a sound understanding of the regulatory requirements for retailing business and what behind them;
- SPOs have a much more in-depth understanding of consumer needs, i.e. what should be contained and should not be contained in their products, and how to acquire new customers;
- Chunbo conducts data analysis, e.g. digital customer profiling, for SPOs, to enable them to make more data-driven decisions;
- E-commerce development can be the first step for SPOs to go digital, reaping potential tremendous benefits of adopting digital technologies/tools to improve their operation efficiency and reshape their business model;
Some of the key benefits of digital technologies identified for the producers include:
- Enhancing back-office efficiency in production and strategic planning through Enterprise resource planning (ERP) systems
- Enhancing efficiency in production and logistic through Radio Frequency Identification technologies
- Enhancing front-office integration and supply chain operation through Customer Relationship Management (CRM) and Supply-Chain Management (SCM) software.
- Enhancing IT systems and capacity through Cloud computing.
- Increasing MSMEs customer base, business viability, and outreach through E-commerce.
- Supporting compliance-by-design approaches and helping reinforce the integration of accounting systems and tax rules, ultimately alleviating the administrative burden on MSMEs through electronic invoicing.
- Helping cut the red tape and level the playing field in government-SME interactions, while providing MSMEs with incentives for further technology adoption with B2G applications.
- Finding a broad range of applications within the firm, supporting efficiency gains in decision-making and strategic planning, general administration, production, pre-production and logistics, or marketing, advertising, and commercialization with Big data analytics.
Some of the challenges of the producers were:
As Fairtrade is not registered in China, its logo and values embedded in it cannot be used for their campaigns, there is no Fairtrade marketing organization to support the promotion in the local market. A large number of SPOs are used to the traditional business model and the vision of the management team need to be changed.