HONEY CARE AFRICA

Money for Honey

Anggia Hindratmo Rina Muasaroh Adriani Eka Juniarti Osman Christopan Sitinjak Egia Etha Tarigan

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BACK GROUND
Existing Business Models in Kenya
Government-owned Parastatals
Monopolistic Forced farmers to sell their at pre-set and rock bottom price Delay payment 8-12 months after collected

Cooperative Venture

Produced & marketed on behalf of their members Corruption, mismanagement & political interference Delay Payment into months

Very Low Purchase Price Delay cash payment receive

Long Sequence of Intermediaries

Involved mid level brokers Farmers have limited acces to end market Benefit goes to Mid level Brokers

Farmers unsustain

Founding HCA
Initially farmers were not motivated Government ventures failed due to improper planning, opportunistic market linkages and poor commercialization Honey Care International distributed Langstroth hives but was struggling in the business Yusuf Keshavjee and Husein Bhanji bought out Honey Care International and established honey Care Africa Farouk Jiwa was the head behind; He ran the business for its owners

Company Background
Expand our Business in a Beehive program to impact one million individuals by 2020 as the African leader in pure honey. Honey Care Africa was established in 2000 by Farouk Jiwa, Kenyan born and rised, as a private sector social enterprise to promote sustainable community-based beekeeping in eastern Africa in partnership with a number of local NGOs and international development and financial institutions. Honey Care Africa (HCA) is a Kenyan social enterprise that sells highquality honey produced by its rural farmers, empowering them to take control of their own lives. Through its Money for Honey program, HCA trains small-scale farmers in commercial beekeeping and then buys their honey for a guaranteed price. HCA provides training in beekeeping and assists rural communities in developing organization and management skills, basic record-keeping, and farm economics competency free of cost. HCA also provides additional services such as start-up financing, technologies, and market access.

Honey Care Product Line

Business Models in Emerging Markets

Why are Emerging Markets Important?

Many Multinational companies (MNCs) are going to emerging country. But, emerging country is a difficult place to do business for them Emerging markets have enjoyed exponential growth. In 1990 they represented 21% ofglobal GDP, by 2008 this had grown to 34% and by 2010 to 38%. A key to success in emerging markets is the development of a business model that allows a company to reach formerly unreachable customers. Companies must build new business models targeting at middle market

Business Model Innovation

3 Steps in developing business model innovation and implementation process:
1. Identify an important unmet job a target customer needs done; 2. Blueprint a model that can accomplish that job profitably for a price the customer is willing to pay; 3. Carefully implement and evolve the model by testing essential assumptions and adjusting as you learn.

Business models must integrate 4 elements:

1. The Customer Value Proposition (CVP) - To give middles alternatives, think of customer value proposition (CVP); elements of your products or services why consumers buy them. - CVP matters effectiveness, simplicity, affordability and access. - Affordability and access are more important 2. The Profit Formula Setting for a price the customers are willing to pay. 3. Key Processes 4. Key Resources

Business models must integrate 4 elements

Competitive Strategies
Build a new business plan Framework: CVP, Profit Formula, Key Processes and Key Resources. Strategy: Differentiation or Pricing

1. Competing on Price

what is CVP?

set a price and design cost structure

what process and resource is needed?

2. Competing on Differentiation what resource and process is needed? how much does it cost?

what is CVP?

HCA in East Africa Market

Industry Attractiveness
Threat of New Entrant

Strong Competitive Force

Bargaining Power of Supplier

Rivalry Among Existing Competitors

Bargaining Power of Buyers

Strong Competitve Force

Strong Competitve Force

Strong Competitve Force

Threat of Substitute Product

Strong Competitve Force

Porters Five Competitive Force of Business Model Honey Care

Industry Attractiveness
Threat of New Entrant

Strong Competitive Force

High Cost of Entry Existing Government, Farmer and NGO Relationship Strong Brand Positioning Honey Care doesnt have an existing competitor Honey Care winning the honey farmer and NGO in Kenya Strong Brand and Expertise No Substitute for Honey High Quality product (from Langstroth hives) Social history Major Supplier of High Quality Honey Product Control Output High Quality Product Reasonable Price Sustainability-Concern Product

Rivalry Among Existing Competitors Strong Competitve Force

Threat of Substitute Product Strong Competitve Force

Bargaining Power of Supplier Strong Competitve Force

Bargaining Power of Buyers Strong Competitve Force

Element of Business Model

Customer Value Proposition Tripartit Model Triple Bottom Line

Key Resource People Patnership Brand

Profit Formula Honey for Money

Competing on Differentiation

Key Processes HR Marketing

Tripartite Business Model

Beekeeping equipment for farmers Project planning activities Coordination / communication Independent monitoring & evaluation Loan remittances from farmer Regular monitoring reports Project status reports Oversee smooth exit Publicity and public relations

Honey Care Africa

Symbiosis Mutualism

Honey production Hive management & harvesting Record keeping Demonstrations Agro-ecological assessment Technical beekeeping training Training in record keeping Supply of beekeeping equipment Community-based extension service Guaranteed market on contract Honey extraction services Honey collection from farm Cash payment on-spot Loan payment deduction

Development Organization Donor Agency / MFI

Participate in community assessment Group formation and rules Identify sites individual / communal Start beekeeping Service loans until repayment done

Rural Communities

Facilitate community assessment Community organization skills Group formation & loans Independent monitoring & evaluation

HCA Make Some Impact

The New Technology HCA Used

An advanced mobile field operations system in partnership with Grameen Foundation, Vera Solutions, the Kenya ICT Board, USAID FIRM, and Open Capital Advisors.

But theres still some challenges

Beehive Financing Challenges
Lack of Capital Investment Purchase the beehives and loaned to farmers who paid back small monthly sums toward eventual of the hives. Several NGOs paid for some beehives, but growth had outpaced the donor finding. NGOs involvement was only temporary. Africa Now Facilitated a partnership between Honey Care and K- rep Bank.

Payment Challenges
On the spot payment cash collected increased risk from robbers Time Leg Honey Cares payment to farmers and Receipts from supermarket

Collection Challenges
Increasing number of farmers join this program Collecting from each individual producers was becoming less feasible

Lack of access to modern production inputs (beehives)

Conclusion

HCA has redesigned the honey value chain through an approach that incorporates the needs of the impoverished. HCA reconfigured the dynamics among private sectors, development sectors, and rural communities through the innovative Tripartite Model Business. Tripartite Model - a synergistic partnership between Honey Care (private sector organization), development sector organizations (NGOs and donor agencies), and rural communities.

Conclusion

The model has two components : selling beekeeping equipment to rural honey producers and selling finished honey products to consumer markets.

Conclusion

Recommendation
Create a standard and replicable beekeeping package financed by micro-finance loans bring modern equipment and professional management Developing a sustainable value chain where the lush equatorial forests are one of the richest sources of honey on the planet. Build a concentrated Clusters begin developing the Cluster infrastructure Collaborate with Technology providers, NGOs/Nonprofits, For profit companies, Academia/universities. Payment challenge use M-PESA system Make regional and international expansion of business

Q&A Sessions