Business Model Innovation for Agribusiness

Business Model Innovation for Agribusiness

By Nicholas Alifa

I have heard times without number that agriculture has the potential to boost the African economy.  I really do not agree with that school of thought. In Africa, agriculture precedes any other vocation. Apart from the fact that it is a cultural heritage passed down to us by our ancestors, agriculture is a major source of income, accounting for 65% of the total labour force and occupies 32% of the total GDP in Sub Sahara Africa according to African Development Bank.

If agriculture has the magical power to change the African economic narrative as we claim, it should have done that a long time ago.

The potential of African economy does not lie in agriculture but in agribusiness. It is business that grows the economy and that is exactly what is lacking or given little attention in the African agri-food sector. This truth has been discovered by the new generation of food and agricultural stakeholders in Africa and several attempts are being made by both the public and private sector players to change this narrative.

However, like any other business, the success of agribusinesses does not just lie in quality food and agricultural product or services but also in its business model. The business model in its simplest terms describes how an organization creates, delivers and captures values to its users. Many players in the Agri-food sector see themselves as just producers and suppliers rather than contractors, suppliers and product developers. As a result, they seem not to pay attention to building a scalable business model which is the bedrock of every successful business.

Business model (source: Forbes)

African agriculture entrepreneurs will have to deliver and capture values in innovative and cost-efficient ways to be able to meet the existing global challenges, emerging opportunities and changing consumer tastes. This is where Business Model Innovation (BMI) has its role.

According to Harvard Business Review, Business Model Innovation is “about delivering existing products that are produced by existing technologies to existing markets”.  It neither requires new technology nor the creation of a new market.  BMI in the agri-food sector has the potential to re-invent the African food systems and releases its potential of contributing significantly to the continent’s economic development. Furthermore, taking business model innovation seriously can set an agri-food company apart as it will position her to meet the constantly dynamic consumer demand and stand out of the competitors. Business Model Innovation often involves changes invisible to the outside world, thus it can bring advantages that are hard to copy.

Any food and agriculture business that must compete globally and grow sustainability need to have an excellent business model, and constantly re-invent the system through consistent business model innovation.


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One thought on “Business Model Innovation for Agribusiness

  1. Thanks for that Nicholas. Could you please provide examples of such models? My interpretation of this before I re-read it was that farmers in Nigeria shouldn’t aim anymore to simply “produce more yams” for example but rather to create innovative products using those yams, perhaps which are packaged and possibly exportable. Looking more closely, I saw that the focus is actually on the business model. Using my yams example, could you please give examples of such models so I could have a better understanding of what you’re saying.

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