Transcript Document

Business Services
Market
Development
Agro Trading
Principles
1
What are agro-trading
principles?
A set of ‘guiding principles’ or ‘rules’ for
businesses in the agro sector on how to
better collaborate and trade with each other
to reduce costs and create value.
Goes hand in hand with contracts
2
What do they do for our sector?
• Reduce the risk and cost of doing business
• Build trust and stability between trading partners
• Allows cooperation, share information, knowledge and
technologies
• Enhance interface with smallholders
• Work together to improve productivity and quality
• Improve organisation, management and planning
• Enhance chances of market access
• Foster innovation
• Encourage clusters to evolve
• Raise competitiveness of whole industry
3
Why have trading principles?
• To avoid negative influences of not having them:
• Sabotage “we believe our competitor arranged for
contaminated consignments to be delivered to our
warehouse”
• Undermine arrangements “Our former employee set
up own company,
solicits business from our
customers / suppliers”
• International market outlets closed due to quality
issues in fish and grain
• 2 examples of dominant players in a sector abusing
their position by flouting rules on input distribution
• “Why would I invest in innovation when I know I
cannot protect my own innovation?”
4
Key Findings from Ugandan
Research
• Ugandan agribusiness dominated by one-off
transactions with smallholders & brokers –
risky, costly, unsustainable
• Widespread interest in creating a set of
business to business ‘trading principles’ that
foster collaboration increase profits.
• A sub-sectoral or sector wide code of conduct
is not an appropriate measure; prefer adoption
by individual industries
• Trading principles should address issues of
loyalty, trust, fair practices and honesty,
fairness and ethical conduct
5
Key Findings from International
Research
•
Codes of conduct are voluntary initiatives, must have a business
case
•
Codes not a substitute for strong national legislation
•
Producers prefer local industry codes
•
Buyers’ purchasing practices are often part of the problem and are
not specifically addressed by many of the codes of conduct in
existence, which deal purely with suppliers’ responsibilities.
•
Partnership is key
6
Examples from international research
•
Export horticulture for Kenya, Zimbabwe, South Africa, Zambia, Egypt.
Tanzania, Uganda and Ghana coming up.
•
Three local multi-stakeholder code initiatives
• Zimbabwe -Agricultural Ethics Association of Zimbabwe.
• South Africa - Wine Industry Ethical Trade Association (WIETA) in
2002.
• Kenya -Kenya Flower Council has a Code of Practice
• Zambian -ZEGA code.
•
Horticultural export sector has benefited from codes
• Increased and sustained market access
• Long-term relationships have been set up
• Access to technical and marketing information
• Benefits for workers
•
7
Agro Trading Principles
8
Principle 1
Businesses should adhere to good trading
practices and honour all their
commitments to their trading partners
Clauses:
• Do not make false commitments to sell or buy
• Demonstrate commitment through written
contracts or advance payments
9
Principle 2
Businesses should put quality at the
forefront of their operations and
strive to reward quality at all times
Clauses:
• Strive to meet industry standards
• Avoid trading practices that encourage
poor quality production, poor harvesting
practices, handling and processing
• Link high quality products to higher prices
10
Principle 3
Businesses should deal honestly
and openly with each other at all
times
Clauses:
• Disclose the correct information, include
perceived and known risks
• Provide timely information regarding
operational problems
• Be transparent about your capacity
• Give ample notice of major changes to
your operations
11
Principle 4
•
Businesses should not undermine
others’ trading arrangements or
engage in unfair practices
Clauses:
– Do not poach suppliers and buyers
– Regularly review your contracts with partners
– Honour obligations to partners who have supported you
with inputs
– Do not disclose partners’ confidential information
– If supported in your initial investment by particular buyers,
inform them of any decision you make to sell to another
– If you are a new entrant to the industry, familiarize yourself
with, and respect, existing norms
12
Principle 5
Businesses should not engage in fraudulent
practices of any kind
Clauses:
– Be transparent about quality of your products
– Refrain from the adulteration of your product
– Be transparent about the quantity you are able
to supply
– Refrain from tampering with established
measurements and standards
– Refrain from fraudulent practices such as ‘air
supply’
– Honour payment commitments
13
Principle 6
•
Businesses should refrain from all forms of
exploitation and abuse of dominant positions
that fall outside of healthy, competitive
behaviour
Clauses:
• Endeavour to respect initially agreed
prices as much as possible.
• Communicate unavoidable changes early,
give reason
• Ensure fair negotiations on prices
• Prepare to justify your price and costs
14
Principle 7
Businesses should at all times, work with
responsible trading partners who
respect these principles; avoid dealing
with businesses they know to be guilty
of malpractice
Clauses:
• Be informed about your suppliers; seek and check
references
• Disclose your full contact details to trading partners in
all business dealings
• Keep records, provide receipts and document all
transactions with trading partners
• Provide references to buyers on request
• Commit to only buying from good, reputable trading
partners
• De-list unethical trading partners
15
Principle 8
•
Respect all Ugandan Legislation and its
intentions, especially:
•
•
•
•
•
Companies’ Act
Sale of goods Act
Registration of Business Act
Trade Marks Act
UNBS standards
16
Next Steps
• Adaptation and adoption
– Printed materials provided
• Agro Trading Principles
• Research Report
• Workshops
– 4 afternoons
• PSFU has Private Sector Competitive Project
II
– BUDS component cost share
– Capacity building component
• Supportive agencies and projects
– SCOPE, BSMD, UNBS, CottonDO, DairyDA/ LO’L, MTCS,
APEP
• Private Service Providers
17
ACKNOWLEDGEMENTS
1.Amfri Farms Ltd
2.Agricultural
Productivity
Enhancement
Programme - APEP
3.Appropriate
Technology Uganda
4.British American
Tobacco
5.Cotton
Development
Organisation
6.Dairy
Development
Authority
7.Dairy Traders
Association
8.Danida
9.Interafrica Law
Associates
10.Jakana Foods
11.Land O’Lakes
12.Medium Term
Competitive
Strategy
13.National
Agriculture Advisory
Service
14.Namifarm Ltd
15.National Council
of Uganda Small
Scale Business
Organisations
16.National Union
of Coffee
Agribusiness and
Farm Enterprises
17.Paramount
Diaries Ltd
18.Strengthening
the
Competitiveness of
Private Enterprise -
19.Star Café Ltd
20.Uganda Coffee
Traders Federation
21.Uganda Fish
Processor and
Exporters
Association
22.Uganda
Floricultural
Association
23.Uganda Flowers
Exporters
Association
24.Uganda Gatsby
Trust
25.Uganda Grain
Traders Ltd
26.Uganda National
Bureau of
Standards
27.Uganda National
Farmers Federation
29.Uganda National
Bureau of
Standards
30.Uganda National
Farmers Federation
31.Uganda Oil
Seed Producers
and Processors
Association
32.Uganda Tea
Development
Agency
33.Uganda
Women’s Finance
Trust Ltd
34.United States
Agency for
International
Development
35.World Wide
Sires
18
ACKNOWLEDGEMENTS
Research and Publication Team
1.
2.
3.
4.
5.
6.
7.
8.
Claire McGuigan
James Ssemwanga
Fred Zake
Paschal Nyabuntu
David Kibanda
Sanjay Kumar
Peter van Bussel
Michael Kairumba
19