"Based on initial estimates, the scheme could engage around 80 low-income farmers during the first year of implementation and reach up to 5,000 by the third year of scale-up."

This inclusive business venture is driven by ACI Agribusiness, the agribusiness division of the Bangladeshi conglomerate, Advanced Chemical Industries (ACI) Limited. The project aims to implement a sustainable contract farming model that engages poor landless farmers as tomato producers and ensures a sustainable supply of high-quality, affordable crops for ACI.

The business model involves three stakeholders: ACI, poor landless farmers and a third party NGO (Practical Action) who has experience in low-income agriculture to act as a facilitator. Under this model, Practical Action gathers the groups of farmers under Rural Sales & Service Centers (RSSCs), assists them to lease land and oversees the cultivation process, while ACI provides all agricultural inputs (machinery, seed and fertiliser) to RSSCs on credit. Under NGO supervision and using ACI inputs, farmers cultivate the tomato which is bought up by ACI Cropex, another division of ACI. Profits are then distributed amongst the farmers by RSSCs based on an agreed pricing model. Based on initial estimates, the scheme could engage around 80 low-income farmers during the first year of implementation and reach up to 5,000 by the third year of scale-up. ACI's revenue model for this project is a profit-sharing contract farming scheme.

This venture is driven by a number of commercial opportunities. It gives ACI access to a new and untapped customer base by engaging farmers who could not otherwise afford their products (agricultural inputs) and goes some way to ensuring future loyalty amongst those farmers who may in future use ACI inputs once they become independent. The model also gives ACI Cropex quality control and ensures high quality tomato for ACI's customer base and for use in crop-based products.

The landless farmers targeted by this venture are currently obliged to lease land to grow their crops. They have no formal access to production finance and often see it as too risky to invest in high quality seed and inputs in the face of uncertain market prices. Through ACI's venture, these farmers could benefit from training on optimal fertiliser use and cropping practices, high quality inputs, affordable production finance and a guaranteed market for their produce. Based on financial analyses conducted on 100 acres of tomato crops, ACI predicts that farmers could see a 30 percent increase in their incomes under this model.

The Business Innovation Facility's support to this project will be focused on refining and testing the business model, identifying a partner NGO and creating a robust commercialisation plan. In addition to help with an initial study of the business model, the Facility will also help to implement the pilot phase and tweak the model where needed.