Local sourcing is not only advantageous to companies because it lowers costs and increases the reliability and responsiveness of the supply chain; it is also becoming increasingly  inclusive as many corporations endeavor to incorporate small, medium and micro enterprises (SMME’s) into their value chains. Recognising these benefits, the hospitality sector is one example where linkage programmes are increasingly being implemented and best practice examples are beginning to emerge.

In 2004 for example, South African hotel Spier incorporated an enterprise development (ED) approach to their procurement strategy to begin sourcing from local suppliers and contractors. Since then, the hotel has benefitted from both local and commercial gains ranging from cost savings to a flexible, committed and resilient local supplier base as well enhanced high staff motivation as a result. The approach also earned Spier government recognition as they helped in the development of local enterprise and employment creation (e.g. in just over a year, 33 new jobs with ongoing contracts worth US$79,000). 

Similarly, in Zambia, the potential for local business linkages is certainly recognised. The National Business Linkages Program, a collaboration between the Zambia Development Agency and the International Labour Organisation (ILO) for example, aims to facilitate the creation, expansion and deepening of commercially viable business linkages between large corporation and SMSEs. A practical “linkage example” of the programme’s activities includes a questionnaire where prospective supplier farmers can fill in their contact information as well as other details such as type of produce, production/ distribution capacity and available machinery. The questionnaire is then forwarded to potential buyers who if interested can get in contact with the farmers directly.

My work as BIF country manager in Zambia does confirm that some leading hotels are increasingly exploring local fruit and vegetable sourcing from small scale farmers. Currently, some of these hotels are buying some of their fruit and vegetables from local smallholder farmers, but scale remains relatively insignificant and many products are imported from South Africa and elsewhere. What are the existing challenges and barriers that prevent hotels from opening their supply chains to local entrepreneurs/farmers?

A recent stakeholder workshop, co-hosted by the Business Innovation Facility (BIF) and the Agri-Business Forum(ABF) in Lusaka, brought together around 15 buyers from local hotels and small scale vegetable farmers, to address this question and explore opportunities for potential collaboration.

The discussion revealed interesting views from both stakeholder groups. Representatives from the hotel sector highlighted the following challenges as the main impediments for increased local sourcing:

• Lack of quality and variety (e.g. produce not meeting health and safety standards and/or farmers unable to provide the variety of produce needed by the hotels)
• Lack of consistency and reliability (e.g. farmers only approaching hotels when they have specific products to sell, but not able to ensure a certain supply over time; supply does not arrive in time)
• Lack of business attitudes (e.g. farmers not growing according to market demand, lack of commitment to contracts and lack of management systems such as bank accounts/ receipt books)
• Lack of market information (e.g. hotels are unaware of who produces what and no central supplier exists for them to source from

For their part, the farmers highlighted different, but related challenges:

• Lack of access to information on the sourcing needs of the hotels in terms of fruit and vegetables such as required volumes and types of produce. For many producers, it was the first time they were meeting a potential large consumer for their produce and admitted that quality is not one of their primary concerns.
• Lack of access to market/ buyers at the hotel. Farmers admitted that the market is difficult to understand as there is no single channel for producers to market, which makes it difficult for farmers their size to penetrate the market.
• Risks of growing produce to meet the needs of the hotels with no guarantee that the produce would be bought given the costs of inputs. 
• Lack of capital to enable the provision of sustainable supply through purchase of fertilizers and appropriate equipment needed to grow quality vegetables. Health and safety requirements are also apparently a barrier for some farmers without the necessary capital to make the needed investments to enable compliance and sometimes inclement weather significantly affects yield as well as the quality of the produce.
• Corruption by buyers in the hotels was also cited as another challenge by some of farmers where they are sometimes required to provide kickbacks to buyers in order to secure the business.

The subsequent discussion focused on ways to overcome some of the barriers summarized above. More effective communication between farmers and buyers/hotels as well as building on existing examples and initiatives were identified as key. Suggested solutions and approaches for ways forward included

• The creation of a single channel/ market to facilitate transactions between farmers and hotels as well as enable the crucial flow of information.
• The idea to strengthen farmer cooperatives to act as agencies for the farmers/ contact points for the hotels to better align demand and supply was also put forward.
• Contract farming was also proposed as a solution to give the farmers more security to go and invest in increasing consistency as well as in improving quality of supply as needed by the hotels.
• The Johannesburg Fresh Produce Market was proposed as a best practice model to look at when further discussing opportunities for Zambia. The Joburg market is a commission market where producers deliver their produce to Market Agents who then sell it to buyers. The market serves thousands of farmers from across South Africa who send their fresh produce to the market to be traded on a daily basis via accredited Market Agents.

There was overall consensus regarding the interest to progress the discussion among stakeholders further. Hotel and farmer representatives were selected to make up a working group to attend the next meeting to thrash out the proposals in more detail and chart a realistic way forward. It was suggested that supermarket representatives would also be invited to the next meeting as their procurement needs are similar to hotels.