Food production is not only a farmer’s job. As a matter of fact, food processing industry represents a significant component in the agricultural value chain. While farmers cultivate the soil in order to produce the crops, food processing industries utilize the crops as their primary resources for various types of processed products.
On first sight, this system seems very simple; for example, farmers grow oranges and sell them to processing companies. A processing company then uses the oranges in order to produce fresh orange juice or some other processed product. But, if we look at the big picture, there are many challenges behind every processed industrial product.
Setting up Cooperative Values
A business deal between a farmer and a processing company is the one thing that sets the entire partnership in motion. Both parties should agree to accept specific conditions. Usually, processing companies request from farmers the delivery of a certain quantity of products over a given period of time. On the other hand, farmers usually demand a specific price, as well as regular paying.
“When setting up a business deal, the main goal is to create a win-win situation.”
In order to establish a solid business deal, both parties sign a contract in which they agree to fulfill the required conditions. When setting up a business deal, the main goal is to create a win-win situation. This means both farmer and processing company will get a piece of the pie. More concretely, farmers ensure a safe source of income and stable price. At the same time, processing companies can achieve certain quantities of resources that meet the specific quality requirements, at an agreed price.
How to Manage a Supply Chain Efficiently?
The health of a supply chain is also the health of a processing company. For this reason, it’s extremely important to manage a supply chain efficiently. As a response, processing companies should focus on managing their cooperatives.
This includes both contract management and regular monitoring of cooperative execution. Therefore, processing companies that strive to achieve operational excellence in managing their supply chain, should create a transparent contract. In doing so, it’s always recommended to define the way of compensation in a case that something goes wrong and the farmer can’t deliver the arranged quantity of products.
“The health of a supply chain is also the health of a processing company.”
In addition to a transparent contract and defined risk management, processing companies should practice regular monitoring of their cooperative farmers. That way, a company can detect which factors influenced farmer’s productivity and ensure on-time reaction if an unexpected situation occurs.
Managing a network of cooperative farmers can be a demanding job. Differences in farmer’s knowledge, resources, farm practices, and weather conditions strongly dictate the outcome of farmer’s growing season. For this reason, having access to the production data is the key requirement for boosting farmer’s productivity.
As a response to that, Agrivi farm management software helps all stakeholders that cooperate with a network of farmers to achieve operational excellence and ensure the health of its farmer network. After all, increasing the profit margin for both farmers and stakeholders is a key mission for Agrivi farm management software.
So, if you are a food processing company and you are interested in finding out more information about how you can manage a farmer supply chain easily, feel free to contact our Sales team.
Image sources: Dreamlandia