The Challenge
Amid the natural beauty of Cartagena’s Caribbean coast there exists an alarming level of wealth disparity in Colombia’s most notable tourist destination - with an estimated 33 percent of the population living in poverty.
Despite the city’s thriving hospitality and tourism industry, the local residents are unable to tap into this growing industry because they do not have the market relationships to approach these high-end restaurants, five star hotels or supermarkets. Furthermore, they lack the necessary skills and business expertise to meet the rigorous market standards of these establishments. Therefore, most are forced to live as subsistence farmers or fishermen, requiring a stable cash product to enable them to meet the basic needs of their family.
The city’s hospitality industry is growing at an impressive rate and having reliable supply chains is a critical requirement for the success of this touristic city. Therefore, a majority of the industry procures their products, including seafood and fresh produce, from reliable establishments in Bogotá (located over 600 miles away), as local infrastructure for sourcing, refrigeration, and transportation is usually inadequate. The local smallholder farmers and fishermen have been unable to meet the quality and quantity standards of these fine establishments.
The Innovation
Together with Fundación Carlos Slim, Fondo Acceso launched its first social Enterprise business in Cartagena - Acceso Oferta Local Productos del Caribe (Acceso Local Offer – Products of the Caribbean) – it was the perfect fit for the growing tourism industry in Cartagena.
This Enterprise operates on a for-profit basis – it will buy, consolidate, and sell agriculture products, seafood, and processed goods from over 1,000 smallholder farmers and fishermen to five star hotels, local supermarkets chains, and catering companies.
However, as a first step, prior to creating the Enterprise, we carried out a diagnostic to identify the demand requirements for several products and services. We sought cooperation from various hotels, restaurants, and supermarkets to provide us with their purchasing history of products, their specifications for each product category, their order placement schedule, their quality standards, and their anticipated growth requirements for each product line.
Next, we carried out a supply diagnostic to identify the current state of production for each identified product and service with respect to demand. When gaps between supply and demand were discovered we saw this as an opportunity to help the city’s underserved population.
After doing a thorough market analysis, we asked for a soft commitment from the various establishments to procure from selected suppliers that we felt could be trained to meet their specifications. We worked with other local NGO groups to identify suppliers that were most ready to receive capacity building, that were open to change, and those that embraced the rigor and discipline needed to be a viable commercial provider.
To prevent supply shortages our production plan supplies the hotels, restaurants, and supermarkets with a limited volume per week in order to maintain a more consistent supply. The hotels agreed to procure 20% of all goods and services over a 3-year period. During this period, the first 30 supplier associations we worked with were able to generate almost $3 million USD in sales. The hotels have since asked to scale the number of products they source locally and we have deployed our Supply Chain Enterprise model to achieve this scale-up.
A state-of-the-art warehouse was created: it provides distribution, warehousing, processing, and logistics in order to reduce costs, and broaden market opportunities. By helping these smallholder farmers and fishermen improve their productivity and ensuring they receive a fair price for their products, we are empowering them to work themselves out of poverty.
The Impact
Our Enterprise will provide skills training, business resources and technologies to over 4,000 household members of smallholder farmers and fishermen while improving their yield and productivity, consolidating their harvest, reducing the number of value chain intermediaries, and substantially increasing their income.
Six buyer groups, consisting of hotels, restaurants, and supermarkets, support our Enterprise and, as a result of these buying commitments we have generated over USD $3 million in sales and we expect to achieve approximately USD $6 million in sales over the next five years.
