COMMITMENT TO ACTION

High Quality Local Sourcing in Puerto Rico

Commitment by Clinton Giustra Enterprise Partnership

In 2019, the Clinton Giustra Enterprise Partnership (CGEP), in partnership with Marriott International, Avendra/Aramark, and Walmart, committed to conducting a market and value chain assessment to determine the viability of a smallholder sourced agribusiness for selected target crops in Puerto Rico. This partnership builds upon on the work of Marriott International, Avendra/Aramark, and Walmart to incorporate sustainability across their value chains locally and across the globe. CGEP builds from scratch, invests start-up capital, and manages agribusinesses that work with smallholder farmers and fishers. CGEP’s agribusinesses provide sustainably-sourced, high-quality local products that meet buyers’ demand at competitive prices and help improve the livelihoods of farmers and farming communities by improving agricultural productivity, creating job opportunities, and facilitating long-term linkages to high-value markets. This commitment will cover the first of CGEP’s three-phased agribusiness building process which includes the market and value chain analysis and the building of the business case for high-quality local sourcing in Puerto Rico.



Overview
Summary

Commitment

High Quality Local Sourcing in Puerto Rico

Launched

2019

Est. Duration

1 Year

Estimated Total Value

$39,600

Region

Latin America & Caribbean

Countries

PUERTO RICO

Commitment by

Clinton Giustra Enterprise Partnership

Partner(s) of the Commitment Maker(s)

Marriott International, Inc.; Walmart; ARAMARK Corporation; World Central Kitchen
Details

CGEP, in partnership with Marriott International, Avendra/Aramark, Walmart, and World Central Kitchen (WCK) commits to conducting a market and value chain assessment to determine the viability of a smallholder sourced agribusiness for selected target crops in Puerto Rico. This commitment utilizes a social agribusiness model that CGEP has successfully deployed, builds upon the work of Marriott International, Avendra/Aramark, and Walmart to incorporate sustainability across their value chains locally and across the globe, and expands on WCK’s work on reducing food insecurity in Puerto Rico.

This commitment will cover the first of CGEP’s three-phased agribusiness building process which includes the market and value chain analysis and the building of the business case for high quality local sourcing in Puerto Rico.

Phase one will be conducted over three months. Key activities include: (a) map partner preferences, including crops, regions, and target beneficiaries, through partner interviews, meetings and opportunity scoping; (b) interview interested buyers to map buyer specifications and requirements, and discuss initial purchase commitments; (c) interview organizations (including WCK Plow to Plate grantees) working with smallholder farmers or funding smallholder agriculture work; (d) conduct pre-feasibility analysis of targeted crops based on preliminary aggregated data, value chain assessment, interviews and desktop research to determine potential social impact, target community needs and commercial viability; (e) conduct further feasibility analysis, including detailed community needs assessment, social impact potential, full target crop value chain assessments and financial modeling via desktop research, stakeholder and expert interviews, site visits, and farmer and community surveys; and (f) develop a pilot plan and early stage business plan.

CGEP will staff Phase one activities with seasoned value-chain and social business professionals. If the criteria are met for a viable business case, commitment partners will jointly fundraise for Phases two and three. Phase 2 would encompass the pilot agribusiness launch, early stage capacity building for farmers in selected crop value chains, and full business case development, as well as preliminary trading of crops between farmers and buyers, facilitated through the (pilot) agribusiness. Phase three would be the launch and scaling of the agribusiness.

March 15: Begin preliminary desktop research and planning.

April 1: Commence site visits and partner interviews in Puerto Rico.

June 1: Develop a pilot plan and early stage business plan, including budget, rollout plan, partner agreements, possible legal and investment structures, and key financial and social impact targets

June 30: Submit final market assessment of selected crop value chains and pilot project plan.

July 2019: Presentation of phase one findings to partners.

Q3-Q4: Start of phase 2 (if viable and funding secured). Phases two and 3three are typically resourced through a combination of grants and early stage investment capital, jointly identified and secured.

Background

Puerto Rico’s economy was based in agriculture for over 400 years, but the rapid industrialization, economic policy changes, and rural to urban migration of the past 70 years shifted the island’s economy away from agriculture. The sector represents less than 1% of Puerto Rico’s GDP, lagging far behind manufacturing, finance, and tourism.

Despite some growth in recent years, hurricane Maria decimated Puerto Rico’s agricultural sector, destroying about 80 percent of the island’s crop value and causing estimated losses to crop and livestock production and infrastructure of more than $2 billion. The storm took a heavy toll on smallholder farmers and further aggravated Puerto Rico’s food import dependency, which stood at 85% before María and jumped to 95% after the storm.

Providing smallholder farmers with technical and financial assistance and enhanced market access will be critical to recover livelihoods, increase food security, and re-establish agriculture as an engine of economic growth for Puerto Rico. A market-driven social business that connects local smallholder farmers to local buyers has the potential to improve local agricultural productivity, increase the incomes of local farmers, create job opportunities, and boost the local economy. Buyers benefit from competitive prices, high product quality, and the opportunity to impact low-income communities by purchasing local products.

CGEP has successfully built from scratch, invested start-up capital, and managed four market-driven social agribusinesses in El Salvador, Colombia, Haiti, and Indonesia that work with smallholder farmers and fishers. CGEP’s agribusinesses provide a one-stop solution tailored to buyers’ needs and eliminate the multiple tiers of intermediaries who traditionally reduce farmer incomes and drive up prices to buyers. CGEP’s agribusinesses provide sustainably-sourced, high quality local products that meet buyers’ demand at competitive prices and help improve the livelihoods of farmers and farming communities by improving agricultural productivity, creating job opportunities, and facilitating long-term linkages to high value markets.

Despite some growth in recent years, hurricane Maria decimated Puerto Rico’s agricultural sector, destroying about 80 percent of the island’s crop value and causing estimated losses to crop and livestock production and infrastructure of more than $2 billion. The storm took a heavy toll on smallholder farmers and further aggravated Puerto Rico’s food import dependency, which stood at 85% before María and jumped to 95% after the storm.

Providing smallholder farmers with technical and financial assistance and enhanced market access will be critical to recover livelihoods, increase food security, and re-establish agriculture as an engine of economic growth for Puerto Rico. A market-driven social business that connects local smallholder farmers to local buyers has the potential to improve local agricultural productivity, increase the incomes of local farmers, create job opportunities, and boost the local economy. Buyers benefit from competitive prices, high product quality, and the opportunity to impact low-income communities by purchasing local products.

Partnership Opportunities

CGEP is seeking to partner with local and international organizations working with smallholder farmers, organizations and communities in Puerto Rico. Additionally, CGEP is seeking to incorporate other buyers (supermarkets, retailers, hotels, fast food chains, etc.) interested in high quality, local, sustainable sourcing solutions that contribute to local economic development in Puerto Rico. This partnership builds upon on the work of Marriott International, Avendra/Aramark, and Walmart to incorporate local sourcing and increase sustainability across their supply chains and WCK’s work to reduce food insecurity in Puerto Rico. In an effort to support these partner efforts, CGEP will complete detailed analysis to determine the viability of an agribusiness to provide a one-stop solution tailored to buyers’ needs and improve farmer productivity and incomes. The proposed agribusiness will seek to provide sustainably-sourced, high quality local products that meet Marriott International, Avendra/Aramark, and Walmart’s demands at competitive prices and help improve the livelihoods of farmers and farming communities in Puerto Rico by improving agricultural productivity, creating job opportunities, and facilitating long-term linkages to high value markets.

Progress Reports

June 2019

In April 2019, CGEP’s Agribusiness manager, Eric Carroll presented on the CGEP agribusiness (supply chain) model and the Puerto Rican market/value chain assessment at the Agrohack Conference in San Juan, Puerto Rico. During the conference, CGEP established connections with various institutions including potential buyers, input suppliers, universities, and credit providers. Additionally, CGEP held meetings with Marriott International, Walmart, World Central Kitchen, local government agencies, NGOs, and other private sector actors in Puerto Rico. Through these meetings, CGEP began analyzing annual demand for fresh fruits and vegetables on the island, and local production capacity.