Inclusive Business Models in Coffee Value Chain: Comparing Practical Evidence Between East Java and North Sumatera

Abstract

This paper explores inclusive business practices by focusing on the relationship between investments for-profit and social impact for small-scale farmers. Value chain mapping was used and combined with business model canvas to enable fact-finding and linkage between profit-taking action and social impact in the coffee value chain. The study was performed in two regions: East Java and North Sumatra. The study interviewed 72 farmers from Bondowoso District, East Java, and 30 farmers from Mandailing Natal District, North Sumatra. The qualitative analysis revealed the role of local organization networks in supporting the extension and improving performance in value chain governance. The organization networks supported social issues and provided access to diverse resources and environments for companies to build commitments. Furthermore, the business model canvas modeled value propositions that were practically tackling the dimensions of profit and social impact to the organization's context. The coffee value chains in both regions were differ based on key features and elements of small farmers' inclusion in the coffee value chain. The findings show that the coffee business model in Mandailing Natal encouraged smallholder farmer inclusion better than in Bondowoso. Therefore, the study implies that a shifting from profit into social initiatives in inclusive business is needed. This study provides practical evidence of business model canvas in the coffee value chain cases, showing how to develop a mission social innovation in a profit organization.

Grinding Uncertainty: Business Model Innovation as a Strategy for Coffee Sector SMEs

“…Approximately one-third of studies analyze popular business models of large companies like Nestle (Nescafe, Nespresso), Starbucks, or Illy [15,[34][35][36][37][38], highlighting the lack of BMI research on coffee SMEs [39]. Three of the studies focus on smallholders proposing the inclusive business model involving the entire stakeholders as market actors as the way forward [40,41], whereas others promote the Relationship Coffee Model (RCM), where coffee quality is at the core of the relationship between growers and global buyers [42]. Three other studies focus on somewhat larger coffee farmers, coffee plantations, and coffee processors, generally using the Triple-Layer BMC as a tool for designing a more sustainable BM [43][44][45].…”

The policy impacts and implications from the insights of mangosteen export chains

“…The (VCA) has been widely studied [7,[9][10][11][12][13][14]. Every study has a different methodology which depends on the research aims; consequently, there is no exact method fit for all value chain studies.…”

“…The value chain of agricultural products, especially export-oriented products, cannot be separated from other actors in the international market. Local organizations in the value chain contribute to supporting the extension and improving value chain performance as well as providing access to various resources and the environment [13].…”

Value Chain Map of Coffee Commodities in Central Aceh Regency in the Implementation of Inclusive Business Model

“…Standard practices show that inclusive business has been modified to reflect the wide range of experiences across business models. Differences in practices demonstrate a variety of contract terms, ownership structures, and leadership impacts depending on household characteristics, land uses and livelihoods (Mulyati & Indrawan, 2021) Implementing an inclusive business model for coffee commodities in Central Aceh Regency involves a partnership or collaboration between coffee farmers and the Baitul Qiradh Baburrayyan Cooperative. To optimize the marketing of coffee harvests from farmers to improve the welfare of coffee farmers.…”