Do you want to develop an agribusiness case using the Capital Pentagon/ Resource Endowment tool? – Learn more!!

The “Optimising the Performance of Producers Organisations (OPPO)” approach aims at developing the capacity of farmers’/fishers’ organisations and other agri-small and medium enterprise (SMEs) by equipping them with the knowledge, skills and tools that can be used to professionalize and improve their organizational performance and business relations (see chart below).

As a follow-up to our recent Innov4AgPacific/PIFON joint OPPO workshop in the beginning of May in Nadi, we want to share and discuss the 8 tools that have been endorsed by representatives of several countries and get feedback from the wider Pacific value chain and agribusiness community on their usefulness.

Capital Pentagon / Resource Endowment tool

As a first example, we would like to focus our discussion on the Capital Pentagon / Resource Endowment tool which seeks answers to the key question:

“What are the essential resources for farmers/fishers/SMEs to develop entrepreneurship with the aim to improve their livelihoods?”

The aim is to assess and understand whether farmers/fishers/SMEs have the resources to grasp opportunities and develop innovation. For this, we need to reflect on their capital endowment.  Own capital is the starting point for entrepreneurship and in the sustainable livelihoods approach, 5 capitals are distinguished namely; financial, human, natural, physical, social (see Figure 1). We need to analyse the 5 capitals to understand their relative importance with each other and in their context and finally to reflect on whether there are possibilities and how to strengthen them.

1. Human capital: The capacities (knowledge and skills) and abilities (to reflect, learn and innovate) that enable each person to pursue a sustainable livelihood.
2. Natural capital. The natural resources (land, water, trees, crops, livestock, pastures, lakes and wetlands, clean air, etc.) that can be used.
3. Physical capital: The infrastructure, machinery, equipment and tools, inputs for production etc.
4. Financial capital: Cash at hand (in the pocket and household savings), or money on bank accounts or in informal saving and credit groups.
5. Social capital: The formal and informal relations that the farmer/fisher/SME has. Examples are: family relations, neighbours and friends, groups, associations, organizations, cooperatives, relations with companies, traders, input suppliers, and government agencies.

Putting Value to Breadfruit in the Marshall Islands

Let us consider the work done by Karness Kusto, President, Marshall Islands Organic Farmers’ Association (MIOFA) in the Republic of the Marshall Islands. MIOFA has identified breadfruit flour as a priority for value chain development. They have organized action for improving tree management and collecting and processing breadfruit into consumer products. MIOFA has used the capital pentagon tool to develop a business case around Breadfruit flour production.

Key outcomes

The MIOFA Capital Pentagon case (Figure 2) shows that the organisation has good social, natural and physical capital:

• Natural Capital – Abandoned land available and resilient varieties that can be expanded. A lot of breadfruit that is currently going to waste.
• Social Capital – The culture of forming relationships which can create a better enabling environment and market relations is strong.

In order to meet strategic considerations developed from their value chain mapping, they need to improve human and financial capitals.

• Human Capital – Develop knowledge and skills in pruning, harvest, transport, value addition and other activities for improving breadfruit production, postharvest handling and processing.
• Financial Capital – Access financing to establish processing facilities.

Do you think applying this tool will be useful for you/your organisation/agribusiness or the partners you are working with?

Would you like to learn how to use this tool (and other tools that aim to professionalise farmers/ fishers/ SMEs)?

If yes, please let us know and join our Capacity Development group here where we will be discussing further: https://dgroups.org/cta/innov4agpacific/innov4agpacific-capacity