1 Do farmers use business models?
Agios Germanos is a village on the shores of Lake Prespa in Florina, Greece with few inhabitants. Very few tourists visit this part of Greece either, but Prespa is famous with biologists and environmentalists as the wetlands of Prespa are protected by the Ramsar convention and form one of the most precious ecosystems in Europe.
Agios Germanos is also renowned for its butter beans, which are unique to the area. The butter beans, which are known as the ‘Elephants of Lake Prespa’ or ‘elephants’, are famous for their quality, taste and size.
But what does Agios Germanos and its butter beans have to do with business models? Well, a few decades ago a group of farmers from the area started experimenting with organic farming on small plots in the mountains (see Filiou et al., 2000). Without being fully aware, these organic farmers, running small farms on isolated plots, followed a very different business model to conventional farmers in the same area, who were cultivating the same crop but in larger plots and using different farming techniques. The organic farmers were using different ingredients in their recipe! They were using manure and organic compost, instead of chemical pesticides; they were using traditional farming techniques rooted in century-old practices and local knowledge, with the use of simple tools and reliant upon the preservation of indigenous seed varieties and crop diversity. The organic butter beans they produced maybe didn’t look as ‘perfect’ as the produce of conventional farming, but the organic ‘Elephants of Prespa’ were unique butter beans. By following two different recipes (business models) and using different ‘ingredients’ these two types of farmers created different value for consumers.
For the organic farmers, although the organic beans might look ‘imperfect’ they have a higher price in the market because they’re more difficult to produce and rare to find. They are able to sell their beans directly to boutique health shops both locally and in big cities.
In contrast, conventional farmers sell their beans to big food companies to package and distribute them to be sold in supermarkets.
Organic and conventional farmers charge different prices and use direct and indirect sales respectively. They use different ways to make money (revenue models) and different methods to ‘capture (some of the) value’ they create with their produce. This week will enable you to grasp the differences between these revenue models.