Concept and Guideline on Setting up AC Business Networking

Concept and Guideline on setting upAC business networking

1. Concept of AC business network

1. Concept of AC business Networking

What Is AC business networking?

Business Networkingis asocioeconomic business activity by which andAgricultural Cooperatives meet to form business relationships and to recognize, create, or act uponbusiness opportunities share information and seek potential partners for ventures.

The principle of networking isfinding and building helpful relationships and connections with other people.

Networkers can be buyers and/or sellers, not least because most people are potentially both: most of us want to 'sell' or promote our own interests, and mostly we are all capable of 'buying' or otherwise enabling the interests of others.

Particularly beneficial results can arise from networkingwhen people's interests coincideto produce an effect greater than the separate parts. Networking can be a very helpful way to find such cooperative and collaborative partnerships - based on mutual interest.

Networking connections which produce this effect are valuable and desirable, so look out for them, and try to build a network which contains these sorts of connections, especially where it strengthens your market offering.

Business networking is essential for increasing business revenue. The best business networkinggroups operate as exchanges of business information, ideas, and support.

2. Concept of "COOPERATIVE" networking.

A cooperative is an organization of cooperation. Cooperation cannot be done alone. When you want to cooperate, you need other person, other party, other organization, etc. So, we can say that cooperation is networking and a cooperative in an organization making networks with other people, other groups, other cooperatives, private companies and so on.

The International Cooperative Alliance or ICA says that Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others.

ICA also decides 7 cooperative principles which are guidelines by which co-operatives put their values into practice and the 6th principle, "Cooperation among Co-operatives" says that

Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.

The agricultural cooperative is the biggest sector in the group of "Cooperatives." You, ACs in Cambodiahave to establish networks following such cooperative values and the 6th principle.

Network has 7 characteristics

1. Common known and common view
2. Common vision
3. Mutual interests / benefit
4. Stakeholders participation
5. Complementary relationship
6. Interdependent
7. Interaction

1. AC Network Objectives

Sharing and exchange experiences and information of supply business, marketing business, credit business or joint utilization business, internal management system, best practices of AC business, and agricultural technique of each AC.

Identifying and linking ACs to AC or to potential private sectors/company to provide the good quality agricultural input and purchase AC products collectively with quality and better price.

Promote collective selling of agricultural products and purchasingagricultural input supply amongst ACs through making sell agreement or contract.

1. Benefit:

Benefit of network is small and medium business which gather to be network in term of production lines and management system can be compete in market same as big size business. Furthermore network business can cause

1. Cost reduction and share costs of operation
2. Able to access expensive technology by joint investment
3. Division of works separating by specialization
4. Able to negotiating in order to get better conditions of contract and transactions
5. Joint producing to be able to access big markets
6. Learning producing technique and management from each other
7. Solving problem faced by membership ACs and intervene all necessary actions to identify solutions.
8. To engage in economic activities among its members within agricultural production systems, agro-industry, agri-business, or services related to agricultural production
9. Receiving updated information on AC business (agriculture, agri-business, and agro-industry)
10. Receiving financial support for expanding their business scope and dividend annually by loan providing to membership ACs
11. Increasing chance of profit making by collective purchase agricultural input or collective selling the AC products using the mobilization model.
12. Making linkage ACs and AC networking with private companies which turn out to be profitable by mutual partnership such as contract farming.
13. Learning the experience of good practice and management from other ACs and AC Union through consultation service.
14. To safeguard the interests of its members with public authorities and private partners;
15. To give advice and direction of the business operations of its members to expand economic activities;
16. AC networking/Union Cooperating with others such collective buyers in other provinces and neighboring countries to strengthen AC network
17. Can get better price of Agricultural inputs supply with quality and save time
18. To fulfill other duties that serve the interest of business operations and interests of AC members
19. Capacity building to ACs (relevant law, management skill, technical skill, and financial management)
20. Strengthening management system following the standard (financial report, progressive report, book keeping.

1. Some necessary case before establish network:

Incase ACs cannot create network PDAFF should give strong support in organizing to meet the supplier/companies for management team to negotiate the price of supply or marketing business

PDAFF organize workshops among ACs producers and ACs buyers. Both sides will know each other and ACs producers can know demand of ACs buyers. Business matching will begin.

The most important is all AC or AC network need to open bank account in AC name not in personnel name so all transaction received or payment will go through their bank account.

If ACs want to establish the network without any support from PDAFF they can jump to follow the advance stage as advise in below.

1. How to set up AC business network:

Types of AC business Networking

There are many types of business networking. Before set up the AC business networking we need to know the types of business and steps how to process to be success in their business.

This creating also requires consulting with experienced Provincial Department of Agriculture in provinces or municipality and concern agencies for getting the improvement of concept and put in to the term of reference for implement smoothly and also consults with Department of Agricultural Cooperative Promotion and AC itself.

Beside this we need to divide in to primary stage and also the advance stage of network because we need to start from the beginning for getting work smoothly with each other by creating soft-network without the organization structure. After that when the business is strong enough and gets more link business they would start to establish the advance stage and improve it step by step until they can become to AC union and get the registration to be official AC union.

1. Primary stage

In this stage is the soft-network that PDAFF and AC network promoter need to introduce the concept of AC business networking, concept of cooperative networking, AC network objective, and network benefit and some other necessary need to be prepare before establishing types of network. Also to provide what is network profit to their business and reduce of cost of production and save the time for their business. Then they can have the agreement with each other. This network there is no organization structure of management but they just request the member to appoint the board director from each district/village for few people and select chairperson to be the representative with for negotiate the price or other business related to their business.

In this situation they just negotiate the price and each AC will have agreement with each other or company and they will pay direct to each other.

For example can have meeting together and join buying together of fertilizer for other inputs, can sell product together, can exchange product to each other, and can buy petrol in bulk to sell to other AC etc….

For payment method:

In the primary stage AC network members pay directly to other ACs which have being networking or fertilizer Supply Company.

Network to achieve the same objective/activity

Several ACs establish network to purchase fertilizers jointly at cheaper price.

In this case network management team collects the demand of fertilizer use from each AC then they will negotiate the price with the fertilizer company and select the lowest price. Then the company will deliver fertilizer to the network office and the supply organizer will inform each ACs to collect the fertilizer by themselves.

An ACafford to purchase a tractor for provide service to other ACs. For the payment each AC need to pay director to AC which provide service to them.

Several ACs establish anetwork to sell vegetables jointly at higher price. Then the market agent delivers to supermarket, Restaurant and also consumers/retail shop. For the payment method company pay direct to the bank account of AC

Network for business transaction

An AC has paddy sell paddy to rice millsells AC and Rice mill AC milled rice and sell to their members. Also they sell rice bran to another AC and the AC makes animal feed and sells to its AC members or market. Moreover, AC has rice mill process rice and sell white rice to members for consume.

An AC provides loans to another AC and that AC provides loans to its members.

Not only ACs creates cooperative networks on products, they also link business in term of capital. Some ACs network havemore capital such as deposit from members, share, etc. will deposit their capital or provide loan to ACs which lack of capital to increase their business or to lend to its members to improve their farm. Such cooperative networks will benefit to both sides ACs, ACs which deposit or provide loan to other ACs will get interest higher than depositing in abank. At the same time ACs which receives deposit or loan will pay less interest than they lend from a bank.

This is the exchange product from one AC to one AC. For example: AC A sells rice to AC B and AC B sells vegetables to AC A.

For example: In Thailand also they supply each other for the agricultural products. Some provinces can not grow the vegetable as they need so they exchange the products by follow the season.

In this case just the network in exchange product to each other because it is different location and AC A location cannot produce the vegetable so they need to buy form AC B which the location appropriate for growing vegetable.

On the other hand, AC B place cannot grow paddy so they buy rice from AC A.

In this type is the marketing process of AC network with the company:

AC network collect product from its members and sells vegetable jointly to company then company grading the best quality to supply to supermarket or central market and the remained prepare and ready product for supply to Burger Company or pack and sell to the retail shop

Network as a strong AC supports neighboring weak ACs

A strong AC which already has network with the company purchases petrol by bulk at cheaper price and sells to neighboring ACs to support their supply business.The AC collects demand of fuel of itself and other ACs. The AC buys big bulk of fuel from refinery and carry fuel by its own trucks to sell to ACs’ petrol station.

Network with private company or restaurant

This type of network is really important because AC can have the contract farming with the company for producing any kind of product such paddy, vegetable, fruit and any other kinds of products that AC can process for them. In this case AC needs to improve the product for supply the demand of the market. This network can help AC who does not have enough capital for production to achieve the productivities

In all those types of business network can be more then above if the AC wants to be doing another ways.

For establishment of this soft network just introduce if AC want to have network make appointment for meeting and discuss want they want to do such buy fertilizer jointly, exchange products, sell raw material to the companies who process products. etc..

Then they can select the group of board according to volume of network and appoint one chairman for lead the network and process of work and make the internal regulation.

1. Advance stage

In advance stage is the time for set up the AC business network by follow the steps, types of AC network by business, transaction, explain the AC Network Management Structure Election Process, and also advise the role of network for strengthen the network strong. This also can continue to work strongly. If the network is stronger and this network wants to be the AC union they can just apply for registration at the department of Agricultural Cooperative Promotion through PDAFF.

This this stage we need the management structure for lead the network running smoothly with the negotiation, lead the meeting and also collect member to discuss and solve problem together with members.gb

The amount of management structure is according to the volume of network and requirement of the criteria or discuss within internal.

For another issue if the network management team can afford to buy in bulk and pay to company then AC pay to network, so the AC only get the commission for assisting the negotiate the price

The steps for establishing the AC network as follow:

Step 1:

Concern facilitator such PDAs conduct the meeting to consult and prepare the concept of AC business network and plan for consultation workshop with the management leaders of all ACs

Introduction workshop/Business forum to introduce AC networking concept and benefit of network establishing to all AC leaders and relevant stakeholders

After the workshop AC board of directors and supervisory committees make the decision to be membership of this AC network or not,

If they want to be the membership of network, then they have to develop their own action plan for structure preparation.

Step 2:

PDAFF assist to draw up a list of ACs which want to be in networking to purchase input or sell products together

For each AC Representative candidates who came to join the workshop disseminate this concept and benefit of network to their members located in each district assisted by PDA staff.

Regarding to this process, amount of AC representative candidates will be selected based on the required criteria in each ACs (voted by members of AC).

All boards of directors and supervisory committees of all ACs in each district will be invited to vote against the set criteria to select the qualified candidates for the network.

Step 3:

Organizing the election workshop for all ACs that want to be a member of network to elect the representative candidates (5 to 7) who will negotiate with the company and PDAFF

Each AC representative candidates per each AC from each district will be vote against the criteria by their AC representatives. Amount of boards of directors and supervisory committees will be selected as AC network at each provincial.

This workshop also divides participants into groups which will discuss on AC network role and responsibilities.

Board of directors and supervisory committees will be informed about their role and responsibilities.

If the AC network does not have the office they can reguest the PDAFF placed to hold the meeting and PDAFF staff will assist to facilitate of the meeting. When the contract have been done by companies and AC network that is the responsibility of AC and Companies so PDAFF shall accept no responsibility.

Step 4:

Building capacity of AC network management structure is very important to equip them with necessary skill in fulfill their roles effectively.

The topics can be identified as leadership skill, administration, marketing business skill, supplying business skill, credit management skill and especially book keeping skill.

Moreover, AC legal documents, agricultural technique, AC annual report, AC business plan, action plan, financial plan and AC financial auditing is also necessary.

We need also conduct the training need assessment collected from them in order to identifying what skill and knowledge they actually need in providing assistance to their membership ACs.

PDAFF provide training on marketing, supply technique. ACs can learn how they can sell their products market channels, logistic etc..

Management structure

 Chief: 1

 Deputy: 1

 Account officer: 1

 Marketing agent: 2

 Secretary: 1

 Technical working group: 3

1. AC Network Management Structure Election Process

Same Amount of AC candidates will be selected from each AC in the province and will be voted by their AC representatives to be supervisory committees and board of directors of AC network.

Selected candidates for AC network should match the criteria such as (honest, commitment, knowledgeable on AC business, high responsibility, active, good communication, willing to work for social development)

All AC network candidates will be taken photos for vote preparation which will take place each province for AC network at provincial level.

Amount of boards of directors and supervisory committees will be selected for AC network according to the volume of network and informed about their role and responsibilities.

1. Role of AC Network

• To convene an extraordinary general meeting when necessary to solve their membership ACs problems and mainstream the market information to their members.
• To participate in their membership AC annual general meeting to observe the operation of ACs and provide technical advices on their business and management strengthening and expanding.
• To provide capacity building to membership ACs on book keeping, financial report preparation, progressive report, and business skills if available.
• Identifying the potential buyers or company to introduce to membership ACs or negotiate to supply the good quality agricultural input for ACs.
• Sharing the good practice or experience of AC management or business model to membership ACs to learn and put into practice.
• Be responsible for administration and operation management of AC network based on decision making of management structure of AC network
• Enforce the mission, business policy, strategy, work plan, financial plan, and other tasks based on decision of AC network.
• Nominate, and terminate the employment contract of executive director, accountant, who needs to improve the business operation of AC network.
• Prepare the work plan, financial plan, and business operational investment project as fiscal year of AC network.
• Submit the annual report of AC network to department of AC development of MAFF
• Represent as owner and asset management of AC network and membership ACs.
• Advertise, educate, train, and improve the leadership effectively on AC management and private sector to build up confidence on AC network.
• Monitor and evaluate the responsibility of executive director based on work plan and financial plan, as well as the economic effectiveness of AC network
• Call for annual general meeting or extraordinary meeting following the AC network by-law, propose the meeting agenda, and arrange the meeting process.
• Check the membership registration, postpone and terminate membership request form of AC network for annual general meeting to approve.

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