One Acre Fund
ONE ACRE FUND: CASE STUDY
The scene is Bungoma, Kenya; Moises Postigo is a buyer interested in purchasing fertilizer on a large scale for his not-for-profit organization the One Acre Fund (OAF). OAF’s mission is to provide fertilizer to farmers “who have nothing” on a credit like system and when the farmers produce their crops a percentage of their supplus would be returned to OAF. Eventually the farmers would no longer need a “free hand out” and will be able to support themselves and their families without putting further strain on the government and the economy. When first looking at Kenya, Postigo had five different suppliers that all met certain criteria he had for doing business. He narrowed down the suppliers by contacting them and asking them for a RFQ. He then, with his knowledge of the market and his product as well as coming to the table prepared, negotiated the fertilizer to an acceptable price that could be offered to farmers enrolled in the OAF program.
1. Fertilizer is a commodity – why did Postigo spend so much time developing a relationship? Shouldn’t he have just set up an auction?
Postigo did his homework and understood that developing and building relationships is a very important dimension in the Kenyan culture. “Kenyan culture’s emphasis on relationships and hierarchy stems from the importance of family. Kenya is a place where you need to get to know people…in a room with twenty-five people, you need to shake everyone’s hand” (Negotiating, pg 3). Postigo realized that most of his potential suppliers we located in Kenya. He also knew that if he could make a deal with a vendor in Kenya then the transportation costs would be much lower, thus creating a little more wiggle room for his BATNA. Postigo grasped the importance of building relationships from a different, more strategic purpose. OAF’s short-term plan incorporated rapid growth with regards to the small family farms, which required rapid growth in their requested
The scene is Bungoma, Kenya; Moises Postigo is a buyer interested in purchasing fertilizer on a large scale for his not-for-profit organization the One Acre Fund (OAF). OAF’s mission is to provide fertilizer to farmers “who have nothing” on a credit like system and when the farmers produce their crops a percentage of their supplus would be returned to OAF. Eventually the farmers would no longer need a “free hand out” and will be able to support themselves and their families without putting further strain on the government and the economy. When first looking at Kenya, Postigo had five different suppliers that all met certain criteria he had for doing business. He narrowed down the suppliers by contacting them and asking them for a RFQ. He then, with his knowledge of the market and his product as well as coming to the table prepared, negotiated the fertilizer to an acceptable price that could be offered to farmers enrolled in the OAF program.
1. Fertilizer is a commodity – why did Postigo spend so much time developing a relationship? Shouldn’t he have just set up an auction?
Postigo did his homework and understood that developing and building relationships is a very important dimension in the Kenyan culture. “Kenyan culture’s emphasis on relationships and hierarchy stems from the importance of family. Kenya is a place where you need to get to know people…in a room with twenty-five people, you need to shake everyone’s hand” (Negotiating, pg 3). Postigo realized that most of his potential suppliers we located in Kenya. He also knew that if he could make a deal with a vendor in Kenya then the transportation costs would be much lower, thus creating a little more wiggle room for his BATNA. Postigo grasped the importance of building relationships from a different, more strategic purpose. OAF’s short-term plan incorporated rapid growth with regards to the small family farms, which required rapid growth in their requested