FINANCIAL RISK

Reliance on small-scale suppliers is often perceived by buyers as increasing the risk of shortfalls in deliveries, product quality and debt repayment, hence endangering profitability. However, the true situation is frequently more complicated:

• when buyers complain that small producers ignore growing instructions, deliver sub-standard produce or break the terms of their supply agreement, experience suggests that the reason is often a failure on the buyer's part to provide promised services, to clarify required quality specifications or to collect and pay for produce on time. (see Case Study);
• when growers complain that their produce has been rejected or bought at a discounted price, buyers often respond that the consignment did not satisfy market requirements or that market requirements have changed.

Such misunderstandings can be reduced if the following key questions on risk assessment and management are addressed.