PROFIT DISTRIBUTION

It follows from calculation of the costs and returns in field, packhouse, export and distribution centre, that the distribution of revenue between each cost centre must be designed in a way that makes each individual activity, as well as the overall enterprise, profitable. If any single stage in the production process is not viable in itself, the overall enterprise will not be sustainable.

This requires the design of product pricing systems which give both producers and exporters a financial stake in the success of the overall enterprise. The profit that they can earn must be competitive with what they could earn from other available investment or production opportunities.

There are essential, desirable and optional elements of a product pricing system, viewed from a smallholder perspective. How these can be incorporated in a pricing system which is acceptable to all is illustrated in a sample smallholder pricing formula, which provides a possible model for adaptation to local circumstances.