Quality management in inclusive business: an Egyptian milk sourcing case study

Abstract

Worldwide, dairy products demand increases in term of quantity as well as it evolves in term of quality. Agribusiness companies consider emerging markets as new Eldorado. Some of them attempt to pump into the production of local small-scale farms through inclusive businesses (IB), often promoted in association with Non-Governmental Organization (NGO). Reaching agroindustrial quality standards is often one of the main obstacles to develop sustainable business models. Their quality management (QM) strategies often include the introduction of agricultural services (feed program, veterinary, training) and quality tests for their milk suppliers. QM is then designed based on linear product flows with little consideration for the supply chain environment: other local dairy operators or local agricultural services providers. In inclusive business, do QM strategies benefit to be limited to the supply chain connecting small farms with agro-industry? Based on an Egyptian case study, this paper aims: (i) to describe a dairy IB and the socioprofessional environment where it’s inserted using a netchain approach; (ii) to analyse the governance and social embeddedness of this netchain in a quality management perspective. Results showed a dense local socio-professional network characterized by reciprocal links. Milk Collection Centres (MCC), promoted by the project, didn’t succeed to develop this links. QM adopted by project promoters focused on vertical approach of the chain, omitting to develop reciprocal connections with the local socio-professional network. It limited the impact of the activities implemented to improve the local quality. The potential to deal with milk heterogeneity that led in this network was also neglected. To develop IB in a shared value logic, involving local socio-professional network, often also in the bottom of the pyramid, seems crucial.