Business Type Definitions

Supplier Business Terms Explained:
Sole producer
Sole producers are responsible for all aspects of the planting, cultivating, harvesting, or further processing of the product. No other producer is involved as an outgrower or supplier for this end product. Produce originates from farms, food gardens that the producer either owns or rents without any other producers growing for them. No other producers supplement their production.
Primary producer
Primary producers supply the majority of produce under a brand or producer name to the final consumer or to retail establishments who directly supply to the final consumer (for example, restaurants or farm shops). Primary producers can make use of outgrowers or secondary producers to supplement their production requirements.
Aggregator
Aggregators are agricultural businesses or cooperatives of growers that consolidate and distribute agricultural products. They typically support regional growers of diverse sizes and experience, and sell products to local or regional markets. Products may still retain individual farm identities. Aggregators will often work with growers to provide on-farm technical support, harvest and pre-production planning to meet market projections. Aggregators often serve as the marketer and distributor, which allows the grower to focus more time on farming and may reduce the marketing and distribution costs of the individual grower.
Food Hub (Participatory Guarantee System / Community Supported Agriculture etc)
Food hubs facilitate the aggregation, marketing and/or distribution of products from local farmers. A main focus is on shortening the supply chain and most often hubs facilitate sales directly to consumers. Many hubs have evolved from an educational or social mission to bring consumers and producers together in the marketplace. Value claims such as sustainably, organically produced or locally produced are drivers of sales. Food hubs represent an opportunity for producers, particularly emerging and small producers to access local markets. Food hubs can also be internet based with multiple community networks as food sellers.
PGS is another form of community-based agriculture. Its focus is on the progression of producers into the organic value chain through a community of practice and alignment with an organic certification. PGS groups are linked to local retailers and other stakeholders in the organic value chain and sell in the local markets and regional areas. PGS is established as a local quality assurance mechanism. In South Africa there is the SAOSO Organic Standard which has been adopted by most PGS groups. PGS, just like third-party certification systems, aims to provide a credible guarantee for consumers seeking organic produce.
Co-operative
Agricultural co-operatives are those that produce, process and market agricultural products and supply agricultural inputs and services to their members (DAFF, 2015). It is a business that farms cooperatively and involves a network of member farmers who reap many benefits of doing business as a unit. Individual farms work together to buy necessary supplies and services, as well as distribute, market and sell their products. All co-operatives need to be registered with the Registrar of Co-operatives. A co-operative business is owned and democratically controlled by its members who provide the equity investment. Any profit is distributed to members in proportion to their use, or 'patronage', of the cooperative's services.
Distributor
A distributor is an intermediary entity between a producer of a product, or manufacturer, and a downstream entity in the distribution channel or supply chain. Distributors buy the produce directly from the producer and distribute it in the market. The downstream entity is typically a retailer or value-added reseller (VAR), but it can also be a wholesaler.
Outgrower
A producer who undertakes to supply a buyer (or another producer) with crops at some future time and meeting certain requirements; in return, the buyer agrees to make the purchase (perhaps at a pre-agreed price) and may provide other support. Outgrower schemes can also be agreements between companies and small scale producers, in which companies agree to purchase agricultural products from small scale producers. Within this definition, there is a huge amount of variation, with considerable diversity on crop type, project size, and relationship between company and outgrower.