The business model: Social enterprise for the small farmland farmers
“A social enterprise or social business is defined as a business that has specific social objectives that serve its primary purpose. Social enterprises seek to maximize profits while maximizing benefits to society and the environment. Their profits are principally used to fund social programs.”
Until now there is no clear definition of what is Social enterprise. However, base on the definition above it is close to the theory of Pareto efficient and has a strong relationship with welfare economics.
“Welfare economics is the study of how the allocation of resources and goods affects social welfare. This relates directly to the study of economic efficiency and income distribution, as well as how they affect the overall well-being of people in the economy…….This microeconomic analysis leads to the condition of Pareto efficiency as an ideal in welfare economics. When the economy is in a state of Pareto efficiency, social welfare is maximized in the sense that no resources can be reallocated to make one individual better off without making at least one individual worse off. One goal of economic policy could be to try to move the economy toward a Pareto efficient state.”
The social enterprise is allowed to earn profit but the main criteria is “maximize profits while maximizing benefits to society and the environment”. But how to? Can we maximize the profit by providing information? The way of the enterprise to maximize the profit is not to exploit the benefit of farmers. Is it possible to provide more information of the farming to let the buyers pay more for the farmers’ good work in Fair Trade and Organic. The buyers become the investors to encourage the farmer. The buyers need to know the farmers and the farmers need to show the buyers and the market price of their products. The platform becomes a market place to handle the “investment” and pass the investment to the farmers when they meet the criteria. The platform will earn the service charge in handling the transaction, payment and logistic. As the service charge base on percentage, not a fix amount, the farmers can earn more when the price of the products going up.
Even the profit of the platform can invest to help the farmers to improve their technology and skill by equipment leasing or insurance support. And if the product grows better and better, base on the percentage of the selling price, the platform will earn more and the platform can provide a better support to the farmers. A good circle to promote the organic farm and fair trade will start. It is a very ideal model of a Social Enterprise. Of course, the basic idea is the buyers willing to pay more in organic food and fair trade products.
The platform can also provide the analyzed data to the local government to help the other farmers and make it as a model to generate the good social effect or the positive externalities as the data can become a kind of public property.