Inclusive Business Model Analysis: Touton, Uganda

| 25 May, 2024

As a leading French trading company, Touton is deepening its involvement in commodity-producing countries by developing direct sourcing and, where possible processing activities. Hence, founded in 2025, Touton Uganda Ltd. aims to deliver quality, responsibly sourced cocoa, coffee, vanilla, and other natural ingredients.

Touton Uganda works with smallholder coffee farmers in the Rwenzori Mountains region to improve their coffee productivity and climate resilience. The partnership not only secures the supply of coffee but also promotes the adoption of regenerative agriculture (RA) through e.g., crop diversification.

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This Inclusive Business Analysis reflects on the question: How can Touton secure and increase its volume of sustainably sourced coffee, cocoa, vanilla, and Bird Eyed Chilli in Uganda through the provision of commercially viable services, enabling farmers to improve their livelihoods and adopt regenerative agricultural practises, while acknowledging current developments in the value chain?

What is a smallholder-inclusive business analysis?

The key recommendations include:

  1.  The adoption of the EU Due Diligence Regulation (EUDR) requires all players in Uganda coffee value chain to collaborate in solving data collection, management, and ownership challenges while seeking ways to benefit farmers. Touton should seek collaboration with the Uganda Coffee Development Authority (UCDA), coffee exporters, and other value chain players, potentially co-steered by an organization like IDH, to assess, design, implement, and evaluate approaches to adopt the EUDR regulation.
  2. The push towards direct sourcing, partly driven by the EUDR, requires Touton to develop strategies to screen, onboard, segment, incentivize, and graduate middlemen into its direct sourcing structure. This allows quick scaling and to leverages their knowledge and expertise.
  3.  Adopting Good Agricultural Practices (GAP) and diversifying with vanilla and cocoa requires farmers to have access to long-term financial support with 5-year tenure loans of $400/farmer, with a sufficient grace period. Touton should explore ways to accelerate access to larger financial tickets sizes through Village Savings and Loan Associations (VSLA) and establish tri-party agreement with Impact Investors, Commercial Banks, and Input providers.
  4.  Producer Organisations (POs) are pivotal in the direct sourcing model, increasing the effectiveness of sourcing diversified produce from farmers. Touton needs to develop and implement strategies to build maturity and sustainability of all service provision vehicles (POs, agripreneur, agronomists) and conduct regular gap assessments and provide fit-for-purpose capacity building.
  5. While transitioning to direct sourcing through POs may increase sourcing costs, the potential to secure and increase the volume of high-quality quality sustainably grown Arabica coffee potentially might outweigh these costs. Touton should isolate and monitor the additional benefits of direct sourcing, such as improved quality, sustainability, and increased farmer loyalty, against the sourcing costs to make strategic decisions on replicating the direct structure in other regions in Uganda.