What do we mean by cost recovery?
We previously looked at the spread of cost per farmer per year.
In the cost to serve information, we show how we derived the cost per farmer of ~100 models that we analyzed.
To make this easier to interpret, we can use a logarithmic scale instead.
We now want to compare the costs with the revenues generated in order to get the percentage cost recovery. We will now show how we calculate this figure:
The metric that we use combines these two values
...to give us a percentage of costs recovered.
We do this for many business models
Ending up with an overview of cost recovery for ~100 business models.
Our main analytical aim is to identify links between drivers (such as last mile delivery method, number of farmers served, etc.) and cost recovery, as well as the other outcomes that we look at in this learning event - cost to serve and farmer income uplift.
To illustrate this example, let's distinguish business models in loose versus tight value chains.
Let's split these to compare them better...
We see that business models in loose value chains tend to recover on average more of their costs (vertical lines indicate median values).
And also see that almost all business models that generate no revenues at all are found in tight value chains.
We think that this raises many interesting points to discuss during these 2 days!
Want to know more? Any issues you see with this? Any stories you would like to share with us?
Find us in the Annual Learning Event, or reach out to us at:
William Saab
Diewertje Hendriks