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One thing any agricultural technology entrepreneur needs to be able to do is identify policies, regulations, and other enabling environment factors that can impede the business. In July, Agrilinks.org has been hosting discussions about how when enabling factors are in place - or not- it can affect the delivery of products and services that are needed to promote agriculture markets. The below article is re-posted from Agrilinks  - it is an example from Feed the Future Partnering for Innovation's portfolio.


As you read, consider: What similar circumstances have you experienced? Is there a policy or regulation that threatened your business, and thus your ability to serve agriculture markets, especially smallholder farmer customers? What did you do? What do you wish you would have done differently?


Import Policies that Cripple Progress Out of Poverty


Surehatch, a South African company, is improving the productivity of the sub-Saharan poultry sector by selling small-scale egg incubators that provide ideal conditions for an egg to develop and hatch. Using these incubators, poultry farmers can increase chick production by up to 10 times compared to traditional production. Surehatch also provides customers with training in proper use of the incubators.


Owing to its success in the South African market and expressed interest from other countries, the company began exploring sales opportunities in Kenya. In 2014, after two years of market research, Surehatch modified its incubator design and sold 20 units within two months of its introduction into the Kenyan market. Also seeing the potential benefits to smallholders, USAID’s Feed the Future Partnering for Innovation program committed support to accelerate market entry through 2015. This included expanding the stock of incubators to include sizes that were more affordable to smallholder farmers.

By early 2015, Surehatch had steadily increased sales. Customers using even the smallest incubator increased their monthly income by more than 50 percent, and business growth seemed on track. However, in mid-2015, customs agents stopped a container shipment of incubators from the South African production facility.


Expanding Sales Crippled by Import Policies
Surehatch was expecting 100 units manufactured in Cape Town to arrive in Mombasa using the same shipping process it had used since 2014. Unbeknown to Surehatch, the Kenya Bureau of Standards (KEBS) had changed its customs policies to require both an inspection and a certificate of conformity for all products entering Kenya. Though the company had a certificate of conformity for the shipment, its container was detained and, ultimately, the entire shipment was lost.

For nearly six months, Surehatch tried to work with KEBS to provide further documentation to release its shipment, as well as clarify the requirements for any future shipments. Eventually, KEBS finalized its import procedures and selected an internationally recognized company to conduct pre-inspections.


At the end of 2016, Surehatch began working with the inspector in South Africa to obtain certification for the shipment prior to export. The business hired a third-party customs clearance agent to facilitate import into Kenya. The sudden change in import policies temporarily shut down its operations in Kenya, slowed down market penetration (and with it, the ability of smallholder farmers to access a technology that improves their progress out of poverty), and increased costs.

In 2017, Surehatch began to adjust its business model to account for the higher costs, including securing a partner that could provide financing to Surehatch customers. Surehatch also partnered with other companies to bundle the incubators with other agriculture products. 


Incentives Help Lower the High Costs of Market Entry

For companies like Surehatch to risk selling products and services to smallholder farmers which in this case required product re-development to meet a lower price point the transaction costs for trans-border commerce shouldn’t drive up the cost of introducing new agriculture technology. Programs like Feed the Future Partnering for Innovation can help offset costs as companies get up and running, and complementary policy support is integral to this process. Surehatch lost months of sales due to unforeseen changes in customs rules. In many cases this can be enough to prevent market entry or expansion, which is unfortunately an all too common story in Africa and other emerging economies. For example, partners in Zambia, Malawi and Guatemala entering into inputs markets have experienced long customs delays, particularly for equipment imports. Such delays stunt smallholder farmer access to the products they need to build their farming enterprises into successful commercial operations and thus hinder our overall progress toward food security and improved livelihoods.

One important lesson in serving smallholder farmer customers is that products that are offered with some form of financing can make or break sales numbers. Why? Commercial financial products are generally not accessible by smallholder farmers. Though some banks are making inroads into better understanding smallholder farmer customers and designing financial products to meet their needs, such solutions are few and far between.


As entrepreneurs, it is important to continually think outside the box for serving base-of-the-pyramid markets and using nontraditional financing within a business model is one example. Other small changes that can be made to products, including for traditional financial products, range from changing labeling practices to integrating "reminder" features into services.


A recent report from Innovations in Poverty Action outlines the above examples and many more, all based on the organization's extension research around the world. Take a look, and see if the information can help with your product design. Remember - think outside the box!

Stewards Globe Limited partnered with the USAID’s Feed the Future Partnering for Innovation program in 2016. One of the major objectives of the program was to increase smallholder agricultural productivity, income generation in order to strengthen household food security and financial security. This would in the long run help mitigate the nutrition challenges that Zambia is facing. In order to achieve this, up-scaling of production and marketing of improved seed varieties which included groundnuts, soybeans, common beans, sunflower, and cowpeas was identified as a key measure for increased smallholder productivity. Under this partnership, Stewards Globe Limited planned to produce and sale a cumulative total of 600MT of improved legume seed for the smallholder market and their accessibility to legume seed over a period of 24 months. Stewards Globe is an emerging seed company that specializes in commercializing seed technology from research organizations and placing them into the hands of farmers. The seed is multiplied using mainly smallholder farmers and is distributed under the Afriseed Brand using various distributed through various channels.

 

Through this partnership, we have increased our seed production and strengthened our marketing programs, enabling us to reach a milestone of recording cumulative sales of over 800Mts of legume seed reaching about 70,000 farming households in Zambia. Our smallholder farmers have been positively impacted with high yielding improved legume seed varieties resulting in yields averaging between 1,200kgs to 1,500kgs per hectare and thereby increasing incomes and improved household nutrition levels. 


When we started the program in May 2016, our marketing reach was restricted to only two provinces of Zambia. We mounted only 123 demonstration plots in the first year from which 41 field days where held. Our production capacity stood at less than 200mt per year. Barely half way into the project cycle, our production capacity increased by over 50 percent.  This has been achieved by the increased number of seed growers on our out grower scheme and the acquired seed production knowledge under the partnership. We are now reaching more farmers than before through the strengthened marketing activities such as the successful mounting of 200 demonstration plots in all the provinces which we are now using as a platform to educate farmers and market our products.


Some challenges still remain. Firstly, the company still needs to make more investment in the promotion of the AFRISEED in order to improve brand visibility. Further, increased investment by stakeholders in the value chains such as organized markets for improved market access will catalyze rapid growth. Some farmers perceived legumes not to have an assured market compared to maize and besides that fact, they also assumed that legume production was more difficult than maize. To overcome this challenge, we set out a technical team that worked closely with government extension staff and key lead farmers (60% of the lead farmers being women). Government extension staff helped in identifying farming camps and lead farmers while the lead farmers played a pivotal role in mobilizing their fellow farmers.


Together, the team held training workshops with lead farmers and extension staff, with the aim of emphasizing the importance of growing legumes.   Additionally, the technical team trained agro-dealers in handling legume seeds and distributed brochures and posters to more than 200 agro-dealer shops which were in turn given to farmers as knowledge disseminating tools and as an effective campaign strategy.


We, as a company, define success not only in terms of the sales growth that we have recorded year after year but also in terms of how many farmers we have been able to reach and positively impact with our products through various projects. As the company’s Chief Executive Officer sums it up: ‘‘we exist simply because a farmer exists and we succeed only when our farmers succeed’’ Through this partnership program, 30,000 smallholders have been positively impacted. For instance, farmers using improved seed increased from a baseline figures of between 500kg and 800kgs based on groundnut, beans and soya bean to 1,200kg and 1,500kgs respectively. Thereby doubling household income in some cases.


Charity Nangogo, a farmer and mother of 6 children says of her experience, ‘‘before I joined the trainings, I used to only grow maize only on a small farm plot, and experienced poor yields (10 x 50kg) this made it very difficult for me to feed and send my children to school but after joining the program in 2016, I learnt how to grow beans which is now giving me a yield of 700 kg per acre that I usually sell and make some more money than I used to make from maize. Additionally, my children are looking healthier because of the incorporation of highly nutritious legume crops’’.


The overall project impact was positive. However, the impact levels were diverse due to various reasons such as droughts in certain parts of the country, pest attacks, general use of agronomic practices, late harvesting, animal invasions, and floods. Grace Mweetwa, a seed out-grower and lead farmer could not hold back her appreciation for the program; ‘‘this program has been a huge blessing to us. Most of us only had a small piece of land of less than one acre before we were recruited by Stewards Globe Limited as seed growers. From the money, realized from selling seed, we have managed to expand our fields in order to diversify our agricultural production. We are able to grow maize and most importantly, I am able to incorporate high yielding, nutritious legumes. We regularly receive technical trainings on the production of cowpeas, groundnuts, common bean seeds etc. And we don’t struggle with market because the same company buys the seeds upon harvest which leaves us with enough household income to educate our children and get other necessities.”


‘‘When you feed the soil, the soil feeds the crop then the crop feeds you’’ says Constance Chishimba, a soya bean woman farmer. “Last year produced soya bean on one hectare, This year I have decided to increase to five hectares because I would like to increase my profit margin. Besides this soya bean is good for my area

 

 

Photo3: Constance Chisamba’s soybean farmer.

(source: AFRISEED archives)

 

Going forward, the company remains focused on developing mutual relationships with smallholder farmers and other key stakeholders.    

March is the month of celebrating women and last week on the AgTechXChange we featured facts, information, and resources about the challenges facing women entrepreneurs. However, you don’t need to be a CEO at a startup or one of the first employees at a quickly growing business to apply the thinking, strategy, and creativity of an entrepreneur. The hallmarks of an entrepreneur - business acumen, strong leadership skills, an ability to innovate and engineer new ideas – are also gender neutral.


So, how can you apply entrepreneurial thinking to your job regardless of title, rank, gender, or the size of your organization? Here are some tips from the AgTechXChange team:


  • Know your customer: Your customer is a critical driver of your business’ success. After all, they decide whether or not to purchase the products and services you are selling. You might think you know them – but do you really? Take some time to read about your customers, to understand any data and information that has been collected about them, and to visit the places where they shop.

 

  • Ask for input: You know that phrase “two heads are better than one”? Entrepreneurs understand that they don’t know or see everything, so they ask for other perspectives, engage their colleagues, staff, friends, and family about their ideas, and integrate inputs that make them even stronger.  So, follow suit: know what you don’t know, and crowdsource the information from trusted colleagues, friends, and experts (especially if they think differently than you!).

 

  • Focus and prioritize: We’ve seen dynamic entrepreneurs and CEOs get distracted by developing new product lines before existing ones take off. Spreading yourself too thin over too many big projects can get in the way of doing a few of them really well. As an employee, make sure your projects fit within the needs of the company by talking to your supervisor/boss and asking for input from her/him, and other colleagues, along the way.

 

  • Manage your time wisely: Often, longer term projects with higher overall value to your organization’s bottom line can be sidetracked by urgent, one-off tasks. While you can’t stop doing those tasks, you can prioritize giving dedicated time to the most important ones.

 

  • Get inspired: New ideas spring forth from even the most unrelated of activities – from picnicking in a park to visiting a museum. So don’t forget to nurture your hobbies: you never know how they will inspire a new or better idea! Read articles from outside your sector and make an effort to make friends with people who are different than you!

 

Let us know how it goes! Do you need inspiration? Check out these tools for getting to know your customer and improving your communications, time management, and more!


BACKGROUND

Nigeria is the largest producer of cassava and according to Feed Navigator Online, in 2011, the nation production climbed to 52.4 metric tons and a total of 6.5 metric tons of cassava peel waste were generated. In some places this waste poses environmental concerns because the peels are burned as waste. NIJI FOODS in partnership with Feed the Future Partnering for Innovation, a USAID-funded program, responded to the environmental pollution caused by burning cassava peels in addition to immense unexplored economic advantage, which has the possibility of improving the earnings of smallholder farmers by converting cassava peels to animal feeds. The Food and Agriculture Organization established that “Animals raised on cassava have generally good health and good disease resistance, and a low mortality, and require few, if any, antibiotics in their feed.” (Hennessy, 2014). The International Livestock Research Institute (ILRI) established the viability of cassava peels as a most cost-effective feed option to substitute maize which is highly competed by man and animals. The High Quality Cassava Peel Mash (HQCP) is obtained through quality processing of cassava peels by sorting the peels, grating, dehydrating, flash drying, and then packaging. NIJI FOODS has established HQCPM processing factories for women groups to manage. So far the company has setup three peel processing factories in Oyo State (Iseyin, Ilero and Oyo) that afford 700 smallholders and 24 youths the opportunity to improve their earnings. NIJI FOODS is a food processing company highly experienced in cassava processing. One of the remarkable success of this project is how the mentality of smallholder farmers have been transformed to see agriculture as a real business, considering the possibility of how waste can be converted into wealth.

 

CHALLENGES AND SOLUTIONS

Oyo is considered one of the largest cassava producing states in Nigeria. And without appropriate knowledge of the economic value of cassava peels they are perceived as waste and environmental nuisance and burnt, in few cases, sold off to cattlemen to feed the cattle’s. NIJI FOODS harnesses more value for smallholder farmers by converting these peels to livestock feeds, which is a viable and more cost-effective substitute for maize. The same time provided smallholder the opportunity to improve health condition of rural dwellers sustainably tackling environmental pollution. NIJI FOODS entered an off-take agreement with major animal feed millers and so far produced and supplied over 2400 metric tons of HQCPM. This green wealth model has improved the livelihood of smallholder farmers by 20% from annually earning of 500 USD to 700 USD. NIJI FOODS perceived that availability of cassava peels will become a major concern in the future. Thus the company is constantly engaging with the women group to take sourcing for peels as another business line. The gesture has been widely appreciated by the women and has contributed 20% to the total peels supply.

 

SUCCESS

“I never knew I could earn more from a single input.” This is the testament of Mrs. Salaudeen Kafayat, a smallholder farmer and mother of 6. Mrs. Salaudeen Kafayat of Ipapo Cassava Village has been farming cassava for the past 15 years and makes earnings via traditional methods of producing Gari. She is part of the well-known community of cassava farmers. In her testimony, she said, “I usually disposed my peels as waste and sometime gave them away to cattle owners to feed their cattle. However since the initiation of the cassava peels to waste project anchored by NIJI FOODS in partnership with USAID, I now know that what I termed waste is actually money. My children now join me in the business. Beyond peeling over 20 metric tons of cassava weekly from our own farm, we now extend the gesture as an enterprise in sourcing and buying of cassava peels from other women, educating them on relevance of the peels. I currently supply on weekly basis 40tons of cassava peels to the NIJI FOODS, she said. It is great to know that we can solve environmental pollution efficiently and yet create enormous economic value with social advantage.”

 

CONCLUSION

The long-term strategic goal of NIJI FOODS, which NIJI GROUP is the mother company is to empower these women to become valuable contributor to the GDP of the nation. Thus the company is constantly seeking for medium such as building the business aspect of the endeavour of these women. Activities of this kind includes providing incentives such as farm inputs and operations supports through the NIJI FARMS and building mobile processing centres for the women to take command of their processing. The NIJI FOOD Cassava Peels Processing Centre’s currently processes over 400 metric tons of cassava peels per day. With demand outweighing the plant production capacity of 5.23 metric tons per day, the company decision is to expand production capacity in the next 5 years and engage other women groups in achieving the same and seamless results across Oyo State.

Did you know that women lead approximately one-third of small- and medium-sized enterprises (SMEs) in emerging markets? Despite this, they remain disproportionately underserved and often face less favorable terms for financing, inhibiting their ability to grow. In fact, more than 40 percent of women-owned SMEs cite lack of access to finance as a major barrier to growth.[1] 


In the agriculture sector, which investors consider particularly risky, women-owned SMEs earn 25 percent less in sales and own 35 percent fewer assets, including financial assets, than men-owned SMEs.[2] Women often have less access to collateral and training, preventing them from obtaining the financial and technical support required to expand their businesses. All of these facts create unfavorable terms for women entrepreneurs, despite their significant potential contribution to economic development. Leveling the playing field for women in agriculture will improve job creation, economic growth, and gender equality.[3]


What is your organization or company doing to promote the role of women-owned businesses? What additional steps might you take? We can think about this every day, not just on March 8, International Women’s Day. In this spirit, below is a round-up of resources to educate, empower, and inspire about the role of women entrepreneurs and how we can support inclusive systems that benefit everyone:


Feed the Future Partnering for Innovation, which powers the AgTechXChange, is contributing to resources that support women entrepreneurs. The program recently released a competitive request for applications (RFA) from women-owned or -operated agribusinesses in sub-Saharan African countries where USAID operates (see country list here).  Check out the eligibility criteria and start filling out your application if you meet them! 


_____________________ 

[1] Strengthening Access to Finance for Women-Owned SMEs in Developing Countries. International Finance Corporation, 2011. https://www.ifc.org/wps/wcm/connect/a4774a004a3f66539f0f9f8969adcc27/G20_Women_Report.pdf?MOD=AJPERES

[2] Women-Owned SMEs: A Business Opportunity for Financial Institutions - A Market and Credit Gap Assessment and IFC's Portfolio Gender Baseline. International Finance Corporation, 2014 www.ifc.org/wps/wcm/connect/b229bb004322efde9814fc384c61d9f7/WomenOwnedSMes Report-Final.pdf?MOD=AJPERE

[3] Ibid.

In the highlands of Guatemala, many smallholders are accustomed to traditional agricultural practices, and have limited access to the technical assistance, improved inputs, and services needed into increase their productivity. Approximately only five percent of Guatemalan smallholder farmers use certified potato seed even though it can significantly increase output and quality. At Post-Cosecha, we saw this gap as both a profitable market opportunity and an important avenue to increase the incomes of smallholders. Consequently, we collaborated with the USAID-funded program Feed the Future Partnering for Innovation to build a modern potato production facility and to commercialize our certified seed.

 

Recently, we finished our first cycle of potato seed production! We produced registered seed to sell on to our outgrowers, who then used the seed to grow certified seed to sell to farmers in their local communities. To increase awareness of certified seed, we have also successfully built 60 demonstration plots and hosted 150 demonstration days to date. As a result of this progress, we have collected success stories from farmers impacted by our work.

 

One important story comes from Florentina Lopez Perez, a youth potato producer and Post-Cosecha outgrower from Aguacatan, Huehuetenango. In addition to being an outgrower, Florentina also works as a demonstration plot leader. Chosen due to her experience, dedication, and leadership skills, Florentina hosts demonstration days to showcase the effectiveness of certified seed and to educate her fellow farmers. We support demonstration leaders like Florentina through providing potato seed and extension services such as training and technical visits. These leaders play a key role in educating farmers and building demand.


We asked Florentina, 20, about the impact of using certified potato seed on her farm:


What was your experience in potato production with certified seed in comparison with traditional seed usage, in the Papais project?

Everything was different, from seed quality to pest management to agricultural practices. We learned new practices from sowing to harvesting, we learned new things that left satisfactory results and motivated us to continue producing. It is a different type of management, but I think we should do things well to be able to have good results.


What do you think about potato cultivation profitability using certified seed in comparison with artisan seed?

It is profitable.  In my case, in previous years I have planted potatoes and I have not earned money because it is for our family consumption and prices are low. Now, in this harvest, I have had higher yields and economic gains. I sold 27 quintals (2,700 pounds) of certified seed to a cooperative and had a good sale price. This combination helped to improve my home economy.


Will you continue potato production using certified seed and applying techniques and recommendations provided by extension agents?

I will continue to produce this year potato with greater enthusiasm, so I am able to help my home economy. I kept notes of what I learned last year, so I can maintain good pest and disease control. The training was very important because we learned new things that we did not know. I thank the Papais project, the local technicians, and professionals who supported us and gave us the opportunity to participate in this project, which has helped me a lot, as well as the other people involved in it.

This is the third in a series of examples of companies successfully overcoming challenges to find profitability in smallholder markets. This week, we are looking at Store It Cold, which is commercializing its innovative cold storage solution in Central America.


Store It Cold is on a mission to bring affordable cold storage to smallholder markets around the world. Store It Cold’s product, the CoolBot, lowers and regulates the temperature controls of a standard window air conditioning unit, transforming an insulated room into an affordable cold storage unit that costs one-tenth that of a traditional cold room. This results in extended shelf life, higher quality produce, and reduced rejection rates.


For many Central American cooperatives, aggregators, and exporters sourcing from smallholder farmers, traditional refrigeration is an unattainable expense. This lack of affordable cold storage leads to higher spoilage and rejection rates, hurting the incomes of both aggregators and farmers. To address this challenge, Store It Cold partnered with Feed the Future Partnering for Innovation, a USAID-funded program, to commercialize the CoolBot in Honduras and Guatemala.

 

Since starting with Partnering for Innovation in 2016, Store It Cold has already achieved several notable successes through engaging directly with aggregators, farmers, and other stakeholders. To date, Store It Cold has sold 40 CoolBots in Honduras, including to two seed banks that supply more than 40,000 smallholder farmers, with an additional 2,569 farmers benefitting from companies that source from smallholders.

Guate_launch_10_17_1.jpg

Flexibility for Getting to Success

Key to Store It Cold’s success is being able to pivot from its initial “do it yourself” to delivering a CoolBot kit with all the necessary materials to set up and use the technology. Initially, Store It Cold sold the CoolBot on its own with instructions for how to set it up, which included purchasing additional materials. But the company has since been testing offering a complete package, such as a mobile unit to give companies more flexibility in where they place their cold room. It is also testing a refrigerated truck unit to move the cold chain even closer to the farmer.

 

How did Store It Cold arrive at the decision to update how it sold its game-changing technology in order to sell in a new market? Through embracing flexibility and fostering innovation.

 

Flexibility and adaptiveness to customers’ demands. Store It Cold is highly receptive to customer feedback, and demonstrated great flexibility in adapting its product and business strategy to better meet demand. In response to feedback that Honduran customers did not want a do-it-yourself solution, Store It Cold created a bundled product that includes the CoolBot, an air conditioning unit, and an insulated room. After realizing that it was not feasible to sell the CoolBot directly to smallholders, Store It Cold pivoted to larger companies that source from smallholders, and identified missing links in the cold chain, such as refrigerated trucking. Store It Cold’s flexibility has allowed it to overcome the constraints and challenges of entering a new market.

 

Initiative and innovative mindset. Store It Cold continually fosters innovation and initiative among its staff, which has been key to the creation of several new products. This support of and investment in the ability of employees to innovate enables Store It Cold to adapt and pivot products and strategies easily. Store It Cold developed a mobile unit for demonstrations and added flexibility and a refrigerated truck unit for transportation. While the refrigerated truck is still in beta testing, it has already completed several trips without incident.

 

By embracing flexibility and innovation, Store It Cold is successfully commercializing the CoolBot in Central America, facilitating the entry of smallholder farmers into cold chains, and becoming an industry standard.

Opportunity International Bank Malawi has been working to expand financial services and products for smallholder farmers in Malawi. In partnership with Feed the Future Partnering for Innovation, OIBM successfully scaled up services to base-of-the-pyramid customers in rural areas, specifically for groOIBM.jpgundnut, soybean, and orange-fleshed sweet potato value chains.


During the partnership, OIBM disbursed more than 5,000 loans (50 percent of borrowers were women) with an average loan size of $93, and trained more than 10,000 farmers in good agricultural practices and financial literacy. 9,272 farmers benefited from OIBM’s banking services. One key to OIBM’s success was its focus on providing intensive training and support to its smallholder farmer customers.


Recognizing that an educated customer is a less risky customer, OIBM conducted not only conducted “group sensitization” sessions with farmers about its financial products, but coupled that with additional training on financial literacy and good agriculture practices. OIBM implemented these additional trainings by partnering with NGOs and government extension service providers. This helped keep costs low so that OIBM products could bring profit to the bank, and the bank could keep providing financial services to smallholder farmers in Malawi

 

Training farmers in financial literacy and good agricultural practices reduced OIBM’s risk for working with smallholder farmers, who tend to lack disposable income or hold assets that banks generally use to reduce their risk, since the bank can simply seize and sell an asset to cover their losses for a defaulting customer. When OIBM customers understand how to calculate “money-in” and “money-out” in terms of calculating their costs versus income for paying off a loan or credit product, they pay their bills on time. And when customers apply good agricultural practices, of which many lack knowledge, they improve their yields, making more to re-pay their loans and perhaps even expand their farming business, requesting higher loan amounts and other financial products that ultimately are more profitable for OIBM to administer. The trainings also incentivized farmers to access the financial services in the first place, and even sign up for more when they found success with their initial participation.

 

Farmers like Sophilina, who lives in the small village of Chilima in Lilongwe District, participated in the OIBM trainings and accessed OIBM loans. With access to these financial services, she was able to establish her own nursery for orange-flesh sweet potato vines. 

 

The lesson from this story for any entrepreneur or business working in base-of-the-pyramid markets is clear: Understand and invest in your customer in complementary ways. Doing so helps them to use your product effectively, benefiting them in multiple ways and creating stronger, better customers who can “graduate” into using higher value versions of your products. It is good for your customer, your business, and ultimately, the communities that you are working in.

 

How can your company integrate some of these practices in order to build a strong customer base in smallholder markets?


See more on the partnership: Equipping Malawian Smallholders to Increase Yields; Empowering Rural Women through Good Agricultural Practice Training


sophie sikwese

Opportunity Bank Malawi

Mark Sevier

SAKINA DAUD MANDANDA

This is the third in a series of examples of companies successfully overcoming challenges to find profitability in smallholder markets. This week, we are looking at Tecnologia e Consultoria Agro-Pecuaria (TECAP), an input supplier in Mozambique that has developed a blended wholesale and retail model to reach more smallholder customers with mechanization and inputs.


Lack of access to improved inputs and equipment is a major hindrance for farmers in Mozambique. Farmers often have to travel great distances to obtain the inputs and mechanization equipment they need, making it a costly process and delaying their work. Agricultural retailers also face lack of or delayed access to mechanization and quality local products. However, one input supply company in Mozambique, TECAP, is blending wholesale and retail to build a supply chain that ensures that smallholder farmers and retailers have easy access to the inputs they need, when they need them, and at a price they can afford.


TECAP’s unique wholesale input and mechanization equipment business model, coupled with a network of agrodealers, franchisees, and agriculture development agents (ADAs), has resulted in significant reach into the Mozambican market. Investment in its distribution network and a product range of both local and imported products is increasing sales and the number of farmers accessing improved inputs. The keys to TECAP’s success are its wide distribution network and diversity of products.


TECAP’s distribution network of agrodealers, franchisees, and ADAs allows it to bring products and services closer to where smallholder farmers live, so farmers save on transportation expenses and time. Smallholder farmers can also purchase the inputs they need from a range of retailers selling TECAP products. TECAP ADAs, who also work as sales agents, demonstrate to farmers how improved inputs can improve yields and incomes, helping farmers see the value of investing their resources in improved inputs. In addition, TECAP trains agrodealers and franchisees on how to use the products they sell, so that they in turn can explain to customers how to correctly use products, avoiding loss of returns by misuse and increasing customer loyalty.


Farmers and retailers are also attracted to TECAP because of its diverse range of products. TECAP imports products in bulk, making them cheaper, and also buys local products to increase the variety of its stocks. This combination of imported and local products makes it a unique wholesaler in Mozambique with a wide distribution network that guarantees on-time access. TECAP’s bulk purchases of inputs and mechanization equipment allow it to competitively sell products in its farmer houses and through its franchises. Over the past year, TECAP, with the support of Feed the Future Partnering for Innovation, has reached 49,547 farmers and generated $1,721,836 in input and equipment sales since operationalizing three “farmer houses” – medium-size input supply shops that cater to individual farmers as well as small retailers – in Nampula, Tete, and Manica.


How are you making yourself competitive in smallholder markets? Tell us about it in the comments below!

Aiming to promote local opportunities for sustainable income for youth, Partnering for Innovation is currently investing in Guatemalan youth, both male and female producers through the AgriJoven project.  AgriJoven is implemented in the western highlands by Mercy Corps in coordination with Rana Labs and local private sector partner, Fair Fruit. With this project, over 1000 young farmers are able to save, invest, learn and adopt best practices that help them improve their livelihoods. AgriJoven fosters innovation that engages youth in streamlined processes and, at the same time, links young producers to formal markets.

 

Fair Fruit works with smallholder farmers that are organized in cooperatives to provide technical assistance and training. The company pays fair prices and invests in the certification of smallholders, which has led to an increasingly reliable supply base of good quality products. Over 400 participants of AgriJoven are sons, daughters or family members of the cooperatives’ affiliates.

 

Through the AgriJoven prosiembra cobertura y riego por goteo.jpgject, Fair Fruit has worked alongside the youth to develop demonstration plots which featuring agricultural technologies and good practices that will help them improve their final yield and generate better and sustainable incomes.

 

In addition, the young farmers have the opportunity to be linked into formal organizations of producers. By linking young farmers to formal markers sustainability in long term production is stimulated as is the use of innovative technologies.   Additionally, this generates new cooperative memberships and allows for greater ingenuity within the directive boards for the future.

 

The experience is developing successfully. The AgriJoven Project is generating the conditions for young people to grow socially and financially in their own communities. The demonstration plots motivate youth to overcome barriers as they give the youth a broader more tangible vision of the production and the benefits they can obtain.

 

Through the demonstration plots, AgriJoven participants have been able to observe the difference between the final product using the new technology, versus the traditional practice. At the end of the growing season, the young farmers grew better quality vegetables with 20 to 40% more produce that in turn generated between 10 to 30% more income than traditional practices.  Proving to the youth that they can care for the environment by using a biological pest control and reduce the application of synthetic pesticides by up to 70%

 

AgriJoven’s objective is to get youth excited about agriculture again. Through the Youth Savings and Loans associations that are established as  part of  the project, young producers are able to access credit to implement new technologies that they’ve learned in their familes´ plots. The project is increasing the participant´s self-confidence, encouraging them to invest in their land in order to obtain better quality products and increase their income.

 

AgriJoven continues to promote new demonstration plots, with ongoing research in order to improve the performance of each geographical area by taking into consideration the microclimate, soil type, access to water and other factors. The project’s participants have shared that they are motivated, especially when their parents ask them to implement the new technologies in their own plots. Female young producers are particularly excited to learn new skills that give them the opportunity to further their scope of opportunities for development and financial Independence.

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Having developed and demonstrated the benefits of soybean inoculants in boosting the crop’s productivity in Malawi, the challenge then to ensure that the technology would be both available and affordable for farmers. Soybean inoculant, which adds nitrogen-fixing bacteria to the soil to improve its fertility, has been found to boost soybean yield by at least 40 to 50%. Other benefits include increasing the protein content of the grain—an increase of up to 40.6% if well inoculated. The project had been importing the inoculant Biofix from MEA, Kenya, for research and demonstration purposes. Previously the Government of Malawi, through the Department of Agricultural Research Services (DARS), produced and supplied about 2000 sachets of an inoculant named “Soy” that was accessible to a limited number of farmers who would come to the research station to buy the product and for research.

Private sector to the rescue

The N2Africa project that had helped develop the inoculant with the International Institute of Tropical Agriculture sought out private sector actors to partner in producing affordable inoculant in Malawi. Fredrick Kawalewale, a qualified accountant, quickly seized the business opportunity through his company Agro-Input Suppliers Limited (AISL). He invested in lab equipment and in 2014 AISL produced 20,000 sachets of Nitrofix inoculant as a pilot. “When we started, we improved the packaging and handling of Nitrofix. We invested in solar coolers for proper storage. From the first 20,000 sachets of 50 g, we have moved to 280,000 sachets managing to reach over 95,000 farmers. All this has happened within a space of three years. We are envisaging that we will reach 1 million sachets which will translate to about 350,000 farmers having access to the product in the next five years,” he said. Kawalewale, who holds an MBA, says his background gave him the opportunity to find practical solutions for farmers. “I did not need to be an agriculturalist to figure out that farmers face problems in the value chain. We needed to be doing things that serve the needs of farmers,” he said.

Quality assurance

To ensure that the inoculant meets the required standards, Kawalewale has set up a well-equipped, high-standard laboratory for production and testing, and excellent packaging for delivery to farmers. He is also currently constructing bigger facilities with robust laboratory equipment to increase production of the inoculant to cater for the whole of southern Africa and later, the world. AISL is also coming up with inoculants for beans and groundnut. Farmers in Malawi are reaping immense benefits from the use of the inoculant and other good agronomic practices introduced by N2Africa and have noted the easier accessibility of the inoculum with AISL’s involvement. Farmers now have easier access to soybean inoculant Natalia Matiasi, a soybean lead farmer from Mpingu Extension Planning Area (EPA) in Lilongwe, is helping fellow farmers with best practices and new technologies of legume farming. In her field, she applies all the agronomical practices she has learned from N2Africa to increase her legume production; she applies inoculant to her seed before planting, planted in double rows to increase yields. She is a clear evidence of how new technologies can improve farmers’ livelihoods. Natalia says there are clear differences in the crop when the inoculant is applied. The plants have greener leaves, longer stems, and more pods than when the inoculant is not applied. Even the roots also had a lot of nodules and were therefore able to introduce more nitrogen into the soil. She also compared her maize harvest from the following year from the same field and observed that yields had increased even with reduced application of inorganic fertilizer. Through Partnership with Feed the Future Partnering for Innovation, a USAID-funded program, Demonstrations and field days were mounted in key soybean growing areas and farmers learnt a lot about use and storage and the resultant benefits from using NITROFIX. However, these demonstrations and field days need to continue and be held in many areas over the next few years to come to ensure that farmer and Agrodealer knowledge about use is enhanced.

  With AISL, access to the inoculant is now easier. “This year, it was easier for us to get the inoculant than other years. We bought it from our local agrodealer at a price of MK1000.00 (US$1.4) per sachet and applied 12 sachets to at least two hectares of land (translating into $8.4 worth of inoculant per hectare), which proves how economical planting soybean is compared to tobacco farming which I did previously and required about $220 worth of fertilizer to establish the crop. I am now able to send my children to school from my earnings in soybean farming.” And like every mother, Natalia hopes that soybean farming can help improve her life and that of her children. She hopes she will be able to send her children to high school and college with savings from soybean farming. She plans to renovate her house and buy more land. As a lead farmer, she says over 400 farmers visited her field in the last planting season to learn about her farming practices. Some of them have already started planting inoculated soybean under her supervision. N2Africa is supporting her through training, mounting demonstration plots, and facilitating field days on soybean and legume farming and marketing strategies.

 

About AISL

Agro-Input Suppliers Limited (AISL) was registered in the year 2003 as a company limited by private share capital. The company’s core business is production and trading of agricultural Inputs and commodities. AISL aims at providing productivity enhancing technologies that will make a difference in farmer’s yields and therefore income.

Our vision is to become a recognized leading local productivity enhancing technology provider. Our Mission is to provide certified seeds, legume inoculants and develop innovative, high value commodity aggregation and marketing systems to farmers.

AISL’s customers are divided into four main segments: (1) Farmers and cooperatives, (2) Corporate agro-dealers, (3) Independent agro-dealers, and (4) Institutions

 

Background

In 2015 AISL signed an MoU with Department of Agricultural Research Services (DARS) to commercialize the production and marketing of soybean inoculant in Malawi. AISL took this initiative following its active participation in the promotion of use of inoculants and phosphate fertilizer in the soy bean production under the N2Africa project, a research and development project that seeks to scale the production of legume crops. During the promotion AISL used imported inoculants from Kenya which was not registered in Malawi because Malawi had no manufacturer.  AISL established that demand for the technology was high despite the problem of availability and registration.

In the agreement DARS was to support AISL with elite strains and staff training whilst AISL was to produce and distribute 20,000 sachets for a pilot local production and commercialization of inoculants in Malawi. This was successfully done and 20,000 sachets were produced and sold off in that year.

Scaling up

Therefore scaling followed with AISL partnering with different institutions who took different roles in support to the product scaling up. IITA N2Africa Project partnered with AISL in bringing technical support and staff capacity building; DFID funded MOST took the marketing component; German Aid through the MEIRA project took the product promotion through demos and field days. Feed the Future Partnering for Innovation, a USAID-funded program, took the strategy development approach to scaling production, sales and marketing of the product.  Through the FTF-P4I intervention AISL developed and implemented an outreach program that resulted in reaching out to over 175,000 farmers within a year. This was a great achievement as ordinarily it would have taken AISL 2 to 3 years to achieve the same using own resources. AISL was also able to develop comprehensive quality control processes and came up with a manual that has been approved by the regulatory authorities. The various stakeholder meetings both local and international organized by FTF-P4I also helped in developing linkages and partnerships amongst grantees. AISL are in talking with Rab Processors to utilize a network of over 45 retail stores that Rab has as NITROFIX distribution network and is currently exploring opportunities in Mozambique market through the FTF-P4I grantees there.

From initial production of 20,000 sachets in 2015, AISL has produced and distributed over 320,000 sachets in 2017/18.

Current production capacity is for 1 million sachets and thus room for growth to meet effective demand is there and also to afford product diversification.

The ability to increase production and sales was due to the following interventions:

Product diversification

AISL took the initiative following farmer demands to develop and launch a groundnut inoculant to compliment the soybean. Currently the market has two products: one for Soybean and the other for Groundnut. Bean inoculant is under trial and is set to be introduced on the market next growing season of 2018/19.

This has been critical to the scaling as different crops are affected differently by both drought and seasonal price fluctuations. As a result they tend to compensate each other in terms of total quantity demanded and hence sales.

 

Infrastructure

AISL has just finished the construction of the new and permanent laboratory in Kanengo. This laboratory will enable it to cater for the scaling and product diversification to reach a million sachets goal based on the projected sales growth. Further AISL is investing in commensurate laboratory equipment’s to cope with the increased production and product diversification plan.   

The approach

As can be seen AISL managed to develop and work with different interests groups through strategic partnerships. Through these strategic partnerships an aggressive marketing and elaborate distribution plan was developed and implemented; Quality and Quality Control measures were put in place to ensure that NITROFIX meets recommended international and national standards.

Further, through the partnerships, capacity building of its staff was ensued right from day 1 and throughout the years to date. This shall be an on-going process as knowledge and getting to improve the way of doing things efficiently and effectively never ends.

AISL has committed itself in making sufficient investments in both infrastructure and equipment’s to support the production, distribution, and marketing of NITROFIX. This has resulted and will continue to ensure a NITROFIX product that meets all required specifications and is effective on the legume crops applied thereby giving a farmer the much needed value for money spent.

Conclusion

The Journey to grow NITROFIX sales and develop a range of bio-fert products in AISL has just begun. The next level is to ensure that local demand is met and satisfied and that regional markets are explored and supplied. AISL shall continue working with the existing and new partners to achieve this fit. Holding demonstrations and conducting of field days shall continue as this has proven to be the best driver for adoption and demand creation. Bean inoculants is on course for realize next season as current trial plots are highly promising.

Further AISL will from 2017/18 season intensify its output markets activity through structured marketing and warehousing receipt systems. This shall stimulate domestic demand for NITROFIX and certified legume seeds.

Success story: Less poverty through business

 

Sociedade de Beneficiamento de Sementes (SBS) is a seed processing company set up in the Zambezia region of Mozambique with the aim of producing low cost, high-quality seeds for the local market. With higher quality seed inputs, farmers will be able to increase their yield and quality of grain. The company was set up as a joint venture between Cooperativa dos Produtores da Alta Zambézia (COPAZA), a local farmer cooperative, and a local investor. The business model is that COPAZA members produce seed, the seed is then sorted, cleaned and packaged by SBS in a new seed processing facility established with support from Feed the Future Partnering for Innovation, and then COPAZA members act as sales representatives for SBS, selling seeds to their network of smallholder farmers.

One COPAA member, Mr. Manuel Alberto Quente stands apart. When he started, he had only 2 hectares of land. Over the years, through technical assistance and support in purchasing machines such as tractors, plows, and seeders, he now has 28 hectares of land. Mr Quente rented his tractor to a foreign company, generating $44,038 in revenue. He was also able to rent the tractor to Instituto Internacional de Agricultura Tropical (IITA), a large commercial farm in Zambezia, and to some outgrower farmers nearby. He grows a diversity of crops, including maize, soybean grain, and other beans. Additionally, he has dedicated 10 hectares of his land this season to growing high-quality soybean seed.

 

Last year, Mr. Quente was one of the top seed sellers of COPAZA. He sold 11,130 kg to 40 clients from which 38 were smallholder farmers he knows from the surrounding area – these smallholder farmers bought 4,625 kg of seed.

 

These sales have a significant impact on the quality of the farming of these 38 farmers. With an average of 2 hectares each, the yearly income for this group is well below the poverty line. The increase in yield due to the use of Mr. Quente’s improved seed (up to 2x times higher than the traditional technology) will provide his clients a substantial increase in profits. Given his confidence in his smallholder farmer clients, he sold the seed on credit. They took one bag of 50kg of seed and at the end of the season, they paid him with 2 bags of 50kg of grain. This allowed farmers without available cash to access high-quality seeds and provided Mr. Quente with the grain he needed for his trading business. This year, he received 9,250 kg of grain in payment.

 

Another reason why he is so successful is that he pairs the seed sales with access to additional services. In addition to selling seed, he rents out his plowing and threshing machines to the farmers.

 

Last year, eight of the farmers rented his plow, resulting in 12 hectares of land under improved practices. He also has a mechanical thresher that he uses to thresh his clients’ production at a discounted price. The thresher has an increased cost efficiency providing the smallholder farmers a reduction in threshing costs compared to traditional hand labor.

 

The seed sales and machine rentals represent valuable revenue streams for Mr. Quente, but also ensure high-quality grain production for the smallholder farmers, which reduces their agricultural risks. In the end Mr. Quente managed to improve the economic conditions of his neighbor smallholder farmers without jeopardizing his own financial sustainability.

It is a win-win scenario.

 

  1. Mr. Quente sees demand for both seed and services increasing. His neighbors have been increasing their land areas, some of them reaching areas as large as 5 hectares. While he plans to continue working with the same 38 farmers next year, he estimates that due to their growth in area the demand for seed will be between 14,000 and 15,000 kg – 5,000 to 6,000 kg coming from the neighbor smallholder farmers. He also recognizes that demand for mechanized plowing services will increase up to 20 hectares and plans to start providing services earlier in the year to help meet this demand.

 

  Through his increasing agricultural revenues, last year Mr. Quente was able to invest the money to purchase one additional sower, one tractor trailer, a small truck, and even a fish culture plant. He was also able to construct a new warehouse and invest in other on-farm improvments

Rana Labs Video Production Workshops
October - November 2017

 

 

Around the world, farmers are incorporating new biological control products into their Integrated Pest Management (IPM) strategy and are seeing encouraging results. While chemical products can be the right solution in certain circumstances, they can also be harmful to our health and to the soil. Furthermore, pests can develop resistance to chemicals which can be harmful to crop production and to the livelihood of smallholder farmers in particular.

 

In the Western Highlands of Guatemala, the AgriJoven project is providing highly technical workshops with youth in the agricultural sector to learn about IPM and new biological technologies that can benefit their crops. Mercy Corps has successfully organized over 40 groups of youth into Youth Savings and Loan Associations (YSLAs) where youth participants learn about new agricultural technologies and invest together with the goal of improving their own crop production. As an additional resource, youth learn about mobile filmmaking to document their learning process by working with Rana Labs, a media production company, to produce videos focused on explaining the technical content of the workshops to a wider audience.

 

In a recent workshop, youth learned about the benefits of biological control for foliage illnesses in potatoes and tomatoes as well as for soil disinfection. After a presentation by Mercy Corps technical staff and a discussion about application techniques and other topics, the youth then set out to make storyboards to produce videos on a variety of products. Youth then recorded their interviews to describe the benefits of the products, their application and expected results. Combined with their narration, youth recorded scenes of proper application of the products on soil fungi, bacteria, stem disease, parasites and other common pests. The final scenes described how the use of biological products allows us to have better roots to achieve more rigorous and productive crops and soil.

 

To date, Rana Labs has completed nine mobile filmmaking workshops with youth throughout the Western Highlands. Each video, told by youth for youth, is a helpful set of tools that will improve the crop production quality and therefore livelihoods of the Western Highlands of Guatemala and the region. Our goal is to inspire a new generation of storytellers by using mobile filmmaking as a transformational tool for extension.  

 

To see all nine videos of the workshops from October and November 2017, please visit: https://www.youtube.com/playlist?list=PLDLkysdU1ReJOzeJxvUflnvCpA55N8ZIF

 

Visit us on Facebook to see even more photos and content produced as part of the training here: https://www.facebook.com/ranalabs and on the AgriJoven page here: https://web.facebook.com/AgriJoven-319688878408179/

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