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39 Posts authored by: agtechteam

As part of the commercialization process, Feed the Future Partnering for Innovation developed a series of user guides designed to accelerate the commercial scaling of agricultural technologies. The guides are designed to provide practical guidance in addressing the market entry and business development challenges that often arise when introducing and selling new agricultural technologies in the smallholder market.


This third guide, attached below, looks at options for financing that your company can offer its customers to improve the upfront affordability of your product. It will help you d
evelop your business and financial strategy and further refine your pitch so that you have the tools to adequately finance your growth.


If you have questions about the guide, don’t hesitate to ask! Simply use the comments feature below and we will try to answer as many questions as possible.

As part of the commercialization process, Feed the Future Partnering for Innovation developed a series of user guides designed to accelerate the commercial scaling of agricultural technologies. The guides are designed to provide practical guidance in addressing the market entry and business development challenges that often arise when introducing and selling new agricultural technologies in the smallholder market.


This second guide, attached below, looks at how to communicate your business' value proposition.The guidebook provides strategies that when put into placed ensure that companies:


  • Capture the value proposition of their products both to their smallholder market and for their bottom line.Choose the optimal communication methods for reaching customers.
  • Understand how the decisions affect business operations so that they can achieve low cost operations.

 

Download the guide and begin looking at how to communicate your value proposition. If you have questions, don’t hesitate to ask! Simply use the comments feature below and we will try to answer as many questions as possible.

The commercial potential for the private sector to expand drip irrigation technology to smallholder farmers is enormous. The sheer volume of potential smallholder customers and the amount of arable land yet to be irrigated presents an enormous opportunity for companies willing to expand into this market. Drip irrigation also has the potential to be a transformational technology for smallholder producers. It increases on-farm yields, allows for year-round production, reduces pressure on scarce water resources, and reduces waterlogging, salinization, and pest and diseases.

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Despite these opportunities, few smallholder farmers use this technology and it has so far failed to reach its commercial potential. Feed the Future Partnering for Innovation recently undertook two studies that explore these factors and help companies thinking of entering smallholder markets with drip irrigation products decide if and where it is viable. One study examines the market for drip irrigation for smallholder farmers in eastern and southern Africa, including the size and characteristics of the smallholder farmer market segment in each country, the enabling environment, and the country-specific opportunities and challenges in commercializing drip irrigation for smallholders. The second study compares Partnering for Innovation’s three partnerships with drip irrigation companies, as well one other commercialization-focused development project. Each of these partnerships had a different approach to commercialization, providing examples of how other companies might design their entry into the smallholder market.

 

For drip irrigation to be successfully commercialized for smallholder farmers, a number of factors must be taken into account, including the design of the drip irrigation system, government support for importing parts, the availability of finance, and which subset of smallholder farmers is best suited to use drip irrigation. These studies show that there is strong potential for commercializing drip irrigation in certain smallholder segments. Farmers who are producing high value crops at a commercial level are most likely to benefit from drip irrigation. Youth farmers also represent an interesting potential market, since they are more likely to adopt new technologies and practices. But there are some potential barriers as well, such as inconsistent implementation of government policies supporting drip irrigation, challenges in proving the value of drip irrigation to some smallholder farmers, and farmers’ access to credit.

 

With a growing global population and increasingly unpredictable rainfall, it is more important than ever that farmers have sustainable access to technologies like drip irrigation. These reports share insights that will help companies understand how they can successfully market their products to smallholders, to the benefit of both company and farmer.


Read the full studies here!

By Jamie Holbrook, Feed the Future Partnering for Innovation


Gender equality and women’s empowerment are recognized as a fundamental elements of effective international development programs. As the private sector plays an increasing role in development activities, however, why should private companies go out of their way to consider gender in the way they do business? Around the world, there is ample evidence that businesses that make the effort to integrate gender equality into their business operations have higher productivity and earn higher profits. 

In Bangladesh, where the shrimp industry is the second largest export industry and provides a livelihood for 200,000 smallholder farmers, women have traditionally been excluded from employment at shrimp hatcheries. Cultural barriers that prevent women from leaving the home to commute to work and that frown on women working alongside men have prevented women from finding employment in this important industry. However, one hatchery has broken the mold, becoming the first hatchery in Bangladesh to employ women.

Ahbib Talib, one of MKA Hatchery's feed production technicians, says of her job at MKA,
"I like the work very much. It is difficult to find work for women in Cox's Bazar. I am
very grateful for the opportunity ." Hear more from Ahbib here.

MKA Hatchery is working with Hawaii-based Moana Technologies and Feed the Future Partnering for Innovation to introduce disease-free shrimp in Bangladesh. As part of this partnership, Moana identified a shrimp hatchery in Costa Rica that could provide needed technical assistance to MKA Hatchery. The Costa Rican hatchery sent two technicians to Bangladesh, one of them a woman, to teach MKA an improved method of shrimp feed production. In Costa Rica and other countries, unlike Bangladesh, women play an important role in the shrimp hatchery industry, particularly in managing the precise and critical process of producing shrimp feed. On the advice of these technicians, MKA’s management decided to actively recruit women to join their team and manage feed production. Now, of MKA’s 12 employees, four are women. Because the women employees can commute from the nearby city together, it is more acceptable for them to travel from home to work than if they were traveling alone. The feed managers are also breaking down cultural barriers by working alongside a male technician – who is their junior. MKA is benefiting from the women’s skills in managing feed production, and the women are accessing a new source of income and social empowerment.

 

Businesses benefit from incorporating women into every step of their operations, from supply chains to consumption. Women produce raw materials, distribute goods, and contribute employee talent, market research, and innovation. Although significant challenges continue to exist, such as cultural barriers and unequal access to education, if companies recognize the benefits of integrating more women into their businesses, they will find a way to overcome these challenges. By providing childcare, ensuring safe transportation to and from work, and offering women-specific training programs companies can engage more women as employees, distributors, and brand ambassadors.

 

This International Women’s Day, let’s recognize the contributions women have made to enterprise and innovation, and work together to ensure that more women are given the opportunity to contribute their skills to developing a profitable, creative, and socially-conscious private sector on every continent.

By Deborah B. Hamilton

Feed the Future Partnering for Innovation


After three years of funding businesses to bring new agricultural technologies to smallholder farmers, Feed the Future Partnering for Innovation has funded 26 companies to commercialize their technologies. Together with our partners, we are investing $71 million in 14 countries. At least 350,000 farmers will be using these new agricultural technologies by 2017. Along the way, we have learned some important lessons about what companies need to do to succeed in smallholder markets:

 

(1) Know Your Market

The smallholder market is large, diverse, and can be difficult to reach. For example, when Surehatch, a South African company that sells egg incubators for smallholders in Kenya, first entered this market, the company quickly learned that it needed to run advertisements in local newspapers and radio stations as well as distribute flyers in villages. Since most of its target customers in Kenya have cell phones, the company also offered 24-hour cell phone support. Kenyan fertilizer company MEA Ltd., which sells a legume inoculant called BIOFIX, learned that it takes about five years of continual marketing and education though demonstration plots and field days for a product to take root.

 

(2) Find the Right Partners

The US-based Toro Company recognized that small-scale farmers are the fastest growing segment of the Zambian agricultural sector and identified the potential market for drip irrigation kits at close to $53 million. The company teamed with iDE, an international nonprofit organization with almost two decades of experience working with farmers in Zambia, to guide modifications on Toro’s smallholder drip irrigation kit. iDE also used its nonprofit tax-free status in Zambia to help Toro to import its drip kits. In Rwanda, Partnering for Innovation funded another US company,PortaScience, to commercialize its mastitis dipstick. New to East Africa, PortaScience worked with a local scientist from African Breeders’ Service Total Cattle Management, Ltd. to commercialize UdderCheck and other dairy cow hygiene products.

 

(3) Join a Community
Commercializing a product in a new market is hard work. Partnering for Innovation developed an online community, the AgTechXChange, to provide a place where companies and others organizations could meet, discuss, and learn without geographical limitations. Its 1,300 members include businesses, nonprofits, and others who work with farmers all over the world. Members connect with one another and discuss their work and also post business tools, funding sources, and requests for networking and partnership development.

 

Partnering for Innovation and our global community continue to expand, learn, and share knowledge. Stay tuned as we continue to bring on new partners from Nigeria, Mozambique, Benin, Guatemala, Kenya, and Zambia. As partnerships finish, we will publish case studies on how companies addressed specific business challenges such as understanding their target market, setting up local manufacturing, and pricing products to sell. Our Tech Talk series will continue with webinars on traceability software, biologicals for pest control, state-of-the-art retail hubs for agricultural products, and how companies are reaching women smallholders.

 

What are you learning about working in the smallholder market? What kinds of connections do you want to make? Visit the AgTechXChange, update your profile, and let us know what’s on your mind.

by Deborah B. Hamilton

Feed the Future Partnering for Innovation


True or False: “It’s a seller’s market.” “Investors are starved for good deals.”


For a business owner, it probably seems that these statements can’t possibly be true. However, David Loew of Open Capital Advisors assured us that these statements are true. Because investors in East Africa and other emerging markets are searching for companies to invest in, David and his colleagues at Open Capital Advisors spend most of their time helping companies prepare for investor funding. (Check out a Future Partnering for Innovation Tech Talk featuring Loew.

The financing process is arduous and can take a year or more. The first step is to decide what type of investor is the best match for your business, because just as business types vary, so do investors. They range from traditional venture capital investors who focus on the maximum financial return to social impact investors who focus on both social and financial returns. In addition, investors are becoming increasingly creative about how they approach deals, and they can involve a combination of equity and debt. There are also banks for loans, and foundations and government agencies for grants. 

Business stage also matters. While nascent businesses may qualify for small amounts of equity finance or microloans, the earliest investments typically come from friends and family, angel investors, or colleagues. Once business owners have fully developed and tested their idea, they will most likely want to grow the business, which requires relationships with new distributors and entry into new markets.

While this process seems daunting, David is quick to point out that a company that has its ducks in a row will be in an excellent positon to receive investor funding. His suggestions for optimal preparation include:

(1)  Have a demonstrated strategy. Prioritize opportunities and stage decisions.

(2)  Build an effective organizational structure. What staff do you need to hire? How will you manage growth?

(3)  Invest in training. This is the best long-term solution to hiring and retaining talent. Get creative in how you look for staff; for example, MBA programs can provide a pipeline of affordable talent.

(4)  Know your story. How are you are going to increase revenue? What partnerships are you going to put in place to help achieve this?

(5)  Have detailed financial projections. Explain the assumptions that underlie your numbers.

(6)  Define your market potential. Don’t say, “There are a billion smallholder farmers, and the company aims to reach 80 percent of them.” Instead, describe your target market in specific terms.

(7)  Determine your capital needs. How much funding are you asking for and why?

(8)  Prepare your documentation. Have a pitch presentation and a detailed business plan in PowerPoint. Investors prefer to click through a presentation rather than sift through text.

(9)  Get a good lawyer or trusted partner. You will need an ally who can negotiate on your behalf.


With all of this in place, funders can more easily assess your company’s suitability for investment, and your company can attract the right investment opportunities to help it grow.

Check out the video of  David Loew's presentation at the AgAccelerator Lab in Lake Naivasha, Kenya, June 2015.


AgAcceleratorLab 2015: Positioning Your Company for Financing - YouTube


What I learned from Naty Barak,

Chief Sustainability Officer, Netafim


By Deborah B. Hamilton, Feed the Future Partnering for Innovation



                         Naty Barak at Fintrac, March 2015


It’s World Water Week and thousands of people have descended on Stockholm to talk about reversing the grim predictions about water. More than a billion people lack access to safe water, and global demand will likely increase by more than 55 percent by 2050. While this sounds bleak, Naty Barak, chief sustainability officer at Netafim, is relentlessly upbeat. Naty is a member of Kibbutz Hatzerim, in the Negev desert in Israel, where drip irrigation was invented in the 1960s. Today in Israel, 75 percent of irrigation is drip irrigation.


Naty has been promoting drip irrigation for over 40 years, and still has a long way to go. Eighty percent of the world’s irrigation is flood irrigation, which wastes water and contaminates aquifers with fertilizers. Very few of the  world's more than half a billion smallholder farmers have access to drip irrigation, even though smallholder farmers account for 80 percent of the developing world’s food producers. Moreover, most drip irrigation systems are too expensive for these farmers. To help address this, Feed the Future Partnering for Innovation, has invested more than $1.6 million in drip irrigation products for smallholders in the past two years.

 

According to Naty, the biggest competitor for Netafim and drip irrigation is ignorance, or people not knowing the advantages it offers. Reaching smallholders requires a long-term investment in helping farmers organize into groups, delivering ongoing training and after-sales support, and providing financing so they can make the initial investment. While Naty clearly believes in drip irrigation as a business solution, as head of corporate social responsibility for Netafim, he is most excited about the links between drip technology and social change.

“The capacity building that you achieve by working with drip irrigation and smallholders is amazing. If you had asked me five years ago, 'Does drip irrigation have anything to do with gender issues?’ I would say, ‘certainly not.’ But farmers in Africa are women and they spend eight hours every day walking to the river and back to fetch water. If they have access to Netafim’s Family Drip System, or something similar, they need one-third of the quantity of water that they did before. Instead of walking eight hours, they walk three hours, and they have time to attend to the children and so on.” What ’s more, Naty believes that being entrusted with a new technology fundamentally changes people. On Netafim projects in India, he has seen how it empowers women and attracts youth to farming. Naty’s vision is to create villages in Africa where the whole village uses drip irrigation. He would like to establish a drip kiosk in each town's center, where people go to buy spare parts and get training.

More than a century ago, W.H. Auden remarked, “Thousands have lived without love, not one without water.” Naty Barak is making sure the world has plenty of both.

To watch Naty Barak talk about the importance of bringing drip irrigation to smallholder farmers, click here.

by Jamie Holbrook,

Feed the Future Partnering for Innovation


We learned a lot from the speakers and also from interacting with other participants. We will always be in touch with our colleagues and share experiences.- Main Uddin Ahmad, Proprietor, MKA Hatchery

We look forward to not only making an impact with our technologies but also ensuring the smallholder farmer gets the best out of this association of powerful individuals!

– Louise Labuschagne, Co-founder, The Real IPM Company




Around the world, businesses are recognizing the potential of smallholder farmers as both customers and suppliers. But unlike traditional business knowledge, the unique know-how to work with smallholder markets is still diffuse, across both regions and sectors. That is why Partnering for Innovation brought 28 companies and nearly a dozen expert faculty members together at Lake Naivasha, Kenya in early June for the AgAccelerator Lab.

The three-day event featured interactive sessions on pitching to investors, strategies for ensuring that smallholders can afford products and services, and understanding smallholders as customers. Participants strengthened their skills and learned new ways of improving their businesses through smallholder engagement.

 

One of the most important parts of the event, however, came between the organized sessions, when participants and faculty members connected directly. Over coffee, meals, and drinks, people met potential buyers for their products, potential partners for expanding to new geographic markets, and even potential investors. Everyone felt that the networking opportunities were the most valuable part of the event and said that they hoped for more in the future.

 

Even in today’s connected world, it can be difficult to make the connections businesses need in order to succeed in smallholder markets. A small agricultural business in Guatemala may successfully source from smallholders, but a company in Zambia trying to do the same thing has no way of learning from that business’s experience. An impact investment firm looking for the best agricultural investments may not know about the innovative poultry business in South Africa with the huge growth potential. Large agribusinesses attend multiple events together every year. But businesses working to engage smallholders, as well as the other diverse stakeholders that contribute to that work, are less connected, even though their challenges are arguably greater. Given the chance to connect, these organizations could increase their smallholder engagement in leaps and bounds, exponentially expanding their markets, their products lines, and their services.

 

Events like the AgAccelerator Lab provide that opportunity, and there should be more of them. That’s also why we developed the AgTechXChange, an online community that allows users to learn and to discuss their successes and challenges. As more businesses recognize the benefits of working with smallholder farmers, the importance of making connections that help businesses and smallholders alike will continue to grow.

By Deborah Hamilton and Jamie Holbrook, Feed the Future Partnering for Innovation


In Zambia, smallholder farmers produce 80 percent of the maize needed for domestic consumption, but farmers lose about one-third of their crops annually as a result of poor handling and limited storage options. Inefficient and low-quality grain storage restricts farmers’ ability to store their harvest to sell for a higher price later in the season and limits their ability to sell to traders and aggregators who prefer to receive grain in bulk. AGCO, a multinational agricultural equipment manufacturer that has been selling to large-scale farmers in Zambia for years, recognized both the problem and the potential of grain storage for smallholders in Africa. By partnering with Feed the Future, AGCO has begun bringing appropriate, reliable grain storage to smallholder farmers in Zambia through its Bags2Bulk program.


AGCO spent several years developing its strategy to enter new markets in Africa and address the challenges that prevent smallholder farmers from fully participating in these markets. In 2012, AGCO sponsored workshops in Zambia on improved farming practices while the CEO and his colleagues consulted traders and farmers about their goals and challenges. In 2013, it established a Learning Center and Future Farm near Lusaka, Zambia to train farmers and dealers in modern farming technology. AGCO found plenty of reasons to develop an expanded Africa strategy that would ultimately reach smallholder farmers. Food production must double by 2050 to feed growing populations, and while Africa has farmable land, farm equipment is scarce and without mechanization, farming is inefficient.

 

 

AGCO realized that higher grain production through increased mechanization would require improved technology for storage and processing. AGCO developed its Bags2Bulk program to address these challenges, partnering with a local distribution company, Grain Systems Inc., Africa (GSI Africa) to create smaller storage silos appropriate for aggregators sourcing from smallholders. Through Bags2Bulk, AGCO targets grain traders who provide commercial storage services, qualify for product financing, and have relationships with aggregators. Importantly, the traders also have existing networks that facilitate connections with smallholder farmers.


To facilitate market entry, AGCO teamed with Feed the Future under its Partnering for Innovation program to introduce these innovative bulk silos to the new market. The need to increase the world’s food production, coupled with AGCO’s desire to increase its market share in Africa and the continent’s agricultural potential, makes Bags2Bulk an important piece of AGCO’s Africa strategy.


Along with GSI Africa, AGCO is collaborating with Musika, a nonprofit that helps businesses integrate technologies into their commercial relationships with smallholders. Another partner, Ybema Grain Services, trains farmers in best practices for grain management, vital to the success of the Bags2Bulk program. AGCO has learned that local partners play a critical role in entering the complex smallholder market in Africa where physical and financial infrastructure is often poor and companies must reengineer their products and absorb the costs of training farmers to use their equipment.

AGCO is currently in the process of installing 40 grain storage silos in Zambia, which will provide grain storage for 12,000 farmers. It hopes to expand to other African markets and ultimately make this technology accessible to millions of smallholder farmers.

By Deborah B. Hamilton, Feed the Future Partnering for Innovation


Pearl millet, one of the most extensively cultivated cereals in the world and a key staple crop in the African Sahel, is particularly important to the food security of smallholder farmers in arid regions. Yet virtually all of West Africa’s 3.9 million pearl millet farmers still rely on rudimentary hand tools for processing pearl millet into edible flour. Lack of access to mechanized processing tools results in postharvest losses of up to 20 percent and makes the work of pearl millet processing, performed mostly by women, inefficient and time consuming. The demand and need for improved technology are immense.

With support from Feed the Future Partnering for Innovation, Compatible Technology International (CTI), a nonprofit organization that designs and distributes postharvest storage and processing tools for smallholders, introduced its Pearl Millet Tools in Senegal. Designed to reduce women’s labor and increase their ability to produce high-quality pearl millet, the Pearl Millet Tools include a manually operated stripper, thresher, winnower, and grinder. The thresher alone allows women to process one kilogram of grain in three minutes, less than half the time and twice the efficiency as threshing using a mortar and pestle. It also captures more than 90 percent of the grain, significantly reducing food waste.

 

Women farmers are also a key part of the CTI design team as members of focus groups and field-testers. CTI’s original design for the Pearl Millet Tools was modified after extensive research into what farmers wanted and needed. The current design is a direct result of the input they received from women farmers. For example, the women requested a more streamlined process for threshing millet, so CTI combined its three-part suite of tools – stripper, thresher, and winnower – into a single unit. They also learned that the grinder component works well for groundnuts and have sold the grinder to women’s groups to produce peanut butter. Aissatou Ly, a 46-year-old women entrepreneur, uses the grinder to sell peanut butter in the local market. According to Ly, “The grinder is simple. It’s durable. I don’t need help to fix it, and I don’t have to face the need to find gas.”

 

In order to reach more farmers, CTI is developing a partnership with a Senegalese manufacturer with a regional marketing presence. Manufacturing the Pearl Millet Tools in West Africa rather than China, where they are currently produced, could reduce the sales price up to 35 percent by eliminating the shipping, customs, and logistics costs incurred by external manufacturing. Partnering for Innovation’s support enabled CTI and SISMAR to start testing the market for the more affordable product.

By the end of the one-year partnership with Partnering for Innovation, women accounted for roughly 90 percent of the farmers using CTI’s tools in more than 1,000 communities and cooperatives, improving food security and income for 14,000 people. As the market for this product increases, it has the potential to reach hundreds of thousands of smallholders in Senegal and to expand throughout West Africa.


This article also appeared in Feed the Future's February newsletter.

by Robert deJongh, Investment Models Lead and March Bishop, Acceleration Services Consultant

Feed the Future Partnering for Innovation

 

 

Companies face significant challenges when engaging smallholder farmers. These challenges range widely in complexity and impact and often hold true irrespective of geography, product type, or context. A recent series of interviews conducted by Feed the Future Partnering for Innovation with companies that are engaging with smallholder farmers shows that knowing your smallholder customer is key to meeting these challenges.

 

Market assessments are at the root of many of the operational challenges faced by these companies. In addition to understanding the broader market, it is critical to understand the way customers live their lives. This understanding must go beyond standard demographic measurements to really grasp decision making – especially who does it, what they value, and how they consider trade-offs. This means understanding not just where they shop but how they shop; not just how much money they could spend, but how much they will spend; not just what the companies see as pain points, but also what smallholders really struggle with.

 

A market assessment that includes customer behavior plays a big role in product adaptation. Only when a company really knows to whom it is selling can it appropriately align the product with customers’ needs and behaviors to ensure product relevance.

 

This deep customer knowledge is also critical to communicating a compelling value proposition. Once you know how your customers make decisions, how is your product going to positively change the life of an individual? And how will you ensure that they understand this potential value so that they purchase your product? This value proposition usually needs to be directly tied to higher earning potential. For example, for a product targeting improved dairy cow health, market it by showing that it increases income through additional milk production rather than marketing it by showing that it improves animal health.

 

If you know your smallholder farmer customer, then you know that oftentimes they need assistance affording and financing the purchase of your product. Traditional banks are often hesitant to make loans to these customers, so how can you structure your business model to help with financing and affordability? Some companies take on the loan itself and then make smaller loans to customers. Some sell by the individual unit rather than in bulk. For larger equipment, group loans and rent-to-buy schemes can be helpful.

 

Finally, there will always be surprises in the smallholder market, but if your business is agile, you can pivot as needed to navigate these surprises. Ensuring that your business is adaptable is another quality that addresses the challenges of engaging the smallholder market. Know your smallholder customer thoroughly and you'll be well on your way to succeeding in the smallholder marke

by W. Robert de Jongh

Technology Commercialization and Models Lead, Feed the Future Partnering for Innovation

 

Who is Juan Valdez and why should we care?

 

Juan Valdez is one of the world’s most iconic brands and a successful business model for smallholders. The cooperative behind it is a story about moving smallholders to the powerful position of shareholders.

 

Juan Valdez and Conchita, Source Juan Valdez

 

Thirty years later—and after having weathered a number of financial crises driven by volatility in the world’s coffee prices— Juan Valdez, the symbol of Colombia coffee, was born. Juan Valdez decided to consolidate its product under a brand that the Doyle Dayne Bernbach agency created to communicate the distinctive attributes of Colombian coffee and sell it at a higher price. Within a year of launching their campaign in the US and Europe, almost 90 percent of the European and American markets were able to associate Juan Valdez with Colombian coffee.
Source: Juan Valdez
Four decades later, facing increased competition and rapid expansion from new market entrants in the gourmet coffee market, like Starbuck’s, Juan Valdez embarked on a bold vision again: to go retail. Why profit only as a supplier in the value chain, when the company could be a player in the entire value chain using an end-to-end strategy?

In 2002, the Federation reached an agreement with Procafecol SA, the firm that manages the Juan Valdez® brand in Colombia and other countries, to brand Juan Valdez in the retail space. They started in a network of branded coffee houses in Colombia and subsequently went global, diversifying into a range of alternative products such as coffee mugs, umbrellas, and t-shirts.  This expansion strategy seemed to be gaining traction until the latest global financial crisis.  Retail stores were forced to close, including Juan Valdez’ iconic footprint on New York’s Times Square.  Juan Valdez learned that expansion should not come at the expense of authenticity – the new imperative was that Juan Valdez coffee houses should feel like a slice of Colombia.

The Federation negotiated part ownership of the joint venture, an, in one ambitious step, smallholders were transformed into shareholders. Since 2002, Juan Valdez has opened more than 200 retail coffee shops around the world. However, competition in this market is fierce, even on home soil. Starbucks opened a large outpost in Bogota earlier this year, thickening the plot of what promises to be an interesting battle of David and Goliath – or rather, dare we say shareholder v. smallholder? Given that Juan Valdez is and has always been about combining values with value, will the Juan Valdez experience and story around its coffee attract new customers into its coffee houses?  

As the Federation learned, getting their business model right and adapting it to an evolving context is fundamental to growth and success. Behind their iconic brand, there is an aggregator scheme that keeps farmers fiercely loyal, while buffering them from the ebbs and flows of the commodity marketplace.

While debates rage on about the ability of smallholders to manage quality, it just takes a sip from hot cup of coffee from Juan Valdez to know that quality and smallholders can go hand in hand.

 

To learn more about the aggregator business model and what works for smallholders, please see From Smallholders to Shareholders: A Guide to Optimizing Partnerships with the Private Sector for Smallholder Impact.

Brenna McKay

Grants Director, Feed the Future Partnering for Innovation


It’s Halloween, and for food security in many African countries, it’s time to put a hex on “witchweed.” Witchweed, also known as Striga, and its close relatives devastate maize, millet, and sorghum by ‘bewitching’ their hosts. That is, they grow on the roots of other plants and get all of their nutrients and water from their host plant. Amidst the short rains in Kenya, planting ends by October for a January harvest. This year, farmers near Lake Victoria will see whether Striga will stunt their maize crop as usual or if the new seed they invested in will result in increased yields.

 

Striga. Source:Royal Society of Chemistry

 

Freshco is a Kenya-based seed company that started producing maize varieties in 2000. In 2013, Freshco began coating seed with imazapyr with a manually operated drum. The drum required six people to operate and could coat one ton of seed per day. Through Feed the Future Partnering for Innovation’s support, Freshco recently installed an automatic seed treater that allows the company to coat ten metric tons of seed per day through a process that increases efficiency and reduces the amount of time it takes for the seed to reach the market. James Karanja, cofounder and general manager of Freshco says, “The seed treater is a game changer for us; now we can coat ten metric tons per day instead of just one. Farmers are also seeing new quality and consistency with their seeds.” A former Army Captain, Karanja thinks big, stating in this video that Freshco aims to reach 300,000 farmers in the next two years.


In January 2014, Partnering for Innovation initiated a partnership with the African Agricultural Technology Foundation(AATF), the International Wheat and Maize Improvement Center (CIMMYT), and BASF to commercialize imazapyr-resistant (IR) improved maize varieties, also known as StrigAway. This consortium provides technical and material support to the local seed companies that are leading the charge to increase quality, production, and sales of these pesticide-coated seeds and to scale this technology in Kenya, Tanzania, and Uganda through sales to smallholder farmers.

 

The strict handling requirements of IR maize deter most companies from entering the market, so part of StrigAway commercialization includes enhancing local seed company operations by installing automatic seed treaters. The use of the treater is crucial to selling 955 metric tons of seed in Kenya, Tanzania, and Uganda and making this life-changing product available to smallholders.

 

There are many striking differences between the manually operated drum and the automatic seed treater:

 

Drum

Seed Treater

I MT coated in 12-hour period

10 MT coated in 8-hour period

Inconsistent application of herbicide

Uniform application of herbicide

Drying seed is an extra step

Seed dried during coating process

Germination lower due to early treatment

Seed packaged immediately and ready for sale

Product arrives late to market

Seed treated as market demands

 

 

 





In addition, Freshco noted that the technical expertise from AATF, BASF, and CIMMYT has been invaluable, especially the “advice on treatment and delivery of the seed to maintain germination.” After receiving training from BASF, Freshco now knows that after seed coating, they need to get the seed to market within two weeks in order for farmers to access the seed before its shelf life expires and germination rates fall. The previous process of treating the seed and then immediately storing it was actually reducing the shelf life of the seed, resulting in farmers having a negative experience with the technology.


Farmers who have planted IR-maize see a dramatic difference in their crop relative to neighbors who are not using imazapyr-treated seeds. When farmers use StrigAway technology, their maize is able to reach maturity before Striga can establish itself, thus ensuring a healthy crop of maize with minimal to no Striga damage. Farmers who are used to harvesting only three 100-kilogram bags of maize expect this year’s crop to double in yield. This maize will help them feed their families and generate income that, without StrigAway technology, would not have been possible.

By Deborah B. Hamilton, Feed the Future Partnering for Innovation


Have you ever wondered what it takes to do business with smallholder farmers in emerging markets? Do you often wonder why many of these business models fail, and why only a few succeed? Are businesses with smallholder farmers for you? Last week, as more than 2,000 participants gathered for the 2014 Borlaug Dialogue and World Food Prize, Feed the Future Partnering for Innovation held a packed session on inclusive business models asking, what’s working and why?

 

Tjada D’Oyen McKenna, Assistant to the Administrator for USAID’s Bureau for Food Security and Deputy Coordinator for Development for the Feed the Future initiative, kicked off the workshop by stating, “In order to make partnerships more effective in achieving positive impacts for smallholders, it is important to get the business model right.” She went on to describe USAID’s strategic engagement with the private sector, which focuses on aligning companies’ core business interests with Feed the Future’s development objectives to foster market-led growth that is critical to reducing poverty, fighting hunger, improving nutrition, and improving sustainability.  

 

 

Key takeaways from the event were:

 



Get the business model right: While better technologies can make a huge difference to smallholder productivity, getting the business model right is critical to assuring the viability and sustainability of these ventures.

Context matters. Understanding the uncertainties in the marketplace are key drivers in ascertaining if a business model will succeed or fail.

The importance of the high-touch. Leveraging methods like human centered design that focus on adapting products and services to local markets and actively engaging the customer through training and after-sales support are important to assuring customer retention and business growth.

Smallholders want solutions that work for them, not cheap products. It is important to demonstrate how a product or service will create value for both smallholders and businesses.

Understanding and managing risks effectively can be the difference between making or breaking an inclusive business.

Public policy matters. Understanding policy constraints and opportunities can help inform strategies for scale and sustainability.

Last mile solutions are needed: Leveraging local partnerships can help ensure market access for critical products and services.

 

W. Robert de Jongh, lead author of the guide, challenged the audience to think about misconceptions of working with smallholder farmers and how some of these misconceptions can drive businesses to failure. He explained that business models succeed in smallholder markets when they are customer- and market-driven, are part of company’s core business, effectively manage risk and context, and create shared value. Additionally, business models succeed when there is a high level of customer support, financing for smallholders to purchase new products, an aggregated supply system, a deep understanding of target markets, and when a ‘third party facilitator,’ such as an NGO or village consortium, brings administrative, financial, and marketing experience. De Jongh also echoed McKenna, saying that donors, such as USAID, play a critical role in providing funds, investment, and technical assistance to help companies reduce their risk or accelerate value creation when entering a developing market.


 

Two Partnering for Innovation partners, The Toro Company and Compatible Technologies International (CTI) as well as a representative from Syngenta Nigeria, which is launching a major partnership with USAID, joined the panel. These organizations are working with smallholders around the world and provided case studies that demonstrated the practical application of the business models.


 

Eduardo Mendías of The Toro Company described Toro’s first entry into a smallholder market and described how a key factor in its success has been working with iDE, an NGO that is on the ground in Zambia and is experienced in reaching smallholders.


Idris Ajani from Syngenta Nigeria discussed challenges that smallholders in his country face, such as the difficulty of mechanizing a one-hectare farm. To address these challenges, Syngenta Nigeria is partnering with USAID to train over half a million farmers in good agricultural practices, develop and certify retailers, and enable access to modern inputs and markets.


 

Wesley Meier talked about CTI’s partnership with SISMAR, a Senegalese manufacturer with a regional marketing presence and a strong brand and reputation. CTI and SISMAR are partnering to produce CTI’s Pearl Millet Thresher, which helps pearl millet farmers, many of whom are women, reduce manual labor and increase production of high-quality pearl millet grain. Moving manufacturing of the thresher from China to Senegal will reduce the sales price by eliminating the shipping, customs, and logistics costs, making it affordable for smallholder farmers.


 

According de Jongh, “The case for public private partnerships has been made; it is time to move from the what to the how—how do we make these partnerships work?” What are some business models you have observed succeeding or struggling in the smallholder market? We want to hear your story.


 

Read or download From Smallholders to Shareholders at www.partneringforinnovation.org; listen to an audio recording of Robert De Jongh’s presentation at the October 22 Ag Sector Council Seminar; and join the dialogue on the AgTechXChange.

agtechteam

Energy and Agriculture

Posted by agtechteam Jul 29, 2016

Haben Berhe, Technical Analyst

Feed the Future Partnering for Innovation

 

Empowering Africa’s Future: Building Infrastructure and Agribusiness Through Public-Private Partnership, organized by the Partnership to Cut Hunger and Poverty in Africa on October 6-7, 2014, examined the challenges of inadequate infrastructure in Africa and how public private partnerships can be vehicles for delivering not just much-needed public service solutions, but also a catalyst for regional integration and overall economic growth of the continent.  

 

Energy, as part of larger infrastructure development, is central to the development of rural communities. In fact, it is one of the common threads that links poverty reduction, food security, and climate change. Over four million people die worldwide every year due to health complications from the use of solid fuels and resulting household air pollution. Unreliable energy also contributes to postharvest losses, as storage facilities are unable to preserve perishable produce and high-value crops. According to 2008 data from the Food and Agriculture Organization of the United Nations, 65 percent of farm power in sub-Saharan Africa comes from human effort, while 25 percent comes from animals, and 10 percent from engines.

 

With only one in eight rural households in Africa linked to an electricity grid, electrifying remote areas is fraught with challenges. Power projects led by private or national electrification companies are primarily focused on urban and peri-urban areas. The private sector, keen on realizing a return on its investment, focuses on less risky customers that are capable of paying for services and on relatively high margin ventures. Donor-financed projects, on the other hand, have had the unintended consequences of dis-incentivizing customer payments and mismanagement of projects. Best practices that already exist from the experiences of other countries in rural electrification are not followed by governments and national operators. Fixing this and other challenges, according to experts, could take 20 to 30 years. Other problems, including high operating and capital costs, low-income customers that are unable to pay, political interference, price distortions, and lack of regulatory transparency have slowed down the rate of electrification in Africa, particularly in rural areas where communities rely on agriculture for their livelihoods.  

 

A number of solutions do exist, however.  Public private partnerships are making electrification possible by bringing in private sector expertise, operational efficiency, and technology to provide public services. Electricity cooperatives, which are private, independent, nonprofit utilities owned by the customers they serve and are established to provide at-cost electricity, are another model. The National Rural Electric Cooperative Association of the US is replicating this model in developing countries by working with donors such as USAID. Low-cost engineering design, workforce training, subsidies, effective systems that enable high revenue collection, and putting in place productive programs to encourage income generation activities around electrification have contributed to the effectiveness of public private partnerships. Donors are also de-risking the upfront cost of these projects and are incentivizing the participation of the private sector, which otherwise would have shied away from involvement due to challenges such as capital costs, the political risks involved, and unclear laws around public private partnership frameworks.

 

As an example of a direct link between access to energy and agribusiness, Kenya runs the largest geothermal-powered greenhouse in the world and uses it to dehumidify flowers that it exports to Europe. Kenya accounts for 30 percent of flower exports to Europe, and one of its first geothermal crop dryers, built in 1939, is still functioning. Volcanic steam, harnessed and distributed properly, can be used to set optimal growth temperatures for produce in greenhouse environments. Other potential uses include tea drying, tannery, pasteurizing, and aquaculture. Powering Agriculture Clean Energy Challenge, a partnership between USAID, the Swedish government, Duke Energy, OPIC, and Germany’s Ministry for Economic Cooperation and Development, is harnessing private sector-driven renewable energy technologies for agricultural transformation. These include irrigation pumps powered by central solar energy, air conditioning unit in Senegal, and a solar-diesel hybrid micro-grid for agricultural processing in Haiti.

 

With 600 million people in Africa lacking access to electricity, well-designed public private partnerships are one solution that can provide access to energy, particularly in remote areas. By utilizing innovative technologies, renewable sources, and off-grid and micro-grid delivery systems, developing countries can achieve reliable energy and increase agricultural productivity, which are inextricably linked and are essential for poverty alleviation.

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