Learn!

2 Posts authored by: bobrabatsky

Zimbabwe farmer in Mazowe showing strong maize harvest.jpgWhile much has been written about the need for better postharvest handling to improve overall farm to fork productivity, the data are all over the place. The rates of losses in both the developed world and emerging markets is similar, it just happens at different points of the value chain. In emerging markets the highest losses occur at the pre-consumer stage, with a rule-of-thumb figure of 30%. In the developed world, most losses occur post-consumer, our aging leftovers molding in the back of the refrigerator or those supersized plates of restaurant food that are never eaten. Bottom line, a lot of food is wasted and much can be done to mitigate this leading to more efficient agriculture including less stress on our land and water resources, and lower food prices.

 

Data are better on postharvest-preconsumer losses for the main grain crops (maize, wheat, rice, soya, sorghum, millet), but still range from 8% (FAO) to 15% (APHLIS) for Sub-Saharan Africa. Still a lot of food that is wasted. For instance, that 15% figure that APHLIS uses totals 7.6 million metric tons, with over half of that maize! That's a lot of food.

 

I believe that improved, lower-cost storage technologies that can be used on the farm and by intermediaries. This will include hermetically-sealed bags that have been promoted by Grain Pro and Purdue (PICs), and more permanent structures like grain containers and silos that are designed more for the larger farmer, farm association, and market-town traders. The technologies help not only to reduce losses from rotting, rodents and insects, but also provide more opportunity to hold onto stock and sell when market conditions are more favorable.

 

I am very interested in hearing from you about what appropriate storage technologies you have seen and/or used, including the effectiveness, challenges and costs. References to studies and papers are most welcome!

Head of Farmer Group (800x530).jpg

Day One: All about the AgBusiness Lab

Partnering for Innovation has made nearly $1.8 million in investments in projects that are promoting drip irrigation, or about 20% of our investment portfolio, so developing better strategies to grow this market is important to our investment success. The AgBusiness Lab in Arusha, Tanzania is all about developing stronger strategies for developing, marketing, and distributing drip technologies. Eleven private irrigation equipment distribution companies from eight African countries are participating.

 

Participants cited system design, financing, extension provision and water access as key challenges they face in succeeding in their businesses. The potential market is massive: we estimate that if only 1% of land under rainfed production in four of our targeted countries-Ethiopia, Kenya, Tanzania, Zambia-were converted to drip irrigation that would conservatively lead to $2.5 billion in new sales for these companies.

 

In the next three days my team and these owners, GMs, and sales directors will be working on the best low-cost systems design, how to more effectively market and distribute systems, better ways to train farmers in using and maintaining systems, and strategies for providing the financing needed to pay the upfront investment in the system. We want them to leave the lab with the tools and strategies needed to tap into this massive market. Tomorrow we head to the fields to talk to farmers who are successfully using small scale systems to get some direct feedback on their ideas. I’ll be reporting out daily on our progress.

 

Day Two: Muddy Boots!

We began with some sun for our field trip to small farms and ag input shops. It has been raining a lot in Arusha….8 straight days, which is a bit unusual this late in the rainy season. One of the distributors asked why we going to see drip irrigation in the rainy season. Good question that we promised would be addressed. As we drove off of the main road from Arusha the effects of the rains were sinking in. We were in serious mud as we slipped and slid towards our first visits in Lakitatu. This first farmer group has been working with the USAID TAPP program for nearly 2 years. We saw a one acre field just seeded in watermelons, a new counter seasonal crop. The farmer, Alfred Oleibanguti, had just harvested tomatoes in this field and sold them for 4.6 million Tsh, or about $2,800. His investment in the drip system and pond cost $3,200 which inclmuddy boots.jpguded a small retention pond that would provide 10 days of water, so he can easily pay off the system with his first year’s proceeds and still have a good income. Financing of these systems is the number one concern of each farmer, as well as the distributors in the Lab. Another farmer we met had .7 acres of tomatoes in the ground and explained that he was not able to find bank lending for the system so borrowed from relatives. He should also be able to pay off the system in a year. We next visited Chem Chem, which means water source or spring in Kiswahili, and we were shown how the water table is now less than one meter from the surface. “Its ironic in a place called Chem Chem that farmers were idle for six months of the year before we introduced irrigation here” said TAPP Chief of Party Antonio Coello. “These farmers now know the benefits of drip, even in the rainy season, and are now really ramping up production after just 2 years of working with them.” Indeed they were…a year ago there was only a quarter acre under green beans and tomatoes, but there are over 8 acres under intensive production by 19 members. And what about drip irrigation during the rainy season? Several of our distributors were impressed that as a result of providing intensive technical assistance in the area the farmers were using or eager to use drip. Why? In addition to providing water, drip is also a very efficient way to deliver fertilizer. “In the rainy season broadcast fertilizer is easily washed away,” explained Fintrac Head Agronomist Raca Lardizabal. “By fertigating you deliver much less fertilizer directly to the root system which is more efficient and effective.” The farmers knew this and those who did not yet use drip were seeking ways to find financing for it. “I want drip but cannot fund it yet,” said one woman farmer in the Chem Chem group. “I am saving and looking for family money. I know I can quickly pay back the loan,” she said. We spent most of the morning in the rain but still heard of the promise of smallholder drip. As we drove back to Arusha, the sun came out (of course!!) but we brought a lot of mud, and ideas back to the hotel. In the coming two days we will be working how to redesign systems to reduce costs, better ways to provide extension and promote technologies, and to also address the financing issue. The night was reserved for more bonding around the bar…..and cleaning shoes!


Day 3: Your first car wasn't a Mercedes

Day three began with a frank discussion of how to bring down the cost of drip systems without compromising effectiveness. Fintrac’s chief agronomist Ricardo Lardizabal worked the group through the design of a drip system that would cover a hectare for less than one thousand dollars, pump included! Skepticism was as thick as Arusha mud (yes, it is still raining hard!) as he began his presentation, but as Raca methodically walked through system design, emphasizing that the objective of the system was functionality even though the selection of some parts, such as filters, pressure valves and venturis could be less costly, but by sacrificing longevity. “But you do that to get them to use the system at the lowest cost. They will quickly realize the value and they will invest in better parts. Your first car wasn’t a Mercedes, it was a used Chevy. It doesn’t mean that is what you will always drive,” he said, emphasizing the importance of cost and functionality to smallholders. The under one thousand price per hectare really shook up the group….we want to see Raca’s numbers said more than one of the distributors. Point made….drip systems can be made more affordable by customizing the design. It’s no “one size fits all” business.

After the group split in two and designed and priced out competing systems using an excel spreadsheet template provided by Fintrac …a system of one acre, 4 meter slope uphill, and other specs laid out by Raca, the best they could do was one thousand per acre….four time what they were just told was possible. Raca just smiled, knowing work was still needed.

 

Guy Fipps then returned to talk best extension systems practices in the US and to suggest ideas to make extension work in environments without government involvement, and Ruben Yanez Sorto, Fintrac’s production manager in Tanzania, discussed Fintrac’s 13 commandments for farmer outreach and training. So these are ideals, but what can companies do when donor-subsidized programs don’t offer competent farmer outreach? Inbed services in the price, demand better from the government, find donors or other subsidies to support? Answer is a mix of all of the above. Bottom line is that you need to do what you can afford to do to give smallholder farmers good technical support because when this is done, they can handle sophisticated technologies.

 

In the afternoon we discussed commercial approaches to providing drip technologies, with Jose Jaar of Del Campo in Honduras explaining how his company grew from a start 19 years ago with $250, to a major irrigation supplier to smallholders selling $1.8 million last year. Some interesting take-aways were that 60% of his sales are from existing customers ordering more drip tape and other supplies for their systems, and that his professional sales staff, mainly agronomists, receive 80% of their salaries from commission. Both these details lead to a better bottom line as more small farmers convert to drip. For Del Campo they are dedicated to develop customer relationships, and to maintain a focus on quality service, to grow sales and create incentives for his employees to increase the company’s markets.

Sustainable extension to help farmers learn about this technology and to correctly install and maintain drip systems is a major priority for these distributors. How to pay for it, either through embedded services that the customer pays for, or by receiving help through effective donor projects or other schemes, depends on what they can find locally. The bottom line is to make that initial sale by demonstrating the advantages of year-round water, and to provide world-class customer service to win, keep and grow your customers from a bare minimum systems into that luxury drip kit model.

 

Also check out what Professor Fipps of Texas A&M recommends based on his mapping projects in Africa.

 

Day 4: An Investment in the Making, or Making an Investment

From drip system design to agricultural extension and distribution -- smallholder centered drip irrigation requires new and innovating thinking if it is going to be sustainable.  And, speaking of sustainable, how to figure out how smallholder farmers can pay for these relatively significant investments. We began the day with microfinance/agfinance guru Lorna Grace of Small Finance Big Change walking us through smallholder finance examples. She told us that although sub-Saharan Africa has over 900 banks, only 95 (about 10%) of these are providing financing to smallholder farmers. There are many reasons for this, from the demand side such as low financial literacy and finance skills, to low producLorna.jpgtivity and margins to service loans, to well-earned risk aversion.


From the supply side, banks don’t have reliable insurance products to mitigate smallholder loan risk, don’t like the uneven/spikey earnings and expenditures, and generally lack sufficient agriculture expertise in their banks to design appropriate loan products. Most loans are for inputs, and structured to be paid at harvest. Longer-term loans beyond what is needed for working capital, such as for equipment and more land, will likely need to be cash-flow related, should likely involve some collateral, and be structured to match the cash flows of the farmer. Co-financing, where equipment distributors take more of the risk, need to be considered since these enterprises are closer to the client and can help when “workouts” are needed. Other ways banks can mitigate smallholder risks is by ensuring farmers get good technical assistance so they learn about farming finance, arrange some ag insurance if available, organize more formal contracts with buyers that can be used as collateral, and design products that match more closely the cash flows of farming.

 

Lorna also provided and discussed a farmer cash flow tool that is excel based, which the group got to test drive and ask questions. The valuable lesson learned here was to see how quickly a drip irrigation loan can be paid back as a result of the boost in productivity from counter seasonal production. As we learned from the smallholders visited earlier in the week, payback is easily done in one year.

Next a panel of bankers was convened to provide their view on working with the smallholder ag. sector. The panel included Godfrey Kabera of Family Bank Kenya, Adrian Ghaui of Opportunity International, and Edgar Kalinga of Equity Bank Tanzania as well as Jose Jaar of DelCampo and Lorna. Key takeaways included: loan products much match agriculture cash flows; group assets and farmers with savings accounts are better investments; partnerships which include suppliers or buyers teamed with farmers are more secure; farmers receiving competent technical assistance are far more likely to succeed; for larger-ticket items it is better to work with the supplier who then shares the small farmer risk; make sure that farmer production choices are driven by the market and not by a project or program. Calendarized production, in which production cycles are established for each week, bi-week, or month, was also cited as a strategy to both spread out the cost of inputs and as well as regularize sales income.


We met in the afternoon to begin to digest the lessons of the last three days and to make plans for our next steps. Individuals began to jot-down what they need to do next in the key areas covered: system design, small farmer extension, distribution and sales, and financing. In particular,  how can they  balance the smallholder demand for efficient and modular systems tailor made to their individual needs and the related extension services required for training and maintenance with the increased costs associated with this after-sales support and outreach models.  While leveraging donor investment may be one of the ways to cover some distribution strategies and after care support (which can eventually be paid by increased crop yields and sales from effective use of drip irrigation systems), the group also wondered if there were more viable market-based approaches through outgrower schemes, contract farming, or other donorless models.  They all wanted more time to “digest and reflect” on these issues. The PI team committed to following-up individually to help address any of these next step issues, to provide them with contacts in the ag development communities who should be promoting good technologies, and to begin to monitor their progress in cracking into this difficult and largely untapped market.

Filter Blog

By date:
By tag: