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3 Posts authored by: hanna

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.

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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.

One exciting innovation in agricultural technology is biological control products. Not only do these pest management products have huge market potential, but they also are environment-, farmer-, and consumer-friendly alternatives to traditional chemical pesticides. Unlike synthetic pesticides, biological control products are derived from natural materials such as animals, plants, and microbes, and are consequently less toxic and more targeted, while remaining highly effective at plant protection.

 

xHPjv2b.pngThis market has experienced rapidly accelerating growth. Since 1993, biological products have grown from being a $100 million to a $3 billion industry, and are projected to reach $5 billion by 2020 and $11 billion by 2015. In the future, the biological control market can potentially capture a $34 billion share of the $60 billion total plant protection market.

 

Despite this enormous potential, there are still a number of challenges both for companies hoping to enter this industry and for companies hoping to commercialize biological products in smallholder markets. First, there are a huge number of companies already competing, some, like Monsanto and Syngenta, already dominate the agricultural input industry and have significant resources and expertise. This means that market access is a significant barrier for smaller or local companies who do not have the same access to financial and human capital. Second, smallholders are often unaware of biological control products and are accustomed to using chemical pesticides, or no pesticides at all. This means that companies must invest in developing product knowledge and demand.

 

Whether you hope to enter the market or are a small biological control producer hoping to scale-up or expand across countries, we have identified a number of important considerations you should look at first:

 

1. Understand what the global and regional market trends are. North America and Europe represent the biggest shares of the market, while Latin America is the fastest-growing. While as a whole Africa represents a smaller share of the market, some countries that are already major agricultural exporters, such as Morocco, South Africa, and Egypt, have active biological control product markets. When considering the biological control product market in different countries, it is important to consider the type of crop, how it is used (if it is domestically consumed or exported), and the price-point of farmers.

 

2. Understand the key market drivers, and what market potential it offers you. The main driver of growth is consumer demand to reduce chemical pesticides. Consumers increasingly consider the health and environmental impact of their food, and biological control products offer a safer solution. Manufacturers are drawn to biological products due to the significantly lower cost of development, reduced pest resistance, and fewer regulatory hurdles. While new synthetic pesticides can take over 11 years to go from development to market and cost upwards of $286 million, biological products take only 3-5 years and cost between $25-50 million.  Farmers, in turn, are driven to use biological control products because they are safer for themselves, their families, and their lands. In addition, the products are also proven to increase crop productivity and quality, allowing them to sell and export more. Knowing these key drivers is essential to develop a targeted marketing plan and business strategy.


3. Understand the intellectual property framework. If you are developing a new innovation, or hope to expand into foreign markets, it is very important to consider intellectual property laws and patents. Patents play a key role in helping small companies compete, promoting innovation, and protecting inventions. For companies hoping to patent biological control products, there are several important considerations. First, in order for your invention to be eligible, it must be different from what occurs normally in nature. For example, if you alter microbes, or combine microbes that are not naturally found together, then you could patent them. However, if you just take a microbe out of nature and do not change it, you would not be able to patent it. Second, you must do extensive research to ensure that your invention is not already patented. Third, different countries and groups of countries have different intellectual property laws and standards, so you must research what is required in each country prior to expanding. Fourth, understand the difference between patents – which, while expensive and have expiration dates, offer formal protection – and trade secrets – which are free and have no expiration date, but require you to protect them.


4. Understand your comparative advantage. While large companies may have more capital and resources, local companies can use their knowledge of local markets, customs, and environment to their advantage. The most competitive producer of biological products in Chile, for example, is a company which developed a product derived from local organisms and as is such is especially adapted to the local climate and conditions.

 

To get the full story about global trends in the biological control product market and how they could impact your company, watch the recent Tech Talk:

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Feed the Future Partnering for Innovation is a USAID-funded program that partners with private sector companies to commercialize agricultural innovations in smallholder markets. Through these partnerships, the program learns a lot about what works and what doesn’t work to get innovative products and services to smallholders. Partnerships with three companies recently ended: Grameen Foundation in Kenya, Zamorano University in Honduras, and the Metal in Bangladesh. These companies had the dual goals of growing their business and addressing unique challenges in their countries, including a lack of affordable microcredit in Kenya, an alternative to chemical pesticides in Honduras, and a need for mechanization services in Bangladesh. Over the course of their work with Partnering for Innovation, each partner achieved notable successes and identified important lessons learned.

 

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When Grameen Foundation and its commercial microfinance partner Musoni began their partnership with Partnering for Innovation, they hoped to use Musoni's digital technology to expand smallholders' access to affordable microcredit. Musoni had already entered the smallholder microfinance market with the Kilimo Booster loan, which includes favorable terms and a customizable grace period based on a farmer's seasonal cash flow. Through the partnership, Musoni and Grameen Foundation built a tablet-based software that streamlined the loan application and management processes, allowing Musoni to reach more farmers. To date, Musoni has made more than 14,000 Kilimo Booster loans, 54 percent of which went to women.

 

To achieve this success, Grameen Foundation engaged directly and consistently with stakeholders. First, they used a human-centered design process that addressed the needs of both loan clients and bank officers, and then they repeatedly tested their software and developed a strong field team of wealth creation officers. Through stakeholder engagement, Musoni was able to identify potential risks and design solutions. Through repeated testing and feedback, Musoni ensured that its product would be high quality and problem-free after entering the market. Finally, Musoni used wealth creation officers to provide financial information and extension services to clients and potential clients. By connecting directly with smallholders, these officers were instrumental in increasing uptake.

 

zamorano_university.jpgZamorano University originally developed its biological pest control product, NemaPower, to provide smallholders in Honduras a safer, more effective, and environmentally friendly alternative to chemical pesticides. Zamorano University became a Partnering for Innovation partner to help it meet rising demand and scale up production of NemaPower. Through the partnership, Zamorano University built an improved laboratory that reduced production time from 55 to 12 days, increasing annual supply by a factor of 20, and selling more than 9,000 doses of NemaPower.

 

Zamorano achieved this success through its understanding and support of both smallholders and distributors. Throughout the partnership, Zamorano needed to build demand for biological pest controls in a market dominated by chemical pesticides and develop a sustainable distribution network. To do this, Zamorano built a multi-step training program for farmers and leveraged relationships with local cooperatives and companies that could act as distributors. By using technicians to develop strong relationships with farmers, Zamorano was able to collect feedback and improve its training and distribution. Most recently, Zamorano partnered with Walmart to train Walmart's technicians in using NemaPower. Now, Walmart orders pest control products from Zamorano's distributors and trains the farmers from whom it sources to use these products to grow chemical-free produce.

 

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The Metal hoped to capitalize on the unmet need for rice and wheat harvesting services in Bangladesh by introducing a low-cost, quality mechanized reaper. Initially, however, The Metal struggled to sell the reaper to local service providers in smallholder markets, as many farmers were unfamiliar with the technology and continued to rely on labor intensive harvesting methods rather than renting reaper services. To overcome this challenge, The Metal partnered with Partnering for Innovation to test and develop a comprehensive marketing campaign. By concentrating interventions in one geographic area, the Metal was able to create a "control" group and an "experimental" group to evaluate the effectiveness of the marketing campaign. In addition, The Metal tested a wide variety of marketing strategies - from field and market day demonstrations to managing retail outlets to hiring sales and technical personnel - and compared them for cost-effectiveness.

 

Through its data-driven and scientifically designed strategy, The Metal successfully built the community awareness and product knowledge needed to commercialize the reaper. In total, it sold 87 reapers to local service providers in the "experiment" province. In turn, these operators provided reaping services to more than 4,000 smallholders. In the future, The Metal will use the results of its tested interventions to develop and implement marketing campaigns across the rest of Bangladesh.

 

Although their partnerships with Partnering for Innovation have ended, these three companies will continue applying their lessons learned to grow and provide smallholders with sustainable access to agricultural technologies and services.

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