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Partnering for Innovation is finding that data based understanding of farmers' motivation and behavior helps gear commercial sales to suit the needs of their customer, smallholder farmers. A recent survey conducted by one of Partnering for Innovation’s partners in Mozambique reveals that understanding smallholder farmers' thinking and behavior can help drive technology and adoption, resulting in increasing their company's sales while opening pathways for farmers to make earlier decisions about their farming businesses by buying certified seeds early, when they have cash in hand from their recent production.


This recent survey was conducted in part to inform the company’s business with regards to the development of a sales management information system as well as a general understanding of stakeholder behaviors to increase the sale of improved seeds so that farmers could opt to buy seed early. Below are major findings from the survey:

 

  • Payment structure- Farmers may not be willing to pay additional cash for the improved seeds from their pocket or may not have the savings available. Partners' experiences in other countries suggests that giving farmers the option to receive partial payment for cash crop sales in the form of high-quality seed at the time of sale, increased adoption of the seed.

 

  • Timing- Linked closely to payment structure is the timing of seed sales. Marketing and sales of seeds is often focused on the planting season. This is months after the farmers have been paid for their crops and often when they have the least amount of disposable income. By moving up the selling season to the same time that farmers are receiving money the company did not even have to offer alternative payment options as the farmers had the cash to purchase seeds.

 

  • Cost-Benefit of seed: Improved seed significantly increases the cost of production, representing 15-25% of total value. This high cost tends to decrease adoption rates of seeds in favor of adopting lower-cost good agriculture practice measures such as efficient land preparation and planting as well as the use of inoculants. Mechanization and inoculants have fewer added costs and significant impact on yield. The company will use this as entry points with the farmer, paving the way for the adoption of improved seed in the future.

 

  • Sales point locations- Farmers must travel long distances to get the improved seed. By increasing the sales points to be closer to the farmers, there is a higher likelihood for them to buy the seeds.

 

  • Trusted seller- Farmers can be skeptical of improved seeds and if what they are buying can really be trusted. They do not want to spend their money on seeds that will not provide improved results.

 

Combining seed sales with other services such as mechanization is one strategy to increase seed sales. Should the company be able to offer reliable mechanization services that is another business line and could help to increase seed sales and could greatly be improved by supporting stakeholders in profiling their clients, identifying their location and creating a more efficient schedule.


What are other examples of how commercial companies have used social sciences to increase adoption or sales? Reply below or message Mark Sevier

In Mozambique, Feed the Future Partnering for Innovation conducted farmer impact surveys that are designed to provide us with data on the use and impact of services offered by our commercial partners. The impact surveys  include getting qualitative information about farmers’ experiences and collecting critical customer information, such as customer demographics, product usage feedback, and yields. Below are some high level findings from the surveys that may be applicable to other markets where commercial companies operate:


Certified Seed Distribution and Sale NCBA CLUSA Amber James Kevin Gifford João Forte

  • 70 percent of farmers reported that they heard about certified seeds for the first time through seed fairs rather than through individual seed stores. Learn more about seed fairs here. Other effective forms of marketing certified seeds includes demo plots/field days, extension agents, and radio.
  • In most cases, access of certified seed at the right time was a more important criteria than the cost of the seed. This demonstrates the importance of investments in effective distribution channels to satiate market demand.
  • Market access opportunities for smallholder farmers are key to convincing farmers to invest in certified seeds.
  • Farmers stated that they would be more willing to purchase seeds if they could access seeds on a credit basis and then pay back in either cash or commodity after harvest.


Financial services Opportunity International

  • Loan interest rates remain high and amortizations times are short.
  • The timing and conditions of loans should take into account the agriculture season, and banks should be open to negotiate the terms of loans in the event that farmers crops fail
  • Limited penetration of mobile money threatens sustainable financial service delivery


Commodity Trading Export Marketing Company Limitada

  • The closer a farmer sells to the final transaction point (ie. Warehouse), the higher price they will receive. 51 percent of farmers interviewed reported selling their products to traders/aggregators rather than directly to the warehouse
  • Farmers are less inclined to invest in storage without access to finance. 

 

Financing and developing strategic partnerships remain critical to effective marketing and sales to base of the pyramid customers such as smallholder farmers. What have been others companies lessons learned with regards to selling technologies and value added services into smallholder farmer markets?

In Mozambique, flash floods and intense droughts, civil unrest, and devaluation of the currency, the metical, against the US dollar and South African Rand by 50 and 70 percent respectively make for a very challenging environment to deliver business in. Many agricultural input suppliers and commodity traders are drastically scaling back operations in Mozambique because of these challenges. Some, however, are finding ways to make business work despite them.

 

Feed the Future Partnering for Innovation partners are maintaining their local operations, and even expanding their services to smallholder farmers through Partnering for Innovation support. Even better, they are helping to stabilize the agricultural market and ensure that smallholder farmers maintain access to technical assistance, improved inputs, and markets despite the current economic and political unrest.  For example, partners such as local seed growers and input suppliers are using their investments to further build their capacity to meet the growing need for improved inputs and supplies marketed to smallholder farmers.

 

How are these partners succeeding despite the challenges? Read on to learn about how Partnering for Innovation partners are working together to overcome the external challenges in Mozambique:

   

Inputs    

  • The devaluation of the metical made it impossible for Lusosem to import inputs in a cost effective way, and so they are partnering with Phoenix Seeds and Tecnologia E Consultoria Agro-Pecuaria, LDA (TECAP) to stock their shops with certified seeds and invest in more cost effective distribution systems such as mobile input shops. 

  • To reduce distribution costs and bring product closer to farmers, Phoenix Seeds has reached an agreement with Export Marketing Company Limited (EMCL) for the sale of certified seeds in their input shops. In Chimoio alone, over 70 metric tons of seed will be stocked in these shops, with the expectation that this will increase substantially next agriculture season.

  • Lusosem, Oruwera, and Phoenix Seeds have worked together to invest in innovative distribution systems such as farmer fairs and hubs. This has reduced each company’s distribution costs and allowed them to deliver their certified seeds on time, which is particularly important given seasonality changes due to weather factors. 

 

Offtaking

 

  • Banco Oportunidade de Mocambique (BOM) facilitated a market linkage between their farmers and EMCL’s facility in Mossourize, allowing them to repay their loans. This was a particularly important linkage given the security concerns in this area and inability of other offtakers to procure the commodity.

 

Financing

 

  • BOM financed Phoenix Seeds agents to allow them to purchase larger volumes of certified seeds when they need it. The interest associated with financing has become exorbitant given the economic challenges that Mozambique is facing, but financing commercial farmers and agents who have collateral and are perceived to be less risky remains an untapped opportunity for financial institutions.

 

Have an external challenge your business is facing? Tell us what they are and how you are working to solve them in the comments section! Pippy Gardner Lindsey Madson Sridhar Thiruvengadam TECAP Tecnologia e Consultoria Agro-Pecuaria João Forte Kevin Gifford

  

Phoenix Seeds, a private sector seed producer in Mozambique is partnering with NCBA CLUSA to increase the distribution of certified soya, pigeon pea and sugar beans to smallholder farmers in Manica, Tete, Nampula and Zambezia provinces. The majority of the production comes from Phoenix Seeds commercial farm near Vanduzi, Mozambique which has pivot irrigation. Phoenix Seeds also contracted some seed outgrowers in order to meet the ready demand for certified seeds.

 

Phoenix Seeds sells the seed through two distribution channels. The first is through Phoenix agents, who have physical locations through which they sell seeds and other improved inputs. This model has been successful to date, with almost 50 percent of the Phoenix Seeds agents investing their own resources in the purchase of seed for re-sale. This indicates that through providing additional support to agents, Phoenix can expect them to play a significant role in the sales strategy in the future. This first campaign of seed sales also serves to indicate which agents are the most engaged in the project, and have the potential to sell the largest volumes of seed through their stores.

 

The second distribution channel through which seed is sold by Phoenix is via seed fairs. This distribution strategy has proven useful for many agents who do not have sufficient working capital to purchase large volumes of stock for re-sale, yet through their demonstration plots they are able to stimulate and aggregate demand within their communities. It represents a way for agents to gain a margin, with limited financial or other investment. The fairs have also reduced transport and logistic costs for Phoenix, with seed fairs taking place in two main locations where Phoenix has set up rented warehouses as well as “mini fairs” in surrounding locations. By reducing costs for Phoenix, the seed fairs also lowers the cost of seed for smallholder farmers as they are purchasing directly from the company. This reduced price to farmers is one of the reasons why Phoenix Seeds is noticing that smallholders tend to purchase larger volumes of seed from the seed fairs than they do from the agents´ stores. Through these two distribution models, Phoenix Seeds has sold 30,547 kg of certified cow pea, sugar bean and soya bean seed to over 2,000 farmers to date.


During the 2016/17 seed sales campaign, Phoenix will improve on the seed fair strategy by developing warehouse and other mini fair locations into official sales and distribution hubs, building the capacity of agents located in those areas to act as Phoenix agents who organize the fairs themselves. This would enable Phoenix to carry out a larger number of fairs at the same time, without relying on others to organize and implement the events. By having agents managing the hubs, the stores will be open as sales points every day and not just on seed fair days. This would increase seed sales and develop the capacity of individual agents to become successful input dealers and, potentially, even offtake buyers. For instance, at present, the owner of the Mugema warehouse is already acting as a Phoenix agent and demonstrates the capacity to become an inputs “hub” in 2016/17. This is a model which Phoenix expects to replicate and build on in other fair locations.

 

Phoenix Seeds Farm Manager.JPG

Sixty percent of adults in Malawi have not accessed any formal financial products or services. Without banking access, Malawi’s farmers struggle to invest in agricultural inputs such as high quality seed and fertilizer to increase their productivity and earnings. Through a partnership with Feed the Future Partnering for Innovation, Opportunity Bank Malawi (OBM) seeks strengthen the groundnut, soybean and orange fleshed sweet potato value chains in Lilongwe rural, Mchinji, Dedza, Blantyre and Ntcheu districts by providing good agricultural practices (GAP) training and access to financial and banking services through loans, savings accounts, and mobile money services to smallholder farmers.

 

With International Women’s Day right around the corner, I wanted to share an update on one of Partnering for Innovation’s partnerships with Opportunity Bank Malawi. To date, 3,342 farmers (60 percent women) have been trained in good agricultural practices and 3,055 farmers (58 percent women) have been trained in financial literacy. OBM has disbursed 482 loans, worth an estimated $38,562. Of this amount, 48 percent of loans went to women worth a total value of $16,233. All loans terms were for seven months, with an average loan value of $77. Interestingly, 60 percent of the loans disbursed were for soybean farmers, with only 168 for groundnuts and 20 for orange-fleshed sweet potato. Loans for soybeans also had the largest average value of $83 (versus $69 for Groundnuts and $60 for orange-fleshed sweet potato).

 

Based on this data, we can conclude the following:

  • Despite cultural norms and barriers, projects can effectively target women with training's designed to increase good agricultural practices and financial literacy
  • 139 of the 294 loans disbursed to soybean farmers went to women (47 percent). This reveals that even in value chains with high potential for incomes and large loan values, women are still viable consumers for production loans
  • Opportunity Bank Malawi has far exceeded its target of 30 percent women receiving training and loans, which suggests that women should not just be reached with financial services to meet a quota, but because they are viable consumers for financial products

 

What other examples can partners provide regarding the inclusion of women in their programs activities?

 

OIBM.jpg

woman with mobile.jpg

It is well known that greater participation by women in national economies can drive economic growth and stability, but how do we increase this participation? Digital financial services present an innovative way to improve women's economic participation. With digital infrastructure providing increased access to relevant financial services, women are gaining greater control over resources, improving the performance of their enterprises and participating more in market opportunities.


Globally, women’s employment to population ratio is under 50% compared to 70% for men. In Sub-Saharan Africa, 13 percent of men and 10 percent of women use mobile money compared to 2 percent of adults globally. This presents a unique market opportunity for the expansion of digital financial payments.

 

Digital financial payments allow women privacy, safety, confidentiality, and control over their finances and increases women’s economic empowerment. Digital financial payments can expand women’s business ownership, which is important when considering the high percentage of women who are self-employed. It can also lead to formal savings, as the challenges to accessing formal financial services are mitigated (less time spent traveling, security concerns, instant remittance of payments).

While the benefits of digital financial services for women are clear, there are also several barriers to scaling access to these services. Legal barriers, low financial literacy, technology challenges, and social and cultural norms are all major impediments to accessing digital financial services.

 

There are a number of stakeholders that can help ensure a roll out of digital financial services for both women and men:


  • Government: Create a supportive legal, regulatory and tax environment for digital financial payments
  • Private sector: Pay employees digitally and digitize purchase and payment data
  • Financial sector: Design client focused payment products that are tailored to base of the pyramid consumers

 

We have seen the successful adoption of the digital financial services in many countries where Feed the Future Partnering for Innovation works (Kenya, Uganda, etc). What are others experiences in using digital financial services as a tool to engage with smallholder farmers, with a focus on women?

While there is extensive literature on agriculture in the developing world, it focuses primarily on the actions of nongovernmental organizations (NGOs), aid agencies and governments, as well as on farmers’ decision making. In addition, much of that literature has been narrowly focused on one crop or one technology in a certain region and lacks specific business implications to inform management decisions. Relatively little has been written about the actions of the pioneer firms themselves— how they develop and execute their strategy and operating model as they grow and, in the process, encourage broad adoption of their innovation.

 

“Growing Prosperity: Developing Repeatable Models to Scale the Adoption of Agriculture Innovations” uses case studies in India, Pakistan, Uganda, Kenya, and Ghana to demonstrate how pioneer firms are achieving scale to encourage mass adoption of innovations.

 

Three key findings from the research point to what pioneer firms and other actors must do to spur greater adoption of agricultural innovations by smallholder farmers.

 

  • First, pioneer firms must systematically ensure that the “Four A’s” (awareness, advantage, affordability and access) are continuously in place for their farmer customers. Adoption starts with an unrelenting focus on the farmer: how to raise his or her awareness of new products and services, how to communicate and reliably deliver on the advantage the farmer will gain by adopting innovations, how to ensure the affordability of these innovations and how to provide easy and timely access to them.
  • Second, pioneer firms must develop Repeatable Models to achieve adoption at scale across villages, regions and countries. This means having the right strategies, processes, teams and supporting systems to drive adoption of their innovation in an adaptive and increasingly efficient and effective manner, while ensuring their own sustained, profitable growth.
  • Third, other actors across the agricultural system should tailor their actions to enhance the Four A’s and help pioneer firms develop and scale their Repeatable Models to bring their products and services to more farmers. Though an understanding of the key factors of adoption and scale are paramount, firms and farmers do not exist in isolation—they operate within a wider market system.

 

What are other examples of how companies have encouraged adoption of their agriculture innovations? Are there any other critical elements of technology adoption that companies have used asides from the four A’s described in this study?

Women in Red Picking Fruit small.jpg

In Mozambique, through a combination of USAID and private sector funding, Export Marketing Company Limited (EMCL), an agricultural trading company, will provide almost 23,000 farmers with access to storage facilities, market opportunities, quality agro inputs, and mechanization equipment. The company is setting up 23 state-of-the-art retail hubs, each consisting of an agro input retailer, farm equipment dealer, and warehouse facility. The hubs will allow smallholder farmers the opportunity to sell or store their maize and beans free of charge for 90 days, allowing them to take advantage of higher sales prices at a later time. The hubs will also allow farmers to purchase quality agro inputs, rent farm equipment, and participate in training workshops. Another partner, Technobrain Limited, will develop and implement a mobile platform targeted at smallholder farmers with up-to-date weather forecasts, commodity pricing, pest control, and information on good agricultural practices. Finally, EMCL is training entrepreneurs, which are mostly women, to manage these hubs.

 

Through Feed the Future Partnering for Innovation’s competitive solicitation process, USAID/Mozambique is investing $6 million in this venture, while EMCL is contributing an additional $12 million. To provide economic incentive for EMCL to meet targets quickly and effectively, the company receives payments only after it reaches business milestones. The ultimate goal is for smallholder farmers to access the supplies and training and use them to improve their productivity and incomes. This partnership is an example of how business goals and social goals can align and be good for business as well as good for smallholder farmers.

 

 

Export Marketing Company Limitada, can you please elaborate on the Farmer Empowerment Hub concept? What does each hub include? How will these hubs remain sustainable after the end of the project?

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