Only around 5% of smallholder farmers in Mozambique use certified seed. One of the reasons for this is a lack of access: on average, farmers must travel around 80km to the nearest store selling certified seed - that’s a long way to go by foot, bicycle, motorbike or informal public transport, especially given that upon arrival the store may have sold out or the product may not even be quality, certified seed but simply grain painted red to simulate the seed treatment process. Access to quality seed in rural areas is poor because, with most seed companies typically concentrating on large, agribusiness, NGO or government sales, the smallholder market has not traditionally been viewed as an attractive market segment for seed sales in Sub-Saharan Africa. Smallholders purchase low volumes; and they are notoriously price sensitive and often fail to recognize the advantage in investing in improved seed as opposed to saving their own grain from one year to the next. Added to this, their rural locations pose huge distribution and logistics constraints for any company wishing to tap into this market.
The times, however, are changing as the traditional sales channels through NGOs and Government are drying up, as smallholders become increasingly aware of the advantages of agricultural inputs (demanding more and more in terms of price, standards and additional services), and as an increasing range of private sector firms begin to move into this previously unexplored market. Seed companies wishing to maintain ground are now feeling the pinch and no longer can they sit back and rely on their traditional, secure, sales channels. They must look to smallholders if they wish to secure their future.
With Feed the Future Partnering for Innovation funding, NCBA CLUSA SEEDS decreases that risk for two private sector seed companies, Oruwera Seed Co and Phoenix Seeds Ltd to enter this market. Key to achieving profitability is distribution: making seed available where it is needed, when it is needed. This involves supporting both firms to establish rural “hub and spoke” distribution networks of agrodealers, each with their own network of rural micro-entrepreneurs (generally kiosk owners who are now adding seed to their existing product range of basic products). Not only is this making certified seed available in rural communities for the first time ever, but it is also generating much needed additional revenue for rural entrepreneurs.
One such entrepreneur is Helder Jorge from Namigonha, Ribaué district, Nampula province, Mozambique. With SEEDS support, Helder is making a difference for Phoenix, himself and his community. Starting off as a vegetable producer in nearby Ribaue, in 2012 Helder started seed and input sales and opened his own inputs store when he realized how hard it was to get his hands on quality product for his own farm. Through SEEDS support, in 2016 Helder linked up with Phoenix Seeds and Oruwera Seed Company and signed contracts as their primary representative in Ribaue district, known as the bread basket of Nampula province due to its ability to serve large urban centers throughout the province. Helder serves as a SEEDS supported agrodealer “hub” which means that he receives product at preferential prices for re-sale in his own store and distribution to his own network of smaller SEEDS supported retailers or agrodealers (the “spokes” of distribution). With SEEDS support, Helder’s business has grown not just in terms of links with suppliers but also in terms of management, with the SEEDS partnership providing business-related technical assistance, monitoring and support in areas such as business planning, marketing, stock requisition/management, transport logistics and credit management. For both Oruwera and Phoenix, small companies usually risk averse in terms of credit, they now feel confident enough to supply Helder on consignment basis for one month.
This year Helder traded 4 tons of Phoenix cow pea, sugar bean, soya, and maize seed and 2 tons of Oruwera cowpea, pigeon pea, and maize seed to the value of around $11,000, in addition to further product from his usual, existing, suppliers. Phoenix and Oruwera product alone represented around $4,300 in increased profits.
SEEDS support has enabled Helder to increase his stock, introduce new product lines, and better keep up with the demand from both is retailers and smallholder clients. As such, his total sales have increased from around 3.5 tons prior to his involvement in SEEDS to 7 tons annually at present, or from a total turnover of around 300,000 mt ($4,300) to 1,000,000 mt ($14,000). With his increased profits Helder has invested in the construction of a new 30-ton capacity warehouse and in other business activities including the construction of two small shops to rent out. And not only has Helder’s own business benefited from his success but so has that of his smaller four smaller retailers in the Ribaué and nearby Malema districts to whom he distributes, who in turn are making quality, certified seeds available in their own rural communities. The 6 tons of certified seed from Phoenix and Oruwera alone was sufficient to plant around 200 ha of smallholders’ land with certified seed in Ribaué district, representing increased yields and profits for 443 smallholder farmers.
As a result of the business coaching, support and technical assistance provided through SEEDS Helder now feels confident enough to continue negotiating directly with Phoenix and Oruwera in the future, bargaining for better delivery terms and prices, increasing his credit allowance and stocking increased volumes of seeds, even planning to paint his store with Phoenix branding. But his success as an agrodealer doesn’t just end with Phoenix and Oruwera. In the future Helder plans to apply his experience to other large seed and input suppliers, stocking an even wider range of product on similar terms, including not just seeds but also fertilizers, pesticides, inoculants, tools, and implements, becoming a reference for quality seeds and inputs in Ribaué district.