Success story: Less poverty through business
Sociedade de Beneficiamento de Sementes (SBS) is a seed processing company set up in the Zambezia region of Mozambique with the aim of producing low cost, high-quality seeds for the local market. With higher quality seed inputs, farmers will be able to increase their yield and quality of grain. The company was set up as a joint venture between Cooperativa dos Produtores da Alta Zambézia (COPAZA), a local farmer cooperative, and a local investor. The business model is that COPAZA members produce seed, the seed is then sorted, cleaned and packaged by SBS in a new seed processing facility established with support from Feed the Future Partnering for Innovation, and then COPAZA members act as sales representatives for SBS, selling seeds to their network of smallholder farmers.
One COPAA member, Mr. Manuel Alberto Quente stands apart. When he started, he had only 2 hectares of land. Over the years, through technical assistance and support in purchasing machines such as tractors, plows, and seeders, he now has 28 hectares of land. Mr Quente rented his tractor to a foreign company, generating $44,038 in revenue. He was also able to rent the tractor to Instituto Internacional de Agricultura Tropical (IITA), a large commercial farm in Zambezia, and to some outgrower farmers nearby. He grows a diversity of crops, including maize, soybean grain, and other beans. Additionally, he has dedicated 10 hectares of his land this season to growing high-quality soybean seed.
Last year, Mr. Quente was one of the top seed sellers of COPAZA. He sold 11,130 kg to 40 clients from which 38 were smallholder farmers he knows from the surrounding area – these smallholder farmers bought 4,625 kg of seed.
These sales have a significant impact on the quality of the farming of these 38 farmers. With an average of 2 hectares each, the yearly income for this group is well below the poverty line. The increase in yield due to the use of Mr. Quente’s improved seed (up to 2x times higher than the traditional technology) will provide his clients a substantial increase in profits. Given his confidence in his smallholder farmer clients, he sold the seed on credit. They took one bag of 50kg of seed and at the end of the season, they paid him with 2 bags of 50kg of grain. This allowed farmers without available cash to access high-quality seeds and provided Mr. Quente with the grain he needed for his trading business. This year, he received 9,250 kg of grain in payment.
Another reason why he is so successful is that he pairs the seed sales with access to additional services. In addition to selling seed, he rents out his plowing and threshing machines to the farmers.
Last year, eight of the farmers rented his plow, resulting in 12 hectares of land under improved practices. He also has a mechanical thresher that he uses to thresh his clients’ production at a discounted price. The thresher has an increased cost efficiency providing the smallholder farmers a reduction in threshing costs compared to traditional hand labor.
The seed sales and machine rentals represent valuable revenue streams for Mr. Quente, but also ensure high-quality grain production for the smallholder farmers, which reduces their agricultural risks. In the end Mr. Quente managed to improve the economic conditions of his neighbor smallholder farmers without jeopardizing his own financial sustainability.
It is a win-win scenario.
- Mr. Quente sees demand for both seed and services increasing. His neighbors have been increasing their land areas, some of them reaching areas as large as 5 hectares. While he plans to continue working with the same 38 farmers next year, he estimates that due to their growth in area the demand for seed will be between 14,000 and 15,000 kg – 5,000 to 6,000 kg coming from the neighbor smallholder farmers. He also recognizes that demand for mechanized plowing services will increase up to 20 hectares and plans to start providing services earlier in the year to help meet this demand.
Through his increasing agricultural revenues, last year Mr. Quente was able to invest the money to purchase one additional sower, one tractor trailer, a small truck, and even a fish culture plant. He was also able to construct a new warehouse and invest in other on-farm improvments