ACDI VOCA: Experience with bundling innovations and services in ADVANCE I & II Projects
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Presented by IWMI's Thai Thi Minh as part of the Small Scale Irrigation Multi-Stakeholder Dialogues: Bundling innovations for scaling farmer-led irrigation in Ghana (organized by ILSSI)
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ACDI VOCA: Experience with bundling innovations and services in ADVANCE I & II Projects
- 1. Photo Credit Goes Here GHANA MARKET SYSTEMS & RESILIENCE ACTIVITY Small Scale Irrigation Multi-Stakeholder Dialogues: Bundling innovations for scaling farmer-led irrigation in Ghana Mensvic Hotel, Accra Tuesday 8th November 2022 ACDI VOCA: Experience with bundling innovations and services in ADVANCE I & II Projects
- 2. • Traditional Extension systems evolving • ADVANCE II project overview • ADVANCE II Outgrower Business Model • Core actors and features • Type of bundled services • Project results • Other results • Proposed sustainable model • Lessons learned Outline
- 3. Extension Organizations Traditional Extension Services The transfer of knowledge generated by agricultural research. Reaching Smallholder farmers with Services • Public Extension Systems • Private Extension System • Profit oriented • Non-profit • Formal Room training • Field training and demonstrations • Advisory
- 4. Commercialization, Globalization and Climate Change Call for New Services • Markets and market information • Managing (commercial) relationships • Competitiveness • Managing Risks • Financial • market • Environmental • Climate
- 5. Agricultural Development and Value Chain Enhancement II ADVANCE II A Feed the Future Project • Promote adoption of Good Agricultural Practices (GAP) • Make production inputs (Seeds and Fert.) available to OGs. • Increase productivity (yield/area) for OBs and OGs • Build sustainable market relationship between buyers and farmers. ➢ Guarantee market for farmers ➢ Guarantee supply of raw materials for the processors • Build sustainable outgrower business for NF/OBs
- 6. ACTORS ROLE REMARKS Community-based individually-owned farm business(OB) Main financier if no buyer is involved. Owns farm equipment High level trust relations with SHFs or Lead farmers. Smallholder farmers Producers of maize or soybean per contract arrangement High level trust relations with Lead farmer and/or OB Lead farmers Mobilizes SHFs, distributes inputs. High level trust relations with OB and SHFs Field agents (OB) Conducts field supervision and support services for OB Normally has ad-hoc business relations with OB Buyer/processor Main offtaker and/or financier. Driver of innovations Trusted relations with OB, supported by OB network Buyer (Field agent)* Input distribution at OB level. Conducts field supervision and support services for buyer. Not a regular actor in the chain ADVANCE II OUTGROWER BUSINESS MODEL- CORE ACTORS
- 7. ADVANCE II OUTGROWER BUSINESS MODEL Features • Trust-based relations – mostly without written contracts • Tractor ploughing is a core service – mostly over subscribed • Bundled services • Credit based transaction • Barter trade (credit repayment by SHFs) • Direct or indirect service delivery
- 8. ADVANCE II OUTGROWER BUSINESS MODEL Type of Bundled services • Seedbed preparation/Tractor plough • Input credit – mainly seed and fertilizer • Crop insurance • Marketing/aggregation • Post-harvest threshing • Farm support/extension/information • Farm transport • Warehousing
- 9. ADVANCE II OUTGROWER BUSINESS MODEL Type of Innovations Introduced • Soil ripping • Hybrid seed • Hand-held planter, Mechanical Planter • Labour saving farm equipment for women • Digital finance • Digital Information on weather/GAP • Warehousing receipt system*
- 10. Outgrower Business Model Community-Based Outgrower Business Agro-input Company Processor/Buyer Firm Weather forecast ADVANCE Outgrower business dev’t & capacity building Thru GGC Fertilizer & Weedicides Inputs ( seed & fertilizer etc) Training on GAPs, PHH, etc Sales Sales Credit Investment Community Warehouse Business Development Warehouse receipts Storage Grants ADVANCE Collaboration Volunteers/Consultants Linking to VC actors Ag. Information (SMS & Voice mail) Radio Stations Ghana Agricultural Insurance Program Grants Grants Grants Crop insurance Info on prices, weather Information on GAPs Temporal storage Bank/FI Tractor services Threshing, Shelling & extension Contracts Warehouse Contract
- 11. LEGEND FBOs - Farmer Base Organizations FI – Financial Institutions GAPs – Good Agricultural Practices OBs - Outgrower Business PHH – Post Harvest Handling VC – Value Chain VSLA – Village Savings and Loans Association 31 Radio Stations Information on GAPs Training on GAPs, PHH, etc 36 Banks or FI disbursed $ 4,895,023 loans 89 Agro- input Companies Rain forecast Feed The Future Agricultural Development and Value Chain Enhancement Project Feed The Future Agricultural Development and Value Chain Enhancement Project Outgrower business dev’t & capacity building Fertilizer & Weedicides Business Development Collaboration Volunteers/Consultants Ag. Information thru’ SMS & Voice mail Ghana Agricultural Insurance Program Grants Grants Crop insurance Info on prices, weather 1,122 VSLA groups saved $1,716,890 Purchase Inputs Linking to VC Credit actors 424 OBs & 651 FBOs provided $ 6,287,869 worth of inputs 158 Processor/Buyer Firms 143,817 OGs. 1,049,794 MT produce sold worth $ 184,577,631 Sales Contract Tractor services Inputs ( seed & fertilizer etc) Threshing, Shelling & extension Sales Contracts $38,577,902 Investment $ 8,113,842 PROJECT RESULTS (AS AT April 2021)
- 12. OTHER RESULTS • Agribusinesses see opportunity to invest/do business in northern Ghana • Increase in amount and quality of information between market actors • Increased flow of resources • Smallholder farmers seen as viable suppliers of quality produce • Some crops (soybean) gain industrial status
- 13. LEGEND FBOs - Farmer Base Organizations FI – Financial Institutions GAPs – Good Agricultural Practices OBs - Outgrower Business PHH – Post Harvest Handling VC – Value Chain VSLA – Village Savings and Loans Association 31 Radio Stations Information on GAPs Training on GAPs, PHH, etc 36 Banks or FI disbursed $ 4,895,023 loans 89 Agro- input Companies Rain forecast OUTGROWER BUSINESS NETWORKS OUTGROWER BUSINESS NETWORK Outgrower business dev’t & capacity building Fertilizer & Weedicides Business Development Collaboration Volunteers/Consultants Ag. Information thru’ SMS & Voice mail Ghana Agricultural Insurance Program Grants Grants Crop insurance Info on prices, weather 1,122 VSLA groups saved $1,716,890 Purchase Inputs Linking to VC Credit actors 424 OBs & 651 FBOs provided $ 6,287,869 worth of inputs 158 Processor/Buyer Firms 143,817 OGs. 1,049,794 MT produce sold worth $ 184,577,631 Sales Contract Tractor services Inputs ( seed & fertilizer etc) Threshing, Shelling & extension Sales Contracts $38,577,902 Investment $ 8,113,842 SUSTAINABILITY MODEL
- 14. Lessons learned • Trust is the bedrock • Community and social relations improves trust • Credit is important but repayment default rate can be high without effective supervision • Field Supervision costs can increase overheads but manageable. OBs reluctant to invest and relies more on trust. • Introduction of imported hybrid varieties was a game changer • Increased productivity • Spurred local development of hybrids