1. Interna'onal
Rice
Research
Ins'tute
Presented
By:
Jehiel
Oliver
Aya
Consul'ng,
Inc.
Mechaniza)on
Schemes,
Gender,
Microfinance
and
the
Rice
Value
Chain
2. “If
you
care
about
the
poorest,
you
care
about
agriculture.
Investments
in
agriculture
are
the
best
weapons
against
hunger
and
poverty,
and
they
have
made
life
beDer
for
billions
of
people.
The
interna)onal
agriculture
community
needs
to
be
more
innova)ve,
coordinated,
and
focused
to
help
poor
farmers
grow
more.
If
we
can
do
that,
we
can
drama)cally
reduce
suffering
and
build
self-‐sufficiency.”
-‐
Bill
Gates,
co-‐chair
of
the
Bill
&
Melinda
Gates
Founda'on
2
4. Rice
and
Global
Popula)on
Growth
• Global
rice
yields
must
increase
by
an
es)mated
1.2%-‐1.5%
per
year
to
keep
pace
with
increasing
demand
0
100
200
300
400
500
600
1991
1996
2001
2006
2011
2016
2021
2026
2031
2036
Tons
of
Milled
Rice,
Millions
Addi)onal
Rice
Needed:
Over
200
million
Tons
by
2035!
2010
Global
Rice
Produc)on
Americas
Africa
Asia
Source:
Samarendu
Mohanty,
IRRI
4
5. Climate
Change
• Drought
• Flood
• Pest
• Disease
outbreak
Produc)on
• Management
Failure
• Low
technical
skill
/
capacity
• Crop
subs)tu)on
• ShiFing
Labor
Markets
Poli)cal
• Regulatory
risk
• Infrastructure
risk
• Poli)cal
risk
• Price
Controls
• Export
Bans
Market
• Variability
in
input
price
• Exchange
rate
vola)lity
• Counterparty
risk
• Default
risk
Challenges
to
Rice
Produc)on
Growth
• While
the
global
supply
of
rice
must
keep
pace
with
a
swelling
popula)on,
covariate
risks
within
the
rice
produc)on
system
challenge
small
farm
produc)vity
✓
5
6. • The
average
size
of
the
world’s
largest
100
ci)es
has
grown
to
almost
10
)mes
their
size
in
1900;
two-‐thirds
of
these
ci)es
are
in
developing
countries
• This
trend
con)nues
to
transfer
valuable
labor
resources
from
rural
to
urban
areas
Impact
of
Urbaniza)on
on
Global
Rice
Produc)on
0
1
2
3
4
5
1900
1950
2000
Average
Size
of
Top
100
Ci)es,
in
Millions
Source:
World
Development
Report,
2009
6
7. 0
15
30
45
60
75
Category
1
Category
2
Category
3
Category
4
Urbaniza'on
and
Income
–
Change
Between
1985
and
2010
80
800
8000
Urbaniza(on
rate,
%
GDP
per
person,
$2000
log
scale
India
Vietnam
Thailand
Indonesia
Malaysia
Source:
World
Bank
and
CIA
World
Fact
Book
Urbaniza)on
and
Income
–
Change
Between
1985
and
2010
China
Impact
of
Urbaniza)on
on
Rice
Producing
Countries
• Growth
in
urban
manufacturing
is
changing
the
distribu)on
of
labor
in
major
rice
producing
countries
as
workers
migrate
to
large
ci)es
for
higher
wages
• Compelling
evidence
suggests
a
posi)ve
rela)onship
between
urbaniza)on
and
economic
growth,
meaning
it
is
a
trend
that
is
here
to
stay
7
8. Labor
Con)nues
to
Shij
Despite
Government
Efforts
• India
implemented
a
Na)onal
Rural
Employment
Guarantee
Program,
but
labor
con)nues
to
migrate
from
areas
like
Bihar,
UP,
AP
and
Karinataka
• Labor
that
remains
in
these
states
(e.g.
farm
hands)
command
wage
premiums
Source:
World
Development
report,
2009
8
10. • As
men
migrate
for
higher
earnings,
women
are
becoming
increasingly
more
important
in
rural
rice
farm
systems
and
will
subsequently
be
affected
most
by
urbaniza)on
Gender
and
Urbaniza)on
India
Bangladesh
Sri
Lanka
Agriculture
share
of
GDP
19.3
21.0
17.9
Female
intensity
of
agriculture
55.5
51.5
40.1
Female
agricultural
employment
as
share
of
total
female
employment
46.0
60.9
39.9
Male
agricultural
employment
as
share
of
total
male
employment
35.5
45.1
29.6
10
Source:
World
Bank
11. Cost
of
Labor
is
Increasing
in
Agriculture
• Wage
infla)on
within
the
Indian
agricultural
sector
increased
by
18%
(CAGR)
between
2010
and
2012
6%
4%
13%
18%
0%
5%
10%
15%
20%
1995
-‐
2000
2000
-‐
2005
2005
-‐
2010
2010
-‐
2012
1995
-‐
2000
2000
-‐
2005
2005
-‐
2010
2010
-‐
2012
Source:
RBI,
Ambit
Capital
Research
11
12. Rural
Wage
Inequality
• Despite
women’s
important
role
in
farming,
men
are
dispropor)onately
benefi)ng
from
rural
wage
increases
• Women
also
par)cipate
dispropor)onately
in
unpaid
work,
trading
farming
services
with
neighbors
• When
labor
is
hired,
increasing
wage
rates
place
downward
pressure
on
women’s
farm
income
in
the
absence
of
mechaniza)on
23.18
29.44
32.18
35.83
15.33
19.02
20.43
23.89
0
5
10
15
20
25
30
35
40
1993
-‐
1994
1999
-‐
2000
2004
-‐
2005
2007
-‐
2008
Real
Wages
of
Casual
Laborers
(Not
in
Public
Works)
Rural
Male
Rural
Female
12
Source:
Government
of
India,
Ministry
of
Labour
and
Employment
13. Empower
Women
Farmers
through
Mechaniza)on
Constraint
• Unpaid
work
is
a
gender
specific
constraint
that
reduces
produc)vity
of
women
in
rural
areas.
• Low
produc)vity
at
the
farm
level
prevents
women
from
engaging
in
self-‐employment
/
income
genera)ng
ac)vi)es
• Hired
labor
is
becoming
increasingly
more
cost
prohibi)ve
Complexi)es
• Land
ownership
is
highly
relevant
to
farm
produc)vity
• Women’s
limited
access
to
land
assets
constrains
credit
• Credit
is
crucial
in
accessing
produc)vity
enhancing
technologies
like
machines
and
improved
seeds
• Even
with
credit,
certain
produc)vity
enhancing
technologies
can
be
cost
prohibi)ve
for
any
one
farmer
ac)ng
independently
Solu)on
• The
provision
of
microcredit
has
partly
addressed
rural
credit
access
amongst
asset
poor
women,
especially
in
South
Asia
• Despite
this
success,
Microfinance
Ins)tu)ons
(MFI)
have
low
penetra)on
in
agricultural
lending
• Significant
technical
capacity
building
is
needed
to
change
this
Con)nuum
• Approaches
focusing
on
MFI’s,
with
access
to
asset
poor
women’s
self-‐help
groups
(SHG),
can
unleash
agricultural
credit
• The
promo)on
of
produc)vity
enhancing
and
environmentally
friendly
farming
prac)ces
is
paramount
13
15. 15
Economies
of
Scale
• Buying
power
for
specialized
machines
for
small
farm
holder
• Bulk
ordering
of
agricultural
inputs
Input
Suppliers
• Machinery
• Fer)lizers
• Seeds
• Etc.
Producers
• Small
Farmer
Holders
• Women
SHG
Members
• Non-‐SHG
Members
• Large
Farmers
Transport
• Farmer
Provided
• Third
Party
Providers
Processors
• Milling
• Quality
Control
• Storage
Aggregators
• Middlemen
• Exporters
End
Consumer
• Retail
outlets
• Restaurants
and
Hotels
• Export
to
Global
Market
Microfinance
in
the
Rice
Value
Chain
Credit
Access
and
Capacity
Building
• Credit
to
finance
machines
and
complimentary
inputs
• Capacity
building
Post
Harvest
• Financing
of
micro-‐
processers
for
small
farm
holder
• Warehouse
receipts
• Quality
assessment
Marke'ng
Efforts
• Price
discovery
/
transparency
for
small
farm
holder
• Market
coordina)on
MFI’s
Suppor)ng
Small
Farm
Holder
Throughout
VC
• Past
experiences
informs
us
that
value-‐chain
(VC)
interven)on
should
be
targeted
at
producer
level
to
maximize
social
outcomes
(e.g.
women
farmers)
• MFIs
can
create
value
at
various
stages
of
the
VC
to
benefit
small
farm
holders
16. • Not
all
MFIs
are
created
the
same,
so
iden)fying
the
right
partner
is
cri)cal
• Focus
on
MFIs
where
credit
is
merely
a
plarorm
to
deliver
development
services
• Ideal
MFIs
would
have
mul)dimensional
approach
to
farm
livelihoods
(e.g.
BRAC)
Self
Help
Group
(SHG)
Results
1. Increase
farm
produc)vity,
labor
savings,
yields
and
income
2. Secure
sustainable
livelihoods
amidst
rapid
demographic
change
3. Empower
marginalized
women
farmers
Educa'on
Access
to
Capital
Value
Chain
Development
Health
Care
Agricultural
Extension
Access
to
Technology
and
Inputs
Community
Mul)dimensional
Approach
to
Farm
Livelihood
16
Source:
BRAC
Microfinance
model,
Developed
from
previous
project
17. No
“One
Size
Fits
All”
Solu)on
• Designing
mechaniza)on
schemes
begin
with
deep
“seed-‐to-‐seed”
analysis
of
local
rice
produc)on
systems,
fit
with
enterprise
models
for
financial
sustainability
analysis
Land
Prepara)on
Crop
Establishment
Water
Management
Pest
Management
Harves)ng
Drying
Storage
Milling
Produce
/
By
Products
Mechanical
Transplan)ng
Direct
Seeders
Hand
Transplan)ng
Laser
Land
Leveling
Bed
Farming
Machine
Boom
Spraying
Manual
Spraying
Combine
Harves)ng
Manual
Threshing
Machine
Drying
Sun
Drying
Tradi)onal
Storage
Sealed
Storage
Warehousing
(Receipts)
Micro
Mill
Commercial
Mill
Rice
Rice
Hull
as
Fuel
Animal
Drawn
Plow
Four
Wheel
Drive
Tractor
17
Source:
IRRI
18. MFIs
Provide
Knowledge
Transfer
Framework
Microfinance
Ins)tu)ons
Rural
Branch
Network
Rural
Branch
Network
Rural
Branch
Network
Rural
Branch
Network
Rural
Loan
Officers
Rural
Loan
Officers
Rural
Loan
Officers
Rural
Loan
Officers
Coopera)ves
in
Rice
Produc)on
Zones
Farmers
Farmers
Farmers
Farmers
Farmers
Cereal
Systems
Ini'a've
for
South
Asia
(CSISA)
• Help identify appropriate
machines and
complimentary products
(e.g. mechanical
transplanter, soil nutrition
management, participatory
variety selection, water
conservation, etc.
• Host “Trainer of Trainer”
capacity building sessions
for MFIs on use of
technologies 18
Farmer
feedback
loop
• Ensures
farmer
needs
are
met
• Replaces
biased
informa)on
sources
(e.g.
pes)cide
salesman
giving
pes)cide
advice)
• MFIs
have
management
informa)on
system
in
place
for
project
impact
repor)ng
(see
Appendix
A)
19. Cost
Reduc)on
through
Resource
Alloca)on
Planning
• Through
MFIs
network
of
self
help
groups
(SHG)
the
cost
of
a
mechaniza)on
scheme
can
be
reduced
by
amor)zing
cost
over
a
larger
pool
of
recipients
• MFIs
have
compe))ve
advantage
over
machine
service
contractors
who
lack
access
to
large
pool
of
SHGs
to
absorb
cost
of
interven)on
• Technologies
like
loca)on
alloca)on
algorithms
in
GIS,
using
Leaf
Indexing,
can
provide
insight
on
rice
produc)on
cycles,
op)mizing
a
machines
usefulness
across
mul)ple
SHGs
within
a
spa)al
market
One
Coopera)ve
may
not
have
capacity
to
absorb
the
cost
of
a
technology
Mul)ple
SHGs,
opera)ng
within
a
MFIs
branch
catchment
area,
with
complimentary
produc)on
cycles,
can
share
the
cost
of
a
machine
SHG
SHG
SHG
SHG
SHG
SHG
SHG
SHG
SHG
SHG
SHG
SHG
SHG
19
20. Environmental
Impacts:
SHG
Coordina)on
for
CDM
Rice
produc)on
accounts
for
1.5%
of
GHGs
globally
It
takes
2,500
liters
of
water
to
produce
1kg
of
rough
rice
The
Clean
Development
Mechanism
(CDM)
allows
emission-‐reduc)on
and
water
saving
projects,
in
developing
countries,
to
earn
cer)fied
emission
reduc)on
(CER)
credits
CER
credits
can
be
bought
and
sold
in
the
open
market
but
most
emission
reduc)on
projects
are
cost
prohibi)ve
for
small
farmers
By
grouping
farmer
SHGs,
CER
credits
could
finance
various
GHG
reducing
and
water
saving
projects,
for
the
benefit
of
the
environment
and
the
small
farmer
• Rice
farmers
are
significant
contributors
of
green
house
gases
(GHG)
and
water
resource
use
• Environmental
interven)ons
can
be
cost
prohibi)ve
for
a
single
farmer
Source:
Ole
Sander,
IRRI
and
UN
Framework
Conven)on
on
Climate
Change
21. Project
Structuring
-‐
Shared
Risk
and
Benefit
• Mechaniza)on
schemes,
collateralized
by
tangible
assets,
mi)gate
covariate
risks
(weather,
disease,
etc.)
related
to
financing
agricultural
produc)on
• Credit
risk
is
further
enhanced
by
SHG
social
capital
• Leveraged
leasing
structures
provide
an
example
of
op)mal
structure
to
balance
stakeholder
incen)ves
and
risks:
21
Specialized
Machine
Manufacturer
Single
Purpose
Leasing
Company
(Fee
Based
Management
Provided
by
CSISA)
Lessee
(Rice
Farmers
in
Microfinance
Coopera)ves)
Delivery
of
Customized
Machines
Purchase
(Bulk)
of
Customized
Machines
Equity
Investors
(Machine
Manufacturer,
MFI)
Provide
Customized
Machines
on
Lease
Leasing
Fee
Paid
by
SHG
Tech.
Capacity,
Machine
Repair,
Support
Share
Capital
Distribu'ons
Debt
Investors
(MFIs)
Debt
Investment
For
Asset
Purchase
Lien
on
Assets
MFI
Provision
of
Credit
and
complimentary
agri-‐inputs
purchased
at
bulk
Repay
principal
and
interest
on
microloans
22. Tradeoffs:
Leverage
Leasing
Structure
22
Pros
• Small
farmers
needs
remain
at
the
forefront
• Sustainable
model
that
provides
market
based
long
term
solu)on
• Shared
ownership
provides
key
stakeholders
a
financial
incen)ve
to
engage
• Helps
mi)gate
biased
informa)on
to
farmers
• Reduced
risk
from
collateral
based
lending
• Reduced
cost
of
mechaniza)on
adop)on
for
par)cipa)ng
farmer
groups
• Circumven)ng
credit
restric)on
related
to
asset
poor
farmers
• Provides
roadmap
for
long-‐term
asset
accumula)on
and
market
development
through
lease
buy
back
op)on
• Can
accommodate
growth
into
more
innova)ve
systems
(e.g.
custom
farming)
Cons
• More
complex
than
tradi)onal
extension
model
• Requires
upfront
donor
capital
for
structuring
• Significant
coordina)on
and
stakeholder
“buy-‐in”
needed
• Financial
due
diligence
process
is
in-‐depth
and
sensi)ve
to
data
input
• All
program
structures
come
with
trade-‐offs,
op)mizing
these
tradeoffs,
for
the
benefit
of
the
marginalized
female
farmer,
is
cri)cal
23. Key
Considera)ons
Target
Progressive
Farmers
in
Coopera)ve
A
farmer
that
is
respected
within
the
group
–
leveraging
social
capital
to
build
group
confidence
in
new
technology
Ensure
this
farmer
is
trained
on
the
proper
use
of
the
machine
and
any
other
complimentary
technologies
Provide
farmer
with
workable
revenue
model
for
machine
Thoroughly
Vet
Interven)ons
Fully
understand
and
appreciate
delicate
local
farm
systems
and
social
fabrics
Pilot
technology
before
large
scale
roll
out
Maintain
feedback
loop
with
individual
farmers
and
coopera)ves
Iden)fy
Appropriate
Partnerships
MFI’s
with
branch
networks
in
rural
areas
experiencing
labor
displacement
and
escala)ng
labor
costs
Coopera)ves
with
appropriate
infrastructure
for
a
given
technological
interven)on
(e.g.
irriga)on,
roadways,
etc.)
Machine
manufacturers
with
servicing
capabili)es
who
also
value
equity
ownership
and
long
term
commitment
23
25. Appendix
A:
Report
Impact
through
MFI
Framework
• Researchers
who
develop
a
technology
are
too
close
to
the
idea
and
can
suffer
from
“inventors
bias”,
therefore
they
shouldn’t
be
tasked
with
assessing
impact
• Assessing
impact
must
be
unbiased
and
on-‐going
system,
not
one
off
reports
• Top
)er
MFIs
have
strong
Social
Performance
Management
systems
(SPM)
in
place
that
could
capture
unbiased
impact
data
for
mechaniza)on
scheme,
this
data
would
only
need
to
be
monitored
and
analyzed
by
CSISA
M&E
specialists:
25
Informa)on
Collec)on
Informa)on
Consolida)on
Informa)on
Analysis
Repor)ng
Decision
Making
Pilot
Tes)ng
Delega)on
Communica)on
Implementa)on
26. Appendix
A:
What
is
SPM?
• Social
performance
management
is
an
ins)tu)onalized
process
that
has
evolved
within
the
microfinance
industry
and
involves:
– Sevng
clear
social
objec)ves
– Monitoring
and
assessing
progress
towards
achieving
social
objec)ves
vis-‐à-‐vis
thorough
data
collec)on
– Using
this
informa)on
to
improve
interven)on
and
communicate
with
stakeholders
and
donors
• A
social
performance
assessment
enables
a
project
to
measure
its
social
performance
rela)ve
to
its
social
mission
and
objec)ves
in
an
on-‐going
way
• Social
performance
looks
at
the
en)re
process
by
which
impact
is
created,
including:
– Impact
data
related
to
mechaniza)on
scheme
(income,
efficiency,
yields)
– Analysis
of
ins)tu)onal
objec)ves
– Effec)veness
of
scheme
in
mee)ng
these
objec)ves
26
27. As
a
global
economic
development
consultant,
Jehiel
brings
a
unique
blend
of
skills
acquired
from
his
over
10
years
of
professional
experience
working
in
both
the
private
and
public
financial
sectors.
Jehiel
currently
focuses
on
the
agriculture,
micro,
small
and
medium
enterprise
industries
on
a
variety
of
projects
including
program
reviews,
financial
due
diligence
and
transac)on
structuring
/
execu)on
for
socially
responsible
investors.
As
owner
of
a
bou)que
consultancy,
Jehiel’s
clients
include
USAID,
ShoreBank,
UN
FAO
and
Calvert
Founda)on.
He
has
work
experience
in
over
ten
countries,
including
areas
in
conflict.
In
addi)on
to
his
du)es
at
Aya,
Jehiel
serves
on
the
board
of
H4H,
Inc.,
a
$250
million
dollar
impact
investment
fund
focused
on
mortgage
reinsurance
for
South
African
communi)es
affected
by
HIV/AIDS.
Jehiel
also
sits
on
the
board
of
Shared
Interest,
serving
as
treasurer
and
execu)ve
commiDee
member.
Shared
Interest
is
a
loan
guarantee
fund
that
has
benefited
over
2
million
marginalized
persons
to
date
through
its
work
in
the
microfinance
and
agricultural
sectors
of
South
Africa
and
Mozambique.
Prior
to
working
in
interna)onal
development,
Jehiel
served
as
an
analyst
and
associate
with
Key
Banc
Capital
Markets.
Within
this
organiza)on
he
worked
within
the
Ins)tu)onal
Capital,
Private
Equity,
Debt
Syndica)ons
and
Upper
Middle
Market
business
divisions.
Jehiel
Oliver
Owner
Aya
Consul)ng
+1(404)
861-‐6617
jehiel@ayaconsult.com
Skype:
jehiel.oliver
ayaconsult.com
Appendix
B:
Biography
