What way is the market?

We need to feed nine billion people by 2050. We, the people of Earth, must produce more food and waste less. That is the top priority of the UN World Food Programme (WFP), too.

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The FtMA app is currently being renewed and updated. Photo: Klara Palatova/WFP

THE BEGINNING OF AN AGRICULTURAL TRANSITION

Africa is growing – so is the rest of the world. By 2050, we will need to feed nine billion people worldwide. And there is no doubt that the African continent is potentially the future breadbasket of the world. But today, Africa still has to import food and the bill continues to rise: It will approximately reach 100 billion U.S. dollars by 2030. Naturally, it is a top priority for the UN World Food Programme (WFP) to increase global food production while lowering food waste.

 

Smallholder farming households produce more than 70 percent of the food supply in Africa and Asia. At the same time, they account for half the hungry people worldwide. For too long, they have been subject to a range of barriers preventing them from fully realising their potential. Access to much-needed finance – for example to buy seeds, fertilisers, farming equipment, or crop loss insurance in case of poor rainfall – is one of those barriers and often tied to deeply rooted obstacles for smallholders; they simply lack financial capital, hard assets, or a credit history. In this sense, the Farm to Market Alliance (short: FtMA) was convened by WFP to support African smallholder farmers to do farming as a business. Through a holistic approach, FtMA helps smallholders to enter the market across the entire value chain – starting as early as planting the seeds.

 

The consortium between Alliance for a Green Revolution in Africa, Bayer Crop Science, Rabobank, Syngenta, Yara International ASA and WFP was established in 2016; shortly afterwards they developed PATH. The PATH solution empowers smallholders and supports them to become reliable market players across four pathways: Predictable markets, Affordable finance, Technologies and quality inputs, and Handling and storage solutions.

 

THE PATH TO COMMERCIAL FARMING

Through working with local agricultural players, FtMA coordinates market engagement, trainings, collective expertise, products and services – every single element helps smallholders to confidently plan, grow, store and sell their produce with the lasting effect to boost their productivity, profitability and resilience.

 

FtMA’s demand-led approach builds long-term linkages between smallholders and other agri-market players, including buyers, financial service and insurance providers, and input and equipment suppliers. FtMA essentially functions as a ‚neutral broker’ between market demand and smallholder supply.

 

One example of how to develop a more profitable and stable agri-market environment for smallholders are pre-planting buying contracts between smallholders and commercial buyers. These contracts create a stability that financiers could take as collateral for smallholders’ loans for inputs, equipment and insurance against climate- and pest-related risks. Buyers, on the other hand, have the opportunity to better plan their logistics and are able to rely on confirmed product supplies. It is a win-win for all sides.

 

This ending season, FtMA has successfully engaged with over 87,000 smallholder farmers in Kenya and Rwanda through PATH. So far, crop purchases by commercial buyers generated more than 31 million dollars. Moreover, roughly 50 local private sector partners joined in, increasing the number of transactions significantly.

 

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"Farm to Market Alliance", FtMA, supports farmers, for example in Rwanda. Photo: Klara Palatova/WFP

DIGITILISATION AND INNOVATION

In order to improve the quality and quantity of products and services, FtMA strongly advocates technological innovation, such as introducing digital tools and technical devices. Digitalisation started through group activities, for instance recording the total volume of aggregated crops or collectively ordering inputs.

 

Really important are the practice of crop aggregation and aggregation centres. Farmers deliver their produce to collection points – referred to as aggregation centres. For smallholders, bringing their produce to such centres can offer many benefits, such as better purchase prices, an increase in profitability or risk reduction. Working together, it can also be easier for smallholders to participate in farmers’ cooperatives and get seeds, fertilisers and equipment.

FtMA is enabled by a digital platform – consisting of a mobile app, SMS gateway and web portal – that was co-developed by MercyCorps’ AgriFin Accelerate program and the WFP’s Innovation Accelerator. Through this digital tool, users can collect and sell their produce, order seeds and (post-harvest) equipment and receive digital receipts. That in turn fosters the trust between smallholders and the service provider or buyer. It makes pricing, commissions and payment periods more transparent, and farmers can easily track all of their transactions. In addition, digital receipts – that are recorded by the app – can be used as a collateral for financiers, and help smallholders establish a credit history, helping them to get loans and other financing.

 

Moreover, FtMA created a platform for smallholders and other agri-market players to connect with each other. Which has the result that one of the most valuable benefits from digitalisation is access to real-time information: Knowing the situation at aggregation centres can prevent overload of goods; information about delays in produce pick-up, price negotiations, and questions can be shared immediately. Of course, this principle works both ways, meaning that donors and investors can decide whether investing in a smallholder or farmer organisation would pay off, based on the smallholders’ digital data on transactions, their harvested and sold volume, or quality and quantity of their produce.

 

With the help of cutting-edge digital tools, FtMA improves coordination and transparency, and strengthens the trust between smallholders and their various agri-market partners. This is most visible in the positive impact on the lives of the more than 87,000 smallholders profiting from FtMA’s products and services in two African countries. A 2018 sample survey in Rwanda demonstrated that the average production of participating smallholders increased by one third over the first two seasons. Farmers who sold their produce with FtMA saw an average increase in incomes of 83 percent in that time. Altogether, the 31 million dollars generated in crop purchases by buyers highlight the necessity of the transition in the agriculture market and making markets more accessible for smallholder farmers, so they do not only feed themselves but also the global population. At the same time, they become competitive contributors to local and regional markets.

 

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The harvest is regularly checked and controlled. Photo: Klara Palatova/WFP

GERMANY’S IMPACT

In cooperation with local partners from public as well as private sectors, FtMA identifies the smallholders’ needs and tailors products and services accordingly. This is only possible thanks to the supporters of the Farm to Market Alliance who share the common commitment to make markets work better for smallholder farmers and who contribute with their resources and expertise. Among others, the German Federal Ministry for Economic Cooperation and Development (BMZ) is one such supporter of the Kenyan operation.

 

Projects like this are born in the labs of WFP’s Innovation Accelerator which identifies, supports and scales up high-potential solutions to hunger worldwide. It provides WFP entrepreneurs, start-ups, companies and NGOs access to mentorship, training, financial support, expert insights and WFP operations. The WFP Innovation Accelerator is generously funded by the German Federal Ministry for Economic Cooperation and Development (BMZ), the German Federal Foreign Office and the Bavarian State Ministry of Food, Agriculture and Forestry.

 

 

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Roseline Siama is a farmer working as FtMA Agribusiness Advisor. Photo: Farm to Market Alliance

 

FTMA IN KENYA: ROSELINE’S STORY

Roseline Siama, a 40-year-old mother of four from the western part of Kenya, used to be an average housewife and a member of a women farmer group. After her group started working with FtMA, Roseline learnt how to practice farming as a business alongside good agronomic practices and post-harvest management. Within three seasons, she earned enough money to triple the size of her farm, pay for her children’s school fee, expand her pig farming business and on top of that, invest in a catering enterprise. Today, as an FtMA Agribusiness Advisor, Roseline assists other farmers to easily access farm inputs and markets, as well as services such as good agronomic practices and postharvest handling and storage. During harvest, she aggregates produce from farmers and links them to a ready buyer, providing a predictable market for farmers at a competitive price.  “Most women, including myself used to fully depend on our husbands as sole providers in the home”, Roseline says and adds: “well, not anymore.”

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