Win-Win Innovations in Smallholder Sourcing

A coalition spanning the private, nonprofit, and research sectors tested innovations in agriculture that can drive impact on a large scale. We share results and lessons from an experiment in Mozambique that leveraged mobile technology to drive shared value.

As the African Green Revolution Forum (AGRF) kicked off in Kigali yesterday, leaders and stakeholders from around the world asked themselves how we can work together to effectively advance agriculture in Africa.

TechnoServe led a panel discussion with researchers and CEOs of African companies to share learnings gleaned from the TechnoServe Coalition of Smallholder Sourcing, which tested a range of innovations with the potential to improve the reach and effectiveness of outgrower schemes – a system of contractual relationships between large agribusinesses and millions of smallholder farmers that has the potential to drive significant shared value in Africa.

Nupur Parikh, Director of Strategic Initiatives at TechnoServe, stressed that interventions do not need to be groundbreaking or complex in order to improve outcomes for both companies and farmers. In fact, “micro” innovations are more likely to drive impact in difficult contexts, and easier to replicate when successful. The Coalition paired experimentation with rigorous measurement by evaluating the innovations through randomized controlled trials in the context of real agribusiness operations.

”Don’t over complicate, get the basic data, keep it simple, and ensure it meets the needs of the company,” said Paul Wang, Partner at IDinsight, which led the research for the Coalition.

Research in action: an experiment in rural Mozambique

Panelist Francisco Santos, the CEO of a Mozambican cotton ginning and export business, described what this research approach looks like on the ground. As part of the Coalition, JFS-SAN piloted a simple mobile-based platform to improve its engagement with its suppliers – a network of  more than 20,000 smallholder farmers in Niassa province. In return for providing these farmers with access to basic cotton inputs and extension services, the company has exclusive rights to purchase seed cotton in the province. When successful, systems like this are a win-win opportunity – companies gain reliable access to local raw materials, while farmers gain access to inputs, financing, technical expertise, and a reliable buyer. Yet these models often suffer from low production and limited loyalty on the part of the farmers, who often engage in side selling.

Seeking to improve the productivity, wellbeing, and loyalty of its suppliers without adding to the size of its extension team, JFS-SAN tested a mobile-based customer-supplier relationship management (CSRM) platform that established two-way communication in order to improve “customer service” to farmers, strengthen the relationship, encourage farmers to grow cotton over other crops, and share best practices to increase yields.

Although the pilot did not prove cost effective for the company in the first year, initial results were encouraging. Farmers who received mobile phones sold 12 percent more cotton than the control group. Further analysis showed that farmers using the platform planted cotton at a higher rate, were less likely to abandon planted cotton for other crops, had a better understanding of best practices, and were overall, more satisfied with JFS-SAN as a company. With a few design and operational improvements, the innovation has the potential to deliver greater impact and a positive financial return.

Lessons from the field

Read the full case study on JFS-SAN’s mobile platform innovation.

The JFS-SAN pilot offers several valuable lessons around the use of mobile technology with smallholder producers, which are relevant to agribusinesses operating in similar rural contexts in sub-Saharan Africa. Learning highlights include:

• Better targeting of phones can drive up impact and lower costs. Seeking to quickly drive up phone ownership in an inclusive manner, JFS-SAN gave mobile phones to farmers at no cost. Requiring a small opt-in payment for the phone would help reveal demand and increase engagement levels. Moreover, a company might be able to replicate this program with lower costs in a market with higher pre-existing mobile phone ownership.
• Delivery receipts can allow for better targeting of content: Having the technical capability to track delivery of messages would allow a company to drive down costs by targeting future messages to active users.
• Field testing of hardware is a critical requirement. After procuring phones that proved to be of poor quality in the pre-pilot phase, JFS-SAN tested a variety of phones to assess quality, durability, ease of use, and solar charging speed to select the right mobile device.
• Prioritizing SMS messages over voice messages will produce similar results at lower costs, even in low literacy contexts.
• Even with basic mobile technology, training is needed to improve adoption. JFS-SAN found that farmers in their remote rural context lacked basic phone literacy, despite growing mobile phone penetration in Mozambique. A rigorous and structured training session on phone usage greatly benefited the farmers.

For detailed results and insights from the pilot, read the full case study here. Seeking to contribute to a stronger and more inclusive sector through knowledge sharing, the Coalition for Smallholder Sourcing published four case studies on company-led innovations in Mozambique and Uganda – spanning new strategis, models of engagement, and technologies.

As Nupur Parikh noted at AGRF, “There is little knowledge sharing between companies, not even when they are not direct competitors. As a result, companies are not always aware of the new approaches or best practices being developed elsewhere.” Greater coordination and cooperation could unleash the enormous growth potential of contract farming and strengthen the future of agriculture.

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Case Studies from the TechnoServe Coalition for Smallholder Sourcing

Boosting Use of Agricultural Inputs	Leveraging Mobile Phone Technology to Improve Engagement with Suppliers
Incentivizing Farmers to Drive Greater Production and Sales from Their Peers	Diversification and Value Addition as Strategies to Improve the Long-term Viability of Smallholder Sourcing