Workshop iii technoserve

Sustainable Participation of Small Holder Producers in Commercial Value Chains PROJECT NURTURE Agribusiness Forum, Uganda 5th October 2010

Coca-Cola, Gates Foundation and TechnoServe established a partnership to improve the lives of thousands of farmers and families Project Overview 4-year pilot 54,000 farmers in Kenya & Uganda NURTURE Mango & passion fruit Doubling small producer fruit incomes 2

Summary Select Best Practices Applied in Project Nurture Capitalize on growing market opportunity with strong economic proposition for small-scale producers  Multiple routes to market / buyers (resilience)  >1 large-scale anchor buyer (↓ risk, stability) Select project areas with greatest potential for competitiveness & impact Identify & address constraints across entire VC Facilitate win-win relationships with partners that have skill, will & resources to tackle constraints Support farmers to organize into sustainable, self-governing business groups 3

Compelling market demand for domestic mango and passion fruit juice, creating attractive long-term opportunity for small holder farmers • Market value of fresh and Projected consumption growth processed fruit in SSA ~$11.5B Percent (CAGR ‘07-12) • Processed fruit consumption growing ~6% annually in Africa 5.6 5.8 and globally 6 5 • Region has tremendous potential 4 to capitalize on this demand, but 3 2.7 2.7 many MNCs import juice 2 concentrate 1 • Due to lack of sufficient capacity 0 to process and poor Global African infrastructure. Estimated that locally produced concentrate can Fresh Fruit Processed Fruit cost 33%-50% less than imports Note: * SSA = Sub-Saharan Africa; MNC = Multinational Corporation Source: FAO, Euromonitor Fruit commodity projections, BMGF/Dalberg 4

Value chain analysis indicates mango farmers can expect a profit margin of ~50% Key Drivers MANGO – Projected Four Year Totals • Multiple markets (U.S. Dollars per Farmer) (export, open air, KENYA UGANDA wholesale, processors) Demand resilience, less wastage • Improve value chain efficiency Post intervention Current • Improve productivity

Targeted regions chosen based on agronomic suitability, poverty density, and number of farmers Uganda Kenya • Agronomic conditions and number of farmers helps assure sufficient volumes for commercial production & sustainability of farmer-run enterprises • Eastern • Eastern • Poverty density used to • Central ensure project reaches • Rift Valley largely farmers earning New Mango and Passion Fruit PBG sites Overlap in existing and future PBG sites <$2 / day 6

7 Intervention focus across the value chain to ensuring producers and buyers achieve mutual success and project sustainability Input Farmers / Assemblers / Wholesaler Retailers Customer Suppliers Producers Traders / Processor Export Seed dealers / Farmer Groups nurseries (PBGs) Wholesalers Local markets Fertilizer Fresh Fruit Small scale Local suppliers and Puree farmers Traders Processing Domestic / Farm Companies Export Market implement providers Processing Agricultural ext. officers Additional TNS partners Credit / Financing Institutions Trainers: Facilitators / mobilizers: TechnoServe is a facilitator / trainer across the value chain 7

Facilitate win-win relationships with partners that have skill, will and resources to tackle constraints • Subject matter experts Partners Business Units • Financial Services: Equity BMGF Bank, Centenary Bank • Seed Propagation • Various & Research: KARI, Business units Coke Project NaCCRI within the TNS system ECABU Nurture • Farmer mobilization & • Bottlers in each training: AMA, country Farm Concern Govern- International ment. • Agronomy: Real IPM

TechnoServe’s Producer Business Group (PBG) model used to organize & empower farmers, to create sustainability Producer Business Group (PBG) model Smallholders PBGs Other market Channels Processors Coca-Cola Definition: PBGs are registered businesses owned by 50-100 small-scale farmers • Coordinate bulk produce sales • Provide crop productivity training • Facilitate access to inputs, credit, and market information • Enforce produce grading 9

Self-governing producer business groups act as ‘hub’ to address multiple supply chain issues on a sustainable basis Supply Chain TechnoServe’s Approach Challenges • Smallholders Organize farmers into sustainable, fragmented, lack Farmer self-governing business groups to: market access Organization − Reduce intermediate linkages • Multiple market − Create economies of scale for intermediaries resources limit farmer profit Train farmers in good agricultural • Processors unable Productivity practices and business skills to: to source enough Improvements − Improve marketable yields quantities of high − Improve fruit quality quality fruit Manage supply needs through direct • Smallholders Market market linkages to: often lack Linkages − Diversify production mix awareness about − Produce forcommercial market market opportunities 10

Thank you! Contact Information TechnoServe headquarters: 1800 M Street, NW, Suite 1066, South Tower Washington, DC 20036 Tel: +1 202 785 4515 Fax: +1 202 785 4544 Email: technoserve@tns.org For office locations around the world, check www.technoserve.org

Local processors are a critical piece of the value chain and will be buying the fruit directly from the farmer groups Sunny • Kenyan-based fruit processors, focused on puree production Processors • Produces puree for sale to customers domestically and as exports • Began full-scale commercial production of puree in 2009 (current capability of 40MT of puree per day) • Ugandan-based fruit processor, focused on puree / concentrate Reco Industries production Sunny Processors has indicated achieving sufficient supply at the quality and volume required as the primary bottleneck to increasing capacity utilization 16

Workshop iii technoserve

by EMRC on Nov 16, 2010

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