Case Study - Agro-Dealership Voucher Scheme in Zimbabwe

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The Agro-Dealership Voucher Scheme in Zimbabwe used vouchers as a way to facilitate improvements in agricultural production, improve access to essential supplies, and therefore to increase the income …

The Agro-Dealership Voucher Scheme in Zimbabwe used vouchers as a way to facilitate improvements in agricultural production, improve access to essential supplies, and therefore to increase the income and employment of rural smallholder farmers in the agricultural sector.

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  • 1. Agro-Dealership Voucher Scheme -Zimbabwe Key points Donor: USAID/Africare Dates: Dec 2009 – May 2011 Sector: Agriculture Location: Mashonaland Central Province, Zimbabwe Successes: 25,338 smallholder farmers benefitted through greater access to inputs. Finance and advice services transformed. Impact Awards winner 2011 Background The aim of the Mashonaland Livelihoods Restoration Project (MLRP) is to restore the livelihoods of rural people in the Mashonaland Central Province of Zimbabwe. This is a pilot project, intended to demonstrate the efficacy, sustainability and potential for impact at scale of this approach. Objective: To increase income and employment of 2,032 rural smallholder farmers in Guruve district by June 2011 by facilitating improvements in agricultural production and improved relations between market actors. The problems: • Despite agriculture being the major livelihood activity in the area, limited supply of agricultural inputs such as improved seed varieties, fertilizers and agro- chemicals, adversely affected agricultural productivity. • The introduction of the multiple currencies in 2009 resulted in improvements in supply of agricultural commodities but smallholder farmers in the communal areas still faced the challenge of accessing critical agricultural inputs. • Because agricultural inputs were not easily available in local ward shops, smallholder farmers in Guruve resorted to travelling large distances to access inputs at Guruve Centre. 1
  • 2. • Whilst the larger commercial seed suppliers were busy concentrating on their distribution centres around Harare, the local agro-dealers were constrained by a lack of cash and credit to ensure the availability of seed.What we did:Agro-dealership voucher schemeThe project used an agro-dealership voucher scheme between 2009 and 2011 to resuscitateworking relationships between commercial agricultural input suppliers, wholesalers, localagro-dealers and the small-scale producers to increase access to inputs.As a result, commercial agricultural input suppliers are now subcontracting wholesalers andsome of the local agro-dealers to continue supplying inputs to smallholder farmers in GuruveDistrict even beyond the project cycle.Though the agro-dealership voucher scheme benefited only 2,032 smallholder farmers,23,306 smallholder farmers are now benefiting indirectly through access to a wide range oflocally available agricultural inputs. This has also benefited the commercial agro-inputsuppliers reach out to more farmers.Financing and trainingThe agro-dealership voucher scheme also provided the local agro-dealer network with start-upcapital to restock their shops with agricultural inputs. Local agro-dealers receivedcommissions ranging from 5% to 8% by the commercial agricultural input suppliers and 70%of the local agro-dealers have restocked their shops with various grocery items andagricultural inputs to sell locally.The commercial input suppliers also delivered training to the agro-dealers on fertilizer, seedstorage and voucher redemption.Micro-FinancingAccess to finance at the lower levels was critical to ensure long term sustainability.Established Micro-Finance Institutions (MFIs), affected like everyone by the economic crises,were undercapitalized and thus had no funds that could support the smallholder farmers withwhom the project was working. Practical Action partnered with an established MFI, ZambukoTrust, to train smallholders on establishing saving and lending schemes from their ownresources. As a result farmer groups are now able to save money from the previous crop salesfor use next season and are venturing into a number of interventions.Collaboration with Public-Private Partnerships (PPP)Practical Action partnered with private sector companies and government line agencies suchas Department of Agricultural Extension (Agritex) to provide agricultural advice and support tosmallholder farmers on issues of utilization of inputs, field preparation, planting and cropmanagement. First the private companies trained Agritex officers in Guruve, and these thentrained lead farmers who in turn trained all the other farmers in the targeted wards. Each 2
  • 3. Agritex officer covered more than 500 smallholder farmers, so through these lead farmers,new skills and knowledge have the potential to reach thousands of beneficiaries.Lessons LearntTimeliness and transparency • Timely and transparent selection of agro-dealers was critical. This needed to be done six months before the actual inputs are distributed. • Timely and transparent registration of targeted smallholder farmers was also necessary. • Timely access of appropriate agricultural inputs to smallholder farmers in Guruve before the onset of the agricultural season (August to September 2010) is critical.Voucher scheme and sustainability • Vouchers are not intended to be sustainable; they are a tool that pro-poor market facilitators like us can use to build healthy, trusted and sustainable business relationships between the smallholder farmers and the commercial agricultural input markets. • If voucher schemes are not designed and used properly they can undermine sustainability. Guaranteeing demand to agro-dealers without a proper exit strategy can present problems as the demand may not be maintained without external assistance. • In this context, where farmers are struggling with hyperinflation and thus extremely low investment capacity, voucher schemes proved to be an appropriate solution for smallholder farmers and local input providers.Cost efficiency • Vouchers can be a relationship and linkage builder. The approach also reduces transaction costs for the implementing organization when compared to direct distribution and it allows the private sector to play their role in making markets work better for marginalized producers. • This approach also fosters agricultural productivity in general as it reduces dependence on the donor. 3