Session ii pie nijnginya


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Session ii pie nijnginya

  1. 1. AGRIBUSINESS LINKAGES With studies cases experienced by GTFS/RAF/391/ITA
  2. 2. CONTENT OF THE PRESENTATION 1. GTFS/RAF/391/ITA 2. Benefits of linkages 3. Linkages established under GTFS/RAF/391/ITA project 4. Lessons learnt : Factors influencing the strenght of the link 5. Constraints = Challenges for Phase II
  3. 3. GTFS/RAF/391/ITA Phase I: Support value chain planning
  4. 4. Phase II. Implementation of the program 2.1. Increase production and productivity for value chain actors 2.2. Upgrade marketing system & increase market access 2.3. Promote value added activities 2.4. Support cross border trade
  5. 5. BENEFITS OF LINKAGES  Equitable and efficient relationship between actors are developed and reinforced  Farmers move beyond subsistence farming and improve livelihoods  Adding value in agricultural sectors  Creation of viable MSMEs (employment, increased incomes, increased local development)  Better access to market, reduction of risks associated with prices, access to information, latest farming technology, crucial agricultural inputs and credits  Assured raw material supplies, better control over the production system in order to comply with set standards of relevance to accessing markets.  Better management, planning and marketing by mastering of production schedules based on sure supplies at definite prices.
  6. 6. LINKAGES ESTABLISHED UNDER GTFS/RAF/391/ITA PROJECT  Mainly purchasing arrangements based on ½ formal contracts /MOU (signed but no binding) defining prices per period, delivery modalities (periodicity and coverage of transaction costs), payment arrangements, quality of product, …  When there is no MOU or ½ formal contracts, ad hoc spot arrangements are used and some time they lats for years.  Services provision contracts reported between MLI and actors, between National Seed Potato producer’s association (UNSPPA) and 43 Seed Potato producers in Kabale-kisoro (Uganda)
  7. 7. LINKAGES ESTABLISHED IN BURUNDI 1. Milk: 1 cooperative (AYERA) : 3 farmer associations composed of 100 breeders (6000 l per month) linked to a rural Cheese factory “Fromagerie Saint Ferdinand” (600 kg of cheeses per month) 2. Passion fruit:  3 cooperatives (Banga, Ruganza, Kabuye) : 27 farmer associations composed of 800 passion fruit growers (350 tons per year) linked to (now this link is broken, cooperatives are directly linked to Marex)  1 association of passion fruit local trader (ECM) composed of 15 members linked to  1 association of passion fruit exporters (Marex) composed of 5 members – 250 tons exported par year (72% of the production)  1 association of passion fruit juice producers (TRANSJUMA) composed of 10 members (1000 l of concentrated juice per month) linked to supermarkets in Bujubmura
  8. 8. 3. Pineapple: 1 cooperative (Akayanzwe) of 5 farmer associations composed of 150 pineapple growers linked to “Burasira agro processing center” (1000 l of pineapple liquor –Burasine- per year) 4. Rice: 3 cooperatives (Kabuyenge, Marangara, Gikuyo) of 15 farmer associations composed of 1500 rice growers (750 tons per year) linked to 1 association of rice traders (Dusangire). This link is not really operational because of the nature of the product and the high speculation around it. The project has facilitated establishment of a strong link between Dusangire and Twitezimbere which can evolve in a serious enterprise if negotiations with local authorities conclude to the attribution of a ground to built a medium size rice factory in the new industrial area of Ngozi Town.
  9. 9. LINKAGES ESTABLISHED IN MALAWI • Cassava producers with community level traders • Processors to be linked with Banks for equipment provision (cost sharing principle : 50% trough a credit and 50% from the project.
  10. 10. LINKAGES ESTABLISHED IN RWANDA • NDONGOZI, COVMB, UMWETE and GATSIBO Irish potatoes & Maize cooperatives linked to market in Kigali. Farmers sell to cooperatives that in turn resell to the Kigali buyers. • Through seasonal agreements (still informal), a wholesale inputs supplier (Mr. John from the nearby Musanze town) advances the 3 grower cooperatives with fertilizers at the planting season. The cooperatives reimburse later on after the sale of the harvests. • The IAKIB milk production and sale cooperative continued its supplies manly to the Kigali clients. The cooperative is still negotiating contract with the INYANGE milk plant that, if all the hygiene and quality requirements met, could buy their milk at a higher price than now. Next linkage will be established with a cheese factory ready to start in the locality
  11. 11. • Cassava growers association linked to a rural cassava factory –CATM- itself linked with an exporter – COCAM- (see pictures) Quality cassava market opportunities have already been identified on the Huye, Muhanga and Kigali town markets. Also, a private exporter has promised to buy the cassava products if the export quality and norms requirements are met by the producer cooperative. • Passion fruit growers linked to Nziza Fruits Factory • Pineapple grower association COCANYA linked with pineapple traders association COCOANYA
  12. 12. LINKAGES ESTABLISHED IN UGANDA Dairy value chain  Rubuguri Dairy Farmers’ Association (128 farmers in Kisoro, 6000 – 800 l per week) linked to Birunga Dairy Corporation in the same district . An MoU signed involving  a government agency –NAADS- that offers extension services to farmers & deals with dairy husbandry issues ,  SACCO for loans to purchase the truck on which the milk tanker (50%)  FAO for technical assistance , supply a milk cooler at the collection centre, a milk tanker (50%) to facilitate transportation of the milk to the plant Honey value chain  6 Honey Marketing associations (BBDA) linked to Honey Collection center about to be erected to facilitate the refining . BBDA has already an MOU signed with a supermarket to supply a few cartons of honey on a monthly basis
  13. 13. Seed Potato VC: • 43 Seed Potato producers linked to a National Seed Potato producer’s association (UNSPPA) so that they are recognized as trained & reliable seed producers. Ware Potato VC: • Kamuganguzi Sub County irish potato Association linked to financial institutions and NANDOs in Kampala (12 tons per month ) • MoU signed between Muko Expanded Potato Growers’ Association and an input dealer Mwongyera & Sons. • 43 Seed Potato producers directly linked to to seed producers that are reliable for clean seed, and subsequently at more affordable prices as the seed production increases in the area
  14. 14. LINKAGES WITH MLI Groups supported by the project access loans trough following Arrangements 1. First of all farmers are associated in operational FO (associations or cooperatives) 2. They are linked to large traders/buyers or processor 3. Commercialization pass trough cooperatives structures 4. Payment are controlled and pass trough account bank 5. Use of 4-ple MOU between FO, Buyer, FAO and MLI. 6. FO and Buyer commit to cooperate trough a purchassing contract arrangement (1/2 formal contract clarifying a certain number of things: price, delivery modalities, periodicity, quality of the product…) and to operate in a transparency way 7. FAO commit to pursue technical assistance mainly in management and accountancy 8. MLI commits to build capacity in business planning, credit functioning, entrepreunership 9. (warranting system)
  15. 15. CREDITS FACILITATED UNDER THE PROJECT • Burundi: 260 000 $ for the two last year. • Rwanda: • Uganda: • Thanks to facilities and incentives offered to FO, case of rice cooperative : – 2008: 0 tons – 2009: 25 tons – 2010: 63 tons and Expected for 2010: 300 tons (extension of groups, structures well organized, population well informed) – Access to loans and other facilities will follow this trend.
  16. 16. LESSONS LEARNT (FACTORS INFLUENCING THE STRENGHT OF THE LINK) 1. Legal validity of the contracts a) Ad hoc arrangements, b) ½ Informal contracts (MOU signed or not), c) Formal signed contracts , d) short term , long term contracts 2. Coping with price determination issue while facilitating contracting (the tough moment and the more confusing for farmers)  immediately result in high price )= main expectation of FO. Benefits associated to linkages as expressed early are ignored. So there is need of information and skills development, creation of awareness for long vision and demonstrate real incentives & positive results from contracting,  If possible calculation of average price for a reasonable period and determine the price accordingly  Price can be fixed on annual basis and then after balance sheet report possibility to give bonuses to farmers when markets perform better than expected.
  17. 17. 3. Psycho socio environmental factors  Mutual interest in forming and maintaining agreements (PF, the partner is the solution)  Appropriateness of the process with environmental situation of contractors especially Contractors’ behavior (patterns, social behavior, historical facts, …) : opportunistic behavior of the contracting parties, Mistrust to commit and adhere to agreements combined with a perceived loss of autonomy and feelings of exploitation are common.  Good preparation and awareness of difficulties for sustainable enforcement (at the beginning mistrust is the law, trust is exception then progressively situation changes): capacity of actor to patient and overcome challenges (contracts details can not foresee all obstacles: Weekly meetings)
  18. 18.  Capacity of farmers to organize / strength of farmer’s organizations  Configuring members with market requirements including training, extension, technology acquisition, provision & supplying agricultural inputs, credit financing, provision of transport and storage facilities  co-coordinating harvesting-delivery schedules & maintaining records and handling majority of post harvest functions  Play an instrumental role to raise funds & defend farmers interests  When FO operate transparent financial accounting they create trust between the executives of the cooperatives and their members who then commit more to contribute to the cooperative for its development and better enforcement of contracts.  Strong FO are able to establish linkages with input suppliers, banks, and a processing company
  19. 19.  Initiator of the Link: its strategy and role 1. Government (Direct role, indirect / regulatory role) 2. Project (here acting as Government partner ) 3. NGO (facilitation) 4. Agribusinesses Company / Private agribusiness enterprises / large buyers 5. Farmers / Farmers' organizations
  20. 20. Economic factors  Nature of Product /Commodity Characteristics or processes involved : perish ability, carful handling, labour intensive, high level of intensification, no alternative market, high competition, market dynamic, fluctuating prices  Importance of Start-up Costs for a linkage (high in nontraditional crops, requires set of facilities including linkages to MLI, trainings, technical assistance, doing certain tasks on behalf of other party, critical equipments and infrastructures, …). Good evaluation of this is essential  Importance of Transaction Costs (start-up cost, growing costs, harvesting- delivery costs and administration costs. charging back differential transaction cost to the small-scale grower by using activity based costing systems to identify the smallholders’ incremental use of company resources. (PF, rice, milk with the new system on the stores)
  21. 21. Constraints to market-based agriculture development • Weak production • Prevailing of individual behavior for farmers reinforcing the marginalization and exploitation • Conservative spirit / Mistrust to commit and adhere to agreements. • Small private operators who disturb the effort to modernize the system / process while no providing any services or facilities ( PF, Rice).
  22. 22. • Lack of financial resources to expand activities • Reluctance of farmers to re-invest their income • Tiny agro processing units to be linked with due to weak industrialization • Raw Material Procurement not easy • Quality Constraints and competitiveness of products • Transportation failure: not easy to supply on time • Educational institutions often have insufficient understanding of the needs of farmers and agribusiness, and lack both the resources and commercial awareness to implement practical programs of support. • Cohabitation with different approach projects
  23. 23. • Extension services often have inadequately resources. • Limited Availability of Inputs • High costs of raw materials in both, farming and processing, lead to a low profitability in the agricultural and business sector. Inputs necessary for adding value to primary products are often imported while local intermediary goods suppliers cannot compete on price and quality of imports. • Restricted Market Information
  24. 24. Sensibilisation, mobilisation en vue de la formation des groupes commerciaux viables
  25. 25. Formation des groupes viables
  26. 26. Facilitation formulation des plans d’actions et des business plans (vue des participants après une session)
  27. 27. Formation à la gestion des opérations sur les hangars sur base des outils conçus a cette fin
  28. 28. Facilitation des linkages et signature des contrats
  29. 29. Formation, assistance technique
  30. 30. Formation action
  31. 31. Production de 120 000 Plants de maracuja
  32. 32. Aspect avant le projet
  33. 33. Aspect actuel
  34. 34. Eparpillement de la production vendue avant le projet
  35. 35. Hangar de commercialisation donné par le projet
  36. 36. Une pause après signature de contrat éleveurs - FSF
  37. 37. Pause « launch » après débat houleux sur le prix du lait
  38. 38. Fromagerie avant réhabilitation
  39. 39. Distribution kit pour le contrôle de qualité du lait
  40. 40. Vieille presse qui a été changée par une plus moderne
  41. 41. Comités des associations des producteurs d’ananas
  42. 42. Vue des plantations sur 5 ha
  43. 43. Petite réception après signature des contrats
  44. 44. Liqueur des ananas
  45. 45. Abakeburwabakumva
  46. 46. Démonstration semis à la ligne (formateurs: paysans venus d’Imbo)
  47. 47. Modèle de camps bien plané (60 plots modèles)
  48. 48. Session FFS
  49. 49. Usine de production de farine de manioc de qualité
  50. 50. Aire de séchage du manioc fermenté
  51. 51. Cooler pour lait collecté auprès des fermiers
  52. 52. Camion citerne (du centre précédent à la laiterie)