Advisory service capacity needs along the value chain


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  • I really appreciate your paper. it is comprehensive and assisted me to review what exactly i am doing as a value chain advisor. More or less you have touched up on key elements of it, i would recommend that you enrich the models such as exposure visit to best performing sites; engagement of the private sector in extension provision; etc. i appreciate that you mentioned time and again multi-stakeholder forums which are the key for dialogue, information, networking and innovations
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Advisory service capacity needs along the value chain

  1. 1. Exploring New Knowledge, Skills and Infrastructure Needs of Ad-visory and Extension Services along Agricultural Value Chain and Their Capacity Enhancement Opportunities within the CAADP Process By Abraham Sarfo (Value Chain and Financing Expert) Conference of Ministers of Agriculture of West and Central Africa Countries CAADP-PILLAR 2 TECHNICAL INSTITUTION
  2. 2. 1. IntroductionAfrican agriculture tends to be dominated by many geographically dispersed smallholderfarmers who produce limited surplus quantities. Smallholders have historically resorted tocooperatives and other forms of farmer organizations to find institutional answers to themany technical, commercial, and logistics barriers resulting from the geographical disper-sion and quantitative dispersion of farm-level supply. Access to extension and advisoryservices is also among the many problem of the sector. These barriers are reflected in highproduct assembly and marketing costs, lack of access to modern inputs at competitive pric-es, limited technical innovations, vulnerability to weather-induced supply fluctuations, andultimately a low level of and returns to productive investments.The Comprehensive Africa Agriculture Development Program (CAADP) is at the heart ofefforts by African governments under the African Union (AU)/New Partnership for Africa’sDevelopment (NEPAD) initiative to accelerate growth and eliminate poverty and hungeramong African countries. The main objective of CAADP is to help African countries reach apath of higher economic growth through agriculture-led development, which eliminateshunger, reduces poverty and food insecurity, and enables the expansion of exports. As aprogram of the AU, it emanates from and is fully owned and led by African governments. • The Principle Of Agriculture-Led Growth As A Main Strategy To Achieve The Millen- nium Development Goal (MDG) Of Poverty Reduction; • The Pursuit Of 6 Percent Average Annual Agricultural Growth At The National Level; • The Allocation Of 10 Percent Of National Budgets To The Agricultural Sector; • The Exploitation Of Regional Complementarities And Cooperation To Boost Growth; • The Principles Of Policy Efficiency, Dialogue, Review, And Accountability; • The Principles Of Partnerships And Alliances To Include Farmers, Agribusiness, And Civil-Society Communities; • Implementation Principles That Assign Roles and Responsibilities for Program Im- plementation to Individual Countries, Coordination to Designated Regional Econom- ic Communities (RECs), and Facilitation to the NEPAD Secretariat.CAADP is a strategic framework to guide country development efforts and partnerships inthe agricultural sector. CAADP directs investment to four mutually reinforcing and inter-linked pillars: I. Pillar I: extending the area under sustainable land management and reliable water control systems; II. Pillar II: improving rural infrastructure and trade-related capacities for market access; 2
  3. 3. III. Pillar III: increasing food supply, reducing hunger, and improving responses to food emergency crises; and IV. Pillar IV: improving agriculture research and technology dissemination and adoption.Pillar II Agenda and ObjectivesThe ultimate objective of Pillar II is to accelerate growth in the agricultural sector by raising the ca-pacities of private entrepreneurs, including commercial and smallholder farmers, to meet the in-creasingly complex quality and logistics requirements of domestic, regional, and international mar-kets, focusing on strategic value chains with the greatest potential to generate broad-based incomegrowth and create wealth in the rural areas and the rest of the economy.Taking a value chain approach to these economic development involves addressing the ma-jor constraints and opportunities faced by these smallholder farmers and other stakehold-ers at multiple levels of a given value chain. This can include a wide range of activities suchas facilitating access to cheaper or better inputs, strengthening the delivery of business andfinancial services, increasing access to higher-value markets or simplifying export licens-ing. (Campbell, R; ACDI/VOCA Value Chain Approach)One of the many critical investment areas in value chain upgrading strategy is coordinationand facilitation and also flow of technical and advisory services along the value chain; espe-cially at the lower end of the chain where smallholder farmers are integrated into the chain.Among the myriad of factors that hinder the inclusion of the smallholder famer in the agri-cultural value chain are business environment and policy, access to cross-cutting servicemarkets, productive assets and property rights, conditions of the location.Addressing these challenges and other emerging ones require agricultural extension andadvisory services to play an expanded role with a diversity of objectives, which include:linking farmers more effectively and responsively to domestic and international markets;enhancing crop diversification; coupling technology transfer with other services relating toinput and output markets; poverty reduction and environmental conservation. We shouldalso enable advisory services to view agriculture as part of a wider set of rural develop-ment process that includes enterprise development and non-farm employment; and capaci-ty development in terms of strengthening innovation process, building linkages betweenfarmers and other agencies, and institutional development to support the bargaining posi-tion of farmers (Sulaiman et al, 2006).Extension workers are known to be the link between researchers and farmers. To fulfillthis role effectively they have to keep abreast with new technological developments. Thiscalls for extension workers and researchers to work together as partners in the researchand innovation processes with strong linkages. A strong link between extension workersand researchers will improve the quality of disseminated information along the value 3
  4. 4. chain, as well as, adoption of new technologies by farmers, and consequently lead to in-creased agricultural production and improved livelihoods of the rural poor. 2. New Knowledge, Skills, and Infrastructure to Facilitate the Expanded Role of Extension and Advisory Services in Agricultural Value ChainsThe value chain is not only an economic concept. Value chains also constitute social sys-tems in which people interact – in line with the given social norms and according to theirown differing or common interests. To the extent that chain development requires im-proved coordination between chain operators and new forms of contractual relations, thebehavior of actors also has to change. Therefore, value chain upgrading is not just a matterof organizational and technical optimization, but is about learning and social relations aswell. (Valuelink)As we move to the next generation of advisory services along the value chain, it is impor-tant we embrace innovation in providing services to the actors along the value chain, moreespecially smallholder farmers. These would also depend on how we embrace, learn andimprove on our knowledge and skills within the social-economic systems in delivering in-novation along the agricultural value chain.New approaches to extension emphasize three elements: 1) strategies to develop Agri-cultural Innovation Systems, 2) pluralism of service providers, and 3) extension ser-vices should be demand-driven (Zhou) . In reaching the smallholder farmer along theagricultural value chain, the extension and advisory service providers should improve theirknowledge and skills not only on the hard skills in extension delivery but also on the fol-lowing value chain facilitation, coordination and remediation efforts. Emerging trends andinnovations that advisory and extension service personnel need to build their capacity oninclude: a. Knowledge and concepts of the agricultural value chain with emphasis on assisting smallholder farmers with access to market b. ICT-led extension delivery and advisory services c. New skills in adult education, learning and delivery (Farmer Field School Model) d. Business management skills and advisory services e. New concepts of financial delivery, intermediation and credit management along the agricultural value chain • Warehouse Receipt Systems • Commodity Exchange • Value Chain Financing • Knowledge in Standards and Grades of specific commodities 4
  5. 5. Knowledge and concepts of the agricultural value chain and skills in upgrading strate-gies with emphasis on assisting smallholder farmers with access to marketThe renewed focus on agriculture and agribusiness, as priority sectors to spur economicgrowth in Africa, calls for value-chain-based strategic approaches that integrate and coor-dinate efficiently interfaced market and production segments so as to position the agricul-tural sector to be more responsive to consumer demand. Such a purpose-driven approachto formulating investment plans, public policies, and partnerships to integrate smallholderfarmers can bring about the significant changes that are being sought in Africa’s agricultureand agribusiness sectorsIt is important that advisory service and extension service personal enrich themselves ade-quately in the value chain approach in agricultural development in order to deliver betterservice to smallholder farmers. All service delivery should be analyzed along the valuechain and their impact on all systems and actors within the value chain brought out. Someof the skills and knowledge required include Value Chain concepts; Value Chain analysis;developing a vision for chain upgrading (generic, but with focus on key Value Chain in thatadvisory service is provided); process design and facilitation skills for working with chainactors and engaging in public-private partnerships.ICT-led extension delivery and advisory servicesInformation and communication technologies are a key input for economic developmentand growth. ICTs have been used in some of the large-scale farms and the commercial sec-tor to tap opportunities and address some of the challenges facing farmers. Several studiesincluding CTA-sponsored ones on smallholder access to public and private extension ser-vices have revealed that the village level extension agent is the most effective source of in-formation for farmers but certainly not the most efficient in terms of cost and coverage.Relatively little attention has been paid to their potential benefits to small-scale farmersand the associated upstream and downstream actors. by embracing ICT in their delivery,advisory service providers would be able to provide service delivery in a more efficient andcost reduced manner to benefit the rural farmer.In the developing world in general, including in Africa, the main issues indicating a greaterneed of ICT include, though are not limited to, the following: • There is large-scale requirement of information on the part of all stakeholders espe- cially smallholder farmers related to the agriculture sector and its operations. This 5
  6. 6. is either largely unmet or is untimely. In either of these two cases gains extracted out of the sector by farmers, in particular, is sub-optimal. This is true for all stages of the cropping cycle. • Information sharing and exchange among smallholder farmers and other actors along the value chain is much less than is required amongst all the stakeholder groups. For example the knowledge of latest research advances made and recourses open to farmers at different stages of the farming cycle is very poor and unmet. • Lack of information further debilitates the farmer and makes him/her more risk- averse than he ought to be.In Pakistan, during a focus group discussion on extension services delivery, extensionworkers cited the main barriers for technology uptake and job performance as lack of ap-propriate incentives, low level of recognition, high transportation cost and inadequatebudgets, inadequate technology training, lack of affordable system of communication withthe farmers, and lack of training in communication skills and social mobilization tech-niques. Reward and recognition of their professional efforts was found to be a sore pointwith farmers and public extension workers1. This phenomenon is not different from Africaand other development countriesThere is the need for ICT to play important role extension delivery and advisory supportwithin the continent and other part of the development world. From the perspective of thefarmer, the cropping cycle typically goes through the following three stages and each cyclerequires a different need of information that extension and advisory service providerscould leverage through ICT: • Pre-cultivation, including crop selection, land selection, calendar definition, access to credit etc • Crop cultivation and harvesting, including land preparation and sowing, input man- agement, water management and fertilization, pest management etc • Post harvest, including marketing, transportation, packaging, food processing etcNew skills in adult education, learning and delivery (Farmer Business School Model)Countries increasingly are realizing the need for extension to engage with a wide range ofissues beyond disseminating technologies. These include markets, inputs and environment.This has raised the need for better qualified and specialized extensions staff and experi-mentation with institutional arrangements. Similarly it is now recognized that there is needfor extension to play a greater adaptive research role to better target technologies at thefield level and to provide organizational and marketing support to farmers. The T&V sys-1 Mahrukh Siraj- A model for ICT based services for agriculture extension in Pakistan ( 6
  7. 7. tem played an important role in the agricultural extension services. However, it was notwell suited for the diverse farming systems and also meeting the challenges of evolving anddynamic needs to integrate farmers into dynamic markets. Current and dynamic extension services include farmer field schools are emerging to offerholistic service to rural smallholder farmers. one example is the Farmer Business Schoolbeing implemented in Ghana. With co-funding from World Cocoa Foundation (WCF) andBMZ, the Sustainable Cocoa Business Project of German International Cooperation (GIZ)implements a component of the Cocoa Livelihoods Program and supports 20 public andprivate partners in Ghana, Nigeria, Côte d’Ivoire and Cameroon to organize basic businessskills training for 97,000 farmers. The so-called Farmer Business Schools comprises the fol-lowing contents:Principles of farming as a business • Basics of human nutrition and farm management for enough food and a balanced di- et • Economics of food and cash crops • Income-oriented decision making based on cost and benefit analyses of different technologies for cocoa and other crops • Strategies to diversify incomes • Financial management • Savings and credit • Benefits from quality cocoa • Benefits from membership in farmer-based organizations • Planning investments in replanting of cocoaThe Farmer Business School complements technical training, agricultural extension pro-grams and financial services in agriculture in Africa.Achievements since March 2010The FBS curriculum has been developed and confirmed in the field. 290 trainers and coordinators provided by publicand private partners have been trained. More than 38,000 farmers (24% women) have “graduated” from FBS acrossthe countries. 96% of the participants gave the trainers a “smiley” to indicate their satisfaction with the contentsand the training approach.Farmers recognize during the training the relevance of improved techniques, planning and business decisions forbetter income. To satisfy their demand for inputs, extension and financial ser-vices the project enhances links withtechnical partners of CLP and other public and private development programs. FBS graduates, among others, openbank accounts, plan production, use fertilizer, improved varieties and better cropping techniques, decide to replanttheir aging cocoa plantation or “simply” improve nutrition of their families by introducing protein crops in the croprotation or association.The decision of COCOBOD Ghana to mainstream FBS into its new public-private extension program represents amajor achievement: from 2012 onwards, more than 200 community extension agents will train approximately48,000 farm-ers per year and assist them to implement their business skills for more income. 7
  8. 8. New concepts of financial delivery, intermediation and credit management along theagricultural value chainAccessing credit is a challenge for most rural entrepreneurs and smallholder farmers in de-veloping countries. While there has been considerable growth in microfinance institutionsand private commercial banks serving micro and small enterprises (MSEs) in urban areasover the last fifteen to twenty years, too often rural areas lack sufficient financial services.The growth of rural enterprises and the industries or subsectors in which they operate isoften limited by the scarcity of institutions offering a range of financial services includingoverdraft protection, working capital, investment and lease financing, savings and others.Banks and nonbank financial institutions often cite the high cost of accessing individualsmallholders as a key constraint to servicing the vast group of smallholder producersIt has become imperative that in addressing the low level of financial inclusion of thesmallholder farmer and rural enterprises, information on financial services and innovationin the financial sector is brought to the level of the famer. The extension service and the ad-visory service offer the vehicle for delivering this financial inclusion. However, currentlymost of the support services lack the knowledge and skills to holistically approach this fi-nancial services delivery as part of their support to the rural farmer. There have been muchinnovation in financial delivery along the agricultural value chain that advisory serviceproviders need to upgrade their knowledge and skills on in order to become effective insupporting the value chain to integrate the smallholder farmer into the value chain. Theseinclude but not limited: • Trader Credit • Contract Farming • Warehouse ReceiptsTrader credit refers to short-term or seasonal loans between buyers and sellers of inputsor products, typically provided in commodity-based value chains such as rice or other basicgrains. In contract farming, financial service and credit are tied to purchase agreements:farmers agree to sell to a given buyer, who in turn often commits to providing additionalservices such as technical assistance. This increased level of commitment is more appro-priate for buyers and sellers of high-value, specialty products.Warehouse receipts, issued to depositors of nonperishable commodities by safe and securewarehouses, allow financial institutions to use the deposited inventory for collateral andfarmers to sell their products for higher prices in the off-season. Warehouse receipts sys-tems (WRS) are part of a framework of ‘modern market institutions’, that countries adoptin different combinations and permutations according to circumstances, to develop their 8
  9. 9. agriculture and render markets more efficient and effective in delivering benefits to con-sumers and producers.There are various other such institutions including grading systems, contracting, alterna-tive dispute settlement (usually through arbitration by trade peers), marketing coopera-tives, contract farming, commodity exchanges, hedging devices (through exchanges orover-the-counter), and market information systems. 3. Strengthening the Capacities of Actors (Farmers, Organizations and Networks) In the Short to Medium Term to Deliver Advisory Services along the Agricul- tural Value ChainWith changing environment of agricultural extension, institutional pluralism and bottomup participatory approaches are necessary to address new challenges. The public sectormay still need to play an important role in providing agricultural extension services due toits ‘public good’ nature, but its role should be changing in the face of increasing role of pri-vate and NGO sector and additional responsibilities of extension services. Entry of actorssuch as the private sector and NGOs in delivery of such services should not be relaxed forthe creation of innovative public-private partnerships (PPP) in extension be facilitated andpromoted.2From the value chain point of view, several interventions have been designed for capacitydevelopment of actors with the Comprehensive African Agricultural Program (CAADP) thatadvisory services providers could benefit. Most of these capacity development programsare generic value chain training and capacity development but there are also specific com-modity capacity development and other specialized capacity development; especially at thefinancial inclusion and innovations in capacity developments.The meaning of “capacity” in value chain promotionFirst, capacity refers to the value chains being supported. The capacity of value chains toperform shows in organized market linkages between farmers, food industry and trade,coordinated investment of producers and buyers, the provision of public infrastructure inline with private sector needs, agreed grades and standards and shared market information- driven by consumer market demand.The second aspect is the capacity to promote investment and development of VCs, whichincludes the political commitment of Government & donors to investment plans, appropri-ate funding mechanisms, the existence of platforms for collaboration of actors in the VC and2 Yuan Zhou: Reinventing agricultural extension to smallholder (Syngenta Foundation for Sustainable Agriculture) 9
  10. 10. available services of facilitators and technical specialists. VC development should be drivenby the needs of the value chain operators.Capacity development has two dimensions – an institutional dimension which implies poli-cies and rules, platforms for the coordination of investment and support services and theindividual competences and expertise of operators and supporters to perform their roles inupgrading the value chain.Objectives of capacity development for VC promotionThe objectives of capacity development are: • Strengthening the institutional set-up for VC promotion projects at country level, in- cluding both national public support policies as well as the private and semi-public support organizations in specific subsectors and value chains (such as VC platforms or committees, “interprofessions”, “VC observatories” or private sector associations) and private lead companies • Building the individual competence of VC facilitators, technical specialists, trainers and advisors at country level. The specialists in value chain upgrading should form regional networks. • In the medium term, developing at least one know-how institution per region as hosts for training workshops.Training and know-how transfer is the main instrument of capacity developmentThe main instrument is training in the concept and methodology of value chain develop-ment. The training is closely linked to the tasks of trainees performing their professionalduties in the enterprises and organizations engaged in VC upgrading. Specific contents andformats may be used according to tasks and levels of competency of value chain actors. • For the whole VC community: Sensitization events for all actors from the policy to the implementation level: General VC know-how, including basic concepts and strat- egies of VC promotion. • Political decision makers on CAADP investment programs (country teams, national and regional offices of ministries, representatives of sub-regional organizations): • Value chain trainers and VCD experts taking facilitating, coordinating and advisory functions (from the public sector, sector specific institutes and apex organizations, and African consulting firms and NGOs): VC analysis and promotion methodology Skills in designing and conducting training seminars, facilitation and didactic skills. • Value chain practitioners (interprofessions and VC platforms, staff of chambers of agriculture, farmers’ organizations, key private firms and sector associations): Knowledge and skills in the different fields of upgrading (services, business linkages, cooperatives, standards, financing) 10
  11. 11. 4. Models in capacity development along the Value Chain for CAADP in AfricaIn the implementation of the Comprehensive Africa Agricultural Development Program(CAADP), a capacity development models have been developed to enhance the capacityneeds of actors and facilitators of value chain. Some of the models are generic models thatadvisory service providers could benefit to enhance their capacity to deliver quality servicealong the value chain for smallholder farmers and other actors along the value chain.There are also other models that a commodity or program specific that could be targeted tooffer specific capacity development along a specific commodity or specific advisory servicealong the value chain. 4.1 Training of trainers (ToT) workshopThe main target of training is for trainers VC trainers, decision makers and advisors on im-plementing VC decisions and Advisory Services at regional, sub-regional and national le-vels. The objective of this model is to develop the critical mass of trainers and experts inAfrica to have the ability conduct training to other advisory service providers and exten-sion staff at country and community levels.The criteria for trainers under this model include: • Have ample experience in rural economic development and value chains in Africa, • Are experienced trainers with strong group facilitation and presentation skills • Are able and available to conduct VC training seminars in their own country and within their region and to participate in follow-up events • Are involved in activities related to VC development in their countries 4.2 Generic CAADP Value Chain Capacity DevelopmentThe Generic CAADP Value Chain Capacity Development Event has the following objectives: • Sensitization of key stakeholders of the CAADP support structure towards the VC approach and its relevance in reaching the CAADP goal of six percent annual growth of agricultural GDP • Advocacy for the establishment of an adequate institutional set-up (policies, coordi- nation platforms, services) and provision of public goods for the VC components of the NAIPs • Strengthen capacities to include high-quality VC components into the specific stage of CAADP implementation at country level (compacts, NAIPs, technical reviews, preparatory roadmap, business meeting) • Participants learn how to plan and implement VC promotion activities in the frame of their NAIP or how to include them into their future NAIP 11
  12. 12. • Representatives from the government will take appropriate actions and coordinate with the private sector (also the different donors with different VC approaches among each other) 4.3 Commodity Value Chain Stakeholder Workshop The main target for this Commodity-specific Value chain capacity development includestakeholders (operators) representing a single specific commodity chain at country leveland public sector representatives as secondary co-participants (MoA, MoF, CAADP focalpoint, etc.)The Commodity VC stakeholder Workshop has the following objectives: • Facilitate linkages between fields of investment (e.g. contract farming/embedded fi- nancial services with horizontal cooperation/cooperative development) and bring these inter-relations in a coherent way into the CAADP process (NAIPs, reviews & business meetings) • Raise awareness of the VC operators regarding the VC components in their NAIP • Ensure that demands of the private sector are heard, that gaps identified by the pri- vate sector regarding the NAIPs are discussed with the public sector • Promote collaboration among all actors of the VC • Boost co-investment of the private sector in the prioritized VC of the NAIP • Make public sector understand what are the needs of the private sector • Setting the basis for future PP-Dialogue, B2B meetings, regular commodity sector meetings, creation of commodity-specific VC platforms 5. ConclusionExtension and advisory services investments should create the capacity to identify new,promising alternatives at the farm level and ensure that they are supported in the rightway (for example, through NGOs, by engaging private companies or farmer organizations,or by providing market information). This requires pluralism in service providers and or-ganizations that have the attitude and the ability to find the right approach in different sit-uations; in short, smart best-fit choices.One of the best models available for agricultural advisory services is the value chain ap-proach. For advisory service staff to be able to reach their clients, they need to build theircapacities in emerging and innovative approaches to deliver service along the agriculturalvalue chain. Entry of actors such as the private sector and NGOs in the delivery of such ser-vices should not be relaxed to facilitate the creation and promotion of innovative public-private partnerships (PPP) in extension. 12
  13. 13. Knowledge and skills in emerging and innovative financial service delivery and other em-bedded services in the agricultural value chain upgrading strategies should be encouragedwithin the context of both the public and private extension and service delivery. Advisoryservice providers should not concentrate their efforts in delivering only scientific innova-tion to farmers but should also improve their skills to deliver business support services tofarmers and other actors along the value chain. 13
  14. 14. 6. ReferencesAnderson, J R (2007): Agricultural Advisory Services A background paper for “Innovatingthrough science and technology”, Chapter 7 of the WDR 2008; Agriculture and Rural Devel-opment Department, World Bank, Washington, DCBusiness Schools for Cocoa Farmers in West and Central Africa Sustainable Cocoa BusinessProject (August 2011) GIZ CMA/AOC, GTZ, NEPAD: “Capacity building in Value Chain Development and support”, June2010CMA/AOC: Framework for the Improvement of Rural Infrastructure and Trade-Related Ca-pacities for Market Access (FIMA)CMA/AOC: Minutes of the CMA-GTZ meeting in Dakar on 2 December, 2010Delloite (2011): Transformation-Ready- The strategic application of ICTs in Africa Impactof ICTs in Agriculture; African Development Bank, World Bank in conjunction with the Afri-can Union (Landscape Report) Eiligmann, A & Gerster-Bentaya, M (September, 2011) Assessment of the effectiveness ofFarmer Business Schools and prospects for rolling out (GIZ)Fries, Bob: Working within the Value Chain to Get Financial Services to Micro & Small En-terprises (ACDI/VOCA)International ValueLinks Association Website: www.valuelinks.orgNEPAD: “CAADP Capacity Development Framework”, 1st draft, 30 Sept. 2010Siraj, Mahrukh A model for ICT based services for agriculture extension in Pakistan (CABIRef.: FR/CABI-PK/KR10015/2026)Sulaiman V.R., Hall A., Raina R., 2006. From disseminating technologies to promoting inno-vation: implications for agricultural extension, paper prepared for the SAIC Regional Work-shop on Research-Extension Linkages for Effective Delivery of Agricultural Technologies inSAARC Countries (20-22 November, 2006).USAID / CMA/AOC: Documentation of the CAADP Program Design and ImplementationWorkshops in Nairobi and Dakar, 2010.Zhou, Yuan: Reinventing agricultural extension to smallholders ( Syngenta Foundation forSustainable Agriculture) 14