Alfred SchmidleyScientist, Business Model and Value Chain Specialist

International Rice Research Institute (IRRI)

APEC CONFERENCEStrengthening Public-Private Partnership to Reduce Food

Losses in the Supply Chain

“Advancing Post-Harvest Technologies and Management to Reduce Losses in

Rice Value Chains”

Westin Hotel, Chinese Taipei6 August 2013

Agenda

1. Overview: Reducing PH losses

2. Advancing PH technologies – an integrated approach– Improved technologies– Business models– Multi-channel extension and delivery– Multi-stakeholder platforms

3. Historical lessons and recommendations

International Rice Research InstituteLos Baños, Philippines

Mission

Reduce poverty and hunger,

Improve the health of rice farmers and consumers,

Ensure environmental sustainability

Through research (& delivery) partnerships

Established in 1960 by the Ford and Rockefeller Foundations

Yield breakthroughs in rice production

1960s • Yields approx.

1.5 t/ha• Famines predicted,

slow growth

Today• Yields approx. 4 t/ha• Foundation for

economic growth

Traditional rice: more biomass than grain, high duration

Modern HYVs: more grain, less biomass, shorter durations

低脚乌尖“semi-dwarf”

Manual threshing1-5%

Sun drying3-5%

Cutting, handling1-5%

Open storage5-10%

Village milling20-30%

Small retailers

Machine threshing1-5%

Combine harvesting1-5%

Mechanical drying1-2%

Sealed storage1-2%

Commercial milling5-30%

Large retailers

Crop Consumption

Physical losses 15-25% in traditional postharvest chain in SE Asia

Physical losses in mechanized postharvest chain

Quality losses resulting in 10-30% loss in value

Average Postharvest Losses

Benefits of Reducing PH losses

• Increased resource efficiency

• Decreased pressures on land and the environment

• Increased food security for the poor – more rice in rice bowls.

• Increased affordability of rice and price stability.

• Increased income for farmers

• Increased livelihood opportunities

Advancing PH technologies and best practices

1. Improved technologies and options

2. Business models

3. Multi-channel extension & delivery

4. Multi-stakeholder platforms / Learning Alliances

1. Improved PH technologies

Common reasons Why technology fails to be adopted...

1. Top-down approach to dissemination rather than “bottom up” market building (e.g., public sector programs that give away free equipment)

2. Lack of “buy-in” from end-users, insufficient knowledge about technology use and benefits.

3. Technology not adapted to suit local needs (i.e., “one size fits all ”)

4. Focus on component technologies alone (w/o recognition of other needs or a clearly defined “business case” for adoption.)

5. Attempts to outscale technologies w/o regard for building sustainable local supply chains.

…equipment graveyards are monuments to lessons unheeded

Technology Adaptation NeedsLocally produced Centrally produced

Characteristics• Complex parts (laser)• Local content (bucket)

Major Support Needs• Demonstrate agronomic

benefits• Establish supply chain• Industrial extension• Business models for

usage and delivery

Characteristics• Mass produced• Very simple or very

complex (SB, combine)

Major Support Needs• Establish supply chain• Support services

(training, after sales)• Regulations• Economic analysis

Characteristics• Simple technology• Complex processes

Major Support Needs• Technology transfer• Industrial extension• Machinery testing• Demonstrate benefits• Capacity building (users,

manufacturers)• Business models for

usage There is no “one size fits all”

Flat bed dryer Laser land leveling Hermetic Super bag

M.Gummert, 2012

Feeding the Technology Pipeline

A.Salvatiera, 2012

2. Business models

Postharvest “system”

Rice markets

Farmers Service providers Millers

MillingStorageDryingThreshingHarvesting

Distributor

Retail Dealers

Service / Repair

ComponentSuppliers

Fabricator

Traders

Production

Business models

1. Improved technology options2. Business models3. Value chains (postproduction

and technology supply)4. Other cross sector value

creators

Other “value creators”

• Research• Extension• NGOs & community

organizations• Banks/MFIs/finance • Policy-makers

Business Model Workshops:What is a business model? What for? How one can be used? Why?

A Tale of Two Dryers…

Left: Defunct dryer Right: Functioning dryer

Both dryers were installed about the same time supported by public sector donor monies. The left one now defunct was grouped-owned by a local farmers cooperative and remains unoperable andunused. The right one was taken over by a single farmer-entrepreneur who now owns and operates a thriving contract services business (based on a Learning Alliance supported Business Plan)As an unexpected outcome, two farmers trained to install and operate the now dyfunct dryer earn money by helping millers and others install theirs!

(Source: A. Schmidley IRRI PH Project, 2011)

Multiple uses of a business plan 1. Analyze my farm enterprise

2. Evaluate a new activity (technology or practice)

3. Communicate one’s business to stakeholders

4. Attract resources and addt’l capital if needed

5. Guide implementation, manage risk

BUSINESS PLAN for

PADDY DRYING SERVICES

Mr. Koul SavoeunEntrepreneur & Cooperative Head

Mobile: 092 571 231

Balat Meaychey Agriculture Development CooperativeBalat Village, Norea Commune, Sangke District

Battambang Province 

Jan 2012

Key learnings:

1. MFIs: Need to offer flexible loan products and services to expand in this key target segment.

2. Farmers: Important of cash flow in a seasonally fluctuating business.

3. Research & extension: integrate actor resources & technical support minimizes risk & benefits of all parties.

Cambodia Highlights – Business ForumsIdentified areas for collaboration:

1. Assist existing MFI clients with technical and other support to optimize efficiency and profitability of PH enterprise (& minimize risk).

2. Train MFI staff about PH technologies & opportunities with business plans from actors.

3. Learning activities to increase financial and market literacy so rural actors can manage loans and new enterprises.

A Business Model approach....1. Treats farmers as private sector actors trying to maximize profits from

farm enterprise activities.

2. Looks at the end-user’s enterprise model to make a “business case” for adoption (not just “disseminating” technology).

3. Translates technical benefits into a quantifiable “value proposition” for end-user purchase of technology. (No free or unsustainable giveaways beyond demo or piloting.)

4. Addresses both “production” and “technology supply” value chains. (e.g., linking retailers to participatory trials and farmer demand for technologies.)

5. Leverages shared learning and integration of actors. (e.g. Learning Alliance helps facilitate learning and outscaling activities with the private sector – though this is a work in progress!)

3. Multi-channel extension and delivery

Multi-channel extension and outreach: Hermetic Storage

5 t Cocoon

0

6

12

18

0 20 40 60 80Storage time, days

O2

conc

entr

atio

n, % Claypot

PVC drum lrgPVC drum sml

Principles• Container with low oxygen permeability• Biological activity inside reduces oxygen

quickly• Insects die at low oxygen level• Container prevents moisture absorption

Participatory trials and data collection: Farmers and local extension/outreach partners

“As we can see (right), Super bags purchased for P100, times 6 bags is P600 for the first season. During my trial, I stored seed for 3 months, and my germination rate improved from 82% to 94% for Super bag stored seed. As a result I saved P1,224 in seed next planting. This is my profit and much more than cost of the Super bags which I can re-use w/o buying again next season, increasing my profit even more.”

Marilyn Aranas, female farmerButuan, March 2012

Philippines highlight

4. Multi-stakeholder Platforms and & Learning Alliances

National Learning Alliances – a work in progress)

Multi stakeholder platform including key public and private stakeholders

Source: R. Flor, T. Mendoza, IRRI, 2011

Plan Act Reflect and capture

• Flexible partnership allows new partners to get on board• Leverages co-funding• Captures learning and makes it available to others• LA is cross-cutting (technologies, business models, extension/delivery, private

sector)

Outscaling & cross-country learning:Combine harvesting

• Response to labor shortage and high harvesting cost• Physical losses reduced from 4-10% to 1-2%• Timeliness -> Better quality

Vietnam: approx 8,000+ combines in the Mekong 2004-2012

Cambodia PH Learning Alliance2009-2012

Improved Postproduction Management = Reduced Losses, Reduced Risk and Reduced Cost

• Extreme labor shortage• Increased production• Delay in harvesting

– Losses– Burned rice fields (2009)

• Labor cost of manual harvesting: US$ 160

• No combine harvesting

Cambodia 2007

Prey Veng Province, 2012

• Combine harvesting cost: US$ 100-120

• (Manual harvesting cost: US$ 180-220)

• Losses reduced to 1-2%• Improved quality• Employment generation: Contractors,

service providers, workshops• 2000 plus combine harvesters, all types

Cambodia 2012

M.Gummert, 2012

Flat Bed Dryers: Key issues• Local production (assist local workshops with

technical support)• Adaptations (up scaling)• Performance testing• Financing (users)• Operator training• Multi-extension pathways needed

Public sector can play a key role here!

M.Gummert, 2012

Will Project cycles limit sustainable development & delivery?Example: Processes for flat bed dryer development, Cambodia

Dryer manuf. training in Vietnam, technology transfer

Project installs 4t demo unit at farmers group

Business model development for farmers group

Training for users

Blower testing training

Local manufacturer starts production

Local manufacturer develops next generation dryer (recirculating dryer)

Other manufacturers copy, millers install dryers

Manufacturers increase capacity to 8-20t, problems with blower

2007 2012

New rice husk furnace

2008 2009 2010 2011

Linking with financing institutions

0

Testing of recirculating dryer

Project

Local manufacturers

Dryer users

Farmers groups Commercial use Commercial and contract

Promotion

1 3 ~20 ~200

M.Gummert, 2012

2013End-users experiencingtechnical problems outscaling. Support?

Summary & Recommendations

1. Component technologies are needed but insufficient for sustainable adoption. (A better functioning “systems approach” is needed.)

2. Each sector should stick to their respective mandates. Public sector giveaways don’t work. PPP’s should NOT be about govt going into business.

3. Group ownership of equipment by farmers hasn’t worked. These tend to go hand-in-hand with public programs for free or heavily subsidized equipment. This distorts agro-machinery markets, retards sector development, and limits choices and options available to actors.

4. Technology adaptation is important to suit local needs (i.e., “one size doesn’t fit all”). Technical support for local manufacturers is essential.

Summary & Recommendations (cont’d) 5. Local product champions are often linked to successful technology

advancement (e.g., farmer leader, researcher, NGO) who stay involved or “stick with” the longer process.)

6. Building sustainable supply chains are necessary for sustainable outscaling and delivery. “Push-and-pull” approaches work best.

7. Multi-stakeholder platforms can facilitate learning, sharing lessons, and integration of actors around a range of needs. (technical adaptation, piloting business models, building supply chains, private sector engagement, and cross-country learning.

8. Time needed for advancing technologies and sustainable adoption is around 10 years if history is any indication. Short-term (3-5 year) project cycles generally result in local actors/stakeholders “falling away” mid-stream or before commercially sustainable thresholds are crossed.

谢谢