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Developing Private Sector

Input Supply Systems

Speakers

Patrick Norrell, CNFA

Dinnah Kapiza, Tisaiwale Trading

Douglas T. Nelson, CropLife America

Moderator

Zachary Baquet, USAID Bureau for Food Security

January 30, 2013

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The Final Frontier: Bringing the Green Revolution to Sub-Saharan Africa

Douglas T. Nelson, Ph.D, J.D.

Executive Vice-President and General

Counsel CropLife America

Washington, D.C., U.S.A.

U.S. Agriculture Track Record

4

Number of People Fed Per U.S. Farmer

American Farm Bureau Federation

In 1930, the

average U.S.

farmer fed

10 people.

Today, that

number is

155.

• Corn yields ─ 1930 – 20 bushels/acre ─ 1960 – 55 bushels/acre ─ Today – 162 bushels/acre (est.)

• Wheat yields ─ 1930 – 14 bushels/acre ─ 1960 – 26 bushels/acre ─ Today – 45 bushels/acre

• Per-cow milk production ─ 1930 – 4,500 lbs./cow ─ 1960 – 7,030 lbs./cow ─ Today – 20,450 lbs./cow

5

U.S. Agriculture Track Record

Without Insecticides, U.S. Crop Production Would be Much Lower

6

U.S. Corn Grain Yield

7

Hybrids

introduced

Fertilizers

Introduced

2,4-D

Introduced

Atrazine

Introduced

Alachlor/Metolachlor

Introduced

Post-Emergence Grass

Herbicides Introduced

Roundup Ready

Varieties Introduced

8

• This miracle of modern agriculture that has happened

in the developed world can occur anywhere:

Provided the national government promotes and

protects innovation.

Only if their invention is protected, will innovators

develop new tools to help farmers grow more and

better food.

The Miracle of Modern Agriculture

How do we foster innovation?

• Patent

Incentive for discovery and development

Social contract – government provides exclusive

marketing time in exchange for disclosure of

invention

20 years from date of filing

• But – National jurisdictions also require registration

9

slide 10

1

Registered

Ingredient

Chemistry Field

Trials

Toxicology Environ.

Chemistry

1.3

Ingredients

170 Tests

Chemistry Biology Toxicology

140,000

Ingredients

Research Development

Research to Register 9.8 Years

2005-2008

Source: Phillips McDougall 2010 Report

10

Active Ingredient R&D Process

slide 11 11

Discovery & Development Costs of One New Active Ingredient

Research 72

Develop 67

Research 94

Development 79

Development 146

Research 85

Source: Phillips McDougall 2010 Report

slide 12

For industry, R&D expenditures expected to increase by 2.8% per year

Total $2,328 m.

Total $2,943 m.

Source: Phillips McDougall 2010 Report

International Standards

• Global Harmonization of Laws

CODEX Alimentarius food standards

Persistent Organic Pollutant Treaty

Prior Informed Consent Treaty

Sanitary & Phytosanitary Agreement

WTO TRIPS Agreement

Patent law

13

Counterfeit Products

• Destroyed crops, farmer loss, environmental loss

• Loss of export crops for national economy

• Solutions:

Training – police, regulators, farmers

Holospots on containers (security holograms)

Aid donations contingent on use of legal pesticides

Extension training

Vicarious liability - know your supplier

14

Driven by 8 Core companies

Crop Protection Global Network

Plant Biotechnology Global Network

Global Area of Biotech crops

18

Sub-Saharan Africa

• 43 Countries

• 700 Million People

• 180 Million Farms

• 170 Million Crop Hectares

Typical Smallholder Farm 1 hectare: 2.5 Acres (1 U.S. city block)

Cow

pea

Home

Garden

Sorghum Cassava

Maize Maize

Yams

Gro

un

d-

nu

ts

Cotton

Maize

Crop Yields (Tons/hectare)

Maize

Rice

Sorghum

Groundnuts

Africa

1.6

1.9

.9

.7

Global

4.5

3.8

1.3

1.4

FAO

African Yields (Tons/hectare)

Experimental Plots

Average Farmer

Maize

8

1-2

Rice

4

1

DeVries and Toenniessen, 2001; Tittonel, et al, 2007

Handweeding is the Predominant Weed Control Practice in Sub-Saharan Africa

• 50-70% of the labor in crop production is spent weeding.

Chikoye, et al, 2007

Cotton Experiment: 4 Weeks After Herbicide Spray H

erbic

ide

Tre

ated

U

ntr

eate

d

-254 hours/hectare Hand weeding

+1.5 kg/hectare of Chemical

Lagoke, et al, 1992

Herbicide Experiment: Kenya

Weedy Herbicide Treated

Maize Yields +53%

Bean Yields +94% Kibata, et al, 2002

Cameroon: Herbicide Use Impact in Cotton

• Reduced labor by 12 days/hectare

• Reduced cost of weeding by 50%

• Increased yield by 400 kg/hectare

Mathews & Clayton, 1999

Maize Experiment: Kenya

“Chemical weeding was one-third

of the cost of two hand-weedings”

Maina, et al, 2003

Herbicide Experiments: Kenya & Uganda

“Herbicides can increase the net economic benefits to

farmers cultivating maize by up to 80%. When this

is combined with their ability to alleviate seasonal

and gender-based labor constraints, their potential

contribution to a more successful and economically

sustainable farming system is substantial”

Overfield, et al, 2001

CARE Zambia, 2011

• Maize yield increased from 1.5-2.0 tons per hectare

to as much as 4.5 tons per hectare.

• The increased use of herbicides also triggered the

adoption of fertilizers, use of hybrid seeds and an

increased practice of other restorative practices such

as conservation farming.

CARE Zambia, 2011

Adoption of herbicide technology among female farmers has also brought behavioral change as most of them have vowed never again to weed their crops using hand hoes.

Intro Slide (Patrick Norrell)

www.cnfa.org

Building Commercial Input Distribution & Output Marketing Networks

Farm Service Centers

Machinery Service Center

Agrodealers

CNFA’s Approach

Africa

• Kenya

• Tanzania

• Mali

• Malawi

• Sierra Leone

• Zimbabwe

• Ethiopia

Eastern Europe

• Moldova

• Georgia

• Romania

Central Asia

• Afghanistan

All based on the business of serving smallholders

3 Related Input Supply/Farm Service Models

=

FARM STORE

NETWORK

AGRODEALERS

FARM SERVICE

CENTERS

Rural Economic Infrastructure

Platform to expand value added/

processing capacities and

enterprises

Up/down stream

linkages for

distributors of other

goods and services Services

Credit

Output

Marketing

Distribution Network

Training

Inputs

www.cnfa.org

Complete Farm Service Infrastructure

Key Components:

• Business Training

• Matching Grants (up to $50,000)

Designed to serve the needs of Moldova’s family farms

• Input supply

• Machinery services

• Output marketing

• Access to credit

• Training and information

A network of 85 stores established between 2000-2004. More than 60 still operational in 2012.

• Annual sales in excess of $9 million network wide

• 900,000+ farmers served

• Single largest source for agricultural goods and services in Moldova

Output marketing, cold storage and other services generate > $3.5 MM in sales increasing incomes of 12,000 farmers

Developing a National Private Enterprise-Based Input Distribution System

Moldova Farm Store Model

Village-level retail outlets

• 80 Stores Total: 30 town stores; 50 village stores

• Average of 3,900 clients per store

• New jobs created: 761 (407 women and 354 men)

www.cnfa.org

Moldova Farm Store KPIs

Western-style service Co-op

Designed to serve the farm stores to:

• Bring down input prices

• Expand supplier credit options

• Expand access to small-packaged

chemicals/fertilizer

• Enhance the viability of the farm store network

Currently:

• 100 members and growing

• 2011 annual sales in excess of $17 million

(up from $0.8 million in 2003)

• 800,000 farmers served

• Output marketing/export activities

• Refrigerated warehouse

• Fresh grapes

• Grain storage facilities

• Wheat

• Soy

• Maize

AGROSTOC Input Supply Cooperative Importer/wholesaler: supporting the network

Farm Service Centers - $5,000 to $50,000 grants (plus $100-$150,000

machinery service add-ons for 10), 0.75 to 1 matching requirement.

Creation of a privately-owned retail network providing a complete range of

agricultural goods and services for Georgian farmers.

“One-stop shop” for farmers

– everything a farmer needs,

under one roof.

• Input Supply

• Veterinary supplies and services

• Machinery Services

• Training and information

• Market information and output marketing services

• 33 locations operational

www.cnfa.org

Georgia Farm Service Centers (FSCs)

FSCs

As a result of this combined investment, ADA-funded FSCs generated the

following key impacts:

• More than 350 new rural jobs

• $2.7 million in increased net revenue to assisted firms

• $11.2 million in sales of inputs and services to more than 100,000 clients

through the Farm Service Center (FSC) network

Georgia Farm Service Center KPIs

•Matching grants program to establish 21 Machinery Service Centers (MSCs)

around the country

•MSCs are equipped with 3-5 tractors and range of agricultural implements (or, in

some cases, combine harvesters), to provide fee-based services to smallholder

farmers

•Program leverages an estimated $20 million in corporate support from John

Deere, Case/New Holland, Claas and local lending institutions

•Program projected to benefit at least 15,000 farmers through improved access to

custom machinery services

www.cnfa.org

Georgia Machinery Service Centers (MSCs)

At the end of the Access to Mechanization project:

• 21 Grants worth $2.7MM, leveraging more than $3.1MM in private sector

matching investment

• 82 agricultural machinery vehicles and 235 implements were procured

• 209 new jobs were created within agricultural sector

• 12,819 small and medium scale farmers served

• 31,190 ha of agricultural land served

• $1,783,092 in sales generated

• 119 extension trainings and 35 business trainings delivered, 25 volunteer

assignments fielded

•$6,113,420 increase in annual income of small-scale farmers

•$1 million of agriculture credit facilitated

Georgia Machinery Service Center KPIs

Private-sector expertise connecting farmers to

critical extension services

www.cnfa.org

Afghanistan Farm Service Centers

Objective: increasing rural family incomes by catalyzing the growth

of rural Farm Service Centers

• Establishing 17 Farm Service Centers (FSCs), regional one-stop

shops that provide input supply and output marketing services

and linkages

• FSCs provide services to more than 45,000 households

• FSCs have formed a national association, enabling:

• Bulk Purchasing

• Quality Standards

• Private Labeling

• Output Marketing/Exports

Afghanistan Farm Service Alliance

(AFSA): $10 million

Kunar

Laghman

Kabul

Ghazni

Zabul

Kandahar

Helmand

Nangarhar

Logar

Wardag

Parwan

Kapisa

Takhar

Kunduz

Balkh

Urozgan

Nimroz

www.cnfa.org

FSC Network Coverage: 17 FSCs

Afghanistan FSC Showroom

• Total increase in sales for all 17 shops was $49.3MM over 4 years

• Average total increase in sales across 17 farm stores was nearly $3MM

• Figures suggest that the longer a center was operational, the greater its

average sales increase suggesting continued sales growth in each year of

business

• Centers open for 4 years saw average annual sales increase of

$1.53MM versus $416k for those open 2 years

• 369 additional full-time positions created

• All of this illustrates strong profit and employment potential, even in an

extremely challenging operating environment

www.cnfa.org

Afghanistan KPIs

Population Growth

Limited Land for

Production

Low Agricultural

Productivity

Limited Access to

Agricultural Inputs

Improved Diets

Factors Facing Africa

3.

4.

5.

2.

1.

UN, IFPRI, FAO, FAOSTAT

2010 Africa: 1.2 billion

2050 Population: 2.2 billion

Africa 6% Irrigated land

Asia 37%

Latin America14%

Africa 1.3 t/ha

~Global 5.12 t/ha

Africa fertilizer 9.6kg/ha

~Global fertilizer 77kg/ha

~Africa

182.71kcal/capita/day

~Global

481.29kcal/capita/day

Among Urgent Needs: Increase Ag

Input Use

Improvement of

Ag productivity

and farmer

revenues

www.cnfa.org

CNFA’s Agrodealer Model

1. Mapping and Surveying

2. Training of Commercial Trainers

3. Certification of Agrodealers

4. Matching grants

5. Credit Guarantee

6. Demand Creation Activities

7. Policy

8. Output Marketing

What is the Agrodealer Model?

www.cnfa.org

1. Mapping and Surveying

Help to

understand the

situation before

our work and

guide priorities

2. Training of Commercial Trainers (CTs)

• Individual with Ag diplomas

• Become fee-based service providers

• Project match 50% for CT fees

www.cnfa.org

3. Certification and Training of ADs led by CTs

• Business Management

• Production Practices

• Safe use of inputs

• Output Marketing

4. Matching Grants

Certified Agrodealers get access to grants for:

• Creation of new shop

• Improvement of shop

• Diversification

• Output marketing activities

5. Credit Guarantee

Certified Agrodealers may use credit guarantee:

• Back up to 50% of input supplier credit sale to Agrodealers

6. Demonstration Activities

• Field days

• Demo plots

• Exhibitions

• Radio Programming

• Access to Farmer Mentors

7. Policy

• Creation and/or development of AD associations

• Support to government policy development

• Strengthen dialogue between Agrodealer associations and

governments

www.cnfa.org

www.cnfa.org

8. Output Marketing

AD offer access to market

• Aggregation

• Small scale processing/value addition

• Connection with larger buyers

Farmers Learn from a Maize Field Day in Kenya

A Group of Farmers Being Taught Maize Varieties at a

Field Day in Kenya

Rads Agrovet in Bondo; Inset is the proprietor Anthony

Rading in his green house. He used the equity loan to

construct the green house for crop demonstrations.

Kenya Agrodealers in Action

Cost per beneficiary $0.98

Progress in 5 Countries since 2007

• Launched in October 2012, CFSP is a two-year project which will

establish 6 Farm Service Centers in Ethiopia, served by a member

owned wholesale buying cooperative

• $500,000: Total value of inputs provided by wholesale buying

cooperative

• $600,000: Total sales of 6 Farm Service Centers

• 30,000: Number of customers served by Farm Service Centers

• $354,600: Private sector matching investment

www.cnfa.org

Ethiopia Commercial Farm Service Program

(CFSP)

Last slide

www.cnfa.org

Intro Slide

www.cnfa.org

Mrs. Dinnah Kapiza Managing Director, Tisawale Variety Shop Malawi

Mrs. Dinnah Kapiza

Mrs. Dinnah Kapiza is a CNFA-Certified agrodealer from Malawi. Mrs. Kapiza, a

mother of 10, owns four successful rural input supply shops that form a critical linkage between Malawian smallholder farmers and output markets. Mrs. Kapiza enrolled with CNFA in July 2002 to receive training in business management through the Malawi Agrodealer Support Program. After completing her training, Mrs. Kapiza gained access to the CNFA credit guarantee enabling her to access secure credit and build a relationship with international seed and input suppliers to supply a full range of quality inputs to local farmers at affordable prices. In less than 10 years Mrs. Kapiza built a chain of agrodealer shops that today boasts $190,000 in annual sales and provides roughly 3,000 small-scale farmers with farm tools, seeds, crop protection products and fertilizer. Her agrodealer business, Tisaiwale Trading, provides credit for farmers, critical technical advice and extension services through demonstration plots and field days.

Mrs. Dinnah’s Photo

www.cnfa.org

Photo of store 1

Photo of store 2

www.cnfa.org

Photo of family

More photos

www.cnfa.org

Photo of farmer

Photo of group

www.cnfa.org

Photo of children

www.cnfa.org

CNFA Logo

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