Testing site- specific Commercial systems to deliver 2WT-based mechanization

Progress report :FACASI Review meeting Ethiopia

9th to 13th Feb 2015

Benesta Titus

Milestones Achieved.Output 2.1:Market analysis of small mechanization.

Methodology:

Country level literature review

-Mechanization information and studies from different sources -collected from primary and secondary information (i.e MAFC,internet search and interviews).

Interviews of national and local market actors

-Checklists and semi structured questionnaires : for interview with

different actors.

-One to one, key informant interviews and FGDs conducted

-Actors involved: importers, LMs, government departments/Institutions, farmers and service providers.

Round table discussions with different key group actors.

-Actors from farmer’s groups, individual farmers and dealers.

Sector profile and organization.

Increased in number of 2WTs from 100 units in 2005 to3325 units in 2010.

Importation by private sector and some distributed bygovernment programs (AGITF), District Agriculture(DADPs) and (DASIP).

There are more than 50 FM dealers or importers of FMs

Total 2WTs in the country is almost more than 6000(MAFC)

Market actors: Importers/dealers, distributors/branches,business partners, agents, local manufacturers, serviceproviders, local mechanics, financial institutions andfarmers

Constraints and weaknesses of market systems.

Lack of quality and standards: Poor farm machineryflooded the market-No so much restriction on poorquality power tillers

Poor marketing of suitable machinery packages tofarmers

High cost of agricultural machinery though no importcharges on agricultural machinery.

Limited access to agricultural finance

Lack of well-trained operators and mechanics for farmmachinery.

Limited management and entrepreneurial skills amongfarmers and other supply chain actors.

Competition.

Opportunities in the market systems.

Population growth: 0ver 40ml people, 80% depend onagriculture.

Abundant natural resource (Land) which are suitable formechanization

Government support through - TIB, AGITF and Agric.Bank.

Growth and engagement youth in agribusinesses andmedium to large-scale farms; Potential to find newservice providers in the districts.

High demand of farm machineries due to farmersmovement from Oxen to small tractors( e.g. Arumeru,Mbulu and Babati).

..Opportunities in the market systems

Involvement of commercial banks and financialorganization in the provision of FM loans (PASS Trust,Equity bank, NMB, Equity-non bank org.)

Favorable policies that promote mechanization in thecountry.

Availability of farm machinery local manufacturers:Increased number of local farm machinerymanufacturers in Arusha and Manyara regions-7identified (5 in Manyara and 4 Arusha regions)

Opportunity for local manufacturer to manufacture 2WTswith wheel drive or steering.

..Opportunities in the market systems

Commitment of FM dealers: Kishen and farm equip inengaging in 2WTs business model.

Partnership with PASS Trust and-financial services - incollaboration with 7 banks(CRDB,TIB,NMB,FBME,BOAand ABC Banks).

Output 2.2; Business Model Design.

Methodology:

Identification of key drivers.

Identification of existing business models

Business model mapping

Analysis of the performance of models

Identification of critical success factors

Preparation of an upgrading plan.

Key drivers identified:

Local dealers: Kishen enterprises, Zana Bora, Farm equip,Rihana Co, General Motor Investment.

Branches: Kishen enterprises and farm equip-Arusha

Business partners: Bhavya trading company Ltd-Arusha,Rihana company and Tanganyika farmers association.

Agents: Toyo companies: In various districts in Arusha

Local Manufacturers: NANDRA Engineering, Elmi farmequipment(Katesh), Bonge enterprises(Babati), PamojaNguvu(Arusha) and Kavishe enterprises(Babati).

Identification and selection of business models:

Dealer-led vertically integrated business models: 2business models-Kishen enterprise model, and Farmequip model.

Manufacturer-led vertically integrated models: Elmi farmequipment model.

Service provider models:

-Individual owner models : 4 business models: Setimodel(Shelling and LP), Petro model(Shelling andtransportation), Pissa model(Shelling and transportation)and William model(transportation and LP).

-Group owner/operator models:2 models: Parachichi andAmani groups.

Criteria for selection of business models:

Interest of the private sector and readiness to invest andshare risks.

Location of the business model in the project area

Potential impact on number of smallholder farmers

Travel times that allows regular support

Opportunity to upgrade the business model withavailable project resources

Potential demand for small mechanization.

BM design: Mapping

Model Stakeholders Functions/ Services

Interventions for upgrading

Service provider Government/ donor/ project

BM1Parachichi (Meru)

- Arumeru dealers- Farm machinery and spare parts agents,- Local mechanics- VCBs

- Custom hire services to group members and other farmers (land preparation and transportation)

- Group organized by the district farm machinery programme- Supplied 2WT farm machinery = trailer + plough

- Link to dealers (Kishen)- Link to local mechanics- Link to spare part stockists- Access to loans and working capital- Develop market linkages- Business management training- Upgrade link with extension

BM2Amani (Mbulu) - Dealer (district

council)- Machinery operators - Local mechanics,- Village community banks

Not operating at present but planning to provide hiring services

Organized by the district farm machinery programmeExtension service support in mechanizationMbulu district council supplied the 2WT trailer , disc plough, rotovator

- Linkage to dealer agents for spare parts (Kishen)- Access to loans and working capital- Business management training and support- Operational training and support- Link to market buyers- Develop linkage with extension service

BM3Seti (Meru)

- Dealer (Rihana)- Manufacturer (Pamoja Nguvu) - Mechanics- Farm machinery and spare parts agents in Meru,- Village community banks

- Maize shelling service and transportation- Supported by workshops and local mechanics

- Strengthen links with dealers and local manufacturers- Facilitate establishment of local spare parts agents- Identify and upgrade the capacity of local mechanics- After sales services- Access to finance- Business management support- Develop links to markets

BM design: Mapping

Model Stakeholders Functions/ Services

Interventions for upgrading

Service provider Government/ donor/

projectBM4WilliamSP (Meru)

- Farm equip,(Autosokoni)-Local mechanics,- Village communitybanks-Extension services

Service provider model– transportation andsome cultivation of rice(located in Meru out ofthe project area)- Supported by villagebanks and localmechanics for R&M

Some limitedextensionsupport

- Link to dealer(Autosokoni/ Kishen) for spare parts- Access to finance- After sales services through localtechnicians- Training in 2WT operations- Broaden range of services offered- Develop linkages with financial institutions

BM5Petro postharvest(Mbulu)

- LM of maizesheller (PamoiaNguvu)- FM and sparessupplier (Kishen)- Local mechanics(Mbulu)- Financial andbusiness servicesproviders-VCBs

- Maize shelling serviceand transportation- Financial supportthrough NMB- Links to localworkshops andmechanics

Some limitedextensionsupport

- Links to dealers and local manufacturers- Access to finance (Equity/ Pass)- Establish cadre of local mechanics- After sales services- Business management and technical training- Links to market buyers- Links to extension mechanization services

BM6PissaPost-harvest(Mbulu)

- Manufacturer(Bonge, Camartec),- Suppler (SARI),– Local mechanics

- Multi-crop maizesheller service andsome transportation- Support by localmechanics and R&Mservices

SARI provideda 2WT and hasset up aleasingarrangement

- Links to dealers and local manufacturers- After sales services- Access to finance (Equity/ Pass)- Farm machinery and spare parts agents- Upgrade cadre of local mechanics- Business management and technical training- Link to finance- Link to market outlets

BM design: mapping

Model Stakeholders Functions/ Services

Interventions for upgrading

Dealer/ Manufacturer

Government/ donor/

projectBM7ElmiManufac.(Katesh Manyara)

- Steel Centre Arusha (dealer)- Operators/ service providers - Financial service providers (NMB)- Extension services

- Local manufacturer of implements (planters, ploughs, threshers, shellers)- Provides after sales services

Extension support in farm machinery maintenance- Extension support in farm organization

- Access to finance NMB, CRDB, PASS and Equity)- Link to local mechanics- Training on how to manufacturer different farm machineries- Business development service support- Market linkage support

BM8KishenDealer (Arusha)

- Arusha-dealer branch, -Toyo company - Local mechanics, Financial providers(NMB, CRDB, Equity, PASS),

- Supply of 2WT farm machineries and spare parts- Promotion of machinery to farmers- Facilitates access to finance

Support in organizing farmers into groups

- Access to finance NMB, CRDB, PASS and Equity)- Linkages to output markets- Linkages to SPs- Access to spare parts by strengthening Arusha branch- Branding (Toyo)- After sale services and guarantees to customers

BM9Farm equip Ltd.(Arusha)

- Local farm machinery and spare parts agents (Meru, Babati, Karatu, Mbulu),- Financial service providers (EQUITY-Moshi, Equity bank, PASS)

- Sales of agricultural machinery including 2WTs- Stocks and dsitributes spare parts and tools and equipment- Provides after sales services- Local level agent support

- Extension support in farm machinery maintenance- Extension support in farm organization

- Establish field agents in Mbulu and surrounding areas- Provide after sales services and R&M support- Link to local mechanics, operators/service providers - Training and extension support in farm machinery - Financial assistance in developing a leasing product- Business services support

Business model analysisPerformance assessment:

Farmer led SP models

Private sector led SP models Dealer/ manufacturer led supply chain models

BM1Parachichi

BM2Amani

BM3Seti

BM4William SP

BM5Petro post harvest

BM6PissaPost-harvest

BM7ElmiManufac.

BM8KishenDealer

BM9Farm equip Ltd.

Infrastructure

++ +++ +++ ++ ++++ + +++++ +++++ +++++

Offering(Product/service)

++ +++ ++++ +++ ++++ ++ ++++ +++++ +++++

Customer

++ ++ ++++ +++ ++++ ++ +++ ++++ ++++

Monetization

++ ++ ++++ +++ ++++ ++ ++++ +++++ +++++

Sustainability

+++ +++ ++++ +++ ++++ ++ ++++ +++++ +++++

Critical success factors

Reliable market for farmers crops

Availability of financial services .

Training on how to operate 2WTs

Business development services:

Cost/price of tractors and equipments

Quality of machine and implements

Availability of spare parts

Customer satisfactions

Farm machinery extension services to farmers.

Availability of farm technologies(planters, shellers and threshers).

Innovation to farm technologies e.g. 2WTs.

Deliverance and timeliness

These critical success factors used to upgrade the models

New models.

Kilimo market –Market hub model, located at Babati rural- Endachani village: link farmers to the market

Maweni Young Vegetable Growers Association Model-Market hub model, located at Maweni village Arumeru.

Bonge enterprises model (Local farm machinery manufacturer.),located at Galapo Babati

Sylvester model: Fitarelli (single row) and Disc plough model; located at Bashay Mbulu.

Pissa model (Double rows and VMP model):this is part of upgrading strategy of the model-to diversify the model he brings in a double row and VMP planters.

How to operationalize and implement these models:

Link service providers to dealers(Kishen & Farm equip):have agreed to supply and connect SPs to FSPs.

The project advised to support local manufacturers(Elmi, Bonge in Babati) to manufacture equipments and lease them to SPs: to supplement the existing models

Work closely with PASS and Equity banks for financial support to SPs.

The project to contribute much in strengthening the existing models through various interventions.

..How to operationalize and implement these models:

For the new models:

Options to provide loans for 2WTs and trailers

-Project to buy 2WTs and give farmer through leasebasis or payback approach.

To connect new models to financial services

Dealers to give out to service providers as lease basis:(Farm equip is working on this approach)

Other achievements

Training on CA equipments and business skills for hireservices

Identification of 7 local farm machinery manufacturersand 23 Service providers in Arusha and Manyara regions(Identification still on-going).

Connecting 7 local farm machinery manufacturers and23 service providers to PASS for financial issuesdiscussion.

Collaboration with PASS Trust, Equity bank and EquityTanzania to provide financial services/ support.

Readiness of farm machinery dealers to collaborate.

Thanks for Listening