INVC- Bridging Activity Advancing Value Chains of Groundnuts and Soy beans Presented at the Annual Review workshop, Lilongwe Hotel, Lilongwe June 2017

Presentation outline Introduction Progress of Achievements Progress of G/nuts and Soya value chains Costs and returns structures of G/nuts & Soy beans value chain Sensitivity Analysis of Soy beans Progress of seed loan management Progress of aggregation and marketing Value created by the 2 chains Lessons Challenges

Introduction The strategic objective was to improve the competitiveness of soya and groundnuts through; increasing access to business development, financial, and extension services; transforming the relationships between value chain actors; and developing market linkages. Working in 5 districts (Mchinji, Lilongwe, Dedza, Ntcheu, and Mangochi) covering 15 EPAs, targeted 15,051 farmers

Progress of Achievement G/nuts and Soy beans Value Chains End Product Seed and Inoculant provision Trading Production Trans- formation Categories of operators - in different channels Seed Producers Funwe – 119MT Makwacha Museco- 21MT Tikolore AISL-40MT CG7 Global Seeds- 30MT CG7 Farmers Farmer groups Association Cooperatives 4,582MT of soya 1,380MT of G/nuts Traders Informal traders Formal traders Goods for Good Bonga traders (ACE Platform) MK110-200/kg Soya MK270-330/kg G/nuts Companies Market Segment

Costs and Returns structure of G/nuts and Soy beans Value Chains Item Soy beans-Makwacha G/nuts- CG7 Yield 1,468kg/ha 963.62kg/ha Price MK160/kg MK300/kg Total variable costs MK212,121.00/ha MK229,360.00 Gross Income MK234,880.00/ha MK289,086.00 Gross margin MK22,759 MK59,726.00 Break-even Price MK144.50 MK238.02/Kg

Sensitivity Analysis for Soy beans (‘What if’) Scenario Yield (Kg/ha) Variable cost (MK) Price (MK/Kg) Gross Income (MK) GM (MK/ha) BEP (MK/Kg) ‘What If?’ 1,000 212,121 160 160,000 (52,121) 212.12 2,000 320,000 107,879 106.06

Seed Loan management 140MT of Soy and 70MT of CG7 was loaned to farmers The rate of repayment varied from one partner to the other but the majority of partners used 1:2 system Repayment rate for FGs ranges from 40% to 100% The initial plan for the seed loan was to sell the repaid grain and use the proceeds to buy new certified seed????? However, there is a challenge that the loan amount will be tremendously reduced…………..

Seed Loan management For example, if we assume 1:2 repayment with 80% repayment rate In view of this, plans are underway to establish a sustainable seed management system-borrowing from Chithumba model- where repayment is as high as 1:4 Value chain Quantity distributed Value (MK) Expected repayment 80% repayment Market Prices Amount (MK) % of the value Soya 140MT 116,825,299 280MT 224MT 160 35,840,000 31% G/nuts 70MT 119,568,900 112MT 300 33,600,000 28%

Aggregation and Marketing Trained 27 (8F, 19M)frontline staff (DAES, We- Effect, Dedza CADECOM) on formulation of aggregation & marketing plans Trained 274 (129F, 145M) farmers on formulation of aggregation & marketing plans Over 350MT of soya was aggregated The market prices are volatile……….fluctuating almost everyday

Aggregation & Marketing Prices of soya beans that were offered by the informal traders ranged from MK110/kg to MK170/kg Linkage of farmer groups - Nyanja and Chitowo Associations to buyers (24.5MT @ MK200/kg for Nyanja and 15.4 MT for Chitowo @MK160/kg)

Value created by the 2 Value chains Commodity Area (Ha) Yield (Kg/ha) Production (Kg) Average Price (MK/Kg) Amount (MK) Soya 3,121.00 1,468.00 4,581,628 160.00 733,060,480 G/nuts 1,432.00 963.62 1,379,904 300.00 413,971,152 1,147,031,632

Lessons Despite the message of aggregation and marketing, farmers still prefers CoD mode of trade Group marketing is being affected by past experiences and lack of trust… Access to structured market is depended on the volume of production

Challenges Low prices Low production- not able to participate in competitive and structured market effectively Poor quality seed of groundnuts reduced the profitability Weak farmer groups- not able to participate in the marketing of commodities effectively Aggregation was affected by past experiences and lack of trust.

Thanks for your attention!...