FACILITATING PRIVATE SECTOR AGRICULTURAL EXTENSION Presented by: Frank Lusby, Action for Enterprise 1

Public sectorPrivate sector Donor Facilitator (project, NGO) Agribusiness Lead Firm 2 Facilitation of Private Sector Extension Farmer Legend: : market-based solutions : facilitation activities

EXAMPLES 3  THE FOLLOWING ARE EXAMPLES OF DEVELOPMENT PROJECTS THAT SUPPORTED (AND FACILITATED) THE INITIATIVES OF PRIVATE SECTOR AGRIBUSINESS COMPANIES TO EXPAND AND IMPROVE THEIR EXTENSION TO FARMERS THEY TRANSACT WITH

AVIAN 4

5  Avian is a poultry input distribution company, supplying day old chicks, medicines and stock feed to poultry farmers. They have eight outlets and ten agents. 80% of their customers are small scale farmers.  The objective of their initiative is to improve the livestock management capacity of the “back yard” farmers they sell to (or might sell to) in order to increase their productivity and their capacity to buy poultry inputs.  AFE Zambia has provided technical and cost share support to AVIAN for: 1) conducting a training of trainers for their staff; 2) training of 645 farmers; 3) development and printing of 1000 producer manuals on poultry management; 4) creation of three poultry demonstration houses; 5) conducting three farmer field days; 6) development of a business plan

LUMUNO 6 FARMER FIELD DAY

LUMUNO 7  Lumuno is a producer of organic herbs, spices, chili sauces and honey for the local market in Zambia  The objective of their initiative is to: 1) expand their network of outgrowers and improve the capacity of these outgrowers to grow high quality organic chilies, herbs, and spices, and; 2) diversify their product range and increase sales, which will in turn lead to increased purchases from farmers.  AFE Zambia has provided technical and cost share support to Lumuno for: 1) development of policies and procedures for outgrowing operations; 2) development of a business plan; 3) training of 175 farmers; 4) development of 200 chili producers manuals; 5) development of demonstration plots for herbs and spices; 7) conducting farmer field day; 8) exposure visit to Malawi to learn from more experienced company.

PARMALAT 8 Company organized exchange visits for farmers

PARMALAT 9  Parmalat is the largest dairy processing company in Zambia, selling both locally and regionally.  The objective of their initiative is to: 1) increase farmer productivity (and income) through training in hygiene and stock feed improvements and; 2) build the capacity of their extension agents’ training skills  AFE Zambia has provided technical and cost share support to Parmalat for: 1) conducting a TOR for their staff; 2) training of 500 farmers in dairy production; 3) development/ upgrading of producer manuals; 4) exchange visits by farmer groups to learn improved dairy farming techniques

DUNAVANT 10 COMPANY DEMONSTRATION PLOTS

DUNAVANT 11  Dunavant Zambia Limited is a leading cotton out-grower and ginning company in Zambia procuring from approximately 140,000 farmers.  The objective of the Dunavant initiative is to introduce soya beans as a rotation crop to cotton growers (which they will purchase and market and which will increase the productivity of farmers over time).  AFE Zambia has provided technical and cost share support to Dunavant for: 1) development of a TOT curriculum for soya production; 2) conducting a TOT for 17 staff members and 20 lead-farmers; 3) organization of 70 trainings for over 3500 farmers in soya production; 4) organization of 150 field days for over 7500 farmers

MINELANDS 12 TRAINING OF FARMER AGENTS

MINELANDS 13  Minelands sells seed, agricultural equipment, and herbicides to small and medium scale farmers in Zambia  The objective of Minelands’ initiative is to train selected producers and stockists to become: 1) distribution and technical support agents for the company’s products and; 2) “spray service providers” to their fellow farmers in the rural localities.  AFE Zambia has provided technical and cost share support to Minelands for: 1) preparing and delivering training to 96 farmer/agents in improved production practices through the safe handling and appropriate use of agrochemicals and skills for marketing products and services to other farmers; 2) the preparation of five demonstration plots and five field days for farmers.

Private Seed Companies in Bangladesh 14

Private Seed Companies in Bangladesh 15  AFE is working with two of the largest seed producers and distributors in Bangladesh.  The objective of these companies’ initiatives is to develop and market “mini-packets” of high quality hybrid vegetable seeds to small and marginal farmers.  AFE Bangladesh has provided technical and cost share support to the seed companies to: 1) develop business plans to target small and marginal farmers with quality seeds at prices ranging from 10 to 20 US cents per packet; 2) design attractive packaging; 3) expand rural distribution channels; 4) demonstrate the appropriate use of quality seed to retailers and farmers.  Over 400,000 mini-packets were sold in the first three months to an estimated 70,000 farmers. The companies continue to conduct extensive farmer field days and retailer trainings.

NAICOL (Bangldesh) 16

NAICOL 17  Naicol is one of the leading providers of cold storage in Bangladesh and is now becoming one of the largest producers of processing potatoes  The objective of NAICOL’s initiative is to develop an outgrowing operation for processed potatoes.  AFE Bangladesh provided technical and cost share support to Naicol to: 1) conduct exposure visit to Frito-lay India potato outgrowing operation; 2) conduct strategic planning for their outgrowing operations; 2) conduct TOT for staff and farmer coaches; 3) conduct training and farmer field days for over 500 farmers (that were contracted for production and that received high quality seed and credit).

Tools for Working with Lead Firms 18 Initial LF Identification VC analysis Newspaper ad, etc. Expression of Interest from LFs Structure d Interview Write-up of Structured Interview with LFs Initial Due Diligence Invitation for Application Applications from LFs Due Diligence and Planning Site visits Inquiries Agreements to Support LF Initiatives MOU and Addendums Strategic planning sessions Capacity building activities Monitoring

Soliciting LF Input through an Application Process 19 “Invitation for Applications” (IFA) assist LFs to identify and propose interventions that could be supported by Development Organization (DO) DO invites LFs to propose THEIR initiatives to build competitiveness and upgrade MSMEs (a better process than having the DO come up with the initiatives) Invitation for Application provides LFs with criteria and parameters of DO collaboration stipulates that DO willing to cost share LF capacity building but not fixed assets or personnel negotiations and discussions done by carefully going through proposals with LFs to discuss and negotiate strategy, timing, technical support and cost shares not a competitive process but an opportunity for LFs to submit ideas, analysis and solicit LF input for DO facilitation activities

Cost Share Rules 20 DO cost share funds cannot be used for:  working capital (e.g. daily operations for purchasing, rent, salaries, etc.)  direct payment to producers  fixed assets (computers, looms, equipment, etc) Cost share agreements ranging from $5,000-$7,500 will be negotiated with selected LFs based on selection process Funds must contribute to significant investment by LF themselves  DO staff also support successful LF applicants in implementation of activities

Rationale for Cost Share 21 Collaboration between DOs & LFs includes cost share component  DO helps offset some costs and reduces LF risks in making new investments (that benefit MSMEs)  cost shares provide LF incentives to move forward with initiative that LF might otherwise not be willing/able to do Justifiable Cost Shares:  LF capacity building activities  initial training and demonstration activities conducted by LF for MSMEs  linking LFs to new markets, buyers, equipment/input suppliers, etc.  market research and feasibility studies  technical assistance for R&D and new product development

Problematic Cost Shares 22 Non-Justifiable Cost Shares:  recurring operational or working capital costs of LF  physical assets  LF personnel Problems with these types of Cost Shares:  promotes dependency and creates problems when cost share ends  can attract ‘wrong’ type of LFs (e.g. only interested in acquiring cost- shared assets)  reduces LF commitment  creates unfair playing field for other firms DO is not working with  risk of asset being diverted for other uses or sold

Thank-you 23 Frank Lusby Action for Enterprise