By Dereje Legesse (LIVES Agribusiness Expert)
Working with national and regional partners, the Livestock and Irrigation Value chains for the Ethiopian Smallholders (LIVES) project has designed sustainable value chain interventions to promote agriculture as a business for both livestock and irrigated crop commodities.
This article shares lessons from the implementation of these interventions. The goal of these activities is to promote market-oriented agriculture through increasing access to input/service supply and market opportunities for all value chain actors by accelerating efficiency and competitiveness in the business sector.
Each of the interventions targeted both new and existing agribusinesses engaged in input supply, service delivery and marketing or processing of commodities. Each of these businesses had different ownership structures—public, private, group, and cooperative/union.
Appropriate interventions were designed and promoted in the 31 districts in 10 zones and 4 regions—Amhara, Oromia, Southern Nations, Nationalities and Peoples (SNNPR) and Tigray—where the project is developing commodity value chain systems for dairy, beef, small ruminant, poultry, apiculture, fodder, fruit, and vegetable commodities.
Technical and business development support was offered to value chain actors under the initiative including in basic business, organization, and leadership skills; enhancing business to business and farmer to business links to market and financial services, cost/benefit analysis, advice on alternative financing (financial leasing) and cost saving transactions (mobile banking).
As of 31 March 2017, 2,356 agribusinesses had received support from LIVES. Out of these, 1,753 are engaged in input/service supply and 603 in marketing/processing businesses.
The project has facilitated new ideas through commodity platform meetings, new technology demonstrations and other means that have led to the establishment of new businesses. Out of the total number of agribusinesses supported by the project, 589 (25%) have established new businesses, out of which 454 are engaged in input/service supply and 135 in marketing or processing.
These businesses have increased access and use of input supplies and services for smallholder farmers and enhanced value addition and market opportunities for value chain actors.
In the mid-term community survey conducted by LIVES in 2016 (covering the time 2012 to 2015) about 49% and 24% of smallholders who have access to and use, the public extension service (for information and knowledge, capacity building/training and linkages support) are satisfied and very satisfied, respectively.
Key lessons and challenges
Despite the achievements of the project in using agribusiness approaches and methods to promote the integration of farmers with markets; challenges have been encountered and lessons learnt in the implementation process.
The most common challenges are lack information by smallholders about the availability of improved input/service supply and processing/ marketing businesses, limited financial access to promote agriculture as a business, and little interest from the private sector in doing business in the agriculture sector. A lack of empirical cost/benefit data to enable business plan has affected the cash flow of community-owned businesses. Information asymmetry, moral hazards and free riding have also been observed.
The importance of addressing market-related challenges is reflected in a number of platform meetings and coaching/mentoring sessions held during the project period. Value chain actors also face commodity- and location-specific market challenges in handling increased production from the adoption of improved farming methods, better post-harvest handling techniques and scaling out.
The cheapest way to enhance realized results in response to these challenges is promoting market-oriented extension services; engaging financial service providers to offer alternative financing (leasing) and delivery channels (mobile banking); encouraging the establishment of private businesses (including family and community-owned); integrating project activities with existing women and youth empowerment activities; and ensuring reliable of local repair and maintenance services for selected technologies.
The project is working with partners to provide information, facilitate market opportunities (including collective marketing), link different value chain actors and promote local demand to address marketing bottlenecks.