To Improve Competitiveness of Rural Businesses, Linking Farmers to the Private Sector

Crossposted from the Worldwatch Institute's Nourishing the Planet.

The U.S. Agency for International Development’s Production, Finance, and Technology (PROFIT) program in Lusaka, Zambia, is different from other development projects, according to Rob Munro, the program’s senior market development advisor. This is because PROFIT has “real clients” in the private sector who maintain relationships with smallholder farmers.

By working with these partners, PROFIT isn’t distorting the market “by throwing money at it” or giving farmers subsidies for inputs, such as fertilizer. Instead, it is working with farmers, the private sector, and donors to improve the competitiveness of rural businesses by linking large agribusiness firms to farmers. It’s helping to improve linkages within industries that large numbers of small and medium-sized enterprises participate in, such as cotton, livestock, and non-timber forest products like honey.

Specifically, PROFIT helps communities select and train agricultural agents who work with agribusiness to provide inputs to farmers in rural areas—places where agribusiness firms had been reluctant to go because they didn’t think there was a big enough market. The agents are essentially entrepreneurs who provide goods and services that the communities didn’t have access to. In addition to selling things like hybrid maize or fertilizer, the agents can also provide ripping services to farmers practicing conservation farming methods, as well as herbicide spraying and veterinary services.

The “key” to the program’s success, says Munro, is that the agent is a “community man” selected by the communities themselves, not by agribusiness firms. The farmers trust the agent not to run off with their money and to deliver the goods and services they’ve purchased.

Unlike traditional development projects that “inundate” communities with trainers, PROFIT minimizes the number of USAID staff involved locally, helping to ensure that the project isn’t viewed as traditional “aid,” which can create dependency. Unlike the AGRA-supported CNFA, which relies extensively on its own staff to train agro-dealers, 80 percent of the trainings for agents are not provided by PROFIT, but by firms that are training agents how to use their products.

PROFIT’s model means that the program doesn’t work “with the poorest of the poor,” but with farmers who have the ability to scale up, says PROFIT chief of party Mark Wood. If you start with the very poorest, Wood says, “it’s like trying to start a car without an engine.” But by working with the 200,000 farmers in Zambia who have the means to collaborate with businesses, PROFIT is helping to create opportunities for thousands of poorer farmers in the future.

Stay tuned this week for more about PROFIT and Mobile Technology’s work to help small and medium-sized enterprises and farmers use mobile phone technology for e-banking services and to access market information.

http://www.youtube.com/user/Worldwatchag#p/a/u/0/JgM3jkaxfO4

http://www.youtube.com/user/Worldwatchag#p/a/u/1/o_dFK6-ENMg

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Tags: Lusaka, Nourishing the Planet, Production Finance and Technology, PROFIT, State of the World, State of the World 2011, Subsidy, U.S. Agency for International Development, USAID, Worldwatch, Zambia, donor, farmers, fertilizer, policy, private, worldwatch institute (all tags)

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