Research Into Use (RIU)

Research Into Use (RIU)[1]

Business Plan Template

20th of October 2009

Introduction

This document is the template applicants should use to prepare a short business plan.

Please follow the structure and page restrictions presented here to ensure that your business plan meets RIU’s submission requirements. Each section has a word or page restriction which is intended to help you bring out the key content and messages of your business plan. [However, you may include additional annexes as you think necessary.]

The template should be completed in Arial font, using a font size of not less than 11 point. The use of jargon is actively discouraged.

Business plans should be presented in MS Word format and should be emailed to Christine Wheeler ( ) by midday on Friday 20th of November 2009. Receipt of business plans will be acknowledged.

Electronic submissions are sufficient - you do not need to post a hard copy of your business plan to RIU.

A. Basic information
Title of your initiative: Safe and Affordable Armyworm Control Tools (SAACO-Tools) for poor farmers in East Africa to protect their crops against devastating armyworm outbreaks.
Name(s) of consortium members:
Eco Agri Consultancy Services Ltd, Tanzania (EAC)
Ministry of Agriculture and Food Security, Tanzania (MAFSC)
Ministry of Agriculture, Kenya (MoA)
Natural Resources Institute, UK (NRI)
Lancaster University, UK (LU)
Desert Locust Control Organisation for Eastern Africa, Ethiopia (DLCO-EA)
Pest Control Products Board, Kenya (PCPB)
Tropical Pesticides Research Institute, Tanzania (TPRI)
Bajuta International, Tanzania (Bajuta)
Juanco SPS, Kenya (Juanco)
Ministry of Agriculture and Rural Development, Ethiopia (MoARD)
CABI Africa, Kenya (CABI)
Country / countries where proposed activities will be implemented:
Tanzania and Kenya
Summary of initiative.
This initiative will establish a system for the production, supply, distribution and marketing of Safe and Affordable Armyworm Control Tools (SAACO–Tools). The tools are for local forecasting of outbreaks, and a cheap, safe biological pesticide for controlling them. Together the tools will reduce the devastating effects of armyworm outbreaks on food production. The system will supplement the centralised forecasting systems which do not meet the needs of the rural poor. It will also replace the use of imported chemical pesticides, which due to high cost and environmental unacceptability currently meet the needs of no more than 30% of poor farmers. The objectives are:
1. Establish a supply network for registered, low cost forecasting tools, meeting the full needs of Tanzania and Kenya (estimated at over 5000 villages).
2. Establish a virus production system in Tanzania capable of producing at least 10,000ha worth of product per annum, and able to expand to meet the regional need of >100,000 ha per annum.
3. Market SAACO-Tools to customers, including government services, farmers, community organisations, NGOs, and development partners, to sustained use and expansion to all affected countries in Eastern and Southern Africa. This will include establishing local forecasting in 120 villages, and applying the virus on up to 1000ha.
B1. Problem / target constraint to be addressed (one half page max)
The African Armyworm (Spodoptera exempta) is a particularly devastating pest. Large ‘armies’ of voracious black caterpillars appear suddenly as if from nowhere, catching farmers unawares and unprepared. This is due to the unusual migratory behaviour of the adult moths, which arrive en masse and lay billions of eggs in a few days. The resulting armies devour any crops in the grass family, including maize, sorghum, millet, rice and wheat, as well as pasture grasses. Uncontrolled outbreaks can cause total crop loss, with millions of hectares affected in bad years, although in some years there may be few outbreaks. The worst affected countries in Africa are Tanzania and Kenya, growing over 5m and 2m ha of cereals, of which 60% and 75% is maize respectively. Tanzania has over 5m rural agricultural households, so average cereal cultivation is around 1ha per household, but poorer farmers have less and are less able to cope with disasters like armyworm. About 30% of districts are susceptible to armyworm outbreaks, or around 2.1m households in Tanzania and Kenya.
The scale and distribution of armyworm outbreaks has resulted in the governments of Tanzania, Kenya and other countries taking responsibility for the problem, using a two-pronged approach; outbreak forecasting and subsidised control. Understanding of the insect’s biology allows broad prediction of which parts of a country might expect outbreaks in the coming fortnight. But while such forecasts are useful for national planning, they are of little or no value to individual poor farmers. Often governments have insufficient capacity for timely control and as many as 70% of farmers may miss out in some years, as insecticides are expensive. Government purchase or external donation of insecticides for armyworm control contributes to pesticide stockpile problems. The SAACO-Tools address the problems of both forecasting and control, with particular benefit to poor farm households who cannot currently achieve timely control.
B2. Opportunity to address problem identified (one half page max)
The SAACO-Tools are a combination of new forecasting and control methods. They provide a safe, affordable and practical solution to the armyworm problem. Research and development of the tools has been funded previously by DFID and others, but they have only recently been validated and become ready for commercialization and widespread use.
Community based armyworm forecasting (CBAF) enables farmers to make forecasts for their own village, while SpexNPV is a non-toxic, low-cost and locally produced biological pesticide. Research has shown CBAF leads to improved control (over 80% accuracy), it is cost effective, and is popular with communities. Field trials with the naturally occurring disease of armyworms (Spodoptera exempta nuclear polyhedrosis virus, SpexNPV) have shown it is technically effective and can be sold at less than half the cost of chemical pesticides. It is also non-toxic, so avoids the problems of poor farmers lacking safety gear, and avoids creating dangerous stockpiles.
The value of accurate forecasting is only realized if control can be implemented, while control needs good forecasting to allow it to be undertaken early enough before serious crop change occurs. Thus CBAF and SpexNPV complement each other. Our initiative will sustain the SAACO-Tool supply chain by addressing production/import, registration, distribution and market development. Use of the tools will sustain the production end of value chains for a range of crops critical to food security and national economies.
C1. Technology/product – technical, regulatory and commercial (one page max)
SAACO-Tools provide a system for safe and affordable armyworm management, with two major components; Community based armyworm forecasting (CBAF) and the virus for control (SpexNPV).
CBAF is a novel approach using technology already developed and validated in the field. Adult armyworm moth populations are monitored using a trap baited with a synthetic version of the scent (sex pheromone) the female produces to attract males. The design of the trap, the chemical components of the pheromone, and a mechanism for slow release of the pheromone have all been researched and optimized. CBAF is a radically different approach, as forecasting is done by, in, and for the community, rather than centrally by scientists. It involves mobilizing and training farmers in communities to use the trap to forecast impending outbreaks. Using local communication methods farmers receive outbreak warnings, so have time to prepare for control or seek help. We are in contact with suppliers of the trap and pheromone in UK (Russell IPM Ltd, International Pheromone Systems Ltd, AgriSense BCS Ltd), but there are no agents or distributors in E. Africa. Although the pheromone has been used for research, it has never been formally registered. Many countries do not require registration of pheromones for monitoring. Kenya and Tanzania do not have a protocol for commercial pheromone registration, so currently uses the rigorous requirements for pesticides, but recognise a less stringent protocol is required. A small amount of insecticide is used in the traps, but an already registered product can be used.
SpexNPV is a natural and highly infectious disease of armyworms that can rapidly wipe out outbreaks threatening to destroy crops. However in the natural outbreak cycle if often appears late or not at all, allowing armyworm outbreaks to devastate crops. The technology involves spraying outbreaks artificially with SpexNPV initiating epidemics that can destroy outbreaks within days achieving control. The SpexNPV is produced by harvesting it from dead insects from infected outbreaks then processing it into a stable formulation that can be applied by farmers just like conventional pesticides. SpexNPV will be marketed in a bottle of 50-100gm of NPV powder formulation affordable by small scale farmers.
SpexNPV has approval for use in Tanzania as part of ministry led control programmes. The project will collect efficacy data from control operations to build a registration dossier for full commercial use but this cannot be achieved during the lifetime of this initiative. For use outside Tanzania EAC will develop strategic partnership with local biopesticide companies e.g. Kenya Biologics and team up to register in those countries. The forthcoming harmonisation of national registration procedures will facilitate adoption of commercial products in East African countries.
C2. Estimated size of demand for the product / technology (one page max)
The total area of cereals prone to armyworm attack in Tanzania and Kenya is estimated at 2.1m hectares. (Larger areas of pasture and rangeland are affected, but demand for SAACO-Tools in those areas is low). The market for the SAACO-Tools is similar, but the pattern and distribution of demand for CBAF and SpexNPV in the susceptible areas is different.
Demand for CBAF is based on outbreak risk, and we do not expect demand from low risk areas. In medium to high risks areas CBAF tools would be required every year. If one forecasting kit serves 200ha of crop (some villages are smaller), and half the susceptible area has a medium to high risk, there would be demand for 5,250 forecasting tools per year in the two countries. The constraint to meeting this demand is the capacity to mobilize and train farmers. Once that is done, our research shows that the tool is sustainable at low recurrent cost (see section C3), but the initial investment is relatively high. In this initiative we therefore focus on building the ability of customers to adopt the tool, stimulating demand. We will implement the approach in 120 communities, but establish in the public and private sector the capacity and supply system for its use in all areas of demand.
The SpexNPV is required where and when outbreaks occur, both of which vary from year to year. In bad years several hundred thousand hectares of crops are affected and need controlling, while occasionally there may be little or no demand. In the last 3 years Tanzania has had outbreaks on crops covering 233,000ha, and Kenya 135,000ha, giving a mean annual area of 123,000ha requiring treatment.
Demand in Tanzania is therefore estimated at 10-100,000 ha per annum of SpexNPV. MOAFS has a budget of US$500,000 per annum for migratory pest control technology and if we market at US$6 per hectare, this could itself fund purchase of enough SpexNPV in all but exceptional years when demand exceeds 100,000 ha. As the project is due to end only six months after the plant is commissioned it is not expected that production will have ramped up to full capacity for more than two months before armyworm outbreaks occur after January 2011, so that initially the MOAFS familiarisation and efficacy trials may involve 200-1000 ha of product in the armyworm outbreak season January- May 2011.
In the future demand is expected from other countries in the region with large areas of cereals susceptible to armyworm, including Ethiopia (8.5m ha), Malawi (1.9m ha), Mozambique (2.3m ha) and Zimbabwe (2.2m ha). Outbreaks are less frequent in those countries, so CBAF might be appropriate for 10% of the area or 1.9m ha, creating demand for another 9,500 forecast tools at one per 200ha.
C3. Technology / product – cost and profitability (one page max)
The cost of the forecasting equipment (f.o.b., Russell IPM) is: Trap - $5.60, Pheromone lure - $0.80; insecticide cube-$1.60. Two lures and insecticide cubes are needed per season, but a trap can last several years (say 3) giving a recurrent equipment cost of $6.7 per village per year, or $13.4 assuming 100% mark-up for distribution. Forecasters are volunteers (although in some pilots the village authorities have opted to provide modest remuneration), but we assume an opportunity cost of $36/year for the small amount of daily work during the susceptible period. Total recurrent cost is therefore almost $50 per village per season, equivalent to about 100kg of maize, or a mere 0.2% increase in yield for a village with 100ha and modest productivity of 500kg/ha.
In addition there are one-off set-up costs involving training of trainers and training of forecasters, which can be discounted over a period of years. In any one year, the costs of armyworm outbreaks and the benefits from controlling them depend on many factors including type of seed used, the weather, the intensity and frequency of outbreaks, the cost of inputs such as fertilizer and insecticide, and the area of crop in a village. In the least advantageous conditions (poor growing season, only 20ha crop, local seed, insecticide use only 50% efficient, outbreaks once in 10 years), the net present value (5% discount rate) breaks even with a 17.5% increase in the number of farmers controlling armyworm. Trials showed CBAF resulted in a 50 percentage points increase in the proportion of farmers controlling armyworms, sustained for 3 years. Thus as well has being profitable at village level on an annual basis, investment in setting up CBAF also generates returns at a district and national level.
By producing SpexNPV using the field production system we estimate this technology can be produced at 3US$ per ha and sold to retail customers at 5-6US$ per ha, currently chemical alternatives sell at 10US$ ha giving the SpexNPV a significant cost advantage. Through use of SpexNPV farmers can save up to 100% of their crop valued at approx $250 per ha, though a more general estimate of savings would be 18-30% of all acreage sprayed allowing for some prophylactic application to fields not subsequently seriously damaged. In order to benefit poor farmers, the product will be marketed in units sufficient to treat 1ha suitable for poor subsistence farmers who are major beneficiaries of armyworm outbreak control operations in East Africa. Distribution channels will be set up to ensure timely delivery at district level.