Rockefeller Foundation Grant Report Form

ADRA Mozambique for AGRA“SAFOZA” Page 1

Grant No.: 2013 FOSCA 003

Project Title:

Strengthening the Ability of Farmer Organizations in Zambezia Province to Access Formal Markets (SAFOZA)

Type of report:Interim X Final

Period Covered by this report:

July 2015 to December 2015

Acronyms

ADRAAdventist Development and Relief Agency

AGRAAlliance for a Green Revolution in Africa

AMODERAssociaçao Moçambicana de Desenvolvimento Rural/Mozambican

Association For Rural Development

BOMBanco Oportunidade de Moçambique/Bank for Opportunities of Mozambique

FOsFarmer Organizations

SAFOZAStrengthening the Ability of Farmer Organizations in Zambezia Province, Mozambique to Access Formal Markets

SDAEServiços Distritais de Actividades Económicas/District Services of Economic Activities

SIMASistema de Informação de Mercados Agrícolas/Information Sytem for Agriculture Markets

Table of Contents

Acronyms

Background

Summary of Activities and Highlights to Date

Objective 1: Organize and Train 244 FOs

Objective 2: To improve smallholder farmers access to structured output markets

Second Semester SAFOZA Activities (July – December, 2015).

Activity Summary

PROGRESS OF ACTIVITIES

Supporting Communities in Establishing and Strengthening Farmers Organizations (FO)

1.1 Improve FOs ability to meet the needs of their members

1.1.1 Train the Farmers Organizations in management of their Associations

1.1.2 Training of Farmers Organizations in leadership and Management

1.2.1, 1.2.3, 1.2.4 Gender and Inclusion of Women

1.2.2 Increase number of members in the FOs

2.1.1, 2.1.2, Create equip and rehabilitate storage capacity

2.2 Increase sales at structured market

2.2.2 , 2.2.3 , 2.2.4 Facilitating the link between producers and MINAG to access the information system of agricultural markets, SIMA

2.2.1, 2.2.5 Facilitate meetings and linkage of Farmers Organizations with buyers, inputs providers and financial institutions (including contact travels and agri-business fairs)

ADRA Bonus: Train for market strategies, joint sales and business skills—get results

1.10 Other activities

1.Achievements

2.Challenges

3.Lessons learned

Background

From January 2014, ADRA Mozambique has been implementing the SAFOZA project, a project that aims to sustainably increase sales in formal markets from smallholder farmers and farmer organizations (FOs). During these three years the project has been implemented in four districts of Zambezia province; namely Mocuba, Ile, Lugela and Mulevala. It is funded by the Alliance for a Green Revolution in Africa (AGRA) through Farmer’s Organizations Support Center in Africa (FOSCA) and the Market Access Program.

Summary of Activities and Highlights to Date

The project was designed to reach a total of 7,200[1] farmers whose work supports the maize, groundnut, pigeon pea and sesame seed value chains. The project aims to provide capacity building and support to smallholder farmers and FOs in order to improve their ability to help their members and facilitate access to formal markets. To date, the following has been achieved.

Objective 1: Organize and Train 244 FOs

A total of 4,721 community members have joined farmer organizations (FOs) as a result of this project.

Seventy-five percent (75%) of FOs (182) have exhibited internal growth since the project began. Thirty-nine percent (39%) of FOs (95) have reserved seats for women on their management committees.

So far, 206 FOs have been trained in organizational governance, 187 trained in leadership, 188 trained in strategic management, 166 in gender issues.

Objective 2: To improve smallholder farmers access to structured output markets

Five (5) storage facilities have been built and farmers have been trained to use them—4,334 in post-harvest handling and 4,880 in post-harvest storage. The storage facilities and training helped 4,793 participants from 207 different FOs to effectively aggregate their production. The result was that participating association members were able to sell 1,248 metric tonnes of select crops (maize, groundnut, pigeon pea, sesame and cashew-nuts) for $ 509,276 USD, an improvement over pre-SAFOZA project incomes of close to 25%.

The project has trained 4,351 farmers from FOs to use Mozambique’s agriculture market information system, SIMA[2], which is available on the internet and accessible via telephone. Of these trainees, the project is aware of 4,054 farmers who have accessed and/ or shared market information from this system. Such accurate, timely market knowledge gives FO sellers much more bargaining leverage and improves their chances of receiving fair, market-based prices for their produce.

Second Semester SAFOZA Activities (July – December, 2015).

Activity Summary

During this reporting period the following activities were implemented:

• Establishing and strengthening FOs
• Training FOs in leadership and strategic management
• Sensitizing and motivating farmers to join associations
• Training farmers in organizational governance
• Actual post-harvest handling and storage of crops
• Marketing and joint sales of crops
• Training for business skills
• Use of SIMA
• Assessing small-holder farmers’ (SHFs’) knowledge of postharvest handling and quality control
• Locating existing storage facilities suitable for use as aggregation centers
• Constructing of new storage facilities
• Equipping storage facilities
• Facilitating joint sales by the FOs
• Motivating individual farmers who participate in those joint sales to make strategic use of their new skills in accessing SIMA

PROGRESS OF ACTIVITIES

Supporting Communities in Establishing and Strengthening Farmers Organizations (FO)

The project has held 551 meetings of board members and 71 general meetings of Farmers Organizations. These meetings handled the various organizational problems encountered by FOs during this start-up phase. The goal of these meetings is to strengthen FO management. Sometimes this can be as simple as learning effective meeting facilitation or as radical as leadership restructuring. But usually activities center on solving administrative issues and designing market and production plans. Meetings often discuss marketing strategies, logistics and the best ways to share agriculture market information with each other.
The creation of Farmer Organizations has also assisted members and their communities in other ways, most notably the facilitation of farmer specialization. For example, members may agree on joint purchasing of agricultural inputs at lower prices and strategic cooperation/specialization between individual farmers according to capacity and/or personal preference. That is, one farmer is designated to buy seeds while others might make a deal with locals (or even a tractor) to cultivate the soil.

1.1 Improve FOs ability to meet the needs of their members

1.1.1 Train the Farmers Organizations in management of their Associations

During this period SAFOZA trained 24 FOs (102% of the target) in four areas:

• structure, function and legal framework of associations
• procedure at the meetings
• social responsibilities to their communities
• accounting and financial literacy.

This training aims to provide to the FO members with solid knowledge in group management, an understanding of and appreciation for the importance of a rotating leadership, management for the common good, and prudent agriculture business. This training increases the level of trust and transparency between the members by helping them to understand or actively participate in the leadership processes of their FO and giving them “buy-in.”

1.1.2 Training of Farmers Organizations in leadership and Management
During the semester 21 FOs were trained in leadership, with emphasis on conflict management. Another 40 FOs were trained in strategic management, highlighting the criteria for decision making. Adding these numbers to those from the first half of the year (in which 25 FOs trained in leadership and 20 FOs trained in strategic management) the achievement for the year is 71.9% of the goal for leadership training, and 93.8% of the goal for strategic management training.

The importance of this training is that it helps to consolidate FOs, minimizing conflicts within the organization and increasing membership trust. As it increases intra-organizational accountability it also holds the FOs accountable to their communities at large to provide better service and greater effectiveness.

During this period the project also supported 24 FOs in the preparation of documents (minutes, constitution, by-laws, rules and policies, statement of members) for its legalization and registration. These documents have been submitted to the local government (administrative posts and district offices) for their consideration and issue of the appropriate certificates.

To facilitate this legalization process, ADRA coordinated with the Provincial Directorate of Agriculture in Zambezia to train 40 leaders of localities (as well the chiefs of administrative posts) regarding Decree Law No2 / 2006 of May 3, which refers to registration and legalization of agro-business and livestock associations in Mozambique.

These training sessions enable leaders of localities to more effectively serve the FOs and ease the legalization process. Legalized FOs benefit from access to several important services provided by different government and private sector institutions. Typically these will include financial services and agriculture inputs. Also the training gives farmers much higher credibility with buyers. In this way FOs are empowered to not only deliver more value and better service, but also at much higher levels than was previously possible.

1.2.1, 1.2.3, 1.2.4 Gender and Inclusion of Women

During this reporting period total of 19 more FOs were trained on gender issues. In response to this and previous gender training and sensitization 31 FOs included women in different leadership positions at the community level, performing roles as treasurer, secretary and vice-president.

1.2.2 Increase number of members in the FOs

During this semester 856 new members joined to form 10 new associations. In addition another 33 existing FOs increased their membership numbers.

Training and membership growth make FOs more resilient, better able to serve their members and withstand risk. For instance, increasing membership generally increases the volume of product available for an organization to sell. This added volume improves the capacity of FOs to negotiate with formal buyers and get better margins to build reserves.

2.1 Reducing post-harvest losses

2.1.1, 2.1.2, Create equip and rehabilitate storage capacity

During the semester the project rehabilitated four (04) warehouses and equipped them with pallets and scales. These, together with the one (01) warehouse which was rehabilitated in the first half of the year 2015, make a total of five (05) rehabilitated warehouses, 250% of the goal.

This happy result was achieved because at ADRA’s request AGRA approved project budget adjustments. The logic behind the request was to allow the targeted FOs to benefit from warehouse access for at least 2 years before the project is due to close. As a result two of the warehouses planned for the year 2016 were instead completed in 2015. The greater efficiencies gained at an earlier stage from this strategic move will likely result in a greater project impact for these communities.
2.1.3, 2.1.4 Post-harvest Training

Warehouses are a great benefit for FOs because they allow for joint sale of agricultural products. In addition they facilitate much better product quality control and conservation. During this reporting period, 650 farmers were trained in product quality and another 2,191 farmers were trained in post-harvest conservation techniques. When added to those in the first half of the year, these numbers are 86.4% and 115% of achievement standards respectively.

2.2 Increase sales at structured market

2.2.2 , 2.2.3 , 2.2.4 Facilitating the link between producers and MINAG to access the information system of agricultural markets, SIMA
The project purchased and provided a computer, a printer and paper to the SDAE in Mocuba district. These made it possible for that office to edit monthly bulletins for agricultural market information. During this reporting period five editions of these bulletins were printed and distributed to communities. Also during this time 11 FO members from Ile district were trained to be surveyors for agricultural markets (mainly for the districts of Ile and Mulevala). Their job is to collect the information about prices, potential buyers and opportunities where the SAFOZA project is being implemented, and which is used to produce these agricultural market information bulletins. These bulletins serve to inform local FO members, especially those who for one reason or another have difficulty accessing SIMA.

In the same period 1,552 producers were trained in the use of SIMA and 856 of them made practical use of that service.

2.2.1, 2.2.5 Facilitate meetings and linkage of Farmers Organizations with buyers, inputs providers and financial institutions (including contact travels and agri-business fairs)
During this reporting period, 51 FOs established trade agreements with buyers of agricultural products. Also, five agro-business fairs were organized with the participation of input suppliers, agricultural product buyers as well as community members in the four districts of project intervention, namely Mocuba, Lugela, Ile and Mulevala.

These developments allowed two FOs, one from Lugela district and another from Ile, to access funding provided by a private company named Cargill, totaling US$ 4,935 which was used for the marketing process.

ADRA Bonus: Train for market strategies, joint sales and business skills—get results

A total of 1,823 producers belonging to 51 Farmers Organizations have sold their products jointly during the semester as a result of trainings in the above-mentioned topics. The products sold totaled 434.9 tons and included maize, sesame, pigeon pea and peanuts. The main buyers were Cargill and other wholesalers who paid a total of US $ 219,091.45 (see Table 1, below).

Table 1: Sales from the second semester 2015

Viewing this information graphically highlights the differences in the relative successes in each district and for each of the five crops (see charts below).

Chart 1 shows clearly that by far the greatest revenues were supplied by Pigeon Peas followed in order by Maize, Cashew, Peanuts and Sesame.

Chart 2 (below), showing the production for each crop by district, is less dramatic, but also informative. Clearly, the farmers in Mulevala have followed a more diversified strategy with representative production in all five crops. At the other extreme are the districts of Ile and Lugela where only Pigeon Peas and Maize were produced. Mocuba is also notable in that while four crops are represented, the crop of choice is obviously Pigeon Peas.

It is important to note here that what is missing is detailed data regarding contribution and profit margins for each crop. In order to capture this data, farmers must be trained in much more sophisticated costing techniques. While comprehensive training in costing is beyond the scope of the SAFOZA project, ADRA Mozambique is using a simplified method to train farmers to take note of the relative margins and the opportunities they represent.

Note the following table and graphic with general data developed by ADRA for the SAFOZA farmers in 2015.

Clearly, Sesame and Peanuts have the highest profit margins. However, one can easily see from the crop graph (Chart 1, on the previous page) that they were the crops least planted by SAFOZA farmers. When confronted by this revelation it is likely that farmers will quickly see that they now have information with which to plan much more strategically.

ADRA Mozambique strongly believes such training and consequent capacity is key to success in any further work aimed at enabling small farmers and FOs to compete with the larger commercial operations which are currently threatening to displace many of them. Small farmers in particular must understand the basic principles of cost accounting and economies of scale in order to weigh the relative risks found in cooperative, “specialist” strategies aimed at increasing volumes and profits (versus doing everything independently), and to plan production strategically based on those predicted risks and rewards.

Much smaller harvests were achieved in the first half of 2015 due largely to severe flooding in the area, but adding that production to that of the second half of the year yields a grand total of 536 tonnes of production which sold for $228,106 USD. These numbers are respectively 107.2% and 108.6% of indicator targets during 2015.

This level of achievement is the direct result of the joint marketing and commercialization approaches espoused by SAFOZA starting with the planning process at the beginning of the year. In this process farmers planned the areas of production. After harvest they determined sales volumes and schedules based on their market surveys of the various buyers, their prices and their services.

As noted above, FOs leaders who have this information and know how to use it can now discuss with their fellow members various sales strategies based on their analysis of the relative cost and benefits, taking into account the margins available at both the farmer gate and the buyer gate. This kind of analysis is new and for the first time enables FO members to make decisions regarding where, when and to whom they will sell.

SAFOZA’s production volume and revenue targets were surpassed in 2015 in spite of the worst floods since 1971. The major drivers for this success included notable price increases for pigeon peas and sesame, driven by increased global demand. The SAFOZA project enabled small farmers to reap the benefits of a continued upward swing in prices through aggregation, better post-harvest processing and FOs new ability to access market information. These SAFOZA activities enabled the farmers to strategically make and implement production plans that would bring in greater revenues and they empowered FO negotiators to arrive at equitable contracts with buyers.