Stories From the Field: Ethiopi
Women farmers face many obstacles that they need to overcome to become successful business women. But the example of Mashuu, from Chefo Umbera, southern Ethiopia, shows that with the right support, female farmers can become independent market players.
When she left school, Mashuu noticed her peers marrying early, sometimes to men who took more than one wife. Mashuu saw her future differently, and together with two sisters and a sister-in-law, formed a women’s group, hoping to empower women through family planning education and HIV/AIDS awareness. They started with four members – today, there are 165.
“As the group started to grow, I realized we needed to become strong and independent economically,” said Mashuu. And that was how Jalela Primary Cooperative was born. Women bring their cereal harvests to Jalela, and the cooperative then sells it to Mira, their local cooperative union. The union sells the aggregated commodities to buyers such as WFP.
The 2011 drought-induced crop failure led to high market prices and a shortage of marketable produce in Ethiopia. This caused most cooperatives to default on their contracts with WFP. But Jalela still sold 30 metric tons of maize to WFP. The net profit of about US$170 was in part kept for the cooperative and in part distributed to the co-op members. Mashuu still has high hopes for the future despite the difficulties with the 2011 drought. She has plans to build a grain mill, start dairy production, and even bring electricity to the Jalela co-op. “We are going to change our lives,” she concludes.
The Experience in Guatemala
In Guatemala, P4P focuses on sales beyond WFP for two reasons: to promote long-term sustainability and to provide alternative outlets for farmers’ surplus production. Since WFP in Guatemala distributes only a few thousand metric tons (mt) of food every year, the quantities it can purchase from smallholder farmers’ organizations is relatively small, as illustrated in the table below.
P4P assisted Farmers’ Organizations (FOs) are located in northern and eastern regions of Guatemala as well as on the Pacific Coastal plain. A market study examined potential alternative buyers for both bulked and processed grain, including regional and national buyers such as the food industry, private traders, exporters, NGOs and the Government of Guatemala. According to information collected between 2008 through 2012, approximately a third of the P4P supported FOs have sold maize or beans to buyers beyond WFP. Of the total of 6,800 mt sold, 70% was maize (4,800 mt) and the rest beans (2,000 mt).
A maize processor in Guatemala that produces tortilla flour purchased 59% of the total tonnage. The second biggest buyer was Wal-Mart, which purchased 918 mt of beans. Sales to other national supermarkets, large traders and exporters represent 11% of the total (750 mt). Some 739 mt of maize and beans were sold on local markets (local grocery stores, municipal markets and traders). Small amounts were also purchased by NGOs, FAO and other P4P supported FOs.
With support from FAO, some FOs have developed the capacity to produce seed as well as grain. This represents 1.3% of the tonnage sold, but 4.2% of the income generated through collective sales beyond WFP. Such a successful focus on higherincome options has motivated the FOs to explore other markets such as retail packaging of beans, production of red beans specific to the El Salvador market, and fresh corn on the cob.
The P4P team works with the FOs to encourage sales beyond WFP. Commercialization committees are formed in the FOs and a roster of identified potential buyers in the market is shared with all. Training on effective negotiation t e c h n i q u e s a n d t h e development of business plans also begins this year.
Potential buyers are invited to the field to see the production of the grains, post-harvest management and quality control. This also allows them to become familiar with the maturity of the organization, increasing the confidence of buyers in the capacity of the FOs to establish commercial relations. This is complemented by demonstrating tools such as the “Blue Box”1, which is both a training tool and a field laboratory, which separates produce that does not meet specifications. Through partnering with P4P, FOs gained the trust of the commercial sector and confidence in their own abilities to reach a broad range of markets.
Farmers organizations’ experience steady progression in Mozambique
In Mozambique, farmers’ organizations (FOs) were created by both national government and nongovernmental organizations to facilitate technical assistance in agricultural production and marketing. This was especially important in the recovery period that followed the 1992 General Peace Agreement.
Most FOs gradually evolved from the village level to linking with other FOs at a district level. The district level is often represented by an ‘umbrella’ association of FOs, the tier with which P4P in Mozambique works directly. There are currently 10 such “umbrella” FOs in Mozambique participating in P4P. As of 2012, WFP has bought almost 10,000 metric tons (mt) of maize, beans and pulses from these FOs, valued at $5.8 million.
Apart from selling to WFP, P4P is helping FOs to identify sustainable and fair markets for sales beyond WFP. Prior to participating in the P4P initiative, many farmers had limited or no experience in selling collectively to markets. In 2009, sales beyond WFP were only 644 mt, tripling by 2012 to 1,800 mt. The table below summarizes crops sold by all 10 FOs under P4P in Mozambique and the income generated from sales per year.
P4P’s support to smallholder farmers in accessing markets for crops such as maize, beans and pulses has had a positive impact. When P4P began in 2009, soybean was the mostsold commodity by P4P supported FOs (2,480 mt). Maize was second at 926 mt, sesame third with 699 mt, followed by pigeon peas at 538 mt of sales. The possible profit margin for growing and selling maize is beginning to compete with the profits available in the soy and sesame trade, although commercial maize value remains low compared to other commodities. Buyers that are purchasing commodities from these FOs are:
- Soybeans: Livestock companies, NGOs, and informal traders
- Maize: Livestock companies, exporters, processors, wholesalers, and informal traders
- Pigeon Pea: Processors, millers, exporters, and energy companies
- Sesame: Supermarkets
- Peanut: Processors
The volume of products marketed in relation to the number of buyers demonstrates that the market in Mozambique is neither structured nor stable. There are often a high number of buyers intervening at the same time in more than one crop. Quality issues are often secondary for many buyers, as product availability is often considered more important.
While marketing platforms still have a long way to go in Mozambique, participating in P4P has helped with sales to markets beyond WFP. The relative consistency of having WFP as a buyer and the training provided by P4P and partners has helped many FOs meet the demands needed for selling to other buyers of quality.
Malawi – How a farmers’ organization is progressing
Kafulu Smallholder Farmers Organization (FO) was established in 2003. At the time of its establishment, Kafulu had two clear objectives: to achieve food security in the area and to find markets for their surplus. Currently the FO has 1,400 members (of which 500 are women) and with assistance from the National Agricultural Smallholder Farmers Association of Malawi (NASFAM), they have been able to build a warehouse. Kafulu had experience of selling maize collectively before P4P started in Malawi, however, since joining P4P they have been given the opportunity to learn the skills needed to achieve better deals with buyers.
A Challenging Beginning
Though Kafulu has progressed in their ability to connect to markets, the process has not been without difficulty. When the FO decided to participate in P4P it obtained credit in the 2008/2009 season, allowing them to expand their inputs loan scheme. In the 2009/2010 season, the organization again had access to credit, but faced severe problems in repayment. Loans were given to individuals and not directly to the FO and as a result, some individuals were unable to meet repayment obligations causing tensions among members. In addition, Kafulu signed a contract with WFP for the sale of 526 metric tons (mt) of maize, but was not able to deliver anything at all due to quality problems. The FO then had to sell the maize to other buyers who were not looking for high quality and they received a lower price.
In spite of these difficulties, Kafulu persevered. They managed to retain most of the membership despite the credit repayment issue, and tried to sell to WFP once again. In the 2010/2011 season, Kafulu delivered 100 mt of maize to WFP, this time with no quality issues.
By then, Kafulu farmers saw a clear way ahead: “We want to sell to people like WFP, because they are able to get a lot of money at one time and they offer fair prices for quality produce”,
stated one of the members of the Executive Committee. Although Kafulu farmers did not know then, they were completing the first step towards graduation - they had learnt how to condition their crop for higher quality standards and they had managed to aggregate at least twice. This placed them in a better position to compete with other FOs.
In the 2011/2012 season, Kafulu managed to aggregate 460 mt of maize, which they deposited into the warehouse receipt system (WRS) at the beginning of the season. From this deposit, they managed to get 70 percent of the receipt value as credit, which allowed them to wait until later in the season to sell when better prices were available.
Market Experience Today
In February 2013, Kafulu was awarded a contract for almost 230 mt of maize from WFP. They competed directly with medium and big traders in the Malawi market. By that time, they had already sold half of their maize to other buyers, at prevailing prices of around 90 MWK/kg (USD 0.27), making a good profit and enabling them to repay the credit and fees for the warehouse.
Kafulu FO still has problems with its membership stemming from past individual loan defaults and it is now dealing with the challenges of managing a WRS on its own. However, the FO has more knowledge of markets and is now prepared to engage competitively in them.