Sustainability. It’s a word we hear so often in the development community – the concept that our impact will last. We know the consequences of failing to achieve sustainability are severe. When time-bound development programs draw to a close and money runs out, local communities no longer have an incentive to keep up the momentum. Some argue that without sustainability, repercussions from failed development or humanitarian aid initiatives can leave countries worse off than they were before aid.

One potential solution to achieving sustainability is a model that is gaining traction around the world — the Pay-for-Results model. In contrast to traditionally funded development programs, Pay-for-Results (PfR) prize competitions use payments to ‘pull’ the private sector to tackle market failures and reach underserved populations. These competitions spark innovation and research, helping businesses to see the potential of entering untapped markets.

The AgResults Tanzania Dairy Productivity Challenge Project, implemented by Land O’Lakes Venture37, used a PfR prize competition that ran from 2020-2024 to encourage private sector input suppliers (“competitors”) to sell productivity-increasing inputs to smallholder farmers. The competition also motivated fodder wholesalers and input suppliers to produce, store, and sell fodder. By providing these prizes, the project aimed to increase smallholder farmers’ dairy productivity, boost smallholder farmer incomes, and strengthen value chain relationships.

When the project ended in June 2024, it was clear that its PfR structure had laid the foundation for sustainability by 1) motivating businesses to improve operations, 2) spurring strategic investments of prize money, and 3) strengthening relationships with customers.  

Evolving Business Operations

One key sign of sustainability is the way that businesses that were involved in the competition have evolved their operations. Following each sales period, competitors received a prize for each bundle of high-quality inputs they delivered. This positioned them to grow over the course of the project, gradually reassessing their operations and improving their business practices. In particular, before the competition, these businesses typically lacked systems bookkeeping procedures that would have been used to verify their sales and determine prize eligibility.

To address this in the competition, AgResults partnered with an AgTech software company, CropIn, to customize their ICT recordkeeping tool. Competitors were required to use this digital tool to track their sales and advisory services to smallholder farmers to determine who qualifies for a prize. As they used the tool for the competition, these businesses discovered additional benefits, such as having the ability to better track staff activities, inventory, and sales records. This allowed them to see the geographic distribution of their customers, monitor demand for inputs by location and consolidate farmer contact information — all of which are critical for business operations.  Dr. Emmanuel Swai and Dr. Cliffson Maro own VetFarm and sell parasite control products, mineral blocks, vaccines, and animal feed. They joined the AgResults competition in 2020. VetFarm’s newest supply shop is nestled in a bustling commercial strip of the Bunju-B neighborhood in Dar Es Salaam. Their shop is stocked floor to ceiling with bottles and packages labelled with images of chickens, pigs, and cows.

Like other competitors, they began using the ICT tool in 2020 to register all their customers, and like others, by the time the competition ended, they were starting to see promising signs of sustainable growth. Emmanuel said using the ICT tool has improved how VetFarm leverages data and client relationships.

“We have got all farmers’ information at our fingertips,” he said. “That builds the relationship because we always ask him or her how the animals are doing… We even know the cows by name! ‘How is Baby doing?’ ‘How is Lisa doing?’… This is the way we build trust…”

Another competitor, Dr. Baklina Mafwere, expressed similar satisfaction with these business changes: “Even if the project is going to end, still we have their names, we have their telephone numbers, we have their sites…”

Baklina explains that the system was a “catalyst” for his business, Baklina Ltd., to track customers more readily in the future. This has helped him expand to two additional districts, and as of June 2024, he had reached approximately 3,000 farmers — a huge jump from the 400 customers that he served in 2022.

Across the board, competitors have expressed satisfaction with CropIn’s ICT tool and how it has positioned them to improve operations and client relationships. Six of these businesses plan to continue engaging CropIn and use the ICT tool even after the competition.

Re-investing into the Business

A second key sign of sustainability is how the competition participants invested their prize money.  VetFarm owners Emmanuel and Cliffson said they used theirs to invest in business improvements, including hiring 16 new employees, opening five new retail outlets, and developing new animal nutrition products to better support their customers. They have even started developing and cleverly marketing their own nutrition products, such as “cow chocolates,” a nutritious supplement for cows made from ingredients like sunflower seeds, corn meal, and molasses. They say the cows “go crazy for it!”

These investments in their workforce, products, and facilities are indicators that VetFarm will continue to grow and serve their customers in the long run – ultimately leading to better service and higher-quality supplies for the farmers they serve.

Tailoring the Business to Meet Customer Needs

A final key sign of a sustainable business model is one that truly understands its customers – and caters to their needs. Seeing that many farmers were struggling to access quality dairy feed, the AgResults competition incorporated a prize for fodder production in early 2023. Accordingly, VetFarm decided to acquire land in the nearby Mukaranga district, where they started growing sorghum to produce fodder for their customers’ dairy cows. Customers used to have to pick up supplies like hay and sileage in person. Now, VetFarm delivers directly to their doorsteps.

VetFarm customer Robert Gervas explains that when he used to call veterinarians, they would “come two days later, but by then, the cows would be in very bad shape.” VetFarm’s services came as a relief in 2021; they were much more reliable than other vets he’d worked with in the past. Robert has seen remarkable change on the farm and attributes this to how readily available treatments and feed are for his cows.

Likewise, the project is improving its services for farmers like Loukia Chacha, who is known by her friends and neighbors as “Mama Ng’ombe” or “Mama Cattle.” Loukia has been in the dairy business for more than 30 years, she recounted as she fondly showed off one of her calves, Angel. It’s a Friesian cross-breed, renowned in the cow world for producing a substantial amount of milk. The calf was the product of an artificial insemination (AI) birth – courtesy of VetFarm – which is a way that smallholder farmers can successfully cross-breed their cows with breeds that are guaranteed to produce more milk.  

Competitor Baklina Mafwere, who owns another supply shop called Baklina Ltd., explains the connection between reliable services and the prize competition. “When I’m going to give the services … I was rewarded. This made us [suppliers]… move vigorously into the field, to see the farmers,” he said. “The [prize incentive] is a very big motivator to me as a proprietor, but at the same time [also] to the extension workers.”

Promising Trends

Motivated by AgResults’ prize competition, businesses like VetFarm and Baklina Ltd. have made critical shifts in their business models, invested in growth, and developed an intimate understanding of their customers’ needs. And they’re not the only ones. In total, these businesses delivered more than 900,000 input bundles to nearly 80,000 farmers in the coastal regions of Tanzania. These changes, catalyzed by the Pay-for-Results model, have the potential to strengthen the country’s dairy sector – benefiting both private sector suppliers and the farmers that depend on them.