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Private Sector Engagement in Mozambique – Two Models of Success in Agriculture
Part One of a Three-part Blog Series from Land O’Lakes Venture37
With an 11-year history operating in Mozambique and with two projects closing in 2021, Land O’Lakes Venture37 has been thinking about the future of this emerging market. The USAID Feed the Future Resilient Agricultural Market Activities – Beira Corridor (RAMA-BC) project is boosting crop farmer productivity and resilience to climate change. The USDA Food for Progress MERCADO project is building a more competitive dairy sector. Two projects closing that are addressing constraints in the agricultural market system with partners from two different industries, but with one commonality shaping their success: private sector engagement (PSE).

In the first of this three-part blog series, Chiefs of Party Nic Dexter (RAMA-BC) and Fidel O’Donovan (MERCADO) reflect on PSE strategies with diverse actors from farmer-to-fork. Each share insights and lessons on how a private-sector led approach and improved business enabling environment can effectively enable inclusive, market-based solutions that lead to food security and thriving agricultural communities.

Read Part Two and Part Three here. 

Tell us about your project and the context.

Nic: Crop productivity in Mozambique is low. Two primary factors are declining soil health driven by monocropping and unreliable rainfall caused by climate change. Improved seeds and soil health raise yield potential, resistance to disease and pests, and drought tolerance. RAMA-BC partners with private sector agro-dealers and informal community enterprises, who increase farmer access to and knowledge of improved seed varieties while introducing the concept of intercropping maize with legumes. Legumes are nitrogen-fixing crops that have a long list of benefits to farmers. They are efficient and low-cost perennials that replenish soil health, sequester carbon, add organic matter, repel unwanted pests and provide an additional nutrition through beans and green leaves.

Fidel: When Venture37 started working in Mozambique in 2008, the dairy industry was nascent. Our first two projects focused on smallholder dairy development and processor capacity building. We learned a lot, including the importance of holistic private sector engagement to create a scalable, competitive market. We also came to an inflection point where a robust enterprise-driven enabling environment was critical to the industry’s future. This was why MERCADO was designed to be facilitative of broad-based PSE across the industry. We still work with smallholder farmers, but now we also work with policymakers, agribusinesses, processors, feed manufacturers, input suppliers, cooperatives, retailers and commercial breeders to ensure broad-based market growth.
 

 

Let’s start with the punchline. If you could ensure readers remember one PSE insight from this blog series, what would it be?

Nic: Solutions to food security and climate change in Mozambique lie in the soil. We need to engage formal and informal private sector networks to first understand constraints on the ground, then co-design market-based solutions to improve soil health and build last mile access to improved seeds and diversification. There is no one-solution-fits-all. We have to get creative and see the private sector as business partners.
Fidel: No matter the value chain, systemic success depends on scaling up and strengthening all aspects of the market system. You can’t focus just on smallholders. One of the most important areas of focus is the enabling environment to create a fair, competitive market. This takes time and trust but is critical to long-term success.
 

 

How has your project prioritized PSE from the start?

Nic: Maize production in Mozambique is low. At RAMA-BC’s start, we saw two main opportunities for PSE: seed input supply for productivity and private ag extension networks to improve soil fertility. Fertilizer wasn’t an option as most Mozambican producers can’t afford it, but RAMA-BC’s intercropping approach with green manure cover crops is a practical alternative to improve soil fertility and health.
Fidel: For MERCADO, we knew from experience that PSE across the board would ensure a strong, resilient market system that creates jobs and incomes along the way. We designed MERCADO to be private sector-led by engaging diverse actors. Small-scale and commercial dairy producers. Supermarkets and street vendors. Micro-processors and commercial processor. Consumers of all ages. And, importantly, policymakers from all levels of government.

 

What is the most important aspect of partnering with the private sector in Mozambique?

Nic: Five percent of Mozambican farmers buy seed from formal seed suppliers. That means 95% of the market is informal. Informal networks are just as critical to the overall market system as supporting formal networks. To create real, lasting change, it’s critical to work with both. The informal market is fragmented, and unimproved seed varieties have low yield potential. On the formal sector side, the biggest constraint to expanding the 5% market penetration is lack of trust between seed companies and agro-dealers. Understanding these constraints gave us a starting point in both market segments.
Fidel: A private sector partnership should not only be good for the business itself, but also should benefit other parts of the value chain. Competition is a good thing for everyone. MERCADO’s PSE approach involved a multi-level grant application process that enabled small, medium and large farmer-to-fork enterprises to apply for what they needed to grow at their own pace. This approach allowed various market system support actors – from production to transportation to inputs to services – to be strengthened. If you focus on just on one of the core systems, it has limited push/pull effect in the market so there is no long-term demand for production. No scalability. No market resilience.

 

Resilience, the ability to mitigate, adapt to, and recover from shocks and stresses, is an important concept in Mozambique. How does the project define resilience and in what ways is it integrated with your PSE approach?

Nic: Cyclones, like Idai and Kenneth, may get more media attention when it comes to shocks, but in Mozambique, drought is more frequent and widespread. RAMA-BC considers three components to creating resilience: Drought resistance to climate change, soil fertility, and dietary diversity. In addressing all three, you take a massive step towards resilience. When shocks occur, hand-outs are a humanitarian response, but they are not sustainable. They also weaken and distort the market. Long-term resilience to shocks will only come from enterprise-driven models – creative solutions between private sector partners and their customers. This is why we strengthen private formal and informal networks – it is painstaking to build these connections but when done right, it leads the system to enduring self-reliance.
Fidel: No matter where you are, agriculture will always have shocks, whether they are seasonal, climatic or COVID-19. Resilience is about being able to go through these shocks with minimal disruption. Engaging the private sector at multiple levels of the value chain ensures resilience of system. For example, if a livestock farmer is experiencing a dry season, it’s important she is linked to a trusted extension service provider who can advise her on the importance of forage to feed her animals. Resilience is baked into a private sector model. 

 

Thanks for joining us for Part One of the blog series. Here is a Part Two Preview:

COP Nic Dexter will take us on a deep dive of RAMA-BC’s focus on formal and informal input supply networks. He will share more insights and recommendations for building a more resilient market system, building in lessons from a recent disaster response and recovery project in Mozambique. And finally, a look to the future. For years, we’ve thought of forage crops and human crops as separate disciplines. Nic sees a future where a PSE model can bring them together – for the benefit of enterprises, farmers, and the animals and people they feed.
 

 

 

 

 

By Ashley Peterson 12/01/2020 #Blog