Project description / objective
To increase equitable growth and incomes in the agriculture sector in Mozambique by:
- increasing the competitiveness of selected value chains
- expanding the number of enterprises that can compete and upgrade their products and services in selected markets
- improving relationships and linkages between those firms and other market participants throughout the value chain
Market system focus
1. Agricultural inputs distribution system
Less than 10 per cent of smallholder farmers (SHFs) in Mozambique use improved agricultural inputs such as certified seed. Even fewer use fertiliser or chemical products. As a result yields of cereals and pulses cultivated by SHFs are half of those in neighbouring countries with similar climatic and socio-economic conditions.
Historically, agricultural inputs have been supplied by domestic and foreign government organisations. Since 2013 the Mozambican government significantly reduced the supply of inputs due to funding shortfalls. In response, input companies have signalled interest in selling directly to SHFs and expanding their market penetration.
Small to medium-sized seed companies are now actively competing and innovating to reach smallholders. The number of fertiliser plants in the country has been steadily rising. Input suppliers are expanding to capture new market segments. Firms are gradually developing distribution networks.
However, much of this response is haphazard. Developments rely primarily on established contracts with large commercial farms and non-government organisations. These are not well positioned to service smallholders.
Inova is actively engaging to facilitate behavioural change within the inputs distribution network. Inova's main objective is to support firms to expand their market scope while servicing the smallholder farmers.
2. Supply chain management system
The dominant business model for most agricultural produce is price-based competition between domestic traders for low quality products. Aggregated product is sorted and graded internally. This results in an adverse economic outcome for both the buyer and seller. Growth of the informal market for commodities produced by smallholder farmers is constrained by limited trust between buyers and sellers.
Inova's objective is to improve the efficiency of interconnected networks that service end customers through partnering with various businesses within the outputs network.
Inova will stimulate improvements for both the buyer and seller by enhancing relationships between primary market actors, namely:
3. Interconnected market systems
The core market systems - input supply distribution and the supply chain - are interconnected. To support the growth of both Inova will use media, particularly radio, to amplify success and best practices.
For the agricultural inputs distribution system
Inova aims to:
- help agri-input traders improve the performance of their distribution networks
- expand retail by improving value for customers
- improve efficiency and reduce operational costs by establishing strategic partnerships
- continue to innovate through the adoption of evidence-based management processes
The interventions in the agricultural inputs distribution system will:
- facilitate an inclusive business model for local inputs retails
- facilitate establishment of a widely-known public competition/award systems for best quality inputs
- increase collaboration between input sellers and end market buyers to improve quality and quantity of production
- support input dealers to adopt collaborative business models with shared information regarding varieties and prices
- support input traders to adopt new marketing approaches to target SHFs for sales of improved inputs
For the supply chain management system
Inova is supporting innovative ideas that help agri-commodity buyers improve:
- the performance of their supply networks
- the efficiency, and reduce operational costs, by establishing strategic partnerships
- continued innovation through the adoption of evidence-based management processes
Interventions in supply chain management will facilitate the expansion of export market options while incentivising investment in the supply chain through:
- improving food safety/quality certification services offered by national service providers
- investing in food safety certifications
- establishing certifiable supply chain traceability
- domestic trade support for innovations in quality testing, sorting and grading at the farm gate
For interconnected market systems
Develop interconnected market systems such as the role that media houses can play (eg community radios) in delivering information to, and providing a voice for, SHFs.