INVC- Bridging Activity Advancing Value Chains of Groundnuts and Soy beans Presented at the Annual Review workshop, Lilongwe Hotel, Lilongwe June 2017 www. iita. org I www. cgiar. org
Presentation outline Introduction Progress of Achievements Progress of G/nuts and Soya value chains Costs and returns structures of G/nuts & Soy beans value chain Sensitivity Analysis of Soy beans Progress of seed loan management Progress of aggregation and marketing Value created by the 2 chains Lessons Challenges www. iita. org I www. cgiar. org
Introduction The strategic objective was to improve the competitiveness of soya and groundnuts through; increasing access to business development, financial, and extension services; transforming the relationships between value chain actors; and developing market linkages. Working in 5 districts (Mchinji, Lilongwe, Dedza, Ntcheu, and Mangochi) covering 15 EPAs, targeted 15, 051 farmers www. iita. org I www. cgiar. org
Progress of Achievement G/nuts and Soy beans Value Seed and Inoculant provision Chains Production Trading Transformation End Product Categories of operators - in different channels Seed Producers Funwe – 119 MT Makwacha Museco 21 MT Tikolore AISL-40 MT CG 7 Global Seeds- 30 MT CG 7 Farmers Traders Companies Market Segment Informal traders Farmer groups Formal traders Association Goods for Good Cooperatives Bonga traders 4, 582 MT of soya (ACE Platform) 1, 380 MT of G/nuts MK 110 -200/kg Soya MK 270 -330/kg G/nuts www. iita. org I www. cgiar. org
Costs and Returns structure of G/nuts and Soy beans Value Chains Item Soy beans. Makwacha G/nuts- CG 7 Yield 1, 468 kg/ha 963. 62 kg/ha Price MK 160/kg MK 300/kg Total variable costs MK 212, 121. 00/ha MK 229, 360. 00 Gross Income MK 234, 880. 00/ha MK 22, 759 MK 289, 086. 00 MK 144. 50 MK 238. 02/Kg Gross margin Break-even Price MK 59, 726. 00 www. iita. org I www. cgiar. org
Sensitivity Analysis for Soy beans (‘What if’) Scenario Yield (Kg/ha) Variable cost (MK) Price (MK/Kg) Gross Income (MK) GM (MK/ha) BEP (MK/Kg) ‘What If? ’ 1, 000 212, 121 160, 000 (52, 121) 212. 12 ‘What If? ’ 2, 000 212, 121 160 320, 000 107, 879 106. 06 www. iita. org I www. cgiar. org
Seed Loan management 140 MT of Soy and 70 MT of CG 7 was loaned to farmers The rate of repayment varied from one partner to the other but the majority of partners used 1: 2 system Repayment rate for FGs ranges from 40% to 100% The initial plan for the seed loan was to sell the repaid grain and use the proceeds to buy new certified seed? ? ? However, there is a challenge that the loan amount will be tremendously reduced…………. . www. iita. org I www. cgiar. org
Seed Loan management For example, if we assume 1: 2 repayment with 80% repayment rate Value Quantity chain distributed Value (MK) Soya G/nuts 80% Expected repayme Market Amount repayment nt Prices (MK) % of the value 140 MT 116, 825, 29 9 280 MT 224 MT 160 35, 840, 000 31% 70 MT 119, 568, 90 0 140 MT 112 MT 300 33, 600, 000 28% In view of this, plans are underway to establish a sustainable seed management system-borrowing from Chithumba model- where repayment is as high as 1: 4 www. iita. org I www. cgiar. org
Aggregation and Marketing Trained 27 (8 F, 19 M)frontline staff (DAES, We. Effect, Dedza CADECOM) on formulation of aggregation & marketing plans Trained 274 (129 F, 145 M) farmers on formulation of aggregation & marketing plans Over 350 MT of soya was aggregated The market prices are volatile………. fluctuating almost everyday www. iita. org I www. cgiar. org
Aggregation & Marketing Prices of soya beans that were offered by the informal traders ranged from MK 110/kg to MK 170/kg Linkage of farmer groups Nyanja and Chitowo Associations to buyers (24. 5 MT @ MK 200/kg for Nyanja and 15. 4 MT for Chitowo @MK 160/kg) www. iita. org I www. cgiar. org
Value created by the 2 Value chains Commodity Area (Ha) Yield (Kg/ha) Soya 3, 121. 00 68. 00 G/nuts 1, 432. 00 963. 62 Average Production Price (Kg) (MK/Kg) 1, 4 4, 581, 628 00 1, 379, 904 00 Amount (MK) 160. 733, 060, 480 300. 413, 971, 152 1, 147, 031, 632 www. iita. org I www. cgiar. org
Lessons Despite the message of aggregation and marketing, farmers still prefers Co. D mode of trade Group marketing is being affected by past experiences and lack of trust… Access to structured market is depended on the volume of production www. iita. org I www. cgiar. org
Challenges Low prices Low production- not able to participate in competitive and structured market effectively Poor quality seed of groundnuts reduced the profitability Weak farmer groups- not able to participate in the marketing of commodities effectively Aggregation was affected by past experiences and lack of trust. www. iita. org I www. cgiar. org
Thanks for your attention!. . . www. iita. org I www. cgiar. org
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