Market interventions double farmers’ returns in the Lake Kivu Pilot Site
Market access and value-addition interventions increased farmers’ returns by about 50% in the Lake Kivu Pilot Learning Site, say Birachi et al in an article published in the African Journal of Agricultural and Resource Economics. The tonnage of potatoes marketed increased from about 3 to 15 MTs in less than one year, and prices went up by 10%. The authors recommend the use of flexible contracts, coupled with credit support, to sustain and further the progress made.
The economies of Uganda, Rwanda and the Democratic Republic of Congo (DRC) are heavily dependent on agriculture, with over 60% of the region’s population deriving their livelihood directly from agriculture. The sector is critical for the growth of the region, but is affected by weak market links and limited value-addition. Techniques are mostly traditional, tools and infrastructure are inadequate, and information scarce. Smallholders have limited market surplus, which translates into inflated per-unit costs of assembly, handling and transportation. They lack basic market and price information, and bargaining power. In periods of surplus, commodities often perish for lack of value-addition technologies. Disorganised markets and marketing play a major role in perpetuating poverty cycles and subsistence agriculture in the region.
In response, the sub-Saharan Africa Challenge Programme (SSACP) tested the Integrated Agricultural Research for Development (IAR4D) approach in the Lake Kivu Pilot Learning Site (LKPLS). SSACP engaged multiple stakeholders to identify interventions that strengthen the value chain. Through three innovation platforms (IPs), namely Musanganya, Gataraga and Bubare, multiple stakeholders engaged in collective marketing, product transformation and capacity building as key drivers for expanding market access. This paper summarises the benefits arising from an IAR4D approach for smallholder farmers within LKPLS.
Two cases, from Rwanda and the Democratic Republic of Congo, were used to evaluate the IAR4D interventions. Data was collected through surveys of key products (banana and Irish potatoes) in key markets in the two countries, from 2009 to 2011. Additional data was collected from production and processing activities. The markets surveyed were Goma and Bukavu in the DRC, and the Kigali city markets in Rwanda. The results show that there is a clear advantage for the IP members from shifting from the sale of raw bananas to processing them into higher-value products—a marginal rate of return of 92%, compared to the highest return obtained for the sale of raw beer bananas of 19%. The benefits generated, if shared with the producers equitably, should be able to sustain required innovations and investments.
In Rwanda, the IAR4D process brought important information about buyers’ potato preferences to farmers, enabling them to identify appropriate entry points and access niche markets in Kigali for the first time. The IP began with only four niche buyers in 2009, but the number of buyers more than doubled in 2010 to 10. In less than two years, there was an increase of over 800% in the volume of potatoes traded under the IP. The combination of extended shelf life, packaging and branding allowed the products to penetrate into more profitable and distant markets, attracting better prices from middleclass consumers.
- to sustain market linkages, producers must plan long-term supply of products;
- simple value-adding activities such as packaging and branding have a positive effect on farmer incomes and must be encouraged;
- easy-to understand and flexible contracts between actors go a long way to ensure agreements are respected;
- the retail system for banana products in the DRC is still weak and needs to be strengthened through training and sensitization on the new products; new and distant markets will be required to sustain the growth of the banana value-added chains; and more technical support will be required to enhance the quality of the processed products;
- farmers’ access to credit should be improved so they can postpone immediate sales in preference for better prices and markets.
Read the full paper: Birachi et al
Birachi E, Karume K, Kyamuhangire W, Chiuri W, Mugabo J, Tumwesigye KS, Kasenge V, Bonabana- Wabbi J, Tenywa MM, Nyamwaro SO, Bikuba G, Habumugisha P, Lubanga L, Byamukama J, Nyamurinda B, Mandefu P, Gafaranga J, Kamugisha R. 2013. Expanding market access and value addition in selected agricultural value chains: the role of IAR4D in the Lake Kivu Pilot Learning Site. African Journal of Agricultural and Resource Economics 8 (3): 135-144
Keywords: IAR4D; potato; market linkages; market development; collective marketing; value addition; processing
Improving smallholder production systems, markets, productivity, sustainability and incomes is a key focus of the CGIAR’s Collaborative Research Project 6 on Trees, Forests and Agroforestry—of which the World Agroforestry Centre is a key partner.