WEF_GrowAfrica_AnnualReport2014

Grow Africa’s work to tackle
systematic constraints
THEME 1: INCLUSIVE MODELS
Pioneering commercial, scalable models
that increase value for smallholders
In 2012, Grow Africa asked farmers, companies and governments what was constraining inclusive
investment in agriculture. Three themes emerged as priorities that Grow Africa could help address through
its unique convening power:
•¡
Inclusive business models: How to pioneer commercial, scalable models that increase value for
smallholders?
•¡
Finance: How to reduce the risks and costs of providing finance to agricultural SMEs?
•¡
Marketplace: How to better connect partners, data and tools to unlock opportunities?
Throughout 2013, Grow Africa has convened partners, designed solutions and catalysed action to tackle
these systemic constraints. The following section unpacks what we have learned with our partners, and
lays the groundwork for further progress in 2014.
Many African smallholders are stuck in a poverty trap that prevents them from improving
their productivity and incomes. However, if smallholders can gain some of the value
currently captured by middlemen, then their commercial equation changes. Innovative,
scalable models for smallholder aggregation are emerging that achieve this shift, and Grow
Africa is committed to working with partners to promote them. For investors on a continent
where the average agricultural holding is around 10 hectares, understanding such
commercial models for smallholder production is absolutely paramount.
AFRICA SMALLHOLDER CYCLE
Decision-making
biased towards risk
mitigation
Low availability
of quality inputs
at a fair price
Not enough
information
and training
LOW PRODUCTIVITY
LOW INCOMES
LOW OUTPUT QUALITY
Low
mechanisation
/ access to
technology
Difficulty accessing
formal markets due
to structural and
infrastructural issues
No availability
of rist mitigation
mechanisms to
guard against total
loss and volatility
No investment
into land
improvements
Professionalisation of farmer cooperatives can help secure off-take agreements, as for these Ethiopian barley growers.
Breaking the vicious smallholder cycle
Smallholder farmers are caught in a vicious cycle,
lacking training, inputs, mechanisation, investment,
risk management and market access, which leads to a
situation of low productivity, low quality and resulting
low income.
Currently, most value chains are relatively
unstructured, so that smallholders have to work
through middlemen to access markets for inputs,
services and outputs. Such aggregation comes at a
cost to the smallholder farmer, culminating in margins
that are too low to be commercially viable.
However, agriculture offers ample investment
opportunities for increased productivity and value
realisation along such value chains if they can be
more efficiently structured. Stakeholder collaboration
can drastically reduce smallholder farmer unit costs
for inputs and services, while increasing output sale
prices.
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Review of 2013 Review of 2013
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