ICT-Enabled Outgrowing Operations- Highlights From Africa

download ICT-Enabled Outgrowing Operations- Highlights From Africa

of 6

Transcript of ICT-Enabled Outgrowing Operations- Highlights From Africa

  • 7/28/2019 ICT-Enabled Outgrowing Operations- Highlights From Africa

    1/6

    BRIEFING PAPER

    ICT-ENABLED OUTGROWING OPERATIONS:

    HIGHLIGHTS FROM AFRICAINTRODUCTION

    This is one of a series of briefingpapers developed by USAIDsFACET project to help USAIDmissions and their implementingpartners in sub-Saharan Africa topromote information andcommunication technologies (ICT)within their agriculture-relateddevelopment programs, includingFeed the Future.

    This briefing paper presents theresults of an assessment carried outto identify, document anddisseminate information about ICTsthat are being used by Africanagribusiness companies to improvethe management of outgrowingoperations and the various forms ofsupport they provide to farmers.

    There are a variety of emerging ICTapplicationsmany profiled in thispaperthat can make outgrowingoperations more efficient andincrease the ability of companiesengaged in outgrowing to supportthe farmers they source from withseeds, fertilizers, training, marketaccess, and technical support.

    The assessment was carried outbetween June and September 2012.

    After carrying out preliminaryresearch, the team conducted fieldvisits to Kenya, Zambia, Ghana andTanzania to interview companiesengaged in outgrowing operations.This resulted in the identification of anumber of ICT applications beingused by these companies to improvetheir operations and provide benefitsto the farmers from whom they buy.

    The paper begins with an introductionto outgrowing and the benefits foragribusiness companies toincorporate ICT into theiroutgrowing operationsespecially forintegrating smallholders. This isfollowed by a description of selectedICT applications that agribusinessesare using to make their outgrowingoperations more efficient.1 Finally, thepaper discusses the implications ofthese applications for USAID missionsand development practitioners.

    OUTGROWING OPERATIONS

    Outgrowing operations can bedefined as an agreement (verbal orwritten) between farmers andcompanies for the production andsupply of agricultural products underforward agreements, frequently atpredetermined prices. Thearrangement also invariably involvesthe purchaser in providing a degreeof production support through, forexample, the supply of inputs or theprovision of technical advice.Outgrowing operations are based on:1) a commitment of the farmer toprovide a specific commodity inquantities and at quality standardsdetermined by the purchaser; and 2)a commitment of the company tosupport the farmers production andto purchase the commodity.

    Outgrowing can be instrumental inaggregating the production of smallscale producers so they can

    1 Brief profiles of each application mentionedin this paper are available online at:https://communities.usaidallnet.gov/ictforag/document-library/ict-and-ag-profiles

    participate in larger, more demanding(and otherwise inaccessible)domestic and international markets.Outgrowing benefits producersthrough the improved inputs,technology and technical assistancethat companies (buyers) operatingsuch schemes provide them. Theyalso can assist donor programspromoting this strategy to achievetheir goals of pro-poor economicgrowthensuring smallholders arelinked into growth opportunitiescreated as competitiveness isadvanced. There is a strong rationalefor donor programs to promote suchoperations in situations wheremutually beneficial relationships arepossible and where it makeseconomic sense.

    INCORPORATING ICT

    Implementing a successfuloutgrowing operation withsmallholders presents a unique set ofchallenges for companies, includingtime and resource-intensiveextension needs; managing largeamounts of data; farmer demands forproduction credit; maintaining farmerloyalty and quality communicationchannels; and scaling up acommercially viable model.

    Fortunately, technologicaladvancements in softwareapplications and products designedfor emerging markets, combined witha revolution in mobile phonecoverage and rural uptake acrossAfrica, has created a favorableenvironment for modernized, moreefficient models of ICT-enabledoutgrowing to emerge.

    ICT-enabled Outgrowing Operations: Highlights from Africa Last updated December 20121

    https://communities.usaidallnet.gov/ictforag/document-library/ict-and-ag-profileshttps://communities.usaidallnet.gov/ictforag/document-library/ict-and-ag-profileshttps://communities.usaidallnet.gov/ictforag/document-library/ict-and-ag-profileshttps://communities.usaidallnet.gov/ictforag/document-library/ict-and-ag-profileshttps://communities.usaidallnet.gov/ictforag/document-library/ict-and-ag-profiles
  • 7/28/2019 ICT-Enabled Outgrowing Operations- Highlights From Africa

    2/6

    Reality Check: Bringing Staff

    Along for the RideTechnology itself is very easy.What is more difficult is behaviorchange. This has been especiallytrue amongst our own staff, who

    are used to doing things how it hasbeen done. This has been achallenge in transferring to adigitized weigh and pay system.

    Managing Director of an

    agribusiness company with outgrowing

    operation.

    Agribusiness companies engaged inoutgrowing in Africa are increasinglyusing a variety of ICT applications toimprove efficiencies as well as thesupport they provide to farmeroutgrowers. Many of these examplesare highlighted below. Technology isallowing companies, for example, toimprove production planning,

    increase product traceability, andmanage payments to farmers. Manyof these applications are now beingused by companies in a commerciallyviable and sustainable manner,independent of donor support.

    Existing ICTboth simple andcomplex, customized and off theshelfcan now be integrated intomany daily operational componentsof successful outgrowing operations

    such as: communicating withoutgrowers, providing technicalassistance, providing credit, ensuringoutgrower access to appropriateinputs, determining prices foroutgrower produce, procuring fromoutgrowers, developing seedprograms, developing demonstrationand trial plots, engendering farmerloyalty, and management informationsystems. ICT applications can helpreduce transaction costs and createpositive impact for both companiesand producersas well as othersinvolved in the system (e.g. inputsuppliers, financial institutions, etc).

    ICT APPLICATIONS IN

    OUTGROWING: HIGHLIGHTS

    This section highlights some of theICT applications being used byagribusiness companies engaged inoutgrowing operations interviewedfor this paper. They include:

    Direct deposits for payments tofarmers

    Integrated GPS and GIS SMS-based database systems for

    procurement planning

    Soil testing to improve outgrowerrevenues

    Automated bulk voice messagingwith feedback loop

    Electronic vouchers to facilitatefarmer payments and reduce cashtransactions

    Bulk SMS and radio programs toimprove direct communications

    Supply chain management software Input tracking systems using

    barcodes

    Traceability and quality assurancesoftware

    Mobile farmer education networksDirect Deposits for Payments to

    Farmers: In Zambia, the dairycompanyParmalatutilizes directdeposits to monitor and manage its

    milk collection system. Traditionally,Parmalat representativescorresponded with and paid localmilk collection centers, which werethen expected to pay the individualfarmers for the milk. With the newdirect deposit system, the milkcollection centers compile thequantity and quality of milk providedby individual farmers. Thatinformation is manually transferredinto a database by Parmalat where it

    is reviewed monthly and used tocalculate payments which aredeposited directly to the bankaccounts of farmers.

    Payments to a large network ofsuppliers via direct electronicdeposits can improve the ability of acompany to track, monitor, andadminister its procurement. Direct

    supplier payments can also buildtrust and social capital between thecompany and its network of

    contracted farmers and producers.

    Integrated GPS and GIS: Geo-Traceability, a private agribusinesstechnology company, uses GPSmapping integrated into acustomized GISto maximize aclients value in responding totraceability demands in themarketplace. In Ghana, they aremapping tens of thousands of cocoaand cotton farmers for Armajarousing handheld Garmins, feeding thisinformation into a customized GIS foremployees (and a simplified web-based platform for clients). Eachfarmer receives a unique farmer code,linked to his/her cocoa certificationID, and trained field surveyorsadminister a field based questionnaire,capturing information such aspesticide use, land tenure, date ofplantation establishment, and keyinfrastructure. To speed data entryand reduce errors, paperquestionnaires are scannable.

    Although mapping is often driven byend market demands for traceability,when linked to a GIS it can providethe data and technology platformbasis for a range of efficiencies andcomplementary applications. ForArmajaro, this includes improvedtraceability capability, more effectivegeographic targeting of infrastructureor social/ health programs importantfor certified cocoa systems, andproduction planning efficienciesrealized from accurate data on farmsizes and locations. For example, usingthis information, Armajaro can quicklydetermine which cocoa plantationsare the oldest to prioritize replantingefforts.

    SMS-based Database Systems

    for Procurement Planning: Alarge Kenyan green bean exporter(who wished to remain anonymous)has made significant improvements to

    ICT-enabled Outgrowing Operations: Highlights from Africa Last updated December 20122

    https://communities.usaidallnet.gov/ictforag/node/339https://communities.usaidallnet.gov/ictforag/node/339https://communities.usaidallnet.gov/ictforag/node/339https://communities.usaidallnet.gov/ictforag/node/365https://communities.usaidallnet.gov/ictforag/node/365https://communities.usaidallnet.gov/ictforag/node/365https://communities.usaidallnet.gov/ictforag/node/365https://communities.usaidallnet.gov/ictforag/node/365https://communities.usaidallnet.gov/ictforag/node/339
  • 7/28/2019 ICT-Enabled Outgrowing Operations- Highlights From Africa

    3/6

    Digitizing Weigh and Pay

    Functions: Utilizing digital scales at

    collection points is an investment, butcan lay the foundation for otherefficiencies, especially when linked toa data management system.

    Illovo Sugaruses digital weigh-bridges and a customized GIS toimplement a complex digitized canepayment system for its 8,000 small-scale outgrowers in Tanzania. Illovocan weigh heavy truck deliveries ofcane accurately by farmer code andcapture both tonnage and qualitygrade for a more differentiated price.Illovo now pays 60% (and counting)of its farmers directly through anautomated process, deducting forassociation fees and credits fortransport and labor. Data is importedinto an Excel file with credits/debitsby farmer code, which is sent to thebank. Each farmer gets an itemizedaccount printout.

    Tanga Fresh is piloting digital scalesat two milk collection centers inTanzania and uses AgriManagr (see

    below) to capture and manage data.Farmers now get paid for portions ofa liter and TF gets farmer-leveldelivery data from each location. Milkcan be weighed en masse instead ofin multiple buckets, which increasesquality. At scale, TF plans to payfarmers directly and by quality grade,instead of weight.

    procurement planning by using acustom built database systemcombined with SMS messaging. Thecompanys network of rural village-based coordinators gathers farmingdata detailing the location and statusof green bean production of severalthousand growers. The coordinatorsthen submit the data to a central

    location through SMS messageswhere it is automatically entered intoa database which generates reportsdescribing overall production. As aresult of this system, more accurateplanning can be done to procureproduce from farmers, process thegreen beans, and export the finalproduct.

    The increased efficiency and reducedcosts allowed by this system has also

    improved relationships withoutgrowers as better understandingof the timing and volume ofproduction enables the exportcompany to purchase the farmersentire cropproviding moreconsistent and increased incomes.The company has improved theirentire procurement process andbelieves the system has more thanpaid for itself through their ability tobetter meet export orders.

    Soil Testing to Improve

    Outgrower Revenues:CropNutritionis a Kenyan agribusinesscompany that provides professionalsoil testing and fertilizer advisoryservices for both smallholder farmersand companies with outgrowingoperations. It uses mobiletechnologies to expand the reachand efficiency of its services. Farmerssubmit soil specimen bags (providedby Crop Nutrition) to arepresentative who then forwardsthe specimen to a lab for analysis.Once the analysis has beencompleted, the results are sentdirectly to the farmer via SMS. Thisprocess reduces costs anddramatically speeds up the transfer ofinformation to the farmers, who can

    then use that information to improvetheir soil and crop qualities.

    Crop Nutritions lab reports includetechnical recommendations thatadvise farmers how to apply thecorrect fertilizers, lime or otherinputs to reduce production costsand improve yields. This contributes

    to greater yields, improved qualityand increased income for farmers. Byencouraging all of their farmers touse this service, outgrowers canbenefit from improved farm producequality and increased product value.

    Automated Bulk Voice

    Messaging with Feedback Loop:HekimaxsMojaCastis an interactive,bulk voice messaging product thatallows the user to send customized,

    pre-recorded voice messages to largenumbers of recipients, with questionand answer response capabilities (e.g.press 1 for yes; 2 for no), and receivestatistics back to facilitate informationmanagement. In Ghana, it is beingpiloted to allow nucleus farmers/traders to communicate moreefficiently and effectively withthousands of farmers. Voice messagesmay range from information on atraders price, reminders onapplication times for agro-chemicals orkey production practices, or tocoordinate delivery days and times.The nucleus farmer/trader records themessage in any language as an MP3which is sent to Hekimax for bulkdelivery. In Ghana, MojaCast hasprimarily been marketed to financialclients as a commercial product. Itsuse in agriculturepiloted in 2012iscurrently provided free as aphilanthropic effort, although asdemand increases the business modelis in place to transition to morecommercial terms.

    By automating certain communicationneeds, these types of products createsignificant time and cost efficienciesfor aggregators, who no longer needto call farmers individually, travel as

    frequently, or rely on word of mouth.Because Hekimax compiles results ofrecipient responses, this has many ofthe same benefits of a simpleinformation management system.

    Electronic Vouchers to

    Facilitate Farmer Payments andReduce Cash Transactions:

    Several Zambian companies such asDunavant, the countrys largestcotton company, are using anelectronic voucher system run byZoona(formerly Mobile TransactionsZambia Ltd). With the e-vouchersystem Dunavant can pay itsoutgrowers with an e-voucher in lieuof cash. Dunavant deposits the full

    ICT-enabled Outgrowing Operations: Highlights from Africa Last updated December 20123

    http://www.cropnuts.com/index.htmlhttp://www.cropnuts.com/index.htmlhttp://www.cropnuts.com/index.htmlhttp://www.cropnuts.com/index.htmlhttps://communities.usaidallnet.gov/ictforag/node/340https://communities.usaidallnet.gov/ictforag/node/340https://communities.usaidallnet.gov/ictforag/node/340https://communities.usaidallnet.gov/ictforag/node/338https://communities.usaidallnet.gov/ictforag/node/338https://communities.usaidallnet.gov/ictforag/node/346https://communities.usaidallnet.gov/ictforag/node/346https://communities.usaidallnet.gov/ictforag/node/346https://communities.usaidallnet.gov/ictforag/node/338https://communities.usaidallnet.gov/ictforag/node/340http://www.cropnuts.com/index.htmlhttp://www.cropnuts.com/index.html
  • 7/28/2019 ICT-Enabled Outgrowing Operations- Highlights From Africa

    4/6

    Embracing ICT in P4PWFPs Purchase for Progress (P4P)engages in formal marketingarrangements with farmerassociations that often mirror atraditional outgrowing relationship. InGhana, P4P recently transitionedfrom paying farmers via check tousingE-Zwich, an electronic smartcard developed by the Bank of Ghanathat allows users (authenticated byfingerprints) access to a network of

    banks and rural outposts and e-payment/savings. Through E-Zwich,P4P pays farmers individually basedon volume delivered. Payment isrouted to the association, thenautomatically transferred to farmersbased on their E-Zwich code. Inaddition to reducing theft andincreased convenience for bothparties, P4P expects E-Zwich toencourage savings, as farmers cannow leave money in the bank insteadof cashing the entire check. Though

    not a commercial enterprise theWFPs use of E-Zwich showspromise with the private sector aswell. In Tanzania, P4P is workingwith USAIDs Connected FarmerAlliance to pilot supply chainmanagement software with its13,000 outgrowers.

    value of e-vouchers it issues into itsregistered Zoona account which canbe immediately transferred uponredemption by the farmers. Thefarmers can use the e-vouchers topurchase inputs at a discount atparticipating retailers or, if theychoose, can even redeem them forcash, merchandise, or other services

    such as school fees.

    Using e-vouchers improves the abilityof a company to track, monitor, andadminister payments to a largenetwork of suppliers. The risk andsecurity concerns of numerous cashpayments by company staff in remoterural areas is also reduced throughthe use of e-vouchers. Farmerregistration also enables thecompany to build a database of its

    suppliers to disseminate and compileinformation via mobile phones.Participating retailers benefit byexpanding customer payment optionsand accepting payment e-vouchers inlieu of cash. Instant payment for e-voucher redemptions, via theirZoona accounts, further reducesretailer risk.

    Bulk SMS & Radio Programs toImprove Direct Communication:

    Tanga Fresh(TF), a dairy company inTanzania with 3,500 outgrowers, usesbulk SMS and weekly radio programsto improve the quality of extensionand marketing messaging delivered tofarmers and to build a directconnection between the farmers andthe company. Using MyPhoneExplorer,TF sends bulk SMSs to 2,500 farmersweekly, communicating extensioninformation and announcing diseaseoutbreaks and price alerts. Farmers

    can text back questions orcomplaints directly to a full-time TFemployee who handlesapproximately 500 messages eachweek. A short radio program, airedon weekends, is developed by TF andincludes messages on milk extension,interviews with a range of dairystakeholders, a meet the Tanga

    Fresh staff feature, and listener call-in, where farmers can ask questions,get answers, and share experiences.

    TF does not have company extensionofficers, so these initiatives serve thatkey function. Before, outgrowerswere dependent on governmentextension officers or cooperative

    advisors; now, outgrowers haveimproved information and cancommunicate directly with TF. Thisallows TF to control the quality andtimeliness of communications, to bemore responsive to the needs of itsoutgrowers, and improvestransparency within the dairycooperative structure. TF has seenthe quality of milk increase along withits credibility amongst farmers.

    Supply Chain ManagementSoftware: Supply chainmanagement software tailored toagribusinesses in African markets isbeginning to emerge. For example,Vodafone currently has severalproducts under pilot in East Africa,2mFarmsin Ghana has products indevelopment, and the Syngenta

    Foundation is launchingFarmForceacross Africa as a commerciallyavailable, largely off-the-shelf productthat runs on an Android device (forfield-level data entry) with a cloud-based server (for back-endmanagement and data analysis). Rollouts in 2013 within outgrowing willinclude rice clients in Burkina Faso,Ivory Coast, and Ghana; potatoprocessing and vegetable exportclients in Kenya; and a cassava client

    in Mozambique. FarmForce iscurrently available in French andEnglish with Portuguese indevelopment.

    In addition, Kenyan softwaredevelopment company VirtualCityoffersAgriManagr, which is currentlyactive in Kenya and Tanzania.AgriManagr automates theprocurement of agricultural productspurchased from farmers. Bymeasuring and recording theprocurement process from weighingthe produce to trackingtransportation and payments, thesoftware is helpful to all value chainshareholders. Cost savings throughincreased operational efficiencies canoffset the price of the software inmost situations.

    2 In partnership with Vodafone, USAID

    recently launched theConnected FarmerAlliance. Through the initiative, Vodafone willdevelop supply chain management technologysolutions for agribusinesses, with three pilotsplanned for 2013: sorghum and horticulture inKenya; concession cotton farming inMozambique; WFP P4P in Tanzania. OtherAlliance initiatives include m-finance researchand product development for smallholders anda Safaricom business incubator for ICTdevelopers.

    ICT-enabled Outgrowing Operations: Highlights from Africa Last updated December 20124

    http://www.ghipss.net/http://www.ghipss.net/http://www.ghipss.net/https://communities.usaidallnet.gov/ictforag/node/363https://communities.usaidallnet.gov/ictforag/node/363http://mfarms.org/http://mfarms.org/http://www.farmforce.com/http://www.farmforce.com/http://www.farmforce.com/https://communities.usaidallnet.gov/ictforag/node/364https://communities.usaidallnet.gov/ictforag/node/364https://communities.usaidallnet.gov/ictforag/node/364http://www.usaid.gov/news-information/press-releases/new-farmer-alliance-improve-incomes-and-food-security-africahttp://www.usaid.gov/news-information/press-releases/new-farmer-alliance-improve-incomes-and-food-security-africahttp://www.usaid.gov/news-information/press-releases/new-farmer-alliance-improve-incomes-and-food-security-africahttp://www.usaid.gov/news-information/press-releases/new-farmer-alliance-improve-incomes-and-food-security-africahttp://www.usaid.gov/news-information/press-releases/new-farmer-alliance-improve-incomes-and-food-security-africahttp://www.usaid.gov/news-information/press-releases/new-farmer-alliance-improve-incomes-and-food-security-africahttps://communities.usaidallnet.gov/ictforag/node/364http://www.farmforce.com/http://mfarms.org/https://communities.usaidallnet.gov/ictforag/node/363http://www.ghipss.net/
  • 7/28/2019 ICT-Enabled Outgrowing Operations- Highlights From Africa

    5/6

    Companies using AgriManagr (andsimilar software) benefit fromimproved inventory management andreduced administrative costs, as wellas access to real-time informationabout the status of their supply chain.Results from existing users haveshown reduced weighing time at thefarm gate and a reduction of up to

    two months in the time it takes topay farmers. In addition, farmersreceive a balance sheet and record ofall their transactions, which can beused as proof of income to banks orother institutions. The system alsoallows companies to evaluate theperformance of farmers and provideloyalty incentives or rewards to topperformers. Furthermore, the systemallows exporters to easily match aproduct to a digital record of when

    and where it originated.

    Input Tracking Systems Using

    Barcodes: In Ghana,Armajaroisusing the barcode traceabilitytechnology they regularly employ totrack cocoa beans in order to moreeffectively track and manage inputdistribution and usage amongst itscotton farmers. When inputs aredistributed on credit, the receiptnow includes a barcode, scanned

    using a handheld device, whichincludes information such as theindividual farmer code and thevolume of inputs. This is linked toArmajaros overall database systemand eases the information burden oftracking and calculating farmer credit.When Armajaros field extensionistsvisit farms, they SMS the farmer codealong with an input-specific usagecode (e.g. that indicates that seedshave been planted or NPK has not

    been applied). The SMS codes areautomatically incorporated into thatfarmers data in the GIS.

    Although the initiative is new, it isexpected to significantly increaseefficiencies in input management andtracking, improve transparency, andreduce misuse. Using the SMSfeedback from extension agents,

    production managers, for example,can know how many farmers havenot applied a key fertilizer and arelikely to have reduced yields duringharvest season. In the future,Armajaro plans to release farmersupplier cards that would givefarmers more direct access to theirdata. Farmers can then use this data

    to support collateral claims and tohelp establish credit histories andcommercial viability.

    Traceability and QualityAssurance Software:MuddyBootsis a UK-based softwaredeveloper that focuses on traceabilityand quality assurance softwaresolutions for agribusiness companies.Quickfire software, one of itsproducts, helps companies track

    what their outgrowers are producingand where they are producing it.Greenlight Track and Trace is apackhouse management systemwhich provides traceability back tothe farmer, and their Cropwalkersystem records all aspects of thecrop production cycle and utilizesmobile devices for recording data.These systems help track products,plan production, and create auditablereports to help improve operationsand planning.

    The improved traceability and recordkeeping systems provide agribusinesscompanies (such as Unilever) withaccess to audit data that hasimproved their procurementefficiency and increased their abilityto provide traceability reports tobuyers. The system also helpsfarmers ensure that their productsare audited to export level standards.

    Mobile Farmer Education

    Networks:CocoaLinkis aninteractive farmer education andinformation delivery system beingpiloted by Hershey in Ghana todeliver extension and healtheducation information to thousandsof cocoa farmers, using mobile phonetechnology. Text messages

    covering production, post-harvest,and health messagesare sent toregistered farmers cell phones froma central service in Accra. Hersheyhas maximized the existing system ofcocoa stakeholders by collaboratingwith the Ghana Cocoa Board(COCOBOD) to provide messagecontent, Cocoa Research Institute of

    Ghana (CRIG) to diagnosis problemssent back by farmers via text orphoto, and the World CocoaFoundation to assist with massfarmer registration. Communitytrainers, selected in each of the 15targeted communities, are each givena smartphone that they can use totake photos of crops, send themback to CRIG, and get a diagnosis(e.g. is this black pod disease?).Hershey partnered with DreamOval,

    a Ghanaian software firm to developand manage the system architecture.

    Farmers benefit from increased accessto technical and health information,and ultimately increased incomesfrom more productive farms. Hersheyestimates that yields of trained cocoafarmers are 15-40% higher. Since July2011, over 100,000 messages havebeen delivered and Hershey aims tohave 25,000 farmers enrolled by theend of 2012. In 2015, the initiative isdesigned to transfer completely toCOCOBOD, the quasi-governmentalinstitution that governs all cocoabuying in Ghana.IMPLICATIONS FOR USAIDAND DEVELOPMENT

    PRACTITIONERS

    It is important to note that many ofthe applications described above arebeing used by companies

    independent of donor support. Theyare using them because they havecommercial incentives to improvetheir operational efficiencies and thevarious kinds of support that theyprovide to farmers. In order topromote this kind of ownership andsustainability, donor programs needto make sure to engage companies ina participatory dialogue in which they

    ICT-enabled Outgrowing Operations: Highlights from Africa Last updated December 20125

    https://communities.usaidallnet.gov/ictforag/node/366https://communities.usaidallnet.gov/ictforag/node/366https://communities.usaidallnet.gov/ictforag/node/366http://en.muddyboots.com/http://en.muddyboots.com/http://en.muddyboots.com/http://en.muddyboots.com/https://communities.usaidallnet.gov/ictforag/node/343https://communities.usaidallnet.gov/ictforag/node/343https://communities.usaidallnet.gov/ictforag/node/343https://communities.usaidallnet.gov/ictforag/node/343http://en.muddyboots.com/http://en.muddyboots.com/https://communities.usaidallnet.gov/ictforag/node/366
  • 7/28/2019 ICT-Enabled Outgrowing Operations- Highlights From Africa

    6/6

    DISCLAIMER

    The views expressed in thispublication do not necessarilyreflect the views of the U.S. Agencyfor International Development or

    the U.S. Government.

    This series of papers is supported by USAIDs Fostering Agriculture Competitiveness Employing Information CommunicationTechnologies (FACET) project under the Financial Integration, Economic Leveraging, Broad-Based Dissemination and SupportLeaders with Associates award (FIELD-Support LWA). It was written by multiple authors fromAction for Enterprise (AFE)andAnna Garloch ofACDI/VOCA. FACET offers on-demand field support to help missions with the challenges of using these ICTinterventions in agricultural development. To learn more about field support options, contact Judy Payne, ICT Advisor,

    ([email protected]) or Josh Woodard, FACET project manager ([email protected]).

    RESOURCES

    Action for Enterprise,Facilitating theDevelopment of OutrowingOperations: A Manual. (USAID,September 2009)

    FAO,Contract Farming ResourceCentre.

    World Bank,Module 10: ICTApplications for Agribusiness SupplyChains,ICT in Ag Sourcebook. (2011)

    Brief profiles of each application

    mentioned in this paper can also befound online at:https://communities.usaidallnet.gov/ictfora/document-library/ict-and-ag-profiles

    determine the ICT applications thatmake sense for them. Programs canthen help to buy down the risk thatcompanies face in developing andexperimenting with theseapplicationsbut the responsibilityfor implementation should lie withthe companies themselves.

    One of the ways that donorprograms can facilitate integration ofICTs is to invite agribusinesscompanies engaged in outgrowing (orthinking about establishing anoutgrowing operation) to proposetheir own ideas and strategies fordeveloping and integrating ICT intotheir operations. This can befacilitated, if needed, by presentingdifferent ICT opportunities (aspresented in this paper) to interested

    companies and/or by facilitatingexposure visits for companies to seehow ICT applications are beingapplied in outgrowing operations inother countries or locations.Ultimately, however, it is thecompanies themselves that need todecide which, if any, ICT applicationmakes sense for them.

    Once companies have identified, orbecome aware of, ICT opportunitiesthe donor program can solicit theirproposed ideas and strategies using apre-determined application formatreferred to as an Invitation forApplication (IFA). The IFA describesthe donor programs objective ofencouraging agribusiness companiesto invest in new ICTs that they mightotherwise not invest in on their ownor take a long time to do so (due tohigh investment costs and risks). Itthen presents the conditions ofparticipation in the program anddescribes the kinds of technical andcost share support that can beprovided to help companies buy

    down the risk and cost ofdeveloping, experimenting, orimplementing new ICTs.

    Not all technology solutions areappropriatescale of the outgrowingoperation, buy-in of leadership, andstrength of the net efficiencies thatwill be created from the change are

    all critical elements that need to beconsidered. For example,transitioning from cash payments tomobile money may be one of theeasier solutions to adopt, but thismay also require other changes, suchas digitizing data collection ortracking sales by farmer instead of aproducer group. In addition, bothagribusiness companies and donorprograms must be aware of accessissues more marginalized farmers

    might face (e.g. collateralrequirements to open a mobilebanking account). Therefore, animportant role for a donor programis to support companies to evaluatedifferent products and promotethose that can be most readily andrealistically adopted.

    ICT is often an overlookedsupporting service market in valuechain analysis. When assessingmarket systems and designing valuechain development programs,programs should consider the rolethat third-part ICT providers can (ordo) play as service providers to valuechain actors. For example, projectsmay want to consider building thecapacity of technology companies tounderstand, design around, andmarket to agricultural clients better.

    CONCLUSION

    ICT is a tool, not a panacea, and notall solutions fit all business models orcontexts. Yet even small, resource-lite technologies can yield significantreturns for companies and farmers.Embracing technology can enablecompanies to take a smallholder-based outgrowing operation from

    the concept or small-scale stage to acommercially viable model. It canalso help firms to transforminefficient and problematicoperations into manageable ones.

    With the explosion of mobilecapabilities across Africa andrenewed attention to the roletechnology can play in empoweringfarmers and base of the pyramid(BoP) consumers. There are many

    opportunities to adopt ICTapplications, a vast number of whichare already on the market but simplynot being utilized in or adapted foragriculture. Technology can indeedbe a powerful partner and catalyst inthe effort to facilitate more inclusive,competitive, mutually profitable, andscalable outgrowing systems inmodern-day Africa.

    ICT-enabled Outgrowing Operations: Highlights from Africa Last updated December 20126

    http://www.actionforenterprise.org/http://www.actionforenterprise.org/http://www.actionforenterprise.org/http://www.acdivoca.org/http://www.acdivoca.org/http://www.acdivoca.org/mailto:[email protected]:[email protected]:[email protected]://backup%20word%20versions/[email protected]://backup%20word%20versions/[email protected]://backup%20word%20versions/[email protected]://www.actionforenterprise.org/paper-usaid.pdfhttp://www.actionforenterprise.org/paper-usaid.pdfhttp://www.actionforenterprise.org/paper-usaid.pdfhttp://www.actionforenterprise.org/paper-usaid.pdfhttp://www.actionforenterprise.org/paper-usaid.pdfhttp://www.fao.org/ag/ags/contract-farming/en/http://www.fao.org/ag/ags/contract-farming/en/http://www.fao.org/ag/ags/contract-farming/en/http://www.fao.org/ag/ags/contract-farming/en/http://www.ictinagriculture.org/ictinag/sourcebook/module-10-ict-applications-agribusiness-supply-chainshttp://www.ictinagriculture.org/ictinag/sourcebook/module-10-ict-applications-agribusiness-supply-chainshttp://www.ictinagriculture.org/ictinag/sourcebook/module-10-ict-applications-agribusiness-supply-chainshttp://www.ictinagriculture.org/ictinag/sourcebook/module-10-ict-applications-agribusiness-supply-chainshttp://www.ictinagriculture.org/ictinag/sourcebook/module-10-ict-applications-agribusiness-supply-chainshttps://communities.usaidallnet.gov/ictforag/document-library/ict-and-ag-profileshttps://communities.usaidallnet.gov/ictforag/document-library/ict-and-ag-profileshttps://communities.usaidallnet.gov/ictforag/document-library/ict-and-ag-profileshttps://communities.usaidallnet.gov/ictforag/document-library/ict-and-ag-profileshttps://communities.usaidallnet.gov/ictforag/document-library/ict-and-ag-profileshttp://www.ictinagriculture.org/ictinag/sourcebook/module-10-ict-applications-agribusiness-supply-chainshttp://www.ictinagriculture.org/ictinag/sourcebook/module-10-ict-applications-agribusiness-supply-chainshttp://www.ictinagriculture.org/ictinag/sourcebook/module-10-ict-applications-agribusiness-supply-chainshttp://www.fao.org/ag/ags/contract-farming/en/http://www.fao.org/ag/ags/contract-farming/en/http://www.actionforenterprise.org/paper-usaid.pdfhttp://www.actionforenterprise.org/paper-usaid.pdfhttp://www.actionforenterprise.org/paper-usaid.pdfhttp://backup%20word%20versions/[email protected]:[email protected]://www.acdivoca.org/http://www.actionforenterprise.org/