Only around 5 percent of smallholder farmers in Mozambique plant certified seed. One reason is a lack of access: on average, farmers must travel about 50 miles (80 km) to the nearest store selling certified seed—a long way to travel by foot, bicycle, motorbike or informal public transport, especially given that upon arrival the store may have sold out or the product may just be uncertified grain painted red to simulate the seed treatment process.
Access to quality seed in rural areas remains limited. With most seed companies typically concentrating on large agribusiness, NGO or government sales, the smallholder market has not traditionally been viewed as an attractive market segment for seed sales in Sub-Saharan Africa. Smallholders purchase low volumes, they are notoriously price sensitive and often fail to recognize the advantage of investing in improved seed as opposed to saving their own grain from one year to the next. Additionally, their rural locations pose huge distribution and logistics constraints for any company wishing to tap into this market.
The times, however, are changing as the traditional sales channels through NGO and the Mozambique government are drying up, as smallholders become increasingly aware of the advantages of agricultural inputs (demanding more and more in terms of price, standards and additional services), and as an increasing range of private sector firms begin to move into this previously unexplored market. Seed companies wishing to maintain ground are now feeling the pinch and can no longer sit back and rely on their traditionally secure sales channels. They must look to smallholders if they wish to secure their future. And while individually small purchasers, groups of smallholders are becoming attractive as a market.
With support from the USAID Feed the Future Partnering for Innovation program, NCBA CLUSA’s Smallholder Effective Extension-Drive Success (SEEDS) project decreases the risk for two private sector seed companies—Oruwera Seed Co and Phoenix Seeds—to enter into this market. Key to achieving profitability is distribution: making seed available where it is needed, when it is needed. This involves supporting both firms to establish rural “hub and spoke” distribution networks of agro-dealers, each with their own network of rural micro-entrepreneurs (generally kiosk owners who are now adding seed to their existing product range). Not only is this making certified seed available in rural communities for the first time ever, but it is also generating much needed additional revenue for rural entrepreneurs.
One such entrepreneur is Helder Jorge from Namigonha, Ribaué district, Nampula province, Mozambique. With SEEDS support, Helder is making a difference for Phoenix Seeds, himself and his community. Starting off as a vegetable producer in nearby Ribaue, in 2012 Helder started seed and input sales and opened his own inputs store when he realized how hard it was to get his hands on quality product for his own farm. Through SEEDS’ support, in 2016 Helder linked up with Phoenix Seeds and Oruwera Seed Company and signed contracts as their primary representative in Ribaue district.
Helder serves as a SEEDS supported agro-dealer “hub,” which means he receives product at preferential prices for re-sale in his own store and distribution to his own network of smaller SEEDS supported retailers or agro-dealers—the “spokes” of distribution. With SEEDS support, Helder’s business has grown not just in terms of links with suppliers but also in terms of management, with the SEEDS partnership providing business related technical assistance, monitoring and support in areas such as business planning, marketing, stock requisition/management, transport logistics and credit management. Both Oruwera and Phoenix—small companies usually risk averse in terms of credit—now feel confident enough to supply Helder on consignment basis for one month.
This year Helder traded four tons of Phoenix cow pea, sugar bean, soya and maize seed and two tons of Oruwera cowpea, pigeon pea and maize seed to the value of around $11,000, in addition to further product from his usual, existing, suppliers. Phoenix and Oruwera product alone represented around $4,300 in increased profits.
SEEDS support has enabled Helder to increase his stock, introduce new product lines and better keep up with the demand from both retailers and smallholder clients. His total sales have increased from around three and a half tons prior to his involvement in SEEDS to seven tons annually at present, or from a total turnover of around $4,300 USD to $14,000 USD. With his increased profits, Helder invested in the construction of a new 30-ton capacity warehouse and other business activities including the construction of two small shops to rent out.
Not only has Helder’s own business benefited from his success, but so has that of his four smaller retailers in the Ribaué and nearby Malema districts to whom he distributes, who in turn are making quality, certified seeds available in their own rural communities. The six tons of certified seed from Phoenix and Oruwera alone was sufficient to plant around 200 hectares of smallholders’ land with certified seed in Ribaué district, representing increased yields and profits for 443 smallholder farmers.
As a result of the business coaching, support and technical assistance provided through the SEEDS project, Helder now feels confident enough to continue negotiating directly with Phoenix and Oruwera in the future, bargaining for better delivery terms and prices, increasing his credit allowance and stocking increased volumes of seeds, even planning to paint his store with Phoenix branding.
But his success as an agro-dealer doesn’t just end with Phoenix and Oruwera; in the future, Helder plans to apply his experience to other large seed and input suppliers, stocking an even wider range of product on similar terms, including not just seeds but also fertilizers, pesticides, inoculants, tools and implements, becoming a reference for quality seeds and inputs in Ribaué district and providing smallholder farmers access to quality products across the board.