WATCH: Scalable Models for "Last Mile" Input Delivery
This post was contributed by Dan White of ACDI/VOCA and Ben Fowler of MarketShare Associates, and is part of Agrilinks' partnership with USAID's LEO (Leveraging Economic Opportunities) project.
Smallholder farmers represent a majority of the world’s farmers and a majority of the world’s poor. Low agricultural productivity is a key driver of their poverty. Yet while the application of improved inputs such as fertilizer, agrochemicals and seeds have significant potential to increase both agricultural yields and farmer income, input access among smallholder farmers remains low. Over the past six months, Leveraging Economic Opportunities (LEO) has researched models focused on increasing smallholder utilization of improved inputs as a means to improve yields and incomes at scale.
Surveying close to 50 cases and researching nine more deeply, we found that a number of factors have impeded efforts to achieve input delivery at scale. For smallholders, limited awareness of the benefits of improved inputs and how to use them, limited access to inputs, and limited cash or credit to pay for them were the most consistent causes. For input suppliers, limited cash and credit, an uncertain policy environment (particularly state-subsidized input distribution schemes), limited knowledge of smallholder demand, and distance from smallholders tended to discourage them from marketing actively to smaller producers. More broadly, counterfeit products and short-term business strategies like recommending inflated application rates in order to sell more product led to high levels of mistrust between input suppliers and smallholders.
The cases studied deployed strategies to solve these constraints by engaging a "change-agent" within the value chain at one of five points: working through larger input suppliers, village-based "micro-entrepreneurs," producer organizations, lenders, or buyers. While our research details some of the salient trade-offs between these approaches, there are several overarching findings:
1. Input demand is correlated to crop demand. Without the ability to sell their crops at attractive prices, smallholders lack the incentives to buy higher quality inputs.
2. There is an inherent trade-off between sustainability and equity. Actors furthest from the smallholder farmer (e.g., input supply companies) are also those with the greatest capacity for sustaining ongoing input delivery. Conversely, those most attuned to the needs of the farmer (e.g., microentrepreneurs and producer collectives) are less likely to have the capacity to manage ongoing input delivery. Policies and project design should reflect this trade-off and seek ways to improve the sustainability of the buyer, producer-collective, and microentrepreneur models, and the equity of the input-supplier model.
3. Extension is an important complement to input access. Without knowledge of appropriate application, the delivery of improved inputs will have minimal or even negative effects, harming farmer livelihoods in the short-term and leading to mistrust of input suppliers in the long-term. It is essential that those investing in input delivery invest simultaneously in extension services.