The Public and Private Investments Boosting Small Seed Companies and Maize Yields in Kenya
Saleem Esmail founded Western Seed Company in Kenya in the 1990s with the idea that better maize varieties could free small-scale farmers from low productivity. He built the company by adapting his own improved maize varieties and varieties shared at no cost by CIMMYT to local climates and ecologies that had never been the focus of Kenya’s big seed companies.
Improved seeds adapted to local conditions could transform yields if farmers would risk trying them. In 2010, the social impact investment fund Acumen provided Western Seed the financing to breed and market new maize varieties for some of the poorest agricultural communities in western Kenya.
“The Acumen assistance came at a time when farmers were still extremely risk averse,” said Esmail. “It gave us a little bit of a cushion to build farmers’ confidence in the products.
This model of public-private partnership can have a huge impact for underserved niche markets. A 2017 Feed the Future evaluation led by the Tegemeo Institute and UC Davis showed that Western Seed’s adapted varieties significantly increased yields in mid-altitude regions compared to local seeds and even other improved varieties. A new analysis by the research team showed how a unique public-private partnership helped Western Seed achieve success.
“The private market on its own may not provide the innovations necessary for smaller niche markets like those in our study area in western Kenya,” said Michael Carter, MRR Innovation Lab director and principal investigator on the evaluation. “The novel public-private partnership in the case of Western Seed can fill that niche and create value for underserved farmers and their local economies.”
A Competitive Advantage for Local Seed Companies
Producing seeds for a new market is a big investment in money and time. Even so, small companies have advantages over the larger seed companies and even multi-nationals. Local companies have already invested in land and infrastructure to do adaptive breeding. They have a better understanding of farmers’ preferences. They know the local growing conditions and challenges. In a small market, these can be the keys to profitability.
“Smaller, locally based companies can cost-effectively adapt varieties to their environment but frequently lack the access to capital to build up the scale of operations needed to really grow the market for their improved varieties,” said Carter.
The original Feed the Future evaluation was a multi-year randomized controlled trial to learn which families benefit from locally adapted improved seeds and by how much. The results showed that better resourced mid-altitude farmers who also applied fertilizer had yield increases of 150-250 percent. Even neighbors with fewer resources had gains between 100-150 percent despite not applying fertilizer.
The research team went on to build an economic model to understand what small, private seed companies need to be able to introduce adapted seed varieties in a small market. The model showed that small companies need a way to meet the high costs of breeding while also being sure the area they hope to reach has enough farmers to buy the seed.
Western Seed was able to leverage CIMMYT’s public investments in improved breeding lines while funding from Acumen supported further adaptive breeding and development of new varieties and marketing for the underserved mid-altitude areas.
“If you don’t have a public sector to provide economies of scale for the initial costs of breeding new lines and a local industry with local knowledge, then you may not be able to serve that niche market at all,” said Carter.
Right Seed, Right Place, Right Time
Esmail said the seed sector in Kenya still faces a number of the same challenges it did three years ago. The real issue, he said, is that small-scale farmers are extremely risk averse and are reluctant to try new varieties. Even if a farmer has adopted a new variety it can be a challenge to ensure continued access to that variety.
“In terms of infrastructure and distribution you’ve got to get the product to the right place at the right time,” said Esmail. “If farmers are convinced the seed is good they are going to do whatever they can to buy it if it’s accessible.”
Today, Western Seed has maintained its expansion into western Kenya and is now also reaching markets in Rwanda and Tanzania. This year, Western Seed will produce over 3,000 tons of seed that will reach half a million farmers. Esmail said it took him 25 years to reach this capacity.
“We don’t borrow from Acumen anymore or get any grants from them,” said Esmail, “but we would really like them to know that they’ve contributed to our success.”