Soybean Innovation Lab Teams with FirstWave in Zambia to Create Resiliency and Market Strength Through Agricultural Mechanization
Introduction: by Kerry Clark (Soybean Innovation Lab)
The Soybean Innovation Lab (SIL) has been conducting fabrication trainings since 2018 for a multi-crop thresher that helps reduce post-harvest loss by enabling faster post-harvest processing and reducing contamination introduced during manual threshing. The training of over 200 artisans from small and medium scale enterprises in nine African countries has been led through collaborations with development organizations and the private sector. Soybean is an important nutritional and commercial crop for smallholder farmers in Africa and demand is strong from local and regional meat production industries. Research done by SIL in Ghana has shown that farmers are more likely to grow soybean when they have access to mechanized threshing. To help meet demand for soy products in their fish production facilities, the FirstWave Group joined with SIL to help start a soybean thresher fabrication industry in Zambia. Anson Knausenberger, Impact Project Director for FirstWave, discusses how access to threshers can assist private sector companies such as FirstWave in contributing to economic resiliency and market strength for African farmers and businesses.
A private-sector view: by Anson Knausenberger (Impact Project Director, FirstWave Group)
What do traditional harvesting methods that lead to huge losses to smallholder farmers have to do with general public interest? Not much, it seems, with all that’s going on these days.
What about ensuring that — amidst declining agricultural yields and depressed economies — supply chains don’t break down, causing major social unrest on a continent that, in 15 years, will have more youth reaching working age than the rest of the world combined?
What about taking advantage of a continent’s incredibly unique position to industrialize value chains with the best scientific and technological evidence that pairs investment with innovative businesses who embed inclusive market systems development into their bottom line?
What about preventing the US presence from continuing to be displaced on this continent by others who recognize that in 5 years, 50 percent of the world’s largest companies will be based in emerging markets?
Perhaps the level of complexity to address the above – the myriad of cross-sectoral linkages between these losses that perpetuate poverty among the world’s 2 billion lives supported by smallholder farmers – makes it tough for the general public to disaggregate their immediate needs from the immediate need to solve the assorted technological, market and financial barriers that perpetuate smallholder farmer losses.
However, there’s hope.
What if achieving these things simply meant breaking the cycle of low levels of productivity and low income through basic economic activities that do not have diminishing returns?
More interested? Well then, let’s talk threshers.
Combine harvesters might evoke the image of expansive corn fields in the U.S. mid-west. In essence, they’re a reaper combined with a thresher. That technology revolutionized many nation’s economies, including South Korea, whose GDP per capita – which while a crude measure for “development” – was in the 1950s, about the same as Ghana’s in the 1950s.
Yet to this day, across sub-Saharan Africa, there’s been a major neglect of agricultural sectors. Stagnant levels of productivity across agriculture — the inability to increase output for every unit of money on farming and every hour of labor — is a huge missed opportunity that for decades hasn’t been adequately addressed by government or foreign intervention.
The majority of agricultural production in Africa comes from smallholder farmers. Yet for a crop like soybean, traditional labor and threshing methods end up leading to as much as 10 percent post-harvest loss, as compared to as little as 0.2 percent loss when farmers have access to a thresher. In addition, threshing soybean by hand is not just primarily driven by women and children who inhale soy particulate matter, but it can be up to 40 times slower than using a Soybean Innovation Lab (SIL)-designed multi-crop thresher. Reduced product quality from breakage and contamination introduced during manual threshing further minimizes demand for local supply for farmers already at the mercy of an opaque supply chain, which forces them to take low prices offered by “briefcase buyers”. In the end, farmers are less motivated to grow a crop that should transform household incomes, and more conscientious buyers are forced to pay an unnecessary premium on the product that ends up in the market.
SIL’s multi-crop thresher is an innovation designed to address the gap between output and labor. However, given the chicken-and-egg conundrum of connecting productive use cases with the right market opportunity, the question becomes, ”Who is best positioned to bridge the divide between low agricultural productivity and greater food value chain efficiency?”
Enter, a company like FirstWave Group.
In 9 years, FirstWave Group has built and operates the largest, most technically advanced, vertically-integrated aquaculture firm in Africa. They have over 1,300 dedicated team-members across Zambia, Uganda, Kenya, South Africa and Europe, and were founded with the distinct purpose to sustainably provide an abundant supply of affordable protein to the growing African markets.
And this mission isn’t just driven by the convenient fact that the feed-to-protein conversion ratio for fish is up to 10 times better than beef, and almost 1.5 times better than chicken.
Their activities are currently comprised of four operational companies. In Zambia, Yalelo fish farm, Aller Aqua aquafeed factory, and FirstWave Commodities (FWC), an aquaculture input company designed to procure grain and other commodity feed primarily from smallholder farmers.
Driving greater efficiencies across this value chain will, from a commercial operations perspective, allow FirstWave to achieve its mission of becoming the lowest cost producer of animal protein globally and the largest producer of animal protein in Africa. Central to achieving that vision is moving far beyond the simplistic notion of corporate social responsibility, and instead developing a sustainable approach to corporate strategy through a lens of achieving total societal impact.
FirstWave began direct grain purchasing activities in 2019 and immediately recognized a massive opportunity to provide sustainable impact assistance to smallholder farmers while realizing more stable pricing. The outcome would be improved crop yields and income for farmers through access to:
- Affordable, locally-produced, multi-crop threshing services heretofore unavailable in Zambia for smallholder farmers, and,
- A sustained, credible offtake market for soya and other grains at highly competitive prices.
Through threshing services and as a sustained offtake market, FWC aims to connect the informal agricultural sector to modern production capabilities and networks. They assume that awareness and access to post-harvest technologies will increase adoption rate of threshers, reduce crop losses and informal threshing inefficiencies, and increase total harvest yield volumes and crop sales, allowing farmers in concentrated areas to easily access a stable market.
However, smallholder farmers will struggle to meet the needs of a large offtake market without the benefit of value addition services. As such, FirstWave has aligned its aquaculture input operation with full-cycle partnership support services - from pre-season and planting through to harvest - to include:
- Financial services for farmers who are “unbankable”, restricted to making cash-based purchases, and who are also, thereby, limited in their ability to access and purchase more products to increase their yield because of limited access to capital,
- Quality agriculture input services for farmers to attain optimal yield quality and levels of productivity, while minimizing adverse environmental impacts, and
- Technical and soy production training and development throughout the growing season.
Increases in the aforementioned indicators, coupled with partner intervention services – financial services, wholistic inputs, and training – are consequently expected to have a positive impact on farmer livelihoods, leading to increased food security, reduced incidence of hunger in farmer households. With these increases comes a major impact on lived discretionary spending power (i.e. increase household incomes), which can begin to solve the cycle of low informal incomes in agriculture.
This has major implications for increasing resiliency within communities by addressing problems associated with other indicators on an individual level (access to education, health care, gender disparities). Ultimately, FWC believes that making small scale farming more profitable will create market forces that improve low economies of scale, and impact. This, in turn, will impact more macro indicators such as aggregate demand in Zambia, which continues to minimize consumption and government spending on infrastructure, investment, exports and other major drivers of development. And this all begins with the investment in multi-crop threshers.
This won’t be the first time an intervention unleashes latent supply. Today, Zambia is a surplus producer of maize (corn) and over 75 percent of this output is from small-scale farmers. The country made similar capacity-building investments between 2005 and 2010. Soya beans can follow the same accelerated path. And this can all begin with the investment in multi-crop threshers.
Given that FWC began operations just before the beginning of the harvest season in Zambia, they sought to first build and deploy this proven low-tech innovation that has been deployed in other parts of Africa. With training from the Soybean Innovation Lab (SIL), FWC was able to set up an operation with a local manufacturing partner, Tanelec Zambia, to create dozens of threshers in the coming months.
In just 3 weeks, FWC, SIL and Tanelec manufactured 17 multi-crop threshers, which FWC has already begun to field test, modify and deploy to smallholder farmers. The goal is to manufacture and deploy 100 threshers by the end of the 2020 harvest season.
As FirstWave begins to piece together the challenges of scale, to get this product – multi-crop threshers – that they know people need to advance productivity, and make it simple and affordable, they will procure grain and other commodity feed from smallholders to meet the significant demand for soybean that makes up nearly 50 percent of fish feed for Yalelo Zambia. Their target by July 2020 is to source and secure 10,000 tons of soya from over 800 smallholder farmers in concentrated areas through an efficient operation (using the latest technology to aggregate supply, pay farmers and ramp up sourcing of maize, sorghum and cassava in interceding months).
Addressing risk with market creating innovations
Given the complexities of doing business due to, for example, infrastructural gaps and relative economic and political volatility, this initial investment in threshers represents a significant risk. While donors have funded threshing programs for smallholder farmers, this is the first private-sector driven initiative known to SIL in Sub-Saharan Africa which has unified an actionable approach to stimulate thresher testing and learning with a market-based approach to scaling.
However, when an opportunity for transformative growth is just too large to ignore we must find the motivation to bridge the gaps that have prevented a market-based approach from taking hold.
That talent not only exists in Zambia, but the market opportunity for threshers has been long-coming.
FirstWave Group was founded by Zambians and other foreign nationals who recognize that you need resilience to manage risk, who believe that strengthening their focus on impact is crucial for maintaining a competitive advantage and also transforming the long-term trajectory of Zambia.
FirstWave believes that scaling up agricultural production to provide feed for its fish requires a nudge from businesses that can supply the market demand for sustainable, resilient and efficient market creating innovations. That’s where having a vertically integrated company that can control the aforementioned costs caused by infrastructural gaps and other volatility comes in handy.
When there exists a market – like there is for multi-crop threshers – but people can’t access the product/service due to infrastructural gaps that increase cost or minimize technical expertise or availability of or access to a product like a thresher, then there comes a need for market creating innovation. Once you identify this non-consumption phenomenon (where people would benefit from getting access to product/service) there’s a huge market-creating opportunity in the country.
Connecting productivity with market opportunity:
Breaking the cycle of low levels of productivity and low income through basic economic activities that do not have diminishing returns is the promise FirstWave Group has made to Zambia for the long term. They see this commercial and impact opportunity as proportionate to the significant risks and challenges to execution. Yet this won’t be the first time they’ve managed to drive down the cost of protein by creating greater levels of efficiency within their feed-to-fish conversion process.
The Soybean Innovation Lab’s (SIL) multi-crop thresher is a major innovation that will help address this gap between output and labor on the feed side. With the right kind of industry value chain investment and commercial attractiveness strategy, the smallholder agricultural sector’s potential can be unlocked at a scale that has never before been seen by SIL in Southern Africa, which in turn would drive sustainable rural development. FirstWave Group is here for the long run, and they hope to do just that.