Abstract
Dr. Fenton Sands, USAID’s new contract representative, faced some challenges. His office, USAID-Malawi over many years showed great commitment to the country, yet there seemed to be insufficient progress in poverty reduction, agricultural yield improvement, and smallholder farmer incomes. Now in 2017, the mission managed 25 different multimillion-dollar projects that touched on agriculture, the economy, resilience, gender, and nutrition, with little sustainability evident. Dr. Sands’ task was twofold, specifically, how to depart from past practice and actually achieve sustainable impact at scale here in Malawi, as he launched the new $60m Ag Div activity and more generally, if successful, how should USAID scale the success across the region. This case study provides unique insights into how Dr. Sands and his team jettisoned traditional development approaches and builds sustainable economic impact at scale through a novel private sector platform. USAID Malawi’s brave new venture successfully leveraged university research via the Soybean Innovation Lab to assure sound science and evidenced based decision making. Dr. Sand’s novel approach, presented here as a teaching case study, provides an explicit pathway for development officers, university researchers, program implementers, and leaders in the donor community to build sustainable impact in partnership with the private sector.
1. USAID Malawi and development
Dr. Fenton Sands, USAID’s new contract representative, faced some challenges. His office, USAID-Malawi over many years showed great commitment to the country. There seemed though to be insufficient progress in poverty reduction, agricultural yield improvement, and smallholder farmer income growth. Now in 2017, the mission managed 25 different multimillion-dollar projects that touched on agriculture, the economy, resilience, gender, and nutrition, with little sustainability evident. Dr. Sands’ task was twofold. First, how to depart from past practice and achieve sustainable impact at scale here in Malawi, as he launched the new $60 million Agricultural Diversification Activity (Ag Div) activity. Second, if successful, how should USAID scale the success across the region.
The mission for whom he worked was going through a period of intense reflection. There still existed fallout from the 2014 ‘Cashgate’ scandal in which extensive looting, theft and corruption were unveiled by senior government officials in Lilongwe. Donors froze their support for the government. Malawi had sustained over three decades of limited developmental progress. It had last experienced rapid progress in the 1960s and 1970s. Its GDP per capita still stood at just $314 USD in 2016, making it one of the poorest countries in the world. Its population of 17 million was rising rapidly, by 2.8 % — or 500 000 people per year. Its economy was growing by 3.6% per year — far too little to create enough economic opportunity and address poverty. Almost three in every four people (73% of the population) still lived on less than $1.90 per day, with few signs of improvement. The country is one of the world’s most vulnerable to climate change, ranking 161 out of 181 in the Notre Dame Global Adaptation Initiative Country Index.1
2. USAID Washington and policy
Dr. Sands was also aware that in 2016 the leadership at USAID headquarters in Washington, DC, USA was finalising an extensive process to develop and launch the 2017–2021 Global Food Security Strategy,2 and in parallel, its first USAID Private Sector Engagement Strategy (PSES).
“To achieve widespread adoption of technology, we will use scaling approaches to sustainably increase the reach of proven packages of technology innovations among significant numbers of potential adopters. In most cases, scaling requires promoting the diffusion of adoption beyond direct beneficiaries of development interventions.”
These two documents followed an external performance assessment and sense that USAID needed to be more impactful in general. They reflected a desire for missions to scale up their impact more effectively. Then the 2022–2026 GFSS3 reinforced the guidance as to the important positive role market system engagement plays in USAID’s goal to realize technologies’ impacts at scale.
“Cutting-edge innovations and information only make a difference when they are in the hands of producers and entrepreneurs, including those who have not always had access to these resources….We strengthen the connections and coordination of system actors by identifying shared goals and facilitating productive engagements that move innovations toward impact, and by increasing access to finance to enhance performance and effectiveness of market systems…” (2022–2026 GFSS: p. 26)
The PSES also reflected the increased desire by USAID to accelerate impact by working with system actors in a different way. Traditionally USAID relied on non-governmental organisations to deliver direct services to “beneficiaries”. These documents were the culmination of many years of effort by proponents of a scaled and private sector-led approach, in agriculture and economic transformation within USAID. The agency realized that this policy shift when implemented would change what had been elusive and would fundamentally improve missions’ ability to achieve sustainable impact at scale.
3. USAID Washington and research
In parallel, USAID’s Bureau of Resilience and Food Security had spent several years investing in agricultural research to accelerate agricultural transformation in developing countries, particularly in Africa. It did this by supporting the CGIAR and 24 USAID Agriculture Innovation Labs (ILs) based at various American universities. However, both folks in Washington and in the field at the missions around the world, felt that by far most technologies and innovations that emerged from this research network failed to be implemented at scale. Thus the research investments had limited effect on poverty reduction in the developing world.
4. Malawian industrial policy and soybean
Malawi’s agriculture sector historically has been dominated by commodities vulnerable to boom-and-bust cycles driven by global price and exchange rate fluctuations. The uncertain environment led to fluctuations in local supply as farmers often switched crops in a chase for high prices. This in turn created a knock-on effect to industrial development as the processing and poultry industries struggled to invest as they worried about raw material supply. They often then had to resort to lobbying the national government for export bans, which in turn depressed local prices and farmer investments. It was a vicious cycle.
Malawi’s exports have mostly been as raw inputs into singular products such as cigarettes, tea, sugar, and coffee. Recent research measured both the relative size of Malawi’s 17 key crop sectors as well as their industrial impact or value addition (Goldsmith et al., 2024). Sector size was measured by gross sales. Value addition was measured using an economy wide industrial multiplier that resulted from a Malawi input-output model. Tobacco, maize, soybean, and tea combine both features of both scale and value addition back to the Malawian economy (Figure 1). In general though, much of the value adding took place offshore thus limiting domestic job creation, innovation, and economic activity. Malawi attempted to break this in the past, such as with cotton and textiles, but all such efforts failed. The country currently produces less than a tenth of historical peak output. The story is similar in sectors outside of agriculture as its manufacturing industry is small, oligopolistic, uncompetitive, and focused on the domestic market. Its tourism industry has potential but remains small, about 5% of the value of tobacco exports. It has traditionally struggled to compete with neighbouring attractions such as Victoria Falls in Zambia and Zanzibar and the Serengeti in Tanzania.
The relative size and impact of Malawi’s 17 crop sectors.
Citation: International Food and Agribusiness Management Review 27, 5 (2024) ; 10.22434/ifamr1015
The calls for supporting the soybean industry started in 2012 through the Government of Malawi’s and United Nations Development Programme (UNDP) efforts to develop Malawi’s first National Export Strategy. Together with other oil seeds such as groundnuts, sunflower and cotton, soybean was identified as a priority value chain with high potential for both exports and import substitution, as well as for driving the industrialisation of the entire country. However, the government lacked the institutional and coordination capacity to develop a suitable enabling environment for the sector to develop.
In 2013, only $0.5 million worth of soybean was exported, equivalent to just 0.1% of tobacco exports. Nationwide production stood at just 80 000 tonnes or $28 million USD. This was mostly consumed at a household level, as an additional ingredient for porridge, and purchased by the 3 small oil seed processors at the time, who only had a capacity for 40 000 tonnes of raw bean.
The oil seed processing firms were mainly producing cooking oil, cake as a by-product for chicken feed, and small amounts of soya chunks. These processors were more traders than processors. They typically imported crude palm oil that they refined, while mixing in oils from crops like soybean, cotton, and sunflower depending on what was available and prices. Just like these other crops, soybean was a commodity crop where little local value addition occurred. Oil processor Mount Meru from Tanzania, invested in Malawi but struggled and remained small. It remained small and felt a “big-push” was needed to coordinate the various actors along the long soybean value chain (Figure 2) and unlock large, transformational levels investment.
Malawi’s soybean value chain.
Citation: International Food and Agribusiness Management Review 27, 5 (2024) ; 10.22434/ifamr1015
Britain’s Foreign Commonwealth and Development Office (then called Department for International Development) was developing its new private sector development project. It initially planned to focus solely on groundnuts but then adopted soybean, sunflower, cotton and sesame too. The Malawi Oil Seed Transformation (MOST) project made some progress in the soybean value chain. For example they facilitated public-private dialogue and analysis to make the case for ending the unpredictable export bans that were prevalent at the time. MOST also promoted the use and local manufacturing of inoculant, a common input to promote high yields. The MOST project ended in 2017 and was not renewed.
5. USAID–Malawi’s AgDiv
The USAID mission in Malawi opened in 1979, although USAID had been supporting the country since 1966 (Figure 3). Its first project was the construction of Malawi’s lakeshore road. By 1979 it had projects in agricultural development, private sector expansion, health and family planning, transport infrastructure and human resource development. By 1991 its annual budget was $54 million and in 1993 encouraged Malawi’s transition from a single-party system to a multi-party democracy. In 2006 its assistance to Malawi increased substantially with the introduction of Presidential Initiatives. Malawi was chosen as a focal country under the President’s Emergency Plan for AIDS Relief, President’s Malaria Initiative, Global Health Initiative, Global Climate Change Initiative, and Feed the Future. Support for education also continued. In 2013, total funding for USAID/Malawi reached $198 million, with $126 million of this being for health. That year USAID/Malawi completed a five-year, $700 million Country Development Cooperation Strategy. The effort promoted integrated development with the goal of “Malawians’ quality of life improvement” via social development, more sustainable livelihoods and strengthening citizen rights and responsibilities.
With all this background and guidance, Dr. Sands wondered if USAID’s new flagship agricultural development project worth $60 million would be different? It was a new 5-year agricultural development project called AgDiv. Through it USAID Malawi had ambitious goals to double average national agricultural yields across three value chains: soybean, groundnut and orange-flesh sweet potato within five years. It also wanted to see 100 000 smallholder farmers experience an increase in their incomes within one year, and 500 000 farmers by year five.
USAID in Malawi timeline.
Citation: International Food and Agribusiness Management Review 27, 5 (2024) ; 10.22434/ifamr1015
5.1 The TOBACCO QUESTION
Since independence in 1964, Malawi’s major export had been tobacco, and this remained true in 2016. Tobacco accounted for 54% of all Malawian exports. But global demand for tobacco was declining and the Malawian industry was at best stagnant. Malawi’s next biggest exports — tea and sugar — each only accounted for around 5–8% of Malawian exports (Figure 4). These sectors had also stagnated for many years, particularly because of their inability to expand land under cultivation.
Malawian exports of soy, sugar, tea and groundnuts (in $ million). Includes exports of oil cake, mostly exported to Tanzania and Kenya for chicken feed production. CAGR, compound annual growth rate. Source: trademap.org.
Citation: International Food and Agribusiness Management Review 27, 5 (2024) ; 10.22434/ifamr1015
While at its peak tobacco provided an income to some 300 000 employees of large farms and 460 000 smallholder farming households. This income averaged $300 to $400 per family per year in high-price years, which is seen as high by smallholder farmers, albeit as low as $70 per year in bad price years. Tobacco consistently delivered high yields, the very thing that had proven elusive to Malawi in other crops. The industry had developed a management system and engagement approach that resulted in high yields and profitability for thousands of small holders.
However, no significant tobacco processing, other than rudimentary drying, took place in Malawi. Thus, there was little downstream economic activity or jobs created. This left Malawi’s macroeconomic situation vulnerable to global tobacco commodity price fluctuations. It also had limited scope for innovation and downstream product expansion. The same was true for sugar and tea. In 2012 the Government of Malawi, in partnership with the UNDP, developed Malawi’s first National Export Strategy in a bid to formalise the country’s efforts to diversify the economy away from tobacco.
Tobacco had historically been a no-go area among Western development agencies and the risk of a bad media story of USAID supporting tobacco was high. At the same time in 2018 two of the biggest tobacco companies in Malawi, both of whom are American — Alliance One and Universal Corporation (operating in Malawi as Limbe Leaf) — were starting to launch non-tobacco diversification programmes to address declining demand for tobacco. In 2018 Alliance One rebranded itself globally as Pyxus, which included its tobacco business, and an explicit aim to focus on new crops beyond tobacco and go into value addition.
Alliance One had some 18 000 smallholder tobacco farmers in its network with whom they had a long-standing working relationship with regular annual offtake that worked for decades. These 18,000 farmers were supported by Alliance One’ own team of 220 extension workers who knew each farmer by name, and who visited each farm multiple times a crop year.
The other two major players, also facing the same decline in demand and a shift to diversifying its farming operation were Universal Corporation with a network of 10 000 small holder farmers and Japan Tobacco International with a network of 8 000 small holder farmers. Network support involved input provision, off taking, and extension support. Other large actors like sugar and tea followed more of a plantation model, with the large firms owning most of the farmland.
5.2 Palladium
Palladium, led by chief of party Carl Larkins, served as the implementing partner (IP) of AgDiv. He and Dr. Sands felt that transforming the national economy meant transforming the tobacco industry. They also recognized the donor community’s and USAID’s negative perception of tobacco and the risks associated when working with the industry. There was likely to be major resistance from within USAID and many others, given that the donor community and non-governmental organizations traditionally stayed away from the tobacco industry. In Washington DC USAID’s Bureau of Health was adamantly against the notion of working with the tobacco sector in any way. It came with major reputational concerns, and the risk of stories in the press saying USAID was supporting the tobacco industry.
Dr. Sands and his bosses knew that the first step was for the mission to convince USAID in Washington, DC, starting with the African Bureau and the Bureau for Resilience and Food Security. He started to build the case by investigating USAID’s policies and exploring if working with the tobacco industry on diversification was allowed. Dr. Sands said:
“In the USAID Operational Policy (Called Automated Directives System, ADS) Chapter 210, I saw that USAID recognized the role of tobacco production and trade in the economic development of many developing countries, and thereby appreciates the immediate need to identify alternative cash crops and related opportunities.”
He zoomed in on article 3.1.3 of Chapter 210 of the ADS:
“USAID will not support the growth of tobacco as a cash crop, nor will it support agribusiness activities contributing to tobacco production, promotion, and use. Further, USAID will not support the reduction or removal by any foreign country of restrictions on tobacco product marketing. USAID may work with local agricultural interests to identify crops that are economic alternatives to tobacco and may support the introduction or expansion of these alternative crops.”
This gave Dr. Sands the entry point that he needed. However, he knew that this clause would not suffice to provide cover/permission for full-fledged partnerships with the tobacco companies to support diversification.
As Dr. Sands continued his research, a senior delegation from Philip Morris International, who bought tobacco from Alliance One and Universal Leaf, visited Malawi. USAID mission leadership agreed to meet the delegation to hear about their diversification plans and interests in Malawi. They met for lunch. It was a cordial meeting, in which the USAID team listened. It was clear the tobacco industry wanted to diversify but was struggling with how to do it.
Returning to his research, Dr. Sands started to expand his search beyond USAID’s policies. He looked into the World Health Organization (WHO) Framework Convention on Tobacco Control (FCTC) which is the first international treaty negotiated under the auspices of the WHO. It is legally binding in 182 ratifying countries, including the United States. From there he extracted the following clause:
“Parties are obligated, in cooperation with each other and with competent intergovernmental organizations, to promote economically viable alternatives for tobacco workers, growers and, as the case may be, individual sellers.”
He used this clause and the ADS clause as the basis for an extensive internal USAID tobacco memo. In the memo, Dr. Sands argued that both legally and philosophically, beyond economically, it was important to support the tobacco diversification effort by tobacco companies in Malawi. He argued that Ag Diversification would support a world-recognised objective and provide a basis to operationalise the USAID policy and the WHO agreement for USAID in Malawi. The memo also mentioned that two of the main three companies involved were American.
The managing director of Japan Tobacco (JTI) commented on the new engagement with Dr. Sands and his team at the mission in Lilongwe:
“Tobacco firms are usually shunned from conversations by the donor community. When USAID came on board, it was a fresh breath of air for us. We did have a JICA pilot project in the past because JTI is a Japanese government-owned company. There was a directive from the Japanese government to work with JTI. We worked on honey production, but it was short-term and did not scale. It had a limited scope. It was directional: they told us ‘This is what we want to do, you can go and find growers for honey, we will give them hives and monitor them, and then they will supply JICA via a cooperative.’ With AgDiv, in contrast, it was open dialogue. We had a lot of engagement, facilitation, and participation between us. They made everything easy for us by providing linkages to stakeholders in the value chains, such as SIL and PIL. These relationships can last beyond AgDiv. They also connected us to COFI to supply inputs and financing etc, and they invited us to conferences and discussions on these alternative crops.”
5.3 The Soybean Innovation Lab
Carl did not take long to note the exceedingly high USAID milestones and goals for AgDiv. He fretted in particular about how to improve the incomes of 100 000 smallholder farmers currently in poverty within one year. He saw that the project he was now in charge of required support for three value chains: groundnuts, soybean and orange-flesh sweet potato. He also saw it had ambitious gender, resilience and nutrition goals. It also included a number of disparate partners such as several well-known international development and aid organizations, and a local youth focused NGO. He also noticed that the project proposal and plan were designed in the classic tradition. NGOs provided direct services and outreach to smallholder farmers via the construction of eight district offices throughout the country.
Liz Venable, the chief economist for Ag Div, informed Carl that two of the major soybean processors were only using 30% of their capacity, while the only groundnut processor at the time, Afri-nut, survived due to donor financing. It eventually shut down. Liz’s analysis showed that low agricultural yields were the biggest problem causing not only limited access to raw materials, but a highly inconsistent supply. When prices rose, farmers moved into oilseeds, and when prices fell, they exited. This type of mercurial farmer behaviour made it difficult to operate, let alone invest in industrial expansion.
While this information was useful, it did not answer the next questions Carl had in mind: “If we invest in these value chains, how should we invest, and what return on investment could we expect?” He needed expertise and evidence to address these questions. The local consultancies, NGO’s, government research agency, or his staff did not have the specialized technical expertise in groundnuts, soybean or orange-flesh sweet potato and achieving sustainable adoption at scale.
He returned to the list of USAID partners that the Economic Growth Team of the USAID Malawi Mission had given him a few weeks prior. Among them, he spotted the Soybean Innovation Lab (SIL), based at the University of Illinois. Carl had heard that this Lab was relatively new and had adopted unique research for development (R4D) model designed specifically to support missions and their implementing partners tasked with soybean value chain development.
SIL was founded in 2013 at the University of Illinois with USAID’s first centrally made investment in soybean as a development crop. USAID had seen how soybean had transformed the rural economies of South America and thought there was potential for a similar outcome in Africa. Pete Goldsmith, SIL’s director and principal investigator, had been a cattle specialist in the US Peace Corps. Now as a university professor of agribusiness management with experience and language skills in Latin America he had sustained a ten-year program of research, teaching, and consulting in the early 2000’s studying Argentina’s and Mato Grosso, Brazil’s fast growing soybean industry. His career also included an MBA, private sector experience, and establishing two start-up companies, which helped in the formation of SIL’s novel R4D design.
SIL’s team of 45 researchers listened to USAID missions, the private sector, and local NGOs to inform their research. Being demand driven allowed SIL to develop a suite of products for direct uptake by practitioner customers, like Ag Div, tasked with developing soybean at some point along the value chain.
One day in early 2017, Pete received an email from Carl. After an introductory call, Carl invited Pete to visit Malawi and to meet with him, and the project partners AgDiv had at the time. When in Malawi, Carl pushed the yield and seed challenge onto Pete. He tested Pete with specific questions as to implementation, timelines, and resulting deliverables. Pete explained the mechanics of SIL’s PAT and SMART Farm technologies that directly served the needs of practitioners who historically struggled with little access to high quality and improved seed and low yields throughout their grower networks.
Practitioner clients of SIL operate the Pan African Trials (PATs) in 30 countries and over 200 locations. These seed companies, nucleus farms, processors, and co-ops require seed for their customer bases or large out grower networks, both involving thousands of small holder farmers. The PATs provide a unique solution to firms and organizations seed problem. As a turnkey product, firms and organizations now control their seed supply chains through the PAT platform. They access a catalogue of 388 commercial varieties, formally run trials to identify and select varieties that work best in their context, produce the high-quality data necessary for licensing and registration, and quickly move the seed out to their customers and outgrowers in as little time as 18 months. PAT users have now registered for commercialization, 38 varieties across 6 countries over the last 5 years, or 1.27 varieties per country per year. The PATs have delivered a 16x improvement over the rate of 0.08 soybean varieties per country per year (one variety every 12 years) between 2000 and 2019 (TASAI, 2022).
Specifically with respect to the seed complex in Malawi where the last variety was released in 2011, the AgDiv/SIL partnership has developed a robust private sector led trial network supporting 100 000 small holder growers (Figure 5). Since 2017, the industry has managed its seed supply chain by operating 67 trials, testing 20–50 varieties per trial, evaluating 161 varieties, resulting in 10 new varieties, licensed, registered, and commercialized between 2019 and 2023. This rate of released of 2.5 varieties per year not only far exceeds the historical average of soybean varietal release for SSA, but it also leads the 30 PAT countries.
The impact of the AgDiv/SIL Partnership on Malawi’s soybean seed system.
Citation: International Food and Agribusiness Management Review 27, 5 (2024) ; 10.22434/ifamr1015
Similar, the SMART Farm platform services practitioners seeking how to achieve and disseminate high yield- high profit bundles throughout their customer or outgrower networks. Practitioners across 17 countries produce the research hub that explores the linear combination of four key inputs of their choosing. The SMART Farm reflects practitioners own input supply chains, costs, and grain price. The SMART Farm not only allows practitioners to adapt soybean to their own context, but addresses an oft repeated industry question, as to, “what should a small holder farmer do first if they only had $50 USD.” Practitioners assemble and distribute bundles, red, yellow, green and blue, depending on farmer demand for inputs, as well as bundle performance. For example, a Zambian seed producer rolled out the two-input yellow bundle containing certified seed and phosphorus fertilizer. The firm’s bundle yield was 2.7 mt/ha and gross margin including labour was $848 USD/ha. This resulted in a 5-fold improvement in farmer profitability and 3-fold improvement in yield (Figure 6).
Example of a SMART farm industry report.
Citation: International Food and Agribusiness Management Review 27, 5 (2024) ; 10.22434/ifamr1015
At this point, Carl now had identified SIL, and its suite of technologies, as a strategic partner. Next, he needed to figure out leverage points in Malawi. He recognised that Ag Div and SIL could only go so far, and sustained adoption at scale weighed on his mind. He needed actors with real capability, viability, and commitment. That is, actors that could anchor the value chains and drive the development of a market that benefits smallholder farmers and all actors along the chain. SIL would then directly support these key actors and help them succeed with soy.
But being new to Malawi, Carl was not familiar with the private sector landscape, and hence which actors might be helpful and which not. He decided to explore what was already in motion and what was challenging managers.
One of the first companies he met was SeedCo, a Zimbabwean seed company SIL had been working with outside of Malawi. Carl wanted to understand their commercial challenges and the association with the larger issue of the lack of seed across the country. He and Liz had heard from the Ministry of Agriculture’s Department of Agricultural Research Services that the last soybean variety released in Malawi was in 2011. Many smallholder farmers used recycled seed for up to 5 or 6 years — each year experiencing declining yield. Farmers accessed fresh seed only when a new donor program emerged via a local NGO.
In their first meeting, SeedCo’s general manager joked:
“Did you say ‘sorrybean’? Jokes aside, as an open-pollinated crop there is no market there for us. Our business is maize, and we see few returns to soy.”
In the back of Carl’s mind, things started to come together as he had learned from SIL that, “when there is free seed there is no seed.” He knew, as SIL had explained, that companies like Seedco need to be able to protect the intellectual property of their open pollinated products like soybean seed. He connected Pete with the SeedCo team to leverage the PAT technology platform to show the superiority and characteristics of the Seedco products against national checks. The Pan African Trials simultaneously provided Seedco an international platform for selling directly to customers who understood the high returns from using high quality seed rather than saved seed, and thus were willing to pay for the quality. The effects from using the PATs were immediate. SeedCo’s Managing Director for Malawi said:
“SIL presented to us how we could, at minimal cost, test and market many of our varieties across many countries and locations under their Pan-African Trials programme. They also presented this to others in Malawi. This helped us — and the other businesses buying and selling seed — to pull up our socks and get to work. We saw that with new varieties displayed through the PATs, our processors could target new soybean products here in Malawi such as cooking oil, protein-meat substitutes, chicken and fish feed, and soymilk. Pete showed us what varieties were fetching premium prices and for which industrial uses and application. He also showed us how many new varieties are being used in West Africa, the Americas and elsewhere that are managing emergent diseases and pests. The trial results and transparent PAT data portal made all results available. This rich varietal performance database was going to help us continually improve as we had never seen our seed products perform against so many other varieties. Pete brought hard evidence to show how different varieties performed with respect to different attributes and in each local market. He showed us what was commercially possible for us as a business, and for our customers, Malawian farmers and processors. It showed us that we could have a product that sold well and was worth investment on our end, because we could now show Seedco’s advantage in terms of yield, other attributes such as disease resistance, and quality in terms of germination levels.”
Carl also visited a potential farm partner, Horizon Farm, that was established in 2003 by Jim Goodman. Carl asked Jim and Andrew, his son who was taking over the business, about their smallholder engagement. They said that they currently work with 4000 smallholders from three surrounding villages and were on pace to reach 10 000 small farmers by 2023. Their nucleus farm provided their network of small holders with extension, credit, and mechanization services and in-grower services to see demo plots and trial advanced practices on Horizon land before using the technology on their own parcels. After a tour, the discussion turned to the challenge of bringing high soybean yields and profitability to their outgrowers. Carl recommended SIL’s Soybean Management with Appropriate Research Technology (SMART) Farm platform, which optimises agronomy and inputs for a specific farm, Horizon in this case. Doing so would provide Jim, Andrew, and the farmers in their network with specific guidance to immediately and cost effectively raise yields. With SIL’s technical support via the SMART Farm platform Horizon raised soybean yields to 4.31 mt/ha and net income per hectare to $1405 USD (Figure 7). Owner Andrew Goodman commented:
“SIL has been very accommodating with what we can do and where we can take it. They listened and tried to make the programme suit us so that the technologies can be locally owned. For example, we used SIL’s SMART Farm Trials to explore specific bundles that we and the farmers in our network suggested. One trial we designed involved local manure so we can see how much this might improve yields. Similarly, we tested lime, compost and plant-based fertiliser. Based on the findings we then developed our bundle protocol. In this way, our research was relevant to our needs and those of the outgrower farmers in our network.”
SMART farm industry report: Horizon Farms 2021–2022.
Citation: International Food and Agribusiness Management Review 27, 5 (2024) ; 10.22434/ifamr1015
Similar visits and discussions were held with other key nodes in the agricultural and processing sectors who maintained large outgrower networks of small and medium sized farmers, such as: tobacco companies Pyxus, Limbe Leaf, and Japan Tobacco, sugarcane producer Agricane; seed companies like SeedCo and the government soybean seed unit, the Department of Agricultural Research Services (DARS); and downstream firms like Sunseed, a processor and food company, and Central Poultry an egg and broiler supplier. Bouke Bijl, Managing Director, Agricane Malawi, commented about Ag Div’s design to achieve sustained impact at scale:
“The change we have seen in soybean in Malawi has been pioneered by SIL and the AgDiv project. Ag Div raised awareness and pushed forward the industry through the way they worked with private sector partners on both the agricultural and the processing sides of the value chain. They made a big difference as a result of their openness to any type of private sector that had some capability and that was already investing in soybean. They added value to them. In effect, they helped make the value chain a win-win situation for everyone, and now you can see how much soybean has evolved just by driving around the country and seeing it grow in the fields.”
Similarly, One Acre Fund leadership, with a grower network of 96 000 small holders and a desire to move their farmers to soybean production, commented:
“Ag Div did a good job at leveraging existing knowledge and resources and connecting everything. They did not say ‘Let’s find something new and unique’. They didn’t try to replicate the system. They found the parts that work, such as SIL, serious seed multiplier companies and DARS, partners like tobacco and us who already had the farmer base and were interested in scaling soybean. They joined us all up to ensure we worked together.”
6. The future
AgDiv had broken the bottleneck of varietal release with ten superior varieties coming to the market in the last four years, compared with 1 national variety coming to the market since 2011. Yield too was no longer a barrier as Ag Div clients were now regularly experiencing yield increases 3 times above the national average.
The AgDiv/SIL partnership showed how demand driven private sector engagement clearly was a way forward to achieve sustainable impact at scale. Ag Div demonstrated the capacity of the private sector to adopt and deploy technology, which produced exciting levels of return on USAID research investment. In addition to technology adoption, the private sector capacity building delivered at scale as well. As impacts accrued to large numbers of outgrowers and customers who are USAID’s target beneficiaries. Finally, the approach that directly embedded SIL with clients made for evidence-based development right at the point of uptake. SIL’s research and development efforts thus became locally-led with active listening and support for AgDiv’s clients.
However, the nuance of private sector led scaling revealed also that one size doesn’t fit all. New needs were always going to emerge as local partners businesses grew and changed and markets are dynamic. Therefore, R&D plans and operating scopes of work, for both the implementing partner (AgDiv) and the Innovation Lab (SIL) needed to be nimble and adaptive.
Firms and their outgrower networks too differed from each other in scope, scale, and business model. This challenges the traditional more linear project approach where beneficiaries are often treated as a homogeneous group that receives benefits from a large programmatic rollout over a fixed number of years. So, heterogeneity in design brings new challenges identifying and servicing unique needs.
Other challenges facing private sector capacity building were that businesses often operated regionally unconstrained by simple national geographies, so technical assistance had to reflect a different design and implementation footprint. Finally, national policy issues too are at play. One AgDiv client JTI mentioned the need for a national program in workforce training, improved capital markets to finance technology adoption and dissemination to outgrowers, and supportive industrial policies that create more certainty in the market. Addressing these challenges are essential yet beyond the direct responsibility of a mission funded ag development project such as Ag Div.
So now Dr. Sands and Carl thought, what next? What is the policy guidance to USAID? To national governments? Innovation Labs? And USAID leadership in Washington.
References
Goldsmith, P.D., S. Dall’Erba and E. Venable. 2024. Comparing crop industry impacts on the national economy: an analytical approach for policymakers. Journal of African Development. 25 (1): 314. https://doi.org/10.5325/jafrideve.24.2.0314
The African Seed Access Index (TASAI), 2022. Various country level reports. Available online at https://www.tasai.org/en/products/country-reports/ (accessed October, 2022).
