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Mozambique Sustainable Smallholder Cashew Production and Marketing Services

To provide a BUNDLED production and market linkages SERVICE to SMALLHOLDER CASHEW FARMERS in the northern province of Nampula, MOZAMBIQUE

Photo of Quisito Bastos Gimo Gimo

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EXPLAIN YOUR IDEA

Cashew is the major source of income to more than 200 000 farmers in the southern region of Nampula province. Discussions with farmers across 5 districts have revealed 3 main pains: (1) Limited access to chemical treatment services. For example, though the National Cashew Authority(INCAJU) recommends 3 doses of chemical treatment and adherence to the spraying callendar, the majority of farmers often get none. A few farmers get only 1 dose from a local agent who charges 2kg of cashew/tree. The result is a pre-harvest loss of up to 6kg/tree, ie, ~$5/tree. (2) Weak collective actions limit farmers ability to negotiate with processors who can pay additional 10cents/kg if cashew is aggregated and of good quality. (3) High sideselling risks restrain processors like Olam,ETG and Condor from establishing direct partnerships with farmers. However, because cashew farmers can pay for chemical treatment services and processors can pay premiums for volumes, we believe that the above pains can be turned into a business opportunity. So AgriSocius Lda is set to provide cashew farmers with high quality & affordable BUNDLED SERVICE consisting of CHEMICAL TREATMENT and MARKET LINKAGES. We'll charge a service fee to cover for our operational costs and profit margins. We've already identified one local processor who is willing to sign an offtake agreement with us provided that we can organize & train farmers, aggregate produce and guarantee quality and volumes- Discussions are ongoing

WHO BENEFITS?

Our customers are cashew farmers who are dissatisfied with the quality of current spraying services and markets and are willing to pay for services that improve yields and access to better markets. Initially, we will target 3000-5000 farmers in year 1 and increase to 10 000 by year 5. Added value to these farmers will include: increased yields from 6kg/tree to 11kg/tree and better prices for their cashew. Trustworthy farmers will get our service on credit and we will deduct at harvest time.

WHERE WILL YOUR IDEA BE IMPLEMENTED?

The present idea will be implemented in the southern region of Nampula province, Mozambique. This region is composed of 5 districts and has the majority of cashew trees. AgriSocius will start small in one district and then scaleup to other 4districts

ARE YOU IMPLEMENTING IN AN ELIGIBLE COUNTRY?

  • Yes

EXPERTISE IN SECTOR

  • I’ve worked in a sector related to my idea for over a year

EXPERIENCE IN IMPLEMENTATION COUNTRY(IES)

  • Yes, for more than one year.

TELL US MORE ABOUT YOU!

AgriSocius Lda is a social agribusiness services provider. FOR A FEE, we provide high quality crop production and marketing services to small scale farmers with a vision of a thriving smallholder sector in Mozambique. We mobilize, train, advise and link farmers to inputs and output markets.

IS THIS IDEA NEW FOR YOU OR YOUR ORGANIZATION?

The present business idea is intended to be our flagship service and will be offered to cashew farmers in Nampula province and, if successful, it will be scaledup to other provinces and cash crops such as soybean and sesame. The business idea is also new in the Mozambican agribusiness context where farmer extension and marketing services are donor dependent and financially unsustainable. We want to be different and we believe in the potential for providing demand-centered services to smallholder farmers in a finacially sustainable way for both parties. To test our business model we have recently offered a similar service to a soybean cooperative that was looking for a market for its 200tones of soybean. We linked it to Abilio Antunes-a poultry and eggs farm in Chimoio city, resulting in $7cents premium per kg of soybean. The first truck of 30tones has been delivered and the coop is aggregating for the 2nd truck. As a social agribusiness service provider, AgriSocius, lda believes in the transformation of smallscale susbsistance agriculture into a more commercially oriented agriculture. We support farming as a business principles for whatever crop we are involved in .

HOW IS YOUR IDEA UNIQUE?

Cashew production in Mozambique is dependent on 3 key inputs: chemical treatment, crop advisory and market linkages. Crop advisory service is provided for free by donors. Chemical treatment is of poor quality and is provided by local farmers who own motor sprayers and charge 2kg of raw cashew nuts per treated tree. Cashew marketing is dependent on the middlemen who buy at lower prices and resell to exporters/processors at higher prices. The loser in this sector are the farmers who pay more for poorly delivered spraying services and get lower prices for their nuts AgriSocius bundles two services into one: high quality and affordable chemical treatment and market linkages that allow farmers to increase yields, get higher price and incomes. Our unique advantages come from: (1) Our Management Information System (farm data management) (2)Our locally based frontline workforce(AGRIMITES) equiped with hard and soft skills to service farmers. (3) Economies of scale resulting from bulk input purchases and collective marketing actions which will lower costs (4) Cost savings from partnerships with INCAJU (subsidized chemicals) and from Gas suppliers (fuel discounts for motor sprayers)

WHO WILL IMPLEMENT THIS IDEA?

AgriSocius, lda will implement the idea. Due to inherent operational risks, the founder (MBA,Bsc in Econonmics, 10 years of experience in agribusiness and >1 year in the cashew sector) will dedicate 100% of his time on implementing the idea to make it a reality. The team includes Finance and Admin Manager (Bcs, account),an Agronomist (Bsc Crop husbandary), 5 officers and a network of well trained field agents (AGRIMITES). We also count on support from INCAJU for specialized sector skills.

HOW HAS YOUR IDEA CHANGED BECAUSE OF BENEFICIARY FEEDBACK?

To get feedback on the service bundle, a focus group discussion was held with 19 cashew farmers whose farm sizes ranged from 30 to 250 cashew trees. The 3-layer bundled service- Crop management Advisory, spraying services and Market linkage was introduced. Many questions were asked and the majority focused on the capacity of AgriSocius to provide such services and what would be the cost to farmers. The major revelation from the discussion was that farmers already have extensive knowledge with regard to cashew crop management which was acquired through donor supported extension programs. So their felt needs were around chemical treatment services and linkages to profitable markets. At the end of the session, at least 8 famers agreed to experiment the service and said would pay 2.5 kg of raw cashew nuts/tree if they see benefits. As a direct result of the feedback from the discussions, we decided to unbudle the crop management advisory and kept a bundle of only 2 services: Chemical treatment and linkages to high paying markets. Also it was implicit in the discussion that, if we are to succeed we would need to be able to get early adopters and make sure that they are kept happy.

WHAT ARE SOME OF YOUR UNANSWERED QUESTIONS ABOUT THIS IDEA?

Our unanswered questions are mostly linked to operational and market risks. We still have to answer the following questions as we develop our service bundle: How can we really get yearly adopters and build trust? Are there farmers willing to pay cash on spot or we would have to offer loans to every farmer? what measures to take for defaulting farmers? If the market price for nuts in the global marketplace falls, will farmers accept price adjustment? Should we include quality certifications like fairtrade? if yes who will support the costs of certification? How can we customise our services to the needs of individual farmers? Can we introduce a warehouse receipt system? will it work?

WHY DO YOU THINK THE PROBLEM YOUR IDEA SOLVES FOR HASN'T BEEN SOLVED YET?

Statistics from the National Cashew Institute reveal that out of 10 million cashew trees in Nampula <2 million receive chemical treatment. There are only 800 farmers who own a motor-sprayer in the 5 districts we are targeting who are also expected to service other farmers. Assuming that each of the 800 farmers can service 40 other farmers, then only 32k farmers have access to those poorly delivered services. The majority, estimated at 200 000 farmers cannot get chemical treatment for their cashew trees, even if they can pay for. So AgriSocius responds to a specific need felt by smallholder cashew farmers giving them an opportunity to boost cashew yield and sell their nuts at better prices.

WHAT WOULD YOU ULTIMATELY LIKE TO ACHIEVE WITH THIS IDEA? WHAT IS YOUR NEXT STEP TO GET THERE?

-Our ultimate business goal is to be profitable by 3rd year, build our brand & reach 10k farmers by year 5 -Increase farmers income by 50% measured by comparison of current yields without project vs yields with project. To reach our goals we've identified a processor who is keen to sign an offtake agreement with us. We have negotiated with INCAJU for subsidized chemicals. We're now looking for a seed-fund of $140k for CapEx and OpEx (Amplify). Detailed budget & action plan on attached images.

MEMBERS OF MY TEAM HAVE BEEN WORKING TOGETHER FOR:

  • Between 6 months and a year

MY INTENDED BENEFICIARIES ARE:

  • Within 50 km of where our team does most of its work
  • Within 100 km of where our team does most of its work

MY ORGANIZATION'S OPERATING BUDGET FOR 2015 WAS:

  • We didn't have an operating budget

Cashew production in Mozambique is the main crop and source of income to more than a million small scale farmers living along the costal area where soils are sandy and inadequate for grains. More than 40% of these farmers are concentrated in Nampula province. The average farmer supply capacity is currently less 100 kg per farmer.

Despite global demand in international markets, cashew production and quality have staggered in the last 5 years in Mozambique. Among other reasons for this staggered production and quality are: old trees, diseases, limited research, weak crop area expansion and poor pre-harvest, harvest and post-harvest management practices.

Powdery mildew and anthracnose are the main reported cashew diseases affecting the majority of cashew trees. It is reported that the existing spraying service delivery model, dependent on a  local service provider, is costly and of poor quality. Individual farmers have no power over the service provider to demand quality service, negotiate prices and the number of chemical doses/treatments, which are usually less than the recommended minimum of 3 doses per tree.

Despite the fact that chemicals are 100% subsidized by the Ministry of Agriculture supply of spraying services is far from meeting the demand. For instance, in Nampula province, with more than 10 million cashew trees, currently only 2,2 million trees are treated against powdery mildew and anthracnose.

AgriSocius, Lda sees the above challenge as an opportunity for increasing  farmer production and yields. The company will provide quality spraying services to farmers through its network of qualified spraying service providers and at relatively lower cost for the farmer, while sustaining its business model by charging a sustainable fee to the farmer, which will be lower than the cost of poorly done spraying services.

AgriSocius will also link farmers to existing export oriented cashew processing companies in Mozambique and negociate higher prices for the farmer.

Attachments (1)

USER EXPERIENCE MAP-AgriSocius.pdf

Me and my wife spent nearly 3 hours figuring the user experience map for the business idea. We found it interesting as it forces you to wear farmers shoes and predict what would be the atitude towards the service being presented to him/her. I apologise for my lack of art skills!!

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