To drive practical and solution-oriented learning, IDH organized an exchange tour focusing on inclusive business models and service delivery to farmers. This tour was hosted by the Raphael Group Limited (RGL), a Tanzanian rice and bean processor headquartered in Mbeya region.
The event, convened by IDH, brought together seven grain processing companies from Tanzania, Kenya, Uganda, and Ghana, and provided participants with an intimate opportunity to discuss their challenges and how to work towards market transformation together. Participants easily related to the realities of their peers and were well positioned to offer advice and share practical solutions with their colleagues. The event placed the companies at the center of learning, allowing them to drive the discussions towards their areas of interest. A vibrant mix of classroom learning, plenary discussions, and field visits inspired participants at multiple levels and about a variety of topics Highlights outlined below.
Gender inclusive transformative business models
In the last decade, RGL has transitioned its sourcing model to deliberately include smallholder farmers in their supply chain. The participants were very inspired by RGL’s approach of including smallholders in their business model, with women farmers in particular. RGL’s gender policy is to work with at least 40% of women in their farmer base. Another key topic of interest was RGL’s provision of services specifically tailored for women and women groups, for instance: bank loans tailored to women’s typical cash flow, support on inclusion in the banking system, and training on gender issues.
Theresia Mwaisumbe, RGL’s Project and Gender officer pointed out that “women usually achieve the highest yields and best quality grains… on average, they dedicate more than 50% of their earnings to their families.”
“It was impressive to learn and see the different women empowerment models adopted by the partner companies who participated. I have learnt that supporting women inclusion is not only beneficial to them and the society but also to the sustainability of the company, as default rates are lowand repayment of loans is high”. Said Humphrey Mutaasa, commercial manager of Afrokai Limited, an agri-business based in Uganda.
Aljahi Braimah, CEO of Tamanaa (Ghanaian rice processor), also shared their initiative of organizing a Women in Business challenge Fund, a large event where women farmers are invited to pitch their business plans and ideas to a panel. The most promising ideas were granted with price money which the women can invest in their businesses.
Partnership and service coalition
To achieve impact at scale and more sustainably, there is a need for industry players to collaborate for mutual benefit. RGL has sought the collaboration of like-minded partners in the industry to build a service coalition to serve the smallholder farmer needs.
RGL leads USHIRIBE (Up scaling the Southern Highlands Rice and Beans Consortium), whose goal is to work together to overcome the complexity of risks, while reducing costs and improving effectiveness of their services. The consortium convenes input providers, financial institutions, agricultural public institutions, and research partners. Participants were deeply interested to learn from RGL’s experience about the advantages of working within a coalition, sharing of data, and management and delivery of services.
According to Lazaro Mwakipesile, RGL’s General Manager: “To look for partners for the consortium, like inputs providers and financial institutions, RGL meets several of them and eventually signs contracts with those who are committed to working with smallholder farmers.”
Farmer contracting and trade
RGL works with farmers through forward contracts, which include tri-partite arrangements for provision of inputs on credit, as well as clauses for minimum and premium prices. These contracts do not only secure grain for the company, but also markets for the farmers, who receive their payments in a timely manner. The company trades the grains in the East African region, leveraging on early agreements with buyers, high-quality standards in their processes, and favourable infrastructure to neighbouring countries.
Joshua Toatoba, CEO of the Ghanaian rice processor Agri-trade was inspired by the lessons from RGL: “I am interested in implementing some of these strategies in my own company. I realize that in Ghana we have trading opportunities with neighbouring countries like Côte d’Ivoire and Burkina Faso. We have the plan to study consumer preference in those countries.”
Farmer organization segmentation and graduation
As RGL sources from around 360 farmer organizations (FO’s), the company has segmented them in different levels, ranging from immature and informal to more formalized and advanced FO’s. Evidence suggests that farmers formally grouped are less costly to serve than their informal or unorganized counterparts. Though in its early stages, RGL started to tailor its services and procurement practices based on the level of maturity of the FO’s. RGL and Smart Logistics (Kenyan grain processor) presented their FO engagement and model with segmented FOs, which increase the efficiency of delivery of services and produce aggregation.
Michael Nzomo, Business Development Manager of Smart Logistics indicated key aspects of their model: “For this model to work, you need to recruit more farmers than the target volumes would suggest. In this way, you mitigate risks like underproduction and side-selling. Then you directly meet leaders or chiefs of the farmer organizations, and they cascade down the information through the structure. That is how you lower costs.”
From learning towards action
During the two days, participants got time to reflect on the learnings and decide what they want to change and implement at their own businesses. They documented their commitment to change into a practical action plan, which included specific interventions, requirement of resources and tentative timelines. Among these actions to be implemented, which are amply based on RGL’s experiences, are Farmer Management systems, grain banking systems, forward contracting, working with socially disadvantaged farmers (e.g., widows), negotiations with financial institutions, and opening of retails shops to provide more job opportunities. These action plans are to be tracked by IDH’s project managers.
IDH is a global organization transforming markets. Collaboration and joint action are necessary to reach progress and impact at scale on complex topics such as living incomes and gender equality. Convening learning events such as this helps private sector companies come together in a precompetitive setting and set targets towards more sustainable and inclusive markets.