SDM Case Report: Sparkx Farms, Ghana

In Ghana, government and businesses are investing heavily in local rice production to replace rice imports currently necessary to meet domestic consumption. While Ghana cannot compete with the Asian rice producers it currently imports from, it has good potential to become a major rice producer in the region.

Sparkx is a small-scale privately owned rice grain and seed producer operating a smallholder outgrower model in northern Ashanti since 2016. Its mission is to become a leading rice producer in Ghana, while improving the livelihoods of farmers in the region. They are seeking to expand its current farmer base of 690 to around 3,500 farmers by 2023. Annual sourcing volumes are expected to grow to 6,400 MT rice grain and 3,500 MT certified rice seed by year 2023.

By expanding farm the per farmer plot  size dedicated to rice, and offering a comprehensive bundle of services (including  training, inputs and mechanization on credit and irrigation) Sparkx is able to increase annual production per farmer from 2.0 MT to 10.5 MT per year, thereby significantly boosting household incomes up from $325 to $2,256 per year, within 3 years (or 6 seasons).

This report analyzes Sparkx’ strategy and business model; the financial performance of both company and farmers; and identifies opportunities in overcoming barriers to scale and mitigating business and farmer-level risks. The main recommendations to improve the business model and reach scale to contribute to Ghana’s mission to increase local rice production are for Sparkx to:

  • Build operational excellence to enable scaling the business. Managerial, agronomic, and digital expertise needs to be strengthened and expanded. Decision-making processes need to be improved to develop, test and improve Sparkx’ farm service and sourcing operations.
  • Implement data infrastructure to measure crop performance, service impact and farmer financial track records, and feed farm-level data into decision-making processes. This allows Sparkx to 1) continuously improve service effectiveness, 2) assess social and environmental impact, and 3) build a case for farmer impact and on-lending towards implementing partners, banks and/or investment funds.
  • Improve buyer payment terms and attract affordable finance would accelerate growth at low additional cost. Firstly, it could shorten Sparkx’ working capital cycle and take on larger input and assets loans to source and process larger volumes and extend more services with every year. Secondly, Sparkx could repair damaged irrigation infrastructure and start building new dams sooner, expanding land under irrigation. Thirdly, Sparkx could complete its mill earlier, leading to increased processing efficiency.
  • Tailor services to female farmer needs and climate change risks to make the business model more inclusive and resistant against climate shocks. While Sparkx is aware of gender disparities and climate change impacts, minimal actions are taken to specifically tailor services to women; or roll-out resilience-enhancing services that go beyond increasing yields. External support for the creation and implementation of a strong gender and climate-resilience strategy would ensure rice production in central Ghana is scaled up while being inclusive and prepared for future climate change impacts.

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