Case study

 

With support from Rockefeller Foundation, Psaltry International Limited is one of the beneficiaries of a fund set up by IDH to establish a sustainable and inclusive supply chain through an Outgrower project using the Block Farm Model.

Read more about the Block Farm Model


The IDH Cassava Technical Assistance (TA) fund was created to support cassava processors build inclusive supply chains and achieve sustainability at scale for industrial processing of cassava in Nigeria

Psaltry International Limited (PIL), established in 2005 as an agro-based company, currently has a 50MT/day factory to process cassava into food grade cassava starch. The company has expanded its operation to construct a 30MT/day Sorbitol plant in 2019, which is the in the first cassava-based sorbitol factory in Africa.

As the demand for cassava derivative is growing in Nigeria, PIL was unable to meet the demand of buyers, due to a shortage of raw materials caused by the low yield from farmers’ farms, an unorganized and inefficient supply chain, and inadequate funds to cultivate required land size for production. The challenge of inadequate and untimely supply of cassava is the main limiting factor most cassava processors face, thereby limiting the full utilization of production capacity.

IDH Cassava program intervention aims at achieving industrial cassava development in Africa. Starting from Nigeria by promoting the sustainable and inclusive supply chains for cassava processors.

Together with our partners, we are striving to resolve the challenges in cassava supply chains, enabling processing factories to have a consistent supply of cassava to their factories to fully utilize their production potentials and empowering smallholders through increased productivity and income.

In Nigeria, industrial cassava processing is growing with the potential to save the country up to US$275million annually from imports of wheat, starch, flour, and other ingredients for industrial food production.

As mentioned, PIL had issues with the consistent supply of cassava to its factory. PIL was not able to meet the demand of its buyers despite the abundant opportunities, potentials and plant capacity. PIL could only meet around half of its major buyers’ demand for three years in a row, respectively due to scarcity of cassava tubers. The supply system which was put in place to source cassava tubers accounted for just about 30% of the total supply in 2016. This mainly because of low productivity which eventually impaired the consistency of supply, flexibility in pricing, and the quality of supply (starch content).

As part of the IDH Cassava program, IDH Technical Assistant (TA) intervention for PIL in 2018 facilitated the establishment of the Outgrower project, on the company’s controlled farmlands, which aimed at building a sustainable and inclusive supply chain for PIL to achieve 100% production capacity by the year 2020.

The project’s goal was to increase the productivity of the farmers through training and provision of technical services that will result in improved livelihoods for the farmers while meeting the raw material capacity of the company.

The specific objectives of the project were to:

  • Support 1,000 farmers to supply 40000MT/annum of cassava root to PIL processing plant;
  • Increase the yield and income of 1,000 farmers under the block farm and additional 7,500 external farmers.

The project, after three years, has enhanced PIL capacity and growth, guaranteeing supply to the factory and improving the livelihoods of smallholders in the supply chain. We outline in this report some of the results achieved by PIL through IDH’s TA support.

Service provision grafted into the supply chain

An essential component of the project is the service provision. PIL as a service delivery operator provided support services to farmers both through internal resources and third-party engagements. Through the project, we aimed to improve smallholders’ knowledge, support them to access production inputs, and produce sustainably for improved livelihoods. The service provisions enhanced productivity, thereby increasing supplies for processors that will enhance production capacity.

The 1,000 farmers (block farmers) who were directly linked to the company’s supply chain through the block farm were allocated 2ha of land each and supported with input services such as mechanization, improved planting materials, and agrochemicals. PIL also provided pre-financing services for farm inputs which the farmers repaid using their harvest and getting cash balance after loan deduction.

60% increase in yield

With the technical support from PIL towards improved agronomical practices and provision of credit, farmers were able to increase yield by almost 60%, increasing cassava supply that will increase capacity utilization of the processing plant to 100% by end of 2020.

The 7,500 external (community) farmers operated outside the block farm, in the neighboring communities. Cassava being a food crop for household subsistence, the community farmers serve the purpose of price stability and food security in the community. The community farmers were trained on good agronomical practices and provided with improved planting materials for increased productivity within the communities.

Block Farmers Community farmers
1. Capacity building through

· training on best agronomic practices

· training on group organization and business skill

2. Establishment of demonstration plot to enhance adoption

3. Organize field days

4. Input financing

5. Transportation/logistics support

6. Market linkage

1.  Capacity building through

· training on best agronomic practices

· training on group organization and business skill

2. Establishment of demonstration plot to enhance adoption

3. Organize field days

4. Establishment of adaptation plots

5. Market linkage

Among the block farmers, the yield has increased by 57% compared to the national average. The farmers attributed to the introduction and learning of good agronomical practices which was the core intervention funded by IDH.

I want to testify that the farmers in Osoogun and its environs have experienced tremendous increases in cassava yield, working with Psaltry, compared to what they were getting in the past. Our yield has increased from 18tons per hectare to 22 tons per hectare. As a result of technical support provided by IDH in collaboration with Psaltry on Good Agronomic Practices which multiplier effect brought about changes in our productivities and hence has increased our income. This has enabled us to educate our children in Private primary and secondary schools. I was able to renovate my dilapidated house. Part of the challenges we were facing before the project intervention included lack of access to tractor for farm cultivation and lack of access to farm inputs like herbicides and fertilizer. Psaltry could provide all these services as a result of this support. We thank Psaltry and IDH for working together to transform our lives for good.

Mr. Olalere Bamiji

beneficiary of the project in Osoogun, Iseyin Local Government Area of Oyo State.

81% of income increase

Likewise, farmers within the block farm earned an income of US$ 1000 per ha compared to community farmers that earned US$ 640 per ha. Through the project, there is a significant difference in the income of block and community farmers by at least 57%. Results further show that the block and community farmers earned 81% and 15% respectively, more than before the project. In the area of pre-financing, within the last two years, PIL pre-financed 500 farmers with the sum of US$ 138,031.98 in 2018 while US$ 244,098.23 was spent as pre-financing for 800 farmers in 2019.

Job creation

A total of 6,223 farmers have been trained on different cultural and agronomical practices related to cassava production and the project has created a total of 41,660 and 40 temporary and permanent jobs respectively in the two years of the project.

PIL has expanded its block farm from 1,000ha in 2018 to 1,600ha in 2019 and 2000ha in 2020. With this, the block farm supplied 53% of root requirement in 2019 and 67% in 2020. Cassava sourced from the block farm has increased production capacity of PIL to 93% in 2019 and 107% in 2020.

 

Change in production capacity

Other Project KPIs

  Parameter 2018 2019
1. Yield (tonnes)
·       Block farm 22 22
·       Community farm 20 20
·       Baseline 14 14
2. Credit for farmers through pre-financing
·       Number of farmers 500 800
·       Total amount (US$) 138,031.98 244,098.23
3. Jobs – Total permanent jobs created (factory and field) 16,063 25,600

The Outgrower project co-funded by IDH is unique in its approach. It provides an opportunity for a win-win arrangement between companies as PIL and smallholder farmers.

The project guaranteed a business case for both farmers and processors and at the same time enhanced both capacities in terms of quantity, quality, and consistency of supply. In addition, the company has control over what is produced within the block farm while farmers have access to credit for farming inputs with a market guarantee.

The cassava program organized by Psaltry has helped farmers a lot in this area. From the proceeds made from my farm in 2018, I saved part of the money and the rest was used for land preparation to expand my farm by 5 hectares. We were given all the inputs needed for our farm and we were also trained on good agronomic practices. All these helped us to achieve a yield increase from the initial 18tons per hectare to 22tons per hectare which translates to an increase in our income

Mrs. Ganiyu Limota

Farmer

The IDH Cassava program promoted a supply chain model that promoted the controlled and sustainable outgrower scheme production of cassava in partnership with farmers and service providers.

This project has assisted PIL to increase its production capacity over the three years from 53% to over 100% with surplus cassava fed into other product lines. This has created a supply chain development initiative that crystalizes into the sorbitol factory established by PIL.

Through IDH support, opportunities were created for farmers to increase yield by 57% through improved production knowledge, access to credit for input supply through a pre-finance arrangement, and to earn more income through a guaranteed off-take arrangement. IDH support to PIL has enhanced capacity to process cassava profitably thereby contribute to the nation’s economy through job creation and forex saving.

IDH has empowered Psaltry in scaling up the supply chain through Technical Assistance, which has helped us increase our services to farmers and increase the number of farmers that supplied raw materials for production lines. This has resulted in increase in farmers’ incomes, productivities and has created a sustainable food system for the multinationals that buy Psaltry end products. Going forward, we shall continue to adopt the three levels training approach introduced by IDH in our subsequent training activities. We will also be promoting the IDH block farmers model because it gives us raw material guaranty and also simplifies our monitoring activities.

PIL Management

In the implementation of the Outgrower project, we collected many lessons learned:

  1. Land acquisition: Issues relating to land availability and acquisition process varies across locations based on prevailing land law and traditional regimes on land.
  2. Pre-financing: Access to finance is key in enhancing inclusive agribusiness. Pre-financing of services such as inputs and mechanization enhances processors’ ability in mobilizing farmers for the block farm and for timely operations.
  3. The role of women: Women play a critical role in agricultural development. In the cassava value chain, women are the primary processors in the local food sector. The goal of the project is to sustain the gender dynamics of every community but motivate women’s involvement so that the potential income benefits can alleviate poverty among women and enhance their livelihoods. Men have a great influence on their women in the community. By appropriately engaging the men, women’s enrollment in the project can be increased.
  4. Smallholder farmers, the key to sustainable sourcing of cassava: Initially, there was over-dependence on commercial farmers to supply the factory on time. Nevertheless, over the period, it has been shown that smallholder farmers are still the major suppliers of cassava. They demonstrated a firm knowledge of supply chain arrangement and they have shown that they can be relied upon.

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