5 December 2012

Africa: Innovating Across African Agricultural Value Chains

"To get innovations right, they must be driven by local cultures, ensuring that farmers, governments and rural entrepreneurs have solutions that they can adapt to their local needs"

A majority of Africans live in rural areas and depend on small scale farms for their livelihoods. While innovations and new technologies can increase the productivity and profitability of these farms, they are often not adopted by small scale farmers, not because they do not work, but because of missing links in the value chains serving these farmers. If credit is unavailable, many farmers are unable to purchase yield enhancing inputs; without storage facilities, farmers must sell their surplus at harvest when prices are unprofitable; and with no insurance, the risk of crop failure may be too great for farmers to invest their scarce resources in boosting farm productivity.

For Africa's small scale farmers to become commercial successes and the engines of economic growth there will need to be critical innovations across the continent's agricultural value chains; to fill missing links, and to remove barriers to adoption. However, to get innovations right, they must be driven by local cultures, ensuring that farmers, governments and rural entrepreneurs have solutions that they can adapt to their local needs.

The Rockefeller Foundation works collaboratively with many of our grantees, including the Alliance for a Green Revolution in Africa (AGRA), to build and strengthen agricultural value chains serving Africa. To achieve sustainable solutions, the Foundation often invests in the design and testing phase of innovations that may benefit small scale farmers, and can then be taken to scale within AGRA's more comprehensive value chain strategy.

AGRA's seeds programme, for example, is a key component of AGRA's whole value chain approach and builds on prior Rockefeller Foundation investments in training African crop breeders, supporting breeders to produce new crop varieties, building African seed companies to multiply and disseminate the improved seeds, and in training and supporting village level agro-dealers who sell the seeds and complementary inputs directly to farmers.

Similarly, the Foundation experimented with credit guarantees as an innovative means of incentivising Africa's commercial banks to make more investments in small scale agriculture. In 2005 the Foundation provided a $500,000 credit guarantee to the Centenary Bank in Uganda to encourage Centenary to lend to farmers who did not have access to credit. Initially the guarantee leveraged two times as much bank lending. After three years, given the history of low losses, Centenary was willing to use the same half million dollars - which had paid more in interest to the Foundation than was lost in defaults - to leverage over $4m of lending for close to 8,000 farmers and firms serving farmers. AGRA has built on this experience, taking credit guarantees to additional African countries and leveraging far greater financing for agricultural value chains.

More recently the Foundation has supported experiments designed to build rural resilience in Africa by helping farmers better manage the risks they face due to weather variability and climate change. One experiment, called the Horn of Africa Risk Transfer for Adaptation (HARITA) project, is led by the Relief Society of Tigrayand Oxfam America. HARITA enables poor Ethiopian farmers to strengthen their food and income security through a combination of improved resource management (risk reduction), microcredit (prudent risk taking), crop insurance (risk transfer), and savings (risk reserves). Farmers pay for crop insurance with their own labour provided during the off-season for community level resource management work.

Building on the success of HARITA, the World Food Program (WFP) and Oxfam America have established the Rural Resilience Initiative, known as R4 for short, to rigorously test the approach at a large scale in multiple countries, the first of which is Senegal. If proven successful in additional locations this could become a component of value chains taken to scale by AGRA.

AGRA now serves similarly as an intermediary for several of its donors and partners; evaluating pilot projects, helping to take the most promising to scale, and incorporating them within comprehensive agricultural development programmes. This renewed focus on value chains, led by the work of AGRA will help assure that useful new technologies and innovative solutions find appropriate applications in Africa where they can contribute effectively to serving small scale farmers.

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