Living up to the challenge of creating market linkages in Mozambique
Trying to create a profitable agricultural market where smallholder farmers were previously involved in subsistence farming is a very difficult task and sometimes an uphill struggle. In Mozambique, the Programme for the Promotion of Rural Markets (Programma de Promoçao de Mercados Rurais-PROMER) supported by the International Fund for Agricultural Development (IFAD) and the government of Mozambique have taken up the challenge and is showing very encouraging results.
The main objective of the nine-year PROMER programme which started in 2009 is to enable small-scale farmers to increase their income from agriculture by helping them to market their produce more profitably. One of the ways to do so is to promote their inclusion into existing commodity value chains or create additional value chains for new cash crops. "Creating a market or market linkages is a complex task," said Carla Honwana, Coordinator of the PROMER programme in Maputo, " we are not only talking about selling the produce but we also have to look at access roads, rural micro-finance, farmers organisations, market information and in some extreme cases literacy."
This is exactly the type of challenge the PROMER programme had to face before it even started promoting market linkages. In the four northern Provinces where it is implemented, which include Cabo Delgado, Nampula, Niassa and Zambezia, many small scale farmers were illiterate and therefore unable to account for their production or enter into a written trading contract. Because they had been relying on subsistence farming for so long, reading figures wasn't a first necessity for them. So the programme started by introducing a literacy programme which proved to be very popular with farmers. "We are now able to understand figures and measure our sales," said a farmer from the Othamala farmers association in the District of Gurue in the Zambezia Province. She is one of many who are about to graduate from the literacy programme. A year after starting, farmers in her association are able to present production figures and indicate sale prices per kilogram. At the end of September 2013, already more than 5,600 farmers had benefited from the literacy programme.
Using community radios
To circumvent the initial problem of literacy in promoting better market information, the PROMER programme started using local community radio stations to inform farmers who could not read, and broadcast a weekly information bulletin. The broadcast turned out to be a very useful tool to reach farmers in remote areas who had no timely knowledge of market prices in their nearest market and couldn't read prices. The market information bulletin was first piloted in the community radio of Alto Molocue, where the PROMER office in charge of the Provinces of Zambezia and Nampula is located, and was consequently extended to nine other community radios across the other Provinces. The information is collected and compiled at District level and sent to the community radio station for broadcasting. "We can still improve on the delivery of market information and ensure prices are always accurate, and as it is working well as a means of communication, we want to continue using community radios and diversify the broadcast to include information on nutrition," said Carla Honwana.
Supporting Farmers organisations to develop marketing plans
However, even with a reliable market information system, a market cannot develop if farmers are not organised and cannot actually get to the market. In most of the Programme's area, small farmers do not produce sufficient volume to be of interest to a potential buyer, so they need to get organised into a farmers association or federation to reach critical mass and be able to negotiate prices and quantities with buyers. "That was a challenge as many farmers were not organised into a workable association, so the programme used a lot of time and energy to support farmers in strengthening their own association in market oriented production ," explained Carla Honwana. As a result of such commitment, a total of 465 farmers organisations were strengthened, with many of them also regrouped into umbrella federations to increase their commercial scope. By the end of September 2013, they were able to negotiate 169 contracts for the sale of produce such as maize, beans, soya and sesame seeds, showing a great improvement in their negotiation skills as an organised group.
Rehabilitating market access roads
Another important aspect of improving market access is transport and therefore roads. Many of the secondary roads in the project area had been neglected or suffered from poor maintenance. Farmers with very limited means of transport had great difficulties in reaching the market and had to travel very long distances. To tackle this issue and since 2010, the PROMER programme started rehabilitating access roads, selected by each district by their importance to improve the access of farmers to the market. ( A total of 34 roads are planned to be rehabilitated by the programme, of which 19 have already been completed. "The road rehabilitation is an important aspect of market access in our region," said Fernando Namucua head of the administrative District of Alto Molocue. "We need them to better connect our farmers to their markets, otherwise they remain completely isolated."
By working on many levels at once, the PROMER programme was able to create the right environment for the market to develop. In the Niassa Province, after the rehabilitation of the Nancare-Muhulema road, farmers no longer had to travel 100 kilometres to go to market, but only about 15 kms. Furthermore, trucks are now able to reach the farmers associations and collect large quantities of produce at once. Spot markets even started to develop along the new road and more farmers associations were formed. Those farmers can now read, write and count and are better informed about prices thanks to the weekly radio broadcast. They no longer have to sell their goods at discounted prices. "The improvement is substantial, we can really see it along the road," said Mario Quissico, Market Intermediary Officer at PROMER, "farmers even started to build new houses along the road to be closer to the market, and they can afford to buy bricks and a tin roof to do so."
Linking with established market operators
Now that enabling conditions have been created, the PROMER programme is moving a step further by supporting the creation of integrated value chains for cash crops together with established market operators in the region. One of the companies involved is Corridor Agro Limitada (CAL) which is supporting the creation of new value chains to reach out to smallholders previously excluded from the market. To do so, the company benefitted from an IFAD Matching Grant, whereby the organisation matched the company's investment with a ration of 50/50. "CAL has a lot of experience in supporting value-chains so they are bringing their knowledge to the project," explained Farai Manhanga, Value Chain Officer at PROMER. "It is a great improvement for farmers as the produce is being collected at their doorstep by the buyer at fair and competitive prices, as opposed to walking miles with a heavy weight on their head to bring it to market." The company will also provide assistance and advice for growing a new crop, producing consistent quality, storing it, respecting market engagements as well as honouring contracts in terms of delivery.
Rural micro-finance remains a challenge
In a well functioning market environment, farmers also need access to micro-finance to cover for their inputs and other costs before the harvest. Such aspect is proving to be a challenge in Mozambique as the rural micro-finance market is extremely fragmented with a great number of small players managing limited portfolios. "The interest rates they charge are far too high for small-scale farmers," said Fion de Vletter, IFAD's rural finance expert based in Maputo. "Some of the small micro-finance institutions can charge up to 90% a year in interest which farmers cannot afford." Also default rates tend to be very high, as high as 60 percent in some areas, with no effective recovery measures. "This is just not viable for any business," concluded Fion de Vletter