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Senegal - Beginnings of a Grain Revolution

posted Aug 1, 2011, 12:40 PM by Andrea Bohn   [ updated Feb 25, 2012, 9:23 AM ]

A Senegalese success story of an EAS private-public partnership in cereal value-chain development

Author: Brent Simpson, Michigan State University
February, 2012

Introduction:

Rediscovery of the power of markets, now featured as a centerpiece in most new agricultural development strategies, is perhaps the most notable change in the operational landscape of development practice over the past decade.  Many early efforts focused on the opportunities offered by higher value fruit and vegetable crops and export commodities.  The relatively inelastic demand for many high-value products, combined with their often highly specific production requirements and growing global competitiveness, has served to limit the extent to which these opportunities can be broadly extended as a poverty reduction tool.  In areas where growing conditions, proximity to markets and the necessary infrastructure backbone make this possible, the value-chain development approach applied to targeted commodities has succeeded in improving the lives of millions.  In other contexts, such as the broad bands of semi-arid Africa, where rain-fed cereal production dominates, the approach has yet to be fully tested.  If the value-chain development approach is limited to the more favorable physical and economic environments, farmers with greater resource endowments and more refined cash crop markets, what then for the hundreds of millions residing outside of these contexts?

As a partial response to this question, the experience of cereal value-chain development in Senegal is instructive in demonstrating that the core principles of market development can be successfully applied in less favorable environments and with the most basic of cereal crops.  Obviously, the value-chain development approach is not the answer to all agricultural development questions.  Improvements in basic infrastructure, investments in education, formulation of supportive trade policies, continued technological innovations responsive to evolving market demands and increasing risks of climate disruption, and the development of new sources of affordable energy are all required.  The value-chain perspective does, however, provide an important organizing framework for investments in developing the business relationships within the agricultural sector that can, when barriers to entry are removed, improve the lives of the rural poor.  For extension and advisory service (EAS) providers, working within a market-oriented framework transforms their roles from a continuation of the supply-push orientation that has characterized much of extension work of the past half century -- “produce and the market will come” -- to a responsive demand-driven focus -- “produce what the markets want.” 

For nearly a decade, a constellation of private and public actors in the southern portion of Senegal’s central peanut basin have, separately and jointly, experimented with and contributed to refinements in a cereal value-chain development model that has grown and matured to the benefit of both suppliers and buyers.  Along the way this experience has shown the willingness of various private sector interests to invest in EAS where there are tangible gains to be had, and highlights the many areas where public extension services can have the greatest impact in supporting the development and success of sustainable private investment.  

On the basis of this experience, the argument can be made that market-led approaches to agriculture-based poverty reduction and increased food security actually increase the demand for modern EAS inputs.   

Case History

The story of millet value-chain development in Senegal began through the separate but synchronous efforts led by local women entrepreneurs and a subregional research project.  The personal narratives and project documents of those involved confirm a general chronology of events involving these two strands beginning in the 2001-02 growing season.  As with most new ventures, early efforts encountered steep learning curves for those involved.  Motivated by the poor quality of millet available in the market (dirty and mixed grains), Madame Coulibaly, owner-operator of La Vivriere, a Dakar-based processor producing a range of cereal-based products targeting urban consumers, became interested in establishing an independent, reliable source of quality millet for her milling operations.  Through social contacts, she initially approached the community of Thiaré, in the region of Kaolack, with a request for access to land where she could contract local labor to produce millet under her specifications to supply her milling operations.  The community denied her request for land but expressed interest in supplying her with millet.  In response, Mme. Coulibaly agreed to supply a group of 13 farmers with 20 MT of fertilizer to cultivate 130 hectares of millet, with the cost of the fertilizer loan to be repaid in cereal at harvest.  To consolidate their efforts and coordinate their new business venture, the farmers involved formed a groupement d'intérêt économique (GIE).  Prior to harvest, Mme. Coulibaly reported setting the value of millet used to repay the fertilizer loan at 100 FCFA/kg.  The prevailing market price following harvest was 60 FCFA/kg, giving members of the GIE a healthy margin in addition to the yield benefits they realized from applying inorganic fertilizer.  They repaid Mme. Coulibaly 100 percent for the loan.  On the basis of this success, the following year 40 MT of fertilizer were supplied on similar terms of credit, supporting the involvement of 25 farmers.  Rainfall during the 2002 growing season was reportedly poor, leading to low yields and higher market prices.  Whether an alternative buyer willing to pay more was found or other factors were involved, the farmers and/or the intermediary through whom they worked failed to supply Mme. Coulibaly with sufficient grain to reimburse her for the loan of fertilizer.  Frustrated with her losses, Mme. Coulibaly abandoned efforts to work independently any further with the Thiaré GIE.

One notable element in this experience is that Mme Coulibaly sought the help of the national extension agency, Agence Nationale de Conseil Agricole et Rural (ANCAR), to assist her in establishing a contract with the Thiaré GIE.  She also paid 170,000 FCFA to ANCAR to cover the transportation costs for field agents to provide crop monitoring and advisory services to the Thiaré farmers that she was working with (Botorou et al., 2004).


In 2003, a pilot project supported by the International Sorghum and Millet Collaborative Research Support Program (INSORMIL CRSP) and the Réseau Ouest et Centre Africain de Recherce sur le Mil (ROCAFREMI) began working with farmers in Thiaré.   Under the project, which had started working with sorghum producers in Senegal the year before, researchers sought to field test the effect of several market development principles – quality-based pricing for clean, single-variety grain; inventory credit (warrentage) to take advantage of seasonal market price fluctuations, generally low immediately following harvest and rising afterwards; and marketing in volumes large enough to interest commercial buyers – with select groups of millet and sorghum producers and processors in Senegal, Mali, Burkina Faso and Niger (Botorou  et al., 2003).  In Senegal, ANCAR identified the Thairé GIE as a promising millet producer group for the project. 

In the first year of working with the INSORMIL pilot, 50 producers from Thiaré were provided with inputs and technical assistance through the project.  The farmers involved included the 25 farmers that had worked with Mme. Coulibaly the year before and members of a second farmers’ GIE that had been supplying another processor with millet.  Participating farmers each received sufficient inputs to cultivate one hectare of millet, including fertilizer (100 kg NPK; 50 kg urea) and 4 kg of seeds of Sounna 3, an improved millet variety developed by the national research institute, Institut Sénégalais de Recherches Agricoles (ISRA), as well as a tarp for threshing to protect the grain from contamination with sand and rocks, and bags for storage and transport.    To address the issue of sustaining the initiative, the project required each participating farmer to contribute 350 kg of grain into a common stock controlled by the farmers.  To manage their affairs, the two GIEs merged to form a single entity under the project.  The collected grain was commercialized later in the year once the postharvest market price had risen (the warrentage system), with the proceeds used to purchase fertilizer and seeds for the following year.  Individual farmers could sell more of their own grain through the consolidated GIE, but this was not required.  In this fashion, 50 additional farmers were brought into the project each year, and over a three-year period the overall number of farmers and hectares grew to around 150.

In the same year that the project started working with the Thiaré farmers, another Dakar-based woman entrepreneur, Mme. Deme, became involved with the project.  Mme. Deme is the owner-operator of Free Work Services, a company manufacturing traditional cereal-based products sold primarily to European importers supplying West African expatriates in large urban markets.   She is also the president of the Association du Transformateurs de Céréale Locales (ATCL), a group of 25 processors who had joined together to protect and advance their business interests.   At the time, members of the ATCL were annually buying a total of 300 MT of grain, with individual processors using up to 1 MT/day in their various milling operations.  In sourcing grain directly from producers, members of the ATCL paid a 20 FCFA/kg premium on top of the agreed upon purchase price -- 10 FCFA/kg as a quality incentive and 10 FCFA/kg for handling and transport.  ATCL members did not provide any inputs on credit or technical assistance for the farmers with whom they worked.

Evolving relationships

As the Thiaré GIE and processors adapted to their new business relations, they learned a number of important lessons. In the first year of contracted sales between the GIE and members of the ATCL, a purchase price was negotiated prior to the start of the agricultural season.  The year proved to be a good one, with adequate rainfall and above average yields.  As a consequence, markets become flooded with extra grain, and prices fell well below the negotiated sales price.  Members of the ATCL buying grain nevertheless honored their commitment and purchased the grain at the higher agreed upon price.  In the following year, below normal rainfall led to postharvest market prices rising higher than the negotiated sales price.  Farmers, too, honored their agreement to sell their grain at the contracted price, though they sold only the minimum required; the rest of their production was sold on the local market at prevailing prices.  These experiences left neither group satisfied and paved the way for adapting the approach used in setting the sale price and other changes under a follow-on to the INSORMIL pilot effort.



Actors and Interests

Processors. For the participating processors, the sourcing of a sufficient quantity of quality grain is their primary challenge. Grain purchased in the open market contains on average 15 percent “impurities,” mainly small stones, sand and other grain types. Not only does this high level of contamination represent a direct loss of cereal, but the stones and sand damage milling equipment and require additional expense of hand sorting and washing. The Thiaré Union is the only farmers’ group from which the ATCL members purchase grain. Some members had independently worked with other farmer groups in the past but broke off the relationships when they encountered problems with farmers not honoring contracts. The general consensus is that the quality of grain provided by the Thiaré Union is consistently high, the price premium that they pay is acceptable, and generally buyers would welcome the opportunity to purchase more.

The top concern among processors is that of honoring contracts. Current contracts specify the volume and technical quality of the grain to be delivered: no more than 5 percent impurities, no rocks, no sand and consistent variety. Traceability of grain purchased is important to them, in case they have a problem. In the past, problems have been relatively small -- e.g., delivery of 15 MT of grain instead of the agreed upon 20 MT. Over the past year, however, two serious issues have emerged that concern the ATCL members. Last year one of the processors received a shipment that obviously had not been properly handled postharvest. Suspicions were that this grain was purchased on the open market from non-participating farmers and sold in an attempt to honor the delivery agreement. This year, several hundred MT promised for sale to ATCL members went “missing.” Farmers maintain that the grain had been stolen from their warehouse at night, but one processor pointed out that, given the volume, it would take several trucks to transport it all, and this was certainly nothing that could be done secretly during the night.

Participating processors also take a great deal of comfort in the fact that ANCAR field agents are involved to ensure that “things are done correctly,” and also to collect local market information upon which price premiums are based.



ANCAR. The national extension agency describes itself as being market- and quality-focused. The agency is consolidating its efforts along the major value-chains in seven agroecological zones to create a critical mass of technical capacity. The current 240 staff members -- including 21 subject matter specialists and 190 field agents, with the remainder serving administrative roles at the national and regional levels -- cover only 60 percent of the identified need. In addition, as of 2010 there were a reported 546 farmer Relais (see below) assisting with extension delivery.

Operationally, field-level work plans are developed in collaboration with communities after an appraisal of local opportunities and needs. On the basis of the appraisal, a contract is drawn up with the community covering activities that will be carried out over the ensuing 6 months to a year. Typical types of activities include training, the introduction of new varieties and technical backstopping. Where relevant, ANCAR is required to work through registered service providers in coordinating delivery of inputs, training and other types of services. In these instances, field agents serve an important role in helping to mediate relations and oversee contract compliance. On average, 22 percent of the services provided by ANCAR are paid for by beneficiaries as either cash contributions or in-kind (e.g., food, labor, etc.). 


Relais. Each of the three Relais hired by the Thiaré Union work with around 200 farmers. None live in the village. Their technical backgrounds consist mainly of prior short-term training acquired through their involvement with NGO projects and the subsequent training they have received through the ANCAR field agents. As the name implies (“relay”), the Relais pass on the technical messages to farmers that they receive from ANCAR field agents, although they have not been trained in any extension field techniques. The Relais use a system of local farmer contact groups, each of which is organized around a central farmer’s field used as a demonstration plot. Over the course of the last agricultural season, the Relais reported visiting their contact groups four times to discuss seeding, controlling striga (a parasitic weed), harvesting and preparing grain for transfer to the warehouse. In addition, individual farmers are visited at four points in the season: to measure field size before seeding, after seeding to verify that the field was fully planted and that there is germination, to check that inputs are applied and to check for diseases prior to harvest. 

In addition to their work with the union, for which they are currently paid for 10 months to assist with both field activities and managing the receipt of grain, manual grading and management of warehouse stock, the Relais also work for hire with other governmental and NGO programs when the opportunities arise. 

The decision taken by the union to pay the Relais’ salaries is critical. Historically, across the subregion, the common practice is not to pay local points of contact assisting governmental and non-governmental extension efforts. In these situations, the individuals involved are often caught between growing local social pressures to continue providing the services that they render and the growing negative consequence of having to neglect their own farms. In some instances, the individuals have taken the only recourse open to them and fled the locality. The Relais employed by the Thiaré Union responded that their salaries are very important and that they use portions to hire labor to work their farms when they are too occupied. Of the chief complaints, they cited the need to provide their own transport and use personal cell phones; neither expense is reimbursed. The lack of transport and need for additional technical training were identified as their major constraints.  


Farmers.
Overall, farmers reported that higher yields associated with varietal change and use of inputs were their greatest benefit and motivation for participating in union activities. The increased production allows them to meet their household food needs and pay off debts. The 10 to 15 percent more that they receive for their production was not cited directly as a benefit, though reduced labor requirements due to changes in cultural practices associated with adoption of the new, shorter season variety were. 

In addition to reimbursing the union for the inputs they received, farmers are also required to “loan” the union 50 kg of additional grain each, which the union holds and sells off later in the year at higher prices. Farmers are paid for the value of the grain (determined at the time it was given to the union) plus a portion of the profits from selling at a higher price. The payment of these additional monies can take several months, which was cited as a complaint because farmers often hire day laborers, typically from outside of the community, to help with the harvest and need to pay them before these laborers can return home.