Using market evidence to protect smallholder farmers from price variability

That most African smallholder farmers can produce enough commodities for household consumption and surplus for the market is now beyond question. The majority of committed farmers have mastered the art of producing almost any commodity.  What remains outside their control are market dynamics such as prices as well as supply and demand trends. The situation is worse in informal agricultural markets through which more than 70 percent of agricultural commodities pass en route to diverse consumers.

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While African insurance companies have started getting excited about insuring agriculture against weather-related parameters like hail, frost or drought, they are still to craft uniquely market-related insurance products. For commercially-minded farmers, insuring agricultural commodities against weather is meaningless if unpredictable market prices result in huge losses.  Agricultural markets re becoming too volatile such that even if commodities are insured against weather, failure to insure against price variability and supply trends derails the whole farming business.

Towards an agricultural market insurance index

Based on data and evidence gathered in agricultural markets across Zimbabwe over the past six years, eMKambo has started exploring a market insurance index that can cushion farmers against negative market dynamics. Lessons from this initiative can be scaled out to other countries. So far, market trends from diverse agricultural commodities signal that an appropriate market insurance product can focus on the following parameters:

  1. The break-even price for commodities to be insured: The insurer and farmers will have to agree on what is considered a break-even price.  If the break-even price for tomatoes is US$2 per box, anything above U$2 becomes a profit for farmers.  Farmers will have to focus on minimizing costs of production. Depending on type of commodity, there will be a minimum area of production for farmers to break-even.
  2. Price elasticity:  This is about how often the price of the insured agricultural commodity can change. Does it change three times a month or is it too elastic such that it can move from $2 today and $3 tomorrow? This factor takes into account differences between perishable commodities and non-perishables whose prices may remain stable for a given period.
  3. Price range: What is the price range for insured agricultural commodities?  For instance, in Zimbabwe’s informal markets, tomato prices can range from 50c a box to $12 a box within eight months depending on supply and demand. However, potatoes rarely go down to $1 irrespective of supply and demand. The cost of producing potatoes determines how low the price can go.
  4. Shocks:  To what extent are insured commodities affected by shocks such as dry spells, floods and others?  Sometimes good rains can cause gluts like what happened this year in Southern Africa.
  5. Trends: How do commodities behave in a given period? There are times when commodity supplies of commodities like onion and oranges are very low. Understanding how these commodities behave in a given season can inform designing of insurance products.

Bundle of services

Since it is not enough to offer insurance as a single service, there is enormous scope to combine insurance with other advisory services so that it becomes a coherent bundle of services that are critical for agriculture. While being evidence-based and knowledge-intensive, the market insurance model incentivizes farmers to work on their costs so that they stay above the break-even. Just as traditional insurance does not cover a car that is not moving, the market index insurance will not pay for poor quality commodities.  Farmer and commodity location will be critical part of valuation of farmers.

Distributing agricultural wealth and finance

By taking into account different commodities, production zones and contexts, the market insurance index will assist in redistributing agricultural wealth. The main challenge for African countries is absence of systems that can distribute agricultural commodities where they are needed without passing through major urban centres.  Agricultural commodities can move from one rural area to urban centres and back to a neighbouring rural areas. In most cases not much value will have been added to the product in urban areas.  Part of the problem is that most African countries have not transformed colonial structures which were designed in such a way that everything is directed to urban centres.  That is why rural to urban migration is not the increase although some rural areas may offer better opportunities.

Mechanisms that can update food needs of various communities are badly needed so that commodities can be easily moved from areas of production or abundance to where they are needed. In most cases, where commodities are produced there is no local market or demand because everyone has the commodity. For instance, there cannot be a market for bananas in Honde Valley area of Zimbabwe because almost everyone produces the fruit. Unfortunately, even if the fruit is needed in Gwanda district, it has to pass through urban centres like Mutare, Masvingo and Bulawayo where there will be so much double handling which results in losses.  A robust insurance index should cover all these issues.

 

Charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

The power of knowledge retention in farming and rural communities

In addition absence of appropriate information at the right time, lack of knowledge retention mechanisms is a big challenge for African farming and rural communities. Unfortunately most resources continue to be directed at the dissemination of ideas from policy makers and development actors.  As a result many development interventions remain projects at the end of which communities go back to their usual practices. This situation would be addressed by clear pathways through which communities can integrate knowledge from outside with their local knowledge in ways that foster reliable knowledge retention.

With increasing urbanization, many African youths are migrating to cities and this means elders have no one to hand over their practical wisdom to. As elders retire from active agriculture or die, critical knowledge leaves with them. As if that is not negative enough, most African rural communities do not have libraries where knowledge artefacts can be kept for recall and adaptation. Given the rate at which human beings forget important details, it is not ideal to depend on human memory to retain all the knowledge needed by a community to function in the modern world. Community resilience is not just about availability of natural resources and food but relevant knowledge which has to be retained and transferred to the next generation.  Such a role cannot be left to formal educational institutions which are full of textbooks from elsewhere instead of people’s lived experiences.

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Establishing Community knowledge centres

Intentionally setting up community knowledge centres should be part of each community’s knowledge retention and transfer strategy. That will reduce risks of communities losing all the knowledge the way their soils lose nutrients and water so much that nothing can be produced to sustain lives for a long time. Many communities have abundant natural resources that people are failing to exploit because they have not been able to retain the most important knowledge to which they have been exposed. Critical knowledge to be retained through a community knowledge centre include important decisions that have been made by the community collectively in the recent past, knowledge priorities for the community as well as ways through which communities address their challenges. A community should be able to retain a certain minimum amount of knowledge and wisdom in order to function dynamically.

African youths as drivers of modern knowledge retention methods

Youths’ exposure to various learning approaches can help them in setting up knowledge retention mechanisms for their communities through gathering what needs to be retained in community knowledge centres. It takes skill, curiosity and progressive attitudes to ask the right questions for surfacing community knowledge.  That is why one youth from a community can fully describe his/her community to outsiders while the other may not see anything worth describing. It is about imagination, interest and skill. Curious and determined youths can start the knowledge gathering process through conversations with community elders, experts and opinion leaders. They can then scan their local environment to identify socio-economic drivers that keep the community hanging together.

Every community has Communities of Practice (CoPs) through which people with the same interest learn together and deepen their practice.  In most cases, these local communities of practice can be invisible and have to be unearthed by someone determined to reveal stories behind the stories. Having figured out the wealth of existing knowledge, youths can capture and document using various methods including Information and Communication Technologies (ICTs).  As part of building ownership and resilience, this initiative should not entirely depend on the donor life support system.

If most development interventions had knowledge retention has part of their community investments, many African communities would have pulled themselves out of poverty. Climate smart agriculture and other approaches being promoted will not go far in building community resilience if there is no commensurate effort in supporting communities to retain knowledge. Besides people’s natural tendency to forget important details, knowledge has a tendency to leak as much as it also tends to stick.  There should be strong initiatives in ensuring retention of critical ideas necessary for important decision making. Retaining critical knowledge enables a community to reduce risks to manageable levels and prevent situations where a community’s basic coping mechanisms have to come from outside.

Towards authentic community knowledge assets

Having gathered the most important knowledge, community youths can produce a number of knowledge assets by converting common sense into operational manuals that, for instance, demonstrate how a community can use its natural resources without depleting them. Stories of local champions and role models constitute some of the knowledge assets. Instead of relying on generic farming as a business manuals, communities can develop their own process manuals and guidelines that speak to their context.  Although most development organizations love to use words like ‘sustainable development’, much of the information being pushed to communities through development interventions is too general and irrelevant for achieving authentic sustainable development.

Knowledge becomes a common good when local people participate in its co-creation.  By producing many documents with their own logos inserted on cover pages, most development agencies are presenting knowledge as if it is their private property.  Even if stories in those publication are about local people, it is difficult for local people to identify with the final artefact in the form of a book or publication produced for the world to read.

Addressing haphazard knowledge sharing

Knowledge retention efforts can address the current scenario where the majority of African smallholder farmers are haphazardly informed about agricultural markets.  In some cases, existing markets do not take enough volumes or are so choosy that most commodities from smallholder farmers are not taken up, leading to loss of potential income.  What is presented as a market by policy makers is for very few commodities like maize and flowers. Very little of what farmers really need to know gets to them.  The rest is either half-truths or misleading advertisements designed for profit maximization by those pushing such messages.

 

Charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

Knowledge-driven ways to assess the socio-economic impact of agricultural interventions

Measuring the authentic impact of development interventions remains a big challenge for many development organizations and governments, mainly in developing countries. Terms like Value for Money (VfM) and Social Return on Investment (SROI) are being mentioned repeatedly as organizations try to ascertain the value of millions of dollars that continue to go towards development. While these efforts focus mostly on the monetary value, there is not much excitement towards assessing changes in knowledge and people’s capacity to make sense of their own development.

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Building community confidence and culture

African agrarian communities may not attach particular names or abbreviations to most of their best practice models but such practices are worthy more than new models being dreamed up by development practitioners every day. eMKambo has realized that, besides using repetition to build community confidence and a strong culture, each farming community has sophisticated ways of evaluating its learning processes through questions like:

  • What is working well in our community this season?
  • Where are we solving the same problems over and over?

After every harvest, individual farming households often find time to discuss their results through questions like:

  • What have we achieved that makes us proud?
  • What could have been better?

Greater community efforts also go into analyzing collective decisions through answering questions like:

  • What decisions did we not implement properly leading to disappointing results?
  • What decisions preceded our good results?

Instead of focusing on monetary value, the impact of development interventions can be revealed through facilitating processes where communities ask and answer their questions intelligently.  It may not be so much about how much money has been spent taking people through formal training programmes like farming as a business or buying ICT equipment like VSAT.

Identifying pockets of positive community energy and knowledge

While a lot of knowledge may exist in a community, there is often need for structured ways of assisting local people to explore relationships that expand or impede knowledge sharing. This can be achieved through helping them to answer questions such as:

  • Where are the pockets of positive energy in our community?
  • Where is the negative energy and how can we minimize it?
  • What brings us satisfaction in our agricultural and socio-economic activities?
  • What is frustrating us and what does that say about our community?
  • What skills are we improving as a community?
  • What skills would we want to acquire and improve?
  • What are we learning about our individual and collective community roles?

Uncovering learning through reflection

Given an increase in the amount of information sources, many farmers now need few rules of thumb rather than a lot of information that ends up confusing them.  Contrary to the widespread notion that the customer is always right, informal markets have shown the extent to which many customers learn from traders, farmers and other actors who frequent informal markets.  Since not every value chain actor can possibly know everything, they thrive on trusting other people’s knowledge. In some cases, providing farmers and other value chain actors with more information or knowledge is unlikely to improve their situation due to several barriers to using that knowledge.

Many farmers need information on a just-in-time basis as opposed to just-in-case basis, on the assumption that it will become useful in the future.  Unfortunately, most capacity building programmes are based on just-in-case knowledge provision approaches on the assumption that communities will use that information when the project comes to an end. Quite often, when the project phases out, which is the end of everything associated with it, including knowledge sharing practices.  That is why setting up community knowledge centres becomes important so that they continue weaving various knowledge pathways into collective community action.

Charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

When old knowledge prevent adoption of new socio-economic practices

One of the dominant facets of colonization is visible in the structure of African formal food industries. Many African countries are stuck with infrastructure designed for supporting manufacturing of a few agricultural commodities, mainly for the export market. Such commodities include maize, beef, coffee, tea, cocoa, soya bean, tobacco and wheat. The biggest mistake by African governments was to cling to the myth that only these few commodities out of thousands found in Africa, can transform African economies. Consequently, billions of dollars continue to be poured into promoting these few commodities which, in most countries have reached their ceiling. Given the decreasing buying power of local consumers, it is naïve for African governments to continue celebrating an increase in the production of mono-crops like maize, tobacco and wheat. When everyone has maize, who will look for maize to buy?

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Handicaps in moving from knowledge to action

While there is increasing awareness and knowledge on the limitations of colonial agricultural model, African policy makers are failing to break out of structural limitations imposed by a colonial economy and food system. Since the 1950s, governments, the private sector and development agencies have poured billions of dollars into maintaining colonial infrastructure like research stations that focus on a few commodities, manufacturing plants that have outlived their usefulness and big maize silos that are no longer relevant for rapidly changing consumption patterns. Maize seed companies have invested millions into mono-crop research stations. In Zimbabwe, the most advanced laboratory supports tobacco production while there is no decent research station for hundreds of foods consumed and traded by the majority.

Transforming African agriculture will mean radically doing away with some of the above infrastructure that continues to reinforce structural economic problems. It means doing away with traditional research stations in which huge costs have been sunk. It means doing away with mono crop storage silos which are gobbling millions of dollars in maintenance costs. Most importantly, it means doing away with knowledge associated with these commodities and infrastructure. However, this is a big threat to thousands of knowledge workers who have spent all their lives and resources studying maize, tobacco, exotic livestock breeds, cocoa and nothing else. Researchers working for international research outfits like the Consultative Group in International Agricultural Research (CGIAR) will certainly not vote for transforming the current structural status quo because it means throwing away all the knowledge they have gathered and experimented with for generations.  However, something has to change.

Resistance to new evidence and knowledge

When policy makers in developing countries and development organizations look at the scale of transformation required to change the above situation, no amount of knowledge will convince them to take corrective action. Due to self-interest, they would rather resist change and ignore fresh evidence from alternative sources like informal agriculture markets which support the majority of local consumers. Instead of continuing to research and promote mono crops, developing countries are squandering opportunities to re-interpret their food system and build new collaborations through lessons from informal markets. In fact, informal markets can be fundamental in generating new theories of change that can be owned by local people and policy makers. Embracing knowledge from informal markets can generate ground-breaking insights through answering the following questions and issues:

  • To what extent are informal food markets not only demonstrating linkages between food and people’s identity but also inspiring new pathways for knowledge interpretation and collaboration?
  • How can we use informal food markets to inspire a correct reinterpretation of the social, economic, ethical, cultural and political characteristics of food systems in developing countries?
  • How can informal markets support the discovery of culturally-rooted food supply models?
  • How can development agencies assist communities in mastering their natural resources advantages in a globalizing world?
  • How can researchers open policy makers’ eyes to the fact that resilient food supply models have a long history and strong cultural roots from which the modern world can learn?

Despite ordinary people’s growing trust and faith in African informal food markets and local ways of sharing food, policy makers, the private sector and development agencies are not investing in the development of these resilient food sharing networks. Such efforts should begin with facilitating systematic reflection of how informal food markets can be theorized and practiced. This will ultimately reveal the strengths and weakness of conventional colonial food systems that are competing with local food systems, vividly expressed through informal markets. There is no way food theories developed in the West can capture all the peculiarities and roles of informal food markets in diverse African contexts.

Charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

Making sense of differences between communicating evidence and facilitating its use

Besides promoting linear ways of communicating information, most efforts by policy makers and development agencies in Africa continue to confuse dissemination of evidence with facilitating its use. Instead of speeding up the adoption of new knowledge, social media is also generating noise which gets in the way of adoption. If they were facilitating adoption and use of evidence, organizations would direct more resources to engaged reflection activities, mentoring evidence users and walking together with people in need of new ideas.

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The difficulty of removing information from public discourse

Among those working with farmers and rural communities, there is an emerging realization that practices that have taken decades to solidify will not be changed overnight. That is why falsehoods and myths continue to compete with objective facts. While a lot of money still goes into producing documents, published information is not changing practices. Supporting the adoption and use of evidence requires thoughtful interventions.  For instance, you cannot change nutrition practices through advertisements because there are many reasons why people are not adopting new nutrition practices. One of the reasons may be that people cannot afford nutritional food due to various constraints.  Agricultural production manuals are not changing practices.

Examining factors that enable the use of evidence

Effective communication of evidence is important but incomplete. Given an increase in information and diverse sources, most people no longer have the time or energy to sift through the ocean of available information in order to identify what is critical for decision-making. The situation is worse among  policy makers like Members of Parliament who are exposed to disparate forms and sources of evidence such that they end up choosing what appeals to them although that may not be the most useful evidence for policy making.

Not all evidence has to be standardized

Contrary to efforts by organizations to turn all available evidence into documents and publications, more than 70 percent of knowledge in African communities may not need to be documented into lifeless publications but baked into best practices and rituals.  Not everyone wants to read a manual or standard operating procedures on how to produce all kinds of agricultural commodities. Many farmers are satisfied with following procedures and rituals into which evidence has been embedded.  This makes sense because it does not over-load memory. It leaves people with some cognitive space necessary for human well-being.  Rather than foisting evidence on communities, it is important to ensure it is demand-driven.  When evidence is demand-driven, it is put to use quickly and in its richest form unlike when it is not demand-driven. Cognitive bias is also minimized when people use evidence for specific purposes.

 Navigating the interconnected nature of opportunities and risks

Given the complexity and interconnected nature of opportunities and risks in African agriculture and socio-economic development, disseminating information is no longer enough. Building sustainable value chains requires facilitating the use of evidence. Numerous knowledge gaps cannot be solved through information over-load.  Instead, value chain actors have to be assisted in aligning their values and resources in ways that ensure business innovation and socio-economic impact. It means development partners and policy makers have to be better at communicating not just the moral imperative of positive change but also the market incentive which can be understood by the private sector. All this is not just about communicating evidence but availing appropriate evidence and facilitating its uptake by all actors.

 

Charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6