Impact on Agricultural Systems and the Private Sector

Introduction

Functioning, efficient agricultural systems are key to sustained, scalable change that lead to agricultural transformation for smallholder farmers. A capable state creates an enabling environment and strategic partnerships leverage technical and financial resources, as will be reviewed below in the Country-Led Transformation and Strategic Partnerships sections. Our investments in those areas are not ends unto themselves, but to transform agricultural systems, oriented primarily around private sector firms that must thrive to serve farmers. Seed and fertilizer systems deliver the improved inputs that lead to better quality crops and higher yields. Extension systems provide information on good agronomic practices and develop markets for improved inputs, and distribution systems move physical goods from suppliers to last-mile farming communities. On the other side, well-functioning output markets provide attractive post-harvest options and, when needed, the financial sector facilitates the flow of capital and credit to agricultural SMEs and farmers. 

However, in much of sub-Saharan Africa, the private sector is not fully delivering the agricultural systems that farmers need. For example, many countries have limited capacity to develop and produce improved seeds, and farmers may still rely on old, open-pollinated seed varieties. Similarly, fertilizer blends may not be suitable for local conditions, and production may be insufficient to meet market. Even where inputs are available, the geographic coverage of the agrodealer distribution network may be poor and too far away from a large share of farmers. These and other systemic limitations leave smallholders ill-equipped to change their agronomic practices, increase production, and operate more profitable farms. We observe common challenges across the systems of many countries:

• Lack of upstream firms to develop appropriate inputs for the local market, including early-generation seeds, certified seeds, or fertilizer blends

• Chicken-or-egg dilemma where market demand for key agricultural goods and services remains nascent, deterring the private sector from investing in supply 

• Narrowly-focused and fragmented interventions address specific needs for smallholder farmers, but the impact is limited by the failure to address broader, systemic challenges

AGRA aims to improve the livelihoods of smallholder farmers by investing in the systems around them. We had already helped countries improve aspects of their inputs value chains, particularly for seeds and fertilizer. In 2017, we broadened our scope to work more deliberately at the system level. Rather than targeted interventions, such as only introducing new seed varieties or training new African agricultural researchers, we looked for coordinated, multi-pronged interventions that would address different points of system failure at once. At the heart of this work is a commitment to strengthening the private sector-driven agricultural systems that will be the driver of scale and sustainability. We help improve systems by supporting the businesses that comprise them. This work thus encompasses stimulating market demand, coordinating among private sector actors, and de-risking investment and expansion.