i

InovAgro Phase II

Annual Report 2017

Submitted to the Swiss Agency for Development and Cooperation (SDC) Swiss Cooperation Office Mozambique

02 November 2017 Submitted by DAI Europe In association with COWI Lda

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Contents

Annual Report 2017 ............................................................................................. i

Executive Summary ................................................................................................. vi

1. Introduction ....................................................................................................... 1

1.1 Investment Climate in Northern Mozambique ............................................ 4

1.2 Business Reaction to Context .................................................................... 7

1.3 Conclusion .................................................................................................. 8

2. Value Chain Analysis ........................................................................................ 9

2.1 Project Outreach ........................................................................................ 9

2.2 Pigeon Peas ............................................................................................... 9

2.3 Maize ........................................................................................................ 13

2.4 Soya beans .............................................................................................. 17

2.5 Groundnuts ............................................................................................... 20

2.6 Sesame .................................................................................................... 22

2.7 Conclusion ................................................................................................ 24

3. Seed Sector ..................................................................................................... 26

3.1 Review of selected seed company strategies: ......................................... 26

3.2 Partnership Activities and Results during Reporting Period ..................... 28

3.3 Conclusion ................................................................................................ 35

4. Enabling Environment .................................................................................... 37

4.1 Partnership with the National Seed Authority ........................................... 37

4.2 Partnership with APROSE ........................................................................ 39

4.3 APROSE Partnership Activities with InovAgro ......................................... 39

4.4 Discussion on APROSE ........................................................................... 44

4.5 Conclusion ................................................................................................ 46

5. Output Marketing ............................................................................................ 47

5.1 Establishment of Produce Buying Centres ............................................... 47

5.2 Volume of Purchased Produce ................................................................. 50

5.3 Enabling Environment for Output Marketing Activities ............................. 55

5.4 Conclusion ................................................................................................ 57

6. Access to Finance .......................................................................................... 58

6.1 Linking smallholder farmers to Formal Financial Markets ........................ 58

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6.2 Implementation progress on the Agricultural Fund through VSLAs ......... 61

6.3 Conclusion ................................................................................................ 72

7. Farmers Economic Security .......................................................................... 73

7.1 Main Activities and Achievements ............................................................ 74

7.2 Expansion of Delimitation Services .......................................................... 77

7.3 Training of Community Leaders / Value Chain Actors ............................. 79

7.4 Conclusion ................................................................................................ 79

8. Project Governance ........................................................................................ 81

8.1 Closure of InovAgro Phase II activities ..................................................... 81

8.2 Preparation for InovAgro Phase III ........................................................... 84

8.3 Conclusion ................................................................................................ 86

9. Conclusion ...................................................................................................... 87

List of Tables and Figures

Figure1:VisionforInovAgroII...............................................................................................................1

Figure2:ValuechainssupportedbytheInovAgroProject....................................................................2

Figure3:ProjectLocationandPartnersMap.........................................................................................3

Figure4:TheLateMayorofNampula....................................................................................................4

Figure5:ExchangeRates:Meticais/USD(Source:BankofMozambique)............................................6

Figure6:PigeonPeaProduceBuyingPrice(Lastthreeseasons).........................................................10

Figure7:Volumeofpigeonpeaseedsoldinprojectlocations............................................................11

Figure8:HealthypigeonpeacropstandinChiure..............................................................................12

Figure9:ProjectsupportedsmallholdermaizegrowersinGurué.......................................................13

Figure10:Comparativereviewofseedsalesinprojectlocations.......................................................14

Figure11:ComparativeReviewofMaizeYield....................................................................................15

Figure12:MaizecropaffectedbytheFallArmyWorm......................................................................16

Figure13:MaizepricesinMozambique..............................................................................................16

Figure14:SoybeanproductionandconsumptiontrendsinMozambique(source:USAIDSpeed,

2016)....................................................................................................................................................17

Figure15:AveragesoyabeanoutputbuyingpricesinInovAgroprojectlocations.............................18

Figure16:No.ofFarmersgrowinggroundnutsinprojectlocations....................................................20

Figure17:GroundnutplotinEratimanagedbyafemalefarmer........................................................20

Figure18:GroundnutValueChainMap(Source:InovAgroSectorReports)........................................21

Figure19:SesameValueChainMap2017(Source:InovAgroSectorReports).....................................23

Figure20:SesameYieldinProjectLocations.......................................................................................23

Figure21:HistoricalReviewofSeedCompaniesActivities..................................................................29

Figure22:LeadFarmerHildaCarlosdemonstratingresultfromdemonstrationplotinRibaue.........29

Figure23:SyngentaDemonstrationPlotLogBook..............................................................................30

Figure24:Volumeofseedsoldinprojectlocations............................................................................32

Figure25:SourceofFundssupportingAPROSEActivities...................................................................41

Figure26:Ms.SumailiengagedinbusinessathernewbuyingpostopenedinAlua,Erati.................50

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Figure27:ParticipantsinthePost-HarvestTraininginErati................................................................52

Figure28:MetalsilosproducedandmarketedbyCOOSENduringthepost-harvesttrainings..........53

Figure29:Participantdemonstratinguseofthesiloduringthetraining............................................53

Figure30:TECAPExtensionOfficerdemonstratinguseoftheproducttoparticipants......................54

Figure31:ParticipantsattheOutputMarketingWorkshopinNampula............................................56

Figure32:OpportunityBankFinancialLiteracyEducationinMolombo..............................................58

Figure33:OpportunityBankLoanOfficerengagingwithsmallholderfarmersinMolombojointlywith

PhoenixSeeds......................................................................................................................................59

Figure34:SmallholderfarmersfromMolomboattheBOMbranchinGuruéforaccountopening...60

Figure35:KleinKarooAgronomistengagingwiththesavingsgroupsmembersinMocubaduringa

SeedFair...............................................................................................................................................63

Figure36:DistrictManagementCommitteemembersattendingtraininginNampula......................65

Figure38:KleinKaroosigningsupplycontractwithDMCinRibaue....................................................68

Figure39:VolumeandvalueofseedpurchasedbytheSavingsGroupsfor2017/2018season.......71

Figure40:ComparativereviewofthevolumeofseedpurchasedunderFundoAgricula...................72

Figure41:HandOverofdelimitationCertificatestotheCommunityLeaders.....................................75

Figure42:Newspaperannouncementforthesaleoftheprojectassets............................................83

Figure43:PartoftheInovAgroteammembersinthenewlyequippedprojectboardroom.............85

Figure44:StaffParticipatingintheEthicsandVettingPolicyTraining................................................86

Table1:StructureoftheReport............................................................................................................2

Table2:Overviewoftheprojectoutreach............................................................................................9

Table3:Comparativesoyabeanyield(previousandcurrentseason).................................................19

Table4:Pannardistributors.................................................................................................................26

Table5:SmallholderfarmersParticipationinFielddays–CurrentAchievement...............................30

Table6:FieldDaysConductedPerPartnerin2016-17........................................................................30

Table7:FielddaysandParticipants.....................................................................................................31

Table8:SeedDistribution/RetailMechanismsintheprojectlocations............................................33

Table9:DisseminationofthePrivateSectorInspectorModellaw.....................................................38

Table10:TimelinefortheOperationalisationofthePrivateSectorInspectorsmodel.......................38

Table11:PartnershipObjectiveswithAPROSE....................................................................................39

Table12:FinancialsupportprovidedtoAPROSEduringthereportingperiod....................................41

Table13APROSEMeetings..................................................................................................................42

Table14APROSEcommittee................................................................................................................43

Table15:NumberofOperationalbuyingpostsduringreportingperiod............................................47

Table16:OutputMarketingPartnersinNampulaandCaboDelgadoProvinces................................48

Table17:OutputMarketingPartnersinZambeziaProvince...............................................................49

Table18:Volumeofoutputproducepurchasedintheprojectlocations...........................................50

Table19:Smallholderfarmer’sreasonsfornotsellingproduceduringreportingperiod...................51

Table20:Demandforsilosandcroppreservationproductsduringstorage.......................................55

Table21:FinancialLiteracyparticipantsinMolombo..........................................................................59

Table22Numberofsmallholderfarmersreceivingloansfromformalfinancialinstitutions..............60

Table23:Performanceofsavingsgroupsduringcurrentseason........................................................61

Table24SavingCycle...........................................................................................................................62

Table25:SavingsbyVSLAmembersforpurchaseofinputsin2017...................................................62

Table26Districtmanagementcommittees.........................................................................................64

Table27:ContractNegotiationMeetingswithSeedCompanies.........................................................66

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Table28:SelectedSeedSuppliersfor2017/2018season..................................................................67

Table29:Seedrequirements–Ribaue................................................................................................68

Table30:Costofseedversusavailablesavings...................................................................................68

Table31:SeedRequirements–Malema.............................................................................................69

Table32:Costofseedversusavailablesavings...................................................................................69

Table33:SeedrequirementsMocuba.................................................................................................70

Table34:Costofseedversuscurrentavailablesavings......................................................................70

Table35:Milestonetargets–FarmersEconomicSecurity..................................................................74

Table36:Marketlinkageswithagribusinessserviceproviders...........................................................76

Table37:ElectedMembers–CommunityLandManagementCommittees.......................................77

Table38:ParticipantsinCommunityLandDelimitationMeetings......................................................78

Table39:ParticipantsinLeadersTrainingonLandLaw.......................................................................79

Table40ManagementofallStaffContracts.........................................................................................82

Table41:SettimelineforsaleofProjectAssets..................................................................................83

Table42StaffDevelopment/Trainings................................................................................................85

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ExecutiveSummaryThefourthandfinalyearofInovAgro’ssecondphaseisendingonaseriesofhighnotes.Theproject

madesignificantprogressonallofitsmajorinitiativesinthesupplyofcertifiedseeds,improvedoutput

marketing,accesstofinance,andimprovedaccesstofarmmechanisationservices.Ithasbroadened

outreach,reachingacumulative16,000smallholderfarmers(10,554maleand5,446female)through

deepenedservicestoSHFacrossZambezia,Nampula,andCabodelGado.Inaddition,InovAgrohas

pioneerednewsystemsforlanddelimitationforcommunitiesgivingthemmoreconfidenceintheir

land tenure and stimulating investment in their farms. With a limitedbudget compared toother

funders, InovAgro has demonstrated the power of an adaptive facilitation model, leveraging the

interestsandresourcesoftheprivateandpublicsectorstodrivegrowth.

Intheseedsector,eightfirmsarenowpartneringwithInovAgro,representingallofthemajorseed

companiesworkingintheNorth.Byofferingastrongvalueproposaltoseedcompaniesforexpanding

their businesses, they have been able to invest significantly in increasing outreach and building

demandforseedbySHF.Thisyear,theyhaveledprojectoutreachwith299demonstrationsguided

by 19 extensionworkers andworking through 55 agro dealers reaching out to 9,190 smallholder

farmers(7612newand1,578old)with97fielddaysonGAPandothertechnicalissues.Theestablished

Agrodealernetworkfacilitatedthecommercial retailof273.79metrictonnesofassortedseeds in

2017,representingmorethan145%increasecomparedtothe111.34metrictonnesofseedssoldin

2016! Input retail innovations are emerging including theoperationalisationof theone stop shop

conceptthathasbeenintroducedbyTECAP–CasadoAgricultorinNampula.

Complementingtheworkwiththeseedcompanies’marketdevelopment, InovAgro’sassistanceto

the NSA and to APROSE have increased the access to information and the overall enabling

environmentandgovernanceofthesector.Thereismuchstrongercoordinationbetweentheprivate

sector,thegovernmentanddonors.Thenewprivatesectorseedcertificationservicewillimprovethe

qualitycontrolofseedinthecountryandAPROSEisnowlinkedtomajorregionalseedprogrammes

andattractingtheirinputsintoMozambique.

Thisyear,InovAgroscaledupitsassistancetothelocalCommodityandAggregatorTraders(CATs).

Firstidentifiedasaseparatecategoryofdynamiclocalmarketingagentsin2015-16,supportin2016-

17grewfrom3outputbuyingpartners(in2015)to19partners(in2017),whopurchasedatotalof

5,447metrictonnesfromsmallholderfarmersworthUS$1,541,868.33.TheCATshadnotpreviously

been clearly defined as a differentiated group of buyers in a country with thousands of small

buyers/agents.Throughcarefulobservationofthemarket,InovAgroidentifiedtheircharacteristicsas

locallybasedentrepreneurswhoaremembersofthecommunitiesthattheyservedandhavedeeper

socialconnectionsmakingthemmoretrustedbuyersthantheBangladeshi(andnowChinese)buyers.

Ourwork toenhanceaccess to finance took twomain thrusts,working throughOpportunityBank

Mozambiqueandcontinuingourinnovative“savingsforseed”ininitiative.OBMprovidedassorted

financialproductstoacumulative993SHF(againstacumulativetargetof750SHF),havingbuilttheir

clientbasesteadilyoverthepast5years.Workingthroughtwoco-facilitators,InovAgrohasassisted

morethan4,721SHFtosave forseedand inputpurchaseswith theFundoAgricola.By leveraging

existingvillagesavingsandloanassociations(VSLA)andtheirsavingstechniques,femaledominated

SHFsavedmorethan$28,000toapplytothepurchaseofseedandinputs,morethandoublethevalue

fromthepreviousyear.

Increasingaccesstofarmmechanisationhasbeenchallengingduetothescarcesupplyoftractors.In

thisfourthyear,InovAgrocontinueditssupporttotheexistingtractorownerstoincreasetheirability

tosupplyservicestosmallholderfarmers.Itleveragedthepresenceofthenewtractorownerswith

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tractors newly supplied under the Agricultural Development Fund (FDA) programme, as well as

recipients of tractors from other donors, like the 31 supported by Technoserve, to deepen their

understanding of the selling and delivery of farm mechanisation services through business and

technicaltraining.

Finally, InovAgro’s success with assisting 4 communities to delimit and register their community

boundaries has affected an estimated 17,2251 SHF who are resident in the 4 communities. The

approachofusinglocalNGOstoassistcommunitiestodelimittheirboundariesaswellascreatingthe

paralegalnetworkensuredthesustainabilityoftheapproachandcreatesopportunitiesforlowcost

replication.Inthisseason,InovAgrointegratedcommercialseedcompaniestothosecommunitiesto

help,identifyingtheirgreaterconfidenceinlandtenurewouldstimulatedemandforinputs.

LessonsLearned

Theexperiencesofthisyear,havebuiltontheexperiencesfromthepreviousyearstoprovidemany

inconjunctionwithlearningfrom

Thebenefitsofflexibleandadaptiveprogramming.InovAgrohasevolvedsignificantlyoverthelast

three years by examining what it learned through its relationships every year and continuously

adapting. Initially focused on buyer led strategy to work through outgrowers, changing partner

strategies led to their loss in interest in outgrower schemes. InovAgro adapted to develop a new

strategystartinginlate2014toleadfarmerimprovementthroughtheseedsuppliers.Interventions

intheseed,credit,outputbuying,landtenureandfarmmechanisationhaveallevolvedsignificantly

overtheperiod,especiallyinthispastyear,makingthemmoreresponsivetotheproblemsoftheSHF.

Bymaintainingsteadyinteractionwithourpartnersandtheirclients,learninghasledtocontinuous

evolutionand improvementofthe interventions. Asonepartbeginstowork,additionalelements

havebeenaddedtoalloftheinterventionsleadingtodeepenedbenefitstotheSHF.

Flexibleandadaptiveprogrammingrequiresbothateamwhocandoitaswellasafunderthatisalso

flexibleandabletoadapttochangesinapproaches.ThecloserelationsbetweenInovAgroandthe

SDC, regularmeetings and sharing of findings and identification of new ideas was critical to this

success.

Importanceofastablepoliticalenvironment.Therestoredpeaceinthecountrythisyearfacilitated

improvedtransportationofagriculturalinputproductsforcommercialretailintheprojectlocations

as well as the aggregation and collection of output produce by commodity buyers. Agricultural

ExtensionOfficershavebeenabletocirculateintheprojectlocationstofacilitatetherealisationof

extension activities designed to promote adoptionGood Agricultural Practices by the smallholder

farmers.Ifthepoliticalstabilityandsecuritycanbemaintained,itwillcontinuetoenhancethespeed

ofdevelopmentintheregion.

Generatingbuy-infromgovernment.InovAgro’sclosepartnershipwiththeNationalSeedAgencyhas

achievedgroundbreakingresultsinsupportoftheseedsector.InovAgroworkedcloselywiththeNSA

to develop its website and database, and to explore options for establishing private sector seed

inspectorsbysupportingmissionstolearnfromneighbouringcountriesanddraftingthelegislation.

ThisculminatedwiththeapprovaloftheprivatesectorseedinspectorsbytheMinisterin2017,which

1Thisrepresentstheestimatedpopulationinthe4communitiesasindicatedbytherecordsmaintainedbythe

local authorities. InovAgrohashowever considered the results from theproject2017Endof SeasonSurvey

peggingthetotalprojectcumulativeoutreachat16,000smallholderfarmersasamoreaccurateindicationof

theprojectachievements(despitebeingalowerfigurecomparedtotheestimatedpopulationdataforthese4

communities).

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isamajormilestonetowardsimprovingtheinspectionandcertificationofseedinthecountry.Thisis

areferenceachievementforwhichtheprojectwillbeacknowledgedinmanyyearstocome.

InovAgrowillneedtocontinuesupportingtheNationalSeedAuthoritytofullyimplementthismodel,

particularly the training and accreditation of the inspectors. InovAgro will also benefit from the

increasedinterestandwillingnessfromtheUSAIDFeedtheFuture(FtF)Seedtradeprojectandthe

UnitedNations Food andAgricultureOrganisation (FAO) to invest in theoperationalisationof the

privatesectorinspector’smodel.InovAgroin2017alreadysuccessfullypartneredwiththeSeedtrade

projecttodeveloptheInspectorsManualforFieldinspections.

Stimulatingcrowdinginbyseedcompanies.Byengagingwithmostoftheimportantseedcompanies

workingintheregiontostimulatetheirbusinessdevelopment,InovAgrohasbuiltacriticalmassof

marketactorscompetingwithoneanothertosellmoreseedsthroughgoodcompetition. Leading

withastrongvaluepropositiontothecompanies,InovAgroisseenasatruepartnerandtheyhave

opened up on their business strategies and internal challenges. The increasing interest and

collaboration from international firms like Pannar, Klein Karoo, Syngenta, and now SeedCo

demonstratesthattheyareseeingthepotentialofthemarketinMozambique–in2014,onlyPannar

waspresentinthemarket.

SomechallengeshoweverremainthatshouldbeaddressedtopositiontheMozambicanseedsector

to operate more efficiently. First, the business governance of seed companies needs to be

strengthenedaswellasthefrequencyandqualityofthepolicydialoguebysectorstakeholders.Inthis

respect,APROSE’sinstitutionalcapacityneedstobereinforcedtodrivethepolicyengagement.This

willrequirestrengtheningAPROSE’soperationalsteering,expandingthedepthandbreadthoftheir

fundraisingactivitiesandgrowingtheAssociation’smembershiptorepresentincreaseddiversityand

inclusivenessofallthesectorstakeholders.

Mozambiqueoperatesinglobalvaluechains.TheimprovedcropharvestsrecordedinMozambique

(andwithintheSADCregion)owingtoimprovedagro-climaticconditionsresultedinlowerfarmgate

pricesin2017(duetoincreasedproductsupplyonthemarket).Importsfromothercountrieswithin

theregion(particularlymaizefromSouthAfricaandsoyabeansfromMalawi)havealsoprovedtobe

cheaperthanlocallyproducedcropcommodities,pushinglocalpricesdown,furtheremphasisingthe

needfortheprojectsupportedsmallholderfarmerstobetterstructureandmanagetheirproduction

costsiftheyaretoremaincompetitiveontheglobalmarket.Indeed,itisimportanttostressthatas

Mozambique continues to embed itself in global value chains, (e.g. soya, pigeon pea, sesame,

groundnut, and cashewnut value chains), theperformanceof the country’s agribusiness sector is

increasinglydependentontheproductiontrendsandpoliciesenactedbyothercountries.Thepolicies

enforced by the Indian Government relating to pigeon pea imports into the country in 2017 for

instance,asexplainedinsection2,generatedsignificantuncertaintyonthelocalmarketsandreduced

productdemandbyoutputbuyers.

Driving access to credit by leveraging existing structures. Banks are reluctant to lend to the

unsecuredsmallholderfarmersmarketinMozambique.ByfindingasteadypartnerinOpportunity

Bankwhohasstayedthecourse,graduallybuildingupabaseofclientsinourtargetzones,weare

demonstratingtheviabilityofthatmarketforsolidfarmers.However,mostoftheverysmallholders

cannot qualify for bank loans because they do not meet the necessary regulatory requirements,

requiringdifferentoptions.

InovAgro’sintroductionofaninnovativenewproducton“savingsforseed”throughaFundoAgricola

usingnetworksofestablishedVSLAshasgainedalotoftractionandisnowpoisedforscaleup.The

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methodologyhasevolvedandInovAgroisreadytopublishanddisseminatethemethodologymore

widely tostimulatereplicationacrossNorthernMozambiquewheretherearealreadyhundredsof

thousandsofVSLAparticipants.TheVSLAapproachhasstimulatedastrongdemandresponse,while

alsoleadingtoincreasedempowermentandagencybytheparticipants.Participantsinthesavings

for seed initiativearenoworganizingbuying committees tonegotiatebetterpriceswith the seed

companiesandareinbettercontroloftheirchoicesandavailabilityofseed.

Adaptively responding to challenges and opportunities. The InovAgro facilitation team has been

creativeandproactiveinrespondingtotheoutputmarketingchallengesfacedbyitstargetfarmersin

2017emergingfromthelowmarketprices.Theteamhasintroducedandimplementedsuccessfully

new activities that had not been in the initial project work plan. For instance, the project team

facilitatedasuccessfulprovincialworkshoptohighlighttheproblemofreducedoutputbuyingprices

whichthreatenedsmallholderprofitabilityandthecommercialactivitiesoftheCATs.Inthesamevein,

whenfacedwiththechallengeofpost-harvestlossesduetofarmersstoringlonger,InovAgroteam

facilitatedacommerciallydrivenresponsewithtrainingsfromsupportingservicesthatareleadingto

greateroutreachbycompanieswithcropprotectionsolutions,anduptakebythefarmers.Although

theprofitssecuredbygroundnutfarmersin2017areencouraging,interventionsdesignedtotackle

aflatoxincontaminationremainpivotaltoopenupalternativeexportmarketsthathavecapacityto

absorblargervolumescomparedtothedomesticmarkets.Thesearegoodpracticeexamplesofhow

amarketsystemsdevelopmentprojectshouldbeadaptivelymanaged.

Improvingmarketlinkagesthroughimprovedlanddelimitationandlandtenure.Theinitialstrategy

forInovAgroinearly2014focusedonaccesstoDUAT.Thisevolvedinthestrategyrevisionin2015to

focus on amore realistic sequencedmodel, startingwith community land delimitation, and then

gradually getting farmers to work through the paralegal structure to apply for DUATs. The

empowermenttoSHFsfromthelandsecurityhasmadethemabettermarketforinputsuppliersas

thefarmersaremorewillingtoinvestintheirproductivelandassets.Inthispastyear,InovAgrohas

advisedtheinputsupplierstofocusoutreachandfielddayinterventionsinthosecommunitiesasthey

aremorelikelytopurchaseandinvest.Atthesametime,InovAgroistargetinglinkstooutputbuyers

for those communities as well. This improved access to services will in turn provide additional

incentivestoothercommunitiestogothroughthelanddelimitationprocess.Amutuallyreinforcing

cycleofeventsthatisbeingdrivenbylocalmarketactorswhichwillspeedtheprocessofimproved

landtenureleadingtoincreasedintegrationintocommercialagriculture.

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1. Introduction

This Annual Report provides details regarding the implementation progress achieved by the

InnovationforAgribusiness(InovAgro)projectduringtheperiodOctober2016andendofSeptember

2017whichrepresentsthefourthandlastyearofInovAgro’sPhaseII.Thereportprovidescomparative

narrationof theproject implementationactual resultsagainstsetmilestonetargets thathadbeen

agreedwiththeSwissAgencyforInternationalDevelopmentandCooperation(SDC)asdetailedinthe

revisedprojectLogframeapprovedbySDCin2015.

InovAgro’s goal is to support smallholder farmers in Northern Mozambique to increase their

householdincomesthroughtheireffectiveparticipationinagribusinessvaluechains.

ThevisionoftheprojectishighlightedinFigure1below:

Figure1:VisionforInovAgroII

Theproject issupporting interventions infivevaluechains:maize,soyabeans,sesamegroundnuts

andpigeonpeas(Figure2).Theprojecthas6crosscuttinginterventionsthatareimplementedacross

eachofthevaluechainsfocussingonimprovingaccessto(a)certifiedseed;(b)outputmarkets;(c)

finance;(d)mechanisationservices;(e)extensionservices;and(f)landtenuresecurity.Inaddition,

the project has emphasised on improving the enabling environment for the seed sector,working

beyondthefivevaluechains.

InovAgro is implementing activities in eleven districts across the three provinces of Zambezia,

NampulaandCaboDelgado.Figure3,theprojectinterventionmap,highlightsthedistricts,aswellas

theseedcompanyandoutputbuyingpartnerswithwhomInovAgroworkswithineachdistrict.

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Figure2:ValuechainssupportedbytheInovAgroProject

ThisAnnualReporthasbeendividedintoninesectionsasindicatedinTable1below:

Table1:StructureoftheReport

Section1 Introduces the report includinga reviewof the investmentclimate inNorthern

Mozambique, socio-political economy issues thathadan impacton theproject

performance.

Section2 Providesananalysisoftheperformanceofeachofthefivevaluechainssupported

bytheproject.Datarelatingtotheproductivityandprofitabilitylevelsachieved

bythesmallholderfarmersintheprojectlocationsispresented.

Section3 Providesdetails regarding the implementationof the seed sector interventions

relatedtoseedmarketing/demandcreation,distributionandretailofcertified

seedintheprojectlocations.Thesectionalsoprovidesresultsregardingprovision

ofembeddedextensionservicestosmallholderfarmersbytheseedcompanies.

Section4 Providesa reviewof the interventions related toenablingenvironment for the

seedsector.Inprinciple,thissectionreviewstheprojectpartnershipwithAPROSE

andtheNationalSeedAuthority(ANS)

Section5 Provides a review of the performance of the project output marketing

interventions.

Section6 Provides a review of the project finance interventions involving the ongoing

collaborationwithOpportunityBankMozambiqueandworkwithVillageSavings

andLendingAssociationsinRibaue,MalemaandMocuba.

Section7 ProvidesareviewoftheprojectFarmer’sEconomicSecurityinterventionsrelated

tolandtenuresecurityinMocubaandNamarroi.

Section8 Providesasummaryofthemainactivitiesconductedduringthereportingperiod

in relation to the governance of the project. Specific details are provided

indicatingmeasuresthathavebeeneffectedtofacilitatetheclosureofInovAgro

IIandsmoothtransitiontoInovAgroIII.

Section9 Providesaconclusionandlessonslearnedtothereport.

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Figure3:ProjectLocationandPartnersMap

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1.1 InvestmentClimateinNorthernMozambique

Thereareseveraldevelopments(socio-economicandpolitical)thatdefinedtheinvestmentclimatein

theprojectlocationsduringthereportingperiod.

1.1.1 PoliticalStability

ThesecuritysituationinthecountryhasstabilizedfromDecember2016afterbothRENAMOandthe

rulinggovernmentdeclaredaceasefiretohostilities.Thehostilitieshadbeencharacterizedbyattacks

tosomecommunities(particularlyinthecenterregion)andthedisruptionoftrafficmovementsfrom

theNorthtotheCentreandSouthernregions.Thedeclarationoftheceasefirehasbeenwellreceived

byvariousstakeholdersinthecountryincludingtheagribusinesscommunitywhoconsiderthisasa

steptowardsthefullrestorationofaconducivebusinessenvironmentinthecountry.Thishaseased

themovementofgoodsandpeopleacrossNorth.

The tensionwhichhadpreviouslydestabilized security in thecountrywascentredoncalls for the

reformoftheelectorallawwhichtheoppositionpartiescontinuetochallengeasnottransparentand

tilted in favourof themain rulingpartyFrelimo.RENAMOhasalsobeen lobbying foranelectoral

systeminwhichprovincialgovernorsareelected,ratherthanappointedbythepoliticalpartywhich

winsthePresidentialvote.Politicalsettlementonthesecontentiousdifferencesisbeingnegotiated

withthesupportofinternationalandlocalmediators.Whiletheceasefirethatwasannouncedbythe

partiesattheendof2016continuedtoholdduring2017,itremainstobeseenwhetherthedifferences

dividingFRELIMOandRENAMOcanbefullybridgedundertheongoingpeacedialoguediscussions.

The ongoing initiatives for the full restoration of peace were however significantly compromised

followingtherecentassassinationoftheMayorofNampulaCityCouncil,Mr.MahamudoAmuraneon

the4thofOctober2017athisresidenceinNampula.Ironically,Mr.Amuranewasmurderedonthe

daywhenthecountrywascommemoratingthe25thanniversaryofthesigningoftheGeneralPeace

Agreement. The murder of the Nampula

Mayor has been attributed to simmering

political tensions between the country’s

political actors particularly as preparations

for the municipal elections in 2018 gain

momentum.

This development has been described as

representingaseriousblowto theprocess

of consolidating the rule of law in the

northern region and Mozambique2 in

general. Stakeholders in the country

(includingbusiness)havecondemnedthisdevelopmentasaclearattackonfreedomofexpression

andasretrogressivetotheveryprocessofpeacebuildinginMozambiquewhichinrecentmonthshas

beenshowingsignsofprogressafterthecessationofhostilitiesbybothRENAMOandFRELIMO.

2RefertothestatementreleasedbytheEmergencyCommitteefortheProtectionofLiberties(CEPL)

Figure4:TheLateMayorofNampula

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Recently,therehavealsobeenarmedattacksintheareasofinfluenceofAnadarkoinvestmentson

gasextractioninNorthernCaboDelgado(MocímboadaPraiaandPalma).Thereasonsbehindthese

eventsarenotyetclear.Somereportssuggest that theattackscouldbe linkedtoradical religious

motivationsasapparently,theattacksweredonebyIslamicfundamentalistgroupsand/orcouldbe

motivatedbythedissatisfactionofthelocalpopulationthatfeelsthattheyareatriskoflosingland

anddeterioratingtheirlivelihoodconditions,insteadofbenefitingfromtheforeigninvestments.The

situationisnotundercontrolbythegovernmentmilitaryforcesanditseemsitisalreadyimpacting

negatively on Anadarko operations (some field staff were evacuated). If the situation does not

improve, itmaydelay foreign investments in theareaand thiswillhaveanegative impacton the

alreadydifficultfinancesandeconomyofMozambique.

1.1.2 RecentSocialIncidents

Inadditiontothepoliticaldevelopmentspresentedabove,InovAgrohasalsonotedwithconcerna

growing trendof negative cultural / religious perceptionswhich affect the imageof theNorthern

region.Atthestartoftheyear,therewaswidespreadconcernemergingfromreportsthatmenwith

baldheadswerebeingabductedforritualpurposesinnorthernMozambique.Thepolicecommander

inZambeziaprovince,forinstance,explainedhowsomemembersinthecommunitybelievethatthe

headofabaldmancontainsgold3andcanbeusedforritualpurposestoattractpersonalwealth.Five

killingsofbaldmenwerereportedtohaveoccurred inCentralandNorthernMozambique in June

2017.

More recently, in October 2017, there were riots in Nampula province by community members

protestingagainstgrowingreportedcasesofphysical“bloodsuckers”whoarebelievedtobewreaking

havocinthecommunities4.Therearereportsthatsomestafffromdevelopmentagencieshadbeen

attackedbycommunitymembersonsuspicionthattheywerelinkedtothe“bloodsuckers”network.

Whiletheabovetwoincidentsmayappeartrivial,InovAgrohasnotedthatthesecultural/religious

myths generate negative perceptionswhich compromise the business environment in the project

locations.Asanexample,theInovAgroTeamLeaderhasreceivedreportsthatsomepartnerextension

workers are now scared to conduct extension visits in some communities due to fear of “blood

suckers”.Privatesectorpartnershavealsoreported increaseddifficulties inrecruitingprofessional

staff to work in some of the project areas due to rampant fears related to perceived witchcraft

practices.ThefailurebythecompaniestoattractandrecruitprofessionalstafftotheNorthernregion

affectsthequalityofdeliveryrelatedtotheircommercialactivities.

1.1.3 Weatherconditions

The rainfall in some project locations (particularly in Nampula and Cabo Delgado) started late

December which affected crop germination and early establishment particularly for maize and

groundnuts.

FromthemiddleJanuary-March2017,therainfallrecordedintheprojectlocationswasregular,in

sufficientquantitiesforcropgrowthandthedistributionwasuniformduringthisperiod.Thisenabled

some smallholder farmers whose crops had not germinated to replant. The good rains recorded

3Seeforfurtherdetails:http://www.bbc.com/news/world-africa-40185359

4Seeforfurtherdetails:http://oneworld.org/2017/10/23/rioters-in-mozambique-attack-blood-sucking-elites/

6

particularlyinZambeziaprovinceareinpartattributedtotheimprovedcropperformanceduringthe

reportingperiod.SomelocalizedirregularrainfalldistributionwasrecordedinpartsofNampulaand

CaboDelgadoprovincesparticularly inChiure andErati butoverall, the seasonwas goodand the

climaticconditionswerefavorableforcropgrowth.

1.1.4 EconomicPerformance

TheMozambicaneconomyisshowingsomesignsofrecoveryafteradifficult2016,whichsawasharp

slowdowningrowthandshockstoboththecountry’scurrencyandaspikeininflation.Duringthefirst

quarterGDPgrowthin2017pickedupto2.9%,morethandoublethegrowthrateofthepreceding

quarter.Themetical,whichhadbeensteadilydepreciating inthefirst tenmonthsof2016, isnow

morestable,havingstrengthenedby28%againsttheUSdollarinthelast9months.Astrongmonetary

policywaskeytothisshift,whichalsohelpedinflationtoslowlybegineasingbymid-2017.

Figure5:ExchangeRates:Meticais/USD(Source:BankofMozambique)

Strengtheningpricesforcoal,aluminum,andgas,apost-elNiñorecoveryinagriculture,andprogress

inthepeacetalks,isexpectedtosteergrowthto4.6%in20175.

Inflation remains very high at 18%, with direct implications forMozambican households, and for

monetarypolicyseekingtoensureastablepriceenvironment.Monetarypolicyhasremainedtight

andhassupportedasignificantadjustmentintheexternalsector.Mozambique’sreferencelending

rateisnowamongstthehighestinsub-SaharanAfrica,however,andaveragecommercialbanklending

ratesintheregionof30%areprohibitivelyhighformuchoftheprivatesector6.Astrongerexchange

rate,easinginflation,andlowercredit levelssuggestthatthemonetarypolicycyclecouldbeginto

loosenastheeconomycontinuestoadjust.However,makingthistransitionsmoothlywillrequirea

coordinatedandrobustfiscalpolicyresponse.

5WorldBankinMozambique,11October,2017.

6Ibid

7

Without progress in the debt restructuring process to date, the country’s debt position remains

untenable.Thepublicwagebillcontinuestobeasignificantsourceofpressure,whilstrecentcutsto

the investment budget are affecting the economic and social sectors including investment in

infrastructuredevelopment(e.g.roadsandenergy)whichisanabsoluterequirementfortheeffective

functioningofagribusinessmarkets.

It is important also to stress how Mozambique is also increasingly getting connected to global

agribusinessmarkets.ThegovernmentofMozambiquenowhasforinstanceabilateralagreementfor

thesupplyofpigeonpeastoIndia.Asthecountryestablishesitselfontheglobalagribusinessmarkets

–thisalsoexposesthelocalfarmerstopriceswingsandpoliciesfromothercountries.

1.2 BusinessReactiontoContext

Despite the sporadic incidences of insecurity recorded during the reporting period, InovAgro’s

facilitationteamworkingwiththeprojectpartnershavebeenabletoimplementallplannedworkin

theprojectlocations.Therewerenosecurityincidenceswhichresultedinthesuspensionofactivities

neitherbytheprojectfacilitationteamnorbytheprojectpartners.

TheongoingpeacenegotiationsbetweenRENAMOandFRELIMOhavebeenparticularlywelcomedby

theprojectpartners.Indicationsonthegroundarethatthepoliticalinitiativesunderwayforthefull

restorationofpeacebypoliticalpartieshavereinforcedtheprivatesectorcommitmenttoinvestin

expanding commercial activities in the project locations. For example, Klein Karoo is already in

discussionswithstakeholdersinMocubatoexplorepossibilitiesfortheestablishmentofoutgrowers

forseedmultiplicationparticularlyforgroundnuts.KleinKarooexpectstohave500hectaresofland

forseedmultiplicationinMocubastartingfromthe2017/2018season.TheBoardofDirectorsfor

KleinKaroohasalsoapprovedtherecruitmentofanAgronomist/SalesRepresentativewhoisnow

based inNampula.Thisapprovalhadnotbeensecured in2016duetoconcerns includingsecurity

considerationsbythecompany.Thecompanyisnowalsointheprocessofsettingupitsdistribution

warehouseandofficeinNampulaandplansfortherecruitmentofanOfficeAdministrationAssistant

areunderway.

PANNARSeedsmanagementhasalsoapprovedtherecruitmentoftheirSalesRepresentativeforthe

Northern region, also to be based in Nampula. Interviews for this position have already been

conducted but the commencement of work by the identified candidate has been hampered by

disagreements regarding the appropriate remuneration package. It is likely that the companywill

conductfreshinterviewstoidentifythenewcandidate.PANNARSeedshasalsorecruitedaProduct

Merchandiser who is currently leading seed marketing activities in Nampula and supporting

productiondistributioninalltheprojectlocationsthroughDistributorsandAgrodealersoperational

intheregion.

Syngenta–arelativelynewactorontheseedmarketinNorthernMozambique–hasalsostartedto

expanditsseedpromotionalactivitiestoMocuba.It’simportanttonotethatmostpartnersin2016

hadsuspendedtheirengagementwithsmallholderfarmersinMocubaduetosecurityfearsarising

frommembersofthenationalarmybeingstationedbetweenNampevoandMorrotonenearMocuba

town.

SeedCo,aZimbabweanseedcompanywhichhadsuppliedcertifiedsoyaseedtoInovAgropartnersin

PhaseIbuthadexitedtheMozambicanmarket,hasrecentlyannounceditsreturntothemarket.The

8

companyisengagingwiththeInovAgrofacilitationteamtoexploreopportunitiesforestablishingseed

distribution channels in northern Mozambique. The company plans to commence with demand

creationactivitiesfocusingontheintroductionofcompanyseedproductstothemarketduringthe

2017/2018season.

1.3 Conclusion

Overall, theMozambican economy has been on the recovery path in 2017. The country’s GDP is

growingandthecurrency(Meticais)hasbeenstrengtheningagainstmajorinternationalcurrencies.

Theongoingpeacenegotiationsandthecessationofhostilitiesbythepoliticalpartieshasgenerally

beenwelcomedbybusinessactorsasprovidingthebasicconditionsforcommercialtradingactivities.

Thisisdemonstratedbytherestoredinterestbytheprivatesectortoinvesttowardsdevelopmentof

theirtradingactivitiesintheprojectlocations.

Thetighteningofthemonetarypolicyhasresultedinbudgetreductionsforsupportingpublicservice

sectors. Public infrastructure development activities have reduced budget allocations and as such

prioritisationof infrastructure investments suchas roads construction in theproject locationshas

lowered.SomebridgesinGurué,Mocuba,NamarroiandMolombodistrictswhichweredestroyedby

thefloodsin2015havenotyetbeenrepaired.Theseconditionscontinuetopresentchallengesfor

theprivatesectorpartnersduetotheincreasedtransactioncostsrelatedtoconductingbusinessin

theproject locations7. The limited investments in infrastructureby the government in theproject

locationsalsohastheeffectoflimitingthelocationsthatcanbereachedbytheprivatesectorpartners

asacertainlevelofinfrastructureisrequiredtosupportcommercialtradingactivities.

Thegrowingprevalenceofcultural–religiousbeliefssuchasperceptionsthatbaldheadedmencan

beusedascharmsforwealthgenerationpointtotheneedforincreasedcampaignsforcivilsociety

education to dispel unfounded cultural practices that can create unstable conditions for business

growthandinsecurityintheprojectlocations.

Whilethecontextualconditionsrecordedduringreportingperiodhavebeenlargelyfavourablefor

business, itremainsclearthatseveralconstraintspersistwhichneedtobetackledtofacilitatethe

strengtheningofaconducivebusinessenvironment required foroptimalperformanceofamarket

systemsdevelopmentprojectlikeInovAgro!

7Thehighcostofdoingbusinessintheprojectlocationsalsooftenrenderslocalproductsmoreexpensive

comparedtosimilarproductsproducedinothercountriesintheregion.

9

2. ValueChainAnalysis

Thissectionprovidesdetailsoftheprojectachievementsduringthe2016/2017agriculturalseason

relatingtosmallholderfarmer’sproductivityandprofitabilityforeachofthe5valuechainssupported

bythe InovAgroproject (maize,pigeonpeas,sesame,soyabeansandgroundnuts).Theagronomic

performanceofeachofthesefivevaluechainsisdiscussedaswellasspecificmarketdevelopments

relatingtotheemergingvaluechainsrelationshipsbetweentheactors.Aconclusiontothissectionis

alsoprovidedwithkeyissuesforcurrentandfutureprojectconsideration.

2.1 ProjectOutreach

The project reached a cumulative total of 16,000 smallholder farmers in the 11 districtswhere it

operatesinNampula,ZambeziaandCaboDelgadoprovinces.

Table2belowprovidesanoverviewoftheprojectoutreachdisaggregatedpercropandgender.

Table2:Overviewoftheprojectoutreach

No.ofsmallholderfarmersreachedbytheproject

ValueChain Male Female Total

PigeonPeas 3,809 2,156 5,965

Soyabeans 1,746 649 2,395

Groundnuts 745 361 1,106

Maize 3,652 2,130 5,782

Sesame 602 150 752

OverallTotal 10,554 5,446 16,000

Percentage 66% 34% 100%

Atotalof66%ofthe16,000smallholderfarmerswhoparticipatedinthe5valuechainssupportedby

theprojectweremale.34%werefemalewiththemajorityparticipatinginthemaizeandpigeonpeas

valuechains(bothhouseholdfoodsecurityandcashcrops).

2.2 PigeonPeas

Pigeonpeaproductionhasincreasedsteadilyintheprojectzonesoverthelastfouryears.Atotalof

5,985smallholderfarmersparticipatedinthepigeonpeavaluechainduringthecurrentseason.This

representsanincreaseof1,305smallholderfarmerscomparedtothe4,660smallholderfarmerswho

grewpigeonpeasastheirprimarycashcropduringthepreviousseason(2015/2016).

The increased interest by smallholder farmers to grow pigeon peas is attributed to two main

observations:

10

a. Thesigningof thedealbetweentheGovernmentsofMozambiqueand India for theexportof

Pigeonpeas(toIndia)providedsomeassurancetosmallholderfarmersthatthecrophadaviable,

guaranteedlargemarket.

b. Thefarmgatepricepaidforpigeonpeaproducehadbeengraduallyincreasingfortheprevious

threeagriculturalseasons(from2013/2014season)asindicatedinFigure6below.

Figure6:PigeonPeaProduceBuyingPrice(Lastthreeseasons)

Theconstantannualfarmgatepriceincreasesrecordedduringthepreviousthreeseasonsrendered

pigeonpeasapreferredcashcropbysmallholderfarmersandhencethenumberofgrowershasbeen

increasingeachyear.

Thetotallandareaunderpigeonpeacultivationbysmallholderfarmersalsoincreasedduringthepast

yearfrom7,117Hato10,831Ha.ThisincreaseinlandareaunderPigeonPeacultivationcorresponds

with(a)theincreasednumberofsmallholderfarmersengagedinpigeonpeaproductionduringthis

seasonand(b)theincreaseinhouseholdlandallocatedforpigeonpeaproduction,whichincreased

about20%onaverageperfarmer.Forinstance,femaleheadedhouseholdsincreasedlandallocation

forpigeonpeaproductionfromlastseasonaverageof1.11hectaresto1.70hectares.Maleheaded

householdsalsoincreasedaveragelandareaunderpigeonpeaproductionfrom1.75hectaresto1.88

hectares. This demonstrates how the smallholder farmers valued pigeon pea production in their

householdinvestmentdecisionsduringthereportingperiod.

While therehasbeen increasedproduction, theproductioncostshave risenaswell. Theaverage

pigeonpeaproductioncostsincreasedalmost63%fromlastyear’stotalaverageof1,984Meticaisto

3,174Meticaisperhectare.Theincreasedproductioncostsareattributedtoseveralfactors.Theprice

of certified pigeon pea seed increased during the reporting period with observations that JNB

EmpreendimentosandPhoenixSeeds–someofthemainInovAgropartnerssellingseedwereselling

pigeonpeaseedat120meticaisperkilogramcomparedto80meticaisperkilogram(duringthe2015

/2016 season). Takingnote that10kilogramsofpigeonpea seedare required for ahectare, this

implies a total cost of 1,200meticais spent on purchase of certified seed alone compared to 800

Meticaisinvestmentrequiredduringthepreviousseason.

Furthermore–thegovernmentgazettedincreaseinfuelpricesannouncedinMarch2017alsohadan

impactinthecostsincurredbythesmallholderfarmersincludingforinstanceanincreaseinproduce

transportationcoststothemarket.

14

3034

0

5

10

15

20

25

30

35

40

2013/2014 2014/2015 2015/2016

PPbuying

priceper

kilogram

AgriculturalSeason

11

Theaverageyieldperhectareduringthisseasonincreasedto612Kgscomparedtolastseasonaverage

yield of 432 Kgs per hectare. This yield is higher than the nationalweighted average yield of 486

kilogramsperhectareasreportedbyWalkeretal(2015)8.Theimprovedproductivityrecordedduring

this season isattributed to the increasedsmallholder farmer’saccess tocertifiedpigeonpeaseed

(mainlysuppliedbyPhoenixSeedsintheInovAgroprojectlocations).Figure7highlightsthefivefold

increaseinpurchasesofcertifiedseed,enoughfor2,000ha.

Figure7:Volumeofpigeonpeaseedsoldinprojectlocations

Theincreaseduseofcertifiedpigeonpeaseedintheprojectlocationsduringthisseasonwasamajor

boost to the crop yieldperformanceachievedduring the reportingperiod. Theamountof rainfall

receivedduringtheseasonwasalsoaboveaverage, inturnpromotingthedevelopmentofagood

standingcropwhichyieldedbettercomparedtothelastseason.

8Referto:PigeonPeainMozambique:Anemergingsuccessstoryofcropexpansioninsmallholderagriculture:

Availableonhttp://fsg.afre.msu.edu/Mozambique/RP78E.pdf

4.81

21.3

0

5

10

15

20

25

2015- 2016season 2016- 2017season

SeedVolume/

MetricTonnes

AgriculturalSeason

VolumeofcertifiedPigeonPeaSeed

Soldintheprojectlocations

TextBox1:IncreaseinFuelPrices

Pricesoffuelsandotheroilproductswere increasedwitheffectfromthe22ndofMarch2017.

Withthereadjustment,petrolpriceincreasedfromthe50.02meticaisto56.06meticaisperlitre.

Dieselpricesincreasedfrom45.83meticaisto51.89meticaisperlitre.

Source:OPaisAvailableon:http://clubofmozambique.com/news/fuel-prices-rise-in-mozambique-

as-of-tomorrow

12

Figure8:HealthypigeonpeacropstandinChiure

Althoughtheaverageyieldperhectareforthisseasonwashigherthanthelastseason–thelowoutput

buyingpriceswhichdominatedthecurrentseasonaftertheGovernmentofIndiaimposedrestrictions

on the importation of pigeon peas (dhal) has dampened the commercial prospects of sustainable

pigeonpeaproductionandmarketingatalllevelsofthevaluechain(Seetextbox2).

TherestrictionsannouncedbyIndiacomeasanunpleasantsurprisetofarmersintheInovAgroproject

locations, who had increased their production of pigeon peas, on the assumption that India is a

guaranteedmarket.Thereducedfarmgatebuyingprices(Averageof5meticaisperKGcomparedto

34 meticais per KG last season) has swallowed the smallholder farmer’s percentage profitability

marginfrom87percent(recordedduringthelastseason)toonly2percentduringthecurrentseason.

Althoughthesmallholderdidnotincuranoutrightloss,underthecurrentvolatilepricingconditions,

themajorityhavestruggledtobreakeven.InovAgroprojectsthat,unlessthepigeonpeacommodity

buyingpricesarerestoredupwardsbeforetheendofthisseason,therewillbeamarkeddecreasein

thenumberofsmallholderfarmersproducingthecropduringthenextseason(aswellastheamount

of household land allocated for pigeon pea production) given smallholder farmer’s calculated

strategieswhichoftenhingeonriskaversion.

13

2.3 Maize

Themaizevaluechainhadthesecondhighestnumber(afterpigeonpeas)ofsmallholderfarmerswith

5,782 farmers in the project locations growing maize as their main commercial crop during the

reportingperiod.Thisrepresentsanincreaseof1,231smallholderfarmerscomparedtolastseason.

Figure9:ProjectsupportedsmallholdermaizegrowersinGurué

TextBox2:RestrictionsrelatedtoPigeonPeaImportsinIndia

InAugust2017,theIndiangovernmentimposedrestrictionsontheimportofpigeonpeas,apulse

widelyusedinIndiancuisine(dhal).InJuly2016,duringavisitbyIndianPrimeMinisterNarendra

ModitoMaputo,IndiaandMozambiquesignedanagreementwherebyIndiawouldimport375,000

tonnesofpigeonpeasfromMozambiquebetween2016and2019.Undertherestrictions,theIndian

authorities imposed quotas on pigeon pea imports, moving the crop from the “free” to the

“restricted”categoryofimports.Thenewrulesstatethatonly200,000tonnesofpigeonpeascan

beimportedinanyonefiscalyear.Inthe2016/2017fiscalyear,whichendedon31March,Indiahad

imported703,540tonnesofpigeonpeas,fromseveralcountriesincludingMozambique.Thepigeon

peaimportsareblamedfordepressingthepricespaidtoIndianproducers.TheIndianauthorities

arguethattherestrictionsonthepigeonpeaimportsarenecessarytoprotectlocalprices.Under

thesignedagreement,Indiahadcommittedtoimport100,000metrictonnesofpigeonpeasfrom

Mozambiqueinthe2016/17agriculturalyear,risingto125,000tonnesinthefollowingyearandto

150,000tonnesfromthe2018/19harvest.IfIndiahonoursthecommitmentsintheagreement,the

importsfromMozambiquealonewillamounttomorethan50percentofthe200,000-tonnecap

onimports.

AlthoughtheIndianauthoritieshaveissuedsomestatementsindicatingthattherestrictionswillnot

apply to the government’s import commitments under any bilateral or regional agreement, the

majorityofInovAgroprivatesectorpartnersthatbuypigeonpeasfromMozambicanfarmersinthe

projectlocationsandthenexportthecroptoIndiaarenotconvincedthatthebusinesswillremain

viable.TheExportTradingGroupforinstancewhichhastwopigeonpeaprocessingplants,inBeira

andNacala,hasreducedthevolumeofpigeonpeapurchasesduringthisseasonasthecompanyis

cautious not to risk making further purchases from farmers because the company still has a

considerableamountofpigeonpeasinitswarehouses,whichwaspurchasedfromproducersinthe

previousagriculturalseason.

14

Theincreasednumberofsmallholdermaizegrowersislargelyattributedtotheimprovedaccessto

certifiedmaizeseedinalltheprojectlocations.Maizeremainedthedominantcommercialseedtype

sought after by smallholder farmers in the project locations and the seed typemost pro-actively

marketedbytheseedcompanies–partnerstotheInovAgroproject.AscanbeseenfromFigure10

below;thevolumeofmaizeseedthatwassoldbytheseedcompaniesin2016and2017.

The dominance of the maize production and marketing in the project locations needs to be

understoodfromvariousviewpointsincludingthefactthatitisbothafoodsecurityandcashcropat

thecentreofrurallivelihoodsofmanyofthesmallholderfarmersintheInovAgroprojectlocations.

Despitetheincreasednumberofmechanisationserviceprovidersintheprojectlocationssupported

throughvarious initiativessuchastheAgriculturalDevelopmentFund(FDA),ExportTradingGroup

(ETG)(withsupportfromUSAID)andTechnoserve(withsupportfromtheDutchgovernment),maize

production in the project locations remains largely under manual production as only 7% of the

smallholdermaizegrowersengaged inmechanisedproduction involvingtheuseof landtillersand

planters.Only1,745hectaresofmaizewereundermechanicalmaizeproductioncomparedto9,286

hectareswhichwereundermanualmaizeproductionduring the reportingperiod. The lowuseof

mechanisation services is attributed to (a) the cost related to purchasing mechanisation services

(mainly for ploughing and planting) and (b) smallholder farmer’s preference to use available

householdlabourtoundertakekeyproductiontaskssuchaslandpreparation,plantingandweeding.

Theuseofhouseholdlabourisinmostcasesconsideredtobeacheaperoptionbythesmallholder

farmers.

Theaverageareaundermanualmaizeproductionremainedconstant,peggedat1.7hectares(same

as last season). The average household area under mechanical maize production increased

significantly from 2.5 hectares (recorded last season) to 4.3 hectares (recorded this season). In

principle InovAgro noted that the same smallholder farmers who engaged in mechanical maize

productionduring the last seasonhadexpanded the land areas during the current season in part

encouragedbytheoutputbuyingpriceformaizeduringlastseason.

Theaveragemaizeyieldperhectare(forbothmechanisedandmanualproduction)increasedduring

thereportingperiodasindicatedinFigure11below:

Figure10:Comparativereviewofseedsalesinprojectlocations

15

Figure11:ComparativeReviewofMaizeYield

Theimprovedmaizeyieldsrecordedduringthisseasonarelargelyattributedtotheimprovedseasonal

rainswhichboostedyieldscomparedtothedryweatherreducedyieldlevelsregisteredduringthe

previous season. The increased availability of certifiedmaize seed (as indicated in the discussion

above)shouldalsobeconsideredaswellastheincreasednumberofprivatesectortechnicalofficers

whowereengagedbytheseedcompaniestoprovideextensionservicestothesmallholderfarmers

intheprojectlocations.

Themaizeyieldlevelsrecordedthisseasonareclosertotheindicatedaveragenationalyieldlevels

whichestimatesmallholderproductivityperhectarebetween1,000kg’sperhectare–1,200kg’sper

hectare(particularlyinthecentralregionwhereproductionandinputdistributionsystemsaremore

developedandadvanced).TheyieldlevelsintheInovAgroprojectlocationscouldhavebeenmuch

higherifthecrophadnotbeenaffectedbytheFallArmyWorm(FAW)outbreakwhichravagedthe

entireSADCregion.

0

200

400

600

800

1000

1200

2015/2016

season

2016/2017

season

9851033

628

876

KGsper

hectare

Ag.Season

ComparativeReviewofMaizeYield

YieldPerHa- Mechanised

YieldPerHa- Manual

16

TextBox2:TheFallArmyWorm

Thefallarmyworm(FAW),Spodopterafrugierda,wasfirstdetectedinMozambiqueinJanuary2017.

TheFAWwasinitiallyconfusedwiththeordinarymaizestemborers,butlaterconfirmedasFAWby

MASAincoordinationwithEduardoMondlaneUniversity(UEM).

Figure12:MaizecropaffectedbytheFallArmyWorm

The FAW outbreak was confirmed in all provinces of Mozambique, except in Cabo Delgado.

Assessmentsbyvariousstakeholdersarestillbeingfinalisedtodeterminetheseverityofdamage

causedbytheFAW,particularlytheimpactoncropproduction/yieldsaswellasthesocio-economic

impactonsmallholderhouseholds.

InovAgroassessmentshowever indicate that the impactof theFAWin theproject locationswas

moderatemainly due to excessive rainfall, which helped to suppress the FAW activity, and the

favourableclimaticconditionsthathelpedtopromotehighcropproductionpotential.

Because the improvedoutput this year,maize imports in the2017/18marketing year particularly

duringtheleanperiod(April/March)areexpectedtodeclinemoderately.Theoutputbuyingpriceof

maizealsodeclinedinrecentmonthsonharvestpressureandinMay2017themarketbuyingprices

weregenerallywellbelowtheiryear-earlierlevelsasindicatedinFigure13below:

Figure13:MaizepricesinMozambique

17

The lower year-on-yearmaize price during the reporting period ismainly attributed to improved

production supply prospects. The strengthening of the national currency in 2017 also eased

inflationarypressure,butmadeimportsmoreattractive.ThecurrentlowerpricesofmaizeinSouth

Africa,akeytradingpartnerforMozambique,encouragedincreasedlevelsofimportsduringthefirst

halfofthereportingyear.Thelowermarketprices(averageof5MeticaisperkilogramintheInovAgro

projectlocations)resultedinanegativemarginfortheprojectbeneficiaries.Thisunderlinestheglobal

nature of value chains, and the importance of continued strengthening of smallholder farmers in

Mozambique to structure their production systems to be competitive not only regionally but

internationallyparticularlyintermsofproductivityandthecostofproductionperhectare.

Overall, food security conditions are expected to improve in all the InovAgro project locations,

becausethelargermaizeoutputrecordedduringthisseasonaswellasthelowermarketprices.

2.4 Soyabeans

Soya bean is a nutritious crop with high levels of protein content. The crop is not traditionally

consumed by Mozambicans as a food crop. The major end markets are animal feed companies

(primarilypoultryfeed)aswellasexportstoMalawi(forfeed).Mozambiquedomesticdemandfor

soyaforprocessingintofeedisestimatedat75,000MT/year.Thirty(30%)percentoffeeddemandin

the country is linked to the commercial activities of one company, Abilio Antunes in Manica. In

Nampula,NovosHorizontesandProalimentarareprominentfeedcompanies.Thedomesticmarket

forsoyaisestimatedtobegrowingatabout60percentperyear(thuspresentingamarketopportunity

for smallholder farmers in the project locations). The projections made by USAID SPEED (2016)

indicatethatsoybeanproductionwillcontinuetofallshortofgrowingconsumptionrequirementsas

indicatedinFigure14below:

Figure14:SoybeanproductionandconsumptiontrendsinMozambique(source:USAIDSpeed,2016)

Atotalof2,395smallholderfarmersintheInovAgroprojectlocationsgrewsoyabeansastheirmain

commercial crop during this season supported through the project facilitation systems. This

representsanincreaseof1,333smallholderfarmerscomparedtothe1,062farmerswhogrewsoya

beansastheirprimarycashcropduringthepreviousseason(2015/2016).

The increased interest by smallholder farmers to grow soyabeans is attributed to severalmarket

factorsasdiscussedbelow:

18

2.4.1 Growinginternaldemandofsoyabeanonthedomesticmarket

Demandforsoyabeansonthedomesticmarketparticularlyforthefeed,poultryandoil industries

has been rising due to the increased growth in these industries. AlthoughMozambique currently

importspoultryproducts(mostlyfromBrazilandSouthAfrica)tomeetitsinternaldeficitinchicken

meat,therehasbeenasignificantincreaseinproductionalready,andthereisincreasedlobbyingby

localactorsforthegovernmenttoreducethevolumeofpoultryimportsintothecountryasastrategy

topromotethedevelopmentofthelocalindustry.Thereareindicationsthatby2019,theGovernment

ofMozambiquemaybanpoultryimportsintothecountry9.

2.4.2 IncreasingFarmGatePrices

The price of soya bean output buying prices at farm gate had been gradually increasing over the

previousthreeagriculturalseasons(from2013/2014season),butthendroppedsharplyin2017as

indicatedinFigure15below:

Figure15:AveragesoyabeanoutputbuyingpricesinInovAgroprojectlocations

The growing farm gate soya bean output buying prices acted as strong incentive for smallholder

farmerstogrowsoyabeansasaprimaryhouseholdcashcrop,leadingintothe2016-17season.During

thereportingperiod,thetotallandareaundersmallholdersoybeanproductionincreasedfrom2,155

ha(recordedlastseason)to4,302haduringthecurrentseason.Asinmaize,soyabeanproduction

remains largelyunmechanizedasonly284haunderthisseasonproductionwasmechanized.Soya

beanproductionremainsamaledominatedcropasonly27percentofthesmallholderfarmerswho

grewsoyabeansastheirprimarycommercialcropwerefemale.

Amarginalincreaseinsoyabeanyieldwasrecordedformechanisedsoyabeanproductionasindicated

inTable3below:

9Seeforexample:

http://www.folhademaputo.co.mz/pt/noticias/nacional/mocambique-vai-banir-importacao-de-frango-em-2019/

1316.5

23

12

0

10

20

30

2013- 2014

season

2014- 2015

season

2015- 2016

season

2016- 2017

season

Price

(Mts)/KG

Period

SoyaBeanFarmGateOutputbuying

Prices

19

Table3:Comparativesoyabeanyield(previousandcurrentseason)

LastSeason(2015/2016) CurrentSeason(2016/2017)

Mechanizedproduction 1,250 1,277

Manualproduction 695 881

Despitetheincreasedproductivityperhectare,theprofitabilitymarginsecuredbytheparticipating

smallholderfarmersincreasedslightlybyonly1percentduetothelowerfarmgatepricesforsoya

beansduringthereportingperiodasindicatedinFigure15above.Mostsmallholderfarmersinthe

InovAgroproject locationshave cried foulon thedrastic fall of the soyabean farmgateprice (by

almosthalf)during thisyear’smarketingseason.Thereareseveral factorshighlightedby thesoya

beanvaluechainactorsthatshouldbetakenintoconsiderationincontextualisingthereducedsoya

beanfarmgatepricesduringthisseason:

A. Speculativeproducebuyingfromthelastseason

Mostoutputtradersduringthelastseason,speculatedthatthepriceofsoyabeanswouldincrease

towards the endof the season. Based on thismarket speculation, the output buyers (particularly

Cargill)purchasedlargevolumesofsoyabeanproduce(atthestartoftheseason)whichtheyhoped

toselltoendmarketsatapremiumpricetowardstheendoftheseason.Thevolumeswhichhowever

werepurchasedbytheendmarketsweremuchlowerthanwhatthecommoditytradershadprojected

resulting in significant unpurchased produce remaining in the company warehouses of the main

commodity buyers10. The commodity buyers (particularly Cargill) took strategic decisions not to

purchaseanynewproduceduringthisseasonbutrathertoprioritisedisposaloftheremainingstock

fromlastseason.Ultimately,thisaffectedthedemandforsoyabeanproduceduringthisseason.

B. Cheaperimportsofsoya

Discussionswithpoultryproducersindicatethatoftenthecostofimportingprocessedsoyabeanmeal

intothecountry(particularlyfromMalawi)forthecompanies’operationsarelowerthanthecostof

buying soya grain (locally). InovAgro Team Leader discussions with Novos Horizonte for instance

indicatethatthecompanyin2016importedatotalof2,000metrictonnesofprocessedsoyabean

mealmainlyfromMalawiandArgentina11.Forthecurrentseason,thecompanyhasindicatedthat

they are importing on average 600 metric tonnes per month of soya bean meal from Malawi

(encouraged also by the firmingmeticais against the USD). The increased soya bean imports, by

poultry producers such as Novos Horizonte consequently have resulted in lower demand and

absorption for locally produced soya bean grain and hence the reduced price. Novos Horizonte

howeverprojectedthatthefarmgatepriceforsoyabeangrainwouldlikelyincreasefromthecurrent

levels.Importanttonotefromtheabovediscussionisthatimportedsoyabeansproducts(particularly

soyameal) is landing cheaper inMozambique compared to output produced locally. This further

emphasisestheneedforsmallholderfarmerssupportedbytheprojecttoimprovetheirproductivity

perhectareand to reduce their production transaction costs to remain competitiveon theglobal

market.

10Therewasincreasedrelianceonimportswhichwereconsideredcheaper.

11ThecompanyindicatedBrazilandIndiaarealsoexcellentsourcesofsoyabeanmealatcompetitiveprices.

20

2.5 Groundnuts

A total of 1,106 smallholder farmers grew groundnuts as their primary cash crop in the InovAgro

projectlocationsduringthisreportingperiod.Thisrepresentsanincreaseof424smallholderfarmers

compared to the 682 smallholder farmers who grew the crop during the last season. While the

groundnutsvaluechainhaslongbeenconsideredbytheInovAgroprojecttobeafemaledominated

cashcrop,theresultssecuredfromthelasttwoEndofSeasonSurveysindicategrowinginvolvement

ofmalefarmersingroundnutproduction–evensurpassingthelevelsoffemalefarmers.

Figure16:No.ofFarmersgrowinggroundnutsinprojectlocations

InovAgrothereforenotesthatasthegroundnutvaluechainbecomesmorecommerciallyoriented,an

increased number ofmale smallholder farmers are gaining interest in this cash crop. This is also

reflected by the size of land that was allocated by male farmers this season towards groundnut

production,increasingfrom0.8hectares(lastseason)to1.36hectaresduringthereportingperiod.

While the larger area allocated by the male farmers towards groundnuts production can be

interpretedasconfirmationoftheeconomicpotentialthattheyseeingroundnutsasacashcrop–

female farmers in FocusGroupDiscussions argued that thiswas also indicativeof reduced labour

capacitybyfemalefarmerstoopenuplargerpiecesoflandtoexpandtheirproductionactivities.

Figure17:GroundnutplotinEratimanagedbyafemalefarmer

It is however interesting to note that althoughmale farmers have larger land area allocated for

groundnutproduction,femalefarmersrecordedamuchhigheryieldperhectarecomparedtotheir

malecounterparts.Themalefarmers’productivityperhectare(535kgs)ismuchlowerthanthe856

0

500

1000

1500

No.of

Farmers 2014- 2015season

2015- 2016season

2016- 2017season

21

kilogramsperhectareachievedbythefemalefarmers12.Theimprovedvolumesofrainfallrecordedin

theprojectlocationsduringthisseasonsupportedtheachievementofhigheryields.Furthermore,the

increasedvolumeofcertifiedseedthatwassoldintheprojectlocationsthisseasoncomparedtothe

previousseason13isalsoattributedtotheimprovedyieldssecuredduringthereportingperiod.The

increasedavailabilityofgroundnutseedduringthisseasonisalsoconfirmedbyMuitiaA.Metal(2017)

whothroughanindependentparticipatoryruralappraisalconductedinCaboDelgadoandNampula

provincesnotedthat56%14ofgroundnutproducersinEratiusedimprovedseedvarieties.Eratiisone

oftheInovAgroprojectlocationsandcommercialdistributionofgroundnutseedinthedistrictisbeing

championedbythreeInovAgropartners–IKURU,JNBandOruwera.

Most of the groundnuts produced in the project locations are targeted for the domestic informal

markets–withstronginterregionaltrademainlytoMaputo(SouthernRegion).

LimitedvolumesofgroundnutproducearealsoexportedtoregionalcountriesmainlySouthAfrica.

Figure18:GroundnutValueChainMap(Source:InovAgroSectorReports)

The price of the groundnuts slightly dropped from an average of 40meticais (last season) to 35

meticaisduringthereportingperiod.Althoughthispricewas lowerthan lastseason–smallholder

12Female respondents in theproject locationsarguedduring FocusGroupDiscussions thatwomenhadmore

experience of growing groundnuts and that they allocated more time in managing their groundnut plots

comparedtotheirmalecounterparts.1322.20MetricTonnesofgroundnutseedwassoldintheprojectlocationscomparedto17,50MetricTonnessoldlastseason.

14Seehttps://apresinc.com/wp-content/uploads/2017/07/Muitia-2017.pdf

22

farmerswhoengagedingroundnutproductionwereabletoachieveaprofitmarginof85%inrelation

totheirinvestment.

InovAgrohasalsonotedanincreasedinterestbyinternationaloutputbuyers(e.g.TwinTrading)to

sourcegroundnutsfromNampulaandCaboDelgadoprovincesforexporttotheUnitedKingdomand

other European markets. This interest is on the back of the company failing to secure sufficient

producevolumes inMalawiand increasinglyMozambique isconsideredapotentialsupplierofthe

required produce volumes if an elaborate system that controls aflatoxin contamination can be

established.AGroundnutWorkingGroup,withstrongInovAgrofacilitation,hasbeenestablishedin

Nampula comprising of various value chain stakeholders to explore mechanisms how aflatoxin

contaminationlevelscanbereducedtomeettherequirementsofinternationalmarkets.Thiswork,

albeit promising, still requires significant support targeting various value chain actors involved in

groundnutproduction,processing,transportationetc.

2.6 Sesame

The number of smallholder farmerswho grew sesame as theirmain commercial crop during this

reportingperioddropped from985 (last season) to752 farmers this seasonofwhich themajority

(80%)weremalefarmers.Thedrop-insesamegrowersduringthisseasonisattributedtosmallholder

farmersriskaversionstrategiesrelatedtotheflybeetleattackonthesesamecropduringtheprevious

season.Theyieldperhectareconsequentlywasreducedcompromisingthesmallholderfarmersprofit

expectations.Itisforthisreasonthataconsiderableproportionofthesesamegrowers(lastseason)

switchedtogroundnutsduringthisseason.Groundnutswereconsideredasafercrop,withtheseed

varieties available on the market capable of resisting most pests and diseases dominant in the

InovAgroprojectlocations.

Thereductioninthenumberofsesamegrowersduringthisseasonwasalsonotedinthereductionof

salesforsesamecertifiedseedintheprojectlocationsfrom11.82metrictonnes(lastseason)to9.14

metrictonnesduringthisseason.

Oruwera,JNBandIKURUremainedstrategicprojectpartnersasthesewerethemaincompaniesthat

soldsesameseedduringthereportingperiod.

23

Figure19:SesameValueChainMap2017(Source:InovAgroSectorReports)

Theyieldperhectare for sesamesignificantly improvedcompared to last seasonyield (more than

doubled)asindicatedinFigure20below:

Figure20:SesameYieldinProjectLocations

0

100

200

300

400

500

600

Male Female Male+

Female

Average

Yield

KGsper

hectare

SesameYieldinProjectLocations

Lastseason

CurrentSeason

24

The reduced production costs incurred by the sesame growers this season have mainly been

attributedtoreducedapplicationofchemicalsandothercropprotectionproductscomparedtolast

seasonwhenthesesamecropexperiencedasevereattackbytheflybeetleimmediatelyafterthecrop

germination.Althoughsomesesamecropthisseasonalsoexperiencedflybeetleattacks,theseverity

waslessaggressivecomparedtolastseasonandthefinancialinvestmentrequiredfortreatmentwas

lower.

Theprofitabilitymarginssecuredbythesesamefarmersarethehighestrecordedduringtheproject

four-yearperiod.Inprinciple–sesamewasthemostprofitablecropduringthisseasonowingtoless

volatilefarmgateprices(comparedtolastseason)andtheimpressiveyieldimprovementsthatwere

achieved.

Thestrongperformanceofthesesamevaluechainthisseasonwillprovidestrongincentiveformore

smallholderfarmerstoadoptthecropastheirprimarycommercialcropduringthecomingseason.

2.7 Conclusion

Themarketdevelopmentsexperiencedduringthisreportingseason,particularlyrelatingtopigeon

peas,soyabeansandmaize,re-affirmedhowthesmallholderfarmerssupportedbytheprojectare

partofglobalmarketsystems.Forinstance,itiscrucialtonotehowpolicychangesinIndiarelatingto

PigeonPeaimportsaffectedthelocalmarkets,resultinginsignificantreductioninfarmgateprices

andoverallproducedemand.Thisreinforcestheneedtocompetebasedonglobalbenchmarksfor

productivity.

Furthermore,the improvedmaizeharvestsrecordedthroughoutthecountry(andwithintheSADC

region)owing to improvedagro-climatic conditionsduring the season resulted in lower farmgate

prices (due to increased product supply on themarket). Imports from other countrieswithin the

region(particularlyfromSouthAfrica)havealsoprovedtobecheaperthanlocallyproducedmaize

further emphasising the need for smallholder farmers to better structure and manage their

productioncostsiftheyaretoremaincompetitiveontheglobalmarket.Thesemarketdevelopments

furtheremphasisetheneedforstrongfarmerinstitutionsthatcanbeempoweredtomonitorglobal

agribusinesstrendsandproviderelevanttechnicaladvicetosmallholderfarmersandotherrelated

valuechainactors.Atpresent,thisisamissinggapinthesmallholderfarmer’sproductionsystems–

tailoringtheirproductionsystemstorespondtoglobalmarkettrendsin-ordertoremaincompetitive

ontheworldstage.

The groundnut value chain has the potential to be a lucrative commercial crop but this potential

continuestobehamperedbysetglobalminimumresiduelevelsrelatingtoaflatoxin.Theinvestments

required to tackle this constraint in the groundnut value chain are considerable, and beyond the

support levels thatcouldbeprovidedby the InovAgroproject. However, somestrongmeaningful

discussionstodefinetheroadmaponhowaflatoxinlevelscanbeloweredinsmallholdergroundnuts

needstobedefinedandInovAgroispositionedtochampionthesediscussionsunderPhaseIIIofthe

project.

Whiletheclimaticconditionsrecordedduringthisseasonwereconducivefortheproductionofthe5

valuechainssupportedbytheInovAgroproject,theincreasedincidenceofdroughts,pestanddisease

25

attacksoverthelastfouryearsreinforcetheneedforappropriatecropinsuranceproductswhichcan

offerthesmallholderfarmerssomeformofsafetynettoprotecttheirinvestments.

Depending on how the Pigeon pea market unfolds during the rest of the season as well as the

projectedprospectsforthefuture,itmaybenecessarytoconsiderothercropsthatmayofferhigher

investmentreturnstothesmallholdersupportedbytheproject.Whilethenegativemarginrecorded

thisseasonformaizewillbeadisincentiveforfutureinvestmentsforsomesmallholderfarmersinthe

projectlocations,thecropretainsitsstrategicimportanceduetofoodsecurityconsiderationswhich

arecentralnotonlytotheInovAgroprojectbutalsoattheheartoftheGovernmentofMozambique

policy priorities. It is important to note how smallholder farmers tend to substitute one crop for

another,dependingonpreviousyear’sperformance (outof sesame intogroundnut, forexample).

Thisrelatestosmallfarmerbehaviour,whichisimportanttotakeintoconsiderationaswearelooking

atthecropssupportedbytheproject.

26

3. SeedSector

InovAgro has placed a heavy emphasis on building themarket for certified seeds for smallholder

farmersandusingtheseedcompaniesasameanstoincreaseSHFproductivitysince2014.Thisyear

has seen a culmination of the buy-in from seed companies to actively promote their products to

farmers.EightseedcompaniespartneredwithInovAgroduringthereportingperiodinvariousproject

locations as indicated in Figure 3 above. These seed companies now employ 19 field extension

workerstodriveoutreachtofarmers,organised299demonstrationsduringtheperiod,whileworking

through55agrodealers. Theseextensionandoutreachactivities led to thesaleof273.79metric

tonnesofassortedseedtosmallholderfarmers,up145%fromlastyear.

InovAgro’s partner seed companies are Phoenix Seeds, PANNAR Seeds, Oruwera, Klein Karoo,

SementesNzarayapera, JNB, IKURUandSyngenta.They represent themajorityof seedcompanies

working inNorthernMozambique. Thesecompaniesareofdifferentsizesandcapacity levels,but

they are all committed to growing their businesses by building greater market demand through

outreach and distribution systems. However, they are at different stages of growth and are

confrontedbyvaryingopportunitiesandconstraintsasmarketactorswhichhasshapedtheirability

togrow.

Thediscussionbelowprovidesdetailsonfourselectedcompaniesthatrequirementioningduetotheir

changesinbusinessapproachand/orfinancialcircumstances.

3.1 Reviewofselectedseedcompanystrategies:

3.1.1 PANNARSeeds

PANNARSeedshasbeenrevisingitsbusinessstrategyoverthelastmonths.Thecompanyno-longer

operates its own shops for direct sale of seed products to farmers; instead, the company has

reinforced implementationof a businessmodelwherebyproducts are delivered toDistributors in

specificzones.TheDistributorsinturnarerequiredtosupplysmallerAgrodealersoperatinginthe

projectareas.

Under thenewcompanystrategy, thePANNARShopthatwasestablished inGuruéwith InovAgro

supportin2015hasnowbeenhandedtoanotherprivateinvestor(EXCAVETA)tooperatetheshopas

adistributionhubsupplyingPANNARseedtoagrodealersinZambeziaprovincewiththepossibilityof

expandingtootherregionsasthebusinessgrows.Thebrandingontheshophasbeenmaintainedto

avoidconfusingthemarket.PANNARmanagementestablishedtwostrategicpartnershipsduringthe

reportingperiodwiththedistributorsindicatedinTable4belowtoservicetheindicatedareas:

Table4:Pannardistributors

LocationsServiced(Districts)

TECAP-CasadoAgricultor Nampula,MalemaandRibaue

EXCAVETA Gurué,Molumbo,Namarroi,Ile,AltoMolócue

27

PANNAR Seeds staffwill now focus largely on promotional activities for their products through a

varietyofmediachannelsaswellasdemonstrations,fielddays,roadshowsandseedfairs.PANNAR

SeedshasalsoestablishedcollaborativerelationshipswithETGwhichwillenablethecompanytouse

ETGwarehousestostoretheirseedpriortodistribution.

The company management has also taken a strategic decision to retain the services of the 11

ExtensionOfficersthatareoperatingintheprojectlocations.Theseextensionofficerswillnotonlybe

required to facilitate the delivery of the company product demand creations activities but an

arrangementhasalsobeenreachedwhichwillenabletheseExtensionOfficerstosaleseedintheir

areasofoperationsforadeterminedcommission.

PANNARSeedshasalsoexperiencedhighstaffturnoverparticularlyinChimoioatthecompanyHead

Office. The company lead SalesAgronomist;Mr. Felisberto Eduardo resignedduring the reporting

periodfollowingalsothedepartureofanotherSalesAgronomist,Mr.AlbinoMutipo.Thedeparture

ofthesekeystaffmembershasweakenedPANNARSeedsasIsmenioChitataremainsastheCountry

Director,butwithoutastrongsupportingteamoftechnicalofficers.Tofillthisgap,thecompanyhas

broughtininterimcoverfromitsZimbabweOfficeuntilsubstantivelocalreplacementsareidentified

andengaged.

3.1.2 PhoenixSeeds

InovAgro conducted a Due Diligence exercise on Phoenix Seeds during the reporting period. This

reviewwasoriginallyscheduledforApril2017butcouldnottakeplaceasPhoenixSeedsmanagement

waspreoccupiedwith financial andmanagerial restructuringnegotiationswith their JointVenture

shareholderpartner,AgDevCo.PhoenixseniormanagementhowhasanewAccountantandGeneral

Manager.

TheresultsfromtheduediligenceconductedindicatethatPhoenixSeedsiscurrentlywithnegative

equitybalancewhollyfromaccumulatedoperatinglossesoverafive-yearperiodandhassignificant

debt.ThepartnershipbetweenPhoenixandAgDevCoisshowingsignificantstrainbutthekeyproposal

byAgDevCoistomergePhoenixFarmandPhoenixSeedsintoasingleentitywhichwillimprovethe

balancesheetofthecombinedentity.Itisunclearatpresentwhattheproposedshareholderstructure

willbeinthemergedcompanyorwhatwillbecomeoftheexistingloans.Kevinishowevercommitted

tocontinueproducingseedeitherinaresurrectedPhoenixSeedsoranotherfreshstart-up.

Mr George Chibanda has been appointed as the ProductMarketing Director leading all company

efforts related todemandcreationandestablishmentofaviabledistributionnetwork forproduct

retail. Mr. Chibanda will also assume responsibility for coordinating the work of Field Extension

Officersworkingintheprojectlocations.

As the company scales up its efforts to turn around its fortunes, Phoenix Seeds’ management is

activelypursuingatpresentpossibilitiesforestablishingawarehouseinMocubatoallowforbetter

seeddistributionintheNorthernregion.

3.1.3 KleinKaroo

KleinKarooisrapidlyexpandingitsoperationsinMozambique.Althoughthecompanyhaspreviously

concentrated its retail activities in the centre region of the country, the company management

increasinglyrecognisesthepotentialgrowthinthenorthernregion.Thecompanymainlyhascertified

28

maize,sesameandhorticulturalseedsourcedbothfromlocalproduction inthecentreregionand

fromimportsfromSouthAfricaandZimbabwe.

Duringthereportingseason–KleinKarooremainedoneofthestrongestInovAgropartnersforboth

demandcreationactivitiesandseedretail.Underthepartnershipagreement,thecompanyhasnow

established a distributionwarehouse in Nampulawhichwill also be used as the company’smain

coordinationofficefortheNorthernregion.ASalesAgronomistwasrecruitedduringthereporting

periodandavehicletosupportproductmarketinganddistributionhasbeenplacedinNampula.

The company has a robust marketing strategy and has now secured partnerships with the main

supermarketchainstoresoperatinginNampulatofacilitatetheretailofbothhorticulturalandcereal

(mainlymaize) seed in theseestablishments. InovAgro ismonitoring thevolumes thatwillbe sold

throughthesupermarketchainsas this representsanotherdistributionoutletwhichhadnotbeen

previouslyexploredwithotherseedcompanies.

3.1.4 SEEDCO

SeedCohasrecentlyannouncedareturntotheMozambicanmarketafterhavingleftthemarketyears

backcitingmarket feasibility limitations.Thecompanymanagementhasalreadyengagedwith the

InovAgrofacilitationteamandindicationsarethatduringthe2017/2018seasonthecompanywill

re-introduce its seed products to the market through establishment of demonstration plots and

realisationoffielddays.

The returnof SeedCo to theMozambican seedmarket is anaffirmationof thepotential that the

markethasbecomemoredynamic.InovAgroexpectsthatcompetitivemarketingwillincreaseasfour

largeseedcompanies(Syngenta,PANNARSeeds,SeedCoandincreasinglyKleinKaroo)willnowbe

fullyoperationalonthemarket.InovAgroanticipatesthatsomeofthesmallerseedcompaniessuch

asJNBwhichhavebeenstrugglingtomanageseedproductionactivitieswillprobablyevolveintolarge

distributorsworkinginstrategicpartnershipswiththelargercompaniesthathavebettercapacityfor

seedproductionmanagementanddistribution.Meanwhileothercompanies,suchNzarayapera,may

focusmoreonmultiplicationforthelargecompanies.Indicationsrelatingtotheformationofsuch

strategicpartnershipsarealreadyvisibleonthegroundasJNBhasbeenengagingKleinKarootoform

astrategicalliancewiththecompanyforseeddistributionintheNorthernregion.Inthesamevein

SementesNzarayapera has also initiated discussions to grow seed thatwill bemarketed by Klein

Karoo.

As more international actors such as SEED Co enter the market, the push for product quality

management by the seed companieswill increase as the smallholder farmerswill have increased

opportunitiestochoosewellperformingproductsthatarepricedaffordably.

3.2 PartnershipActivitiesandResultsduringReportingPeriod

InovAgro continued its approach involving supporting the seed companies to conduct demand

creationactivitiesforcertifiedseed(throughestablishmentofdemonstrationplotsandrealisationof

fielddays),provisionofembeddedextensionservicestosmallholderfarmersaswellasestablishment

ofadistributionnetworkforcommercialseedretail.

29

3.2.1 DemonstrationPlots

A total of 299 demonstration plotswere established by the project partners during the reporting

period.Thenumberofdemonstrationplotsestablished in2017bytheseedcompaniesrepresents

morethanthreefoldincreasecomparedtothe94demonstrationplotsthatwereestablishedin2016.

Figure21:HistoricalReviewofSeedCompaniesActivities

Thisisastrongindicationoftheincreasingseedmarketingefforts(includingfinancialresources)that

arebeingappliedbythecompaniestopromotevolumeincreaseintheirsales.Itisalsoanindication

ofthegrowthandcrowdinginofmarketactorsapplyingnewandinnovativeapproaches.

Figure22:LeadFarmerHildaCarlosdemonstratingresultfromdemonstrationplotinRibaue

0

50

100

150

200

250

300

350

2014 2015 2016 2017

HistoricalReviewofSeed

CompaniesActivities

No.ofPartnerSeed

Companies

No.ofdemonstration

plotsestablished

No.offielddays

conducted

30

Thecapacityoftheseedcompaniestoestablishdemonstrationplotsintheprojectlocations(including

managing relationships with the Lead Farmers) has grown significantly and InovAgro now notes

progression by the companies towards operationalisation of enhanced management systems for

demo plot quality control including information

management. Syngenta Seeds for instance has

developedademoplotlogbookwhichnotonlyacts

as a guidance manual for lead farmers on how to

managethedemonstrationplotsbutalso facilitates

improvedrecordingofdataonthecropperformance

during the season. This data is used to explain the

cropperformanceduringfielddaysbutalsoprovides

recorded feedback to the companies for ongoing

productresearchanddevelopment.

Figure23:SyngentaDemonstrationPlotLogBook

PANNARSeedshasalsostartedtheapplicationofaqualitycontrolchecklistwhichallowsthescoring

ofanestablisheddemonstrationplotbasedonasetofdefinedcompanyguidelines.Theapplication

ofthesesystemsfortheimprovedmanagementofthedemonstrationplotsiscommendedandastep

intherightdirection.

3.2.2 RealisationofFieldDays

Table5:SmallholderfarmersParticipationinFielddays–CurrentAchievement

MilestoneTarget2017 Cumulative

Achievement2017

Cumulativenumberofsmallholderfarmersparticipatingin

fielddaysfacilitatedbytheprojectpartners

7,500 12,933

Atotalof84fielddayswereconductedduringthereportingperiodinvolvingtheparticipationof8,918

smallholderfarmersintheprojectlocations.Atotalof97fielddayswereconductedreachingoutto

atotalof9,190(7612newand1,578old)throughfielddays.

Table6:FieldDaysConductedPerPartnerin2016-17

Partners Field

days

Participants

Pannar 36 4,182

Phoenix 42 3,241

KleinKaroo 6 504

Oruwera 3 209

Syngenta 8 809

IKURU 2 245

97 9,190

PANNAR Seeds and Phoenix Seeds were the main project partners who invested more in the

realisationofthefielddaysasindicatedinTable6above.

31

Table7:FielddaysandParticipants

District Partners #ofField

Days

#of

Participant

Ribaue Pannar 8 1,519

Phoenix 1 92

1 89

Oruwera 2 144

KleinKaroo 2 192

Malema Pannar 2 155

KleinKaroo 2 200

Phoenix 2 157

Oruwera 1 65

Syngenta 1 209

Erati Phoenix 2 152

KleinKaroo 1 61

SDAE 1 51

Chiure Phoenix 3 251

Namuno Phoenix 2 190

Pannar 3 420

Gurue Pannar 13 1,861

Phoenix 11 792

Mulumbo Phoenix 9 849

Namarroi Phoenix 3 224

AltoMolocue Syngenta 7 600

Ikuru 2 245

Pannar 10 227

Phoenix 5 250

Mocuba Phoenix 3 195

TOTAL 97 9,190

ThesecuritychallengesnearMocubaearlierintheyearresultedinsignificantlyloweroutreachinthe

districtbytheprivatesectorcompaniesasmostpartnerssuspendedtheiractivitiesduetosecurity

concerns.Guruéremainsanareaofsignificantprivatesectorinterestasdemonstratedbythelevelof

investmentinfielddaysinthisdistrictbythecompanies.MostcompaniescurrentlycategoriseGurué

and Ribaue as large potentialmarkets for seed products and there is significant focus tomarket

productsintheselocations.

3.2.3 EmbeddedExtensionServices

Atotalof19ExtensionOfficerswererecruitedbytheseedcompaniestoprovideaftersalestechnical

backstoppingservicestosmallholderfarmersonproductuseandgeneralGoodAgriculturalPractices

(GAP)in2016-17.Thisrepresentsacommendableincreasecomparedtothe9extensionofficersthat

wereengagedin2016.Thisisyetagainanotherfirmindicatoroftheincreasing/deepeningcapacity

andeffort being appliedby the seed companies to grow the seedmarket in theproject locations

throughaggressivemarketingcampaignsanddirectengagementwiththesmallholderfarmers.

32

Theinvestmentbythecompanies,however,needstocontinuegrowingtoallowforthedistribution

of the extension officers in all project locations rather than the current scenario whereby the

extension officers are often concentrated in particular districts ranked as having higher market

potential. This also underlies the need to facilitate improved coordination with public extension

officerstocomplementtheprivatesectorefforts.

3.2.4 SeedSales

Atotalof273.79metrictonnesofassortedseedhasbeensoldtosmallholderfarmersbytheseed

companies in the project locations during the reporting period through InovAgro facilitated

distributionsystems.Thisrepresentsanencouragingincreaseofmorethan145%comparedtothe

111.34metric tonnes thatwas soldby the seed companies to the smallholder farmersduring the

previousseason.

Figure24:Volumeofseedsoldinprojectlocations

Agrodealersremainthemaincommercialdistributionmechanismthattheseedcompaniesareusing

forproductretail.Atotalof55Agrodealersdistributedindifferentprojectlocationsarenowactively

selling seed to smallholder farmers. The Village Based Agro dealers (mainly concentrated in Alto

MolócueandMolumbo)werefirstpioneeredbyPhoenixSeedsbutInovAgronotesthatotherseed

companiessuchasKleinKarooandIKURUarewarminguptotheconceptandareconsideringuseof

thismodelfortheirtradingactivities.

195.10

14.00 21.30 17.50 9.14 16.75

Maize Soybean P.Pea Goundnut Sesame Othercrop

Volumeofseedsoldinprojectlocations

percropin2016/17season(MT)

33

Table8:SeedDistribution/RetailMechanismsintheprojectlocations

Location SeedCompanyShops Agrodealers VBA FA

Gurué 1 5

3

Molumbo

6 5

Namarroi

Molocue 2 13 15 2

Mocuba

1

1

Ile - - - -

Malema 1 4

Ribaue

2

Chiure

2

1

Erati

1

Namuno

1

Total 4 35 20 7

TheintroductionoftheonestopshopconceptbyTecap-CASADOAGRICULTORinNampulahasbeen

wellreceivedbyboththeseedcompaniesandsmallholderfarmersalikeasthefutureofagricultural

inputsretailinMozambique.Theconcept,whichinvolvesestablishmentofahardwareshopselling

assortedtypesofagriculturalinputsincludingseed(frommultiplecompanies)provideswiderproduct

choiceforthesmallholderfarmersaswellastheabilitytopurchaseotherproductioninputsthatare

requiredtoenhancetheperformanceofcertifiedseed.Thisonestopshopconcept isexpectedto

dominate themarket in the near future as it also provides entrepreneurswith increased income

productlinestoenhancetheirincomestreamsandprofitmargins.

3.2.5 GovernanceofSeedCompanies

InovAgro conducted business governance reviews of four partner seed companies during the

reportingperiod(PhoenixSeeds,KleinKaroo,SementesNzarayaperaandJNBEmpreendimentos).The

businessgovernancereviewswereintendedtoreviewtheeffectivenessofgovernancesystemsthat

these seed companieshave inplace to facilitate sustainablemanagementof a seedbusiness. The

assessmentswereconductedintheformofOrganisationalCapacityAssessments(OCA)uponwhich

specificfindingsandactionplansweredrawnuptofacilitatecuringofidentifiedareasofweakness.

The results from these assessments indicate that the governance of the seed companies requires

strengthening.Thefollowingkeygeneralobservationswerenoted:

• Businessmodel:MostSMEseedcompaniesengagedwerefoundtohaveweakorfundamentally

flawedbusinessmodels.Adoptedmodelsarenot informedor foundedonempiricalstrengths,

34

abilities, andopportunities in the company. Theyaremoreguidedby seasonal perceptionsof

lucrativeopportunities.Thissignificantlyweakensthesustainabilityofabusiness.

• Structureandidentity:Companiesarecorrectlyregisteredandgenerallycomplywithstatutory

requirements. However, beyond registration, most the companies are not formally and

adequatelystructured.Thecompaniesdonothaveplausibledocumentedprofilesandveryfew

haveactiveuptodatewebsites.

• Leadership:SomeoftheseedcompanieshavenoformalBoardsofDirectorsto leadandinstil

governance,withpreferably,andasrecommended,somenon-executivequalifiedpersons.Where

Boardsexist,theyareoftenweak,poorlyorganizedandinmostinstances,areoffamilymembers.

• Corporateethos:CompaniesarenotstronglydefinedbyspecificVisionsandMissions,Valuesand

Ethics.Inmodernbusiness,despitethesizeofacompany,thesetenetsguidethephilosophyof

structure,formalityandgrowth,anddetermination.

• Strategicplanning:ThereisclearabsenceofformalstrategicplanninginSMEseedcompanies,

andwhereattemptsaremade,itisrudimentary,inadequatelyfacilitatedanddocumented,and

serves as a bottom drawer paper. This is a critical indictment on the small to medium seed

enterprisesasabusinessthatdoesnotplanitscommercialactivitiesisaradar-lessship.

• Skills:Theseedcompaniesdemonstratedweakskillsinseveralfacetsoftheiroperationsbutmore

significantly in financeandadministration,and intechnicalseedmultiplicationsprocesses.The

entrepreneurs appear unwilling to invest in skilled and qualified personnel and deploy token

competenciesthattheyseldomdevelopthroughtraining.

• ICTandtechnology:Acceptanceanddeploymentofinformationandcommunicationtechnology

generallyvariesfromcompanytocompany.It,however,remainsanareainwhichalotremains

tobedone.InmanyoftheSMEseedcompaniesitisthetop-levelmanagement,theshareholders

andentrepreneursthatlacksignificantlyinICT.

• Succession planning: The concept of succession planning and grooming in the SME seed

businesses is yet to be embraced. This applies equally to family owned businesses and to

entrepreneur/owner managed businesses, where there is inadequate preparation for the

untimelydemiseoftheproprietor.MostSMEseedcompanieswouldceasetoexistintheevent

ofprematuredemiseoftheowners.

• Insurance:InsuranceisaphenomenonwhosebenefitsarenotyetfullyappreciatedbysomeSME

seedcompanies.Theadventofinsurancecompensationforlossofprofit,production,crop,asset

damageetc.aswellascropcoveragainstdroughts,adverseweathersuchascyclonesetc.need

to be embraced. The absence of fully fledged all-encompassing insurance products in

Mozambiqueexacerbatesthesituation.

• Budgeting:There is littleornoevidenceofbudgetaryplanning inSMEseedcompanies.Many

companies operate without formal budgets. Budgeting is a critical aspect of planning and is

essential to ensure available resources are allocated to the correct objectives and planned

activities.

• Accounting reporting: There is evidence of a varying degree of financial reporting. A general

weakness is that the financial reporting appears not to be accurate. Fundamental areas of

incompletenessandinaccurateamountsisininventories,andaccountsreceivable.

• Auditexamination:Themajorityof theSMEseedbusinessesdonot subject themselves toan

external audit examination of their financial performance and financial reports. Whilst such

35

independentexaminationwouldprovideassurancesofaccuratereporting,theadditionalcostis

notpreferredoraffordabletomostoftheseedcompanies.

• Marketingstrategy:Whileprogresshasbeenachievedinstrengtheningseedmarketingactivities

bythecompanies,SMEseedcompaniesneedtocontinuerefiningthedevelopmentofinnovative,

appropriate,vibrant/aggressivemarketingandmarketdevelopmentstrategiesthatgobeyond

establishmentofdemonstrationplotsandrealizationoffielddays.Insomecases,InovAgronoted

that some seed companies continue to depend, to a large extent, onNGO/donor guided and

subsidizedmarket demand creation activities. The SMEs seed companies also do not allocate

sufficient resources tomarketingactivities,andassuchcontinuetostruggleagainst the larger

companies who have huge support from experienced international parent companies. It is

InovAgro’sviewthatmanySMEsseedcompaniesneedtoconsiderthisaspectwhenre-scoping

theirbusinessmodels.

Giventheabovegovernancechallenges(andotherfactorstobereportedinaseparatepaper),the

InovAgrofacilitationteamhasdevelopedarecommendedFrameworkToolforthetransformationof

seed companies into viable enterprises. This framework tool has beendeveloped toprovide seed

companies’managementguidance/checklistofcriticalpointsthattheyshouldconsiderfacilitating

thetransformationoftheirseedbusinessesintoviableenterprisesembracingmoderntenetsrelated

tothecompanycorporatisationandenhancedfinancialmanagement,productmarketingandseed

production.ThemodelwillbedisseminatedtoseedsectorstakeholdersduringtheEndofPhaseII

conference on the 9th of November 2017 andwill also be published in a development journal to

facilitatewiderdissemination.

3.3 Conclusion

Theresultssecuredthroughthepartnershipswiththeseedcompaniesduringthereportingperiod

areveryencouraginganddemonstratesystemicchange.Theseedcompanies’investmentstowards

market development are increasing as indicated for instance by (a) the tripling of the number of

demonstrationplotsestablishedin2017comparedto2016levelsand(b)theincreasednumbersof

extension officers being recruited to conduct product demand creation activities as well as drive

companysalesintheprojectlocations.Duetotheseefforts,thevolumeofseedpurchasedbythe

smallholderfarmershasmorethandoubledthosein2016.Thisvolumeincreaseinseedpurchasedby

thesmallholderfarmersisthecumulativeresultofdemandcreationactivitiesthatInovAgrohasbeen

conductinginpartnershipwiththeseedcompaniesoverthepastthreeseasons.

Thecontinuedprogressiontowardsdeepeningandbroadeningthesustainabilityandimpactofthe

seedcompanies’activitieswill,however,requiremoreinnovativeproductmarketingstrategiesthat

complement the establishment of demonstration plots and the realisation of field days. Equally

importantalsoistheneedforstrengtheningtheseedcompanies’governancemechanismstoensure

thefulltransformationoftheseedcompaniescommercialactivitiestobestructured(andtooperate)

inlinewiththeparametersrequiredforsustainablebusinessmanagementsuchasregularplanning,

developmentofstrategicpartnerships,budgeting,aggressiveproductmarketingetc.ItisInovAgro’s

growing opinion thatwhile significant attention over the past seasons has been concentrated on

developing thedemandandretaildistributionsystems forcertifiedseedproducts,moreattention

needs to be focussed on growing the supply capacity of the seed companies to provide quality

products.Thisincludesstrengtheningtheirinstitutionalstructures(andproductionassets)toposition

36

them to operate and grow fully as viable enterprises. This technical backstopping on business

governancewillbestrengthenedundertheupcomingInovAgroIII.

TheentryonthemarketofnewcompaniessuchasSeedCoindicatesthatthecopyingprocessbyother

seed companies has commenced. While SeedCo had previously exited, the Mozambican market

preferringtoconcentrateitscommercialactivitiesinotherregionalcountriessuchasZimbabweand

Kenya, the company return to the domestic market is reflective of the growing buy–in by seed

companiesonthevaluepropositionthataninclusiveseedmarketingbusinessisviableopportunity

forsectorstakeholders!

37

4. EnablingEnvironment

InovAgro emphasized the critical importance of a conducive business environment for the

development of the seed sector this year. During the reporting period, the project continued

implementationofassortedinterventionsundertwopartnershipsestablishedwiththeNationalSeed

Authority (NSA) and the Association for the Promotion of the Seed Sector (APROSE). The details

regardingtheinterventionsdeliveredunderthesepartnershipsarepresentedbelow:

4.1 PartnershipwiththeNationalSeedAuthority

The partnership activities with the NSA are intended to enhance the capacity of the regulatory

authoritytoprovideseedqualitycontrolservices(throughtheoperationalisationofcomplementary

PrivateSectorSeedInspectors)aswellastoprovidesectorstakeholderswithregulatoryinformation

throughtheestablishmentofawebsite.InovAgrohasalsosupportedthedevelopmentofaninternal

database which will enable the NSA to capture, store and generate data for analysis regarding

stakeholdertransactionsundertheseedsector.

4.1.1 Website

TheNationalSeedAuthorityengagedalocalcompany,InCentea,todevelopthewebsite.Thedesign

ofthewebsitehasnowbeencompletedandplansarebeingoperationalisedtofacilitatethelaunch

of thewebsite tosectorstakeholdersonthe9thofNovember2017alongside the InovAgroEndof

PhaseIIconference.

The website provides information on the services that are provided by the NSA and allows

stakeholderstodownloadassortedformsrelatedtoprovisionofvariousservicessuchasregistration

andreleaseofseedvarietiesandapplicationforfieldinspections.Thewebsitealsocontainsregulatory

information(variouslegalinstruments)relatedtotheseedsector.Arestrictedversionofthewebsite

canbeaccessedonthislinkhttps://www.incentea-mi.pt/ansementes.

4.1.2 Database

In parallel to the development of the website, InCentea was also engaged to facilitate the

developmentof thedatabaseduringthereportingperiod.Theworkhasbeencompletedandthe

formallaunch/presentationofthedatabasetosectorstakeholderswillbeconductedonthe9thof

November2017alongsidetheInovAgroEndofPhaseIIconference.

The database will enable the NSA to secure assorted data including seed varieties that are in

circulationinthecountry(andtheSADClevel),seedcompaniesoperatinginthecountryandvolumes

ofseedproducedbyeachcompany.Thedatabasewillalsoallowforimprovedtrackingofdatarelated

tofieldandlaboratoryinspections.Datarelatedtoseedimports/exportsaswellasseedvarieties

registrationwillalsobecaptured.

Thetrainingofthedatabaseusers(NSAstaff)hasbeenscheduledforthirdweekofNovember2017.

ThedatabaseisexpectedtoimprovethecapacityoftheNSAtogeneratesectorreportsallowingfor

enhancedsectorperformancereviewsandevidencebasedplanning.

38

4.1.3 PrivateSeedInspectorsandlaboratoriesanalysts

The Ministerial Diploma related to the operationalisation of Private Sector Seed Inspectors was

approvedinJune2017.Thislawallowsfortheaccreditationofprivateinspectorsandlaboratoriesfor

seedinspectionandcertificationprocesses.

Since the approval of the Ministerial Diploma, the NSA has been supported to facilitate the

dissemination of the law to seed sector stakeholders at various platforms as indicated in Table 9

below:

Table9:DisseminationofthePrivateSectorInspectorModellaw

Date Event Facilitator Location

31stAugust2017 Conference on Investment

Opportunities in the Seed

Sector

ElsaTimana Maputo

6thSeptember2017 Provincial Seed Sector

CoordinationMeeting

ElsaTimana Nampula

20thSeptember2017 Presentation of the SEMEAR

workplanfor2017/2018

ElsaTimana Nampula

Theengagementsessionswiththestakeholdershavefocusedonprovidinginformationrelatedtothe

legal frameworkwhichwill guide theoperationalisationof thePrivateSector InspectorsModel. In

addition,therecruitmentofinterestedcandidateshasbeeninitiatedthroughastructuredapplication

process.Table10belowprovidesanoverviewofthetimelineandmilestonesthathavebeensetin

relationtotheoperationalisationofthemodel:

Table10:TimelinefortheOperationalisationofthePrivateSectorInspectorsmodel

Timeline(2017)

Activity September October November December

Stakeholder awareness raising on the

approvedPrivateSectorModel

Development of the Private Sector Field

InspectorsManual

ApplicationandSelectionofPrivateSector

FieldInspectorsCandidates

Training and Accreditation of the Private

SectorInspectors

39

ThePrivate Sector InspectorsManual providing guidancehow the inspectors should conduct field

inspectionswasdevelopedbytheNSAinOctoberwithjointsupportfromInovAgroandtheUSAIDFtF

Seed-Trade project. The training of the first group of Inspectors has been scheduled for early

December2017atPhoenixSeedsfarminChimoio.

4.2 PartnershipwithAPROSE

APROSEisamulti-stakeholderplatformthatwasestablishedtofacilitatecoordinationandinformation

exchange between seed sector stakeholders in Mozambique. This started as the National Seed

DialoguePlatformbutthenamewaschangedtotheAssociationforthePromotionoftheSeedSector

(APROSE)aftertheformallegalizationprocessin201615.Nowthatitisestablishedasalegalentity,

APROSEcan receivegrantsandoutside funding fromdonoragencies,amongothers.Thevisionof

APROSEistohaveadynamic/commerciallycompetitiveseedsectorthatcontributestowardsthe

improved access of certified seed to farmers enhancing the growth and positive development of

agricultureinthecountry.

APROSEseekstostimulatethegrowthoftheagriculturesectorthroughthecreationofanenabling

environmentfordialogue,informationexchangeandcollaborationbetweenseedsectorstakeholders.

The core values of APROSE are defined as honesty, transparency, inclusiveness, democratic

governance, dedication, inclusive participation and accountability. Central to APROSE’s work are

sevenspecificobjectivesintheoperationalplan:

• TostrengthentheinstitutionalcapacityoftheAPROSE

• Toimproveinformationexchangeandcoordinationbetweenseedsectorstakeholders.

• Tostrengthenavailablecapacityforseedqualitycontrol

• Tostimulatethecommercialdemandforcertifiedseed

• Tostimulatethesupplyofcertifiedseed

• Tocontributetowardspoliciesandregulationsthatallowfortheeffectivedevelopmentofthe

seedsector

• Topromotecapacitybuildingactionsrelatedtotheseedsector

4.3 APROSEPartnershipActivitieswithInovAgro

ThepartnershipbetweenAPROSEandInovAgroduringthereportingperiodwasbasedon4principal

objectivesasindicatedinTable11below:

Table11:PartnershipObjectiveswithAPROSE

Objective ActivitiesSupportedunderthePartnershipwithInovAgro

To strengthen APROSE

institutional capacity to

coordinatedialogueactivities

relatedtotheseedsector.

• Procurementofofficefurnitureandequipmenttocreatebasic

workingconditionsforworkbytheAssociationSecretariat.

• Openingofabankaccount for improvedmanagementof the

Associationfinancialresources.

15APROSE is now legally registered inMozambique, legal registration number 100722542. The legalisation of

APROSEwaspublicisedinNationalBulletinNumber52/2016publishedonthe3rdofMay2016.

40

• Institutingregularmanagementmeetingsbythevariousorgans

oftheAssociationbothatthenationalandregionallevels.

• Review APROSE internal governance policy guidelines with

particular emphasis on roles and responsibilities of the

managementstructuresoftheAssociation.

• Conduct national and regional awareness campaigns to

increaseAPROSEmembership.

To improve information

sharing and coordination

withintheseedsector

• Conduct a business conference to facilitate dissemination of

marketinvestmentopportunitiesintheseedsector.

Tostimulatethedemandfor

certifiedseedinthecountry

• Operationalise a demand creation programon certified seed

through national / regional media channels (both radio and

television).

To propose policies and

regulation that promote the

development of the seed

sector

• Lobby for the approval of the private sector seed inspectors

modeltoenhanceseedqualitycontrolinMozambique

4.3.1 PartnershipResults

ThefollowingarethemainresultssecuredfromtheAPROSEpartnershipwith InovAgroduringthe

reportingperiod:

ProcurementofofficefurnitureandEquipment

ThefollowingassetshavebeenpurchasedbyAPROSEunderthepartnershipwithInovAgroduringthe

reportingperiodtofacilitatethecoordinationworkoftheSecretariat.

1. ExternalharddriveforstorageofAPROSEdocuments

2. HPcolourprinter

3. HPmultipurposeprinter/scannerandphotocopyingmachine

4. Lenovolaptopwithantivirussoftware

5. OrganisationStamp

TheseassetshavebetterpositionedAPROSEtofunctionasaformalinstitutionwithabilitytogenerate

communicationstotheirmembersandrelatedsectorstakeholdersusingownresources.Inlinewith

theAPROSEinternalpolicyguidelines,theseassetshavenowbeenregisteredontheAssociationasset

register.

Openingofabankaccount

TheAPROSEformalbankaccounthasnowbeenopenedatBCIBankwitheffectfromApril2017.This

account is being used to facilitate receipt of funds from multiple partners and the Association’s

membership.Table12belowprovidesanoverviewof themain funding thatAPROSEhas received

fromvariousactorsfromJanuary2017todate.Intotal,theassociationhasfinancialprovisionupto

US$114,718.83tofacilitatetheimplementationofvariousinterventions.

41

97%ofthefundsusedbyAPROSEtoimplementitsactivitiesduringthereportingperiodweresourced

fromdonorsupportedprojectsthatareimplementingregionalanddomesticinterventionsintheseed

sector.Only2%and1%of the fundswere secured fromthemembership contributionsandother

incomegeneratingactivitiesrespectively.

Figure25:SourceofFundssupportingAPROSEActivities

Table12:FinancialsupportprovidedtoAPROSEduringthereportingperiod

Partner Amount(US$16) PurposeoftheFunds

USAIDSeedTradeProject 7,931.97 RegionalTrainingWorkshopforLaboratorySeed

Analysts.

USAIDSeedTradeProject 5,000.00 RealizationoftheBusinessInvestment

ConferenceconductedinMaputoonthe31stof

August2017.

USAIDSeedTradeProject 19,973.86 Awarenessraisingonfinancingopportunitiesfor

seedcompaniesofferedbytheSeedTrade

project.DisseminationoftheSADCprotocolson

seedharmonizationintheregionandnational

seedlegislation.

USAIDSEMEAR 3,380.00 RealizationoftheBusinessInvestment

ConferenceconductedinMaputoonthe31stof

August2017.

Agencia do Vale do

Zambezia

2,000.00 RealizationoftheBusinessInvestment

ConferenceconductedinMaputoonthe31stof

August2017.

InovAgro 50,000.00 Procurementofofficeequipment,support

towardsmanagementcommitteemeetings,

16Exchangerateusedis1USD=60Meticais

42

productionofvideocontentfordemandcreation

awarenessprogramonnationalradioand

televisionchannels,studiesonseedsectorto

informpolicyadvocacyinitiatives.Salaryfor

theparttimeAccountant.

FAO 24,000.0017 SalarypaymentfortheparttimeAPROSE

ExecutiveSecretary

MembershipFees 1,933.00 Thesearemembershipannualfees

OtherfundraisingActivities 500.00 ThesefundsweregeneratedbyAPROSEto

supporttheimplementationoftheassociation

activities.

TOTALFundsrecieved 114,718.83

RealisationofAPROSEmanagementmeetings

The following meetings were conducted by APROSE with InovAgro support to provide strategic

steeringoftheplatform:

Table13APROSEMeetings

Date Location Meeting

Description

Keydiscussionpoints

1 March

2017

Maputo National

Management

Committee

Meeting

ReviewAPROSEInternalpolicies,reviewpartnership

activitieswithInovAgro,Developmentof3months’

workplan,defineprocessfortherecruitmentofnew

Members,ReviewtheroleofAPROSEinlobbyingfor

the approval of private sector inspectors, define

guidelinesforfinancialmanagement.

10 May

2017

Maputo Management

AdvisoryCommittee

Meeting

Discussion on the proposed partnership with

Seedtrade, Review of the role of APROSE in the

implementation of Early Generation Seeds

recommendations provided from the study

conductedbyAGRA.

Define mechanisms for APROSE engagement with

USEBAtoimprovebasicseedaccessinthecountry.

30 August

2017

Maputo National

Management

Committee

Meeting

Review of implementation progress of APROSE

activitiesinthethreeregions

Reviewofmembershiprecruitmentandpaymentof

membershipfees.

17Thisistheceilingannualbudgetamount.Paymentisconductedonthebasisofactualtimeworkedeach

month.

43

Establishmentofacommitteetofacilitatethereview

ofmembershipapplications.

PlanningfortheNationalAnnualConference

03

September

2017

Maputo Verification

Committeefor

Membership

Applications

Reviewofmembershipapplications

DevelopmentAPROSEGovernanceguidelines

TheAPROSEinternalgovernanceguidelineshavebeendevelopedduringthereportingperiod.These

policiesprovideguidanceontherolesandresponsibilitiesofthevariousmanagementstructuresof

theorganizationaswellastherecruitmentandapprovalproceduresfornewmembers.Theseinternal

governance guidelines have been formally documented and have been disseminated to the

membershipinthevariousregions.

MembershipofAPROSE

During the reporting period, a verification committee was established to facilitate review of

membershipapplicationsfromseedsectorstakeholders.

Thiscommitteecomprisesthefollowingpeople:

Table14APROSEcommittee

Name Role

ElsaTimana Chairperson

AnabelaManhica CommitteeMember

FernadoChilenge CommitteeMember

Duringthereportingperiod,atotalof16candidateswereapprovedasmembersbythecommittee.

Oneapplicationwasrejected.ThisbringsthetotalmembershipofAPROSEtoacurrent42members

with themajority being private sector seed companies. At present, only one financial institution,

BarclaysBank,hasregisteredasamemberandisactiveinthedeliveryofAPROSEactivities.Atpresent,

onlyoneresearchinstitution,theInternationalInstituteofTropicalAgriculture(IITA)hasregistered

asamember.ThisindicatestheneedforAPROSEtodevelopclearstrategiestofacilitaterecruitment

of specific target stakeholders (suchas financial institutions and research institutions). Thiswould

strengthentheplatformnotonlyintermsofpluralrepresentationofvoicesandinputfromthesector

stakeholdersbutalsowithregardstoincomegenerationthroughmembershipsubscriptionsfroma

widermembershipbase.

Operationalisinganawarenessprogramoncertifiedseedthroughpublicmediachannels

bothradioandtelevision.

APROSEhasengagedanadvertisingmediacompanytodevelopvideoandaudiomaterialthatwillbe

used to strengthenmarketing of certified seed. The content that is currently under development

focusesonthreemainthemes:

44

1. Thevaluepropositionofusingcertifiedseed

2. SeedQualityControl–Howthemarketcandistinguishgoodseedfrombadseed

3. TheroleofAPROSEontheseedsector

The dissemination of the content under development is expected to start from the 1st week of

Novemberwith a view to increase the volume of seed sales during the 2017 / 2018 season. The

content has also been specifically developed to enhance the visibility of APROSE on the market

particularlytoensurethatassortedstakeholdersfullyunderstandtherolethattheAssociationplays

ontheseedsector.APROSEhasmanagedtosecurecollaborativepartnershipswiththemainmedia

channels in the country STV and TV Mozambique to facilitate the dissemination of the target

messages.APROSEwillalsocollaboratewithseveralcommunityradiochannelsacrossthecountry.

BusinessInvestmentConference

Onthe31stofAugust2017,APROSEconductedaBusinessInvestmentConferenceinMaputowhich

aimedathighlightingtopotentialinvestorsthebusinessopportunitiesthatcurrentlyexistintheseed

sector inMozambique.Theeventalsosought to facilitate informationsharingbetween thesector

stakeholdersonfinancialproductsthatarecurrentlyonthemarketwhichentrepreneurscoulduseto

supporttheirinvestmentsontheseedsector.

Dr.MohammedValawastheGuestofHonourattheconferencewhich includedapproximately60

participants. This event received financial support from multiple actors who contributed varying

amountstosupportthedeliveryoftheevent.

InovAgro’s assessment however indicates that the event was only partially successful due to the

limited number of potential investors who attended the event. InovAgro also noted that the

programme discussions and facilitation provided during the event steered away from the main

objectivesborderingmoreondiscussionrelatedtobasicseedavailabilityinthecountry.Theevent

objectiveswereassuchpartiallyachievedandthereisarecognizedneedforthedeliveryofamore

focused event, involving awider range of potential investors, supported by sharp facilitation and

moderationofthediscussions.

4.4 DiscussiononAPROSE

AlthoughAPROSE’scapacitycontinuestogrowanddemonstratepromisingsignalsthatinthefullness

oftimetheAssociationwillbeaforcetoreckonwithontheseedsector,InovAgronotedseveralpoints

duringthisreportingperiodwhichneedtobeaddressedtoallowAPROSEtoquicklyprogresstobeing

aviableinstitutionontheseedsector.Thesepointsarediscussedbelow:

4.4.1 Fundraisingstrategy

While APROSE has raised more than $100,000 for activities, it does not yet have a realistic

sustainabilityplanthatwillgenerateregularfundingtocoveritsoperatingoverheads.Inaddition,the

funded activities at this point seem ad-hoc and are not focused towards achieving the central

objectivesandmissionof theAssociation.This increases the riskofhavingAPROSEhigh-jackedby

othervaluechainactorsordonors to fulfil theirownobjectives.APROSEneeds todevelopaclear

fundraisingplanwhichislinkedtoitsobjectivesandapprovedworkplanstoensurethatitconducts

itsresourcemobilizationactivitiesinlinewiththeapprovedstrategiesasdefinedbythemembership

duringtheAnnualGeneralAssemblyandwhichguaranteessufficientfundingformanagement.This

45

shouldbethecentralroleoftheExecutiveSecretary.InovAgroshouldcontinueprovidingtechnical

backstopping to support the development of a viable Fundraising strategy which targets not just

institutionaldonorsbutalsostrengthensthe levelofcontributionfromthemembershipandother

private enterprises that have an interest to develop in the seed sector as part of their social

responsibilityinitiatives.

4.4.2 OperationalSteering

Atpresent,Ms.MariaEstrellaAlbertoistheExecutiveSecretaryforAPROSE.Thepositionisparttime

andisfullyfundedbytheFoodandAgricultureOrganisation.Thevolumeofworkandoperational

steeringthatisnowrequiredbyAPROSEcannotbesustainedbyapositionholderworkingonapart

timebasis.Assuch,InovAgronotedwithconcernthatthedeliveryofsomescheduledinterventions

and agreed partnership activities was not conducted on the agreed timelines and the depth and

qualityofdeliverycouldhavebeenbetter.ThisisconcerningparticularlyatthispointwhenAPROSE

isattemptingtosecurecredibilityandfullrecognitionasamarketfacilitatorintheseedsector.

WhileEstrellahasdoneagoodjobtosetupthefoundationofAPROSE,theoperationalsteeringof

APROSESecretariathasreachedthatpointwhenitrequiresamoreseasonedpairofhandswithmore

establishedexperienceofmanagingamembershiporganization.Thischangeisextremelycriticaland

urgent to ensure that strong leadership is available for the timely and quality implementation of

APROSEinterventions.

4.4.3 OperationalSystemsDevelopment

InovAgro conducted an audit of the APROSE financial books in September 2017 to facilitate

reconciliation of the funding support that the project provided for the implementation of agreed

partnershipactivities.ThisauditwasalsoconductedasanOrganizationalCapacityAssessment(OCA)

todetermineoperationalcapacitygapsandareasofweaknessthatpotentiallycouldderailAPROSE’s

abilitytoimplementitsprogramssustainably.InovAgrohasnotedwithconcernthatthefinancialand

procurementsystemsthatAPROSEhasatpresentareinadequatetofullycomplywithbestpractice

standards related to financial and administrative processes. APROSE needs to prioritize the

development and operationalisation of its finance and procurement manuals to provide clear

managementguidanceondaytodaytransactionshandledbytheassociation.Thesemanualsshould

alsobe structured tomeet the requirementsof thekey institutionaldonors thatprovide financial

supporttotheAssociation.InovAgrowillneedtofocusmoreitsinterventionstowardssupportingthe

institutionaldevelopmentofAPROSE,particularlythegovernancesystemstoenhancemanagement

transparencyandaccountability.

4.4.4 MembershipRecruitment

APROSEneedstostrengthenitsmembershiprecruitmentstrategiesnotonlytogrowthenumbersbut

also to ensure increased representational diversity by targeting actors in specific sectors that are

currentlyunderrepresentedontheAssociation,suchasfinancialinstitutions.

Differentmembers on the Association have different interests. For instance, financial institutions

wouldbekeenAPROSEmembersprovidedthatthisbecomesavehiclethroughwhichtheycanbetter

understand the seed sector to facilitate development of more appropriate financial products.

ResearchinstitutionsontheotherhandareeagertouseAPROSEasaplatformthatwillenabletheir

46

better understanding on the performance of released seed varieties and to explore how these

varieties potentially could be improved. APROSE management team therefore needs to be in a

position topackage thevaluepropositionofAPROSEmembership in linewith the interestsof the

target value chain actor. InovAgrowill need to continue to provide technical backstopping in this

respect.

4.5 Conclusion

Overthepastfouryears,InovAgrohasfacilitatedanddrivenmostoftheworktoenhancetheenabling

environmentfortheseedsector.ItssupportAPROSEandtheNSAoverthepast4yearshaveputin

place thebuildingblocks for an improvedenabling environment conducive to growthof the seed

sector.

Thewebsiteanddatabasethathavebeendevelopedwillbeusefultoensurestakeholdersaccessto

sector informationandtoimprovethequalityofdataandevidencerelatedtothesector.TheNSA

howeverwillneedtoinvestmorehumanandfinancialresourcestoensurethatboththewebsiteand

the database aremanaged professionally to provide relevant sector information. Themapping of

sectoractivitieswillalsoneedtobeconductedinthenextmonthstoallowforupdatingofdataon

the database. TheMinistry of Agriculture has providedwritten confirmation of the government’s

commitmenttothisprocessandtoensurethatsufficienthumanandfinancialresourcesareprovided.

InovAgrowillcontinueprovidingtechnicalbackstoppingunderPhaseIIItoensurethatthesetoolsare

effectivelyusedforthebenefitofthesector.

TheapprovalofthelawallowingtheoperationalisationofthePrivateSectorSeedInspectorshasbeen

wellreceivedbytheseedsectorstakeholders.InovAgronoteshoweverthatmoststakeholdersare

alsocautiousandwaitingtoseehowtheprocesswillevolveoverthenextmonthsandthescopeof

work(andpower)thattheaccreditedinspectorswillhave.InovAgroworkingwithotheractorssuch

as the Seed trade projectwill remain engaged to provide theNSA technical backstopping for the

successfulimplementationofthemodel.

Asarguedinthediscussionabove,InovAgronotesthatAPROSEisstartingtostrengthenitsvoicein

thesector.Thispotentialhoweverneedstobefullycapturedthroughsomerealignmentsrequiredto

widenitsfundraisingstrategy,strengtheningthedaytodayoperationalsteeringoftheAssociation,

and enhancing membership recruitment drive. Equally important is the need to continue

strengtheningtheinstitutionalcapacityforAPROSEtofunctionasaformalinstitutionwithappropriate

governancesystemsforenhancedaccountabilityandtransparency.

47

5. OutputMarketing

The InovAgro output marketing interventions focus on identifying market failure preventing

smallholderfarmersfromsellingtheiroutputmarketingproduce.Theinterventionsaredesignedto

supportthevaluechainactorsinvolvedinoutputmarketingactivitiestodevelopsolutionstofixthe

identifiedconstraintswithaviewtoimprovethetradingrelationshipsbetweentheparties,including

buying prices and purchased volumes. In 2017, the InovAgro project engaged in partnership

negotiationswith25CommodityAggregationTraders(CATs).Fromtheseengagements,theproject

successfullysignedpartnershipagreementswith19CATs(5inCaboDelgado,7inNampulaand7in

Zambeziaprovinces)(Tables16and17below),upfrom12thepreviousyear.Thesignedpartnership

agreementsfocussedmainlyon:

• Strengthening the quality of service at existing produce aggregation / buying posts through

introduction of service enhancing technologies (weighing scales, moisture meters, price

dissemination boards, etc.). These technologieswere introduced at the aggregation / buying

centres to improve transactional transparency and confidence between the parties. This is

importantnotonlytoencouragedeliveryofincreasedproducevolumesbutalsotosustainrepeat

transactions.

• Establishmentofnewoutputaggregation/buyingpoststoexpandthegeographicalareawhere

theCATsareable tooffer their service.Expansionof thenumberofaggregationcentreswas

intended to increase the volume of produce purchased by the CATs but also to reduce the

distancethatthesmallholderfarmersmusteitherwalkortransporttheirproducetoabuying

centre.

Inadditiontotheabovedirectpartnershipactivitieswiththe19companies,InovAgroalsosupported

trainingonpost-harvestproducehandlingandconservationdesignedtostrengthenthesmallholder

farmers and CATs capacity to reduce losses at both the aggregation centres and smallholder

household level. A workshop was also conducted in Nampula designed to improve dialogue and

coordinationstakeholdersworkinginthesector.Thisworkshopwasalsoaimedatencouragingthe

formationofstrategicpartnershipsbetweentheoutputmarketingactorsasastrategytoenhancethe

sector’scompetitiveness.Theseactivitiesarediscussedindetailbelow.

5.1 EstablishmentofProduceBuyingCentres

Atotalof266producebuyingpointswereoperationalduringthereportingperiodintheInovAgro

projectlocations.Theoperationalbuyingpostsincluded129newpoststhatwereestablishedwiththe

projectfacilitationduringthereportingperiod.

Table15:NumberofOperationalbuyingpostsduringreportingperiod.

Numberofoperationalbuyingposts

Location OldBuyingPosts NewBuyingPosts

(Establishedthisseason)

Total

NampulaProvince 52 38 90

CaboDelgadoProvince 51 36 87

ZambeziaProvince 34 55 89

TOTAL 137 129 266

48

Table16:OutputMarketingPartnersinNampulaandCaboDelgadoProvinces

Targetvolumeofcroptobepurchasedunder

PartnershipAgreement(MetricTonnes)

Contribution(MZN)

Location Partner Maize Groundnuts SesamePigeon

pea

Soya

beansTotal InovAgro

Partner

Status

ofPA

Nampula

Ribaue

ChipangueeFilhos 500 20 50 200 0 770 265,350.00 2,178,750 Signed

FacilitadoradeAlimentos 300 200 100 100

40

740340,378.00 1.642,700 Signed

IndústriaMoageiraFátima 400 0 0 0

0

400289,096.00 696,200 Signed

OrganizaçõesMorgado

200

100

150

150

0

600171,487.00 1,863,400 Signed

Malema FerragemMaleiro 150 0 40 500

10700 214,480,00 1.201,200 Signed

Erati

AnitaCatijaSumail 100 80 20 170

0370 115,000.00 336,000 Signed

ConstantinoCalisto 200 200 150 400

0950 275,500.00 1,067,500 Signed

Sub-total 1,850 600 510 1,520 50 4,530 390,500.00 1,403,500

ChiureQuedasdoRioLurio 500 350 200 350 0 1400 341,502.50 1,269,324 Signed

EstevãoGomes 150 0 10 50 0 210 74,000.00 297,000 Signed

Namuno

LonconeComercial 120 40 30 50 0 240 165,250.00 206,750 Signed

CarlosAfonsoCorneta 350 100 150 250 0 850 109,000.00 916,967 Signed

12deJunho 80 80 15 25 0 200 79,000.00 253,200 Signed

Sub-total 1,200 570 405 725 0 2,900 768,752.50 2,943,241

TotalNampula+CaboDelgado 3,050 1,170 915 2,245 50 7,430 1,159,252.50 4,346,741

49

Table17:OutputMarketingPartnersinZambeziaProvince

TargetvolumeofcroptobepurchasedunderPartnership

Agreement(MetricTonnes)Total

Contribution(MZN)

ProjectLocation PartnerMaize Groundnuts Sesame Pigeonpea

Soya

beans InovAgroPartner

StatusofPA

Zambezia

Alto

Molócue

Ecops&

Consultores 100 0 0 0 0 100

55,000

207,140

Signed

JaimeLucas200 0 0 150 0 200

175,750

225,750

Signed

Mocuba

Winnua500 0 0 0 30 530

125,973

575,375

Signed

AgroTrading300 0 0 100 30 430

223,740

650,060

Signed

Gurué&

Molumbo

Silverio

Comercial 500 0 0 250 200 950 225,9201,310,248

Signed

Namarroi JacintoMossela 250 0 0 150 0 400 161,314 561,113 Signed

Molumbo TomeCosta 150 0 0 350 100 600 177,004 631,420 Signed

TotalZambézia

2,000 0 0 1,000 360 3,210 1,144,701

4,161,105

50

Figure26:Ms.SumailiengagedinbusinessathernewbuyingpostopenedinAlua,Erati.

5.2 VolumeofPurchasedProduce

From the partnership agreements that InovAgro had signedwith the project partners during the

reportingperiod,thetargetvolumeofoutputproducetobepurchasedfromsmallholderfarmerswas

10,790metrictonnesofassortedcrops.Theincreasednumberofbuyingpostsintheprojectlocations

whichalmostdoubledduringthereportingseasoncomparedtothelastseasonwasaimedtoensure

achievementofthistarget.ThevolumeofproducepurchasedbytheCATshoweverwasonly5,447

metrictonnes(areductioncomparedtothe6,036metrictonnespurchasedduringthelastseason).

Table18:Volumeofoutputproducepurchasedintheprojectlocations

Crop Target

Volume(MT)

Actual

Volumes

Purchased

(September

2017)

Average

PricePer

Kilogram

(KG)

Valueof

Purchased

Produce

Valueof

purchased

producein

USD

Maize 5,050 2,416 4 12,797,750 213,296

PigeonPeas 3,245 977 5 6,030,750 100,513

Sesame 915 362 39 18,368,100 306,135

Groundnuts 1,170 1,231 35 49,122,000 818,700

SoyaBeans 410 461 12 6,193,500 103,225

TOTAL 10,790 5,447 92,512,100 1,541,868

Thereducedvolumeinoutputproducepurchasedduringthisreportingperiodisattributedtovarious

factorsincludingthefollowing:

51

1. The reduced farm gate prices recorded for maize and pigeon peas acted as a significant

disincentiveforsmallholderfarmerstoselltheiroutputproduce.Mostsmallholderfarmersare

currentlyholdingontotheiroutputproducewiththehopethatthepriceswillincreasebeforethe

endoftheyear.Toqualifythisfact,theresultsfromtheEndofSeasonSurveyconductedbythe

projectinSeptember2017indicatethatonly50%percentofthesampledsmallholderfarmershad

soldalltheiroutputproduce.Theother50%havenotsoldtheirproduceforavarietyofreasons

withthedominantfactorbeinglowmarketpricesasindicatedinTable19below:

Table19:Smallholderfarmer’sreasonsfornotsellingproduceduringreportingperiod

Reasonsfornotsellingtheproduct Freq. Percent

Marketpriceistoolow 104 54.17

Lackofbuyers 15 7.81

Needstheproductforhomeconsumption 28 14.58

Lowproduction 8 4.17

Marketisfar 1 0.52

Other 8 4.17

Notapplicable 28 14.58

Total 192 100

2. ReducedVolumesPurchasedbyOutputBuyingCompanies

TheuncertaintyemergingfromthelackofclaritywhetherIndiawouldpurchaseMozambicanpigeon

peas(asexplainedinsection2)resultedinmanyoutputbuyingcompaniessuspendingpurchaseof

pigeon pea produce until such time when confirmation would have been secured regarding the

availabilityofa viablepigeonpeamarket.Understandably,outputbuyingvaluechainactorswere

cautious not to purchase large volumes of produce forwhich therewas a risk they could end up

withoutamarket.Someof the InovAgropartners switched focus tocrops likecowpeasside-lining

pigeonpeasandmaize.Thiscautiousmodeengagedbybusinessconsequentlyresultedinasignificant

reductioninthevolumeofproducepurchasedfromsmallholderfarmersduringthereportingperiod.

MostCATsengagedawaitandseemodehopingthattargetendmarketswouldprovide improved

assurances confirmingmarket availability for produce that theywould purchase from smallholder

farmers.

ThesuspensionofoutputprocurementbyCARGILLalsohadanimpactonthetotalvolumespurchased

fromsmallholderfarmersduringthereportingperiod.CARGILLindicatedthatitstillhadunsoldstock

(fromlastseason)whichthecompanyisstillattemptingtoselltoendmarkets18.TheExportTrading

Grouphasalsobeenlukewarmonthemarketthisseasonpreferringtotakeacautiousapproachuntil

theIndianGovernmentpigeonpeapolicyimpactsontheirMozambicanbusinesswereclearer.

18CARGILLhadpurchasedlargevolumesofmaizeandsoyabeanproduceatfairlyhighpricesonthespeculation

thatthevolumesrequiredandpricespaidbyendmarketswouldincrease.Themarketdevelopmentsearlierin

theyearandthroughoutthisseasonhoweverwentcontrarytothecompanyspeculativeprojections.

52

5.2.1 Post-HarvestManagementforOutputProduce

Taking note that an estimated 50% of the smallholder farmers supported by the project are still

holdingontotheiroutputproduceathouseholdlevelanticipatingimprovedmarketprices,InovAgro

facilitationteamtookthedecisionthatpost-harvesttrainingneededtobeprovidedtotheCATsand

smallholderfarmerswithaviewtoreducepotentialpost-harvestlossesofoutputproduceduetopoor

storagemechanismsat thebulkingcentresandathousehold level. Inorder todeliver thiswork–

InovAgroestablishedpartnershipswithtwomarketactorsCOOSENandTECAP.

COOSEN is a Business Services Cooperative, an initiative which was established in 2013 through

HELVETAS19 facilitation (with SDC financial support) to support smallholder farmerparticipation in

markets.ThecooperativeoperatesfromNampulabuthasmembershipinthreeprovinces,Nampula,

Cabo Delgado and Zambézia. The cooperative provides various business development services to

smallholderfarmersincludingsupportfortheestablishmentoffarmergroups,retailofagri-inputsas

wellaspost-harvestproductsmainlysilosandhermeticbags.

COOSENledthedeliveryofthepost-harvesttrainingtosmallholderfarmersbasedonamanualthat

wasdevelopedwithsupportfromHELVETAS.Thetrainingmainlytargetedleadfarmersintheproject

locationsaswellasmanagementstaffattheCATsbuyingpointsandstoragefacilities.Atotalof1,020

participantsengagedinthistraininginallthe11districtswheretheInovAgroprojectisoperational.

Figure27:ParticipantsinthePost-HarvestTraininginErati

COOSENalsotooktheopportunitytostimulatedemandformetalstoragesiloswhichareproduced

forcommercialretailbythecompanytargetingsmallholderfarmersastheprimarycustomers.Each

silo is currently being sold for 3,000Meticais (US$50) and has capacity to storemaximumof 400

kilogramsofoutputproduce.

19HELVETASisaSwissNon-GovernmentalOrganisationwhichiscurrentlyworkinginNorthernMozambiqueoperatingfrom

Nampulacity.

53

Figure28:MetalsilosproducedandmarketedbyCOOSENduringthepost-harvesttrainings

Other smaller silos are also available to suit smallholder farmer’s needs and these options were

demonstratedduringthetrainingsasindicatedinFigure29below:

The InovAgro project also partnered with TECAP, an agri-input retail company to facilitate the

commercialdistribution,demandcreationanddemonstrationofcropprotectionchemicalswhichare

Figure29:Participantdemonstratinguseofthesiloduringthetraining

54

requiredforpreservationofcropproduce.Specifically,thecompanymarketedAtelic,aproductwhich

canpreserveoutputproduceinstorageforamaximumofsevenmonths.

Figure30:TECAPExtensionOfficerdemonstratinguseoftheproducttoparticipants

InovAgro supported both COOSEN and TECAP to identify and to establish partnershipswith Agro

dealersinthecommunitiestoenablethecommercialretailofboththesilosandthecropprotection

chemicals during storage in the project locations. Following these trainings reports from the

companies indicatethat theyhavestartedtoreceiveprocurementorders fromboththeCATsand

smallholder farmers in the project locations. Table 20 below provides details of the procurement

ordersandpurchasesreceivedwithinthefirsttwoweeksofSeptember2017afterthetraining.Asthe

companies continue with their demand creation activities for both products, the purchases are

expectedtocontinueincreasing.

55

Table20:Demandforsilosandcroppreservationproductsduringstorage.

Location NameofPartnerAgrodealer No.SHF

requesting

silos

QtyofActellic

Purchasedby

SHF(bottles)

Qtyofactive

ActellicGold

Purchasedby

SHF(grams)

Ribaue ReguaChipangueandVictor

Daniel

12 5 100

Malema BonifácioAgostinho 15 4 80

Erati EuricoMonteiroand

FranciscoJanuario

5 5 100

Chiure 20 8 160

Namuno ArlindoCololo 10 7 140

Namarroi

COOSEN

14 5 100

Molumbo 6 4 80

Gurué 13 5 100

Mocuba JuniorLibra 5 6 120

Ile SergioBize 3 5 100

Alto

Molócue

BernaldoJaneiroandLucas

Jaime

12 6 120

Total 115 60 1,200

Note:EachBottleofActellicGoldhas20-gramcapacityandcantreat400kgsofmaizeproduce,so

thisquantitycouldtreat24MTofmaize.

5.3 EnablingEnvironmentforOutputMarketingActivities

InovAgro recognises the importance of promoting a conducive environment for outputmarketing

activities in the project locations. In this respect, the InovAgro project facilitated realization of a

Provincialworkshop thatwasconducted inNampulaon the26th of July2017. Theworkshopwas

deliveredinpartnershipwiththeMinistryofIndustryandCommerce–thegovernmentarmthatis

responsibleforregulatingalloutputmarketingcommercialtransactionsinthecountry.Theobjective

oftheworkshopwastocreateaplatformforthedifferentvaluechainactorstoengageonhowthe

output marketing sector in Nampula province could be strengthened, with a view to strengthen

competitivenessofthesector.Theworkshopwasalsointendedtostrengthendialoguebetweenthe

outputmarketingvaluechainactorswithaviewtopromoteincreasedcollaborationandpartnerships

formutualcommercialbenefit.

TheworkshopwaschairedbytheProvincialGovernorforNampula,Dr.VictorBorges,andinvolved

participantsdrawnfromthe23districtsofNampulaprovince.Thisincludedalldistrictadministrators,

theirrespectiveSDAEsDirectors,relevantoutputbuyerssuchETG,OLAM,NovosHorizontes,maize

millersandrelatedstakeholders.Atotalof192stakeholdersparticipatedintheworkshop.

56

Figure31:ParticipantsattheOutputMarketingWorkshopinNampula

Themainissuesthatemergedfromthisworkshopandtheresolutionsthatweremadearehighlighted

below.

IssueNo.1:Limitedcoordinationbetweenthe stakeholders intheoutputmarketingsector inthe

province

AgreedMitigationAction:

Aprovincialoutputmarketingcommitteecomprisingofdifferentvaluechainactors,privatesector

(represented by Conselho Empresarial deNampula), Government (represented by theMinistry of

IndustryandCommerce),Farmers(representedbytheProvincialUnionofFarmers)andCivilSociety

(representedbyPPOSC)was established. This committeewill have themandate to reviewoutput

marketingactivitiesintheprovinceandtochampiontheestablishmentofconditionsthatpromote

thedevelopmentandcompetitivenessofthesector.Thecommitteemeetseverytwomonths.

IssueNo.2:Decliningmarketpricesparticularlyformaize

Stakeholders(particularlysmallholderfarmersandtheCATs)lamentedthatthereductionintheprice

ofmaize(4–5meticaisperkilogram)wasamajorthreattothecommercialsustainabilityoftheir

productionandmarketingactivities.Thestakeholdersinquirediftherewaspossibilityforgovernment

toputinplacemeasureswhichwouldprotectthefarmersandtheothervaluechainactorsfrombeing

pushedoutofbusiness.

AgreedMitigationMeasures

There was acceptance that this represented a larger problem which involved (a) the need to

strengthen smallholder farmers productivity per hectare as a strategy to increasing smallholder

farmers competetiveness through improved yield (b) the need for various value chain actors to

improvethemanagementoftheiroperationalcosts(duringproductionandproducemarketing)(c)

theneed to strengthenextension (d) theneed to improvequalityofphysical infrastructure in the

provincetocreateimprovedconditionsforbusinesstotransactviably,etc.TheProvincialGovernor

57

of Nampula committed to discuss these issues at central level inMaputo to lobby for improved

Governmentactionsandinvestmentstoaddresstheindicatedconstraints.

Althoughareferencepriceof7.5meticaisperkilogramofmaizewasproposedastherecommended

buyingpriceinNampulaprovince,therewasconsensusthatpricedetectionbyregulatoryauthorities

wasnotthesolutiontoenhancingthesector’scompetetiveness.

Thescopeofdiscussionsemergingfromthisworkshopandthedepthofanalysistoissuespresented

re-affirmedInovAgro’sstandingonthemarketasaleadingfacilitatingprojectwhichhasthecapacity

to bring various actors together for transparent discussion / debate for inclusive business

development. It was evident after this workshop that the recognition of the project efforts as a

Facilitatorinmarketsystemsdevelopmentwasenhanced.

5.4 Conclusion

Thisoutputmarketingseasonhasbeenaverydifficultoneforvariousvaluechainactorsdueto(a)

the uncertainty emerging from India’s new policy guidelines on pigeon pea imports and (b) the

decliningmarketpricesforothercropsparticularlymaizeduetoincreaseddomesticandinternational

productavailabilityaftertheimprovedharvestsrecordedthisseason.Themainpointtostressfrom

thisseasonhoweveristhefactthatthesmallholderfarmersintheprojectlocationsareoperatingin

globalvaluechainsanddecisionsmadeinfarawaycountriescanhavesignificantimpactonthelocal

farmersintheprojectlocations.

ForMozambican farmers to remain competitive, theymust increase their productivity. InovAgro

continuestonotethattheproductivityperhectareachievedbythesmallholderfarmersintheproject

locations, albeit increasing, remains below regional and international levels.While extension and

quality inputs are important elements for increasing farm productivity, InovAgro also notes an

increasedneedtostrengthensmallholderfarmer’scapacitytodesignandstructuretheirproduction

systemsasenterprises.Thereisneedtoinvestinfurthertrainingforsmallholderfarmersonviable

productionschedules,productioncostmanagementandreductionofpost-harvestlosses,whichcan

befurtherpromotedthroughourprivatepartners.Theimprovedharvestsrecordedthisseasonhave

guaranteed smallholder farmers’ food security. In most of the project locations the majority of

householdshavesurplusathouseholdlevel.Inaddition,thelowmarketpricesareenablingcheaper

purchasesbythosehouseholdsthatrequiretopupfrommarkets.

InovAgrohasbeencreativeandproactiveinrespondingtothechallengesfacedbyitstargetfarmers

inthistimeoflowmarketprices,introducingnewactivitiesthathadnotbeenintheinitialworkplan:

• When faced with the serious problems with marketing, InovAgro facilitated a provincial

workshoptohighlighttheproblem;

• Whenfacedwiththechallengeofpost-harvestlossesduetofarmersstoringlonger,InovAgro

facilitatedacommerciallydrivenresponsewith trainings fromsupportingservices thatare

leadingtogreateroutreachbycompanieswithsolutions,anduptakebythefarmers.

Thisisexactlywhatafacilitatorshouldbedoingtostimulateresponsestoproblemswithmarketand

enablingenvironmentsolutions.

58

6. AccesstoFinance

Inordertostrengthensmallholderfarmers’accesstofinanceintheprojectlocationswithanemphasis

onpurchasinginputs–InovAgrocontinuedimplementationofitsdualstrategywhichinvolved:

(a) Continued collaboration with formal financial institutions (Opportunity Bank) in Gurué and

Molombo;and

(b) Continuedsupport toVillageSavingsandLendingAssociations to facilitate “savings for seed”

undertheAgriculturalFund(FundoAgricola)inRibaue,MalemaandMocuba.

Fulldetailsoftheproject’sactivitiesandmainachievementsduringthereportingperiodareprovided

inthediscussionbelow.

6.1 LinkingsmallholderfarmerstoFormalFinancialMarkets

InovAgrohascontinuedtocollaboratewithOpportunityBankinGurué,MolomboandNamarroito

stimulatedemandforandaccesstothefinancialproductsthatarebeingmarketedbythebank.The

collaborationbetweenInovAgroandOpportunityBankhasmainlyfocussedonrealisationoffinancial

literacyeducationforsmallholderfarmers,promotionofmobilebankingservicesandcreditaccessto

financeagribusinessactivities.

Figure32:OpportunityBankFinancialLiteracyEducationinMolombo

N.B.OpportunityBankGuruéBranchManagerleadingasession.InovAgroTeamLeaderin

attendance.

Atotalof393smallholderfarmersparticipatedinthefinancialliteracymeetingsthatwereconducted

inMolumboandGuruéwithInovAgrofacilitation.Thesemeetingsfocussedonvarioustopicsranging

fromeffectivecreditmanagement,enterprisedevelopmentandmanagement.Thesemeetingswere

59

alsousedtogenerateincreasedawarenessofthefinancialproductsthatareofferedbythebankand

thetermsandconditionsrelatedtotheapplications.

Table21:FinancialLiteracyparticipantsinMolombo

# MeetingLocation No.OfParticipants

01 MolumboSede 19

02 Muguliua 30

03 Macolocotxo 34

04 Nandie 121

05 Nandie 137

06 Gurué 52

Total 393

InovAgrohasalsobeenfacilitatingimprovedcollaborationbetweenOpportunityBankandothervalue

chainactors,inparticulartheseedcompanies.ThishasresultedinOpportunityBankutilisingsomeof

theseedcompanies’fielddaysintheprojectlocationstomarkettheirfinancialproducts.

Figure33:OpportunityBankLoanOfficerengagingwithsmallholderfarmersinMolombojointlywithPhoenixSeeds

Thefinancialliteracyeducationclassescontinuetoimprovesmallholderfarmers’awarenessonthe

needtomaintainabankaccounttosupporttheiragribusinesstransactionsincludingsupportingfuture

creditapplications.Atotalof44smallholderfarmers(includingagrodealers)fromMolombodistrict

openedbankaccountsattheBOMbranchinGuruéduringthereportingperiod.Whilethedemand

60

forbankaccountsishigh,missingidentitydocumentsrequiredforaccountopeningcontinuestobea

keyconstraint.

Figure34:SmallholderfarmersfromMolomboattheBOMbranchinGuruéforaccountopening

Atotalof40smallholderfarmersinGurué,MolomboandNamarroireceivedloansfromOpportunity

bank to finance purchase of production inputs and to cover related costs such as weeding. The

achievementsecuredfromthisseasonbringsthecumulativetotalnumberofsmallholderfarmerswho

havesecured loansfromOpportunityBankduringInovAgroPhaseII to993againstatargetof750

smallholderfarmers.

Table22Numberofsmallholderfarmersreceivingloansfromformalfinancialinstitutions

Indicator Cumulative target during

reportingperiod

Cumulative

Achievement

Cumulative number of smallholder farmers

receiving loans from formal financial

institutions

750 993

Thenumberofsmallholderfarmersthatareaccessingfinancialservicesremains lowintheproject

locationsduetoavarietyofreasonsasdiscussedbelow:

1. OpportunityBankrequiresallloanstobesecuredthroughappropriatecollateraloraguarantee

facility. This continues to limit the number of smallholder farmers who can access the credit

servicesfromthebank.

2. Thetransactionalcostsrelatedtotheoperationalisationofmobilebankingservicesarehighgiven

theterrainandinfrastructurelimitationsintheprojectlocations.Thehighcostofinsurance(for

thetruckanddepositstherein)isadeterrentforthebanktoexpandtheservicetonewlocations.

Thisinturnlimitsthelocationsthatcanbeservicedthroughmobilebankingservices.InovAgro

61

hasnotedanincreasedinterestbyOpportunityBanktooperationaliseanagentbankingmodel–

whichinvolvesidentificationofasuitableentrepreneurwhoenterspartnershipwiththebankto

providea setofdefined financial services in the locationasa representativeof thebank.This

modelincreasinglyisconsideredtobecheapertooperationalisebuthasrestrictionsonthetype

ofservicessecuredbytheclientsandoften ischaracterisedby longertransactionalprocessing

times.

6.2 ImplementationprogressontheAgriculturalFundthroughVSLAs

In 2015, given the weak interest of formal financial institutions to lend to smallholder farmers,

InovAgro introduced a new initiative to increase access to funding designed to leverage off the

extensivenetworksofvillagesavingsandloanassociations(VSLA).Thisinitiativefocusedonassisting

farmerstosavespecificallyforthepurchaseofseedatplantingtime–“savingsforseed”-usingthe

normalVSLAsavingsandcontrolmechanisms.TheVSLAmembersnamedtheinitiativetheFundo

Agricola.

Inovagrocontinued itspartnershipswiththetwoco-facilitating institutionsNANA(inMocuba)and

Ophavela(inRibaueandMalema).Thepartnershipsfocussedonstrengtheningtheoperationalisation

oftheFundoAgricolainthreeprojectlocations,Ribaue,MalemaandMocuba.Theprimaryobjective

of the partnershipwith bothNANA andOphavelawas to deepen the savings group’s capacity to

sustainablyimplementtheFundoAgricolaparticularlyimprovingtheabilityofthegroupstoengage

withinputcompaniesandtheirabilitytonegotiatefavourablesupplydealsforrequiredinputs.

Atotalof174savingsgroupscomprising4,721members,participatedintheFundoAgricolaprogram

duringthereportingperiodasindicatedinTable23below:

Table23:Performanceofsavingsgroupsduringcurrentseason

Service

ProviderDistrict

Numberof

group

Totalof

MembersWomen Men Valor(MZM)

OphavelaRibaue 42 1,013 709 304 223,127

Malema 47 1,750 1,225 525 290,000

NANA Mocuba 85 1,958 1,022 936 1,065,195

Total 174 4,721 2,956 1,765 1,578,322

Thefinalprojectmonitoringandevaluationstatisticsindicatethat4,721smallholderfarmers20(2,956

femaleand1,765male)participatedintheFundoAgricoladuringthereportingperiod.Thesavings

cycleforthegroupsinMocubastartedinJanuaryandendedinSeptember2017.ThegroupsinRibaue

andMalemastartedtheirsavingscyclemuch later in theyear, inApril,at theonsetof theoutput

marketingseason.ThesavingscyclewillendinNovember2017.Table24belowprovidesdetailsof

thesavingscalendarinthethreelocations:

20TheLogframetargetforthisreportingperiodwas2,000smallholderfarmers.

62

Table24SavingCycle

Location SavingsCycleStartDate SavingsCycleEndDate

Mocuba 1January2017 30thSeptember2017

Ribaue 1April2017 15November2017

Malema 1April2017 15November2017

AscanbeseenfromTable25,below,thesavingsgroupsinMocubahavethehighestamountsaved

todate.ThesavingscycleinbothRibaueandMalemaisstillrunninguptomidNovember2017andit

isprojectedthatattheendofthecyclethefollowingwillbethefinalsavingsinthetwolocations.

Table25:SavingsbyVSLAmembersforpurchaseofinputsin2017

CurrentAmountSavedonFundo

Agricolaasat30thofSeptember

2017

Projected amount to be saved

under Fundo Agricola by 15th of

November2017

Malema 290,000 362,500

Ribaue 223,127 278,909

TOTAL 513,127 641,409

Thisprojectedsavingsamountinthethreedistrictsisequivalenttomorethan$28,000towardsthe

purchaseofinputs.

There are several factors thathavebeenattributed to the reduced level of savings inRibaueand

Malemaduringthereportingperiod:

1. Quality of co-facilitation support provided by Ophavela: The quality of co-facilitation support

providedbyOphaveladuringthereportingperiodhasbeenratedbytheInovAgroteamtohave

diminishedinqualitycomparedtothelastseason.OphavelawasawardedamuchlargerUSAID

grantduringthereportingperiodandInovAgronotedthattheattentionoftheco-facilitatorswas

focussed largely on setting up the USAID supported project (PEPFAR funding). This in turn

compromised the quality of technical backstopping that was provided to the savings groups

promoters. The savings group promoters, through their association in Ribaue have already

approachedInovAgroandhaveindicatedthattheywouldliketoworkindependentofOphavela

duringthenextseason.

2. Thereducedmarketpricesforoutputproduceduringthisseasonparticularlyformaizeandpigeon

peas–keycashcropsinbothRibaueandMalema–hadtheeffectofreducinghouseholdliquidity

andconsequentlytheamountssavedduringthesavingscycle.Asindicatedinchapter5onoutput

marketing,40–50%ofthesmallholderfarmersintheprojectlocationshavenotyetsoldalltheir

output produce hoping that themarket priceswill increase. This also reduced the amount of

63

disposable income that the households in the two locations had for investment in the Fundo

Agricola.

3. Asindicatedinthehalfyearreport–themethodologiesthatwereimplementedbybothNANA

and Ophavela on the Fundo Agricola were different. While NANA allowed the savings group

memberstoloantheFundoAgricolafundsandtorepaytheborrowedfundsatadefinedinterest,

OphavelasupportedgroupshavenotbeenallowingmemberstoborrowfundsfromtheFundo

Agricula during the savings cycle. The interest secured from the NANA supported groups has

allowedthefundstogrowmuchfastercomparedtotheOphavelasupportedgroupsfunds.The

NANAmodelwastheoriginaloneproposedbyInovAgro.

6.2.1 ProcurementofAgriculturalInputsbytheSavingsGroups

Members

Duringthepreviousseason(2016planting)–themainstrategytofacilitatepurchaseofagricultural

inputs by the savings groupmemberswas through seed fairs thatwere conducted in the project

locations.

Figure35:KleinKarooAgronomistengagingwiththesavingsgroupsmembersinMocubaduringaSeedFair.

While this strategy has itsmerits–a review session conducted with the savings groups’members

highlightedseveralconstraints/concernsthatneededtobeaddressedduringthisseason:

64

1. During the seed fairs, each savings groupmemberpurchasedagricultural inputs thathe / she

requiredasanindividual.Assuch,eventhoughtheVSLAmemberswereorganisedasgroupsin

theirfinancialsavingsactivities,theindividualbuyingarrangementduringtheseedfairsweakened

theircapacitytonegotiatewiththeseedcompaniesparticularlyintermsofthecostoftheseed.

2. Some savings group members lamented that the type of seed that they required had been

unavailableduringtheseedfairs.Forinstance,somemembersindicatedpreferencetousetheir

savings to purchase horticultural21 seed which was not always available during the InovAgro

supportedseedfairs.

3. Thesavingsgroupmembersalsolamentedthatthepricesthathadbeencommunicatedbythe

seed companies in earlier engagements had been changed during the seed fairs which

compromisedtheircapacitytoeffectivelyplantheuseoftheirsavedfinancialresources.

4. Even though the savings groups members generated business for the seed companies, the

memberslamentedthattheindividualprocurementmethodthroughseedfairsweakenedtheir

voiceandleveragetonegotiateforaftersalesservicefromtheinputsuppliers.Provisionofafter

salesservicessuchasextensionservicesandproductpromotionalmaterialswerehighlightedas

keyconsiderationstobecentralinfutureengagementswiththeseedcompanies.

Takingnoteoftheabovepoints–theseedprocurementmethodthathasbeenemployedduringthis

season(2017planting)hasbeenrevisedandadaptedtoincludeseveralinnovationstoaddressthe

aboveconcerns.Thedetailsarediscussedbelow:

1. EstablishmentofDistrictManagementCommittees

The savings groupmembers, in each of the three districts, have elected from theirmembership,

individuals that now constitute the District Management Committees – a body that has been

mandatedtoconductthenegotiationswiththeinputsuppliersonbehalfoftherestofthesavings

groupmembers.EachDistrictManagementCommitteecomprisesofthePresident,VicePresident,

SecretaryandCommitteeMembers.

Table26Districtmanagementcommittees

District NameofMember Position

Mocuba

LídiaHilário Secretary

AngelinaGerente CommitteeMember

AlfredoSimplicio CommitteeMember

CarlitosNihipanana CommitteeMember

VirginiaJose CommitteeMember

ManecasCavira President

CarlitosElias CommitteeMember

CelsoTualo Vice-President

PaulaErnesto CommitteeMember

LimpezaRapoio CommitteeMember

21Although InovAgro does not have specific interventions related to the horticulture sector, the project has

adoptedastrategicstancethatthesavingsgroupsmembersshouldbeallowedtopurchaseanytypeofinputsas

pertheirpreferenceandnotnecessarilybeobligedtopurchaseseedforthefortheInovAgrosupportedvalue

chains.

65

JacintoItocotoco CommitteeMember

FernandoJose CommitteeMember

Ribáue

ConstantinoP.Assane President

SilviaPedro Secretary

MariaJ.Pereira CommitteeMember

GracioA.DaCostaLeite CommitteeMember

ArmandoPatiola CommitteeMember

Malema

MarioAlia President

RodriguesFernando Secretary

TeresaPedro CommitteeMember

RodriguesJulião CommitteeMember

LídiaÁlvaro CommitteeMember

2. CapacitybuildingoftheestablishedDistrictManagementCommittees

InordertopreparetheestablishedDMCsforfullengagementwiththeprivatesectorinputcompanies,

InovAgroprovidedtrainingtotheelectedrepresentativeswhichcoveredvariousdiscussiontopicsas

indicatedbelow:

• RoleandmandateoftheestablishedDistrictManagementCommittees

• Negotiationskills–howtogeneratewin–winoutcomesinstrategicpartnerships

• Contractmanagement (the legal significanceof contracts, importanceofunderstandingall

contractclauses,fulfilmentofcontractobligationsandmechanismsfordisputeresolution).

Figure36:DistrictManagementCommitteemembersattendingtraininginNampula

ThetrainingoftheDMCsmembersforRibaueandMalemadistrictswasconductedinNampulaonthe

5thofSeptember2017whilethesametrainingforMocubagroupswasconductedonthe19–20thof

September2017.

66

3. ContractNegotiationMeetingswithSeedCompanies

InovAgro facilitated two meetings between the agricultural input companies and the DMCs as

indicatedinTable27below:

Table27:ContractNegotiationMeetingswithSeedCompanies

Date Location Participants

Nampula • MalemaDistrictManagementCommittee

• RibaueDistrictNegotiationCommittee

• 5SeedCompanies+1Distributor(Oruwera,Syngenta,

IKURU,Phoenix,JNB,PANNARseedsandAgroDalton)

Mocuba • MocubaDistrictManagementCommittee

• 3Seed Companies (Phoenix, Phoenix Seeds, Klein

Karoo)and1Distributor(AgroTrading)

Prior to the above meetings, the District Management Committees had consolidated the seed

requirementsofthesavingsgroupmembersintheirrespectivelocationsintermsofseedcroptypes

andvolumes.

Theobjectiveofthesemeetingswastofacilitatediscussionbetweenthepartiesregardingtheterms

andconditionsofeachcompanyforthesupplyoftheinputsrequiredbythesavingsgroupsmembers.

Discussionevolvedaround(a)pricingstructureandpaymentarrangementsfortheinputs(b) input

delivery dates by the seed companies (c) packaging (d) provision of after sales service by the

companiesparticularlyextension.

Themeetingsandsubsequentengagementswereconductedinthefollowingformat:

Step1: Each company presented their proposed terms and conditions to the District

ManagementCommitteesdemonstratingsamplesoftheseed/inputproductsthat

theywouldsupply.Thesepresentationswereconfidentialengagementsbetweenthe

DMCsandthecompanyconcerned.InovAgroparticipatedonlytowitnesstheprocess.

Step2: The District Management Committees scored the presented offers to facilitate

selectionofthemostfavourabledeal.

Step3: Theselectedinputsupplierswereadvised.

Step4: Asupplycontractwiththeagreedsaleconditionswasdraftedandreviewedbythe

relevantpartiesandInovAgrofacilitationteamprovidedtechnicalbackstopping.

67

6.2.2 SigningoftheSeedSupplyContractswithSeedCompanies

Table28indicatesthedecisionsthatthesavingsgroupsmembershavemade–throughtheirDistrict

ManagementCommitteesrelatingtothesupplyofseedduringthe2017/2018season:

Table28:SelectedSeedSuppliersfor2017/2018season

District SelectedSupplier+Comments

MalemaandRibaue KleinKarooSeedCompany.

The company will distribute the seed to the savings groups members

throughitsnewdistributionwarehousethatisbeingsetupinNampulacity.

Mocuba KleinKarooSeedCompany

ThecompanywillworkwithAgroDalton,adistributor,alreadyestablished

inMocuba.

Figure37:Left–Director(OruweraSeeds)presentinghisoffertotheDMCs:Right:DirectorSyngentaSeedsengagingwiththeDMCsinNampula

68

Figure38:KleinKaroosigningsupplycontractwithDMCinRibaue

Table29belowprovidesdetailsof thevolumeofseedthatwillbesuppliedtothesavingsgroup’s

membersinRibaueunderthesignedagreement:

Table29:Seedrequirements–Ribaue

Crop UnitCost(Mts/kgasper

agreement)

Quantity(Kilogram) TotalCost

Maize 165 500 82,500

PigeonPea 145 300 43,500

Groundnuts 140 400 56,000

Sesame 150 300 45,000

OverallTOTAL 1500 227,000

Table30belowprovidescomparisonbetweenthetotalcostoftheseed(tobesuppliedunderthe

agreement)andtheamountofmoneythatthesavingsgroupscurrentlyhavesaved.

Table30:Costofseedversusavailablesavings

Totalcostoftheseedtobesupplied

undertheagreement.227,000Meticais

Totalamountofmoneysavedbythe

groupstodate(September30th)223,127Meticais

Comments The savings cycle in Ribaue closes mid November. It isanticipated that by then the groupswill have savedmorethan enough funds to cover the current 4,000 Meticais

variance.

69

Table31belowprovidesdetailsof thevolumeofseedthatwillbesuppliedtothesavingsgroup’s

membersinMalemaunderthesignedagreement:

Table31:SeedRequirements–Malema

Crop UnitCost(asper

agreement)

Quantity(Kilogram) TotalCost

Maize 165 600 99,000

PigeonPea 150 444 66,750

TomatoRioGrande 210 0.03 6,300

TomatoRioGrande 120 0.06 7,200

TomatoCalJ. 120 0.05 6,000

CabbageCopenhagen 75 0.06 4,500

CabbageCopenhagen 85 0.03 2,550

Cauliflower 75 0.06 4,500

Cauliflower 85 0.03 2,550

LettuceGreatLakes 140 0.025 3,500

LettuceGreatLakes 105 0.05 5,250

OverallTOTAL 1,044.40 208,100

Table32belowprovidescomparisonbetweenthetotalcostoftheseed(tobesuppliedunderthe

agreement)andtheamountofmoneythatthesavingsgroupscurrentlyhavesaved.

Table32:Costofseedversusavailablesavings

Total costof the seed tobe suppliedunder

theagreement.

208,100.00Meticais

Totalamountofmoneysavedbythegroups

todate

290,000.00Meticais

Comments The saving groups in Malema have indicated

preference to purchase vegetable seed due to

current market opportunities for horticultural

produce. The amount of money saved by the

groupstodateishighercomparedtothetotalcost

forsupplyseed.InovAgroisencouragingthegroups

toincreasethevolumeofseedtobepurchased.

70

Table33belowprovidesdetailsof thevolumeofseedthatwillbesuppliedtothesavingsgroup’s

membersinMocubaunderthesignedagreement:

Table33:SeedrequirementsMocuba

Crop UnitCost(asper

agreement)

Quantity(KG) TotalCost

PigeonPea 110 1,600 176000

Maize 75 6,510 488175

Sesame 140 1,100 154000

Groundnut 140 1,450 203000

Soyabean 110 400 44000

OverallTOTALin

MZN 11,060 1065175

Table34belowprovidescomparisonbetweenthetotalcostoftheseed(tobesuppliedunderthe

agreement)andtheamountofmoneythatthesavingsgroupscurrentlyhavesaved.

Table34:Costofseedversuscurrentavailablesavings

Totalcostoftheseedtobesuppliedunderthe

agreement.1,065,175Meticais

Totalamountofmoneysavedbythegroupsto

date

1,065,195Meticais

Comments Availablefundsareenoughtofacilitatepurchase

of approximately 11metric tonnes of assorted

seed.

71

An analysis of the savings

group members’ seed

requirements for2017/2018

season as per the signed

contractswith input suppliers

indicates that maize seed

remainsthedominantproduct

purchased by the savings

group’smembers.

Thedemandforpigeonpeaseedisalsohighalbeitthelowmarketpricesduringthereportingperiod.

Thisperhaps canbe takenasan indication that the smallholder farmershaveconfidence that the

pigeon pea value chain will

recover and that competitive

prices will be restored during

the next season especially

after the recent

pronouncements by

Government authorities

indicating that India would

allow Mozambique to

continuepigeonpeaexports.

Figure39:VolumeandvalueofseedpurchasedbytheSavingsGroupsfor2017/2018season

72

AcomparisonofthevolumeofseedpurchasedunderFundoAgricoladuringthecurrentseason(2016

/ 2017) and theupcoming season (2017 / 2018) indicates increasedvolumes for all seed typesas

indicatedinFigure40below:

Figure40:ComparativereviewofthevolumeofseedpurchasedunderFundoAgricula

TheseresultscouldhavebeenevenbetteriftheamountssavedinRibaueandMalemacouldhave

been higher. Above all considerations however, this demonstrates the potential that the Fundo

Agricola should improve seed access to smallholder farmers and to increase their agency in

negotiationswithseedcompanies.

6.3 Conclusion

The milestones that have been achieved during the reporting period particularly relating to the

operationalisation of the Fundo Agricola are encouraging and demonstrate the potential of this

interventiontoimprovesmallholderfarmer’saccesstocertifiedseed.Therearekeylessonsthathave

been learned by both InovAgro and core-facilitator teams which need to be considered moving

forwardtofacilitateadaptationofthemethodologyof implementationfor improvedresults. This

particularlyrelatestotheneedtogrowthefundthroughacreditsystem,similartotherestofthe

VSLAmodel,whichattractsinterestduringthesavingscycleratherthankeepingthefundsunderlock

andkey!TheresultsachievedbytheNANAsupportedgroupsinMocubaaretestimonytothisfact.

The strong WILL demonstrated by the Association of Savings Group Promoters to engage with

InovAgrotoexpandtheFundoAgricolarepresentsanopportunityfortheproject.Thisprovidesan

opportunity towiden the network for the operationalisation of the FundoAgricula in the current

projectlocationsandbeyond.TheAssociationoftheSavingsGroupsPromotersalsohastherequired

capacity (SKILLS) to continue supporting the establishedDistrictManagement Committees for the

FundoAgricolatoguaranteecontinuedeffectiveengagementwiththeinputcompanies.

InovAgroneedstocontinueinvestingintherelationshipwithOpportunityBankparticularlytoexpand

thegeographical coverageof the servicesprovidedby thebank in theproject locations. Fromthe

interactionswiththebank,indicationsarethatthisexpansionwillfollowanAgentmodelasdetailed

inthediscussionabove.Initialcostsharingarrangements–particularlyrelatingtoinsurancecostsfor

3,686

498 374 82 80

7,610

2,3441,850

1,400

400

Maize PigeonPea Groundnuts Sesame Soyabens

2015/16 2016/17

73

theexpansionofservices(e.g.mobilebanking)mayberequiredtoactasacarrotforgrowthandscale

upoftheinterventionswiththepartner.ThiswillbethefocusoftheupcomingprojectPhaseIII.

7. FarmersEconomicSecurity

In2017,InovAgrocontinuedtopilotactivitiestoaddresstheincreasingthreat22tolandtenuresecurity

for the smallholder farmers in theproject locationsand theneed to scaleup supportprovided to

enablethemtoprotecttheirland.

The Farmers Economic Security (FES) Strategy that was submitted to and approved by the Swiss

Agency for International Development and Cooperation (SDC) in September 2015 guided

implementationofinterventionsunderthiscomponentfortwoyears.

Underthisapprovedstrategy–InovAgro’smaininterventionswereto:

a. Facilitate communities to acquire land delimitation certificates (through subsidy support

providedbySDC);

b. FacilitatetheestablishmentandstrengtheningofCommunityLandManagementCommittees

(CLMCs);

c. Facilitatetheestablishmentofaparalegalnetworkintargetcommunities;and

d. Conduct a study on land tenure security to determine the main strengths, weaknesses,

opportunitiesandconstraintstosmallholdertenuresecurityintheprojectlocations.

In2017,InovAgrocontinuedthepartnershipwithCentroTerraViva(CTV),startedin2016,tofacilitate

implementationoftheinterventions(a)–(c)above.CTVisalocalnon-governmentalinstitutionwhich

was established in November 2002. The organisation is one of the main SDC partners on the

governancedomain,implementingarangeoflandtenuresecurityinterventionsinthecountry.Under

thepartnershipwithInovAgro-CTVledthedeliveryoftheinterventionsrelatingtocommunityland

delimitation,establishmentofcommunitylandmanagementcommitteesandaparalegalnetworkin

fourcommunities.

Implementation of the activity (d)was concluded during the last reporting period (2016) and the

results from the study have since been disseminated to sector stakeholders. For this activity,Mr.

Sergio Baleira, an independent Consultant, was engaged to review the land tenure security of

smallholderfarmersintheprojectlocationsandtodisseminatetheresultstosectorstakeholders.

Table35belowprovidesanoverviewofthemilestonetargetsthatwereagreedbetweenSDCand

InovAgro under the FES component. The cumulative achievements secured during the reporting

periodarealsohighlighted:

22Thereisanincreasingnumberofprivateinvestments(megaprojects)thatrequireaccesstolargepiecesoflandparticularly

for commercial farming purposes, forestry, solar energy generation andmining. Thesemega projects often result in the

displacementofsmallholderfarmersfromtheircommunallandrelocatingthemtolocationsthatareoftenarguablylessfertile

andunfavourableforthegrowthoftheiragribusinessactivities.RefertothelandTenurestudyconductedbyInovAgro(2016).

74

Table35:Milestonetargets–FarmersEconomicSecurity

MilestoneTargets

Outcome Intermediate

outcome

Outputs Output

Indicators

Agreed

Targets

with

SDC

Cumulative

Achievements

Increased

farmer

participation

in

commercial

valuechains

Smallholder

farmer

communities

acquire land

delimitation

certificates

Communities

supported to

acquire land

delimitation

certificates

(through

subsidy)

No. of farmers

benefiting from

land

delimitation

2,000 17,225

No. of

community

delimitations

4 4

Land

Management

Committees

capacity

strengthened

No. of

communityland

management

committees’

capacity

strengthened in

project

locations

4 4

Smallholder

Farmers have

increased

awareness of

the importance

of IDs and land

certification

andtitling

Paralegal

networks

established in

target

communities

No.ofparalegal

officers trained

to conduct

demand

creation

activities in

target

communities

20 57

Credible

information

available on

smallholder

farmers land

tenure security

for SDC and

stakeholders

Study on Land

TenureSecurity

No. of studies

conducted on

land tenure

security for

smallholder

farmers

1 1

7.1 MainActivitiesandAchievements

Duringthereportingperiod(2017),InovAgroadoptedathree-prongapproachfortheimplementation

ofitsFESinterventions:

75

A. Provisionofongoingsupporttothedelimitatedcommunities inMocuba23 tofacilitate linkages

betweenagribusinessserviceproviders(seedcompanies,extensionagentsetc.)andsmallholder

farmersinthetwocommunitiesinMocuba.

B. Expansionof support to facilitate thedelimitationof twoadditional communities inNamarroi

district.

C. Training of community leaders in 5 districts on the Land Law. The training of the community

leaderswasconductedwithaviewtostrengthentheirunderstandingofthelegalinstrumentsthat

guidelandtransactionsinMozambiqueandtopromoteresponsible/informedleadershipinthe

managementofcommunitylandtransactionsincompliancewiththenationallaws.

Specificactivitiesthatwereimplementedduringthereportingperiodlinkedtotheabovethreepillars

arediscussedindetailbelow:

7.1.1 SupporttoMocubadelimitatedcommunitiesformarket

integration

InovAgrocontinuedtoprovidesupporttothetwocommunitiesthatweredelimitatedduring2016in

Mocuba. The focus of the InovAgro support in these two communities was (a) to continue

strengtheningtheoperationalfunctionalityofthe

established Land Management Committees and

paralegalnetwork(b)tofacilitateestablishmentof

linkagesbetweenthecommunitymembersinthe

delimitated communitieswith other agribusiness

value chain actors as a strategy to promote the

sustainable / profitable utilization of the

delimitatedland.

Asindicatedintheprojecthalfyearreport(2017),

the ceremony to facilitate the handover of land

delimitationcertificatestothetwocommunitiesin

Mocubawasconductedonthe19thofApril2017.

Figure41:HandOverofdelimitationCertificatestotheCommunityLeaders

The District Director for Education, Youth and Technology, Mr. TitosJosé, in his representational

capacityfortheDistrictAdministrator,officiatedattheceremony.Thelanddelimitationcertificates

willenablethetwocommunitiesto:

a. Enterstrategicpartnershipswithinvestorsforeffectiveutilisationofthelandtofacilitatemutual

gain.

b. ReducetheriskoflandrelatedconflictsbetweenthetwoneighbouringcommunitiesofMalopa

andMunhacuaparticularlyrelatedtoboundariesandexplorationanduseofnaturalresources.

23TwocommunitiesweredelimitatedduringthelastreportingperiodinMocubawithInovAgrosupport.

76

Thisinitiativealsofacilitatedtheamicableresolutionofalong-standinglanddisputethathadbeenat

thecentreoftherelationshipbetweenthetwocommunitiesandaprivatesectorcompany-Bio-Fuel

Industries(MBFI)-operatinginthearearegardinglandboundariesforeachoftheparties.

7.1.2 OperationalfunctionalityoftheestablishedCLMCs/Paralegal

Network

The Community Land Management Committees and Paralegal network that were established in

Mocuba have continued to function in both communities during the reporting period. These

committeeshavenowinitiatedtheprocessforprogressiontowardsindividualtitling(DUAT)ofthe

landusinganinnovativemodelwhichallowsthecommitteestopegindividual landboundariesfor

members within the community. In this instance, the Government Land Technicians will merely

confirmthecorrectnessoftheestablishedboundariesfortheDUAT,thereforereducingtheamount

of time spent on boundary establishment and the related costs. The paralegals are intended to

promoteincreasedsmallholderfarmers’awarenessofthelandlawandtenuresecurityoptionsthat

theycanbenefitfrom.Theparalegalofficersalsoidentifyandreportcasesthatcouldresultinland

disputestorelevantauthorities.InovAgroplanstosupportthecompletionofthisworkunderInovAgro

III.

7.1.3 LinkagestoAgribusinessMarketActors

InovAgro has been stepping up efforts to facilitate market linkages between the delimitated

communities andother agribusinessmarket actors to promote themembers’ integration in value

chains(forsustainable/profitablelanduse)andenhancethevalueofthehavingofficiallydelimitated

land.Table36belowprovidesdetailsofprogressthatwasachievedduringthereportingperiod:

Table36:Marketlinkageswithagribusinessserviceproviders

Agri-businessService Comment

AccesstoFinance A total of 3 savings groups have been established in the twocommunities involving the participation of 65 communitymembers.Thesavingsgroupswillbeusedasavehicletoenhancethecapacityofthe community to save resources topurchaseagricultural inputs fortheirproductionactivities.

Accesstoagri-inputs Two seed fairs were conducted in the two communities during thereporting period to improve access to certified seed. Phoenix Seedsand Agro Trading are currently assessing feasibility for establishingAgrodealersinbothcommunities.

AccesstoOutputMarkets AgroTradinghasestablishedatotalofthreeoutputbuyingpostsinthetwocommunitiestofacilitatepurchaseofassortedoutputproduce.

77

7.2 ExpansionofDelimitationServices

Duringthereportingperiod,twoadditionalcommunitiesweresupportedfordelimitationinNamarroi

district.ThefocusofNamarroidistrict took intoconsiderationthe increasingthreattosmallholder

farmers landtenuresecurity in thedistrictparticularlydueto theexpansionof forestryprojects24.

Despitethisincreasedthreattosmallholderfarmers,thenumberofcivicorganisationsworkingwith

thecommunitiesinthedistricttosupportthemtoprotecttheirlandremainslimited.

FollowingconsultationswiththeDistrictAuthorities,twocommunities(MussanoandMualiua)were

selectedfordelimitation.Thedelimitationofthesetwocommunitiesfollowedtheestablishedprocess

including(a)Communitysensitizationmeetings;(b)EstablishmentofCommunityLandManagement

CommitteesandParalegalNetwork;and (c)Submissionof theDelimitationApplications toCentral

GovernmentforApproval.

The subsequent community engagement and awareness raisingmeetings in the two communities

commencedinMay2017withtheintentionto:

a. Initiatediscussiononlandlawandprocessesthatareinvolvedincommunitylanddelimitation.

b. Initiate discussion regarding the roles and responsibilities of Community Land Management

CommitteesandParalegalOfficers.

c. Initiatediscussiononmenandwomen’slandrightsasprovidedforunderthecountry’sLandLaw.

ThesemeetingsculminatedintheestablishmentoftwoCommunityLandManagementCommittees,

with the elected members, also doubling as the paralegal officers. The established committees

compriseatleast16electedrepresentativesasindicatedinTable37below:

Table37:ElectedMembers–CommunityLandManagementCommittees

President Vice-President Secretary M F Total

Mussano

Community

Bernardo

Álvaro

SilêncioEusébio

Mussano

TelvinaRamos

Corio

1

0

8 18

Mualiua

Community

BonifácioRosári

o

EstrelaAgostinho Cornélio

Rodrigues

1

0

6 16

Theestablishedcommitteesweretrainedonthefollowingthemes:

ü Communityrightsintheuseoflandandothernaturalresources;

ü Communityconsultations:LegalOpportunitiesandConstraints;

ü LegalAspectsrelatedtoLanddelimitaçãoanddemarcação;

ü TheroleofParalegalOfficersinLanddelimitations,resolutionandmanagementofconflicts

relatedtotheuseoflandandothernaturalresources;and

24PortcelforinstancehasbeenexpandingactivitiestoNamariacommunityintheDistrict.

78

ü How to secure justice and redress in cases relating to the violation of the rights of

communities.

A total of 1,820 community members (1,076 female and 744 male) participated in the land

delimitationmeetingsasindicatedinTable38below:

Table38:ParticipantsinCommunityLandDelimitationMeetings

No. Activity Community Participants Total

Male Female

01

Communitymobilisationmeetingstodiscuss

objectivesofthedelimitationprocess.

Mutaliua 47 53 100

Mussano 35 50 85

Sub-total 82 103 185

02

Training on Land Law and the Delimitation

Process

Mutaliua 41 57 98

Mussano 44 33 77

Sub-total 85 90 175

03 Training on Gender Equity and Rights in

CommunityLandManagement

Mutaliua 53 44 97

Mussano 39 52 91

Sub-total 92 96 188

04 Impact of Climate Change in Sustainable

CommunityLandManagement

Mutaliua 23 49 72

Mussano 61 54 115

Sub-total 84 103 187

05 Consultative meetings with neighbouring

communities

Mutaliua 6 21 27

Neighbouring

Communities

Reps

39 96 135

Mussano 9 14 82

Neighbouring

Communities

Reps

24 58 82

Sub-total 63 154 217

06 DevelopmentofCommunityLandUsePlans Mutaliua 81 113 194

Mussano 73 112 185

Sub-total 154 225 379

07 EstablishmentofCommunityBoundaries Mutaliua 11 37 48

Mussano 19 43 62

Sub-total 30 80 110

TotalParticipants 774 1,076 1,820

Following theaboveprocess, the fulldelimitationapplications for the twocommunitieshavenow

beensubmittedtorelevantgovernmentdepartments.Thedelimitationcertificatesare likely tobe

handedovertothetwocommunitiesbyyearend.Atotalof5,155communitymembers(3,033women

and2,122men) in the twocommunitieshavebenefited from thedelimitationprocessof the two

communitiesduringthereportingperiod.

79

7.3 TrainingofCommunityLeaders/ValueChainActors

In addition to the above activities which were at the center of the approved Farmers Economic

Security Strategy, InovAgro expanded training on Land Law targeting Government Officials,

CommunityLeadersandothercommunitymembersdeemedtobechangeagentssuchasleadfarmers

andsomeprivatesectorrepresentativeswhoareoperatingintheprojectlocations.Thesetrainings

wereintendedtoensureincreasedunderstandinganddialogueontheprovisionsoftheLandLawin

Mozambiqueandhowactorsintheagribusinesssectorcanconducttheiractivitiesincomplianceto

thelegalstatutesandprovisionsasdefinedbythelaw.Thetrainingswereconductedin5districtsand

involvedtheparticipationof175participantsasindicatedinTable39below:

Table39:ParticipantsinLeadersTrainingonLandLaw

District Participants

Male Female Total

Mocuba 20 03 23

Molumbo 35 10 45

Ribaue 26 07 33

Chiure 25 05 30

Namarroi 28 16 44

Total 134 41 175

Theabove-mentionedmeetingsalsofacilitateddiscussiononidentifiedemerginglanddisputesand

thedevelopmentofactionplansbyauthoritiestoaddressthedisputessothattheydonotescalate

intofullscaleconflicts.

7.4 Conclusion

Whilenottypicallypartofamarketsystemsproject, InovAgropilotedinterventionstoaddressthe

enablingenvironmentaspectsoflandtenuretoenhancethecompetitivenessofsmallholderfarmers.

ImplementationoftheFarmersEconomicSecurityInterventionshasbeencompletedsuccessfullyin

linewiththeapprovedcomponentstrategyandall thesettargetshavebeenachieved intermsof

outreachandcreatingunderlyinglandregistrationsupportsystems.Buildingonthisfoundationof

landtenuresecurity,InovAgrohasstartedcreatinglinkagestoproductionenhancingservicessuchas

savingsandaccesstoinputs.

InovAgro’sfocusinPhaseIIIwillnowshifttocontinuingtostrengthenserviceprovisionandlinkages

of the delimitated communities to agribusiness actors to promote the efficient and profitable

utilizationofthedelimitatedlandforsustainableeconomicbenefitofthecommunitymembers.The

work thathasbeen initiated inMocuba involving the inclusionof communitymembers in savings

groupsandlinkagestoseedandoutputcompaniesarestepsintherightdirectionthatrequirefurther

deepening.ThereispotentialthattheestablishedCommunityLandManagementCommitteescould

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bestrengthenedtoleadpartnershipnegotiationswithothervaluechainactorsforserviceprovision

that will allow the sustainable / profitable use of the delimitated land. This will be the focus of

InovAgroIIIaswellaswidelydisseminatingtheresultstostimulateadoptionofthesepracticesand

helpinputproviderstotargettheirmarketing.

AsindicatedintheFarmersEconomicSecuritystrategy,itisimportanttoemphasisethatcommunity

landdelimitationcertificatesdonotprovidethefulllegalprotectionrequiredbysmallholderfarmers

intheprojectlocations.Landdelimitationremainsafirststeptowardsindividuallandtitling.Thework

thathasbeeninitiatedbytheCommunityLandManagementCommitteeinMalopaandMunhacuain

Mocuba, as discussed above, provides encouraging indications that the established committees /

paralegal network can be central in supporting community members in the four delimitated

communities to secure individual titles. InovAgro III will continue to work with the established

committeestosupporttheireffortsfortheprogressionfromlanddelimitationcertificatestowards

attainmentofindividualtitlesbyallcommunitymembersinthefourcommunities.

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8. ProjectGovernance

Thissectionprovidesanoverviewofthemainprojectgovernanceactivities/managementactions

thatwereconductedduringthereportingperiod.Forthepurposeofthisreport,theseactivitieshave

beencategorizedintotwo(a)managementactionsrelatedtotheclosureofInovAgroPhaseIIand(b)

preparatorymanagementactionsrelatedtostart-upofInovAgroPhaseIII.

8.1 ClosureofInovAgroPhaseIIactivities

Theprojectfacilitationteamhastakenvariousactionstofacilitatethesuccessfulclosureofthecurrent

PhaseIIbythe31stDecember2017.Thesemanagementactionsaredetailedbelow:

8.1.1 EngagementwithProjectPublicandPrivateStakeholders

Partnership reviewmeetings have been conducted with all the project private and public sector

partnerstoadvisethemoftheendofInovAgroPhaseIIandtoensurethatallcontractualobligations

oftherelevantparties(includingfinancialcostsharecontributions)areverifiedandfullcomplianceis

achievedtoensureclosureofthecurrentpartnershipagreements.Therearenoanomaliesthathave

beenidentifiedbytheprojectmanagementtodate.Indicationsarethatallthecurrentpartnership

agreementswill be terminated successfully by the 31st ofDecember 2017 (leading to the smooth

transitiontoInovAgroIIIinJanuary2018andnewpartnershipagreementsdrawnupinlinewiththe

technicaloutcomesandoutputsasdefinedunderthenewprojectPhaseIII).

AnauditoftheAPROSEfinancialbooks(fortheInovAgropartnershipactivities)hasbeenscheduled

forthe15thofOctober2017tofacilitateclosureofthepartnershipagreementunderthecurrentPhase

II.TheInovAgroprojectaccountantwillleadthisprocessworkingcloselywiththeSeedSpecialist(also

theRelationshipManagerforAPROSE).AtechnicalreportwillbedevelopedandsharedwithAPROSE

withaviewofusingthisreportnotonlytofacilitateclosureofthecurrentpartnershipactivitieswith

InovAgrobutalsotoprovidesomeconcretebackstoppingrecommendationsonhowAPROSEcould

strengthenitssystemsinmanagingfundingsupportfromitsotherpartners.

PreparationfortheInovAgroexternalauditwillalsocommenceinDecember2017,inlinewiththe

workplanandscheduletodeliverthefinalauditbyMarch2018.

8.1.2 ManagementofallStaffContracts

Table40belowprovidesanoverviewofthespecificactionsandtimelinethathasbeensetinmotion

toensurethelegalterminationofcurrentemploymentcontractswithprojectstaffaswellastoensure

thatrelevantstaffmembersaremobilizedfortheupcomingPhaseIII.

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Table40ManagementofallStaffContracts

Action Comments Deadline Status

Issue termination

letters to all InovAgro

staff under DAI

Mozambiquecontract

InovAgro will be terminating all current

staffcontractsbythe31stDecember2017.

InlinewiththeMozambicanlabourlaw,3

months’ notice has been provided to all

staff confirming termination of current

contracts.

1stOctober

2017

Completed

Issue offer letters to

staff for

implementation of

InovAgroIII

Inlinewiththesubmittedhumanresources

staffing structure for InovAgro III, offer

letterswillbeprovidedtorelevantstaffto

confirmprojectcommitmenttoretaintheir

skills under InovAgro III. This move is

intendedtoproviderelevantstaffwiththe

securitythattheyrequireandtoreducerisk

ofstaffcrossingovertootherrunningand

upcomingprojects.

1stNovember

2017

Pending

Performance

Evaluations

PerformanceEvaluationsforallstaffwillbe

conducted prior to the issuance of new

staffcontractsforInovAgroIII.Thepurpose

of this process is to identify current staff

capacitystrengthsandgapstoensurethat

an effective staff training programme is

developed under InovAgro III to address

identified areas that require further

capacitystrengthening.

1st

December

2017

Pending

Calculate contract

termination benefits

as per Mozambican

law and issue

notificationtorelevant

staffmembers

Staff members that are on open ended

contracts are entitled under the

Mozambicanlawtoterminalbenefitsupon

termination of their existing contracts. A

totalof10staffmembersarecurrentlyon

openendedcontracts.

1st

December

2017

Pending

Issuenewcontractsfor

PhaseIII

ThecontractswillbestartingJanuary2018

for a three-year period in line with the

Agreement that DAI Europe will have

signed with SDC for the delivery of

InovAgroPhaseIII

1stDecember

2017

Pending

8.1.3 AssetManagement

AnassetdisposalplanhasbeenpresentedandapprovedbySDCforfullimplementation.Thisasset

disposalplaninvolvesthesaleofprojectassetsthatarenolongerrequiredbytheproject(including

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someoldofficefurniture,threeNISSANprojectvehicles),aswellasageneratorpurchasedin2015

whenthecityofNampulahadatotalblackoutflowingthedevastatingeffectsoffloodsinthesame

year.

In linewith the SDC asset disposal guidelines, a public announcementwas placed in the national

paperstofacilitatethetenderingprocessforthesaleoftheprojectassets.

Figure42:Newspaperannouncementforthesaleoftheprojectassets

Table41belowprovidesanoverviewof thedefinedstepsandtimelinesrelatedto thedisposalof

theseassets:

Table41:SettimelineforsaleofProjectAssets

Action Deadline

Submission of tender documents by interested

parties

27thOctober2017

Tender committee reviews submitted tender

documentsandadvisessuccessfulbidders

1stNovember2017

Theselectedbuyerswillbegiventhreedaystomakerequiredpaymentandtocollecttheirpurchased

goods.

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Atotalof21,000UnitedStatesDollarsisexpectedtobesecuredfromthesaleoftheprojectassets.

The final reportof the incomemade from saleof InovAgroassetswill be submitted to SDC tobe

deductedfromthefinalinvoicepaymenttoDAI.

ClosureoftheGuruéOffice

TheGuruéofficehasnotbeenretainedunderInovAgroPhaseIII.Theofficeassuchwillconsequently

beclosedonthe31stofDecember2017andrelevantstaffrelocatedtothemainfacilitationofficein

Nampula.

AformalnoticefortheterminationoftheleaseagreementfortheofficeinGuruéhasalreadybeen

senttotherelevantparties.

8.2 PreparationforInovAgroPhaseIII

AlongsidetheInovAgroIIphaseoutactivitiesdetailedabove,InovAgrofacilitationteamhasalsobeen

activelypreparingforthetransition/commencementoftheprojectPhaseIII inJanuary2018.The

Project Document (ProDoc) for Phase III was submitted to SDC together with the accompanying

documentssuchasthebudget,log-frameandtheoryofchange.Inaddition,thefollowinghasbeen

conductedtopositiontheprojectforasmoothtakeoffforthePhaseIII:

8.2.1 OfficeRelocation

Theproject facilitationofficehasbeen relocated toMilenioCentre, theofficebuildingwhich also

housestwoothermainprojectsfocusingonsimilarissues,INOVA(implementedbyDAI/US)andthe

Resilient Agricultural Markets (RAMA) project implemented by Winrock International. These two

projects are both funded by USAID. InovAgro anticipates that the coordination of its project

interventionswiththeseprojectswillbestrengthened,duetotheincreasedopportunitiesforjoint

planningandinformationsharing.

Thenewprojectfacilitationofficehasadequateworkspacefortheteam.Theofficehasalsobeen

equippedwithnewfurniture.Itisimportanttoreiteratethatmostoftheofficefurniturehadbeen

purchased in 2011 and had deteriorated such that the professional image and reputation of the

projectwouldhavebeencompromised.

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Figure43:PartoftheInovAgroteammembersinthenewlyequippedprojectboardroom

8.2.2 ITSetUp

InovAgro is investing in settingup appropriate hardware and systems for improved reporting and

accounting.TheseincludepurchasingnewlaptopsandinvestinginHRandaccountingsoftwarePHC

in accordance with the external audit recommendation, and customizing the DAI Management

Information SystemTAMIS for InovAgro III. The teamwill be fully trainedonboth systemsduring

November.

8.2.3 StaffDevelopment/Trainings

InovAgrohasalsoprioritizedstaffdevelopmentandtrainingduringthereportingperiodtoensure

thattheprojectfacilitationteamhasenhancedcapacitytodeliverthecurrentprojectphaseIIandthe

upcomingphase III. The following staffparticipated in the indicated trainingsduring the reporting

period:

Table42:StaffDevelopment/Trainings

StaffMember TrainingFocus TrainingDates Location

AbelLisboa Springfield Market Systems

DevelopmentTraining

May2017 Thailand

OctavioMachado MarketSystemsDevelopment 21–26Sept2017 Maputo

NephasMunyeche SHFsfinancialinclusioninagribusiness

development

12–14June2017 Kenya

Allstaff EthicsandVettingPolicy April2017 Nampula

Allstaff DAIDueDiligencePolicy August2017 Nampula

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Figure44:StaffParticipatingintheEthicsandVettingPolicyTraining

8.2.4 PurchaseofNewProjectVehicles

TwonewprojectvehicleshavebeenpurchasedtoreplacethethreeoldNISSANHardbodyvehicles

whoserunningexpenseswerenowbeyondsustainablelevels.

ThetwonewNISSANdoublecabvehicleswillbedeliveredtotheprojectbyendofOctober2017.In

line with the defined SDC asset guidelines, the vehicles will be registered as SDC Mozambique

property.Thesevehicleswillfurtherstrengthentheprojectlogisticalcapacityaheadofthestartofthe

projectPhaseIIIinJanuary2018.

8.3 Conclusion

The InovAgroproject iswellpositioned tosuccessfully close thecurrentprojectphase IIactivities,

whilesettingupthesystemsforphase III toensureasmoothtransition.Theprojectmanagement

teamhas put inmotion a carefully designed plan for the closure of the current partnerships and

termination of the project employment contracts. The asset disposal plan that has also been

operationalisedwillallowtheprojecttoretainthoseassetsthat itrequireswhileeliminatingsome

assetswhichnolongeraddvaluetotheprojectimplementationstrategies.

Strongprogresshasalsobeenachievedtoensureasmoothtransitionandsuccessfultakeoffforthe

projectphaseIIIinJanuary2018.Anewofficehasbeensecured,withtherequiredconditionsbothin

termsofspaceaswellasfurnishings.Projectstaffhavealsobeenundergoingseveralrefreshertraining

coursestoensurethatteamskillsareupdatedandstrengthened.Twonewprojectvehicleshavealso

beenpurchasedthusstrengtheningtheavailableprojectlogisticalcapacities.

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9. Conclusion

Thecontextualconditionsrecordedin2017havelargelybeenfavourablefortheprojectinterventions

relating to improving smallholder farmers access to seed, finance, output markets, farm

mechanisation and enhanced land tenure security systems. The restored peace in the country

facilitatedimprovedtransportationofagriculturalinputproductsforcommercialretailintheproject

locationsaswellastheaggregationandcollectionofoutputproducebycommoditybuyers.

Therainfalllevelsthatwererecordedin2017intheprojectlocationswereaboveaverage,enabling

improvedcropperformance forall thevaluechains supportedby theproject. The results secured

throughthepartnershipswiththeseedcompaniesareveryencouraginganddemonstratesystemic

change.Theseedcompaniesareincreasinglyestablishingcommercialrelationshipswithdistributors

andagrodealerstofacilitatethecommercialdistributionandretailofseed.Thesedevelopmentsand

achievementsdemonstrateaseedmarketsystemthatisgrowingandbecomingmoreestablished.

ThereturnofSeedCobacktotheMozambicanseedmarketin2017shouldbecelebratedasaclear

signalofcrowdinginindicatingtheincreasingconfidencethatmajorseedcompaniesaredeveloping

intheMozambicanmarket,aresultthatneedstobeattributedinparttothestrongvalueproposition

thatInovAgrohasdemonstratedtothesectoroverthepastfouryears.

The approval of the private sector seed inspectors by theMinister is amajormilestone towards

improving the inspection and certification of seed in the country. Equally, the finalisation of the

websiteandthedatabasetobelaunchedtothesectorstakeholdersonthe9thofNovember2017is

anothermajormilestoneforthesector,keyfootprintsofthesuccessofInovAgroII.

TheimprovedcropharvestsrecordedinMozambique(andwithintheSADCregion)owingtoimproved

agro-climaticconditionsresultedinlowerfarmgatepricesin2017(duetoincreasedproductsupply

on the market). Although the profits secured by groundnut farmers in 2017 are encouraging,

interventionsdesignedtotackleaflatoxincontaminationremainpivotal toopenalternativeexport

marketsthathavecapacitytoabsorblargervolumescomparedtothedomesticmarkets.

TheresultssecuredfromtheimplementationoftheFundoAgricolain2017demonstrateanincrease

inthefundssavedbythegroupsfrom13,000USD(in2016)to28,000USD(savedin2017).Although

the amounts saved by the groups could be higher, perhaps with sharper, better structured co-

facilitationsupportfrombothNANAandOphavela,itisimportanttonotehowthemodelhasbeen

adaptedtostrengthentheengagementbetweentheseedcompaniesandtheestablishedgroups.The

establishment of the District Management Committees leading the negotiations with the seed

companies(onbehalfofthegroups)hasempoweredthefarmerstohavestrongercollectivevoiceand

leverage enabling them to negotiate for additional after sales services such as extension. This

represents a transformation in the relationships between themarket actors, an example of how

InovAgro has catapulted strengthening of the market system between the seed companies and

smallholder farmers. InovAgro takes note of the need to expand the Fundo Agricola beyond the

current three districts. To facilitate this expansion, the savings groups District Management

Committees will need to be empowered to evolve into a co-facilitator role that can support the

establishmentofnewgroupsbeyondtheengagementwiththeinputcompanies.

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The Association of Savings Groups Promoters in Ribaue also represents another opportunity of a

potential futurepartner that theproject couldworkwith to facilitate theexpansionof theFundo

AgricolabeyondRibaue,MalemaandMocuba.

While the InovAgro II project hasmade significant in-roads in terms of training of the equipment

operators(inpartnershipwithUNIZAMBEZI)anddemandcreationformechanizationserviceproducts,

theremainingconstraintsofavailabilityandpurchasingpowerarelimitingmarketdevelopment.The

progression towards broader adoption requires the active participation and investment by the

Governmentandothervaluechainactorswithlongerinterventionlifeperiodsandlargerbudgets.

The implementation of the Farmers Economic Security Interventions has also been concluded

successfullywithalltheagreedtargetshavingbeenmet.Fourcommunitieshavebeendelimitated.4

CommunityLandManagementCommitteeshavebeenestablishedandfullyoperational.Anetwork

of 57 paralegal officers has also been established (against a target of 20 officers). Thework that

InovAgro has conducted in partnership with the Centro Terra Viva under this component

demonstrates amore cost effective, and appropriately scaledprocess for developing greater land

tenure security for communities through empowerment of established Land Management

Committeestoactaslocalsuppliersofservices.Assuch,InovAgroIIhasbuilttheunderlyingservice

systemstoenablecommunitiestodomoreforthemselveswithoutourhelp(notjustguidingthem

towardsDUATS,butalsoguidingneighbouringcommunitiestowardsthedelimitationprocess).

InovAgroalsosuccessfullydemonstratedavaluepropositiontotheagriculturalinputcompaniesto

targettheirmarketingeffortsondelimitatedcommunitiesastheyaremorelikelytoinvestininputs

and other services given their enhanced security. InovAgrowill use this to demonstrate to other

communitiesthevaluepropositionfordelimitationtostimulateoutsideinputandotherservicesto

targetthem.Thisshouldstimulatethedemandsidefordelimitationservices.InovAgroacknowledges

that the knowledge generated under this component should bemore effectively disseminated to

other stakeholders with a view to promote the replication and the leveraging of the supporting

servicesthatwehavebeenestablishedinbothMocubaandNamarroi.

Theremainingmonths(October,NovemberandDecember2017)willbeusedbytheInovAgroteam

tofacilitatetheclosureoftheprojectPhaseII.Thefacilitationteamiswellpositionedtosuccessfully

close the current phase II activities guided by a carefully crafted Phase Out Plan which involved

partnershipreviewswithalltheprivatesectorpartnersforclosureofallpendingworkandsettlement

ofagreedinterventionfinancingmechanisms.Astaffmanagementplanhasalsobeendevelopedand

operationalised to facilitate the legal termination all the current contractual obligations with

facilitationteammembers.Theassetmanagementplanwillensurethedisposalofprojectassetsthat

nolongeraddvaluetotheprojectworkandprocurementofsomenewassets(officefurnitureand

vehicles)requiredtofacilitatesmoothprogressiontoPhaseIII.Anewofficehasbeensecuredwith

improved conditions both in terms of space aswell as staff security. Project staff have also been

undergoingseveralrefreshertrainingcoursestoensurethattheirskillsareupdatedandstrengthened.

TheworkthatInovAgroIIhasdeliveredandtheachievementssecuredhavefurtherreinforcedthe

recognitionandacceptanceoftheprojectasamarketfacilitatorofchoice.Thefacilitationteamhas

earnedthetrustandconfidenceoftheagribusinessmarketactorsinMozambiqueandthishasfurther

strengthened theproject capacity to successfully deliver theupcoming InovAgroPhase III starting

January2018.