Due to their small farm sizes, price sensitivity, and limited uptake of improved seeds and inputs, the smallholder farmer market segment in Mozambique has historically been ignored, with seed companies preferring to focus on the large stable NGO and government contracts who purchase seed for aid and development programs.
In recent years, however, policy changes have meant that these NGO and government markets are drying up while donors like USAID have promoted agricultural development in Mozambique through encouraging smallholders’ direct purchase of certified seeds and inputs as well as other improved technologies, which increases agricultural production.
The result is that smallholders are not only buying more seeds themselves, but are also becoming increasingly demanding in terms of quality, price, and availability.
Mozambique has 36 million hectares of arable land and 2.5 million smallholder farmers. These farmers account for 99 percent of total farms and 90 percent of the cultivated area, according to the Ministry of Agriculture. The smallholder segment is substantial in terms of client numbers and the potential for growth. Indeed, it is probably the market segment for any seed company wishing to secure its long term foothold in the seed market in Mozambique.
Perhaps the single greatest challenge for seed companies wishing to gain a foothold in this market is the lack of cost effective rural distribution systems. Given the country’s sheer size and poor transport network, distributing any product is hard work. Add to that mix a high value product that needs to reach the remotest of rural communities and you have a recipe for logistical difficulties and high distribution costs. This can make certified seed too expensive for many smallholders’ limited budgets and it puts seed companies off targeting rural consumers.
Despite these challenges, Phoenix Seeds is of the first seed companies to take advantage of this market opportunity and tackle the distribution problem head on. This was made possible by the USAID-funded Partnering for Innovation SEEDS project buying down the risk for Phoenix to engage with this segment. Previously, Phoenix limited its seed sales to areas immediately within range of its commercial farm in the Vanduzi district of Manica province, but with the SEEDS project implemented by NCBA CLUSA, this firm expanded out of Manica and gained a foothold in the Nampula and Zambézia provinces, establishing long term business relationships with a network of over 250 agro-dealers. These agro-dealers vary in terms of size and sales capacity, ranging from smallholder farmer seed promoters with demonstration plots and small rural stores to larger, established agro-dealers who serve as distribution hubs that receive and store Phoenix product before distributing it to smaller agro-dealer retailers, agribusinesses and other clients.
Nampula city agro-dealer Amilcar Dalton is one of three agro-dealer hubs in Nampula province. SEEDS coordinated the initial contact between Phoenix and AgroDalton, the company he formed, arranging for Phoenix staff to visit his store and begin business negotiations in terms of products, price, quantities and delivery/payment terms. From there, SEEDS staff supported AgroDalton in placing his seed orders and assisting in coordinating the delivery process from Phoenix farm to his store. With recommendation from NCBA CLUSA and regular technical assistance from the SEEDS project, Phoenix has felt confident enough to provide stock on consignment basis, increasing AgroDaltons’s sales volumes.
During the 2016/17 seed sales season, AgroDalton received 450 kg of maize and 150 kg of sugar bean from Phoenix on consignment basis for a commercial value of over $1,500. However, the most important benefit of this relationship was that SEEDS supported negotiations between AgroDalton and Phoenix to act as the company’s Nampula storage and distribution point—an invaluable resource for Phoenix since it lacks its own storage facilities, physical presence, or staff in Nampula province. AgroDalton has played a pivotal role in receiving trucks carrying Phoenix product from the farm in Manica, overseeing its unloading and transport to his own warehouse for temporary storage, and coordinating the receipt and dispatch of Phoenix seed to other buyers such as other agro-dealers, individuals and commercial farms in Nampula province during the 2016/17 campaign.
AgroDalton is just one of 282 SEEDS supported Phoenix/Oruwera agro-dealers who have realized seed sales are a lucrative source of income, amounting to over 142.5 tons of pigeon pea, soya been, sugar bean, cowpea, sesame and peanut seed and sales to 15,683 smallholder farmers during SEEDS’ duration. This has brought economic benefits not only to Phoenix and its agro-dealers but also to those smallholder farmer clients—farming around 7,100 ha of land—who expect to see higher yields and improved livelihoods from using certified seed in their agricultural production.
The SEEDS project (Smallholder Effective Extension-Driven Success) is an NCBA CLUSA managed program supported by Feed the Future Partnering for Innovation, with funding from USAID, which works in partnership with two Mozambican seed companies—Oruwera and Phoenix Seeds—to increase smallholder farmers’ access to certified, improved seed.
The SEEDS project and the Pheonix Seeds company were featured in the PBS Series Visionaries, now broadcasting worldwide. To host a screening of this documentary, fill out the application here.