E-Agriculture

Walter de Oliveira

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Walter de Oliveira
Walter de OliveiraFood and Agriculture Organization of the United NationsMozambique

Hello colleagues. Just to start today's discussion, I would like to share our experience in using ICT to support smallholder farmers in Mozambique. As soon as I manage to understand how to attach a document, I will share it with you

 

Using ICT to Improve Access to Agricultural Inputs for Family Farmers in Mozambique

About 80% of Mozambique's population depends on agriculture as their main source of income. However, agriculture (including livestock, forestry and fisheries) is the sector that contributes less to the country's GDP, indicating that the productivity of the agricultural sector is very low compared to other sectors of the economy.

The gap between demand and supply of financing for family farmers in Mozambique is very large and affects the majority of farmers in the country. With about 3.8 million family farmers producing approximately 95% of national agricultural production and cultivating an average of 1.5 hectares/family, family farming in Mozambique is responsible for ensuring good part of the food and nutritional security of the country, and is responsible for employing about 86% of labour force at national level.

In many cases, farmers are unable to buy inputs at the right time and in the right amounts. The lack of seasonal credit lines often forces farmers to sell to middlemen at a low price. Moreover, farmers who are already highly exposed to natural disasters go into debt with few prospects to break free of this burden.

The Government of Mozambique and FAO agree that “smart subsidies" programmes through the use of vouchers, can be a powerful tool to facilitate access to seeds, fertilizers and other inputs needed for production.

Rural extension, when practiced effectively, can help solve many of the constraints related to access to finance and therefore support the expansion of the use of agricultural inputs by family farmers.

A combination of financial and extension services can help financial institutions overcome limitations in designing and distributing financial products suitable for family farmers. For example, the agricultural extension service could assist farmers in obtaining and using credits through value chain development programs; this would result in an institutional strengthening of the public sector and the creation of a favourable environment for the entry of financial institutions.

When combined with financial instruments (e.g. vouchers, credit lines, crop insurance, etc.) agricultural extension services can play an important role in mitigating risk and increasing the confidence of farmers in financial institutions.

It also requires a better coordination between rural extension services (public and private) and development partners along the supply and demand process in order to help to share perspectives, disclose financial instruments and provide technical assistance that simultaneously addresses the various constraints of the value chains.

In short, there is a great opportunity to boost the development of local economies through specific policies (e.g. increased productivity, promotion of mechanization for small-scale farmers, access to credit and markets, agribusiness, etc.) in support to family farming.

We know however that there are a number of barriers that must be removed in order to use the most of the farmer’s productive potential. In Mozambique, the percentage of farmers with access to credit has declined steadily over the past 10 years and inefficiencies in the production and distribution chain reduced the competitiveness of domestic products. The limited development of small and medium-scale agro-industry further reduces market opportunities for family farmers. With no market prospects and no support for hedging, it is difficult for farmers, especially small farmers, to have access to the capital needed to invest and expand their farms.

Bearing in mind the above-mentioned barriers, FAO launched at the beginning of the agricultural season 2015/2016, an electronic voucher scheme in order to improve market access for agricultural inputs (mainly seeds and fertilizers) and the distribution of quality agricultural inputs through the involvement of various agro-dealers.

The electronic voucher system is a financial inclusion and a flexible market development tool that allows farmers to buy certain quantities and types of inputs from providers (agro-dealers) that accept the vouchers as payment. The agro-dealers redeem vouchers with a profit margin previously agreed.

In other words, the electronic voucher is a credit to enable farmers to access and use improved inputs to increase their yields. It is simply a discount for the purchase of inputs, co-financed by the beneficiary farmer.

A significant advantage of the electronic voucher system is that farmers will have more freedom to decide what, where and when to buy their inputs, thus ensuring that they are the main decision makers in the process.

The electronic voucher scheme, the first of its kind in Mozambique, has been tested in Manica Province and is gradually replacing the "paper voucher" which has been used by FAO in Manica, Zambezia, Nampula and Sofala provinces since 2013.

The electronic voucher should ensure (i) increased access to and use of improved inputs to increase production, know-how, food security and income of family farmers; (Ii) the development of the marketing and distribution sectors of seeds and fertilizers.
It is expected that the voucher system could also help in the management of other inputs and services provided to farmers by state institutions and cooperation partners, and in the long term, help in the development of an efficient private sector input distribution sector.
The program targets two groups of beneficiaries; (I) small emerging farmers and (ii) subsistence farmers. Special attention is given to rural women and women heads of families.

How the e-Voucher Works in Mozambique?

The electronic voucher is an alternative to the paper voucher using an electronic technology. Recipients receive an electronic card that contains a subsidy and is activated upon payment of the beneficiary's contribution. The programme is implemented in 11 districts of four provinces in Mozambique:

→ Manica: Barue, Gondola, Manica and Sussundenga

→ Sofala: Buzi, Gorongosa, Maringue and Nhamatanda

→ Zambezia: Alto Molocue and Gurué

→ Nampula: Ribaue

Types of Packages

Package A:       Subsistence Farmers

Approximately 35 USD for the purchase of OPV seeds of maize and beans and post-harvest insecticide.

Farmer’s contribution = 30% of the value of the package

Package B:       Emerging Farmers

Approximately 130 USD for the purchase of seeds of maize (hybrid or OPV), beans, oleaginous, fertilizers, etc.

Farmer’s contribution = 50% of the value of the package

 

 

Walter de Oliveira
Walter de OliveiraFood and Agriculture Organization of the United NationsMozambique

In addition to what Pietro said on the use of ICTs through e-Vouchers (without causing market distortion) and ensuring the traceability of commercial transactions, improving resilience should also been seen as the potential of providing smallholder farmers with the flexibility of choosing the right moment to purchase inputs. This is particularly valid in Mozambique.
Smallholder farmers need to really be able to decide “what, when and how” to purchase inputs, produce and market their products. ICT can and must provide this flexibility.