Expected Impact of Fertilizer Investment in Nigeria

Expected Impact of Fertilizer Investment in Nigeria

For an international impact investor, Agri-Logic developed a point of view on the potential development impact of investment in fertilizer in Nigeria.

With 34,000,000 hectares of arable land, Nigeria has the potential to be an agricultural powerhouse. Despite this, farmers constantly struggle with low yields and low product quality and the country is still a large importer of food and food products. Current average application rate of fertilizer in Nigeria is estimated at 11 kg/ha while recommended fertilizer application rates are ~130 kg/ha. Increased fertilizer application rate could be of major advantage in improving production quality and quantity, thereby enabling sustained productivity growth. Other commercial opportunities could also be derived along the fertilizer value chain.

Agri-Logic estimated impact based on a representative basket of cassava, maize, and tomatoes; three major crops in Nigeria. A literature review on fertilizer application for these crops provided useful information on impact potential in production quantity and income as a direct result of increased fertilizer use at recommended application rate. Field surveys with farmers and other stakeholders gave an understanding of the reality of fertilizer application and factors affecting its use, prices and availability across the country.

The study provided an overview of the current fertilizer market in Nigeria, as well as its potential impact on yield, livelihoods and food security. The client was provided with an estimated impact on smallholder farmers’ income as well as food self-sufficiency for the population of Nigeria. We also indicated risks and success factors to be monitored in implementation.

Farmer segmentation for optimised service delivery

Farmer segmentation for optimised service delivery

By assignment of IDH Sustainable Trade Initiative, Agri-Logic conducts 4 farmer segmentation studies to optimise service delivery by Supply Chain Management companies to farmers, in order to increase the impact at farmer level.

Many supply chain companies offer services to smallholder farmers to improve productivity, quality and profitability at farm level, and to secure their supply. The effect of these services at farm level is mixed and there is a strong desire to improve their performance. One way to do this is to group farmers in segments based on household and farmers characteristics. These segments are likely to have differing needs, development potential, ambition levels and investment rationales. When these segments are defined, services could possibly be better targeted and return on investment of service delivery could be improved.

The objective of this project is to gain experience with farmer segmentation exercises and to share the learnings of these experiences to support supply chain partners and IDH to segment farmers. Additionally, we aim to develop tailor-made services and products in order to increase the return on investment for supply chain partners, farmers and organizations that are co-investing in service delivery models. Four segmentation case studies are performed with coffee and cocoa supply chain partners in West- and East-Africa.

The envisioned results are:

  • For each segmentation case study: identification of farmer segments, their defining characteristics and recommended tailor-made service packages
  • A set of guidelines on how to monitor effects of service packages on different farmer segments and knowing when to change a strategy
  • A framework for organisations on how to realize effective farmer segmentation to optimise service delivery
African Coffee Investment Review

African Coffee Investment Review

Via its Global Coffee Platform (GCP), the IDH Sustainable Trade Initiative seeks to make a significant impact on the global coffee sector. Africa features heavily in it’s strategy as an under-utilized source of significant new coffee volumes to meet growing demand. Ironically, much of the coffee and sustainability investments over the past 10-15 years have taken place in Latin America and Asia. Africa has just 4% of global certified sustainable supply (against around 10% of total supply), yet the needs for investment in coffee on the continent are arguably greater than elsewhere.

Agri-Logic was asked to conduct in-depth coffee sector studies for 9 African origins: Angola, Burundi, Cameroon, Ethiopia, Ivory Coast, Kenya, Rwanda, Tanzania and Uganda. These studies are used to develop the GCP’s African investment strategy, and feed into the establishment of an African Coffee Facility by the African Development Bank (AfDB) and the Inter-African Coffee Association (IACO). Investment opportunities in each origin are investigated, including modelling of their impact and return on investment at different levels of the value chain.

We developed a dynamic sector model allowing to analyze large volumes of data from different sources. This model is fed by a structured database and allows insight into a sector’s performance compared to user-defined global benchmark origins. The study has been presented at the Africa Coffee Facility inception meeting in Abidjan to a public of regional coffee sector representatives and staff of IACO and the AfDB, as well as during the Global Coffee Platform workshop in Addis Ababa.

African coffee sector investment opportunities – summary (GCP)
African coffee sector investment opportunities – country report Angola (GCP)
African coffee sector investment opportunities – country report Burundi (GCP)
African coffee sector investment opportunities – country report Cameroon (GCP)
African coffee sector investment opportunities – country report Cote d’Ivoire (GCP)
African coffee sector investment opportunities – country report Ethiopia (GCP)
African coffee sector investment opportunities – country report Kenya (GCP)
African coffee sector investment opportunities – country report Rwanda (GCP)
African coffee sector investment opportunities – country report Tanzania (GCP)
African coffee sector investment opportunities – country report Uganda (GCP)
Coffee Sustainability Catalogue

Coffee Sustainability Catalogue

The coffee sector has invested heavily in sustainability for decades, recognizing that we must ensure our ability to meet rising demand for coffee while also increasing the prosperity and well-being of producers and conserving nature. In 2014, leaders in the sector came together to develop a vision for coffee sustainability  that resulted in Vision 2020: a call for improved alignment within the sector on our sustainability efforts.

In late 2015 the Global Coffee Platform, the Specialty Coffee Association of America and the Sustainable Coffee Challenge jointly recognized the need to inventory existing efforts to make coffee a sustainable agricultural product, understand who is doing what sort of work, where the investments are going and how we can better understand and share our impacts and experiences.

The report compiles information on the sustainability initiatives of more than 80 stakeholders throughout the coffee sector. The Catalogue sheds light on sustainability efforts currently underway, and how actors in the sector can collaborate to make coffee the world’s first fully sustainable agricultural product. It includes a mapping of aims, interventions and investment.

Several key findings from report include:

  • Across the coffee industry, more than $350 million is being invested annually in sustainability programs. Collective efforts are also enabling the industry to reach 350,000 farmers each year – a figure that has nearly doubled in the last 15 years.
  • Certification is a tool commonly used to increase consumer awareness, social inclusiveness, traceability and assurance and incentives.
  • The report estimates that transitioning the entire sector to sustainable production is possible, but at the current rate of investment, it would require a total investment of $4.1 billion to achieve and would take until 2045 to incorporate all coffee producers.
Coffee Sustainability Catalogue – full report (GCP-SCA-SCC)
Coffee Sustainability Catalogue – summary factsheet (GCP-SCA-SCC)
Coffee Sustainability Catalogue – initiatives framework (GCP-SCA-SCC)
Coffee Sustainability Catalogue – stakeholder directory (GCP-SCA-SCC)
Coffee sustainability support for Olam

Coffee sustainability support for Olam

Agri-Logic supports the Olam global coffee business with designing and implementing projects to strengthen the farmer supply base that delivers to the company. We assist the Olam coffee business and the Corporate Responsibility and Sustainability function of the company in developing small- and large scale interventions with their clients, donors, banks and governments. At their core these projects are designed to help unlock growth potential of small-scale coffee farmers, such that both farmers and the Olam businesses benefit. Such benefits can be found in greater supply, improved coffee quality, premium payments, more efficient supply chains as a result of group selling by farmers and extending credit to farmers. This project has been operational since July 2014.

Logistics and food losses perishable crops

Logistics and food losses perishable crops

The Netherlands has a policy to integrate Foreign Trade and Development Cooperation. Food security and rural development are a top priority in development cooperation. Market inefficiencies in logistics cause post-harvest losses of perishable products. Food waste negatively impacts both food security for local consumers, and the income of many smallholder producers.

Identifying and addressing market opportunities in logistics can improve these issues in food security and rural development. This also provides commercial opportunities for Dutch and local entrepreneurs in developing local markets and foreign trade.

As part of a global study, we mapped the value chains for tomatoes, capsicum and pineapples in Nigeria. Contextual interviews provided an understanding of the value chains, whereas data collection and surveys provided deeper insight into volumes and food losses, prices and value distribution.

The report was submitted to the Netherlands Embassy in Lagos, Nigeria for consolidation into the global study.

The study provided insight into food losses in fruit and vegetables (30-60% depending on the product), formal and informal import and export, investment needs in processing, and export quality requirements.

The report can be shared upon request.

Farmer Field Book implementation Ghana

Farmer Field Book implementation Ghana

Sustainable Management Services Ghana (part of Ecom group), a number of its chocolate manufacturing clients and IDH, The Sustainable Trade Initiative run a large scale sustainability programme in Ghana targeting tens of thousands of cocoa farmers. The programme aims to improve their productivity, profitability and in turn enhance farmer loyalty. All parties expressed a need to gain better insight into farm and farmer performance and an enhanced understanding of the programme’s effects.

To meet the requirements, Agri-Logic is assisting Ecom and its partners to implement the Farmer Field Book. Close to 1,075 farmers across 43 districts keep daily records of all their activities, investments and outputs on their cocoa farms. This information is collected every 2 weeks and digitised in the FFB software. Every year each farmer receives a detailed agronomic and economic profit & loss statement as well as a group report that details the performance of each farmer versus that of his/her peers. Agri-Logic trains Ecom staff on implementation of the FFB and supports the implementation by analysing the collected data at different levels. At company level a sophisticated report is made each year that details the effects of Ecom-provided training and inputs to farmers on e.g. productivity, profitability and loyalty. Data from Ghana is then merged with FFB data from other cocoa-producing countries for meta analysis of the IDH cocoa programme.

Results so far:

  • 64 Ecom management and staff trained in FFB implementation
  • Same staff trained on farm level data analysis
  • 1075 farmers keep records on a daily basis
  • Collection of the third year’s data currently on-going
Impact of Common Code for the Coffee Community

Impact of Common Code for the Coffee Community

In 2009 we were contracted by the 4C Association to conduct an impact assessment of the the implementation of its code of conduct in Vietnam, Uganda and Nicaragua. In 2014, 4C asked to revisit the same farmers in Uganda and Vietnam and conduct a similar study to identify and quantify long-term effects of its programme.

We designed an impact study for this that uses a difference-in-difference approach and relies on Propensity Score Matching to create realistic counter-factual scenarios. This allows us to answer the question: what would have happened to a farmer if s/he had decided not to join the 4C programme? Two experts from Wageningen University and Research provided extensive feedback on the research design and interpretation of results.

Farmers that are part of a 4C verified supply chain have more access to training. For farmers in Uganda, we confirm that 4C verified farmers are more efficient financially. Productivity has not changed significantly, but efficiency of production as measured by the production cost per Mt green coffee, has. In Vietnam, an origin where productivity is extremely high, we did not observe additional increases in productivity as a result of being 4C verified. Of the changes in economic and agronomic performance that are observed, none correlates with application of GAP training.

On the social dimension we again see notable effects in Uganda, but less so in Vietnam. A clear link between being 4C verified and an increase in dietary quality was confirmed for Uganda. In Vietnam we only see differences in wages paid to workers, which show a stronger and significant increase over time among 4C verified farmers.

Farmers that are part of a 4C verified supply chain have more access to training. For farmers in Uganda, we confirm that 4C verified farmers are more efficient financially. Productivity has not changed significantly, but efficiency of production as measured by the production cost per Mt green coffee, has. In Vietnam, an origin where productivity is extremely high, we did not observe additional increases in productivity as a result of being 4C verified. Of the changes in economic and agronomic performance that are observed, none correlates with application of GAP training.

On the social dimension we again see notable effects in Uganda, but less so in Vietnam. A clear link between being 4C verified and an increase in dietary quality was confirmed for Uganda. In Vietnam we only see differences in wages paid to workers, which show a stronger and significant increase over time among 4C verified farmers.

Environmental performance is hardly affected by 4C. Only in Uganda did 4C verified farmers take significantly less new land into production for coffee. Other environmental aspects were not impacted in either country.

Business case certified sustainable coffee DR Congo

Business case certified sustainable coffee DR Congo

ELAN DRC is a large scale value chain programme funded by DFID and implemented by Adam Smith International. For its coffee value chain programme in the Kivu’s, Agri-Logic was contracted to conduct a business case analysis ofor growing and exporting certified sustainable coffee.

Over a two-week period we conducted interviews and focus group discussions with coffee farmers, local exporters and cooperatives. Further interviews with international traders, coffee roasters, NGOs and certification agencies were held to collect sufficient data.

Analysis showed a reasonable business case for organic certified coffee, possibly in combination with Fairtrade, but only if the latter could be marketed sufficiently well. Our modelling showed that implementing of mainstream standards like UTZ Certified, 4C and Rainforest Alliance in this sector does not yield significant economic benefits for farmers and exporters alike. This is due to low volumes of coffee per farmer  and an above average quality profile, the buyers of which usually go for more demanding standards. As a result the ELAN DRC programme is currently rethinking its coffee strategy.

Cost and benefit of certification for smallholders

Cost and benefit of certification for smallholders

Certification of agricultural products (organic certification, Fairtrade etc.) is often expected to provide a wide array of benefits for small-scale farmers. These include poverty alleviation, reduced environmental impact and food safety. Together with Wageningen Economic Research we reviewed 270 studies and present an analysis of the benefits – but also the costs – of such schemes. It demonstrates that the decision to invest must be based on sound economic principles, and the text also provides recommendations to improve the certification business case and impact on smallholders.

The Sustainable Coffee Conundrum (DE Foundation)