By Peter O'Flynn

The purpose of our research into smallholder supply chains is to increase the evidence base on the information collected and used by companies and investors who invest in them. We define smallholders as small-scale farmers, pastoralists, forest keepers and fishers who manage and operate areas between one and ten hectares (FAO, 2013). In November 2017, I worked with firms in both Malawi and Kenya (while a colleague did the same in Ethiopia) to find out: 

  1. How do investors and companies monitor the performance of smallholders in supply chains?
  2. What are the barriers and incentives for monitoring the performance of smallholders?
  3. What conclusions for best practice can be drawn on how investors and companies monitor supply chains?
  4. How can DfID increase transparency in the monitoring and evaluation of supply chains? 

In Malawi, I spent time with Malawi Mangoes, an agroprocessing company producing mango puree for companies such as Coca Cola and Schweppes. With 5,000 smallholder outgrowers, it presented us with the opportunity to look at how a nascent business (less than ten years old) works (and collects) data on smallholders. The company is currently attempting to diversify its product base, developing it’s dried and fresh food business, and so trying to present greater opportunities for smallholders. This was followed by two days conducting a comparative case study of Lujeri tea estate (an industry leader with approximately 9,000 smallholders) and Satemwa Tea Estate, a family-owned tea estate that has been operating since 1923! In terms of monitoring performance – and tracking of data – there is an inevitable cost to conducting such activities, but often there are pure business motivations for doing so, including expansion of the available product, risk diversification and obtaining greater information about the supply chain to increase both quantity and quality. 

There are also institutional factors that drive these demands for smallholder products, and therefore the demand for data. For instance, in Malawi, estate laws now mean that businesses struggle to purchase land freehold, so working with smallholders is a better way of expanding the business product. 

In Kenya, I spent two and a half days with New KCC, one of the country’s largest dairy processers and owned by the government since 2004 (with the intention to privatise back to farmer cooperatives in the future). They have been attempting to capacity build their farmers through providing a new structure of extension services to smallholders, whereby one graduate – having studied livestock rearing, farm management or a similarly relevant degree - would be able to provide services to 50 smallholders. The model would be made sustainable by the farmers paying 50 Kenyan cents per litre of milk produced to finance the graduate. New KCC are in the process of trialling an app through a partnership with Agrilife which would automate payments and collect data on individual dairy cows in the farm (such as litres produced, grazing type and health issues) to provide security for microfinance partners (who New KCC are working with to ensure timely payment for milk). This app will mean data on smallholders can be updated in real-time as well as securing a new order/payments service for smallholders so that they will be able to be paid on time (previously a major constraint for New KCC).

Other interviewees included K-Lift, a sub-section of the veterinary association of Kenya, which provides small scale loans to smallholders. They do this through working through close relationships with cooperatives to ensure that data for loan applications is consistent and reliable. I also visited Unga Maize Millers, who, because they process over 600 tonnes of maize a day, cannot accurately capture data on the smallholder level, and are instead trying to capacity build their network of 1,000 traders to monitor their data to create impact at the smallholder level. Through this, they hope to see improvement in maize procurement and productivity in the yields in the areas they work.

Throughout these firms there is a recognition of the contribution that smallholders provide in the value chain. These actors are varied (mangoes, tea, dairy and maize) and represent different forms of governance structures, or accountability relationships. Nevertheless, each are trying to make improvements at the smallholder level in terms of how and what data they collect. On that positive note, I look forward to presenting the core findings in January 2018!

Partner(s): Institute of Development Studies