Consultants André Vording and Victor van der Linden were involved in the The Strengthening African Rural Smallholders (STARS) project of Mastercard Foundation and ICCO Terrafina. The project used an MSD approach to improve access to finance and markets for more than 200,000 smallholder farmers in Ethiopia, Rwanda, Senegal and Burkina Faso. The project ran from 2016-2021 and impacted over 200,000 households, and thus more than 1 million people
F&S was involved in the design of programs, the training and coaching of staff, strategy development, and the development of a results chain based monitoring system, covering eight value chains in Rwanda, Ethiopia, Burkina Faso and Senegal.
The Rice Value Chain in Rwanda
Constraint: post-harvest losses and insufficient rice quality
- Farmers used sticks to thresh the paddy rice, which caused high post-harvest losses and 25% broken rice that fetched lower market prices
- Producers Organizations (POs) did not have the capital to buy threshers and winnowers. Moreover, the minimum price for rice set by the Rwandan Government made producer organizations reluctant to invest in these machines
- Consequently, processors, who lacked supply of good paddy rice and have under capacity, had to sell a substantial share of their polished rice at low market price
Project intervention: multi stakeholder meetings to address the issue
Four meetings with 6 POs, 1 processor, the processors forum and the Rwandese farmers’ federation were held in four months. The goal was to create trust between the stakeholders and to show them a business case of interventions that would decrease post-harvest loss and broken rice, and jointly design scenarios on how to increase rice quality.
Market trigger and uptake: processors advance costs for POs to buy the machines
Stakeholders agreed that processors advance the purchase costs of threshers and winnowers for POs. POs use the advance to buy these machines. This is an embedded financial service; the costs are subtracted from the sales of paddy rice over a period of two years.
Impact: more income for farmers and revenue for processors
- Post-harvest losses of rice went down from 25-30% to 2-3%
- 5560 farmers (2693 female) save time and have a higher income because of lower post-harvest losses and a better sales price, which is 5-10% above minimum price
- Processors sell a higher quality product at relatively low cost, and the advance for the machines is fully repaid. Close to 25% of the rice can be sold in a better market segment (it now becomes food instead of feed) and their revenue increases
- 4 other POs and 3 processors copied the business model, resulting in benefits for 4342 additional farmers (1660 female)