BENIN

Non-Cotton Crops to Boost Agricultural Growth in Benin

Improving Farmers’ Access to Inputs for

BENIN

BackgroundImproving agricultural productivity is among the top priorities of Benin’s overall development agenda. Achieving this goal requires a substantial increase in the use of agricultural inputs such as improved seeds, fertilizers and crop protection products. However, with higher agro-input prices and decreasing crop yields, most smallholder farmers cannot afford to pay for these needed agro-inputs. At the same time, financial institutions are reluctant to extend credit for agricultural activities due to the risks involved, their limited knowledge of the agricultural sector and farmers’ lack of collateral.

Government efforts to build long-term demand for agro-inputs while ensuring a sufficient supply of the products have focused primarily on export crops such as cotton. Smallholder farmers find it difficult to procure agro-inputs for other crops and often divert fertilizers meant for their cotton crop to food and other cash crops. As a result, none of their crops receive the optimum amounts of fertilizer.

p Cover image: The project helps to secure the supply of non-cotton agricultural inputs and the marketing of agricultural produce.

t Farmers participating in warrantage programs can begin to move up the value chain by processing their crops. This photo shows a high-capacity steamer designed and tested by the project to increase the trade capacity of female rice producers.

Meeting the challenge:

to Boost Agricultural Growth in Benin

Improving Farmers’ Access to Inputs for

BENIN

1Non-Cotton Crops

OverviewThousands of maize, rice and pineapple farmers in Benin now have better access to the agro-inputs, information and credit systems they need to improve crop productivity and increase their incomes. These are key outcomes of Improving Farmers’ Access to Inputs for Non-Cotton Crops in Benin, a three-year pilot project begun in 2009 that is helping to meet the challenges facing Benin’s farmers.

In line with the country’s agricultural development policies, the project focuses on two staple food crops (maize and rice) and one cash crop (pineapple). Project objectives are to help targeted farmers increase their maize, rice and pineapple productivity by 40 percent and their incomes by 20 percent. To achieve this, project staff members are working to increase 30,000 farmers’ use of agro-inputs on crops other than cotton by 40 percent.

The Non-Cotton Inputs project (as it is known for convenience) is implemented by the International Fertilizer Development Center (IFDC) and the Netherlands Development Organization (SNV) with funding from the Royal Embassy of the Netherlands in Benin.

u The project covers agricultural regions in Benin that already receive support from SNV and IFDC’s 1000s+ project: Borgou/Alibori, Plateau and Couffo for maize; Collines for rice; and Atlantique for pineapple.

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During the first year of project implementation, 10,000 farmers were targeted though 16 farmer-based organizations (FBOs) – eight for maize, six for rice and two for pineapple. The project will reach another 15,000 producers during the 2011-2012 cropping season.

u A database has been developed and installed at the headquarters of nine FBOs to help structure the demand and improve the management of agro-inputs. Nearly 40 FBO managers were trained on database use in order to record and analyze the data collected on individual farmers’ agro-input demand history and to consolidate the data at communal and departmental levels.

u Nearly 600 FBO executives were trained in business plan development for the 2010-2011 cropping season. More than 220 business plans were developed and submitted to a partner financial institution, reflecting a financing need estimated at nearly 2,700,000,000 FCFA (about $5 million) – of which 60 percent is for agro-inputs.

u Three FBOs received administrative and logistical support to participate at the Salon international de l’artisanat de Ouagadougou in November 2010. During the three-day event, the Initiative for Boosting Pineapple Development (Initiative pour la Relance de l’Ananas, or IRA) sold 12.6 metric tons (mt) of bottled fruit juice; the Regional Association of Pineapple Producers (Association Régionale des Producteurs d’Ananas, or ARPA) sold 3.75 mt of fresh pineapples; and the Union of the Centre Rice Growers Union (Union des Riziculteurs du Centre, or UNIRIZ-C) sold 3.5 mt of rice. The participants also developed business relationships with importers and supermarkets for future transactions.

u The capacities of 2,657 FBOs were strengthened through the training of their executive members in administrative and financial management. Nearly 700 management tools were distributed including cash books, member books, minute books and stock record cards.

u Nearly 200 rice producers and another 200 maize producers were trained in crop storage and convervation best practices.

Key Achievements

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The project has also strengthened the FBOs’ capacities to prospect for markets and collective marketing of agricultural produce. Training courses included assessing production costs, the structure of agricultural produce markets, price calculation and input supply management.

u 30 seed producers from UNIRIZ-C received technical training and credit in the form of foundation seeds and fertilizers. As a result, 30 hectares in six communes of the Collines region are being used for the production of certified seeds for two improved varieties.

u 34 FBO managers were trained in techniques to negotiate with financial institutions.

u 21 micro-finance institutions (MFIs) were trained to use the inventory credit system (known as warrantage in French) effectively and the extent of risk in the financing of business plans.

u A study to propose a mechanism for the establishment and management of a guarantee fund was validated in September 2010. In December 2010, a convention was signed with the Fédération des Caisses d’Epargne et de Crédit Agricole Mutuel du Bénin (FECECAM-Bénin) for the financing of business plans and agro-input credit delivery.

u A memorandum of understanding was signed between IFDC and two financial institutions: Banque Régionale de Solidarité (BRS) and FECECAM, to facilitate FBOs’ access to credit.

u A feasibility study on the establishment of inventory credit systems in Benin and a study on the functioning of the guarantee fund were conducted.

t The storage facility is secured by two locks, with one key kept by the FBO and the other by the financial institution.

p Training provided by the project has improved record-keeping by FBO members. Stock inspections are carried out on a regular basis and observations are recorded on standardized forms.

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Building Demand

One of the first constraints to improving access to agro-inputs for crops other than cotton is the difficulty farmers have in assessing their needs and structuring their demands. With participating FBOs, the project has developed a bottom-up mechanism to address this central issue. Each year, during their FBO general assembly, individual farmers

express their agro-input needs based on their production plan. These needs are consolidated at different levels, based on actual crop acreage, available farm equipment and credit history, as recorded in the FBOs’ historical database.

Developing this histor-ical database was a primary activity of the project. The database records information on the production history of each FBO member in terms of crop area, crops produced, fertilizer used over at least three years and credit received. The database serves as a tool for each FBO to control the needs expressed by individual farmers and validate reasonable agro-input demands in an effort to limit farmers’ indebtedness. Calls for tenders to cover farmers’ validated needs are made at the final decision level.

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Building Capacity

n Farmer-Based OrganizationsFBOs are at the center of the project strategy because their functions are crucial to improving farmers’ access to agro-inputs. The project is strengthening FBOs’ capacity to drive their own development agenda and add value to their members’ activities. Prior to the start of the project, most FBOs in Benin lacked the capacity and means to train and provide support services to their members.

FBO managers are being trained in different aspects of agro-input supply management such as: identifying and validating farmers’ needs; negotiating contracts with agro-input suppliers; controlling the quantity and quality of delivered agro-inputs; and managing small stocks of agro-inputs. FBO leaders and board members are being trained in using a number of key administrative and financial tools.

Improving Farmers’ Access to Inputs for Non-Cotton Crops in Benin is also strengthening FBOs’ capacity to explore and exploit market opportunities to better increase farmers’ incomes. Activities are being conducted to develop and sustain business linkages between farmers and traders and among members of specific value chains, which is a pre-condition for improving farmers’ access to credit and agro-inputs.

The project is providing technical support to FBOs to develop business strategies and organize the pooling of agricultural produce for more efficient marketing. Training is also provided to improve farmers’ knowledge of agricultural market requirements and to acquaint them with the regional market regulations established by the West African Economic and Monetary Union and the Economic Community of the West African States.

n Agro-DealersEntrepreneurs are not eager to serve the non-cotton sector because of uncertain demand and the difficulty to assess the credit-worthiness of orders. Efficient agro-input demand estimating is crucial to minimize carry-over stocks and limit the risk of product shortages. The project is helping to develop an efficient network of rural agro-dealers able to supply fertilizers and other inputs to farmers in a cost-effective manner.

The project provides training for agro-dealers on quality control procedures, market exploration and feasible options to lower the transaction costs of supplying rural areas with agro-inputs. The training modules also cover bookkeeping, cost-estimating and pricing, developing business relationships, and managing sales, stocks and working capital.

t Storage facilities are inspected every two weeks by representatives of the FBO and the lending institution.

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Facilitating Access to Finance

The project is implementing two institutional mechanisms to reduce risks and provide incentives for all those along the value chains in order to facilitate access to credit to purchase agro-inputs:

A Guarantee FundThe project supports FBOs as they develop business plans based on contracts to secure a supply of agro-inputs and the marketing of agricultural produce. These sales contracts serve as a guarantee for financial institutions willing to extend credit. When the business plan is considered “bankable” but there is a lack of collateral, the bank may request that the guarantee fund cover the risk of financing the needed agro-inputs. The guarantee fund is lodged like a term deposit in the bank, and governed by a partnership agreement between the bank and the project. The fund is managed by a tripartite committee.

The project also supports financial institutions in the development of new financing mechanisms that better suit farmers’ conditions and capacities.

Warrantage – The Inventory Credit SystemAfrican farmers are penalized because they usually have to sell their produce immediately after harvest when there is an abundant supply (and therefore prices are low).

The project has introduced warrantage in Benin. Under this system, farmers can use their production surplus as collateral to obtain credit from a bank or MFI. In return, the farmers leave their harvest in a locked warehouse with keys held by both the financial institution and their FBO. Farmers can buy needed agro-inputs for the next planting season, provide for their family’s needs and engage in other income-generating activities until the lean season when produce prices climb.

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IFDC is a public international organization, governed by an international board of directors with representation from developed and developing countries. The nonprofit Center is supported by various bilateral and multilateral aid agencies, private foundations and national governments. IFDC focuses on increasing and sustaining food security and agricultural productivity in developing countries through the development and transfer of effective and environmentally sound crop nutrient technology and agribusiness expertise.

SNV is a non-profit, international development organization, established in the Netherlands in 1965. It has been present on the ground in developing countries for over 40 years, and now operates in 35 countries in Africa, Asia, Latin America and the Balkans. SNV’s 900 advisors in the field come from a variety of cultural and technical backgrounds, and over 60 per cent are nationals of the countries where SNV works.

t A certificate of storage deposit is issued to each farmer, listing the quantity and quality of the product.

p A farmer and his healthy rice fields.

q On back page: Rice farmers gather for a group portrait upon completion of a training program on crop storage and preservation.

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IFDC BeninQuartier Patte d’Oie10 B.P. 1200, CotonouTel. +229 21 30 59 90Email ifdcbenin@ifdc.org

IFDC HeadquartersP.O. Box 2040Muscle Shoals, Alabama 35662 USATel. +1 (256) 381-6600Fax +1 (256) 381-7408Email general@ifdc.orgWebsite www.ifdc.org

© IFDC 2011. All rights reserved.

For additional information about IFDC and/or the Non-Cotton Crops project, visit www.ifdc.org.

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