Agribusiness Management in the Coffee Value Chain A smartphone-based IT system ensuring transparency and traceability
The challenge
Uganda is one of Africa’s largest coffee ex porters. More than 1 million
farming households (approx . 7 million individuals) rely on growing and
selling coffee beans as their major source of cash income. For the larger
region of East Africa, these figures can almost be tripled. Smallholder
farmers face a number of challenges such as inadequate agricultural
practices, limited information and market access as well as limited access to
financial services.
In order to address some of these issues, about 54,000 Ugandan
smallholder coffee farmers have been organised in producer groups to
channel their produce through commercially managed bulking stations being
provided with direct market access and released from dependencies and
captive relationships with informal middlemen.
However, important challenges have remained: Above all, transparency,
efficiency and accountability were still problematic at many bulking stations,
leading to a lack of trust and hampering cooperation. The manual and
paper-based systems were error-prone and did not provide timely and
comprehensive overviews.
Our approach
The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH
and the software company SAP have joined forces through the
develoPPP.de programme on behalf of the German Federal Ministry for
Economic Cooperation and Development (BMZ) in order to provide farmers
with the opportunity to grow and market more and higher quality coffee and
to thereby increase their income.
Within the development partnership the partners have developed an IT
solution for the coffee value chain, featuring a smartphone application linked
to a central database with a sophisticated analytical and geographical
information system (GIS).
Coffee farmers deliver their bags to bulking stations, where they are
registered and issued a bar-coded membership card.
Using the SAP smartphone application, their bags are not only recorded on
delivery, all subsequent transactions such as cash advances, bulking,
hulling, selling to ex porters and final payments are captured digitally and
synchronised with the central database as soon as mobile network
coverage is available. The path of both, the produce and the money, is
traced throughout the entire value chain.
Addressing the needs of farmers, traders, processors, exporters as well as service providers While farmers are provided with SMS notifications on deliveries, weather
updates as well as information on agricultural practices and prices, traders
utilise the system to increase their efficiency when buying, bulking and
arranging their transport logistics. Up-to-date market prices can be sent to
the bulking stations via smartphone on a daily basis.
Centrally, the system provides aggregated seasonal and geographical
analytics, yield reports as well as traceability of produce, which is especially
relevant for certification. After the initial field trial in July 2013, the demand
for the tool was so high that the full rollout using 12 smartphones catering
for more than 7,000 farmers was started in October 2013.
“This joint PPP is an entry point for SAP to new
markets in the developing world. The early adoption
and end usage of our system in Uganda is more
than promising and proves our intention for a
globally applicable solution.”
Christian Merz, Research Manager, SAP AG
Contact GIZ Uganda
Dr. Dirk Steinwand
P +256 414-253840
GIZ develoPPP.de
Anna Karolina Lamik
F +49 6196 79-2372
SAP AG
Christian Merz
F +49 62 27 75 25 44
Published by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH Sitz der Gesellschaft Bonn und Eschborn Geschäftseinheit Zusammenarbeit mit der Wirtschaft Dag-Hammarskjöld-Weg 1-5 65760 Eschborn, Deutschland
T +49 6196 79-2371 F +49 6196 79-1115 I www.giz.de
Printed by Top Kopie GmbH
Photo credits SAP AG
As at April, 2014
A project by
Implemented by
On behalf of Federal Ministry for Economic Cooperation and Development
Divison Cooperation with the private sector; service point
Impact
The smartphone application addresses various gaps in the coffee value
chain ensuring traceability as well as increasing efficiency and transparency.
Producers, sellers, buyers and service providers can now collaborate
seamlessly through a system tailored to Base of the Pyramide (BoP)
businesses.
In this way electronic communication of market information prevents
arbitrary prices and handling fees fix ed by middlemen. Farmers gain direct
access to ex port markets improving their competitive position and
bargaining power, increasing their sales margin and fostering their cohesion
as producer groups. Similarly, ex porters show great interest in tracing not
only the origin of their quality coffee beans but also ensuring that fair prices
are paid to the original producers.
Additionally, agricultural and financial service providers as well as input
suppliers are starting to link into the system. For ex ample, digital cashless
transactions (“ Mobile Money” ) can now be initiated seamlessly through the
smartphone application and immediately at the point of sale of the produce.
With a complete transaction record for each individual farmer at hand, banks
now have – for the first time – sufficient data to evaluate their risk
adequately in order to provide loans for agricultural or even household
purposes. Similarly, input suppliers can deliver well-targeted quantities and
quality input and link into the ex isting payment flow.
With declining transaction cost and increasing control, profitability increases
for all players involved. As a result, smallholder farmers benefit from higher
incomes, ultimately leading to improved livelihoods of farmer households.
Scaling up
Coffee has been identified not only by Uganda but also by its East African
neighbours as one of the key cash crops, hence the dissemination of this
successful approach through national apex es and industry associations is
receiving significant support.
With the ex isting IT system being a state-of-the-art solution to multiple
challenges of smallholder farmers in developing countries, its potential has
to be assessed beyond coffee farming, as it is just as relevant in many other
value chains of cash crops and staple foods.
At a glance Ter m: January 2013 – May 2015
Countr y: Uganda Objective: The project objective is to enhance transparency,
efficiency and traceability of business operations in the coffee value chain in cooperation with the Uganda Coffee Farmers Alliance (UCFA).
Par tner : SAP AG
Impacts: • Improving farmer incomes and livelihoods • Increasing transparency, efficieny and
accountability in agricultural value chains • Enabling traceability for certification • Central collection and monitoring of data
• Opening the door to tailor-made financial services for smallholder farmers
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