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Table 3 Findings from the market analyses

From: An evaluation framework and empirical evidence on the effect of pay-for-results programs on the development of markets for welfare-enhancing agricultural technologies

Did the PfR motivate the private sector to overcome constraints to developing an inclusive market?
Demand-side and supply-side constraints to market development [FS] Nigeria: Farmer’s knowledge constraints remained somewhat unaddressed by PfR. While farmers learned about the Aflasafe as a way to gain access to premium markets, limited knowledge of the adverse health impact of aflatoxins and Aflasafe as a solution remained a constraint
Kenya: Key constraints to market development were addressed by competitors. Smallholders’ access to improved on-farm storage increased, they learnt how to use it and found value in using it because it mitigated the need to use pesticide dust to prevent storage loss
Uganda: Demand-side and supply-side constraints remained unchanged since the PfR was not successful. PfR was primed to address supply-side constraint by providing seed companies incentive to invest in legume seed production. However, without quality certification they could not distinguish their product and the PfR could have paid out for increase in sales of even poor-quality seeds
Zambia: Demand-side and supply-side constraints remained unchanged since the PfR was not successful
Role of enabling environment in promoting or constraining development of market [FS] Nigeria: Enabling environment did not limit market development. Limited enforcement of regulatory limitations on aflatoxins in maize did not constraint PfR outcome because markets existed that were willing to pay a premium price for aflatoxin-free maize
Kenya: The enabling environment was neutral, even supportive
Uganda: Lack of seed quality certification remained a key constraint to market development. A weak national seed certification system meant that buyers had no effective means of differentiating between high- and low-quality legume seed on the market, which depressed the price that they were willing to pay for legume seed in general
Zambia: Low demand and government subsidies for mainstream white maize depressed incentives for PVA maize. Ongoing government involvement in the standard/white maize market may have depressed investment in the PVA maize market. Maize millers had little experience in developing supply or demand for a differentiated product
Did the PfR engage the private sector?
Number of market actors competing and number that win the prize [FS] Nigeria: PfR awarded prizes to numerous and diverse set of maize aggregators. 35 maize aggregators competed for and won prizes, aggregating 82.4 metric tons of aflatoxin-compliant maize in the last year of the project (approximately 0.4 percent of the nation’s maize harvest); 100% of sales through commercial markets. Competitors increased the scale of their efforts by re-investing interim prize award payments
Kenya: Several big companies, including manufacturers and distributors of on-farm storage bags competed and won prizes. Nine competitors engaged in the project, together accounting for 14% market penetration of on-farm storage solutions, far greater than previous traditional projects had achieved. Competitors increased the scale of their efforts by re-investing interim prize award payments
Uganda: No company won prizes. Seven seed companies were interested, but none met prize award criteria in the first year
Zambia: Only two companies won prizes with waning interest in continuing to compete. Eight millers and 2 seed companies chose to engage, however none reached the minimum sales threshold that would have triggered prize payment
Type of market actors that compete and type that win [FS] Nigeria: Diverse types of market actors participated and won prizes. PfR prize structure motivated participation by a large number of competitors all of whom won prizes. These competitors sold the maize to large-scale buyers such as feed and flour mills and multinationals such as Nestle and small and medium-scale buyers including the poultry producer market and feed market
Kenya: Larger companies participated. Of the nine companies that participated six made significant investments to tailor and develop their supply distribution networks and won prizes. The participating companies were generally large and were either manufacturers of the technology or distributors
Uganda: None of the competitors won prizes. Seven seed companies participated but none of them won prizes
Zambia: Very few competitors won prizes. Three seed companies and eight millers participated. Of these, two seed companies achieved the outcomes and won prizes. None of the millers won prizes: the millers together procured and marketed less than one metric ton of PVA maize over three project years, whereas the minimum threshold that would have qualified an individual miller for an AgResults incentive payment was itself one metric ton of PVA maize
Private sector actors' business cases for investment in market [FS] Nigeria: Some final buyers pay price premiums for aflatoxin-free maize making it profitable for maize aggregators to acquire it, although not necessarily from smallholder farmers. Poultry feed market and export market have strong demand for aflatoxin-compliant maize, offering a high-market value to maize aggregators. Other than the relationships developed through PfR there is economic incentive for the maize aggregators from smallholder farmers. That said, some of these relationships have sustained
Kenya: Smallholders farmers are buying improved on-farm storage in large numbers and at prices that are profitable. On-farm storage suppliers maintained their business model of selling storage solutions to farmers. Farmers gain by not having to apply pesticides that they perceive to be unhealthy and unwieldy to use
Uganda: Profit margins were slim in producing quality legume seeds. Potential seed distributors had little case for investing in improved legume seed markets, owing to very slim profit margins on account of a weak national seed certification system
Zambia: Maize millers did not see a role in developing the demand for Vitamin-A enhanced maize. Demand for PVA maize was growing among urban consumers but the maize millers had little experience in developing the supply for the differentiated product and could not capitalize on this demand
Did the PfR lead to the development of an inclusive and sustainable market?
Percentage of target product produced or transacted in the relevant market area Nigeria: Niche market for aflatoxin-free maize emerged as a result of the PfR. From 1 private sector market actor aggregating Aflasafe-treated maize to 24; from 1700 MT of Aflasafe-treated maize at baseline to 82,355 MT five years later (0.4% of maize marketed nationally); 100% of sales through commercial market channels
Kenya: PfR led to significant sales of diverse types of improved on-farm storage. Number of commercial suppliers of improved on-farm storage increased by 6 during the project, with an additional 3 new suppliers in the two years following project; 334,000 MT of improved on-farm storage sold to 220,000 smallholder farmers; emergence of commercial distribution channels through which most sales are made
Uganda: N/A
Zambia: Very small volume of milled maize was transacted but with waning interest. Eight maize millers processed 993 MT of PVA maize, of which 82% was marketed through commercial channels to middle-class, nutrition-focused consumers
Participation of smallholder farmers, women and other marginalized groups relative to their presence in the relevant market area Nigeria: Smallholder farmers engaged extensively; women’s participation was low. Smallholder farmers were responsible for nearly 100% of Aflasafe-treated maize produced because the PfR management was requiring it as part of informal prize requirement; women’s participation varies widely but averaged 19% in final year of project (compared to 50% participation of women farmers nationally). Outside of the PfR there are no real incentives for the aggregators to work with smallholder farmers and a greater incentive to work with larger farmers who can fill their quantity and quality needs more easily
Kenya: Women had a higher level of adoption. Women-headed households also adopted the improved on-farm storage 3.7 percent greater than other households
Uganda: N/A
Zambia: N/A
Competitor’s demonstrated engagement or intent to continue to engage in the market Nigeria: Competitors continued to engage in the market after the PfR ended. Most competitors planned to continue engaging in the market for Aflasafe-treated maize, but were concerned about limited demand growth given weak enforcement of aflatoxin limits
Kenya: Competitors continued to engage after the PfR ended. Commercial suppliers of on-farm storage affirm intended to continue to act in market
Uganda: N/A
Zambia: N/A