SNV’s mission is “to strengthen capacities and catalyse partnerships that transform the agri-food, energy and water systems which enable sustainable and more equitable livelihoods for all.” 

SNV’s agri-food sector aims to support the equitable transition to a sustainable and resilient agri-food system that delivers food security and adequate nutrition for people in all their diversity in such a way that the economic, social, and environmental bases are safeguarded for future generations. Through CRAFT project, the adopted private sector approach model has achieved significant milestones which include proper service delivery to farmers in sorghum and potato value chains. This article aims to provide an insight into the Service Delivery Models way of strengthening value chain actors with a focus on both B2B and B2C benefits.

About CRAFT

 The Climate Resilient Agribusiness for Tomorrow (CRAFT) project is private sector-driven intervention working through and promoting viable business cases (BCs) that are climate-smart, inclusive, scalable and have a clear value proposition to all stakeholders, in particular smallholder farmers.

Implemented by the SNV Netherlands Development Organisation (lead), in partnership with Wageningen University and Research, accelerating impacts of CGIAR Climate Research for Africa, Rabo Partnerships and Agriterra, CRAFT seeks to contribute to increased availability of accessible and resilient food for the growing populations in Kenya, Tanzania, and Uganda.

As climate change continues to challenge global initiatives to increase food production, innovative solutions are essential for ensuring food security and sustainable livelihoods. In East Africa, the Climate Resilient Agribusiness for Tomorrow (CRAFT) project is pioneering effective Service Delivery Models (SDMs) to integrate and define business models of Agribusinesses who are implementing partners in this project. This article explores how the CRAFT project leverages optimized Service Delivery Models to foster CSA practices and technologies, highlighting the success story of Freshcrop Ltd.

What’s an SDM?

 Effective Service Delivery Models are crucial in addressing challenges with the Tripple Bottomline approach of inclusive, sustainable, and commercially viable business. A service delivery model encompasses the framework of interrelated processes involved in providing a service, and the interactions between the business champion and the customers throughout their business relationship.

The viability of the Sustainable Development Model (SDM) for the business case is dependent on achieving anticipated growth and generating revenue from its services. This includes meeting various costs to ensure profitability. Key revenue factors include the volume sold to buyers, diversification of revenue streams, price adjustments, and growth estimates. Operational and administrative costs include extension services, dedicated staff, management information systems, and marketing. Direct costs include buy back prices, threshing and harvesting, running aggregation centres services, warehousing, logistics, production, and packaging. Capital expenditure focuses on purchase of equipment for automation, machinery for farm mechanization. Additionally, working capital is necessary for financing input costs and anticipated production increases.

The Service Delivery Model builds on integrated service provision for smallholder farmers, enablers and centred around the business.

The business case for smallholder farmers.

The business case for smallholder farmers revolves primarily around growth in revenues and more stable margins as a result of the application of CSA practices to increase farm production.

The business case for service providers

• Extension services. This is done through engagement with ToTs and agronomists who train farmers.
• Seed and agro-chemical input services-Seed and input retailers increase their customer base and relationships and, consequently, potential revenues amongst the farmers linked through contracts with business champions.
• Financial service providers.
  • Finance providers build on established and commercially sound product and service models and, like other service providers, stand to grow their customer base and increase revenues through the SDM.
  • To reduce potential credit risks, incentives for the participation of finance providers include tri-partite agreements that include business champions and the other service/ input providers.
• Other in-kind support that service providers can give to the SDM is to help Identifying gaps in service delivery.

Table: 1.1 Service Delivery Model outlook.

Intervention (CRAFT)

The CRAFT project addresses the challenges faced by smallholder farmers by implementing optimized Service Delivery Models tailored through the business champions. The project provides coaching and support to businesses with growth potential, delivering actionable climate proofing and analysis products, and integrating modern technologies and practices to streamline operations. These interventions enhance the resilience of farmers and business champions, enabling them to adapt to climate change risks and improve productivity.

Success Story: Freshcrop

Background and Initial challenges.

FreshCrop Limited, was established in the year 2016 with offices in Nakuru town. Initially, the company focused on the production of ware potatoes on a 4-acre land. The company rapidly expanded due to high demand for ware potatoes, but this growth posed several challenges.

As FreshCrop expanded, it became evident that the availability of certified seeds in the market was inadequate to meet the increasing demand, threatening the company's ability to meet customer demand and sustain its growth. Additionally, farmers directly under the company, reported a decline in potato yields due to the adverse effects of climate change, and outbreaks of pests and diseases. These factors led to increased incidences of crop failure, reduced yields, poor tuber quality, land degradation, and post-harvest losses. The slow adoption of CSA agribusiness practices and technologies by farmers exacerbated these issues, resulting in a reduced purchase of seeds from FreshCrop. These initial challenges meant that Freschrop was to supply farmers with certified potato seeds and offer technical support to improve crop yield through integrated crop management, mechanization services, weather information, and soil testing among other support services.

To address the challenges of insufficient seed supply and the adverse impacts of climate change, FreshCrop made strategic adjustments to its Sustainable Development Model (SDM), supported by CRAFT through its Climate Investment Facility (CIIF). The company diversified its operations to include certified seed potato production, ensuring a steady supply of high-quality seeds.

An out-grower model was developed, involving contract farmers and farmer organizations to align production with market demand. FreshCrop also established supply agreements with smallholder farmers for Shangi potatoes to maintain consistent production targets. To mitigate climate change impacts, FreshCrop integrated Good Agricultural Practices (GAP) and climate-smart agricultural practices. The company provided comprehensive after-sales extension advisory services, linking farmers to input suppliers/ enablers, irrigation solutions, financial services, mechanization, and market access. These strategic changes enhanced seed availability, improved farmer resilience to climate change, and strengthened farmer support and market access.

A prime example of CRAFT’s successful implementation of Service Delivery Models is Freshcrop.  FreshCrop operates hub-sites in potato production zones providing farmers with CSA training, access to inputs and technical services. The company’s model provides a closed loop, ensuring customer lock-in offering proven solution which increase profitability both at company and farmer level.

Picture: 1.3 FreshCrop Ltd team in Mau Narok Hubsite

Freshcrop has developed a comprehensive service delivery model that includes:

• Demo Farms: Demonstration farms where farmers can access climate-smart agriculture (CSA) practices and technologies in action.
• Farmer Hub: A centralized location where farmers receive training on CSA practices, acquire fertilizers, tree seedlings and other farm inputs, and access mechanization services.

Picture 1.4 Storage Facility in Freshcrop’s Farmer Hub in Mau Narok

Through this model, Freshcrop supports over 6,000 farmers, helping them adopt CSA practices and technologies. The training provided at the farmer hub empowers farmers with knowledge and skills, leading to better crop yields and increased incomes. Additionally, the mechanization services offered significantly reduce labor costs and improve efficiency in farming operations.

Key highlights from Freshcrop’s Service Delivery Model and areas of focus

1. Farmer Engagement, Extension services, and Training

• TOT Model Expansion - Emphasis on increased awareness to farmers on adoption of CSA Practices and technologies.
• Diversification of TOT Roles - TOTs have been transitioned to broader roles to enable them earn commission, including aggregation of climate smart products and services like soil testing, weather information, and seed and ware potato aggregation services. This will ensure their continued engagement.
• Continuous Support and Capacity Building. The business champion team has continued to build their capacity in managing aggregation through buy back agreements with farmers and value addition.

2. Financial Viability. The business’s Revenue Projections is forward looking backed by a defined service delivery model that integrates revenue streams that are farmer centred. With increase in awareness of CSA practices and technologies, the business will significantly increase number of customers, number of farmers and high yields.
3. Linkages (Access to Finance, Access to Markets and Access to Support Services)

Freshcrop Ltd collaborates with various service providers, including OCP Africa, which offers mobile soil testing services and fertilizer. Additionally, through a partnership with Syngenta/Equity, Freshcrop Ltd provides financial support to smallholder farmers, facilitating access to necessary inputs and credit.

4. Inputs and Productivity

• Certified Potato Seeds. Ensured smallholders have access to certified, high yielding seeds via the farmers hub points to boost productivity and reduce losses. The main potato varieties from FreshCrop are Dutch Robin, Shangi, Unica, Wanjiku and Chulu.

• Mechanization Services and Inputs Distribution. FreshCrop has an outlet stocked with agrochemicals. Also, through the farmer centres and a partnership with Hello Tractor, the company supports farmers to access tractors for land preparation and harvesting.

Key Strengths

• Robust Farmer Training: Through the TOT model, Freshcrop effectively links farmers to extension services, mechanization services, inputs distribution, and aggregation services.
• Qualified Personnel: TOTs and smallholder farmers trained with CRAFT support are a significant asset.
• Extensive Network: Freshcrop's extensive smallholder network encourages consistent supply and supports a competitive service market.

Summary

FreshCrop’s effective SDM, enhanced by the CRAFT project approach, focuses on farmer engagement, financial viability, diversified extension services, and strong business partnerships. Leveraging these strengths and opportunities will help Freshcrop reach its peak financial position and ensure the long-term sustainability of potato value chain in Kenya.

Challenges

• Market Barriers. Small Holder Farmers face difficulties accessing markets and securing fair prices for their produce.
• Input Access. There is limited access to appropriate agricultural inputs and technologies.
• Knowledge Gaps. There are gaps in knowledge and extension services related to climate-smart practices.
• Operational Costs. Agribusinesses experience high operational costs and inefficiencies.

Opportunities

• Climate-Smart Technologies. Adoption of climate-smart practices enhances farm resilience and productivity.
• Public-Private Partnerships. Collaboration with government agencies and private sector partners can integrate and scale climate-smart technologies.
• Capacity Building. Training local service providers and farmers ensures sustained support and knowledge dissemination.
• Knowledge Sharing. Sharing successful Service Delivery Models and leveraging emerging technologies can further enhance agricultural resilience.

1. Results and Impact

• Revenue Optimization. Business champions have improved service delivery, aligning their operations to optimize revenues.
• Increased Incomes. Farmers have reported higher incomes due to improved agricultural practices and better market access.
• Enhanced Resilience. Adoption of climate-smart practices has made farms in the sorghum and potato value chains more adaptable to climate uncertainties.
• Efficiency Improvements. Optimized SDMs have led to better resource allocation, reduced operational costs, and increased profitability through practices like crop-specific fertilizers, informed planting, and integrated pest management.

1. Lessons Learned

• Tailored Support. Effective service delivery requires tailored support that addresses specific pain points of agro-processors.
• Role of Enablers. The involvement of enablers, smallholder farmers, and continuous improvement through regular evaluations are crucial.
• Impact of CSA Practices. Enhanced profitability is linked to the use of climate-smart practices and technologies, including certified seeds and soil testing.

1. Sustainability

• Public-Private Partnerships (Multi-Stakeholder Partnerships). The CRAFT project emphasizes sustainable change through collaborations that integrate climate-smart technologies into standard operations.
• Ongoing Training. Training local service providers ensures continuous support for farmers and agribusinesses.

1. Future Outlook

• Expansion and Scaling. The CRAFT project aims to expand its reach and impact by supporting business champions in operationalizing sustainable service delivery models.
• Knowledge and Technology. Future efforts will focus on knowledge sharing, leveraging emerging technologies, and addressing barriers to climate-smart solutions.
• Monitoring and Adaptation. Continued monitoring of private sector contributions and adaptation strategies will help in scaling and sustaining business models and climate-smart solutions.

Conclusion

The CRAFT uses an inclusive business approach to drive investments in climate smart practices and technologies among smallholder farmers and agribusiness actors (SMEs and Cooperatives). The CRAFT project is transforming agriculture in East Africa through innovative Service Delivery Models that empower smallholder farmers. By increasing incomes, improving resilience, and enhancing efficiency, the project significantly impacts livelihoods and food security. Investing in sustainable agriculture is crucial for building a resilient future for East Africa, and the CRAFT project is at the forefront of this endeavour.

It is clear that climate change continues to negatively impact food security due to poor yields and low return to farmers, and other actors (e.g. buyers, processors) in the value chain are also negatively affected yet both potato and sorghum have a high market potential both locally and internationally. The business cases under each value chain seeks to increase crop productivity within the target value chains, improve market access for smallholder farmers, and enhance quality of produce marketed. The business cases are expected to benefit smallholder farmer, women and youth who are directly involved in the production and marketing of the crops resulting in increased incomes and improved food security. Some of the interventions in the business cases include provision of quality inputs (improved seed), providing climate smart extension services, promote post-harvest handling practices for quality enhancement, linkage with financial institutions to access credit, promotion of labour-saving technologies (mechanization), aggregation of produce, threshing, packaging and storage etc.

Article by Elly Choso and Harold Mate