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Alfred Schmidley Scientist, Business Model and Value Chain Specialist International Rice Research Institute (IRRI) APEC CONFERENCE Strengthening Public-Private.

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Presentation on theme: "Alfred Schmidley Scientist, Business Model and Value Chain Specialist International Rice Research Institute (IRRI) APEC CONFERENCE Strengthening Public-Private."— Presentation transcript:

1 Alfred Schmidley Scientist, Business Model and Value Chain Specialist International Rice Research Institute (IRRI) APEC CONFERENCE Strengthening Public-Private Partnership to Reduce Food Losses in the Supply Chain Advancing Post-Harvest Technologies and Management to Reduce Losses in Rice Value Chains Westin Hotel, Chinese Taipei 6 August 2013

2 Agenda 1.Overview: Reducing PH losses 2.Advancing PH technologies – an integrated approach – Improved technologies – Business models – Multi-channel extension and delivery – Multi-stakeholder platforms 3.Historical lessons and recommendations

3 International Rice Research Institute Los Baños, Philippines Mission Reduce poverty and hunger, Improve the health of rice farmers and consumers, Ensure environmental sustainability Through research (& delivery) partnerships Established in 1960 by the Ford and Rockefeller Foundations

4 Yield breakthroughs in rice production 1960s Yields approx. 1.5 t/ha Famines predicted, slow growth Today Yields approx. 4 t/ha Foundation for economic growth Traditional rice: more biomass than grain, high duration Modern HYVs: more grain, less biomass, shorter durations semi-dwarf

5 Manual threshing 1-5% Sun drying 3-5% Cutting, handling 1-5% Open storage 5-10% Village milling 20-30% Small retailers Machine threshing 1-5% Combine harvesting 1-5% Mechanical drying 1-2% Sealed storage 1-2% Commercial milling 5-30% Large retailers Crop Consumption Physical losses 15-25% in traditional postharvest chain in SE Asia Physical losses in mechanized postharvest chain Quality losses resulting in 10-30% loss in value Average Postharvest Losses

6 Benefits of Reducing PH losses Increased resource efficiency Decreased pressures on land and the environment Increased food security for the poor – more rice in rice bowls. Increased affordability of rice and price stability. Increased income for farmers Increased livelihood opportunities

7 Advancing PH technologies and best practices 1.Improved technologies and options 2.Business models 3.Multi-channel extension & delivery 4.Multi-stakeholder platforms / Learning Alliances

8 1. Improved PH technologies

9 Common reasons Why technology fails to be adopted... 1.Top-down approach to dissemination rather than bottom up market building (e.g., public sector programs that give away free equipment) 2.Lack of buy-in from end-users, insufficient knowledge about technology use and benefits. 3.Technology not adapted to suit local needs (i.e., one size fits all ) 4.Focus on component technologies alone (w/o recognition of other needs or a clearly defined business case for adoption.) 5.Attempts to outscale technologies w/o regard for building sustainable local supply chains.

10 …equipment graveyards are monuments to lessons unheeded

11 Technology Adaptation Needs Locally producedCentrally produced Characteristics Complex parts (laser) Local content (bucket) Major Support Needs Demonstrate agronomic benefits Establish supply chain Industrial extension Business models for usage and delivery Characteristics Mass produced Very simple or very complex (SB, combine) Major Support Needs Establish supply chain Support services (training, after sales) Regulations Economic analysis Characteristics Simple technology Complex processes Major Support Needs Technology transfer Industrial extension Machinery testing Demonstrate benefits Capacity building (users, manufacturers) Business models for usage There is no one size fits all Flat bed dryer Laser land levelingHermetic Super bag M.Gummert, 2012

12 Feeding the Technology Pipeline A.Salvatiera, 2012

13 2. Business models

14 Postharvest system Rice markets FarmersService providers Millers MillingStorageDryingThreshingHarvesting Distributor Retail Dealers Service / Repair Component Suppliers Fabricator Traders Production Business models 1. Improved technology options 2.Business models 3.Value chains (postproduction and technology supply) 4. Other cross sector value creators Other value creators Research Extension NGOs & community organizations Banks/MFIs/finance Policy-makers

15 Business Model Workshops: What is a business model? What for? How one can be used? Why?

16 A Tale of Two Dryers… Left: Defunct dryer Right: Functioning dryer Both dryers were installed about the same time supported by public sector donor monies. The left one now defunct was grouped-owned by a local farmers cooperative and remains unoperable and unused. The right one was taken over by a single farmer-entrepreneur who now owns and operates a thriving contract services business (based on a Learning Alliance supported Business Plan) As an unexpected outcome, two farmers trained to install and operate the now dyfunct dryer earn money by helping millers and others install theirs! (Source: A. Schmidley IRRI PH Project, 2011)

17 Multiple uses of a business plan 1.Analyze my farm enterprise 2.Evaluate a new activity (technology or practice) 3.Communicate ones business to stakeholders 4.Attract resources and addtl capital if needed 5.Guide implementation, manage risk BUSINESS PLAN for PADDY DRYING SERVICES Mr. Koul Savoeun Entrepreneur & Cooperative Head Mobile: Balat Meaychey Agriculture Development Cooperative Balat Village, Norea Commune, Sangke District Battambang Province Jan 2012 Key learnings : 1. MFIs : Need to offer flexible loan products and services to expand in this key target segment. 2. Farmers: Important of cash flow in a seasonally fluctuating business. 3. Research & extension : integrate actor resources & technical support minimizes risk & benefits of all parties.

18 Cambodia Highlights – Business Forums Identified areas for collaboration: 1.Assist existing MFI clients with technical and other support to optimize efficiency and profitability of PH enterprise (& minimize risk). 2.Train MFI staff about PH technologies & opportunities with business plans from actors. 3.Learning activities to increase financial and market literacy so rural actors can manage loans and new enterprises.

19 A Business Model approach Treats farmers as private sector actors trying to maximize profits from farm enterprise activities. 2.Looks at the end-users enterprise model to make a business case for adoption (not just disseminating technology). 3.Translates technical benefits into a quantifiable value proposition for end-user purchase of technology. (No free or unsustainable giveaways beyond demo or piloting.) 4.Addresses both production and technology supply value chains. (e.g., linking retailers to participatory trials and farmer demand for technologies.) 5.Leverages shared learning and integration of actors. (e.g. Learning Alliance helps facilitate learning and outscaling activities with the private sector – though this is a work in progress!)

20 3. Multi-channel extension and delivery

21 Multi-channel extension and outreach: Hermetic Storage 5 t Cocoon Principles Container with low oxygen permeability Biological activity inside reduces oxygen quickly Insects die at low oxygen level Container prevents moisture absorption

22 Participatory trials and data collection: Farmers and local extension/outreach partners

23 As we can see (right), Super bags purchased for P100, times 6 bags is P600 for the first season. During my trial, I stored seed for 3 months, and my germination rate improved from 82% to 94% for Super bag stored seed. As a result I saved P1,224 in seed next planting. This is my profit and much more than cost of the Super bags which I can re- use w/o buying again next season, increasing my profit even more. Marilyn Aranas, female farmer Butuan, March 2012 Philippines highlight

24 4. Multi-stakeholder Platforms and & Learning Alliances

25 National Learning Alliances – a work in progress) Multi stakeholder platform including key public and private stakeholders Source: R. Flor, T. Mendoza, IRRI, 2011 PlanAct Reflect and capture Flexible partnership allows new partners to get on board Leverages co-funding Captures learning and makes it available to others LA is cross-cutting (technologies, business models, extension/delivery, private sector)

26 Outscaling & cross-country learning: Combine harvesting Response to labor shortage and high harvesting cost Physical losses reduced from 4-10% to 1-2% Timeliness -> Better quality Vietnam: approx 8,000+ combines in the Mekong Cambodia PH Learning Alliance

27 Improved Postproduction Management = Reduced Losses, Reduced Risk and Reduced Cost Extreme labor shortage Increased production Delay in harvesting –Losses –Burned rice fields (2009) Labor cost of manual harvesting: US$ 160 No combine harvesting Cambodia 2007 Prey Veng Province, 2012 Combine harvesting cost: US$ (Manual harvesting cost: US$ ) Losses reduced to 1-2% Improved quality Employment generation: Contractors, service providers, workshops 2000 plus combine harvesters, all types Cambodia 2012 M.Gummert, 2012

28 Flat Bed Dryers: Key issues Local production (assist local workshops with technical support) Adaptations (up scaling) Performance testing Financing (users) Operator training Multi-extension pathways needed Public sector can play a key role here! M.Gummert, 2012

29 Will Project cycles limit sustainable development & delivery? Example: Processes for flat bed dryer development, Cambodia Dryer manuf. training in Vietnam, technology transfer Project installs 4t demo unit at farmers group Business model development for farmers group Training for users Blower testing training Local manufacturer starts production Local manufacturer develops next generation dryer (recirculating dryer) Other manufacturers copy, millers install dryers Manufacturers increase capacity to 8- 20t, problems with blower New rice husk furnace Linking with financing institutions 0 0 Testing of recirculating dryer Project Local manufacturers Dryer users Farmers groups Commercial useCommercial and contract Promotion ~20 ~200 M.Gummert, End-users experiencing technical problems outscaling. Support?

30 Summary & Recommendations 1. Component technologies are needed but insufficient for sustainable adoption. (A better functioning systems approach is needed.) 2. Each sector should stick to their respective mandates. Public sector giveaways dont work. PPPs should NOT be about govt going into business. 3. Group ownership of equipment by farmers hasnt worked. These tend to go hand-in-hand with public programs for free or heavily subsidized equipment. This distorts agro-machinery markets, retards sector development, and limits choices and options available to actors. 4. Technology adaptation is important to suit local needs (i.e., one size doesnt fit all). Technical support for local manufacturers is essential.

31 Summary & Recommendations (contd) 5. Local product champions are often linked to successful technology advancement (e.g., farmer leader, researcher, NGO) who stay involved or stick with the longer process.) 6. Building sustainable supply chains are necessary for sustainable outscaling and delivery. Push-and-pull approaches work best. 7. Multi-stakeholder platforms can facilitate learning, sharing lessons, and integration of actors around a range of needs. (technical adaptation, piloting business models, building supply chains, private sector engagement, and cross-country learning. 8.Time needed for advancing technologies and sustainable adoption is around 10 years if history is any indication. Short-term (3-5 year) project cycles generally result in local actors/stakeholders falling away mid-stream or before commercially sustainable thresholds are crossed.

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