1. Case Study: Using Data to Develop a Groundnut Seed Introduction Strategy in Bangladesh
Maputo
February 2017
FARM2MARKET Agribusiness Consulting, Inc.

2. Principal Crops in Bangladesh
With a total of 19.6 million net cropped acres in agricultural production (or 37.3 million total cropped acres, taking into consideration multiple cropping patterns), the distribution of this acreage by crop is estimated to be as follows:
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3. Oilseed Crops in Bangladesh
Oilseed crops in Bangladesh represent an estimated 584,000 acres (2.98%) of total agricultural land utilization. Of this amount, groundnut production takes up 40,000 acres (0.2% of land under cultivation)
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4. Groundnut Crops in Bangladesh– Areas and Production
Groundnut production in Bangladesh is distributed across the four major production zones of the country, ranging in importance from Dhaka, with 37% of national production, to Khulna/Barisal with only 10% of national production.
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5. Groundnut Crops in Bangladesh– Comparative Yields
While Bangladesh’s groundnut yields are comparable to those found in neighboring countries in Southern and Southeast Asia, they are significantly lower than average yields in China
Groundnut usage is evenly split between out-of-hand consumption and as an ingredient in snack foods
Processors would prefer a lower-moisture variety of groundnut. No such varieties are cultivated in Bangladesh.
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6. Seed Procurement Channels in Bangladesh
Farmer-sourced seed dominates the seed sector, representing on average over 80% of total seed origins for the five crops shown below
The private sector share averages 6%, ranging from a low of 0.2% for pulses, to a high of 43.6% for vegetables
Typically, selection of farmers for field trials is delegated to dealers and retailers.
Public sector sources (BADC & DAE) average almost 12%, ranging from 4% of potatoes to 31% for rice.
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7. Private Sector Distribution Share
Of the 6% of total seed distribution controlled by the private sector, there is no single company which dominates across the entire spectrum of selected crops
Aggregate companies in the “Other” category demonstrate the degree of fragmentation within the private sector component of the seed sector.
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8. Private Sector Distribution Networks
With the exception of Syngenta, all of the dealers and retailers for the respective seed companies work on a non-exclusive basis
Head counts and office deployments for each company generally follow their respective market shares, with Lal Teer, ACI and Syngenta representing the only material departures from this norm
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9. Groundnut Seed Distribution
As regards groundnuts, the reliance on farmer-sourced seed is even stronger here than for the industry at large
There is no private company role in the groundnut category, with BADC providing the only non-farmer source for seed
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10. Seed Sector Landscape – Takeaways
Agriculture plays a preponderant role in the Bangladeshi economy
Land utilization is dominated by rice (78% of total acreage), while groundnut (0.2%)constitutes only a niche crop
Yields in Bangladesh for groundnut are materially lower than in China
Farmer-sourced seed accounts for 80%, on average, of all planting material for the principal crops in Bangladesh, with private sector companies contribution at less than 6%.
When private sector suppliers set out to field trial new seed varieties, selection of farmers for field trials is typically delegated to dealers and retailers.

11. What Next? How can this data be converted into strategy?
What are the most attractive opportunities associated with the introduction of improved varieties of groundnut seeds?
What are the immediate challenges which will need to be overcome in the introduction of these improved seeds?
What elements of a groundnut strategy are you able to formulate on the basis of the data you’ve just seen?
What are the questions that remain to be asked in order to complete your strategy?
What data do you need in order to come up with the answers?

12. Varietal Development Strategy -- Groundnut
Why groundnuts?
Low productivity compared with other global producers
No low-moisture varieties available to meet demand of processors
Few hybrid varieties currently in commercial distribution
95% of all groundnut seed is farmer-sourced
Identify six high-yielding varieties in China (3 each for processing and for fresh consumption)
Research trials to define yield characteristics for each variety
Simultaneous consultations with processors and farmers to confirm required product specifications
Field trials of 3 best-performing varieties (chosen from original six)
Initially seed will be imported from China, eventually will be propagated in Bangladesh
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13. What Research Tells Us (1)
Surveys were commissioned to conduct in-depth interviews with Bangladeshi farmers in the Jessore and Barisal areas
Designed to gain insights into two key areas:
How farmers decide where to access their seeds
Whether or not farmers access media as part of their seed procurement process
A diverse sampling of 30 farmers from various locations within the two geographical focus areas was created
Farm sizes ranged from < 100 decimals to >1,000 decimals
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14. What Research Tells Us (2)
Research Findings
How do farmers decide where to buy seed?
Most important factor governing where farmers buy seed was convenience of location (65%), followed closely by trusted relationship with vendor.
Many respondents (55%) indicated they relied more on retained seed than on outside purchases.
Many (45%) also indicated that a seller’s past performance as a supplier of high quality seed influenced their decision.
While important, other factors such as price (40%), range of products on offer (35%), and availability of desired quantity (15%) were viewed as lesser considerations in the purchase decision.
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15. What Research Tells Us (3)
Why do farmers decide to buy one brand of seed instead of another?
Nearly all interviewees (80% most important, 90% top 3) rated quality as the most important factor in the decision regarding which seed they would buy. They reported using a variety of techniques to test product quality, including visual and physical inspection, chewing, and test applications of small quantities.
Few respondents (15% most important, 25% top 3) mentioned producer logo or seal as assurances of product quality as their leading consideration
Even fewer respondents (5% most important, 45% top 3) described price as a determining consideration. Many expressed willingness to pay higher prices for better quality inputs, and many described high prices as a signal of quality.
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16. What Research Tells Us (4)
Why do farmers decide to plant one crop instead of another?
Personal/Family Experience (70%)
Expected Revenue (40%)
Vendor Advice (40%)
Extension Officer Advice (30%)
Resource Availability (35%) – land/water/capital
How strong is a farmer’s brand loyalty?
Most interviewees (60%) displayed familiarity with relevant seed and fertilizer brands.
Many (50%) said they either did not have a regular brand of seeds or fertilizer, or were unable to distinguish between brands
Some (30%) said they always buy the same brands, while some (20%) mostly stay loyal to the same brand.
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17. What Research Tells Us (5)
Where do farmers get their information?
Local retailer (80% usage, 45% high confidence)
Neighboring farmers ( 80% usage, 30% high confidence)
Extension agents (70% usage, 35% high confidence)
Input dealers/manufacturers (45% usage, 10% high confidence)
Private television (45% usage, 15% high confidence)
BTV national television (25% usage, 15% high confidence)
Local print media (5% usage, 0% high confidence)
National radio (0% usage, 0% high confidence)
Local radio (0% usage, 0% high confidence
National print media (0% usage, 0% high confidence)
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18. What Research Tells Us – Takeaways
Dominant decision factors for seed selection by farmers:
Easy access
Relationship with trusted vendor
Product performance/quality
Favorable personal or family experience
Subordinate decision factors:
Supplier reputation
Price
Vendor or extension officer advice
Brand loyalty
Strong preference for use of retained seed
Little/no influence by media (television, radio, print)
Farmers gather information from multiple sources (retailers, farmers, extension agents, manufacturers, media), but do not believe everything they hear
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19. What International Best Practice Tells Us —Takeaways
Successful pioneer firms continually focus on providing farmers with information regarding:
Awareness: the new product that is on offer, and how the product should be used
Advantage: the capacity of the new product to provide better outcomes as compared with current practices
Affordability: the extent to which farmers are able to purchase the new product
Access: insuring that the new product is in stock when the farmers need it, at a location they can easily get to
Successful pioneer firms work to build repeatable models that allow them to expand into new territories, and to incorporate new products into their line of offerings, by
Exploiting core competencies and prioritizing growth options
Investing in talent and systems to enable long-term growth
Establishing routines and systems which can translate its strategy into action
Building feedback and learning systems which allow for continual adaptation and innovation
Farmers have grown accustomed to product adulteration and mis-representation, and discount vendor claims accordingly. Insuring that new products keep their promises is essential for a successful introduction.
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20. What Practitioners Tell Us — Takeaways
Aggressive marketing strategy that uses promotional incentives to cultivate smallholder early adopters during the launch phase of a new variety is critical.
Limit the risk by having promotional tactics that have farmers use only a small portion of their land for testing new seeds – creating like to like comparisons is often less risky and more effective when dealing with smallholder
It’s always better to under-promise and then over-perform
Leveraging enthusiastic early adopters can make a critical difference through referral programs and testimonial advertisements
Dealers and retailers should be carefully schooled in the care & feeding requirements of each new variety, so they can communicate these requirements effectively to their customers.
FARM2MARKET Agribusiness Consulting, Inc.

21. What Dealers Tells Us — Takeaways
Good product performance – in terms of yields, flavor and appearance – trumps all other considerations in determining the success of a new variety
First impressions are critically important; what dealers see at (or hear from) field trials determine what new varieties they will take on
Dealers typically take on only 4-5 new varieties per year.
Dealer loyalty is divided across many competing suppliers
Dealers’ shelves are already crowded, with different varieties typically in inventory. In most cases, space for new varieties is made by the elimination of old varieties
Farmers call the shots in terms of what new seed varieties dealers take on
Dealers welcome new varieties – provided they perform well
Dealers appeared to be uninformed about the supply and distribution chains for groundnut seed. There is virtually no overlap between conventional distribution networks for commercial agricultural seeds and the bazaar-based distribution network for groundnuts
FARM2MARKET Agribusiness Consulting, Inc.

22. Conclusions (1)
Groundnuts are a niche crop within the overall context of Bangladeshi agriculture
Groundnut yields are comparatively low, with 2014 yields in China higher by 116%.
Retained seed is estimated to represent 95% of total seed used by Bangladeshi farmers for groundnuts
Private sector seed suppliers account for less than 6% of total seed usage for the major agricultural crops in Bangladesh
BADC is the only vendor of commercial groundnut seed. The 95% portion of the market controlled by retained seed is distributed through specialized retailers operating at village-level bazaar markets. Conventional dealers and retailers have little understanding of this distribution network
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23. Conclusions (2)
Being able to buy seed close to home and when they need it are critical factors in a farmer’s seed procurement decision
Confirmed product performance, demonstrated through farmer field days, is essential for a successful new product introduction
Trusted vendors can exert a positive influence on the farmer’s decision to take on a new seed variety
Awareness, advantage, affordability and access should all be taken into consideration by vendors as part of their introduction strategy
Addressing farmer concerns with respect to adulteration would facilitate their decision to adopt a new variety
FARM2MARKET Agribusiness Consulting, Inc.

24. Conclusions (3)
Dealers, retailers and farmers alike encourage the use of early adopters/”advocate farmers” during the initial stages of a new product introduction
Pioneer companies need to take a long view in terms of investments in staffing, management systems, and feedback systems in order to improve the prospects of a successful introduction
Remember to under-promise, then over-deliver. Even excellent performance may not be enough to compensate for unrealistically-high expectations
Seed companies cannot work with farmers only through their dealers and retailers. They need to work with farmers on a 1-on-1 basis in order to understand the full details of the procurement process, particularly for non-conventional crops such as groundnuts.
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25. What recommendations would you make to this client regarding its groundnut introduction strategy?
Research trials
Field trials
Grower outreach
Short-term
Long-term
Product integrity
Distribution channels
Immediate introduction of multiple varieties
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26. Recommendations (1)
Continue research trials until a full package of seed & agricultural practices have been elaborated. If necessary, defer the initiation of field trials until research trials have demonstrated that the technological package for each new variety has been perfected
Take control of field trials: Typically, selection of farmers for field trials is delegated to dealers and retailers. Client should take advantage of these field trials to begin 1-on-1 interaction with farmers. Dealers should be encouraged to make recommendations, but final selection should remain with Client’s personnel. Successful field trials are the most important ingredient for a successful launch; human and financial resources should be deployed accordingly
FARM2MARKET Agribusiness Consulting, Inc.

27. Recommendations (2) Survey growers to learn
The processes that lead them to try new varieties
The incentives which motivate them
How they define “easy access”
How to communicate complicated, technical information to illiterate farmers
Then incorporate findings into an overall informational and promotional strategy tailored to the needs of these particular grower groups.
Develop methods to insure product integrity: Growers have been burned in the past by adulteration of product between the time when it is packed by vendors and it reaches the farmers’ hands. A credible guarantee of the integrity of the product from tampering would constitute a competitive advantage
FARM2MARKET Agribusiness Consulting, Inc.

28. Recommendations (3)
Establish feedback loops to capture positive and negative feedback with regard to Client’s seeds, old as well as new. Such a loop would provide an opportunity for quick action in the event of the emergence of an unexpected product defect. It would also foster the type of direct vendor-to-farmer contact which could serve to signal opportunities for new products and services
Given Client’s limited dealer network, consider distribution approaches which could meet farmers’ expectations for easy access to the seeds they want, when they want them
FARM2MARKET Agribusiness Consulting, Inc.

29. Recommendations (4)
Study the existing bazaar-based distribution system which mobilizes 95% of the groundnut seed planted in Bangladesh. No one within Client’s management team, its dealers or its retailers appears to have a good understanding of how this market channel works. Understanding this channel will be critical to the task of successfully replacing it
Adapt this system to the distribution of Client’s new groundnut seed introductions:
By adding the bazaar retailers to the existing dealer networks used by Client, or
By co-opting the existing bazaar-based network as a separate distribution system, or
By some combination of these two approaches
This process will need to be closely coordinated with Client’s existing cadre of dealers & retailers
FARM2MARKET Agribusiness Consulting, Inc.

30. Recommendations (5)
Recognize the enormity of the changes that will be involved in adding new processor varieties and new fresh varieties into a system where a single variety has historically supplied both markets indiscriminately. With the exception of a small (and, in all likelihood, poorly propagated) segment of groundnut seeds from BADC, this market segment is unfamiliar with the use of improved or hybrid seed. Asking such farmers to buy unfamiliar and expensive seed, perhaps through new supply channels, is already assuming a lot of them. To impose a further variety/market segmentation into processor and fresh varieties at the same time may undermine the success of the entire product launch process
FARM2MARKET Agribusiness Consulting, Inc.

31. Recommendations (6)
Based on the logic in 3 above, consider a deferral of the introduction of processor varieties until the improved fresh varieties have been established, and targeted adoption rates have been achieved. At that point, the advantages of processor varieties can be fully communicated to groundnut farmers.
The prospects for successful introduction of processor-specific varieties could be made more attractive if accompanied by reassurances from processors that the market for such varieties would be assured. This might consist of contract farming relationships, or some other form of purchase guarantees on the part of the processors.
FARM2MARKET Agribusiness Consulting, Inc.