1. INVC- Bridging Activity
Advancing Value Chains of Groundnuts and Soy beans
Presented at the Annual Review workshop, Lilongwe Hotel, Lilongwe
June 2017

2. Presentation outline Introduction Progress of Achievements
Progress of G/nuts and Soya value chains
Costs and returns structures of G/nuts & Soy beans value chain
Sensitivity Analysis of Soy beans
Progress of seed loan management
Progress of aggregation and marketing
Value created by the 2 chains
Lessons
Challenges

3. Introduction
The strategic objective was to improve the competitiveness of soya and groundnuts through;
increasing access to business development, financial, and extension services;
transforming the relationships between value chain actors; and
developing market linkages.
Working in 5 districts (Mchinji, Lilongwe, Dedza, Ntcheu, and Mangochi) covering 15 EPAs, targeted 15,051 farmers

4. Progress of Achievement G/nuts and Soy beans Value Chains
End
Product
Seed and Inoculant provision
Trading
Production
Trans-
formation
Categories of operators - in different channels
Seed
Producers
Funwe – 119MT Makwacha
Museco- 21MT Tikolore
AISL-40MT CG7
Global Seeds- 30MT CG7
Farmers
Farmer groups
Association
Cooperatives
4,582MT of soya
1,380MT of G/nuts
Traders
Informal traders
Formal traders
Goods for Good
Bonga traders
(ACE Platform)
MK /kg Soya
MK /kg G/nuts
Companies
Market
Segment

5. Costs and Returns structure of G/nuts and Soy beans Value Chains
Item
Soy beans-Makwacha
G/nuts- CG7
Yield
1,468kg/ha
963.62kg/ha
Price
MK160/kg
MK300/kg
Total variable costs
MK212,121.00/ha
MK229,360.00
Gross Income
MK234,880.00/ha
MK289,086.00
Gross margin
MK22,759
MK59,726.00
Break-even Price
MK144.50
MK238.02/Kg

6. Sensitivity Analysis for Soy beans (‘What if’)
Scenario
Yield (Kg/ha)
Variable cost (MK)
Price (MK/Kg)
Gross Income (MK)
GM (MK/ha)
BEP (MK/Kg)
‘What If?’
1,000
212,121
160
160,000
(52,121)
212.12
2,000
320,000
107,879
106.06

7. Seed Loan management
140MT of Soy and 70MT of CG7 was loaned to farmers
The rate of repayment varied from one partner to the other but the majority of partners used 1:2 system
Repayment rate for FGs ranges from 40% to 100%
The initial plan for the seed loan was to sell the repaid grain and use the proceeds to buy new certified seed?????
However, there is a challenge that the loan amount will be tremendously reduced…………..

8. Seed Loan management
For example, if we assume 1:2 repayment with 80% repayment rate
In view of this, plans are underway to establish a sustainable seed management system-borrowing from Chithumba model- where repayment is as high as 1:4
Value chain
Quantity distributed
Value (MK)
Expected repayment
80% repayment
Market Prices
Amount (MK)
% of the value
Soya
140MT
116,825,299
280MT
224MT
160
35,840,000
31%
G/nuts
70MT
119,568,900
112MT
300
33,600,000
28%

9. Aggregation and Marketing
Trained 27 (8F, 19M)frontline staff (DAES, We- Effect, Dedza CADECOM) on formulation of aggregation & marketing plans
Trained 274 (129F, 145M) farmers on formulation of aggregation & marketing plans
Over 350MT of soya was aggregated
The market prices are volatile……….fluctuating almost everyday

10. Aggregation & Marketing
Prices of soya beans that were offered by the informal traders ranged from MK110/kg to MK170/kg
Linkage of farmer groups - Nyanja and Chitowo Associations to buyers MK200/kg for Nyanja and 15.4 MT for

11. Value created by the 2 Value chains
Commodity
Area (Ha)
Yield (Kg/ha)
Production (Kg)
Average Price (MK/Kg)
Amount (MK)
Soya
3,121.00
1,468.00
4,581,628
160.00
733,060,480
G/nuts
1,432.00
963.62
1,379,904
300.00
413,971,152
1,147,031,632

12. Lessons
Despite the message of aggregation and marketing, farmers still prefers CoD mode of trade
Group marketing is being affected by past experiences and lack of trust…
Access to structured market is depended on the volume of production

13. Challenges
Low prices
Low production- not able to participate in competitive and structured market effectively
Poor quality seed of groundnuts reduced the profitability
Weak farmer groups- not able to participate in the marketing of commodities effectively
Aggregation was affected by past experiences and lack of trust.

14. Thanks for your attention!...