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Feed the Future Mozambique Agricultural Innovations Activity (FTF Inova) Is a Five-Year Market Systems Development (MSD) Activity That Began in February 2017

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Feed the Future Mozambique Agricultural Innovations Activity (FTF Inova) Is a Five-Year Market Systems Development (MSD) Activity That Began in February 2017 Feed the Future Mozambique Agricultural Innovations Activity (FTF Inova) Annual Report (October 2019 - September 2020) Maputo, October 2020 This publication was produced by FTF Inova for the United States Agency for International Development (USAID), USAID Contract Number AID-656-C-17-00001, at the request of the USAID Mozambique Mission. This document is made possible by the support of the American people through USAID. Its contents are the sole responsibility of the author or authors and do not necessarily reflect the views of USAID or the U.S. Government. USAID/Mozambique Contact: Elsa Mapilele, Contracting Officer’s Representative, FTF Inova [email protected] Contact: Raul Pitoro, Chief of Party, FTF Inova raul_pitoro@FTF Inova.com FTF Inova: Annual Report (October 2019 – September 2020) Table of Contents Table of Contents ............................................................................................................... i Tables and Figures ............................................................................................................. ii Acronyms........................................................................................................................... iii 1 Executive Summary ..................................................................................................... 5 2 Strategic Review and Outlook .................................................................................... 8 3 Key Results Achieved ................................................................................................... 8 3.1 Way Forward in the Next Year and Quarter(s) .......................................................................12 4 Progress Over the Last Year .................................................................................... 14 4.1 Input Distribution Network ...........................................................................................................14 4.2 Supply Chain Management ..............................................................................................................31 4.3 Support Services ................................................................................................................................41 5 Collaborating, Learning, and Adapting.................................................................... 55 5.1 Operational Environment ...........................................................................................................55 5.2 Collaboration with other Stakeholders .......................................................................................57 5.3 Information on indirect impact and replications from FTF Inova interventions .................57 Other Research Findings .................................................................................................................60 Annex 1 – Theory of Change .......................................................................................... 62 Annex 2 – Performance Indicator Table ....................................................................... 63 Annex 3 – Success Story ................................................................................................. 66 FTF Inova: Annual Report (October 2019 – September 2020) i List of Tables and Figures Table 1. Results per Outcome Pathway 1................................................................................... 9 Table 2. Results per Outcome Pathway 2................................................................................. 10 Table 3. Results per Outcome Pathway 3................................................................................. 11 Table 4. IDN Progress ................................................................................................................ 17 Table 5. SCM Progress ............................................................................................................... 33 Table 6. SSS Progress ................................................................................................................. 43 Table 7. FTF Inova Progress on Performance Indicators ....................................................... 63 Figure 1. Agricultural Market System and Network Map ....................................................... 58 Figure 2. Network Analysis ........................................................................................................ 60 Figure 3. FTF Inova's Emergent Theory of Change Graphic .................................................. 62 Figure 4. Part of the cotton crop purchased from one of the best farmers’ clubs in Lalaua (Nampula) ............................................................................................ Error! Bookmark not defined. Figure 5. Members of one of the best farmers’ clubs in Lalaua (Nampula). ......................... 67 FTF Inova: Annual Report (October 2019 – September 2020) ii Acronyms AICAJU The National Cashew Processors Association AIPM Agro-Imbeu Parque e Máquinas BDS Business development services BMO Business membership organization CdA Casa do Agricultor CLA Collaborating, learning, and adapting CRM Customer relationship management DECA Desenvolvimento e Comercialização Agrícola ECA Empresa de Comercialização Agrícola Ltda ESD Enterprise and Supplier Development ETG Export Trading Group FTF Feed the Future FTF Inova Feed the Future Mozambique Agricultural Innovations Activity FY Fiscal year HEI Higher education institution IDN Input Distribution Network ICT Information and Communication technology ISPM Instituto Superior Politécnico de Manica K2 Klein Karoo KDT Ka Da Terra MEL Monitoring, evaluation, and learning MeTL Mohammed enterprises Tanzania Limited MGT Mozambique Good Trade MITADER Ministry of Agriculture and Rural Development MOU Memorandum of understanding MSD Market systems development MZN Meticais NGO Non-Governmental Organizations Q Quarter SCM Supply Chain Management SHF SHF SSS Support Service Systems FTF Inova: Annual Report (October 2019 – September 2020) iii ToC Theory of Change UBS UniLurio Business School UCM Universidade Católica de Moçambique USAID United States Agency for International Development USD United States dollar VBA Village-based agents VSLA Village savings and loan association FTF Inova: Annual Report (October 2019 – September 2020) iv 1 Executive Summary The Feed the Future Mozambique Agricultural Innovations Activity (FTF Inova) is a five-year market systems development (MSD) activity that began in February 2017. It works with market actors, such as businesses and government entities, to help them adopt new ways of doing business and delivering services, to help Mozambican agriculture become more competitive and inclusive. In its first three years of implementation, FTF Inova has successfully managed to be a catalyst for new practices, products, and services in agriculture, nudging the system to become more responsive to SHFs' needs, whilst improving relationships and resilience. During the year under review in this report, FTF Inova has registered remarkable progress. We have proven the concept of several innovative business models, which are seeing increasing interest from market actors, moving them closer to the tipping point when these innovative practices can be adopted at scale, while also meeting all performance monitoring targets. On the input distribution market system, although government practices continued to create market distortions, market actors in partnership with FTF Inova adopted customer-centric practices that delivered more value and agronomic information to farmers. These practices are successfully building sustained demand and sufficient volumes to raise efficiency and lower the costs of distribution to the last mile. Examples include: ● Innovative pricing strategies aimed at controlling mark-ups and reducing the retail price of inputs for SHFs, originally piloted with FTF Inova partners, have been adopted by 13 “second-movers.” ● CdA has increased its last-mile distribution routes from an initial 3 to 17, serving thousands of farmers through a network of over 200 agro-dealers and retail points with total sales of 2,389,466 Meticais. ● The use of pull distribution systems to improve the timeliness of product delivery to strengthen relationships, add value, and build customer loyalty is starting to show impact: ○ K2 scaled the pre-order distribution network from 3 to 11 agro-dealers, adding dealers in Sussundenga, Manica, Gondola, Macate, and Vanduzi districts. Four of these agro-dealers are already working with sub-networks of 10 VBAs each, while 7 are still in the process of recruiting agents. K2 is planning to expand its network further into the regions of Macossa, Gorongosa, and Mussorize and is already working to identify agro-dealers and retail points. ○ Luteari, who initially piloted a small distribution network of 8 VBAs, has now expanded the network to 40. These VBAs reach more than 8,000 farmers. ○ Bayer has built a network of regional hub-distributors with the capacity to reach at least 90 agro-dealers and serve over 10,000 farmers. Significant progress has also been observed in the supply chain management market system. FTF Inova has implemented innovations with its partners to change the predominant “spot market” business practices and unlock more value by developing domestic supply chains. The implementation of a transparent performance management mechanism through supplier clubs, which aims to increase production quality and farmer loyalty,
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