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, is showing encouraging results. For instance:

● The best-supplier clubs established by Olam helped cotton farmers improve yields and quality, and repay credits beyond expectations. With this successful implementation, Olam has begun to expand the use of these clubs to other crops. ● Ka Da Terra supermarkets has successfully registered an association of 25 women representing 800 farmers to supply fresh produce from Niassa province. As a legal entity, the association will look for other off-takers and transact on the market. ● After piloting performance-management supply chain schemes with 391 farmers, Novo Madal has expanded access to the performance suppliers' clubs to 9,560 farmers.

FTF Inova: Annual Report (October 2019 – September 2020) 5

● Miruku has successfully adopted suppliers club tactics in maize and soya supply chains. Through the clubs, Miruku has distributed 3,500 kg of maize seeds and 3,700 kg of soybean seed on credit, with a value of USD 16,039, to 348 farmers. The final assessment of the intervention showed that with the implementation of the initiative, most of the producers in the Alto Molocue district increased their cultivation areas and improved inputs, which increased productivity by 25%. The producers were satisfied and motivated with the incentives received and increased confidence with Miruku.

As the supplier club innovation draws the attention of off-takers across multiple sectors, FTF Inova is discussing potential replication and innovation with AICAJU, the Mozambique Cotton Association (MCA), and ETG. Each has expressed its plans to scale performance management schemes.

This year, FTF Inova has expanded its portfolio to facilitate market access for producers and improve the quality of fresh produce in urban areas through linkages in transport. With Adicional as the “first mover”, the innovative approach combines direct links with farmers' contacts and a crop aggregation function that supplies horticulture products to identified retailers in Nampula using the available backhaul capacity from CdA input distribution. With the initial investments, Adicional has developed two purchasing routes and reached 84 producers and 5 aggregators from the Ribàué district, earning total revenue of 180,950.00 Mt’s (USD 2,585.00), corresponding to the sale of 11,878 kg of different vegetables and an average margins around 20% from the sales only in two months of piloting. As a result of this successful intervention, Adicional is investing in the expansion to 2 additional routes (Nampula - Lichinga - Nampula, and Nampula - Nacala - Nampula). With 4 routes, Adicional can increase from one to 3 deliveries per week, add more suppliers and retailers, and diversify the varieties of products offered to urban vendors. The two new routes are linked to CdA’s “Rota Certa” input distribution strategy, and a recent agreement signed between Additional and ZAP to deliver TV satellite kits to rural areas.

Support services are important for input distributors, retailers, and off-takers to build profitable businesses that also enable SHFs to have affordable, timely, and convenient access to quality inputs and sell their produce to fair markets. FTF Inova promoted innovations with marketing firms, universities, logistics companies, financial services firms, ICT firms, and media companies. ● Marketing: FTF Inova partnered with the marketing and branding firm Tangerine, connecting them to input companies to provide communication and branding services is catalyzing their adoption and promotion of business strategies that are key for input firms’ growth. As result, Tangerine has invested in Cultiva, a platform that allows input suppliers to have real-time data on their brand presence and competitor activity for different levels of customer segments. During a 3-month pilot, Tangerine has pitched to 10 input companies and has already attracted 4 leading brands (K2, Phoenix, Syngenta, and Fepro) with between 400-520 agro-dealers profiled and benefiting from improved merchandising skills. ● Logistics and transportation: Three “first movers” (Appload, Adiciaonal, and Ecotri) invested in different types of transport and logistics innovations to increase cost-efficient coverage to the last mile. Appload has seen significant growth in its transport service matching platform as a result of investments in market research to better understand the agriculture sector and in promotional activities. Its clients' portfolio increased to 40 clients, 60 transporters, and 115 drivers. ● Universities: Two universities (UBS and UCM) have invested a total of $23,850 to provide a new service to rural agriculture-based businesses. Their program, supported by FTF Inova, to increase the availability and placement of high-skilled workers in the agriculture market system resulted in the training of 81 students (36 female) and the placement of 16 students (9 female) at 10 agro-dealer shops.

FTF Inova: Annual Report (October 2019 – September 2020) 6

Key Actions for Next year

In the last year of program implementation, FTF Inova will focus on the sustainability of the capacity building and the scaling of innovative practices. In the input sector, FTF Inova will devolve capacity building into the system, with less direct involvement from the program and greater focus on working through our partner input supply companies and service providers to train their staff and village agents. FTF Inova will invest in strengthening large input firms' staff capacity, such as K2, Easiseeds, and Bayer, in promoting customer-facing strategies to their network of agro-dealers. FTF Inova will also document and disseminate business cases and lessons learned from the pilots to encourage replication/scale; strengthen the flow of feedback from SHFs into the system to increase pressure on input supply businesses to work with farmers and perform key market functions in new ways; and push all network actors to invest in pricing systems that provide a fair price to their customers and generate increased sales volumes. In supply chain management, FTF Inova will consolidate the proof of concept and document the suppliers club experience, while continuing to strengthen local capacity (such as industry associations, government institutions, and academia) to support commodity buyers using supplier club management schemes to ensure the sustainability of this innovation; and leverage outreach from actors such as government institutions, business organizations, and NGOs that influence the market system to promote scaling. Finally, in the support services sector, FTF Inova will partner with academic institutions, marketing, and logistics firms to strengthen their capacity to provide relevant services demanded by market actors and continue facilitating market research and linkages.

This progress is elaborated in the sections below.

FTF Inova: Annual Report (October 2019 – September 2020) 7

2 Strategic Review and Outlook

During FY 2020, FTF Inova continued implementing a flexible, systems-oriented, learning-based approach to support the agricultural business. Partnership selection continued consistent with the previous fiscal year, emphasizing the sharing and co-creation of ideas with the private sector which resulted in co-investment partnerships. With knowledge accumulated from the past two years, FTF Inova used lessons from implementation to better understand and develop its theory of change in FY2020, depicted below. FTF Inova used grants for the first time in order to buy down the risk of innovation in the agriculture market system. With a robust MEL system, FTF Inova has captured early signs of change and used these signs internally to refine and adapt interventions. In FY2020, FTF Inova’s communication strategy intensified technical analysis to address gaps in knowledge critical for programming. FTF Inova also increased the development and sharing of communication products – written materials, events, and videos – to highlight success and encourage positive feedback loops that crowd in adoption and amplify impact.

With the outbreak of the Covid-19 pandemic in March 2020, the Government of Mozambique announced a State of Emergency, bringing many business activities to a standstill. Agribusinesses in Mozambique faced increased uncertainty and worsened economic outlooks. FTF Inova adapted to focus activities on minimizing the negative impact of government restrictions and improving the economic resilience of agribusinesses; and by revising and adding activities that strengthened market relationships, particularly with smallholder farmers (SHFs), by embedding health support services. Aligned with these developments, FTF Inova presented a proposal for additional funding to deliver a Challenge Fund to strengthen the agricultural market system resiliency. The proposal was approved by USAID and implementation will begin in the next quarter.

3 Key Results Achieved

FTF Inova: Annual Report (October 2019 – September 2020) 8

Outcome Pathway 1: Improved terms of sale for agricultural products Table 1. Results per Outcome Pathway 1 Indicator Achievements in FY20 Relevance The value of new US Government EG.3.2-14 Value of new USG commitments and private sector commitments and private sector investment leveraged indicated the investment leveraged by the USG $1,705,810 contribution of the US Government to to support food security and support terms of sales for agricultural nutrition [IM-level] assistance products. Sales figures alone are not sufficient to understand terms of sale, but analysis of sales by and to SHF, or of particular products (i.e. input) or services can prove EG.3.2-26 Value of annual sales $17,210,863 this year of which 65% ($ useful to understanding developments in of farms and firms receiving USG 11,169,806) are sales of SHFs (SHFs)) markets. They also show us aspects of assistance access to markets and the ability of some market actors to influence others. This is especially relevant among specific segments of SHFs. GNDR-2 Percentage of female Excluding females or youth from market participants in USG-assisted systems and from solving problems and programs designed to increase 28% of the 5,147 assisted were female innovating in the face of shocks and access to productive economic stresses is missing out on potentially resources valuable sources for resilience. Changes in YOUTH-3 Percentage of social norms regarding gender and youth participants in USG-assisted 15% of the 5,147 assisted were under can prove transformative if giving those programs designed to increase 30 years of age traditionally excluded more beneficial roles access to productive economic and opportunities. resources who are youth

This year FTF Inova has improved the terms of sale for agricultural products through innovations that led to increases in sales value and volume, increased investment, and improved participation of women and youth. Our most significant achievements this year include:

Farmers increased the productivity of their land and achieved higher yields and higher quality produce. FTF Inova worked with partners to improve the sales of SHFs in two main ways. The first is to increase yields. FTF Inova successfully worked with off-takers to better align their incentives with farmers. This alignment has led off-takers to provide smallholders with access to inputs on credit, significantly increasing their potential yields. The second is by increasing the quality of the products smallholders produce. Off-takers are also investing in services and training that enable farmers to produce more high-quality products, and subsequently increase their incomes. Within supplier clubs, for example, farmers have been supported with inputs on credit, services, and in some cases, land. This has resulted in bumper harvests, with increased incomes for farmers, and a better supply of goods for aggregators.

With financial rewards becoming clear, both SHFs and companies are investing in their productivity. FTF Inova has worked to prove the viability of several models within the agricultural sector of Mozambique. This is leading to investments from both the private sector and from individual farmers. Investments leveraged from the private sector total USD 1,457,986 and include private companies investing in input distribution mechanisms, improving access to inputs for farmers, and training their staff. Farmers are also investing in themselves. Access to new varieties of seeds and inputs has led farmers to grow new types of crops. For example, in Manica SHFs report gaining access to red onion varieties instead of only white. This allows them

FTF Inova: Annual Report (October 2019 – September 2020) 9

to move to a more valuable crop, making more money from the same land. As farmers increase their profits, they are enlarging their land under production, increasing their farming businesses in scale and formality.

The agricultural sector is becoming more inclusive as women and youth have increased access to markets. Women and youth have traditionally not been included in the agriculture sector in a meaningful way, usually assigned to roles with low-value addition and low prospects for improving outcomes. This year, FTF Inova has prioritized women and youth participation, with 28% of participants being women, and 15% of participants being youth.

Outcome Pathway 2: Improved access to agricultural inputs, services, and information Table 2. Results per Outcome Pathway 2 Indicator Achievements Relevance in FY20 EG.3.2-24 Number of individuals in the The adoption of improved practices and agriculture system who technologies (like CRM systems, improved seeds, have applied improved 22,291 individuals marketing, etc) by diverse actors throughout the management practices agricultural system increases productivity and or technologies with profitability. USG assistance EG.3.2-25 Number of hectares (ha) of land The increased area under improved technology or under improved management practices such as the use of technologies or 23,322 ha improved seed and fertilizer increases management practices productivity, production, and income.. with U.S. Government assistance EG.3.2-27 Value of The increased access to finance improves agriculture-related inclusion for targeted segments (like MSMEs) and USD 6,322,901 financing accessed as a helps strengthen and expand markets and result of USG assistance agricultural growth.

Improving access to agricultural inputs, services and information has been a vital part of increasing growth and resilience in the agricultural sector, as well as contributing directly to the improved terms of sale of agricultural products. Our most significant achievements this year include:

Suppliers are providing inputs with more consistent prices, consistent quality and consistent quantities. FTF Inova worked across several interventions to increase the reliability of input supply chains that serve SHFs. This includes establishing transparent pricing mechanisms that provide clear prices to farmers in rural areas which are consistent with prices paid in urban areas. It also includes improving distribution networks to improve the way inputs reach the last mile. This resulted in a greater variety of products being available in greater quantities, and at key times of the year. Quality has also been improved through better links to formal suppliers who can guarantee their product as genuine and effective.

Input suppliers are beginning to compete with each other in terms of quality of services, rather than simply by providing the lowest price possible. As input suppliers increasingly recognize rural areas as viable markets, they are also recognizing that providing quality services alongside inputs makes business sense. This year, with FTF Inova support, companies such as CdA have started to support the technical capacity of community agro-dealers and SHFs to improve their use of inputs, the benefits they see from those inputs, and

FTF Inova: Annual Report (October 2019 – September 2020) 10

therefore the value of inputs they will buy in the future. This is increasing competitive pressure on other actors in the supply chain, to the benefit of SHFs.

New technologies are increasingly being used in the agricultural sector, with 20,421 hectares now using improved technology or management practices. Traditionally, a lack of investment in rural areas meant that new technology or management practices were lagging. This year, FTF Inova has been working to increase the pace of uptake. Companies such as Olam and Miruku have directly brought new technology to farmers, by providing training or services as part of supplier clubs. New technology has also been introduced through innovations in input supply. For example, commission schemes partnering local shops with large input distributors are increasing the availability of a wider range of products and information in rural areas, leading to new production techniques and new crops being tested by SHFs.

Outcome Pathway 3: Improved Quality and Quantity of Relationships Table 3. Results per Outcome Pathway 3 Indicator Achievements in Relevance FY20 Custom indicator #3 Number 15,850 farmers with of farmers who have a strengthened new/improved commercial commercial Strong networks, social capital, and expectations relationship with partner firms relationships of trust and cooperation between market actors Custom indicator #4 Number 54 firms with enable collaborative solutions to business of FTF Inova partner firms who strengthened challenges, shocks, and stresses. have new/improved commercial commercial relationships with other firms relationships

FTF Inova has facilitated new and improved relationships throughout this year, intending to improve both growth and resilience. Our most significant achievements this year include: Input distributors investing in providing quality services are now benefitting from better relationships with agro-dealers and SHFs. FTF Inova has worked with input distributors to provide better services to SHFs. This is having positive qualitative impacts, with farmers trusting more of these input distributors, and intentionally choosing agro-dealers that are part of these distributors’ networks. It is also having positive quantitative impacts. Credit offered from distributors to agro-dealers, to enable them to buy products from distributors, is being paid back on time or early, as agro-dealers look to solidify relationships that are increasingly valuable to them. Similarly, where SHFs feel valued, for example within supplier clubs, they are paying back credit more consistently and side-selling less. As these instances of trust and cooperation increase, we expect to see reduced transaction costs and greater scope for mutual benefits. Improving relationships, based on trust and cooperation, are leading to increased specialization in the market. Firms that develop working relationships with others in the value chain are now feeling confident in their ability to trust other firms to provide services. As this trust increases, firms are specializing in the market. For example, rural agro-dealers and CdA used to compete for customers. Their new relationship within an extended distribution system has led to a collaborative relationship serving customers. CdA now encourages farmers to go directly to their supported agro-dealers, rather than make the journey into towns, recognizing that in the long-run this will lead to higher sales. Agro-dealers benefit significantly from this, and in turn, are relying more heavily on CdA as the main distributor. As these specializations continue to take place, the system will evolve into one that is more effective, diverse, and resilient.

FTF Inova: Annual Report (October 2019 – September 2020) 11

3.1 Way Forward in the Next Year and Quarter(s)

Going into the last year of program implementation, FTF Inova will focus on the uptake of the innovations piloted through the life of the program that has proven to be profitable for business and SHFs. FTF Inova will continue to be flexible, particularly in the light of the COVID-19 pandemic. For the coming year, FTF Inova will continue focusing on its strategic objectives, including:

● Strengthen our proof of concept for priority innovations by supporting “second movers”

Over the past three years of implementation, FTF Inova disseminated innovations widely, seeking replication or adaptation by market actors. In the next year, we will continue to collect data and share lessons learned with a wider audience. FTF Inova will also document and disseminate business cases and lessons learned from the pilots to encourage replication/scale; strengthen the flow of feedback from SHFs into the system to increase pressure on input supply businesses to work with farmers and perform key market functions in new ways; and push all network actors to invest in pricing systems that provide a fair price to their customers and generate increased sales volumes.

● Scope the market to identify new or existing partners with the potential to become scale- agents

FTF Inova’s experience working with scale-agents such as industry associations has been instrumental in realizing greater impact within our existing partners. Going forward, FTF Inova will continue to approach other scale agents by disseminating the business cases developed with existing partners. These business cases will be used to pitch alternative, more inclusive, ways of doing business to other scale agents to amplify innovations. A constant identification of such large firms will be the focus of the activity. FTF Inova has identified some industry associations including AICAJU, Cotton Association as vehicles to expand promising innovations promoted over the years.

● Invest in capacity building of partner firms

In all three market systems, FTF Inova will work to develop capacity building into the system, with less direct involvement from the program and greater focus on working through our partner input supply companies, off- takers, and service providers to train their staff and village agents. FTF Inova will invest in strengthening the capacity of large input firms (such as K2, Easiseeds, and Bayer) to promote customer-facing strategies to their network of agro-dealers. In the supply chain management system, FTF Inova will continue to promote the improved capacity of industry associations, academia, and other actors to provide training and other services to commodity buyers in supply chain management schemes. This will increase the sustainability of supply chain management strategies, extend the dissemination of this innovation, help to document and analyze the supplier club experience, and leverage government institutions, business organizations, and NGOs that have influence in the market system for scaling. Finally, in the support services sector, FTF Inova will partner with academic institutions, marketing, and logistics firms to strengthen their capacity to provide relevant services demanded by market actors and continue facilitating market research and linkages.

● Implement the COVID resilience activities

In the face of the Covid–19 pandemic and its economic consequences for Mozambique’s agricultural sector, FTF Inova presented a proposal to USAID/Mozambique for additional funding to design, launch, and implement a Challenge Fund to strengthen agriculture market system resiliency to adapt to economic consequences of the pandemic. Through the challenge fund, FTF Inova aims at bringing mitigation efforts to new geographic areas, new partners, and new challenges. Recognizing the disruptions that Covid-19 represents for the domestic supply chain of agricultural products and food security of Mozambicans, FTF Inova has

FTF Inova: Annual Report (October 2019 – September 2020) 12

proposed a package of interventions to focus the additional USAID resources available on addressing constraints in the domestic supply chain through private-sector engagement.

The proposal and additional funding was approved by USAID/Mozambique and activity is planned to begin in the next quarter, with planned completion in the first quarter of FY2022.

● Conduct continuous assessments of the impacts of Covid-19 and use the findings to build partners’ resilience capacity

This year, FTF Inova has taken steps to understand the impact of Covid-19 in the input distribution market. FTF Inova will continue to monitor the impacts of Covid-19, conducting additional interviews with inputs distributors to expand our sample and delving deeper into learning about business adaptation and market resilience. We also plan to replicate the study in the supply chain management system. FTF Inova will use the findings to inform training and learning sessions with partners to manage the current crisis and future shocks. We will build the resilience of industries through stakeholder dialogues, for example with AICAJU business association to plan and execute an industry response for cashew production and procurement. FTF Inova will also build the resilience of businesses through scenario planning exercises with new and existing partners on managing slow business cycles.

● Strengthen how we and partners gather data and share evidence from activity implementation

Data is key to being able to understand the success of new business models and communicate these successes to the market. FTF Inova has already begun collecting and communicating data, and this work with partners will continue introducing simplified data collection tools.

FTF Inova: Annual Report (October 2019 – September 2020) 13

4 Progress Over the Last Year Progress during the year is presented by “probe,” a rapid and flexible way to explore possible pathways to improving market system performance that FTF Inova uses to facilitate positive changes towards more inclusive relationships and market expansions, in each of the three portfolios of the market system that FTF Inova works with. 4.1 Input Distribution Network In Mozambique, SHFs make minimal use of agricultural inputs because the cost of inputs is prohibitive for the smallholder market segment. A closer analysis of the cost components shows that while input companies have introduced well-suited products to SHFs such as smaller packages for seeds, the cost of inputs remains high. Farmers live far from input retail points, increasing the total cost to purchase. The limited number of retail points lowers competition in rural areas, so retailers can charge high mark-ups. Paired with high prices, agriculture inputs also are often low quality, since the needs of SHF consumers are not well represented in the industry, and the few existing feedback mechanisms to protect farmers from adulterated or expired products are inadequate. The challenges faced by market actors trying to develop a distribution infrastructure that can deliver the right inputs at the right price to SHFs are being exacerbated by the market distortions introduced by most donors and GOM who continue to distribute free or highly subsidized input kits. These market distortions destroy incentives for input distributors to adopt customer-centric practices that deliver more value and agronomic information to farmers. As a result, these firms are unable to create sustained demand or build sufficient volumes to raise efficiency and lower the costs of distribution to the last mile. Over the last four years, through FTF Inova, USAID has been at the forefront of a truly pro-market and pro-private sector approach for the development of agriculture in Mozambique. The results we have seen emerge during this fiscal year prove that this approach can deliver sustainable investment and change at scale.

Over the fiscal year under review, FTF Inova has continued to improve access to inputs and services by SHFs through four core strategies. 1. We have been improving the way input suppliers communicate with farmers by improving the design of product packaging and shop layouts so that customers are able to learn more about the products, how to use them, and make better informed choices. By creating a few model shops, and by leveraging business schools, larger companies and distributors for replication across a multitude of retail points, several agro-dealers this year have significantly changed the way they exhibit their inventory, distribute information and manage promotions across their customer database. Through FTF Inova’s support, partners have learned how to improve the value of inputs for SHFs, and how to use those adaptations to raise demand for their products. Companies have also been testing new branding and packaging of products, to provide more information on the quality of the products, how to use them, and ultimately get better yields. 2. We have improved input distribution by partnering with the largest distributors in the country to support the building of national and regional distribution networks and village-based agents (VBAs) working in rural areas. We continue to help them to analyze and understand the business case to expand and serve new areas in the country. 3. We helped partner input suppliers to bundle services (such as agronomic training or spraying services) with the inputs, as a way to promote sales and adoption of inputs. 4. We have been strengthening input retail networks in rural areas by facilitating investments by distributors into hub agro-dealers, stockists, and non-agricultural businesses such as hardware shops, fuel station convenience stores, market stalls, and supermarkets such as Shoprite. Including these retail points in their distribution networks is expanding outreach to rural networks, a structure that is better suited to serve and deliver quality products and services to SHFs. This includes implementing pricing

FTF Inova: Annual Report (October 2019 – September 2020) 14

strategies that set recommended prices for retailers, seeking to move their business model from being mark-up based to volume-based.

To shift the market towards adopting the changes highlighted above, FTF Inova has worked with a large number of partners including seed companies, national distributors of inputs, logistics companies, marketing companies, radio stations, retail points, and local business schools. Throughout the year we have recorded signs of significant shifts in the market, with a growing number of sustainable innovations adopted by many of our partners. The most significant changes recorded are:

● Seed companies, such as Oruwera, IPM, and K2 now recognize the need to create products that are better aligned with their customers' needs. For example, these companies are now researching the potential impacts of reducing seed packet sizes and providing clear instructions on how products should be used on packaging. This is a result of customers’ feedback that these companies have gained through support from FTF Inova. The changes will improve the value of these products to farmers’, increase customers’ trust and loyalty and raise demand. ● CdA, the largest distributor in Mozambique, and Bayer, an input supplier that carries a large variety of products from chemicals to seeds, have changed their approach to input distribution to expand their retail footprint and serve more SHFs directly. CdA has invested in 17 trucking routes, which deliver genuine products without delivery fees to rural customers through a network of agro-dealers and non- agri-retail points. Bayer is developing a network of 13 regional hub distributors to expand its retail outreach. For the first time, these investments are customer-centered. The pivotal point of their strategy is to build customers’ reliance and loyalty through regular and timely delivery of inputs at reasonable prices. Both companies have made this approach part of their core business. Taken together, these two companies cover a large share of the market for inputs in Mozambique and have the potential for impact at a large scale. ● Bayer and K2, well-known seed companies, are strengthening their relationships with distributors and retail points by adopting performance-based contracts. These contracts include co-investment with the distributor to upgrade the retail point so that the retailer can deliver better information, value and services to its clients, improving overall sales. This co-investment innovation, initially facilitated by FTF Inova, is now being replicated at a much larger scale.

Some of the innovations introduced within FTF Inova’s partnerships have now reached a significant scale. This has happened primarily through increased investments and expansion by existing partners, but over the last year, FTF Inova has also recorded some new entrants in the market that have been taking on new, more inclusive business models, imitating, adapting, or responding to the innovations introduced by Inova’s partners. More specifically:

● Thirteen “second-movers” have adopted pricing strategies aimed at controlling mark-ups and reducing the retail price of inputs for SHFs, copying innovations that FTF Inova has piloted with other partners. This is the first step for a significant number of actors to push for a business approach that is based on expanding sales volumes, rather than charging high mark-ups. ● Some of FTF Inova’s larger partners have expanded their pilot innovations. For example, CdA has increased the 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. Luteari, who initially piloted a small distribution network of 8 VBAs, has now expanded it to 40, reaching more than 8,000 farmers. Similarly, Bayer has built a network of regional hub-distributors that currently leverages six regional hub distributors, supplying an estimated 120 agro-dealers and serving over 10,000 farmers.

FTF Inova: Annual Report (October 2019 – September 2020) 15

The innovations that FTF Inova has supported over the last few years have made markets more inclusive of the poor, raising the importance of the SHF segment, and delivering more inclusive value to poor farmers for their purchases. The following key impact areas were recorded during the year:

● More than 200 small local retailers are benefiting from the improvements in the input distribution system. Small companies benefit from lower costs, from direct delivery (reducing transport costs) and on-demand supply which reduces their credit requirements. SHFs benefit from improved access to inputs, since they have a wider choice of products, and increased predictability of when products will be available at the retail point. The increase in predictability allows them to make more confident choices on how to manage their farm, making it easier to decide to expand production. For example, some farmers are now confident enough to expand their production, while others are buying new varieties of higher value crops. ● Farmers benefit from reduced prices and higher value, as input suppliers and distributors shift to commission-based sales and recommended prices, while also increasing the value of the inputs by bundling services and offering more agronomic information. At the community level, we observe that farmers are now buying more inputs locally, instead of having to travel to the nearby town, increasing the economic activity in the rural area. Locally available, on-demand supply of inputs reduces the need for either farmers or retailers to stock-pile and take the risk of investing in inputs that can easily get spoiled. ● Farmers have access to an increased variety of inputs, at different pricing points, with different returns, allowing them to develop their farming practices gradually, as they learn new techniques. FTF Inova is helping companies to offer improved ranges of products, by collecting and analyzing customers’ feedback that involves both distributors as well as manufacturers. ● The increased resiliency of the input distribution market system, as a result of these innovations, has been demonstrated during the COVID-19 crisis. FTF Inova’s COVID-19 impact assessment has shown that thanks to the last-mile distribution system, farmers in rural areas have been able to access inputs despite the restrictions on travel that were imposed across the country. The distribution networks that were established were also used as viable channels of communication on how to cope with the virus and for the distribution of personal protective equipment.

Our detailed achievements with partners in this quarter are outlined against each of our active probes in the following section:

FTF Inova: Annual Report (October 2019 – September 2020) 16

Indications of Change and Progress Towards Outcomes Table 4. IDN Progress Probe IDN5: Use pull distribution systems to improve the timeliness of product delivery to create dependency, add value, and build customer loyalty. Outcome Pathway 2: Improved access to agricultural inputs, services and information Actors: CdA, Luteari, Klein Karoo’s (K2’s) retailers (Rumbizai, Agrovet, Simao, Zacarias Ismael, Multimoz, Rudogama, Agro Seela, Casa de venda, Chaora, Nova tech, Agrofuturo), Agro Dalton, Sitole, three shops of Joao Agricultor, AGRO-DEALER Moleiro, Akila, Armazens Gabriel, Olima farm, Oruwera, Chaora, Bayer, and ETG. Changes in Sustainability Changes in Scale Changes in Inclusive Value The first movers in establishing a pull distribution While first movers like CdA, K2 and Luteari are The changes that FTF Inova is bringing to the way system (based on orders), CdA, K2 and Luteari expanding their pull-distribution network, during inputs are being distributed in Mozambique are have continued to invest in improving and scaling the year under review, sixteen second movers transforming SHFs’ lives in many ways. The SHFs up this innovation during the course of the year. have begun replicating and adapting this go-to- touched by the distribution networks supported by market approach. These include Chaora, FTF Inova have now access to a bigger variety of Key updates for the year Agrodalton, Sitole, Oruwera, Bayer, ETG, as well inputs at a lower price. The value of the inputs has FTF Inova’s work with CdA has proven that a pull- as ten Agro-dealers supported by UBS. The size increased since distribution is more often paired distribution system, anchored on regular deliveries and number of the replicators is a good indication with bundled service and improved agronomic of products to agro-dealers in rural areas, is a of the concrete opportunities that USAID and FTF information. More importantly, because agro- commercially viable way of increasing sales and Inova have to change how companies distribute dealers no longer need to stock, and delivery is improving SHF access to inputs. inputs in Mozambique, making inputs cheaper and frequent, farmers can access inputs in a timely more affordable to SHFs. manner, which improves predictability, With support from FTF Inova, CdA has been dependency and supply. Importantly, a number of expanding its investments based on a careful Key updates for the year FTF Inova’s interventions have allowed SHFs to analysis of costs and sales data. Data is uploaded continue accessing inputs despite supply chain to, and interpreted within, a cloud-based As reported in the sustainability column CdA disruptions caused by Covid-19. As farmers dashboard. This dashboard has provided significant distribution routes have expanded this year; they increase the use of improved inputs, their yields insights, and based on these CdA has been able to started with 8 trucking routes in October 2019, and income improve. improve the efficiency of the delivery system and with total sales of 503,233 Meticais to 17 routes reduce transport costs by 46%. With the available and a sales volume of 2,389,466 Meticais by Women are also increasingly participating in the evidence, CdA has also been able to negotiate with September 2020. During the year, CdA also input market, both as customers as well as ETG the exclusivity in the distribution of their established new routes based on a systematic suppliers. For instance, female individuals and fertilizer products, adding volumes to trucks and collection and analysis of data. Doing so, CdA has women groups are being included as agents by further reducing transport costs. During this year, been able to expand its outreach by adding 123 input distributors. CdA has also signed-up more agro-dealers into more agro-dealers to its network from the initial their network, and adapted the catalog based on 37 they were serving when the truck distribution SHFs needs. started. Key updates for the year

FTF Inova: Annual Report (October 2019 – September 2020) 17

Based on the volumes generated on the During the year, as previously mentioned, K2 Agro-dealers adopting the pre-order agent model distribution routes, as well as a now well- scaled the pre-order distribution network from 3 are increasing their outreach to new areas helping established vision that the delivery services will to 11 agro-dealers. The new agro-dealers are more rural SHFs to access inputs, services, and continue indefinitely, CdA and Adicional have been located in Sussundenga, Manica, Gondola, Macate information. During this year, through the work of able to re-discuss their contractual agreement and and Vanduzi. districts. Four of these agro-dealers FTF Inova’s partners, a total of 60 new agents (17 reduce Adicional’s charges. Both companies have are already working with sub-networks of 10 VBAs females) have been recruited to provide increased also strengthened collaboration to make delivery each, while 7 are still in the process of recruiting access to inputs and information to about 10 000 more efficient. agents. K2 is planning to expand its network new SHFs in three provinces: Manica, Sofala and further into the regions of Macossa, Gorongosa Nampula. To achieve these results, with support from FTF and Mussorize and is already working to identify Inova, CdA has trained 7 employees to develop and agro-dealers and retail points. Over 49,000 SHFs are buying inputs from CdA manage their go-to-market approach. The new supported Agro-dealers, which have increased skills introduced involve gathering and analyzing Chaora, an agro-dealer based in Gondola district., access to inputs in rural locations despite Covid-19 sales data, gathering and analyzing customers' is expanding CdA’s delivery system further into the travel restrictions in the Provinces of Nampula, feedback, improving value by developing last mile, by serving 5 communities within Manica, Sofala, Gaza, Tete, Cabo Delgado, informational material on product usage, and Cafumpe, Sanga, Mudima and Chiongo, located in Zambezia, and Lichinga. This is added to over implementing new marketing approaches for the the peripheries of the district of Gondola at a 17,000 SHF farmers buying from K2 agro-dealers, last mile. maximum of 60 kilometers from the district town, 19,000 from Bayer and 1,300 from agro-dealers and has engaged 5 agents for consolidation of and shops assisted by UBS. To date, the routes established by CdA have grown orders and provision of extension services. To from revenues of 2.7 million Meticais in the first 3 support this tactic, Chaora has invested in a The farmers and retail points that are now being months, to 8.7 million in the most recent 3-month technical member of staff to both expand and served by the newly established distribution period. This is a rapid rate of growth for CdA, and ensure that the innovation effectively targets systems report the following: illustrates the size of the potential. FTF Inova has farmers. Additionally, a radio program was subsidized these routes. However, these subsidies developed to broadcast Chaora’s services and ● Lower costs. Local agro-dealers report have been reduced since May 2020. To ensure the products to the neighboring communities of that there is less need to travel to large routes remain profitable for CdA when they are Gondola. The agent sales are contributing to 14% towns, resulting in lower transport costs, paying for all transport costs, they have modified additional sales to Chaora, and about 112 farmers and in some cases lower prices for inputs some routes, invested in agro-dealers ability to are benefiting from this service. for farmers. increase sales, and renegotiated transport costs ● Improvement in the quality of the inputs with the trucking company Adicional. Sitole Commercial and Agrodalton (two agro- available in rural areas, with increased dealers in Manica and Nampula respectively) have trust in brands. The just-in-time delivery K2 has also adopted a pull-distribution model over replicated the CdA model to a smaller scale, by system reduces the need for inventory the last year. With support from FTF Inova they rolling out pre-order systems to a number of rural and the opportunity for adulteration. have trained 5 technicians to develop the network. communities with the use of 6 agents in total in ● Increased yields. Farmers report that These technicians now work with 11 agro-dealers Gorongosa and Malema districts. Despite a because they have access to better quality and have led the company to invest $11,000 in joint number of challenges due to Covid-19, both products, and at the time they need it they marketing campaigns to boost the agro-dealer companies have maintained their agents during the manage to achieve higher yields. This has year, and still consider this a viable and strategic led many to begin investing in increasing

FTF Inova: Annual Report (October 2019 – September 2020) 18

sales, channeling orders through the pull- approach. The agents used by Sitole also aggregate production further, by planting more land, distribution system. crops for sale to traders and processors. with significant potential for increasing incomes. Luteari who has established a pull-distribution Leveraging the experience accumulated by FTF system with support from FTF Inova, has Inova’s partners in rural distribution, and the study Broader changes related to economic activity and significantly scaled the network this year after carried out last year on the role of women within input distribution are also happening within the proving its viability. Luteari has now recruited 40 the farmers’ household in decision -making to buy communities that are being touched by the agents to both distribute inputs as well as aggregate certified seeds, this year, Oruwera (a Mozambican distribution system. For instance, some individuals products that the company then re-sells to traders seed company) has rolled out a new distribution report using the trucking routes to start their input and processors. Through this network Luteari can strategy centered on targeting and serving female selling businesses, further adding to rural economic reach more than 8,000 SHFs. The company has customers in Mogovolas and Malema districts in development and improving the resilience of the helped each agent to establish a buying point and Nampula province. So far Oruwera has established sector. reach out to 200 farmers. They have also hired 4 a network of 5 female VBA's who are remunerated supervisors to monitor the input sale and crop on commission, based on a blend of performance buying activities. indicators that integrates sales volume and customer satisfaction through feedback. Oruwera is also facilitating the formation of farmers buyers' clubs, currently supporting the establishment of 2 of them, each with 70 members. The idea is that buyers’ clubs are a way for farmers to bulk orders for volume discounts and other benefits such as training and on-demand technical assistance.

At the beginning of the year, Bayer contracted 13 successful mid-sized agro-dealers to upgrade to Regional hub-dealers with each hub-dealer supplying a minimum of 10 agro-dealers, making a total of 130. Six of the Regional hub-dealers have started to distribute orders and, to date, have distributed inputs worth 1,000,000 to 120 retailers across the country (south, center and northern districts of Nampula province). One of the Regional Hub Dealers, Agricon in Gurue, is also involved in the importation of Bayer’s input products and is serving Zambezia and Nampula regions, thus easing the load of Isolmoc, who was the only importer and Regional Distributor in the north. Through the Regional Hub-dealers, Bayer is increasing its sales in rural areas. Bayer’s

FTF Inova: Annual Report (October 2019 – September 2020) 19

investments are also stimulating growth in distribution and retail networks, with farmers gaining better access to a broader range of high- quality inputs and improved information on how to use the products.

To strengthen and increase awareness of the new distribution system, Bayer has invested in: ● Weekly radio broadcasts to increase awareness about Bayer products using farmers as a testimonial. ● Hiring 15 technical staff dedicated to work with Regional hub-dealers and train them to use a performance-based compensation plan, focusing on hub- dealers ability to manage their network of agro-dealers. An additional 2 employees are in the recruitment process to coordinate investments in the growth of hub-dealers, in pull distribution, marketing campaigns, and technical training. ● A new warehouse in Chimoio to serve clients in Manica, Tete, Sofala and Zambezia province, in a timely and consistent manner.

Seven agro-dealers supported by UBS interns have preselected 47 agents (12 female) to use the pre- order tactic in 10 communities. However, Covid- 19 restrictions slowed down demand activation, and only two agro-dealers with 8 agents (4 each) were active from July and have reported an increase in sales by 15% - 20% each. Students have resumed the internships and are currently shadowing agents to improve the pre-order tactic.

ETG with FTF Inova’s support is in the early stages of rolling out a three-season marketing and promotional strategy which will cover the pre-

FTF Inova: Annual Report (October 2019 – September 2020) 20

planting, growing, and cropping seasons. In its expansion campaign, ETG has prioritized investments in Murrupula, Mogovolas, and Nametil, in Nampula province, starting with engaging 5 out of what is expected to become a network of 150 retailers. ETG will use its resources to contract interns from UBS to introduce an input pre-order system similar to the one used by K2.

Probe IDN4R: Use customer-oriented pricing strategies (i.e., commission schemes or price lists) to provide inputs at a fair and transparent price and expand retail footprint. Outcome Pathway 2: Improved access to agricultural inputs, services and information Actors: Luteari, K2’s retailers (Rumbizai, Agro Seela, Simao, Multimoz), Agro Dalton, Sitole, three shops of Joao Agricultor, AGRO-DEALER Moleiro, Akila, Armazens Gabriel, Olima farm, Oruwera, Chaora, Bayer, CdA Changes in Sustainability Changes in Scale Changes in Inclusive Value Fifteen input firms have adopted fair and transparent pricing These practices have witnessed a considerable The adoption of these innovative pricing strategies to standardize and reduce the prices SHF's pay for progress towards going to scale. Thirteen strategies is allowing companies to increase inputs. K2 and Luteari are the first movers to have adopted market actors have copied and learned from the demand for their products, while they these pricing mechanisms on a sustainable basis, as it is experiences developed by FTF Inova’s partners deliver tangible savings to SHFs. As the demonstrated by the fact that they continue to adapt and and have adopted commission-based schemes to approach is being replicated across the expand the use of the system to new geographical areas. adopt some diverse price strategies. These input distribution channel, more farmers include price displays, sales commissions, and are benefiting from this value. Key updates for the year recommended price lists to be used across their Luteari was the first to adopt commission-based pricing with distribution networks. The objectives of these For instance, the number of farmers buying 8 VBAs in 2019 in the district of Gondola and has since innovations are all to improve sales and generate inputs from agents engaged by Luteari, increased the number to 40. During the year under review, more sales volumes. Chaora, Agrodalton, Sitole, Agrodalton, Sitole, Chaora, and K2’s 4 they have expanded the use of this pricing strategy with more Oruwera, and seven agro-dealers supported by agro-dealers that are using commission- agents in Nhamatanda and Gorongosa, where they are UBS interns have adopted the use of based pricing has increased to about 10,000 working with 10 VBAs in each location. Luteari’s stated commission-based pricing with their agents with from 1,133 that we registered at the objective of moving to a commission-based system is to push the aim to reduce retail prices paid by SHFs. beginning of the year. VBAs to generate volumes, by controlling the retail prices to Bayer and CdA are expanding the use of price affordable levels. PIn turn, this pushes Luteari's and the agents' displays and providing the recommended price The price of inputs has stabilized and more revenue up (as opposed to mark-ups). Luterai doesn't pay list to control retailers' markups in their catalog benefits were associated. For example, commissions directly but offers a 10% discount to their agents and advertisement publications. prior to Rota Certa, farmers only had the and a recommended price list. All Luteari agents, regardless of option of visiting local agro-dealers, often region, offer the same retail sale price to farmers. Key Updates for the year resulting in low-quality products in insufficient amounts, or of traveling to a main town to visit an official outlet, which

FTF Inova: Annual Report (October 2019 – September 2020) 21

Four K2 retailers have adopted commission-based pricing During the year, CdA has adopted a resulted in significant additional travel with their 10 VBAs to support the retailers' expansion to comprehensive catalog of products, featuring costs. With Rota Certa, farmers report reach more customers in new geographies. K2 is about 300 agriculture input products from that they are now able to reliably access complementing these efforts by providing recommended price different manufacturers. The catalog also high-quality inputs locally, with only short lists to their retailers and ensuring that at maximum a price includes a recommended price list, giving delays and guaranteed delivery date if margin of 20% is applied, so as to make their products more retailers and farmers access to more products products are not in stock. Farmers are affordable to SHFs. than ever before, with a level of transparency on reacting to this, and now rely more on local pricing that has never been experienced before. agro-dealers. This has reduced both By the end of the year under review, CdA was transport costs and time for those that had serving 170 retailers nationwide with the catalog. to travel to towns, which often required The result has been that retailers have overnight travel, and has decreased the remarkably increased the variety of the products losses of those that relied on low quality they sell to farmers, which provides different inputs that impacted production. In price ranges as well as solutions for more Gondola, farmers buying inputs from problems that farmers may come across. Luteari agents reported savings on the cost of two-way travel ranging from MZN60- Bayer is working with 6 Regional hub-dealers 200. Another change noted by farmers is who are actively supplying to 90 retailers. The the reduced variation in prices of inputs distribution is ruled by a pricing strategy that bought from agro-dealers serviced by Rota provides greater control over products' retail Certa and agents. The improved last-mile costs. To do this, with support from FTF Inova, access to inputs has been particularly Bayer has introduced a price list with a important for female farmers, who face standardized distributor and agro-dealer restrictions on their mobility due to markups. They have also started to reward the cultural norms and time constraints distributors and retailers that comply with the associated with childcare responsibilities. pricing recommendations they establish by extending additional discounts and credit. Bayer The impact of the approaches adopted by also adopted non-financial rewards like CdA and Bayer is also of large scale. FTF marketing material, support to improve the shop Inova plans to quantify it next year. layout and presentation, as well as merchandising support.

Chaora, Agrodalton, Sitole have also adopted commission-based pricing models with their 11 agents, with the aim to lower retail prices. Towards the end of the year under reporting, these agro dealers have also started adopting non-financial incentives, such as sponsoring

FTF Inova: Annual Report (October 2019 – September 2020) 22

promotions (radio adverts) and public recognition awards for best-performing agents.

Oruwera is investing in sales commissions that integrate volume and customer satisfaction incentives for its 5 female agents instead of inputs on credit to reduce the risk of defaults on payments. They are also promoting groups of women to organize their purchases into large orders to gain volume discounts and cheaper or free transport. For its 50 stockists, Oruwera will have fixed prices and commissions. Previously, the stockists owned products and determined prices—this created price discrepancies and discouraged customers from buying Oruwera's products due to non-uniform and high price markups. The new pricing strategies have created an opportunity to increase sales to the female customer segment through fairer pricing, allowing farmers to buy higher quantities. The new approach will also strengthen the relationship between Oruwera and its female agents.

Probe IDN 1: Design and deliver customer-centric product(s)/service(s) to improve the value-proposition for farmers and generate more demand from end-customers. Outcome Pathway 2: Improved access to agricultural inputs, services and information Actors: K2, CdA, Oruwera Changes in Sustainability Changes in Scale Changes in Inclusive Value Three firms CdA, K2, AIPM and Oruwera, all of which have Replication to scale in this area is currently limited SHFs are accessing new inputs, and introduced customer-centric innovations with the support of to the partners of FTF Inova, who are investing guidance on inputs use through the FTF Inova, are now funding and supporting these efforts additional resources. For the moment the activity investments in rebranding, packaging, almost entirely on their resources. Except for AIPM, which is has not been able to identify replications and and information materials such as exploring affordable packaging solutions, companies have copycats. But more attention to the tracking scale catalogs by CdA and information decided to invest in this area. With the support of FTF Inova, in the course of the new fiscal year. pamphlets by K2. they have been able to test that improved quality and value drives up demand even in the SHFs’ segment. Key updates for the year A significant focus of FTF Inova’s work N/A, still in the early stages. around this probe has been on

FTF Inova: Annual Report (October 2019 – September 2020) 23

Key updates for the year encouraging input firms to deliver better CdA continues to expand its investments in customizing its value to their distinct market segments, service to the needs of the client base. During the year, they particularly female farmers. We have have introduced the following innovations, which are been working with CdA, K2 and currently being entirely sustained through company’s Oruwera to better understand their resources: female market segment and develop unique products and distribution ● Distributed and updated a print catalog for all of their strategies to effectively target them 170 retail points. Through the catalog they are able (such as buyers’ clubs and pre-order to expand the choice to the final customer. agents). Oruwera has adopted a strategy ● Printed and distributed identification plates for all of to specifically target female customers. their high-performing agro-dealer shops, and have This is a significant shift that placed radio adverts in each district to help farmers' demonstrates the company recognizes find the closest agro-dealer shop. female farmers as a valuable and strategic ● Created dedicated radio programs where SHFs can customer segment. By utilizing buyers' discuss production constraints share information, clubs and pre-order agents, they will and CdA can provide suggestions on how to improve mitigate mobility/travel restrictions that farm productivity. women have due to family and household duties. ● CdA has also started to invest in customer interaction, organizing group discussions with farmers to speak about CdA products while also Key Updates for the year getting customer feedback. Scaling up this initiative, during the upcoming fiscal year they will launch a Oruwera, with FTF Inova's support, has mobile extension service on tricycles called “Doctor invested in a female customer feedback Machamba” which will help farmers address their survey as part of its strategy of delivering farming challenges. more value to the female market segment in Nampula, Zambezia, and K2's commitment level has significantly grown throughout the Niassa provinces. Oruwera is using the year in prioritizing customer feedback in its branding, analysis to strengthen its marketing and packaging, and production information given to farmers to sales strategies, better target female increase K2's product use and value. Some of K2's investments customers' needs, raise the awareness of in this area include developing illustrated graphic pamphlets the Oruwera brand, and improve female with a cost-benefit analysis of hybrid maize production versus customer loyalty. OPV varieties, which are distributed in partnership with their retail points. K2 has also developed a crop calendar with Based on this experience, Oruwera has targeted extension information and recommended products made progress expanding into a new to use throughout the production cycle from planting to market to include the female customer harvesting. segment. Social pressures limit women from travelling to shopping centers

FTF Inova: Annual Report (October 2019 – September 2020) 24

Oruwera is at an advanced stage of launching its new brand where agro-dealer stores are physically and packaging targeting female customers. With support from located. For this reason, Oruwera is FTF Inova, the company has developed a new brand and investing in tactics that bring inputs and packaging design that are appealing to women and are made services closer to where the female with reusable materials, such as branded reusable bags with customer base is to ease access. One of their logo. To accompany the launch of their new seed the tactics Oruwera is using is tapping product, Oruwera is also developing other marketing practical into female-organized groups as channels tools like branded seed spacing twines, planting calendars, and for sales and distribution. They have photo-cards to illustrate critical issues such as managing pests pitched to 3 groups in Malema and and diseases. The production of these materials is however Lapala. They have finalized negotiations delayed due to COVID travel restrictions. with 2 of the groups – a women savings group with 20 female members and an AIPM has developed a new brand and package design for their association with 50 members (majority new maize seeds product based on the target customer women) whom they will supply maize preferences. Due to funding constraints, they have not and bean seeds in October. Oruwera managed to launch the new designs. They have approached has also contracted 5 of the 7 FtF Inova for assistance in identifying potential packaging prequalified female agents for pre-order suppliers that are in progress. AIPM is targeting to reach at agents and buyers’ clubs. Supplies via least 1,000 new SHFs with the rebrand. agents and to buyers’ clubs start in October. Oruwera is extending this approach further to target more female groups.

Probe IDN 2: Bundling products and services to improve affordability and uptake of inputs by demonstrating valuable combo for SHF productivity of specific crops Outcome Pathway 2: Improved access to agricultural inputs, services and information Actors: Ngala, Isomoc, Pannar Changes in Sustainability Changes in Scale Changes in Inclusive Value FTF Inova has supported three partners to pilot the bundling Isolmoc and Ngala are increasing the scale of their The expansion of activity under this of services with input distribution. These three partners have bundled products and services, with the objective of probe is increasing access to services continued and adapted this approach during the year under expanding the number of farmers they reach. In for SHFs and providing employment review. Isolmoc and Ngala have successfully piloted bundled doing so, the two companies have included in their opportunities for the youth. Bundling offers of inputs, spraying and technical services and are network a significant number of spray service benefits farmers by decreasing costs, investing in improving the tactic, while Pannar is still in the providers, crowding in more players around the improving efficacy, and offers greater early stages of testing. innovations that they have introduced. Building on clarity on the correct combination of the successful service offering by Ngala and Isolmoc, products and services needed for each Key Updates for the year Incaju has included a private spraying service crop.

FTF Inova: Annual Report (October 2019 – September 2020) 25

provision into its industry database, and is offering At the beginning of this year, Isolmoc adapted the to use this platform to further scale up the provision Key Updates for the year experiences developed with support from FTF Inova on of these services. offering spraying services for cotton, to launch a fully 432 SHFs are buying bundled offers of commercial spray service through 13 Regional hub-dealers. Under a coordination effort put in place by Pannar ag inputs with spray services from To set up such a network, Isolmoc has leveraged Bayer’s (a well-established seed company), with support Ngala and are benefiting from network of local retailers. The identification of local retail from FTF Inova, is replicating and adapting the improved affordability and value from points to become hubs for the provision of spray services, bundling of products to offer kits that will include investments. has helped Isolmoc establish a stronger presence in rural maize seeds as well as other inputs. areas, and consequently monitor the quality of the service 16 youth have been employed by they provide more closely. Key Updates for the year Isolmoc and Bayer to safely and accurately apply pesticides in farmers' During this year, Ngala has continued offering spray services Following the experience with support from FTF fields. in exchange for payments in cashew nuts, and has adapted it Inova, this year Isolmoc has expanded the range of in a way to make it more viable, by more closely monitoring crop-protection products they offer. They now their risk portfolio. The database establishes some simple include chemicals for cashew, maize, cotton, and criteria to classify SHFs by allocating a score to each of them horticulture crops and are working with 6 of Bayers that reflects the risk that they may not achieve a good Regional hub-dealers and their current network of harvest. This year, the new method allowed the company to 90 retailers to extend the bundling of spraying identify 346 farmers who qualified to receive chemicals and services and various products. One offer that spraying services on credit. For the rest of its 86 customers, Isolmoc is promoting is to bundle inputs with Ngala offered spray services instead under direct cash technical advice by its staff and support from Bayer payment terms. This market segmentation has allowed the technicians. They have also continued to promote company to reduce to its losses to zero and to start investing bundled inputs with spraying services to cotton to activate demand and offer a better service. farmers in Nametil and vegetable producers in For instance, to improve trust and loyalty with its customer Maputo, with 16 spray service providers identified in farmers, Ngala has introduced proper contracts to agree on partnership with SESAP and Technoserve. the price for payments in cashew. Ngala has also invested in Ngala is also expanding its outreach to provide improving the quality of its services, by training and spraying services and cashew tree treatments to also establishing performance-based rewards for the spraying include 2 new districts: Meconta and Mogovolas. service providers, which included the distribution of new Through this expansion, Ngala has increased its spray equipment. The company has also improved its customer base from 215 to 432 cashew farmers with employment policy, making an effort to hire more women, in an average of 23 cashew trees each. particular for the management of its retail stores and warehouses. Ngala has also invested in strengthening their Responding to Ngala’s innovations, this year, 12 capacity to monitor and analyze their field activities by hiring spray service providers have crowded in to provide a young graduate for the job. spray services on cash terms from in-kind payments with cashew. The operators are from Menconta and Nampula, where Ngala does not offer its services.

FTF Inova: Annual Report (October 2019 – September 2020) 26

In an effort to accelerate replication and scale in this area of work, this year FTF Inova has started a partnership with Incaju, to help them categorize spray providers in Incaju’s, so that they can target spray service providers more effectively with capacity development initiatives and the establishment of incentives to grow the industry further. Going forward, Incaju plans to concentrate its activity to assist the top-performing spray providers with the marketing of their services to leading cashew companies and farmers. Incaju intends to include 2,000 spray providers in its database.

The idea of supporting farmers and raising demand for inputs through offering bundles is increasingly taking off, with new companies adopting this type of innovation and building on the experience of FTF Inova’s partners. During the year, for instance, Pannar approached 6 partners, including Yara, Bayer, Gani Comercial, Miruku, ECA, and Desenvolvimento e Comercialização Agrícola (DECA) on a partnership to increase SHFs maize productivity through investments in bundled offers of maize inputs and technical assistance. DECA would help the input companies have access to 300 SHFs with a guaranteed market for their produce. Two input companies – Yara and Bayer confirmed their interest to collaborate. However, the kick-off of this initiative has experienced some delay because of changes in senior management at DECA and COVID-19.

Probe IDN 6: Human-centered design to improve customer experiences at retail locations (Leverage non-traditional sales channels to improve distribution presence) Outcome Pathway 2: Improved access to agricultural inputs, services and information Actors: Cantina, Emila Comercial, Empresa de Comercialização Agrícola Ltda (ECA), Novatech and Bayer Changes in Sustainability Changes in Scale Changes in Inclusive Value

FTF Inova: Annual Report (October 2019 – September 2020) 27

Cantina 2001, a small agro-dealer in The example of Cantina 2001 has been leveraged to provide advice to Investments in improved shop layouts Manica, was the only agro-dealer that much larger companies on how improving the show experience can lead and improved merchandising targeted was directly supported by FTF Inova to to more demand. Following such engagement, this year ECA/Novatech and to the SHF segment improve the value review/redesign their retail point in a Bayer have decided to also adopt human-centered design principles in for farmers of purchasing inputs, and way that can improve sales in setting up their retail networks. This decision has brought these increase the adoption of certified November 2019. The investments innovations to a larger scale. seeds, fertilizer, and crop-protection made were of a small entity and to chemicals. However, besides the prove the validity of this type of Key Updates for the year limited experience of Cantina 2001, investment. Cantina 2001 has seen a FTF Inova still needs to quantify the considerable increase in foot traffic at ECA has built a relationship with Nova-Tech Agro to pilot a new impacts of these changes on farmers’ its retail point as a consequence of this customer-facing shop concept at two of their maize collection centers in behavior and the benefits that they innovation. Honde and Cruzamento de Macossa. Nova-Tech is an agro-dealer with 4 accrue. During the next fiscal year, stores in Catandica, Sussundenga, Rotanda and Machipanda and is keen to these benefits will be quantified. Key Updates for the year grow its business through increased input and service provision to farmers through a “Retail Chain Model.” The new shop will be ready in November Customer-facing tactics contributed to 2020 at the beginning of the next cropping season. Nova-Tech targets sales increased customers’ traffic in the to more than 6,000 maize suppliers to ECA that could benefit from Cantina 2001’s shop. A systematic data increased access to inputs and extension services across multiple crops. collection during the intervention, in the first quarter, showed that the Bayer has invested in posters to brand 13 Regional hub-distributors and number of customers per month 130 agro-dealers promoting their inputs. Bayer uses branding as a form of increased 25%, from 104 before the investment and reward for the best performing regional hub-dealers and intervention to 130 during the agro-dealers. Bayer has set aside a dedicated investment fund of 414,000 intervention. Cantina 2001 continued MZN for this rewards program. They have also invested in a Brand experiencing an increased number of ambassador program targeting to recruit 150 loyal customers to advocate customers during the peak season. In for Bayer’s brand, with the brand t-shirt design ready for printing. So far, quarter three (April to June) the the company has invested USD 46,142 in communication strategies and number of customers reached 709 marketing materials for brand awareness in line with the recommendations against 594 in the previous quarter developed together with FTF Inova. (January to March). However, the number of customers declined in the last quarter (July to September) to 274 with the end of the second planting season.

FTF Inova: Annual Report (October 2019 – September 2020) 28

Changes in the Wider Operating Environment COVID1 19 travel restrictions continue to affect input firms' performance in the areas of input importation, stocking, and delivery of timely and frequent assistance to retailers and customers. For example, K2 imports horticultural seeds from Europe and South Africa but could not import and supply Mozambique due to the restrictions in global markets. This is creating constraints but also providing opportunities for local seed multipliers. FTF Inova is already working with local seed multipliers such as Oruwera to increase their distribution channels via brand innovation, VBAs, and buyers' clubs' tactics. The2 Government and NGOs continue to distribute free inputs. The government is also planning to scale distribution up under the Sustenta project. These initiatives are a serious threat to developing a viable and sustainable input distribution system as it undermines private sector investments. FTF Inova will promote dialogue between NGO, government and private firms whose sales are being affected to try and mitigate these distortions.

There is an increase in the number of new competing multinational companies marketing their ag inputs in Mozambique. For example, in the last 1-2 years, ETG, Bayer, and Easiseeds have started distributing inputs. ETG has bought a fertilizer processing plant previously owned by Agrifocus Supplier to increase its input product range in Mozambique. FTF Inova will continue to work with the new market entrants, leveraging their interests and resources to develop an input distribution and retail system that works for SHFs. FTF is working with firms to build regional distribution and increase retailers' customer outreach and performance.

GOM has started phasing out its procurement of agriculture inputs to the cashew sector. FTF Inova has started to work with leading cashew companies such as Olam and ETG to map and build retailers' capacities that can increase their sales of inputs across multiple crops, including cashew farmers. We will continue these efforts and leverage industry associations such as AICAJU to promote bundled offers on inputs and services, leveraging its 2,000 spray providers' database.

Lessons learned and new opportunities 1 Partners are increasingly appreciating the facilitative approach and innovations promoted by FTF Inova. They understand the value of receiving advice, and use their own resources to invest in business innovations that benefit SHFs. For example, K2 and Bayer have set aside larger than ever budgets for co-investments with agro- dealers to increase their outreach and sales to SHFs, while agro-dealers expand their distribution networks and number of VBAs with no technical and financial contribution from FTF Inova. Also welcome is the shift in recognizing female farmers as a distinct segment with unique needs, by firms such as Oruwera. FTF Inova will leverage this interest and will continue advising partners' to expand the new innovations to new locations with new customers. FTF Inova has now developed extensive evidence and lessons to highlight successful innovations through increased networking and relationship strengthening between key input firms and public-sector actors to bring innovations to scale. FTF will widely spotlight successful innovations such as developing a national and regional input distribution system with CdA and Bayer to increase the number of input suppliers leveraging the investments to expand their distribution to agro-dealers and SHFs.

Key Actions for the Next Year During1 next year FTF Inova will increase its effort to bring successful innovations to scale. FTF will invest in strengthening large input firms' staff capacity, such as K2, Easiseeds, and Bayer, in promoting customer-facing strategies to their network of agro-dealers. The activity will also leverage the emerging relationships that UBS is establishing with market actors such as Joao o Agricultor and Nova-Tech to bring innovations to scale. FTF2 Inova will document business cases and lessons learned from the pilot for dissemination via various channels to encourage replication/scale. Replication will also be encouraged through stakeholders dialogues.

FTF Inova: Annual Report (October 2019 – September 2020) 29

FTF3 will continue to work with input firms such as Oruwera, K2, and Bayer to improve their product offerings in branding, packaging, and provision of information based on feedback from SHFs. F4TF Inova will continue to work with Bayer and K2 to mainstream the use of performance incentives with agro- dealers distribution networks. FTF5 will push all network actors to invest in pricing systems that provide a fair price to their customers and generate increased sales volumes. This will involve promoting different pricing strategies at different levels of the input distribution chain with suppliers, distributors and retailers. The activity will also invest in research to inform leading input firms pricing plans.

FTF Inova: Annual Report (October 2019 – September 2020) 30

4.2 Supply Chain Management Most aggregators, wholesalers and processors in Mozambique do not see the value of developing a domestic supply chain. The prevailing model for sourcing commodities from SHFs remains that of spot transactions, repeated each year, intending to buy at the lowest possible farm-gate prices. This practice prevents producers from mobilizing and committing resources for improving quality and yields, with the consequence that production is generally appropriate only for basic processing and low-grade exports. The lack of capacity to deliver the right quantities and qualities is also a barrier for local producers to enter the domestic retail market, since supermarkets have these requirements and therefore continue to import from South Africa or overseas. Over last year, FTF Inova has continued to work with a number of partners to explore the business case for Mozambican companies to establish longer-term relationships with SHFs. One of the things that FTF Inova has tested, for instance, is the fact that Mozambican urban consumers value locally-produced, quality products, and are often willing to pay a premium for products “Made-in-Mozambique”. FTF Inova has also made significant progress towards making the business case for off-takers to introduce tactics that reward high- performing farmers, helping them grow and become loyal. FTF Inova has introduced these innovations to any off-taker that was willing to try and change the way they source from SHFs. Once a few examples were established, FTF Inova has more purposefully targeted larger off-takers, in order to push the market system to adopt these practices at scale. Over the course of last year, FTF Inova has worked primarily with three large companies to help them adopt transparent performance management mechanisms for their supply chains. Thanks to these changes, off-takers have signaled long-term commitments to farmers, and have supported them with inputs on credit, training, and clear purchase price- agreements. The tactics introduced have also involved larger investments in the dissemination of information on good agronomic practices. They have delivered support and rewards that have a monetary component, but also improve social status so that best performing farmers are taken as models by the community in future seasons. They have also helped companies test the importance of investments that improve farmers’ welfare, such as delivering personal protective equipment or distributing school bags or uniforms. In the areas where these tactics have been tested, farmers have delivered better yields and better quality. As a consequence, FTF Inova’s partners are now introducing this way of working to an increasing number of farmers. Leveraging stronger supply chains and taking advantage of the disruptions caused by COVID-19 to cross border trade, FTF Inova has also intensified its work to strengthen domestic supply chains. FTF Inova is now working with three food distribution companies to help them establish direct domestic supply channels. This area has great potential for expansion and will be the focus for the newly approved Challenge Fund that FTF Inova will implement next year. The key highlights for the year that confirm the sustainability of investments in supply chain management are: ● The best-supplier clubs established by Olam were able to help farmers improve yield, quality and repay credits beyond expectations. Following the success, Olam has begun to expand the use of these clubs to cover crops beyond cotton. ● An association of 25 women, representing 800 farmers was registered to supply Ka Da Terra supermarkets with fresh produce. Being a legally-registered entity, the association can now more easily transact on the market and look for other off-takers. Signs that these innovations are going to scale, with the potential to change the typical way Mozambican off- takers manage their relationship with SHFs include: ● After piloting performance-management supply chain schemes with 391 farmers, Novo Madal has expanded access to the performance suppliers' clubs to 9,560 farmers. ● After seeing the results that investments in supply chain and performance clubs can deliver, ETG, one of the largest off-takers in the country, is adapting and introducing this scheme to 900 SHFs for the 2021 campaign.

FTF Inova: Annual Report (October 2019 – September 2020) 31

● Adicional, a logistics company which, with support from FTF Inova, has established a new business that makes use of backhauling to bring fresh products from farms to markets, is tripling operations from one to three areas of the country. Adicional has been able to prove that this business model can deliver good margins, and is now reaching sufficient volumes to target larger buyers and processors, or domestic supermarket chains. The value delivered to SHFs by these innovations this year includes: ● Over 4,600 farmers that were part of supplier clubs in 2020 received inputs on credit, training and a secure market for their produce. The support they received is beyond what they would have been able to afford or access without the clubs, since the explicit goal of introducing these tactics is for companies to raise trust, reduce side-selling and support farmers achieve better yields. ● A significant proportion, 39%, of the farmers within supplier clubs are women. These women are unlikely to have been able to access inputs on credit, or formal training, without having been members of a supplier club. Some of FTF Inova’s partners have explicitly targeted women when creating supplier clubs. ● The direct purchase model created by Adicional pays above market prices to farmers, because it cuts out middlemen, such as small aggregators. The pilot reached 84 smallholders along one pick-up route, but Adicional is rapidly tripling the numbers. In the medium-term, Adicional thinks they will be able to source products from over 5,000 farmers. ● In an effort to support smallholders to become more productive,off-takers are establishing strategic alliances with input distributors, which further improve the smallholders’ access to inputs and services. ● The quality of the relationship between SHFs and off-takers has significantly improved in the areas where FTF Inova’s partners have been piloting innovations.

Our progress for this year for each of the probes in the Supply Chain component is outlined in the following section:

FTF Inova: Annual Report (October 2019 – September 2020) 32

Table 5. SCM Progress Probe SCM 2 - Transparent performance management mechanism with supplier clubs to increase farmer quality production and loyalty, reducing side-selling. Outcome Pathway 1: Improved terms of sale for agricultural products by SHFs Actors: Miruku, Olam, Novo Madal, Winnua, METL, Export Trading Group (ETG), AICAJU, Moz Cotton Association (MCA) Changes in Sustainability Changes in Scale Changes in Inclusive Value FTF Inova started piloting these innovations with three All of the FTF Inova partners, with the exception Transparent performance management companies: Miruku, Olam and Novo Madal. Although the level of MeTL are adapting and expanding the use of mechanisms create value for of support provided has been decreasing over time, this group suppliers clubs. This practice is also being smallholders because they provide of first movers has continued to establish and maintain suppliers socialized by important market scale agents such them with access to markets, inputs, clubs, as they report that the results delivered by these tactics as the Mozambique Cotton Association (MCA) and technical knowledge. Differently outweighs the cost of running them. and Acaju, and is being replicated by large from concession schemes, which make market actors such as ETG. farmers become completely dependent Key achievements for the year: on a single off-taker, performance Key achievements for the year: schemes encourage multiple actors in This year, Olam trained and used 16 technical staff to roll out the market to participate and performance suppliers’ clubs in Ribaue and Lalaua districts. The Olam intends to scale the supplier performance collaborate with the objective of company also invested in a wide outreach campaign to explain mechanism by targeting new value chains with increasing farmers’ yields and graduate to farmers what the terms of the clubs are and to encourage supplier clubs, including maize, soya bean, and them to larger farming units. As farmers them to join. The campaign, which was in part supported by FTF cowpeas. In total, Olam expects to extend the grow, the efficiency of the supply chain Inova, consisted of PVC banners, roll-ups, t-shirts and radio tactic to 18,000 new farmers over the course of also grows, lowering sourcing costs for drama messages. Through this effort, Olam was able to sign the next season. companies. The pilots implemented 4,033 farmers into suppliers’ clubs. By the time this report was with support by FTF Inova also include being prepared, all of the farmers signed into the program Novo Madal is expanding performance suppliers' a strong focus on including women. reported increases in yields. Many have also completed early clubs to target 9,560 SHFs from 14 communities harvests, which are essential to preserve the quality of the in Zambezia (60% women). Novo Modal will The key signs observed this year cotton buds. Of the farmers that participated in the scheme, clear a total of 9,000 ha of land to allocate to that this type of schemes offer 3,866 have already sold their cotton, and Olam is finalizing the farmers who have no access to land. They will value to farmers are as follows: purchase process from the remaining 167 farmers in October. also allocate an additional 2,400 ha to house up to 3,000 farmers’ households. To demarcate the All of the producers that were part of The new approach to performance management seems to have land, Novo Madal is working with the USAID's performance clubs this year gained made a big impact on results. Early results are significantly better Integrated Land and Resource Governance access to high quality inputs on credit, than previous years. For instance, Olam has been able to (IRLG) activity. technical training, mechanization recover 88% of its credit to farmers, far more than the previous services, as well as a number of life- year when recovery stopped at 69%. As previously stated, Miruku is expanding the enhancing rewards and supports (such use of performance clubs by employing a new as PPE, phones, and school material). As In the last year, Novo Modal has also made significant staff member. They are also investing USD a result, relationships between off- investments in performance suppliers clubs. Novo Modal’s 205,000.00 in a new warehouse that will hold takers and farmers have improved and scheme was developed with a stronger focus on amplifying social 1,500 tons of grains. 60% of the investment is

FTF Inova: Annual Report (October 2019 – September 2020) 33

and productive returns for farmers, compared to Olam, so most covered by a commercial loan, which was farmers have been able to achieve of the rewards distributed by Novo Modal consist of objects and provided to them because they have access to higher yields. For instance: inputs such as mobile phones, bicycles, certified seeds, fertilizer, quality maize. Miruku has identified Alto and cassava stems. Novo Modal carefully explains categories and Molócuè as an area for expansion, where they ● The volume of cotton rewards at the beginning of the season, in order to improve think they can sign up 1,074 farmers to suppliers’ purchased this year by Olam transparency and trust. Through this model, this year Novo clubs. from farmers was 927 tons for Modal has achieved the following: a total value of 23,175,000.00 Winnua, who was one of FTF Inova’s early MT, with higher average yields ● It has established groups with 391 farmers, 149 of partners, but that was subsequently dropped than normal. For instance, which are women; because of lack of interest, has now also based on previous years, Olam ● It has provided inputs on credit to all 391 farmers, introduced suppliers’ clubs, following the had expected that only five including 8,550 kg of bean seeds. examples of the other market actors. At the farmers would achieve 1 ton ● It has provided extension support to all farmers by moment, Winnua is doing this without any direct per hectare (the top establishing demonstration plots for Good Agricultural support from FTF Inova. Next year, FTF Inova performance tier in Olam’s Practices for cowpeas, guar beans, and cassava. will collect and analyze data from Winnua to scheme), but by the end of the ● It has purchased 6 new tractors and farming assess the extent of the impact. season, 30 farmers had implements for a total of 107,627,518 MZN with reached this level, indicating funding from Agencia de Desenvolvimento do Vale de The work done during this year by FTF Inova has significant productivity Zambeze and support from the Governor of Zambezia, also involved signing partnerships with a number improvements. to support the farmers’ clubs. of organizations that can play a significant role in ● Through the clubs, Miruku has promoting the adoption of suppliers’ clubs-type distributed to SHFs a total of Due to the success of this pilot, Novo Madal is expanding the investments across the market system. 3,500 kg of maize seeds and scheme by adopting an IT management solution, and using 4 3,700 kg of soybean seed on interns from UniZambeze, UEM, UniLucungo and UP, to identify One of these organizations is the Mozambique credit, equivalent to 16,039 additional areas that can be included in the scheme. Cotton Association (MCA), a business USD; membership organization that comprises the ● All of the partners that have Miruku has also successfully adopted suppliers club tactics, to major cotton companies of the country: Olam, introduced these schemes grow maize and soya. This year, through the clubs, the company San-JFS, Sanam, SAM, Plexus, Contas de Cultura, have paid a premium price to managed to purchase 32.3 tons of maize, worth USD 6,814, CAC, and Gerl. MCA is very interested in taking those farmers clubs that from 66 farmers and distributed an extra USD 454 in rewards FTF Inova’s experiences to scale, to also cover produced the quality and based on quality. The schemes were successful in delivering the soya, sunflower, beans and maize, crops that the quantities requested in the enough good-quality maize to push up Miruku’s mill utilization government has recently added to the cotton contracts that were signed at rate to 67%, compared to a Mozambican industry average of concession through the Sustenta initiative. Most the start of the season. 62% (the optimum is considered to be 70%). of the work of next year will be focused leveraging this opportunity. To date 248 farmers (26% female) have Miruku gained significant returns from the suppliers’ clubs, but been reached by Miruku, 4,033 farmers needs to adapt them to improve results. The volumes and the In the area of cashew, during the year, FTF Inova by Olam (44% female), and 391 farmers number of farmers who participated in the schemes were still has nudged Aicaju to promote performance by Novo Madal (49% female). supplier clubs with cashew processors. As a

FTF Inova: Annual Report (October 2019 – September 2020) 34

below what Miruku initially expected, because of the following consequence, Aicaju, Incaju and GIZ have signed Across the three companies, 29% of the reasons: a partnership to rollout performance clubs, farmers participating in the supplier potentially to 19 cashew processing companies clubs are women. ● A number of targeted farmers reported low yields. Miruku and over 500,000 SHFs. This opportunity, as well will need to understand whether to support these farmers as collaboration with GIZ, will be further more during the next season or not to work with them explored in the course of next year. anymore; ● At times, during harvest, Miruku had challenges in Finally, a large and very visible processor, such managing their cash flow, and that led some farmers to sell as ETG has also approached FTF Inova to design to other buyers, reducing the amount of maize available to and adopt a new supplier club program that will Miruku;. start with a pilot involving 900 SHFs. FTF Inova ● Poor rains in Monapo had a negative impact on production; has helped them develop criteria to measure performance and support graduation to better- In order to improve the management of the clubs, and performing tiers. Support was also provided to overcome some of the challenges of the past year, from design communication materials that explain the November 2020 Miruku is employing a Supply Chain schemes to farmers. FTF Inova expects that, Relationship Manager. when successful, ETG can greatly increase the visibility of suppliers clubs in the industry and accelerate replication. While Olam, Novo Modal, and Miruku have adopted and are sustaining their version of the supplier clubs, the partnership with MeTL has not progressed during the year due to the increased challenges of Covid-19. MeTL was at the early stages of setting up producers’ clubs, with the aim to establish a supply chain that sources maize directly from the farmers, as opposed to buying from local traders. Due to Covid-19, MeTL has decided to postpone this investment to a later date.

Probe SCM 6 - Targeted branding and sourcing of minimum quality standard in domestic markets to increase market access and satisfy latent demand. Outcome Pathway 3: Improved quality and quantity of relationships amongst agricultural market actors Actors: Ka Da Terra, Mozambique Good Trade (MGT), VIP Spar, Five Star Changes in Sustainability Changes in Scale Changes in Inclusive Value This year FTF Inova has increased its effort to Although KDT has not yet proven the viability of the This area of work has started recently, establish supply chains for domestic supermarkets innovations it aims to introduce, FTF Inova has broadly particularly to the scale that the and food retailers. The first mover with this type of socialized the idea of piloting domestic supply chains, since opportunities created by COVID-19 may innovation is Ka Da Terra (KDT), a supermarket COVID-19 has made cross border trade more difficult. As offer. There is not yet enough experience chain based in Maputo. During the year under a consequence of this, VIP Spar and Five Star, two large to be able to quantify what the benefits to

FTF Inova: Annual Report (October 2019 – September 2020) 35

review, after having tested the consumers’ demand players in the food retail space have already started SHFs will be. It is undeniable, however, for grown-in-Mozambique products, KDT has made replicating and adapting the experience of KDT. that stable domestic supply channels progress in piloting a flexible and cost-effective could create lots of opportunities for supply system for beans, pulses and rice from the Key Updates for the year farmers in the north of the country, as North of Mozambique to Maputo. The sustainability well as for micro-retailers in urban areas of these investments, however, still needs to be Similarly to KDT, VIP Spar is interested in identifying (majority of whom are women). Five Star, proven. farmers groups in Mozambique that can become long-term for instance, is working to connect farmer suppliers of this large supermarket chain. Over the last groups in Zambezia and Nampula to over Key achievements for the year quarter, FTF Inova has supported VIP Spar to identify some 1,000 micro retailers (90% of which are of these viable groups, however, the company is female) that would distribute products to Throughout the year FTF Inova has supported KDT proceeding quite cautiously with firming clear consumers in Maputo. to establish a first reliable supply chain for national commitments and with testing samples. Since VIP Spar products. A first stepping stone has been for KDT remains a potentially large-scale agent, FTF Inova will to support one association of 25 women in Majune continue to work with them in the coming year. District, Niassa Province, to formally register their organization. This association aggregates produce Five Star is a large distributor of fast-moving consumer from 800 SHFs for KDT. goods. Through support from FTF Inova, Five Star has invested in creating a brand to sell grown-in-Mozambique KDT is also at an advanced stage of negotiating products. Although things have slowed down during the contracts with 3 other female aggregators and a second half of the year, due to COVID-19 travel local transporter to establish aggregation points in restrictions, FTF Inova is continuing to support Five Star Niassa Province, where the supermarket is running with identifying and signing contracts with farmers radio advertisements to invite smallholders to join associations in Zambezia and Nampula. Five Star is planning its project. to start introducing some sample grown-in-Mozambique products next year. While KDT remains determined to establish this line of business, towards the end of the year under In an effort to accelerate replication and scale with the review, the company has temporarily slowed down establishment of domestic supply chains, while some investments in this area, to focus its attention to partners have slowed down during the year, because of dealing with the challenges and opportunities of COVID-19, FTF Inova has intensified its efforts to identify COVID-19. One of the new opportunities, for viable suppliers’ groups. Over the year, the project has instance, is to create a catering delivery service for mapped 118 farmer associations counting 3,979 members corporate clients to eat at their desks, so to avoid (2,048 females) and 48 emerging commercial farmers (12 exposure to COVID-19 (targeting Vodacom, banks, female) in Maputo, Manica, Zambézia and Nampula. The etc.). KDT has also restructured its operations by project has gathered information by location, production closing the Interfranca supermarket. These capacity and consistency, to make it easier for priorities have led the company to postpone the supermarkets and domestic off-takers to test these supply launch of the grown-in-Mozambique line of channels. The addition of the COVID-19 challenge fund products to October 2020. that FTF Inova will launch next year will also help the

FTF Inova: Annual Report (October 2019 – September 2020) 36

activity catalyze more investments and changes in this area Another early partner of FTF Inova in establishing of the market system. domestic supply chains is Mozambique Good Trade (MGT). During the year under review, however, primarily due to the challenges of operating during COVID-19, MGT has suspended its investments in this area.

Probe SCM 7 - Strategic alliances to build the supply chain especially between off-takers (buyers) and service providers (input suppliers, finance, etc.) oriented towards farmers. Outcome Pathway 3: Improved quality and quantity of relationships amongst agricultural market actors Actors: Olam, MeTL, ECA, Nova Tech Agro, CdA, Phoenix, Novo Modal Changes in Sustainability Changes in Scale Changes in Inclusive Value The purpose of helping market actors create Although the returns of establishing alliances are not yet Strategic alliances can benefit SHFs by alliances is to allow them to grow faster and become evident, in the course of last year, FTF Inova has promoted strengthening relationships within the more capable of including SHFs into the market. the adoption of these innovations at scale. market system in ways that allow actors Good and long-term strategic collaboration to deliver better services and inputs, as between companies in Mozambique is however Key Updates for the year well as access to markets. For instance, uncommon, because the number of actors in the the partnership between ECA and Nova- market is small, and trust and relationships are Amongst the set of second tier adopters, the partnership Tech will provide 6,000 farmers access to weak. During the course of the year under review, between Empresa de Comercializacao Agricola (ECA), a better services and inputs while the FTF Inova has continued to encourage and support leading maize buyer in Catandica, and Nova Tech, an agro- partnership between Novo Modal and alliances between off-takers and input distributors dealer with 4 stores, is the one with the highest potential Phoenix has created concrete business to demonstrate the potential commercial returns for impact. Within this alliance, Nova Tech has agreed to opportunities and the potential to involve that these could deliver. establish new stores at two of ECA’s maize collection 9,560 SHFs in seed multiplication. points, with the aim of improving farmers’ yields and Key Updates for the year generating new sales for inputs. If successful, once brought to scale, this pilot can benefit all of the 6,000 farmers that With the purpose of creating a first demonstration are currently supplying to ECA. Nova Tech’s commitment of the value of long-term strategic alliances, during in this deal is to invest in improved services, technical the year, FTF Inova facilitated a partnership between assistance and customer-centric services, as well as Olam and CdA, to support CdA extend its offering bundled input packages. The new stores are under distribution network to also serve cotton construction and will be open in November 2020. producers in Ribaue, and help Olam to open up the concession space to other market actors. This will

FTF Inova: Annual Report (October 2019 – September 2020) 37

create business opportunities for CdA by engaging Another alliance that FTF Inova facilitated this year and that more retail points in areas where Olam farmers are improves the chances that these practices may go to scale located. Up to 24 retail points were identified during is one between Novo Madal and Phoenix Seeds, to use the establishment of this partnership, although Novo Madal suppliers club to multiply beans and sesame delivery to this area has been delayed because of seeds for Phoenix. This partnership has enabled Phoenix COVID-19 travel restrictions. to expand its market for seed multiplication to Zambezia. During the year under review, 9660 farmers involved in A second early alliance that FTF Inova facilitated this partnership produced 24,000 kgs of seeds. during the year is between METL and Bayer with the aim to get them to collaborate on building a network of aggregators and input suppliers. During the year, MeTL identified 6 agro-dealers in its selected procurement zones of Ribaue and Malema districts, Nampula Province, and signed a partnership with Bayer to build the capacity of these agro-dealers to successfully sell inputs for maize production, including seed, fertilizer, and agrochemicals. The launch of this initiative will take place next year.

Probe SCM 8 - Facilitate market access for producers and improve quality of produce in urban areas through linkages in transport Outcome Pathway 3: Improved quality and quantity of relationships amongst agricultural market actors Actors: Adicional Changes in Sustainability Changes in Scale Changes in Inclusive Value In the course of the year under review, Adicional, Until now no other market actor is replicating Adicional’s By facilitating direct access to urban the partner piloting this innovation, has successfully experience. However, because of the positive results of the markets, improved transport linkages established its viability. pilot, Adicional is expanding and taking its model to scale. have the potential to significantly improve terms of sale for farmers by allowing them Key updates for the year: Key Updates for the year to bypass middlemen.

Adicional’s innovative business model is to take Adicional is expanding from 2 to 4 procurement routes Key Updates for the year: advantage of the fact that its fleet travels regularly (adding Nampula - Lichinga - Nampula and Nampula - to rural areas, using its trucks to connect fruit and Nacala - Nampula). With four routes,Adicional can make 3 Adicional initiative has so far contributed horticulture retailers in Nampula with groups of deliveries to the market per week, serve more retailers to savings for 84 SHFs related to producers in rural areas. Since the beginning of this and offer a bigger variety of products. These two routes transport costs since they no longer have intervention, Adicional has been bringing 11,878 kg are developed on the backhaul of CdA’s “Rota Certa” to travel to local markets and Nampula of vegetables (cabbage, onion and tomatoes) from distribution routes and a recent agreement signed between city markets to sell their produce. Their 84 smallholder producers and 5 aggregators from Adicional and ZAP to deliver TV satellite kits to rural areas. income has also improved as Adicional

FTF Inova: Annual Report (October 2019 – September 2020) 38

the district of Ribàué to the market in Nampula. The offers fair prices compared to middlemen. total revenue paid to the farmers has been 180,950 The forecasts points to 5,040 SHFs Mts (USD 2,585). On these sales, Adicional margins expected to sell their produce, are 20%, enough to make the business profitable and representing revenue of approximately replicable. USD 280,000. On the other hand, 11 retailers (mostly street vendors) in the city of Nampula have more convenient sourcing through Adicional deliveries. They no longer go to the wholesale Waresta market to buy the products they need to retail in the urban markets.

FTF Inova: Annual Report (October 2019 – September 2020) 39

Changes in the Wider Operating Environment 1 The drastic economic impacts of COVID-19 have forced FTF Inova partners, such as Ka Da Terra, to reduce operations. Since partners are busy managing these processes, their attention and capacity to follow-through on FTF Inova partnership activities may also be reduced. The disruption of COVID-19, however, has also created a more compelling need for market actors to rethink their business models, and more opportunities for FTF Inova to engage with them. Taking advantage of this opportunity, next year FTF Inova will conduct resilience training and learning sessions through industry associations to assist them in planning the best scenarios for working with SHFs and managing through the on-going Covid-19 crisis.

Lessons Learned and New Opportunities The1 transparent performance management tactics that FTF Inova has introduced in the market are improving trust and loyalty amongst buyers and farmers. As a consequence of improved relationships, transaction costs are lowered for off-takers, who are then more willing and able to invest in helping producers become more productive. For example, when Miruku wasfacing cash flow constraints, farmers agreed to accept late payments to sell to Miruku instead of other off-takers. This year, Olam recovered 88% of its credit from farmers who participated in the supplier clubs, 19% higher than the usual recovery rate. During next year, FTF Inova will run an assessment of trust and consolidate evidence of the impact its improvement can have on the costs of operations of off takers and farmers. The study will be shared widely to stimulate further replication and scale. More companies are expressing interest in using supplier performance mechanisms to improve production and relationships with farmers as a result of FTF Inova’s demonstration effects. For example, according to a new plan by the Mozambique Cotton Association (MCA), nine leading off-takers, including Olam, are segmenting suppliers and defining technical assistance and benefits for each category of farmers. This new initiative is funded by SUSTENTA and the Ministry of Agriculture and Rural Development (MITADER) and will promote maize, beans, soybeans, and sunflower production in North and Central Mozambique. FTF Inova will continue to have discussions with MCA to move towards uniform grades and standards by all its members and promote increased collaboration with local retailers to increase ag input distribution efficiency.

Key Actions for the Next Year FTF1 Inova will continue to strengthen industry associations and academia to promote and offer training services to commodity buyers for the adoption of performance management schemes for suppliers. These organizations offer the best opportunity to scale up these tactics, even after the end of FTF Inova.

FTF2 Inova will measure and evaluate the benefits of the way suppliers clubs are being adopted in Mozambique. Findings will be documented and disseminated in order to effectively share these experiences to stimulate replication and scale.

FTF Inova: Annual Report (October 2019 – September 2020) 40

4.3 Support Services Support services (marketing, business development services, logistics, financial services, ICT, media, etc.) are necessary for companies to grow, become more efficient, and expand in the market to serve more customers. They are also essential for entrepreneurs, to help them turn innovative ideas into successful businesses, and eventually challenge the few large companies that often dominate the agriculture sector in thin markets like Mozambique. Since service providers have the potential to interact with many market actors, they are also important channels for the amplification and replication of innovations. Since its start, FTF Inova has worked to strengthen the services that are offered to the agriculture sector in Mozambique. The activity has done this by recognizing that while many services may be available, most of them do not target the Agriculture sector, and are cautious of taking the risks to explore where opportunities lie. During the year under review, FTF Inova has continued to support interested service providers to test and take to scale innovative services for Agriculture. The areas where FTF Inova has worked this year include: ● Logistics services - To improve the ability of farmers and off-takers to transport products to markets and inputs to farmers three companies (Appload, Adicional, and Ectori) have invested in low-cost transport and logistics innovations for the agricultural sector. About 50 small and micro businesses (30 street vendors and 40 ag firms) are targeted to benefit from the services. ● Marketing services - Four leading brands (K2, Phoenix, Syngenta and Fepro) are using Cultiva, Tangerines real time analytical data platform on brand presence to understand farmers' needs, and raise brand visibility to encourage the adoption of improved inputs. Tangerine has also profiled the marketing skills and practices of 520 agro-dealers across the country that could benefit from its services. ● Business development services - Two universities (UBS and UCM) are providing graduate students and interns to support agriculture businesses to grow and continue to innovate so they can connect SHFs to markets better. ● Financial services - Five firms (ABSA, Ecotri, Novo Modal, Olam, Miruku) have introduced financial mechanisms such as credit terms, layaways and prepayments to increase SHFs and agri-businesses access to appropriate financing tools and unlock investments. ● Technology integration services - Three ICT firms (Green Fingers Mobile, XR Global and Kuza One) are developing and customizing technological solutions that can help agriculture companies harvest and manage data ● Business membership organizations - Three industry bodies (APROSE, AICAJU and MCA) are investing in their ability to encourage best-practices among members. The key highlights for the year under review that demonstrate the sustainability of service provision for agriculture include: ● Over the year under review, demand for business school and university interns and graduates in agriculture has risen. This year, for instance, UBS placed 16 interns within agro-dealer shops, to help them gather data on their customer base, develop new promotion approaches, and reorganize shop layouts. This has had the impact of increasing customer numbers and improving services and information to SHFs. Following this experience, UBS has created the first dedicated incubation center for agricultural trading and retailing businesses, where graduate students now develop their ideas further on improving agriculture retail services. On the back of this, Easiseeds (a well-known international seed company) has approached UBS to use the incubation center to develop their distribution network from scratch. At the same time, the Universidade Católica de Moçambique (UCM) is investing to expand its teaching offering and its intern schemes to cater more to the agriculture sector. UCM is also setting up a permanent career development unit, which will continue to support graduate students to find opportunities with agribusinesses. ● The marketing company Tangerine, with support from FTF Inova, launched a new brand benchmarking platform for agri products called Cultiva. At the launch event, the company promptly

FTF Inova: Annual Report (October 2019 – September 2020) 41

signed partnerships for its roll out with four large input companies, including seed companies and wholesalers. This success demonstrates that market actors in agriculture have a strong appetite for marketing services, although there are very few marketing companies targeting this sector. ● The technology firm Appload, with incubation support from FTF Inova, has successfully launched a platform that links farmers directly to buyers and matches logistics services for the delivery of produce. This simple but innovative business idea currently connects over 100 drivers with farmers in rural areas and is growing rapidly. It has catalyzed more innovation in partnership with other service providers, such as the insurance company Hollard which is now ensuring cargo for free on the platform.

The results achieved during the year under review show that logistics services for agriculture have great growth potential and should be an area of focus going forward. The demand to establish domestic supply chains and reduce transaction costs from farm gate to market has driven most of the work by FTF Inova and its partners in this area.

While FTF Inova has successfully midwifed a number of sustainable services, broad systemic transformation and scale in the service sub-sectors would require investments beyond the current resources of the project. In this year, USAID’s technical direction has increasingly focused on FTF Inova’s direct impact on SHFs, rather than on the use of resources to improve market functions that have more indirect impacts. Within this context, FTF Inova recognizes the importance of service providers to support the replication and scale of inclusive practices benefitting SHFs within the core functions of the input distribution and supply chain management. The results achieved by FTF Inova this year demonstrate that support services contribute to making markets more inclusive and benefit SHFs both directly and indirectly. Support services contribute directly to livelihoods, by increasing productivity and reducing costs (like in the case of finance, logistics and ICT) or by supporting entrepreneurship and creating employment (such as in the case of university training and BDS). Indirectly, support services can help companies come together to advocate for a better business environment, as well as to learn and adopt successful practices, that ultimately have positive impacts on SHFs. Support services can also be a catalyst to bring innovation to scale. This year, FTF Inova has recorded the following key benefits to farmers from the work done with support services firms: ● The improved links between higher education institutions and agriculture sector businesses, established between FTF Inova’s partners, have created better employment prospects for graduate students. The involvement of young graduates in the traditional Mozambican agriculture sector is essential to bring new ideas and skills and to accelerate the pace of innovation. ● Better marketing insights help agri firms to understand the needs of SHFs better and offer them an improved service. Through the work done by Tangerine marketing firm, input distributors have been made aware of the importance of a consistent purchase journey to improve brand loyalty and activate demand. As SHFs get more value from buying inputs, they demand more of them, and they have more opportunities to improve yields. ● The increased offer in logistical services through the work done with FTF Inova’s partners has offered more opportunities for SHFs to access markets and sell their products. This is also facilitating the supply of domestically grown agriculture products to urban retail chains increasing the opportunity for smallholders to sell what they produce.

Detailed progress and achievements with improving services for agriculture during the year under review is illustrated under each probe below:

FTF Inova: Annual Report (October 2019 – September 2020) 42

Indications of Change and Progress Towards Outcomes Table 6. SSS Progress Probe SSS1: Marketing firms develop and provide services for agribusinesses to facilitate access to a new set of agri-based clients, expanding retail to the SHF better. Outcome Pathway 1: Improved terms of sale for agricultural products by SHFs Actors: Tangerine, Forcier Changes in Sustainability Changes in Scale Changes in Inclusive Value FTF Inova continued to work with two marketing companies, Tangerine’s Cultiva platform represents The segmentation of agro-dealers allows Tangerine and Forcier, to help them introduce new services for the expansion of its services to a new set input companies to make targeted the agriculture sector, pitching and piloting them with a few of agricultural clients. The company is investments to improve the buying initial customers. The product offered by both companies, but leveraging data acquired through experience of customers, and serve the SHF Tangerine’s above all, were met with great interest by input interactions with input suppliers, retailers, segment better, driving up demand for distributors and retailers, revealing the growth potential for this and their customers to demonstrate its improved inputs. kind of services. value to more input companies and thus foster more demand for its services. As the Key updates for the year Key updates for the year first set of large customers experience Cultiva, Tangerine can adapt its product SHFs (500 customers on average) are already This year, Tangerine has launched Cultiva, a platform that allows and reach new clients. benefiting from Tangerine's work, input suppliers to have real-time analytical data on their brand experiencing improved shop layouts, larger presence and positioning versus their competitors for different Key updates for the year choice of products, access to more customer segments. During a 3-months pilot, Tangerine has information on the correct use of inputs, as pitched to 10 input companies and has been able to sign deals Tangerine's Cultiva platform is active with well as the opportunity to provide feedback with 4 leading brands (K2, Phoenix, Syngenta, and Fepro) a database of 520 agro-dealers in Manica on their level of satisfaction. profiling the marketing skills and practices of 520 agro-dealers and Nampula Provinces that allows input across the country. The idea of Cultiva was born from the companies to make better-informed experience that Tangerine has developed through the work marketing and distribution decisions. For done to design the brand of AIPM’s seeds in partnership with instance, the platform will enable FTF Inova, as well as the work they have done to develop CdA’s companies to target investments to those marketing and communication strategy. agro-dealers that most need them, and to identify the most successful partners in After a period of organizational restructuring, this year Forcier building their distribution chains. The developed a customer feedback tool to help input distributors platform is providing visibility on customer gather quick customer feedback using CATI (Computer Assisted demographics, product availability by Telephone Interviews) technology. Forcier is launching this new brand, competitor activity snap surveys, service at the time this report is being compiled. and retailer segmentation by size and sophistication level.

FTF Inova: Annual Report (October 2019 – September 2020) 43

Probe SSS2: Develop low-cost market-driven services to the agriculture sector improving value offered to customers, suppliers, and building the workforce. Outcome Pathway 2: Improved access to agricultural inputs, services and information Actors: Universities: Universidade do Zambeze; Universidade Eduardo Mondlane- Faculty of Agronomy; UniLurio Business School-UBS; Catholic University (UCM)- Faculty of Engineering; High Polytechnic Institute of Manica-ISPM Agro-dealers: Hélder Comercial, Agro-Dealer Ernesto Gabriel, Ákila Agro-clínica, Chipangue & Filhos Agro-dealer, Agro-dealer Maleiro, Olima Farms, and 4 João Agricultor franchisee shops Changes in Sustainability Changes in Scale Changes in Inclusive Value With FTF Inova’s help to pilot, two The HEIs that have partnered with FTF Inova are offering BDS HEIs investments are catalyzing innovations Universities are now sustainably providing services at an increasing scale. HEIs are forging new that stimulate Mozambique's agricultural increased support to agriculture businesses relationships with big input companies such as Easiseeds and market system to become more competitive and supplying graduate students and interns ETG to develop strategies to grow their market and reach and inclusive of SHFs. The relationships to the sector. more farmers. between HEIs and agri-businesses demonstrates value to agri-businesses, Key updates for the year Key updates for the next year showcasing the mutual benefits of investing in internships, and help HEIs become more During the year under review, UBS and UBS has further adapted its approach to creating a business innovative and competitive. Also, an UCM have invested $23,850 ($12,565 and incubator for graduate students to develop services for emphasis on improved relationships with $11,285 respectively) to develop new agriculture. The first round of startups involves 9 students, 4 of customers contributes to increased value teaching modules and practical experiences which female. The university has then established a relationship for new and existing customer-farmers to bring the universities closer to the agri- between the startups in its incubator and Easiseeds, a based on the range of benefits such as business sector. The magnitude of the distributor carrying its brand of vegetable and maize seeds as product information received during a investment, for organizations that do not well as multinational brands such as Pannar and Cooper. transaction. The partnerships also provide typically dispose of large budgets, shows the Easiseeds has challenged the students to establish a network of an entry pathway for youth into the magnitude of their commitment to driving small stockists in Ribaue, Malema and Cuamba areas that could agricultural sector, providing them with this innovation and gives good hopes for it to distribute Easiseeds. The agreement is that Easiseeds will pay a valuable early-career experience. be sustainable. 20% commission fee on the value of the products sold. Half of the commission (10% of the total value) will go to the stockist, Key updates for the year one quarter (5% of the total value) to the VBA engaged by the UBS interns helped introduce a series of

After a short interruption in the middle of stockist that works with the rural communities, and one customer-centric services leading to: the year due to COVID-19, UBS continues quarter is paid to the incubation center to continue supporting to support a number of agro-dealers of the startups in their first year of operation. Easiseeds has also ● Increased customer traffic for the various sizes through its internship program. hired one UBS graduate to coordinate the work with UBS and agro-dealers by 2-8 customers per UBS has active internship placements with lead on the expansion of their distribution network. day per store Helder Comercial, Agro-dealer Ernesto ● Better access for farmers to quality Gabriel, Ákila Agro-Clinica, Chipangue & Following the experience of Easiseeds, ETG has expressed inputs and technical information Filhos, Olima Farm, Agro-dealer Maleiro and interest in working with UBS interns to build its input with an increase of 60 to approx.

FTF Inova: Annual Report (October 2019 – September 2020) 44

João Agricultor (4 shops) reaching out to 48 distribution network as well. ETG’s objective is to support 5 150 customers per month buying VBAs and respective rural communities agro-dealers in Malema, Murrupula and Mogovolas to develop products in two agro-dealer stores. where the VBAs operate. The internships VBAs networks. If successful, ETG may extend this approach ● A new network of 48 (12 female) are instrumental to improve the agro- to its network of 150 stores. Village-based Agents (VBAs) dealer’s management systems (accounting, implementing a pre-order system. customer registers and services, stock management, improved shop layout) to During the year, UBS trained 81 students better respond to customer needs. (36 female) and placed 16 (9 female) at 10 aagro-dealers shops with support from FTF Four of these shops internalized the Inova. In the middle of the year, however, recommended retail growth practices by the internship program was suspended due keeping an up-to-date customer database to COVID-19. It is now resuming in and using it for marketing as follows: October 2020.

● Akila Agro-Clinica in Ribaue District has been giving away prizes and discounts to repeat customers and has expanded its distribution network by engaging 4 VBAs who were trained by the interns. As a result, customers' loyalty and referral has grown. Ákila, which was registering on average 60 customers visits each month in its database, has more than doubled this rate to approximately 150 with support from the interns. Because of the success, Ákila has now recruited interns for two more of its input shops. ● Thanks to UBS’ interns building a customers’ database that includes contact details, Ernesto Gabriel, an agro-dealer in Ribaue District, was able to sign a deal to become an official Yara retail point. In this deal, he agrees with YARA that his most loyal customers shall receive one free fertilizer pack as a sample.

FTF Inova: Annual Report (October 2019 – September 2020) 45

● João o Agricultor (a franchise by JFS) is facing challenges to stock its 4 shops in Cuamba. The shops have not been receiving inputs since February 2020. To solve this impasse, JFS has reached out to UBS, asking the school to help them build a partnership with Easiseeds that could make it easier for them to access seeds stocks. The role of the interns will be to develop an inventory management and order system, and to train 4 VBAs to aggregate orders for Easiseeds.

When asked to rate the performance of the interns they have hosted on a scale from 1 to 10 scale (with 10 being “extremely satisfied” and 1 meaning “dissatisfied”), the average feedback provided by agri- businesses is 9 points, showing good interest for these type of placements to continue.

UCM has started to design a career development unit to promote regular interactions with the private sector through job fairs, to get feedback on its curriculum, and to market its students for internship and employment opportunities. The platform will also promote skills improvement in business management, customer services, marketing, ICT, CV writing, job interview, and workplace induction. UCM has engaged a Brazilian consultant based in France to guide them on integrating digital learning systems into the platform.

FTF Inova: Annual Report (October 2019 – September 2020) 46

Probe SSS3: Transportation and logistics agriculture support services help companies reduce costs and enable more cost-effective transportation services for distribution to the last mile SHF Outcome Pathway 2: Improved access to agricultural inputs, services and information Actors: Appload, Adicional, Ecotri Changes in Sustainability Changes in Scale Changes in Inclusive Value During the year under review, FTF Inova has been During the year under review, these three The business innovations introduced by Appload, working with three different companies, to pilot logistics companies have been expanding Ecotri and Adicional are still small-scale but quite disruptive innovations that can improve the availability their offer to new areas of the country, disruptive. The high cost and low access to and cost of transportation services for agriculture. All reaching out to a growing number of agri- transportation services are major constraints for three of these companies are further adapting the businesses. Notwithstanding, the market for the growth of agri businesses, and in particular, innovations introduced with FTF Inova, and continue to logistics services for agriculture remains thin SHFs. Because of these challenges, farmers face invest the effort to improve them, increasing the in Mozambique. FTF Inova, therefore, very limited options to sell their produce beyond chances that they may be sustained over time. expects that scale in this area will be achieved their farm gate, which limits their negotiating by expanding these current pilots to their full power and their opportunities to raise their Ecotri has signed up a partnership with CdA and has potential, rather than increasing replication income. Increased transportation in rural areas proactively targeted a number of agro-dealers in rural and copying. also improves access to inputs for SHFs. areas, using their own resources. Key updates for the year In the past year, Adicional alone has served 5,040 Adicional has used the information gathered during the farmers and 30 street vendors to reach a pilot with CdA to streamline its operations and reduce Thanks to relentlessly targeting the cumulative revenue of $280,000. During next year, the cost of the transport solutions it offers in rural areas. agriculture sector, Appload's portfolio of FTF Inova will carry out a detailed impact study of clients continues to grow. Since the launch, the indirect benefits that logistics in rural areas has Key updates for the year this year, Appload’s portfolio has continued on the income of SHFs to include more data from to grow to reach 40 clients, 60 transporters, the entire portfolio. Appload is the most committed of the lot. The startup and 115 drivers by the end of the year. has continued to carry out market research, and to socialize their product with agribusinesses. They have Ecotri is also growing. During the year, the also started a strategic collaboration with Hollard, an company has expanded its customer base insurance company, as reported earlier. Through this specifically by targeting the agriculture partnership, Hollard is providing free insurance for segment. By the end of the year, Ecotri had cargo to the first journey that a customer books via pitched to 40 agro-dealers in rural areas Appload. By joining forces, both Appload and Hollard through marketing events. An additional 50 are gaining lots of visibility with transporters as well as agri businesses have independently visited agri businesses. Ecotri’s showroom. Despite COVID-19, Ecotri has been able to turn these visits into A second partnership signed by Appload is with Ecotri, 5 sales of tricycles. an importer of low-cost motorized cargo tricycles that are well suited for agricultural transport in rural areas. Adicional also continues to expand, and The idea developed by Appload and Ecotri is to jointly beyond ZAP TV this year it has managed to

FTF Inova: Annual Report (October 2019 – September 2020) 47

market Ecotri tricycles to young entrepreneurs that work with a number of new agri-businesses would like to join Appload’s network of small through their backhauling offer. transporters. To increase its offering and lower the cost of its services, Appload is also negotiating backhaul and inbound cargo rates with cashew producers and transporters in Nampula to offer complete round trips journeys on its platform. Lastly, with support from FTF Inova, Appload has also developed a trading platform for producers or aggregators to trade with processors and traders. The platform is intended to be a solution to the constraints to face-to-face interactions and deal making that is being imposed by COVID-19. The platform is free, but at the back of each deal, Appload can sell its transportation services.

Besides entering into a partnership with Appload, Ecotri has also signed a deal with CdA to include Ecotri tricycles into CdA’s catalog and distribute them across their large network of agro-dealers. Through the use of Ecotri tricycles, rural agro-dealers are able to conduct small aggregation businesses as well as deliver inputs further into the last mile.

As described earlier in the report, Adicional is also sustaining and amplifying its presence in the agriculture market by bringing produce from farm to market as backhaul cargo. In addition, Adicional has also signed an agreement with ZAP TV to distribute satellite TV Kits to rural areas in Nacala and Niassa.

Probe SSS4: Applying financial service solutions through agribusiness partners allows expansion of products and services to more rural areas and improves access to technologies for SHF. Outcome Pathway 2: Improved access to agricultural inputs, services and information Actors: Absa, Ecotri, Prodeca, buyer check-off credit (Nova Modal, Miruku, Olam), CdA Changes in Sustainability Changes in Scale Changes in Inclusive Value

FTF Inova: Annual Report (October 2019 – September 2020) 48

Over the year under review, FTF Inova has introduced a number Layaway schemes and credit schemes for Financial schemes such as credit terms, of innovative financial services that its partners are continuing to inputs have the potential for expansion at layaway and prepayments schemes have sustain. scale. In the course of next year, while clear advantages for SHFs. They offer the amplifying the success of producers and opportunity for this segment of Ecotri in Nampula and Prodeca in Manica, are sustainably buyers clubs, FTF Inova will also disseminate unbanked customers to smoothen their implementing layaway plans whereby they reserve an item and evidence of the impact of these schemes on cash flow and save for small investments deliver it when customers pay the complete amount for it through farmers' income and capacity to participate that would not otherwise be possible. a series of small installments. These schemes, developed with in the market. Similarly, supply-chain credit benefits support from FTF Inova, have been introduced to help Ecotri sell small retail shops, who otherwise would tricycles and to help Prodeca sell small movable assets, such as Key Updates for the year not be able to access credit to build their pumps, wheel barrels, etc. store’s inventory. Some input retailers are starting to replicate Nova Madal, Miruku, and Olam continue to advance credit for prepayment and layaway schemes based on Key Updates for the year quality inputs through a buyer-check-off plan (a plan that requires the successful experience of FTF Inova’s first tracking payments with each supplier involved). Another form of pilots. For instance, Oruwera and Olima Being one of Absa’s customers, Agrico supply chain credit is CdA's pre-order scheme, whereby agro- Farms in Nampula are going to introduce Marketing has been able to mobilize dealers have a 30-day credit period to pay for inputs supplied, such schemes starting from November 2020. working capital to guarantee an offtake giving them some flexibility to manage inventory. Once these market actors replicate the market to a large number of SHFs pilots, we estimate that approximately 1,000 (numbers cannot be published for Key Updates for the year SHFs will benefit from the scheme, including confidentiality reasons). associations and savings groups. Absa Bank has continued to work with FTF Inova to target its The pilot check-off input credit system Enterprise and Supplier Development financing program (ESD) to CdA is continuing to increase the scale of its implemented by Olam, Novo Modal and the agriculture sector. During the year under review, two large distribution routes, and the credit facilities Miruku during the past year, has agribusinesses negotiated a significant loan, thanks to FTF Inova’s that it makes available to agro dealers. As benefited over 4,600 SHFs and will be match-making efforts (recipients and amounts of the loan cannot other large players such as Bayer replicate expanded to reach 13,774 SHFs in the be disclosed for confidentiality reasons). this kind of distribution system, there is course of next year. potential to bring these kind of credit With support from FTF Inova, during the year under review, practices to scale. Although FTF Inova does not usually Ecotri has adapted a layaway plan to the business cycles and report CdA’s just-in-time distribution capacity of rural agro-dealers to pay. Thanks to these adaptations, model as an innovation that improves 15 agri businesses have been benefiting from the scheme. Ecotri is access to finance, the fact that also in negotiations with Standard Bank and Indico Insurance to distributors such as CdA maintain make a purchase loan available to its customers, coupled with products in inventory until purchase by insurance. the final customer is also a form of supply chain financing, since it reduces the Olam, Nova Modal, and Miruku intend to expand their input credit financing burden for the small agro- system to reach 13,774 SHFs by November 2020, from the 4,600 dealers. Once freed from the constraint SHFs that benefited during the last cropping season. of financing their inventory, agro-dealers

FTF Inova: Annual Report (October 2019 – September 2020) 49

can focus on the core parts of their Prodeca, with support from FTF Inova, conducted a small market business, which consists of keeping in survey to explore the option of targeting urban areas to sell inputs touch with farmers and delivering that can be delivered to extended family members in remote rural information and services to activate parts (as a form of in-kind remittance). The findings of the survey demand. As a consequence of the were presented in Chimoio by Prodeca and FTF Inova to 3 input increased support, farmers have more firms (K2, Phoenix, and Luteari), 2 agro-dealers, as well as ABC tools at their disposal to improve their Bank. All of these market actors have expressed interest to test yields. this tactic during the cropping season that will start in November 2020.

Probe SSS5: ICT-Enabled inventory and digital payment solutions for agribusinesses allow for better inventory and customer management practices that facilitate better services to SHF as customers. Outcome Pathway 2: Improved access to agricultural inputs, services, and information Actors: Green Fingers Mobile (GFM), XR Global and Kuza One, Vodacom Changes in Sustainability Changes in Scale Changes in Inclusive Value In order to grow, businesses need to be able to mine, manage and The use of ICT solutions for agriculture in The benefits that can accrue to SHFs for analyze data. Data allows them to make savvy investment Mozambique is still in its infant stages. The innovations in data management and ICT decisions, improve the efficiency of their business cycles, reduce opportunities for change at scale are tools, are indirect, and not easy to costs for inventory management and transport, measure therefore limited. quantify. In the course of next year FTF performance and take corrective measures when it swindles. As Inova will gather evidence to allow a some of FTF Inova’s partners scale up the innovations that they Amongst the portfolio of partners engaged more precise understanding of the pilot with the support of the activity, their need for gathering and by FTF Inova, the one with the strongest benefits of this service function. managing data grows as well. Often, this need can only be satisfied opportunity for scale is GFM, due to the through the adoption of some ICT solution. strategic partnerships that the company has Key Updates for the year been able to forge, following FTF Inova’s For these reasons, in the course of the year that has just support. However, the experience obtained with concluded, FTF Inova has continued to support some ICT service GFM in the course of the year under providers with appetites to expand their services to the agriculture Through their work with Novo Modal, GFM review shows how ICT solutions can sector, helping them customize and pilot solutions that can fit the is planning to grow its platform to include rapidly touch many farmers. needs of market actors such as Bayer, Luteari, Novo Modal, Olam, 9,560 SHFs across multiple crops, including and Miruku. beans, tomatoes, and coconut trees, by For instance, through its work with November 2020. The platform will be used Bayer, GFM will deliver information and During the year, three ICT firms (Green Fingers Mobile, XR to manage and track a great number of support communication between 13 Global, and Kuza One) have made some remarkable progress with transaction information, including biodata of regional hub dealers and 130 agro- FTF Inova's assistance, designing and customizing solutions for suppliers, extension services delivered, dealers, including their VBA networks. agriculture. However, the sustainability of these tools, and the producers’ performance, and purchases This means that the platform will gather payment plans that the companies want to establish, remains to be from each supplier. If successful, this pilot and deliver information to a network of verified. approximately 7,800 SHFs.

FTF Inova: Annual Report (October 2019 – September 2020) 50

has the potential to be scaled up further and Key Updates for the year replicated by other offtakers. Through their work with Novo Modal and Olam, GFM expects to register almost 27,000 SHFs. Novo Modal will use With support from FTF Inova, Green Fingers Mobile (GFM) has the platform to manage 9,560 farmers signed a partnership with Bayer to co-create a platform that can that are growing coconut, tomatoes, and be used to register customers at different levels of the distribution different bean varieties. Olam will use it chain, to track consumers’ preferences and behaviors, and to with 17,000 SHFs who are currently disseminate targeted information. Based on the experience growing beans, maize, and other crops. developed with Bayer, GFM has further adapted its platform and pitched it to more off-taker companies like Olam, Nova Modal and METeL. In the course of next year, FTF Inova will help the partners to understand the use case for this solution and will support GFM to socialize it further with other market players.

During the year, FTF Inova has facilitated XR Global, an international company specializing in Virtual Reality (VR) content creation and training, to customize a series of VR training modules on inventory and stock management based on the needs of Mozambique’s input firms. FTF Inova has also helped XR Global pitch its solution to Bayer, Proma Commercial, and UBS. Next year, FTF Inova will follow-up with XR Global and support the start of a pilot and skill transfer to UBS in order to deploy these training tools in Mozambique.

Finally, during the year, FTF Inova has also provided some limited support to Kuza One, a digital agriculture extension services platform, to customize its offer and services to meet the needs of off-takers who use suppliers’ clubs tactics. After the adaptation, FTF Inova has linked Kuza One to AICAJU and the Mozambique Cotton Association. During next year, the activity will continue to nudge these partners to work together, in the hope for a pilot to take off.

Finally, during the year FTF Inova has also facilitated a business link between Vodacom and K2. Through its support, FTF Inova has helped the partners co-create a new approach for M-pesa to penetrate the rural market in Manica by leveraging K2’s network of agro-dealers. By the time this report was prepared, K2 had shared with Vodacom a contact list of 34 agro-dealers located in

FTF Inova: Annual Report (October 2019 – September 2020) 51

and around the city of Chimoio. Vodacom will geotag them and select those within reach of a strong network signal to be included in the pilot.

Probe SSS6: The recognition of good business practices in the form of public awards and rewards can serve as a vehicle to drive quality improvements in specific agricultural sectors. Outcome Pathway 1: Improved terms of sale for agricultural products by SHFs Actors: APROSE, AICJAU, Mozambique Cotton Association (MCA) Changes in Sustainability Changes in Scale Changes in Inclusive Value During the year under review, FTF Inova has been actively working The work being done with The benefits to farmers of working with BMOs is with a few business membership organizations (BMOs), as a vehicle sector BMOs has the aim of indirect, and difficult to measure. for disseminating and amplifying the innovations that the activity has disseminating FTF Inova’s introduced in other areas of the market. partners’ successes, and of The seed award, for instance, will allow farmers to promoting the adoption of provide feedback to seed companies, about their Key Updates for the quarter more inclusive business preferred products and input suppliers. This will practices at scale. The work encourage companies to deliver better services Most of the year’s BMO work has been with APROSE, the national done in this area is not focused and quality, with obvious advantages to farmers. platform for the seed industry. With facilitation from FTF Inova, on improving the sustainability During next year, FTF Inova will assess what APROSE is organizing a national award for quality seed products that of the BMOs themselves or the improvements and benefits can be attributable to is based on customer voting. The aim of the award is to raise scalability of their membership the seed competition. The assessment will help to awareness among consumers on the advantages of using quality seeds, base. make the case for the award to be repeated in the and to stimulate competition amongst seed companies to deliver future. better products to the SHFs segment. During the year APROSE has As promoting replication will be been successful in getting the industry behind the award program, and a key strategic area of focus for By working with associations like AICAJU and has also been able to raise funds to run it. Following FTF Inova’s advice next year, the work with BMOs MCA, FTF Inova can indirectly benefit a large and support, APROSE will invite farmers to vote by using a mobile will intensify. number of farmers. AICAJU, for instance, can help Unstructured Supplementary Service Data (USSD) voting system, an improve management practices and access to automatic phone service that has no costs to the voter. Prior and inputs and extensions for at least 17,000 SHFs during the three-months-long voting period, APROSE will run (considering that each one of the 19 member firms

television and radio spots throughout a three-month voting period, to works directly with at least 900 SHFs). Meanwhile, encourage farmers to vote. About 3,000 SHFs will have voting access MCA’s nine members work with over 200,000 to the platform. APROSE will launch the award in the first week of farmers across several commodities, including November 2020. maize, beans, soy, and sunflower.

A number of partners besides FTF Inova are supporting this effort. Firstly, the Ministry of Agriculture’s Seed Department and Institute of Agriculture Research will sponsor the event and use it to disseminate technical guidance to farmers. The Feed the Future Mozambique

Improved Seeds for Better Agriculture (SEMEAR) activity is also

FTF Inova: Annual Report (October 2019 – September 2020) 52

supporting APROSE’s award with $9,000. Forty of APROSE’s members, including 25 seed companies and multipliers, will participate in the competition.

As reported in other parts of this document, FTF Inova has done significant work with AICAJU during the year to help the BMO promote suppliers' clubs, tactics and bundling services among its associates and members. AICAJU’s membership includes 19 cashew processing companies, covering almost the entire cashew market in Mozambique.

During the year, FTF Inova has also started working with the Mozambique Cotton Association (MCA). MCA is a BMO that has 9 large cotton companies as members, including Olam, San-JFS, Sanam, and Plexus. MCA is an important platform to amplify the performance management practices that FTF Inova has been piloting with Olam, also beyond cotton, since most of the members work across different crops. Through this organization, FTF Inova has the potential to reach 200,000 suppliers growing soy, sunflower, beans, and maize. MCA is working with the Ministry of Agriculture and Rural Development (MADER) to increase SHFs yield, and is therefore interested to pilot distribution and credit based on SHF's performance.

FTF Inova: Annual Report (October 2019 – September 2020) 53

Changes in the Wider Operating Environment 1The COVID-19 related travel restrictions have had a significant reduction in volumes of cargo transported within the country and neighboring countries. Most transport and logistics companies are operating well below their loading capacity, resulting in an increased need for backhaul and coordinated services, reflected by the increased demand for Appload and Adicional's services. FTF Inova will continue to support the two firms to pitch to more ag sector players to expand their services countrywide. 2COVID -19 related school and university closures disrupted education services at most Universities, including FTF Inova's partners UCM and UBS. Education institutions were closed from April 2020 to September 2020 as a containment measure, and interns had to interrupt trips to assist agro-firms in continuing testing models. Learning from this experience, FTF will continue to work with the universities to introduce digital learning and integrate them to provide BDS to the ag sector. FTF will continue to work with ICT service providers such as XR Global to build universities' capacity on digital learning systems.

Lessons Learned and New Opportunities There1 is a growing demand for specialized and affordable services by ag firms to perform their core functions better and cheaper. For example, there is an increase in demand and use of the new transport and logistics services by Appload and Adicional to ag companies and SHFs. Another example is the large input firms such as Easiseeds and ETG using their resources to hire interns to help expand their input distribution networks. FTF will focus on consolidating the business case to support these early moving support service firms to pitch their services to broader audiences and increase uptake of the services by more ag firms. There2 is a clear need for ICT platforms to improve ag firms' inventory, customer, and supply chain management. Despite this broad potential, there is a lack of existing suitable ICT solutions in the local market which has slowed FTF Inova's progress in this area. FTF Inova will continue to support Bayer work with GFM to develop a platform for its regional hub-distributors and agro-dealers. FTF Inova will also continue to explore the potential of the international service providers to build local capacity (e.g., academia) to increase the supply of suitable platforms. FTF3 Inova has observed early signs of the potential to develop marketing services at the supplier and agro-dealer level. Input firms are using Tangerine's Cultiva platform to forecast SHFs demand, while agro-dealers invest in Tangerine’s recommendations to improve merchandising and customer services. FTF will continue to work with Tangerine to segment the agro-dealer market, develop appropriate offers for each agro-dealer segment, and shape its different service offerings accordingly. We will also support Tangerine to promote its services to more input suppliers to co-invest with their agro-dealers network.

Key Actions for the Next Year FTF1 Inova will continue to strengthen academic institutions, marketing, ICT and logistics firms' ability to develop and promote practical and relevant services to increase the supply of services that support the core systems of inputs and supply chain. This will include pitching tailored offers to more ag sector firms through stakeholder events.

FTF3 Inova will support testing the ICT solutions offered by GFM, XR Global, and Kuza, who have shown interest in developing suitable platforms for input distributors and supply chain actors. FTF Inova will continue to work with business associations to disseminate FTF Inova’s partners’ successes and promote the adoption of successful innovations at scale.

FTF Inova: Annual Report (October 2019 – September 2020) 54

5 Collaborating, Learning, and Adapting

5.1 Operational Environment

From October 2019 to September 2020, Mozambique’s agricultural market system has experienced several important changes in dynamics.

At the start of the fiscal year, the majority of households in Mozambique, which earn their income from selling crops and livestock, were facing decisions of what to cultivate for the year. The cyclones Idai/Kenneth and associated flooding in central and northern regions, drought in the southern region, and conflict in Cabo Delgado had made the previous year difficult, although, in some parts of Manica and Sofala provinces, there was an above-average harvest of horticulture crops, like cabbage, lettuce, carrots, and some tubers1. Of course, as more households cultivate agricultural crops, their opportunities to sell the production often decreases, as has the price they receive historically. That said, the price for maize grain, maize meal, and rice were generally stable in July 2019 and higher than the previous year in 2018, so the interest and motivation were still very much present at the start of the planting season in late 2019.

Then, in January 2020, Mozambique’s President Filipe Nyusi kicked off his second term by highlighting Mozambique’s huge agricultural potential (including agro-industry and agro-chemistry) in his inaugural speech. Agriculture in Mozambique is constrained principally by challenges in the business environment and lack of infrastructure. Allocations of 10 percent of the country’s 5.1 billion meticais budget were made towards the agricultural sector to help purchase and improve the quality of seeds, as well as to introduce irrigated and mechanized farming. Unfortunately, this year’s latest assessment from the World Bank’s Doing Business ranked Mozambique 138 out of a total of 190 countries in the business environment—falling three places below its previous rank. Mozambique fell across almost all indicators, primarily for failure to implement legal instruments correctly and consistently, making the country less attractive to investors and traders. Financing rates were also considered too high for entrepreneurs and the Confederation of Business Associations of Mozambique (CTA), the main employers’ association, had suggested the banking system offer alternative lines of credit for SMEs to deal with the difficult market conditions. To top it off, the majority of Mozambicans work in agriculture, but the exports of the country continue to be dominated by natural resources—coal, aluminum, and natural gas2.

In addition to these dynamics, agricultural trading in Mozambique has not been a traditionally easy endeavor, especially given the challenges presented by underdeveloped road infrastructure in remote areas cultivated by farmers. However, COVID-19 restrictions on travel in 2020 also caused significant delays and, in some cases, losses for producers. For example, Fatima Matavele, a commercial farmer in the district of Chokwe, faced challenges getting her vegetable shipments to target markets like the Zimpeto vegetable market, soso she ended up having to dump sacks and boxes of fresh vegetables on the roadsides. She and other commercial farmers have found that transporters, like the traders’ collective she used, have reduced the number of trucks they are running by 75 percent. Meanwhile, she and other employers around the country struggle to keep their workers employed3. As early as April 2020, nationwide Mozambique was experiencing a slowdown in growth by -14.1%,

1 https://fews.net/southern-africa/mozambique/food-security-outlook-update/august-2019 2 https://africanbusinessmagazine.com/sectors/agriculture/can-mozambique-realise-its-potential-for-growth/ 3 http://www.ipsnews.net/2020/09/covid-19-worsens-mozambique-hunger/

FTF Inova: Annual Report (October 2019 – September 2020) 55

attributed in part to reductions of personnel, especially those employed in the food, beverage, and cement groups. All surveyed sectors by the National Institute were also experiencing reductions in pay: tourism (- 10.4%), industry (-6.5%), other services (- 3.3%) and trade (-0.3%). Mozambique has also experienced challenges in the decline of business volumes – as evidenced in transport (- 16.8%), influenced by the fall in air transport as well as in rail, and commerce (-7.5%), influenced by the fall in the wholesale trade of fuels as well as in motor vehicles4.

As noted in previous reports, there have been breakdowns in the food supply chain which have contributed to mounting fears, as well as increased prices for commodities and food, as people began to stockpile. FEWSNET was even reporting by July 2020 that maize grain prices were significantly higher than the previous year and the five-year average. This also means, however, that increasing numbers of Mozambican poorer households are struggling to afford food and the means to keep their farming afloat. Overall, quarantines have shown a negative impact on economic and livelihood activities, thus reducing employment and access to economic opportunities. Whilst affecting the poor across Mozambique, this impact will be particularly pronounced for women, who disproportionately work in insecure labor whilst also coming under increasing pressures at home. As such, FTF Inova has been conducting ongoing monitoring, with a specific focus on the impacts of Covid- 19. We have maintained contact and regularly interviewed market actors, like agro-dealers and agribusinesses, on the delays, stressors, and concerns they are experiencing in the market system. Throughout the year, we have found that logistics, transport, and finding ways to maintain operations have been principal concerns.

Business risks: Through its strategic plan, the Ministry of Agriculture and Rural Development is implementing the SUSTENTA program, aimed at improving the quality of life of rural households by promoting sustainable agriculture (social, economic, and environmental). SUSTENTA is a national policy for the integration of family farming in productive value chains. The strategy for SUSTENTA establishes the links between the medium- sized emerging commercial farmers (known as PACE) and other market actors in value chains, including the suppliers of the inputs. Although the program has the potential for improving agricultural production, productivity, and incomes of the SHFs, it requires an implementation strategy that does not hinder the development of input markets in Mozambique. Through the program, through the funding from the World Bank of USD 50 million, MADER is investing in 10 technological packages, each including 250,000 kits to be distributed countrywide made of 12,275 tons of seeds (maize, rice, beans, groundnuts, soya, sesame, etc.); 25,000 tons of fertilizers; and 250,000 liters of chemicals (mainly insecticides). The distribution is planned to be done through a consortium of a few input firms. Although the program has the potential to reduce poverty, the lack of clarity on the distribution model can harm the interventions promoted by some market system programs like FtF Inova. As such, USAID is urged to advise MADER on the best ways that SUSTENTA can be implemented to leverage the efforts from development projects like FtF Inova.

4http://www.ine.gov.mz/estatisticas/estatisticas-economicas/indice-de-actividades-economicas-iae/brochura_iae_no196_- julho.pdf/view

FTF Inova: Annual Report (October 2019 – September 2020) 56

5.2 Collaboration with other Stakeholders

FTF Inova recognizes that we are not the only facilitator nor stakeholder involved in changing market system dynamics in Mozambique. To improve both the reach and durability of improved outcomes and trends in the agricultural market system, FTF Inova has worked with other stakeholders throughout the past fiscal year as indicated below:

● FTF Inova participated in discussions with AICAJU and GIZ to improve coordination in supporting the cashew companies. GIZ is funded by the EU to implement PROMOVE-Agribiz to improve rural competitiveness in Nampula and Zambezia provinces. We agreed that GIZ would hire a service provider to provide business training for club members, monitor farmers' performance, and train AICAJU to use evidence to advocate for standardized criteria to qualify farmers for the suppliers' scheme. ● On October 20th, FTF Inova presented to USAID the results from the brainstorming session on the challenge fund organized as part of the Annual Portfolio Review and planning. The objective of the presentation was threefold: Introduce the challenge fund concept, explore potential challenges, and strategize outreach and communication. As the results of the discussion, FTF Inova received additional guidance on the implementation of the challenge fund. Key guidance was the need for FTF Inova to address the key challenges in the supply chain which include the need to improve production, productivity, and quality. In the sense, the highlights were on the following areas of focus: a) Improved production, productivity and quality of agricultural products; b) Post-harvest management; c) Markets and Market infrastructure. It was agreed that FTF Inova would work on 2-3 challenges. Additionally, it was reminded that FTF Inova should think about the best ways to engage the stakeholders and potential applicants and the timeline for the implementation given the fact that FTF Inova is going to its last year of the project life. ● During the fourth Quarter, revisions of the mid-term evaluation were provided by FTF Inova, and co- creation meetings were held to support the evaluation consultants (MSI) understanding the approach and highlight the results achieved by FTF Inova so far implementing the market system approach. Through the co-creation process, the theory of change was developed which allowed FTF Inova to update the earlier MEL Plan. ● FTF Inova continued establishing linkages with the Government through meetings facilitation by USAID. FTF Inova along with AGRA, SPEED+, and FTF-Seed trade project attended the meetings. The objective of the workshops is to introduce USAID funded projects and discuss potential areas of collaboration with the Government. FTF Inova represented by the incoming COP made a presentation about the activity which was well accepted by the host and created interests in exploring more on how to engage the private sector.

5.3 Information on indirect impact and replications from FTF Inova interventions

In FY2020, FTF Inova has worked to learn more about how the Activity’s interventions are facilitating changes in the market system. As presented in the MEL plan, our overall understanding of the market system and its principal actors can be visualized in the Figure below.

FTF Inova: Annual Report (October 2019 – September 2020) 57

Figure 1. Agricultural Market System and Network Map

One particular result area that FTF Inova assesses is at the network level, considering how well market actors are interacting and with whom they are interacting within the system. As explained in the theory of change narrative:

Mozambican commercial relationships have primarily been driven by price. This is a low-risk strategy but does not encourage investment in value addition within the market. FTF Inova works to increase trust as a way of incentivizing investments in relationships that are driven by the belief in another's competency, integrity, and reliability. FTF Inova also seeks to create more cooperative relationships between producers and buyers to increase value in the market, and therefore incomes and profits for businesses and farmers.

To detect changes in the networks within the Mozambican agricultural system, FTF Inova has two custom indicators monitored throughout the year and reported annually. See below:

✔ Custom Indicator #4. Number of farmers who have a new/improved commercial relationship with partner firms ✔ Custom Indicator #5. Number of FTF Inova partner firms who have new/improved commercial relationships with other firms

Throughout the year, FTF Inova interviewed firms and farmers, as part of our Market System Health survey and in-depth field interviews and site visits, to detect changes in the flows of information, finance, transport, logistics, payments, and other goods and services exchanged. This enables us to determine whether any new commercial relationship, involving the exchange of goods or services, that did not previously exist has emerged. We also use this data to detect whether an existing commercial relationship has improved, in terms of greater formality, or greater quantity, quality, or diversity in the supply of goods and services (for example, information, credit, and insurance).

FTF Inova: Annual Report (October 2019 – September 2020) 58

Over the year, several new relationships have emerged, as highlighted in this report. These include relationships within sub-systems of the market like those between CdA and K2, between Adicional and Ecotri and between agro-dealers and CdA. An example of the results of these relationships, CdA have sold USD 495,378 of inputs (16% of its total sales nationwide) through agrodealers under Rota Certa. We have also seen an increase in new relationships forming across sub-systems of the market like those between universities and CdA, between Appload and Hollard, and even with banks. We also continue to see improvements between CdA and service providers like Tangerine and Adicional.

In line with the MEL approach to not only observe, detect and register changes occurring in the agricultural system but alsoto assess significance in terms of the depth and breadth of changes, FTF Inova has been assessing commercial relationships within our networks of partners. One of the networks we selected for further investigation, using a case study and network analysis, was the implementation of the new input distribution system – Rota Certa by CdA with Adicional to improve input distribution by agro-dealers serving SHFs.

The assessment has shown that the new distribution system improves the access to inputs for a significant number of agro-dealers and smallholders. For CdA, Rota Certa introduced improvements and new relationships, especially with agro-dealers. The case study found that several agro-dealers started to see CdA as their main supplier, primarily because Rota Certa reduced the amount of money and time needed to access inputs.

“Before, I spent a lot of money to travel to Maputo to purchase inputs. I never knew if the amount of money I was taking to buy inputs was sufficient, as prices changed. Thus, the amount of money I took did not always allow me to buy all the inputs I needed. Today, CdA calls me to ask me what inputs I will need and delivers the products to me once a week. Now, I no longer need to spend on transport to Maputo and then, I can adopt lower prices and sell more.” - Male agro-dealer from Gaza

From the information provided by a Commercial Manager at CdA, 54 improved commercial relationships and 87 new commercial relationships have been identified since the implementation of FTF Inova in 2017. This means that CdA has a total of 141 commercial relationships that were stimulated in some way by the intervention of FTF Inova and have contributed to changes in the system dynamics at a significant level. From a Network Analysis (Figure 2), developed within the Case Study, it is possible to visualize these relationships and observe the structure of the existing links between some actors that make up these commercial relationships. In this specific case, it is possible to see a snapshot of the overall market reality (in a certain period) and to analyze the possibility of effects on a complex network of relationships developed within a thin market.

FTF Inova: Annual Report (October 2019 – September 2020) 59

Figure 2. Network Analysis CdA’s new and improved commercial relationships since the intervention of FTF INOVA

Source: Case Study of the Pull Distribution System – Casa do Agricultor.

Throughout the year FTF Inova continued providing technical support to partners in data collection and analysis of the interventions being piloted and expects to present an in-depth report on this case of the Rota Certa in the first quarter of FY21. Over the next year of implementation, FTF Inova will continue to use sociograms and social network analyses to help analyze where we have initiated changes, and how significant these changes have been in helping FTF Inova in pursuit of its overall goals, as articulated in the theory of change narrative: At a systems level, FTF Inova seeks to promote systemic evolution towards two goals: inclusive growth and resilience. Agriculture-led economic growth in Mozambique is critical to reducing poverty and hunger. As market actors become more productive and competitive, market system functions will expand and generate opportunities to integrate new market actors and improve the terms in which existing actors participate. As market systems become more inclusive, FTF Inova posits that strengthened relationships in the agricultural market system (both new and improved) with traditionally marginalized actors will endure, even in the face of shocks and stresses, if they are formed on mutually beneficial gains.

Other Research Findings

● FTF Inova shared the findings from an Outcome Harvest (OH) conducted in the last two months with CdA. The OH main objective was to understand changes at the agro-dealer and farmer level due to the Rota Certa distribution network of regular truck deliveries. Nine findings have been validated. Some are immediately clear, such as the increase in the availability of products at the retail and farmer level. Others have taken a few months to become clear, for example, agro-dealers becoming more commercially viable, as they no longer have the cost of transport. On the other hand, some observations which relate to deeper changes in the system require further investigation, for example,

FTF Inova: Annual Report (October 2019 – September 2020) 60

changes relating to farmers' consumption patterns, or SHFs becoming more commercially viable. CdA verified these findings and has made plans to increase agro-dealers' capacity to offer better services and information to farmers. The findings will be shared with a broader audience to encourage replication.

● FTF Inova conducted two surveys of members of Miruku's supplier clubs and another survey of members of OLAM's best producer clubs in order to find out the changes and the level of satisfaction of producers with the implementation of these initiatives. The survey of Miruku producers included 83 producers (27 women) who are members of 7 supplier clubs in Alto Molocue and Monapo. This research showed that with the implementation of the initiative, most of the producers in the Alto Molocue district increased their cultivation areas and improved inputs, which increased productivity by 25%. The producers were satisfied and motivated with the incentives received and reported increased confidence in Miruku. However, some regretted the process of buying products with Miruku. In Alto Molocue, Miruku did not buy soy, and in Monapo district, they did not buy any products. Instead, the local cooperative had to sell the products to other buyers. Miruku’s delay was due to a delay in funds being disbursed by Banco Societe General, and FTF Inova is working with Miruku to improve this system for the next season.

● A survey carried out by OLAM on producers in the districts of Ribaue and Lalaua covered 73 members (19 women) of the best producers' clubs. In general, these producers were very satisfied with the initiative, especially those from Lalaua who saw their cotton productivity increased by 450 Kg/ha to 900 Kg/ha. This increase was due to the constant assistance of OLAM technicians who monitored their fields from the land preparation stage, with the measurement of areas with GPS until the harvest and post-harvest phase. In Ribaue, unfortunately, a lack of rain during the growing season reduced yields despite similar assistance. The producers were satisfied with the process of selling their cotton to OLAM because, despite the Covid-19 pandemic, OLAM prioritized the purchase of cotton from club members at a price considered good. This research also showed that producers who were not part of this initiative are willing and eager to take part in the next harvest due to the levels of assistance that members had and, consequently, productivity levels.

● FTF Inova is conducting a mapping of farmers associations in the Maputo regions and the Beira and Nacala corridors to better understand the potential for partnership with the associations and the type of assistance or partnership they need. The survey has already covered 68 associations and 11 small companies that have shown their interest in establishing partnerships in the area of agribusiness.

● FTF Inova surveyed Oruwera's female customers to understand their market segment and their performance. This research showed that many Oruwera customers are connected to VBA and/or Agro-dealers. However, Oruwera does not have a record of them, which makes it difficult to follow up to improve their relationship and gain feedback. Oruwera's customers have a great preference for their products due to the quality, accessibility, and sizes sold. However, many of these women ask their spouses to buy products, limiting their ability to gain technical information about the product, as this information is mostly given by VBAs or Agro-dealers at the time of sale. This research helped Oruwera to define a market strategy to be implemented this year to reach more female customers.

FTF Inova: Annual Report (October 2019 – September 2020) 61

Annex 1 – Theory of Change

Figure 43. FTF Inova's Emergent Theory of Change Graphic

FTF Inova: Annual Report (October 2019 – September 2020) 62

Annex 2 – Performance Indicator Table During FY 2020, FTF Inova has met all targets set for the year. The progress on key performance indicators in FY 2020 is summarized in Table 7. Table 7. FTF Inova Progress on Performance Indicators

FY 2020 Achieved Q4 of Cumulative FY 2020 Deviation Narrative of +/- Number Indicator FY 2020 Achieved Overall Target 10% (Q1-Q4) Not achieved. The performance Percentage of female on this indicator depends more participants in USG- 11% 28% on the programs targeting assisted programs women and Covid-19 was one of GNDR-2 35% designed to increase 57 female 1,792 females the main constraints on their access to productive 536 participants 6,387 participants implementation. Oruwera economic resources activities targeting women will be implemented in the next quarter. Percentage of participants in USG-assisted programs Not achieved. This indicator was 13% 15% designed to increase also affected by Covid-19. Inova

YOUTH-3 access to productive 22% is expecting youth engagement in 71 youth 965 youth economic resources who partnerships which are starting 536 participants 6,397 participants are youth (15-29) [IM- with Bayer, ETG and Ngala. level] Value of new USG commitments and private sector investment EG.3.1-14 6,808 3,063,462 1,492,612 Achieved. leveraged by the USG to support food security and nutrition [IM-level] Number of individuals EG.3-2 participating in USG food 3071 24,289 21,026 Achieved. security programs. Number of individuals in EG.3.2-24 2,217 22,291 16,136 Achieved. the agriculture system

FTF Inova: Annual Report (October 2019 – September 2020) 63

who have applied improved management practices or technologies with USG assistance Number of hectares of land under improved EG.3.2-25 technologies or 3,685 23,322 22,823 Achieved. management practices with USG assistance Not achieved. Although the overall sales were affected by restrictions of activities given the covid-19 pandemic situation, is worthy to highlight that one of Value of annual sales of the partners with significant sales farms and firms receiving EG.3.2-26 3,551,727 17,212,229 29,267,590 (Condor) did not sell as usually USG assistance [IM-level] does because of the following -Value two main reasons: first, because of lack of financial capital, and, second, they are not happy with the Government policies on cashew exports. Overachieved. The target was Value of agriculture- largely overreached because of related financing accessed the subsidy of the Government EG.3.2-27 539,901 6,445,901 265,573 as a result of USG to the price of cotton agreed this assistance [IM-level] year and the loan of BNI (bank) to Miruku using Sustenta funds. Number of farmers who Custom have a new/improved 2,931 15,850 10,488 Achieved. Indicator #3 commercial relationship with partner firms Number of FTF Inova Achieved. Beyond the Custom partner firms who have relationship between large firms 6 54 27 Indicator #4 new/ (suppliers and buyers) there improved commercial were more relationships

FTF Inova: Annual Report (October 2019 – September 2020) 64

relationships with other between input suppliers with firms distributors and agro-dealers, for example under CdA, Rota Certa.

FTF Inova: Annual Report (October 2019 – September 2020) 65

Annex 3 – Success Story With the “best farmer’s club” approach, OLAM is having an unprecedented boost in cotton production.

Cotton is the seventh most exported product in Mozambique. Annual production is between 40,000 to 50,000 tons, and the sector provides almost 20,000 permanent and seasonal jobs.

However, cotton productivity has been decreasing. This is due to several factors, including poor agronomic practices; low use of certified seeds; and risks associated with cotton market price fluctuation. Further, for companies trying to invest in increased productivity through traditional contract farming agreements, there is frequent side-selling and a general lack of trust, which means many of these types of arrangements fail.

Olam is a major player in the Mozambican market. The company has Figure 5. Part of the cotton crop purchased from one of the best farmers’ been working to promote cotton production for more than twenty clubs in Lalaua (Nampula). years. FTF Inova established a partnership with Olam to revitalize the production of this important cash crop through the Suppliers’ Club initiative. These suppliers’ clubs provide select smallholders with high quality inputs, professional technical assistance and close communication links with the company. By establishing relationships with the best performing smallholders, the expectation is that this will increase yields, improve relationships, and therefore lead to an increased amount of cotton available for Olam to buy.

Olam ran a pilot of the approach during the 2020 growing season, working in the districts of Lalaua and Ribaue. Domingos Francisco was one of the farmers that joined his local suppliers’ club, growing cotton on twelve hectares of land in Lalaua district. As part of this club, he received incentives that included technical assistance, cotton seed, and insecticides. He followed all production recommendations, participated in the meetings provided by Olam, and as a result improved his cotton yield from 350 Kg/ha to 900 Kg/ha.

João Rodrigues, another farmer from Lalaua district had a similar experience:

"Before we didn't have technicians to advise us on good production practices, for example, I spent a lot on spraying and did it without much control. At the Club, I was taught that I must first analyze the plants and then control the pests accordingly. Now I realize that being part of the Club is an asset."

Olam technicians have also noticed a change. Agostinho Mara, a technician assisting farmers, stated that as a result of the suppliers’ clubs, many producers had both increased their cultivation areas and improved their yields as they followed all the technicians' recommendations.

At the end of the pilot, the initiative had included 3,866 producers in 143 clubs of which 44% of producers were women, a group traditionally less likely to join formal groups that provide training and inputs. Significantly, Olam reports the initiative contributed to the 25% increase in productivity in Lalaua and 5% in Ribáuè. This, coupled with beneficial process offered by Olam, has increased smallholders’ incomes, and there is a reported improvement in trust between these farmers and Olam, with side-selling below expected levels. Overall, cotton productivity grew by 19% compared to last season, leading to improved credit repayment by 38% compared to 50% observed in the past cropping season, equivalent to savings of about USD 57,000. In terms of projected production, farmers harvested 927 tons of cotton against an expected 1,400 tons. These results are made more

FTF Inova: Annual Report (October 2019 – September 2020) 66

significant having been achieved during the Covid-19 pandemic, and demonstrate that the future scale-up of suppliers’ clubs can lead to better growth and resilience.

Figure 6. Members of one of the best farmers’ clubs in Lalaua (Nampula). https://www.youtube.com/watch?v=a9TYPJT0Qgk&feature=youtu.be

FTF Inova: Annual Report (October 2019 – September 2020) 67