Q&A: The private sector's role in getting improved seeds to farmers

ACCRA, Ghana — Across the African continent, national agricultural research systems are developing seed varieties more durable to withstand drought, disease, and pests, as well as producing higher yields. But after the seeds are developed, a challenge remains — getting them to farmers’ fields. A report published last month by the Seed Systems Group found that if one-third of the farmers in the 15 African countries it analyzed obtained improved seeds, they could generate an additional 25 million metric tons of food, worth $4 billion over 5-7 years. The Seed Systems Group, which is a U.S.-based charity, assesses the need among smallholder farmers for improved seeds and documents how many local entrepreneurs are already looking at this as a potential business opportunity. It then analyzes what sort of investment is needed to meet this demand among farmers and works with donor agencies to obtain these funds. "The funds contributed by donors allow Seed Systems Group to mobilize new crop varieties, expert trainers, and start-up capital to help them grow into viable seed companies over a period of approximately two years," according to Joseph DeVries, president of the group. “What’s holding companies back? It's not policy, it's not the seed, it's just a little bit of capital to start those companies.” --— Joseph DeVries, president, Seed Systems Group Devex sat down with DeVries to discuss the role that private seed companies and agro dealers can play in getting improved seeds to smallholder farmers. This conversation has been edited for length and clarity. What kind of challenges do these seeds address? Most of them relate to factors driven by climate change. We are experiencing longer periods of drought, in most of the countries that we focus on. The rains are more erratic. Farmers can get a deluge of rain one day and for the next three weeks, there is nothing. The seed we are working with are bred to resist long periods of drought. They also grow quicker, so that in many cases it avoids the drought all together. By the time the soil dries up and the rain stops, the crop is already harvested. That’s a huge advantage to farmers. Wherever we go, when we talk to farmers about what kind of seed they want, they say [they] want early-maturing seed varieties because they know they are exposed to increased risk from drought. How do you actually get the seeds to smallholder farmers in remote areas? That was the challenge for a long time. Various methods were attempted. Governments tried to be the supply agent. NGOs also got involved. But those efforts are often ad hoc. When an NGO gets a grant from a donor or when the government has sufficient funds, then farmers get the new seeds … But we need regular, dependable supplies of high-yielding seed, every year, whenever a farmer wants to plant. In response, we went to the private sector. In the beginning, it was a high-risk type of philanthropy. We put money into the hands of unproven entrepreneurs. But we found that the vast majority of them, in fact over 80% of the people that we bet on, eventually developed a seed company that was viable and continues to grow. The national crop breeders would share the seeds with the entrepreneurs — what would that involve? They usually sign license agreements. The seed’s genetic property belongs to the government, in perpetuity, but the seed company can sign an agreement to market the variety throughout the country and in some cases, there may be royalty payments to the research center. What’s holding companies back? It's not policy, it's not the seed, it's just a little bit of capital to start those companies. What we're proposing is we bring in a certain amount of angel investor capital to these companies. We have a rigorous method for deciding which ones we want to work with. We invest, maybe in the first year $50,000, to help them get started, maybe in the second year, another $50,000. At the end of three years, we will have invested perhaps $150,000. Then, they are on their own. We're not trying to create seed NGOs that come back to donors for funds. What prevents these seed companies from taking this investment and focusing outreach on smallholder farmers in easy-to-reach areas, rather than remote areas? We actually put that in the agreement. There are some checks and balances in our letter of agreement that allows them to access the funds … We have people who monitor where those seeds are marketed. If they're not getting out to the smallholder farmers that we agreed to serve in the first place, then we just have to cut off the funding. And we've done that in several cases. “We need regular, dependable supplies of high-yielding seed, every year, whenever a farmer wants to plant.” --— Are there stipulations on affordability? Yes, we also insist on at least a 10% reduction in the commercial price of the seed for the period that we support the company. We also agree on what seed they're going to produce. They can’t produce coffee seedlings when what we're funding them to produce is rice seed. And there's a monitoring system that goes along with it. The real market payoff in starting a seed company is in the numbers, and so the seed companies see that the greatest number of customers they can have are the ones growing the food staple crops in the country. If they produce good seed, there is repeat business because the farmers come back the following season. In about 80% of the cases where we’ve made these kind of angel investments, the seed companies have lived a long life and are still growing. Some of the companies that initially benefited from that kind of assistance are now going into new countries. What would you say are the biggest challenges in using the private sector to get seeds to smallholder farmers? The truth is, it's not easy to build a seed company. The incentive and the business opportunity are there, but the number of people who are actually capable of putting it together and managing the long business cycle, the production, the processing, the stores, the distribution and doing it profitably are limited. Because of this, there's a lot of pressure on us to select the best entrepreneurs. That's probably the biggest challenge. The African agricultural landscape is also incredibly vast. You've got seed sitting in a warehouse somewhere, that can benefit farmers, but they don't know about it. It's a big communications problem. And that's why we're always looking for efficient ways of getting the message out there. The most effective one we've found so far is using tiny packs of seed. This way, when you see a farmer and propose they try a new seed, you're actually giving them something that they can go home and plant on their farm. Have companies complained that the stipulations you place on them has hurt their profitability? Yes, those concerns have been expressed, but it's a stipulation, and we've been advised [by the U.S. Internal Revenue Service] that this is the case [in order for Seed Systems Group to qualify as a public charity]. The purchasing power of these farmers is very limited. And we're really trying to make sure the seed is affordable to farmers. There's a lot of factors that go into making a company profitable. During that initial 2-3 year period, where they're selling their seed at a reduced price, they can work on their efficiencies. Later on, when those conditions are removed, the market will play its role. If they hike their prices too high, they'll lose their customer base and somebody else may come in and say they can produce it cheaper. We are not investing in a single company. We are working to develop a vibrant, competitive seed sector … We are never saying it's easy, but we do see that it is profitable. Editor’s note: The Alliance for a Green Revolution in Africa facilitated Devex's travel and logistics for this reporting. Devex maintains full editorial independence and control of the content.