Reducing post-harvest losses: What is the next breakthrough?

By Naki B. Mendoza 27 April 2016

Razoa Wasike, a One Acre Fund farmer, harvesting maize. Partnerships, innovations and creative strategies of all types are needed to address the gaps in agricultural value chains that are currently blocking postharvest loss strategies from taking hold. Photo by: One Acre Fund / CC BY-NC

At $1 trillion, it’s an opportunity cost so large that it nearly equals the entire gross domestic product of sub-Saharan Africa. By most official statistics that’s the value of food that gets lost or wasted every year in the production process — roughly 30 percent of the amount that gets harvested.

Post-harvest loss and its consequences for development is a widely recognized challenge, particularly with the headwinds of rising populations, food security and extreme poverty shaping much of the 2030 development agenda. Efficiencies of all sorts are needed in agriculture value chains to boost food production and maximize the inputs for growing food, not least of which is eliminating or drastically reducing the amount that goes to waste. Every 1 percent reduction in post-harvest losses leads to $40 million in output gains, with farmers as key beneficiaries, according to the World Bank.

There are many sorts of innovations from a wide range of companies and donor organizations, but among the various interventions and investments to reduce post-harvest losses, what more can be done?

Early and unaddressed

To begin with, look more to the beginning of the supply chains. Losses occur throughout all parts of the value chain from harvesting through to processing, distribution and consumption. Damage, spillage, rotting and discard all undermine the amount of food that is ultimately consumed.

According to various World Bank studies, food drying and storage in the immediate post-harvest period are the main drivers of food loss. While they may be most important, innovations in the early stages after a food harvest is still a perplexing puzzle to solve, according to a number of agricultural service companies that Devex spoke with who invest in post-harvest techniques.

“[Grain] drying is absolutely still a very unaddressed market,” said Jordan Dey, vice president of food security for GrainPro, a social enterprise that provides storage solutions for smallholder farmers. “There’s not much between plastic sheeting and mechanical dryers.”

Of course, not all agricultural products are created equal. Many do not require the same post-harvest drying methods and it is impossible to lump all harvested food products under one set of best practices. Many current calls for innovation refer specifically to staple grains such as rice, cereals, wheat and corn.

The drying methods Dey refers to are common agricultural practices for those types of crops. The former involves laying them out to soak up the sun’s rays while the latter employs more advanced machinery. Both have their shortfalls.

Most varieties of corn, for instance, require an especially low moisture content in order to be shelled from their cob and safely stored without the risk of rotting. Left open for sun-drying, crops are prone to losses from the elements — wind, rain, animals and pests — not to mention theft. Mechanical dryers, meanwhile, are either too expensive for smallholder farmers or are employed by more industrial grain purchasers and buyers after early harvest losses have already occurred.

Drying and storage often go hand in hand in the early post-harvest stages. On the storage side, a number of advanced innovations have been introduced that go beyond traditional silos.

GrainPro has commercialized a variety of hermetic — airtight — storage solutions that suppress aflatoxin and other grain-infecting molds. Vestergaard, a global health technology company, has developed grain storage bags with insecticides laced into individual fibers in order to reduce infestation. Those are just a few, but storage solutions, while generally more advanced than drying innovations, are still considered to be in the early stages.

“The smallholder market is so huge and the market share of improved storage interventions that has been done is just a small percent,” Allan Mortensen, managing director of food security for Vestergaard told Devex. “My gut is only 3 percent. The safe storage that is being done is only scratching the surface.”

For example, PICS, an agricultural research unit at Purdue University, has commercialized a line of hermetic storage bags for staple grains. By January 2016, its sales in Kenya had reached around 300,000 units, roughly equal to 30 million kilograms of storage capacity. Annual maize production in all of Kenya, meanwhile, is around 2.2 billion kilograms, according to its Ministry of Agriculture. Other variables factor in and more companies sell solutions to the market, but the numbers provide a glimpse of the scale needed to be reached.

Innovations for drying solutions are even more limited. One Acre Fund, a financier and trainer of smallholder farmers, uses special harvest drying sheets that reduce fungal and pest problems during storage. Other types of sheets are designed to be more easily foldable to better guard against wind and rain.

An emerging idea being piloted by Amaizz, an Israeli startup, is to recreate a traditional granary with a modern twist. The company is in early stages of prototyping small storage facilities whose designs in ventilation, sun exposure and locking components can provide drying capabilities that protect against all sorts of pests.

But across drying technologies at large there is still much more need for innovation.

The market of many

Companies developing these drying and storage solutions offer several reasons as to why large scale breakthroughs are still elusive.

First, the vast size and fragmentation of the smallholder farmer market makes it extremely difficult to penetrate. It is cost-prohibitive for small companies with limited scale to reach a network of thousands of disparate farms, while larger companies encounter a host of logistical issues.

“This is an incredibly difficult population to reach,” said Dey. “It’s expensive to reach them, it requires heavy investment in education and training and a great distribution network — none of which exist, or exist in limited form, in the developing world.”

Transportation bottlenecks can also run up costs. The price to ship a storage bag from GrainPro’s production facility in the Philippines to its warehouse in Nairobi is negligible compared to transporting the same bag from Nairobi to a farm in the Kenyan countryside.

And companies bear the risk of their product being mothballed by local distributors who are unaware of how to inform potential buyers of its uses. They must do significant outreach and training with partner organizations to educate distributors about product technology.

“That’s why a lot of technology companies working in this space end up failing — on some level it’s the distribution, education and training that’s hard to crack,” said Dey.

Consequently, end user costs is a limiting factor. On the high end, GrainPro’s solar bubble dryer — a miniature greenhouse of sorts that traps heat and dispels moisture through solar-powered vents — costs upward of $1,500 per unit, putting it out of reach for the smallholder market. Vestergaard’s insecticide incorporated storage bag costs 80 cents in most African markets, but is still expensive for a farmer living on less than $2 per day.

“The price point is too high due because of the premium from the insecticides,” Mortensen told Devex.

Addressing the affordability constraint can unlock many issues of scale. But how? Reaching scale is virtually impossible in sub-Saharan African markets without some form of large-scale subsidy from government and international donor partners, Mortensen said.

Vestergaard has its storage bags registered in seven African countries, none of which apply subsidies for the product. The company knows the potential benefits of subsidies in part because they gave a boost to the rollout of its bednet product for vector-borne diseases. Price relief, he said, can promote wider adoption, with scaled production eventually driving down costs for both the company and smallholder customers.

Absent any large subsidies, farmers face liquidity constraints and a limited ability to access finance at the times or seasons when they need it. Most farmers don’t have the money to invest in drying, storage or other agricultural technologies before a harvest, when most of them get paid. As a result most smallholders are forced to sell at peak harvest when supply is high and prices are low. They don’t get the premiums that they might if they were able to properly store their grains and sell it several months after the harvest.

New models in agricultural finance, however, are working to address that funding gap.

Sarura Commodities, a Rwandan social enterprise, has developed what it calls a “warrantage” model to ease farmers’ liquidity crunch. Sarura — meaning “harvest” in Kinyarwanda — collects beans from smallholders and pays them in two separate increments. The first comes at peak harvest and is equal to 60 percent of the crop’s market price. A second payment comes months later and is based on 40 percent of the higher post-harvest price. The staggered proceeds are meant to smooth out the otherwise long payment lags and provide cash flow for other types of business investments.

Since launching in 2012 the model has caught on and is now being financed by local banks using Sarura crops as collateral. It is the first time ever that commercial banks in Rwanda have provided inventory loans backed by staple crops.

Partnerships, innovations and creative strategies of all types are needed to address the gaps in agricultural value chains that are currently blocking postharvest loss strategies from taking hold.

A strong boost came in January at the World Economic Forum when the Rockefeller Foundation officially launched YieldWise, a $130 million initiative that aims to cut food loss in half by 2030. The initiative envisages a multistakeholder approach that engages governments and companies through all steps of the value chain from facilitating purchase agreements with major buyers to the rollout of new technologies. A key component is to create a demand-driven model that incentivizes and pays farmers to use efficient technologies that boost output and reduce food loss.

The initiative already has the support of global corporations such as Coca-Cola and Dangote who have major influence across agricultural value chains. It is likely to unlock new innovations and financing streams that address post-harvest loss. But any large-scale impact on the post-harvest loss challenge must target innovation and investments early on in the production process.  

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About the author

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Naki B. Mendozamfbmendoza

Naki is a former reporter for Devex Impact based in Washington, D.C., where he covered the intersection of business and international development. Prior to Devex he was a Latin America reporter for Energy Intelligence covering corporate investments and political risks in the region’s energy sector. His previous assignments abroad have posted him throughout Europe, South America and Australia.

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