In 2014, IDH signed a contractual agreement with AFAP to help support a fertilizer market development program in Côte d’Ivoire. Under the agreement, AFAP was required to provide the following technical assistance:
- a matching grant and implementation of the project’s guarantee facility through AFAP’s APC program; and
- Development of an agrodealer network in the cocoa belt of Côte d’Ivoire.
In 2014, AFAP received two qualified APC applications seeking support for fertilizer market-building activities. While the applications did not seek payment guarantees, they may offer opportunities to support fertilizer market development in Côte d’Ivoire.
GBCC Loan Credit Guarantee Application
In December 2014, the first APC application was submitted by Global Business Consulting (GBCC) of Abidjan. GBCC needed to increase its distribution of foliar fertilizer manufactured by Brandt Manni-Plex. The company requested a loan credit guarantee from AFAP for $100,000 for the purchase of 50 motorcycles and one truck to help move fertilizer from Abidjan to the hinterland.
At the time, GBCC was a seven-year old company registered with the Ministry of Agriculture to trade in agricultural inputs. It worked with 300 cooperatives, comprising approximately 150,000 farmers, working 450,000 hectares of land in 10 regions of Côte d’Ivoire. GBCC’s sales volume has been increasing at a significant rate over recent years. GBCC not only sold inputs, but also provided farmers with technical assistance to sustain their production of cocoa and other crops.
GBCC sought AFAP’s APC to expand its distribution and make fertilizer more accessible to small farmers. In exchange for AFAP’s assistance GBCC was willing to:
- expand its extension services;
- offer a 5% discount to farmers; and
- Extend credit to farmer organizations and credit-worthy rural-agrodealers.
Results: Although the APC was approved in February 2015, GBCC encountered difficulties finding a bank that would provide a loan, even with the 50% guarantee from AFAP. AFAP’s regional and APC managers made presentations to two local banks with Edmond Konan, GBCC’s owner. But, unfortunately, the two banks – Banque Atlantique Côte d’Ivoire and Banque de l’Habitat de Côte d’Ivoire (BHCI) – refused to accept the AFAP APC on behalf of GBCC. Banque Atlantique required a 100% guarantee from AFAP, and BHCI declined because it claimed that AFAP was not a registered NGO in Côte d’Ivoire.
Yara-Barry-Callebault Supplier Credit Guarantee
Also in December 2014, AFAP recommended a $43,000 supplier credit guarantee for Yara-Barry-Callebaut. The APC was to support a gradual, step-by-step approach to improve fertilizer supply, especially for farmer cooperatives that sold cocoa beans to Barry-Callebault. The global chocolate company decided that it no longer wanted to handle fertilizer distribution and thus welcomed the AFAP mechanism with Yara.
The consortium of Yara-AFAP-Barry-Callebaut confirmed that fertilizer usage in the cocoa sector was constrained by:
- high costs;
- lack of knowledge on proper usage;
- poor fertilizer quality control; and
- a lack of adequate agrodealer networks.
Yara-Barry-Callebaut had designed a three-year program to address those impediments, and help farmers access more affordable, high-quality fertilizer.
In the first year of the program, the consortium’s objective was facilitating the delivery of 150 tons of fertilizer on consignment to six cooperatives that worked with Barry-Callebaut.
Under the APC, the volume was to increase to 600 tons in 2016, working through 12 cooperatives to supply 1,200 farmers. In 2017, the target was estimated at 1,500 tons of fertilizer, through 30 cooperatives, to supply 3,000 farmers.
Results: The APC was implemented with a zero default from first-time fertilizer users.
The AFAP supplier credit guarantee benefited six cooperatives, serving about 300 farmers who purchased 112 tons of fertilizer. In addition, both Yara and Barry-Callebaut established six demonstration plots for the cooperative – one for each participating cooperative.
Those 300 farmers have not previously used fertilizer for their cocoa trees. To help manage the default risk, the AFAP guarantee covered 50% of the value of the fertilizer sold to the farmers. Meanwhile, Yara and Barry-Callebaut each took 20% of the remaining risk and the cooperatives secured the balance with a 10% cash deposit on purchase, as seen in the table below.
As seen in the table below, the total volume of fertilizer to be distributed was short by only 39 tons. Since the APC expired in December 2015, AFAP wasn’t able to report on 2016 data.
Louis Dreyfus-Cargill Supplier Credit Guarantee
In April 2015, Cargill West Africa (Cargill) and Louis Dreyfus Commodities Côte d’Ivoire (LDC) signed a supplier credit guarantee to supply 300 tons of fertilizer on credit to about 80,000 cocoa smallholders through Cargill’s 100 partner cooperatives involved in its sustainability program. To facilitate the successful implementation of that project, AFAP approved the use of $80,354 for the supplier credit guarantee as seen in the table below.
Results: Through the guarantee, 22 cooperatives have benefited from at least 3,000 kg each or 81 tons of fertilizer in total. As seen in the table below, LDC did not manage to sell the 300 tons per the APC because the cooperatives were not willing to travel to Abidjan to purchase only 3 tons of fertilizer.
AFAP and the Agricultural Market Trust (AGMARK) conducted an agrodealer assessment in October 2014. During the field visit, the AGMARK representative interacted with eight agrodealers in Abidjan, San Pedro, Daloa, Vavoua, and Soubré. A list of 67 companies was compiled in the assessment report.
Some of the conclusions of that assessment were as follows:
- There was a lack of business knowledge and consistent follow-up for their training.
- Agrodealers can be strengthened by training to harmonize modules and help farmers increase their profit with appropriate input supplies and good agronomy practices (GAP) provided by agrodealers.
- Subsequently, the IDH Initiative partners approved the agrodealer development program in June 2015. The objectives were as follows:
- Design an agrodealers training manual including the following training modules:
- Financial Management and Accountability.
- Good fertilizer storage practices.
- Good fertilizer application practices.
- The 42 agrodealers listed in Table 47 were selected and trained according to the recommendation of the initiative stakeholders, from July to August 2015,
In Côte d’Ivoire all training related to the cocoa industry must be administered via the National Agency to Support Rural Development (ANADER). From March to April 2016, AFAP collaborated with ANADER and the Coffee Cacao Board (CCC) to train 26 agrodealers from the list of 42 proposed. The remaining 16 individuals were in cooperatives.
Successes and achievements:
- A new fertilizer company, Agro West, bought Wilmar (which is one of the companies that joined this initiative when it initially started) and is becoming the fastest-growing fertilizer company.
- AFAP assisted a new blending company Agro West with the branding exercise of a new fertilizer blend “Magicao” (a 0:23:19 blend) for the cocoa sector.
- The 22 cooperatives under the Louis Dreyfus-Cargill APC were not previously using fertilizers.
- Yara-Barry-Callebault introduced for the first time the APC scheme to cooperatives.
- All major producers for the oil-palm sector are also considering entering a similar APC with AFAP as a result of cocoa arrangement.
- More than 26 hub-agrodealers and ANADER agents received appropriate business advisory and technical services training.
Public value created: Five master trainers from the government technical agricultural extension agency (ANADER) have been trained in commercial and technical training related to agro-input commercialization.
Private value created: A total of 26 agrodealers have been trained in business advisory and technical services and linked to the fertilizer suppliers.