Effective programming creates success in the Ethiopian malt barley value chain
This project professionalized malt barley farmers in Ethiopia, which led to a massive increase in crop yields and additional access to finance for many farmers. Read on to find out how they did it, with help from SCOPEinsight’s data-driven tools.
Agricultural challenges in Ethiopia
Thanks to its environmental conditions, particularly the altitude and annual rainfall, Ethiopia is perfectly situated to produce malt barley. However, yields traditionally averaged 2.4 MT/ha, an amount lower than what companies such as Heineken required to produce their end product. Instead of being able to buy their malt barley domestically, Heineken’s Ethiopian brewery Kilinto had to import malt barley from other countries.
Many barley farmers in Ethiopia are small scale producers with limited access to agribusiness training. They do not have direct ties to the market and barley buyers. This limits many barley farmers from accessing the credit required to invest in their farms and improve productivity and outputs. In order to help these farmers, IFC and Heineken partnered in an innovative project to enable farmers to tap into the demand for domestically-produced barley.
Multiple partners working in coordination creates the best outcome
To increase malt barley productivity in Ethiopia, Heineken partnered with the International Finance Corporation (IFC). The first step in helping the farmers was assessing their business acumen. To do this, Heineken and IFC used two SCOPE tools: SCOPE Basic for the cooperatives and unions, and SCOPE Agent for the model farmers.
The information gathered from these assessments then led to the customization of eight Agribusiness Leadership Program (ALP) training modules to fit the exact needs of the farmers. This training was carried out on a large scale, reaching leaders of cooperatives, model farmers, and unions. The project was able to directly benefit over 40,000 farmers and indirectly benefit a further 50,000.
Results: Doubled yields, increased food security, and access to finance
Overall, the project was a success. The malt barley yield for the directly affected farmers more than doubled, reaching an average of 5.2 MT/ha. This exceeded the initial target of 5.0 MT/ha. In all, the project led to the production of 90,000 MT of barley over three years. This far exceeded Heineken’s own needs of 24,000 MT. The extra barley was able to go into the food market, which added an estimated 60 million USD (51 million EUR) in value and local food security.
The project also helped farmers gain access to loans. Through local MFIs, 1.8 million USD (1.53 million EUR) was mobilized in short-term financing. These loans did not require collateral, and Heineken provided a guarantee to the financial institutions. They went to an estimated 29,000 farmers. There were virtually zero defaults in payments for these loans, and side-selling, a major challenge in the malt barley sector, was reduced among the farmers who received these loans.
The professionalism of these farmers also increased, which should have a lasting impact on the cooperatives. SCOPE reassessments showed an 11% increase in overall scores, and the scores for over three-quarters of the organizations indicated good levels of business management capabilities. The leaders of the cooperatives noticed many tangible and intangible benefits as a result of those changes, including enhanced business skills and increased reliability between value chain partners.
This project was a clear success on multiple levels. The farmers came out with higher productivity, greater access to finance, and higher levels of professionalism.
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