Connecting smallholders to markets is the main goal of P4P. One of the approaches WFP is testing is to link them with commodity exchanges. In September, six farmers’ organisations from Malawi were invited to the capital Lilongwe to take part in a WFP online tender for 531 tons of maize.
For the past year P4P Malawi has been working with farmers’ organisations to improve their business mindset and their understanding of contract terms. Together with partners, P4P concentrated its capacity development support during the last six months on training that focused on improving the ability of organisations to plan and deliver (see here).
In August, P4P witnessed the first results of this strategy. The farmers’ organisation Mwandama, based in Zomba district in southern Malawi, independently bid for a WFP tender on the Agricultural Commodity Exchange for Africa (ACE) platform - and won. The total amount of 19 tons of maize, valued at US$ 8,361, was successfully delivered to WFP. Following this, P4P decided to undertake a small experiment.
In September 2012, P4P and the Malawi-based ACE held a bid-volume-only (BVO) session for 568 tons of maize with six farmers organisations. In a BVO tender, the buyer fixes the quantity he or she wants to purchase and receives price offers from interested sellers. WFP Malawi carries out most tendering opportunities under P4P in this reverse auction system.
For the session, representatives of the six farmer organizations were invited to place their bids on the ACE internet platform. Three of the twelve representatives were women, while female membership in their organizations makes up almost 40 percent.
A year ago nobody, least of all the farmers themselves, would have imagined that they would be able to bid online. In the past, bidding would have been done by writing a bid on paper, placing it in an envelope and posting it into a locked box. This method is easily understood by the P4P farmers and has been successfully done on several occassions.
For the new procedure, the farmers representatives were taken through exercises at the ACE offices that included setting realistic prices and profit margins and an introduction to how the ACE platform works. As all of the farmers present had never before used a computer, ACE rural trade facilitators assisted each farmer organisation present.
What stood out throughout the day was the amazement and excitement of everyone involved. Farmers, who until that moment had never even touched a computer, learned how to use a password, how to use a mouse and the keyboard. These small instances of technological mastery mean much more than simple basic computer skills, they represent a new opportunity for farmers to independantly decide, plan and participate in the formal market economy. Macdonald German, a member of the Chandawe cooperative said: “I am very happy, I am learning. This was the first time I have ever worked on a computer and I know it is going to help us make good business.”
For WFP and partners’ staff, this day showed that given resources, training, inputs and time, the goal of improving farmers livelihoods through P4P is achievable in a very real and measurable way. However, it takes more than just these things to achieve the goal of building the capacity of smallholder farmers to sell to institutional buyers and engage with the formal market.
For P4P Programme Officer Leigh Hildyard, “It takes belief, teamwork and a leap of faith from everyone involved. Of all the successes we have had over the past year, watching Mr Katcherenkhwanya, a 60 year old farmer from the farmers’ organisation Cheka, look on in stunned pride as his bid appeared on the main projector screen, is the most meaningful. I truly believe that in the very near future our farmers will bid from their own districts with minimal or no support from ourselves.”
The results of the BVO session were that five of the six organisations won contracts to deliver a total of 340 tons of maize for an average value of US$ 232 per ton. WFP will distribute the maize as part of its school meals programme.