Building effective partnerships: the quality seed mini-packet case study
Quality seed mini-packets include a variety of vegetables such as bottle gourd. Photograph: K Usayed/GREEN ink
Katalyst, a market development project in Bangladesh, demonstrates how joint initiatives between development actors and private companies are essential for achieving the SDGs
The recently adopted Sustainable Development Goals (SDGs) aim to eradicate poverty and build a more sustainable and prosperous world over the next 15 years. In order to achieve these ambitious goals, everyone needs to do their part, from governments and the private sector to society as a whole. We at Swisscontact, a Swiss-based NGO, believe that the private sector lies at the heart of realising some of the SDGs’ important objectives, which will lead to more sustainable, inclusive economic growth across the globe.
Inclusive economic growth does not happen by itself: the private sector needs guidance and the right incentives to establish more inclusive business models. In order to harness innovation, power and market know-how to achieve the SDGs, development organisations and the private sector must speak the same language and combine their skills and strengths.
Katalyst, a market development project implemented by Swisscontact, works in close collaboration with Bangladesh’s agri-business community. The project’s business consultants are not only experienced development workers, but also practiced business specialists who understand how markets work and how businesses can make them work better for poor people.
Mini seed packet case study
The quality seed mini-packet case study demonstrates the role the development sector can play in supporting businesses to become more inclusive. In order to break out of the cycle of poverty, smallholder and poor vegetable farmers need access to high-quality seeds that improve their yields and increase incomes. However, since private seed companies usually target medium- to large-scale farmers, quality seeds are costly and usually sold in large packets, which exceed the requirements of smallholders. In addition, private seed companies are often reluctant to diversify into untapped markets.
Initially, the idea of selling quality vegetable seeds in mini-packets seemed almost too simple, yet it was a risky concept for seed companies. Katalyst developed a business case that demonstrated how seed companies could increase their profits by designing business models that serve the needs of poor farmers. In its initial stage, the project collaborated with new BCtA member Lal Teer Seed to provide quality vegetable seeds to smallholder farmers by including Mobile Seed Vendors (MSVs) in the company’s distribution channel. MSVs are traditional vendors who sell seeds in burlap sacks at rural markets across Bangladesh, catering to poor farmers. Until Katalyst’s partnership with Lal Teer Seed, MSVs had only been selling inferior-quality, non-packed seeds to these farmers.
A pilot project in which MSVs were provided with standard-quality seed packets revealed a high demand for quality seeds among poor vegetable farmers. Within two years, this approach had been widely adopted by other seed companies. However, since the packets were not appropriately sized or priced for smallholder farmers, Katalyst observed that MSVs developed the bad practice of cutting open the packets and selling the seeds from them. This reinforced the idea of a market for mini-packets.
Building on these findings, Katalyst conducted extensive market research, which demonstrated that despite the perceived risks, there was clear demand – and a supply gap – for quality seeds among smallholder farmers. Through detailed strategic planning sessions, development of business plans and confidence-building measures, Katalyst convinced Lal Teer and another Bangladeshi seed company that they could sell quality seeds to an untapped market of farmers if they were appropriately sized and priced. This led to the introduction of cost-effective quality seeds in mini-packets. Roughly one-tenth the size of standard packets, mini-packets are sold at local shops at affordable prices and hold enough seeds to cover .03 to.04 acres of land. This makes them ideally suited for the needs of smallholder and homestead farmers.
Katalyst has supported its private-sector partners on multiple levels: the project played a crucial role in convincing the companies to introduce the mini-packets through a detailed analysis of market dynamics. In order to mitigate the risks for the private sector, Katalyst also contributed to the initial investment. In addition, Katalyst provided technical assistance throughout the planning and launch phases, and helped the companies to make strategic decisions and develop business plans. The project furthermore utilised its know-how on how to reach the rural poor in order to develop effective marketing strategies for the mini-packets launch.
After the launch of the mini-packets, Katalyst measured the results, providing the companies with essential market intelligence for successful growth. The results showed how innovative models designed to meet poor people’s specific needs could prove economically and socially beneficial for both businesses and poor communities.
Through December 2014, 580,000 smallholder farmers used the mini-packets to grow a wide variety of vegetables, which helped them to feed their families and increased their incomes through sales of surplus produce. The beneficiaries included more than 185,000 women homestead farmers who are now able to earn an extra income. This led to the women’s greater decision-making power in their families, communities and beyond. In one year alone, $14m (£9.7m) worth of additional vegetables were produced, resulting in greater food security in Bangladesh.
The positive impact of this initiative was noted by other private seed companies, which were encouraged to introduce different sizes of quality seed packets catering to different types of farmers. Lal Teer Seed’s own analysis demonstrated that the growth of mini-packet sales also contributed to the growth in sales of standard packets. This has further strengthened the business case for products and services targeted to people at the base of the economic pyramid. Currently, Katalyst is scaling-up the use of mini-packets by partnering with other private seed companies – and supporting them in developing marketing strategies and establishing distribution channels.
The success of the quality seed mini-packet business case shows how joint initiatives between development actors and private companies are essential for achieving the SDGs – from ending poverty and hunger to empowering women and promoting sustainable, inclusive economic growth. The development sector can leverage its expertise in analysing untapped markets and identifying ways to include poor people within these markets. The private sector can utilise its innovation power and business skills. By bringing both sides together, we can create innovative inclusive business models that pave the way for sustainable development and a more prosperous world as we reach the SDGs.
Content on this page is provided by Business Call to Action, and originally appeared on the The Guardian Business and the Sustainable Development Goals Hub