Analysis of the import and supply of resources for potato
production in Mali
Master Thesis Econometrics Faculty of Economics Rijksuniversiteit Groningen
Preface
From the 6th of September 2006 until the 5th of March 2007 I lived in Mali, West-Africa. There, I did an internship for the IFDC at the development program Prodepam. My intern-ship was part of an exchange program between the Center for Development Studies (University of Groningen) and the International Fertilizer and Development Center. The idea of the in-ternship was to research the potato market in Mali. For this purpose, I lived and worked for six months in the city of Sikasso.
Living and working in an African country was a fantastic experience for me. I learned a new language, met very different people than I was used to and enjoyed life in a very different way than in the Netherlands. The work and my colleagues were a joy for me too. They also drink coffee or thee (with about five cubes of sugar per cup!) and have a (somewhat bizar) sense of humor. Overall, it was a great adventure. The internship even turned out to be very successful and it made it possible for me to finally finish my studies of Econometrics, which I began in 2000. I’ve been studying a while. Or maybe you should say, I’ve not been studying a while.
There are some people I would like to give thanks to. First of all, Caspar Schweigman. He has been my outstanding supervisor for two projects. His enthusiasm and positive atti-tude has been a great motivation all the way. His visit to Sikasso was remarkable. He was always available for support and discussion, when I needed it. Thank you.
Second, my colleagues of Prodepam and IFDC and in particular Alain Sy Traore. This agronomist from Burkina Faso made my internship possible. I lived in his house and I shared many great conversations on a vast variety of subjects with him. Without his knowledge of potatoes and the market in Sikasso, I was nowhere.
Third, my friends and family. Living abroad for six months alone can be hard. There is little to do and days can be long. I would like to thank them for all the emails, cards and phone calls I received there.
Last but not least, Harmke Duijnisveld. My friend and my travel partner. We have spent six months together in Africa, every day. Living with me (and with her) can be a big challenge, but it all turned out great. Merci pour tous, Denibi Blani. J’avait une periode avec des grandes moments et des grandes drolements!
Abstract
Analysis of the import and supply of resources for potato production in Mali Author: Tom Plat
The situation of potato farmers in Sub-Saharan Africa is precarious. Although the product is quite profitable for cultivation in the southern region of Mali, there are much economic difficulties to deal with. The report considers the import and distribution of potato seeds in this region. This process is presented in details, to which end an internship was followed at Prodepam, a development program in the agricultural sector in Mali.
The market of potatoes in Mali and its economic properties are presented after which a detailed analysis of the market of potato seeds is made. Potato seeds are imported from Eu-rope, which is a costly affair. The objective of the report is to chart this process and develop a distribution network for the suppliers of potato seeds in Mali. These suppliers import the potato seeds, after which they distribute them to the potato producers in the region. The objective of these suppliers is to be able to meet demand of all producing villages in the region, while minimizing cost of transportation.
Chapter 1
Introduction
Potatoes are an upcoming agricultural product in Sub-Saharan Africa (SSA). Although small-scaled, the potential of the potato production in the region is very promising. Although farming conditions are precarious, there are regions where farming conditions are suited for potato production. In Sikasso, in the southern region of Mali, the production of potatoes is relatively widespread, most production in the region is centered there.
This research project deals with the potato production in the region of Sikasso. The produc-tion chain of potatoes is a complex mixture of organizaproduc-tions, procedures, actors and interests. As with many agricultural products in developing countries, the production chain of potatoes faces many problems. A small part of the production chain will be highlighted and used as a problem setting.
The production chain of potatoes consists of the import of seeds and other required in-puts. The seeds are the most important input, which are produced in countries in Europe. High quality potato seeds are transported by boat and truck. The inputs are delivered to producers for the use in production. Production is divided in periods of seeding, cultivation and harvesting. With the help of credits from banks and credit institutions, the supply of inputs and the production process are undertaken.
After the harvests, the products are traded and commercialized on the market of Sikasso. Sikasso serves as a trading point for the local region, as well as for transport to other regions of Mali and export to neighboring countries. The export is undertaken by organizations which are developing a more dominant role on the market and the production chain as a whole. At the end of each planning period, consumption potatoes are imported to meet demand which can not be satisfied with the production supply.
This research is focused on the role of the import and supply of seeds of potatoes on the production chain of potatoes. Its intercontinental and transport characteristics produce in-teresting problem settings which are charted and analyzed. The analysis of this report will try to answer the following questions:
• Can a well functioning planning scheme lower costs of import and distribution of seeds for potato production, by adjusting transport quantities, qualities and timing?
The remainder of this research project will be focused on answering these questions. Use will be made of Operations Research (OR) as it fits the required modeling tools to answer (some of) these questions. The research questions fit into a decision making problem setting, which is suited for the use of OR. Planning and transportation theory will be used to model the problem for an appropriate analysis. Several mathematical methods and extensions to modeling will be employed to make an efficient and thorough analysis.
The next chapters will be build up as follows. First, an overview of the potato and the potato marketing chain will be presented. All the relevant factors, organizations and prob-lems will be introduced. Next, the supply of the inputs will be explained in detail. Focus will be on the supply of seeds for potato production, as they are considered the main input. Relevant details for modeling will be considered.
A problem setting and subsequently a mathematical model for planning of supply and distrib-ution of seeds will be developed next. Results and several analysis’ will support the answering of the research questions.
Chapter 2
Agricultural background
This chapter is meant as an introduction to the marketing chain of potatoes in Mali and all of its related organizations and circumstances. It will start with a general introduction to the agricultural product potato, after which different aspects of economic nature will be presented. References can be found in [1] and [3].
2.1
The potato
The potato is an agricultural product which has a great nutritional value. In some western countries, it is one of the most common products in food consumption. This is mainly due to its high quantity of starch and vitamins, which are important nutrients.
Next to its high nutritional value, the potato has profen to be a highly rendable agricultural product. (see table 2.1; from [1],1).
Table 2.1: Overview of margins of profit of agricultural products in the region of CMDT and l’Office du Niger, in Mali
Product Margin of profit Depreciation Rank in rapport (per hectare in FCFA) in FCFA
Potatoes 1.776.000 11.000 1 Tomatoes 1.305.000 11.000 2 Eschalot 965.000 11.000 3 Mangoes, exported 474.000 28.000 4 Rise, cold season production 208.000 25.000 5 Rise, late season production 198.000 25.000 6 Rise, paddy 194.000 25.000 7 Mangoes, locally sold 67.000 28.000 8 Maize 58000 11000 9 Sorghum 37.000 11.000 10
Millet 36.000 11.000 11
Under the proper conditions and the appropriate application of sufficient inputs, the yields of potatoes are amongst the highest in the agricultural production sector. For this reason, it is interesting to see that the potato has been introduced to the agricultural production
1
chain in several countries in Sub-Saharan Africa (SSA). In these countries, the environmen-tal conditions are not optimal for the agricultural production of potatoes. Nevertheless, the conditions are good enough to grow the product and still achieve very high yields compared to the other products grown in these agricultural sectors (rice, sorghum, tomatoes etc.)
2.2
Types of potatoes
Potatoes can be grown for two reasons: consumption or production. Potatoes which are grown for production are called seed potatoes. The use of this term is quite obvious. Seed potatoes are grown to produce high quantities of quality seeds which can be used for more production. Seed potatoes are grown mainly in western countries which can produce them at a very low cost. There is some research on production and development of new seed potatoes in Mali. This will be explained in a later section. Seed potatoes are not yet produced in Mali, they are imported from Europe.
2.3
Potato production in Mali
Potato production began at the end of the colonial period of Mali, around 1940. The re-maining French colonists were the principal managers of the product. The potato was (and still is) considered a luxury product. Price of potatoes is relatively higher then that of other agricultural nutritional goods (like rise and maize). After severe droughts in the seventies and eighties, the luxury of the potato slightly diminished as price differences between the potato and the other products became less. Around this period, changes also occurred in the produc-tion chain of potatoes. Up until 1973, all the business was in the hands of French companies, which controlled the flow of goods and money in the potato market. Malian companies were carefully kept out of the business.
Due to some bad management of the French, this changed in 1973 when the company ’La Sikassoise’ was founded. La Sikassoise was able to become active and compete with the French companies in the supply of inputs for potatoes.
In Mali, the production of potatoes is concentrated in the region of Sikasso (over 75 per cent of the overall production is located there). Sikasso is the second-biggest city in Mali (with approximately 130.000 inhabitants). Its climate is best suited for growing potatoes in Mali. It has a long dry and (relatively) cold season which is necessary for the production of potatoes, which comes after a rainy season (see figure 2.1; adopted from [2]). The cold season has average temperatures of about 25 to 30 degrees Celcius. In the rainy season, temperatures are above 30 degrees. In the hot season, temperatures rise to 40 degrees Celcius. In the rainy season, rainfall amounts to 200 mm per month and more.
The ’big’ production is the production in the dry season. The ’small’ production is the production in the rainy season. The small production is significantly smaller in terms of yields then the big production, it is viewed as a byproduct to rise and cotton, which are the main agricultural products in the rainy season.
Figure 2.1: The planning period of the potato production
of inputs of the producers. They work at village level. Around 60 per cent of the production is sold on the market of Sikasso. Next to markets in the cities, about 30 per cent of production is sold directly in the vicinity of the harvested parcels.
2.3.1 Factors influencing production of potatoes
The production of potatoes on a certain parcel of land is dependent on a number of factors. The lands are irrigated by natural subterranean water, as well as by artificially applied water. Materials and tools used in cultivating are picks, ploughs, (hand)barrows, pumps and pesticide sprayers. Insecticides, pesticides and animals are used for the work. Most producers utilize family for the manual work and can not afford to hire labor. This is only done by the relatively fortuned producers, which account for a very small part of the producers.
2.3.2 The potato as an agricultural product in Mali
2.3.3 Development of potatoes
Development of seed potatoes has been a long process. The biggest producers of potatoes (for consumption as well as production) - which are the Netherlands, Belgium and France - have spent much time and money in the research and development of a seed potato which has the highest yields under several possible circumstances. For this reason, Malian producers use imported seeds to grow potatoes. Seed potatoes in Mali are still mostly in a research stage. They are not used for production of potatoes by the Malian farmers at the moment.
2.4
The supply chain of potato production
The seeds needed for production are imported. This is done via shipment over sea. The ships containing the potato cargo arrive in the harbors of Abidjan (Ivory Coast), Lom´e (Togo), Accra (Ghana) and Dakar (Senegal). As Mali is not a country by sea, the cargo has to be transferred by trucks from the neighboring countries. The quality of the potato seeds suffers due to bad roads and long transport under difficult climatic conditions. Some importers of seeds find the costs of necessary conservation (cooling systems in the trucks) to high, resulting in additional loss of quality of the seeds.
The production period of potatoes is mainly from the beginning of November until the end of January. The rainy season ends around the beginning of November and therefore the best moment to plant the seeds is around this moment. Seeds arrive the end of October and are distributed from that moment to the producers. Harvests take place in the month of January and beginning of February. Depending on the variety of potato, the production period is between 60 and 95 days long.
Next to this production period, there is also a small extra production in the rainy season (which is from August to October). As rise and cotton are the main agricultural products which are grown in this period, the potato is only grown on a very small scale and considered a ’byproduct’(see [3]). This small production is insignificant in contrast to the main produc-tion in the dry season and therefore not considered in detail in the report.
After the arrival of the seeds, the seeds are distributed and then planted. In the beginning of the growing season, the crops are cultivated with the use of inputs and resources(fertilizer, pesticides) after which the necessary agricultural activities are applied (sowing, ploughing). After the growing season, the crops are harvested and sold on the market.
As the production of potatoes is insufficient to meet the demand on the market, consump-tion potatoes are imported at the end of the rainy season to compensate for the shortage in production. The potatoes for consumption are also imported from Europe.
2.5
The value chain of potatoes
to the value chain of potatoes. Obtaining credit for investment in inputs, for example, is very difficult for a producer. Conventional banks are very restrained in providing credit for agricultural projects as these are considered very risky ventures. The risk of no returns on the investment is high. As a consequence, interest rates on loans at conventional banks are high (reaching levels of 30 per cent per year). In addition, usually very strict conditions are set on the credit project (such as requirements of minimum deposits).
In this section, the implications of the several aspects will be elaborated.
2.5.1 Cost price of potatoes
The price of potatoes is determined by several factors. Production costs are build up as follows(from [4]):
Table 2.2: Overview of margins of profit of agricultural products in the region of CMDT and l’Office du Niger in Mali, 1998
Potatoes Annual Gross Production 3,043,282.89 Inputs
- Seeds 963,695 - Fertilizer, inorganic 408,450 - Fertilizer, organic n.a. - Herbicides and pesticides n.a. - Other inputs n.a. Total inputs 1,372,145 Irrigation costs n.a. Transport costs 6,941 laborcosts 512,400 Write-offs 19,112 Production costs (FCFA/kg) 86
Production costs are higher when inorganic fertilizer is applied at higher quantities. With only organic fertilizer applied, the cost price of potatoes is, on average, 72 FCFA/kg. This in-formation represents the cost structure of potato production. The reader should be informed that the author doubts the validity of the actual figures, as the information is contradictory to other sources of information. Nonetheless, it is a useful representation of the cost structure of potato production.
2.5.2 The financing of the potato value chain
There is a number of conventional banks which participates in the potato business. They offer financial support and provide credit to the actors involved in the business. Besides the conventional banks, small credit institutions are involved in offering financial support. Until the devaluation of the CFA franc in 1994, most agricultural projects were self-financing and did not include any support from conventional banks or credit institutions. The financing of the projects was therefore very unstable.
For a small-scale producer (such as local farmers) is it hard to comply to the above stated conditions. Producers can only obtain credit through their AV’s, which represent a group of producers. They are able to meet the conditions of the banks. However, necessary stimulants (investments) for development of production are not taking place, as the banks are reluctant to assign more credit then necessary for the purchase of seeds and other inputs.
The problem for the banks are the risky conditions under which the financial support suffers. The potato business in Mali (and the agricultural business in general) is highly unstable. Many investments projects fail to meet their goals, entire crops can fail or the crops are not sold due to market inefficiencies (the earlier mentioned conservation problems). Banks are wary to undertake any risks in the agricultural business without firm conditions and/or as-surances on the credit provision.
Development organizations are trying to stimulate meetings between producers, merchants and other actors in the potato business. Furthermore, recommendations (which is formulated as a result of several reports on the potato value chain; for instance [1]) are made for increas-ing financincreas-ing for export production under acceptable risk conditions and financincreas-ing research into new markets (such as neighboring countries).
The financing of the potato value chain in Mali is an complex area of expertise. Unlike financing in developed countries, communication and different interests of the actors are big obstacles to reaching agreements. Furthermore, endless administration and bureaucracy combined with a political framework which works against instead of for the process is very counterproductive as well.
Most actors in the business looking for financing support have to rely on the support of NGO’s and development programs therefore, which are explained in the next section. Crediting is done for different organizations and different objectives. Producers use credits to buy inputs from suppliers. Suppliers might use credits to be able to satisfy the demand of the producers. Traders can use crediting to buy large stocks of potatoes to sell on the market (or abroad in the case of export). Also, the timing of the crediting can be different. Crediting before the actual transaction is possible. It is also possible that credits are obtained at the moment of the necessary transaction.
2.6
Actors in the potato production chain
Figure 2.2: Overview of the production chain of potatoes
2.6.1 Producers
There are several Producers’ organizations (PO) active in the potato business in Mali. ’l’Association Malienne d’Appui Technique Villageoise’ (AMATEVI) is an organization active in offering technical support to producers. It is also involved in research and development of agricultural technology in cooperation with partners, both local and foreign. ’Science Outil Culture - International’ (SOC) is an organization active in controlling the technical framework of the traditional producers. They are also active in assistance, technical as well as financial. ’L’Association des Producteurs de Pomme de terre de Sikasso’ (APPS) is a specific organiza-tion for producers of potatoes in the region of Sikasso. APPS is a union of the small-based village organizations of farmers in the region of Sikasso. On a national level, it is associated with the organizations ’l’Assemble Permanente des chambres d’Agriculture’ (APCAM) and ’l’Association des Organisations Paysannes des Producteurs’ (AOPP), which are producers’ organizations active in the potato business, as well as other agricultural products.
2.6.2 Suppliers
A few companies in Mali are active in supplying the necessary inputs for farming potatoes (seeds, fertilizer, pesticides). Seeds are imported from Europe by La Sikassoise, Inter-Agro and Cikela Jigi. They do not supply fertilizers or pesticides (in general), which is a different market then the supply of seeds. La Sikassoise is the main supplier of seeds with a market share of 80%. These organizations are generally entreprises. Cikela Jigi is a cooperative, consisting of members from a particular sector of the business. Most farmers use such an organization for their supply of inputs, but they also rely for a small part on them for the use of (in)organic fertilizer, distributed by small local organizations (such as Cikela Jigi) or traders.
The suppliers import the required resources. They use a distribution network which they developed for the supply of producers and traders. In reality, these networks are not used ef-fectively. There is no collaboration between the different suppliers. No advantages are gained therefore by working together in buying resources and distributing them. One of the research questions of the report will be to analyze this. If the suppliers would cooperate and use each others networks, a more efficient transport network might be applicable.
2.6.3 Traders
Retailers distribute the harvested potatoes from the producers on the consumption market. There are a few different types of traders:
• Wholesalers: big traders which have market power and are responsible for the import and export of potatoes and related products. Their weekly volume is between 7 to 20 tons. Wholesalers can be divided in two types: wholesalers with interests in the commercialization side and wholesalers with interests in the production side of potatoes • Semi-wholesalers: traders of a smaller size then the wholesalers. Their weekly volume is between 3 to 6 tons. Semi-wholesalers can be divided in three different types: interest in commercialization of imports, production of export or internal retailing
2.6.4 Exporters
Export of potatoes is undertaken by two organizations: URCEP and Mali Yiriden. URCEP (’l’Union R´egionale des Commercants Exportateurs de Pomme de terre de Sikasso’) consists of four cooperatives which are active in the export and commercialization of the potatoes. Each cooperative is aimed at a different region of West-Africa to sell the product. Mali Yiri-den is of smaller size and has ties with the supplier Cikela Jigi. It works in a similar way as URCEP, although its organizational aspects are quite different.
Mali is the biggest producer of potatoes in the region and exports the product to Ivory Coast, Ghana, Burkina Faso, Togo and Benin. With a share of over 90% in the export, Ivory Coast is by far the most important importer of Malian potatoes. The market in Ivory Coast is often packed.
Chapter 3
Interactions and problems in the
potato market
In this chapter, the interaction between the factors and actors presented in the previous chapter in the potato production chain are analyzed. Which organizations are connected to each other? What parts of the production chain are overlapping? Which problems arise due to these interactions? Strengths and weaknesses of the production chain will be elaborated.
3.1
Potato markets in Mali
Several markets for potatoes exist. Most of them have a demand relative to their popula-tions. Supply of potatoes needs to be done to all of these regions therefore, while most part of the production is in the region of Sikasso. On each market there are several actors con-ducting business. In most regions, there are only traders and buyers of the potato present. In Sikasso, there are producers, traders, exporting companies, wholesalers and importers ac-tive. Currently, some of the types of actors are also intervening on other types of activities. The exporters are trying to get a grip on the commercialization process of the potato. The activities of the actors on the market of Sikasso are complex. The organizational structures of several of them are also complicated. There are organizations, cooperatives, enterprises and individuals active. The organizational aspects of the suppliers and their relations will be explained in the next chapters.
3.2
Relations between the different actors in the production
chain
Relations between the different actors in the production chain are very tight. Many of these relations have been build up over a long period of time and are not very dynamic. Relations between the different actors are described in this section.
3.2.1 Demand and production driven relations
The demand side of the production chain is controlled by the suppliers. Producers have a demand for seeds and other inputs. The amount of seeds and inputs granted to them is decided by the suppliers. They control this side of the market. They also determine the demand of potatoes on the market and adjust their supplies of inputs to the producers accordingly. The producers have no influence on the market. They are restricted to purchasing what they are offered by the suppliers and then apply the acquired inputs to their farming lands. The suppliers use the small village organizations (i.e. communities) to obtain the required information they use to manage their business. The information in the villages is centralized by these small local organizations (such as AV’s).
3.2.2 Financial relations
The banks in Mali active in credit provision hold the creditors under strict control. They mostly have relations with the organizations or cooperatives active in the potato business. The biggest bank, BNDA, has relations with organizations in all the sectors of the production chain. It does not deal with small farmers. This is done by the smaller banks and credit providers. BNDA handles the organizations active in the business. La Sikassoise, the main supplier of seeds, is credited with about 500 million CFA franc1(about 762.000 euro’s) yearly. BNDA is mostly active with crediting the suppliers (La Sikassoise and Inter-Agro). An-other bank, Kafo Jiginew, is active in crediting producers directly. It has some small local offices, for financial support to the local markets. It also credits one of the suppliers of seeds, Cikela Jigi. The third bank active in crediting in the potato business is the bank BMS. There are two principal ways in which credit is provided in the value chain. First, banks provide credit to suppliers which use these to obtain resources and supply them to the pro-ducers. After selling the products to the producers, the credit is repayed to the banks with interest. This way, the bank indirectly finances the producers. Second, it is possible that banks finance the producers and the suppliers directly, where after the harvest the producers repay the banks. This way, the role of the suppliers in crediting producers is removed as an intermediary part in the process. This results in a more direct relation between banks and producers.
As the supply of seeds for potatoes is the central issue in this research, its complex financing structure will be explained in detail in chapter 5, which deals with the individual suppliers.
3.3
Agricultural development programs and organizations in
Mali
Development organizations and programs are initiated for the purpose of stimulating devel-opment which lack the commercial interest of the other actors in the business. The NGO’s make the funding available with the objective of stimulating development without a profit intention. The American development program USAID (United States Agency for Interna-tional Development) is the biggest development program in agriculture in Mali. In 2004, it started a new project called Prodepam (’Programme de d´eveloppement de la production agricole au Mali’) for a five-year period. Prodepam is engaged in research and support in the production side of the potato value chain. Together with TradeMali (which is engaged in the commercialization of the potato value chain) and MaliFinance (which is engaged in the financing of the potato value chain) it forms a development program for potatoes in Mali. Prodepam utilizes present NGO’s (Non-Governmental Organizations) and its resources to acquire employees, knowledge and other necessary resources. At present, five NGO’s have a representation in the workforce of Prodepam. As all of these NGO’s are from different political color (or different nationality) with different targets, the organizational structure of Prodepam (and TradeMali and MaliFinance) is complicated.
Prodepam is active in the research and assistance of farmers and producers of the potato. It does this by supporting and organizing development programs in potato villages and train-ing farmers in production techniques. It tries to stimulate investments and technological innovations.
3.4
Agricultural research in Mali
There are two institutions in Mali occupied with research in potatoes currently. These are l’Institut d’ ´Economie Rurale (IER) and l’Institut Polytechnique Rural (IPR) in Katibougou (a village 60 kilometers north of Bamako).
Potatoes is not considered as the primary subject for agricultural development in Mali. There-fore, little research is undertaken at the moment to improve the production technology applied in growing potatoes. One of the running programs is a research program of potato seeds at the test laboratory in Katibougou. The program has been set up to examine the possibility of producing seed potatoes in Mali. For this purpose, potential seeds are being tested under sev-eral environmental circumstances. Potentially, a seed can be chosen and/or developed which is suited for the climatic conditions under which seed potatoes can be grown (which are more strict than the conditions required for growing consumption potatoes). The research program concerns an analysis of several varieties of micro- and mini-tubers (which are small seedlings) of different seed types, which are examined and then planted in specifically designated potato fields. Yields and the amounts of ascertained diseases (viral, fungal or bacterial) are observed and reported. A mixture of criteria is applied to determine which varieties of tubers are best fitted for growing in Mali (Sikasso).
a seed variety which can be grown such that the harvested potatoes can be planted again to produce more potatoes. These are called multiplication cycles. The quality of the seeds and - as a result - the potato yields decline with every cycle of multiplication. The profitability of the process depends on the choice of the frequency of the multiplication cycles. Schedules of one or two cycles per year are possible. The first scheme takes more time to complete. It has higher benefits though. A mixture of the two schemes is also feasible.
There is research and development of seed potatoes in Mali. The seed potatoes are, how-ever, still in an experimental stadium and not yet of the same quality as the imported seed potatoes. Potato producers only use imported seeds.
3.5
Problems in the potato market
There are many problems associated with the production of potatoes. First of all, problems exist with the growing of potatoes of agricultural or technical nature. Second, commercial problems exist which are mainly concerned with market inefficiencies. Third, organizational problems exist as a result of poor management of the production chain. Fourth, financial problems concern mostly the inability for actors to get access to credits.
3.5.1 Agricultural and technical problems
Potatoes face agricultural difficulties. Production is often disturbed by the presence of a disease which can occur in the potato production. These can be of viral, fungal or bacterial nature. These problems are intensified as a result of bad sanitary conditions and the inability of producers and traders to satisfy the required conditions for conservation in transport and storage. Pesticides are necessary to keep this problem under control.
Technical problems are mainly concerned with the quality of the seeds which are produced in Mali. Seeds produced in Mali are of far lower quality then the seeds imported from western producers. The inability to improve the technology for the production of quality seeds is a major obstacle in the development of the potato industry. If Mali were to produce their own quality seeds, this would develop a new agricultural sector as well as a large stimulation to the current potato production and commercialization. The cost price of the potatoes would be lower and the potato industry could be independent from foreign organizations providing necessary inputs and thus holding a market power over the potato industry.
Conservation is a big problem. The conservation methods developed and applied in Mali are insufficient for the production of potatoes. Potatoes are an agricultural product which requires of lot of sanitarian treatment and conservation to prevent it from becoming useless due to diseases or lack of cooling. Storage of potatoes is therefore difficult, due to these strong requirements on conservation of the product.
3.5.2 Problems concerning demand and supply
from western countries, at high cost.
Another common problem is the planning of certain activities. Due to miscommunication and mismanagement, the input deliveries are late on a regular basis. This causes problems in the production chain. Failure to deliver is also caused due to the non-respecting of contracts. Producers have no market power and are completely dependent on the service of their sup-pliers. Producers often face insufficient revenues from their production and/or investments. The problems with commercialization are also the insufficient capabilities to stock and con-serve the product, as mentioned earlier, as well as the inability to obtain credit or proper promotion. Good promotion might be able to make the potato a more prominent agricultural product on the market, improving the current market share of 6%(from [3]).
3.5.3 Organizational problems
The production chain of potatoes can be simply presented, like most other production chains, as follows:
Figure 3.1: The flow of goods and information in the production chain
There exists, however, little vertical competition or collaboration (different blocks in the sup-ply chain working together or competing). This would also be beneficial to the functioning of the market. Producers and traders should cooperate and effectively manage the supply chain. The agricultural industry in developing countries commonly lacks this type of collaboration, which is an essential part of Supply Chain Management (a field of science which studies these types of production chains).
Next to the lacking of strong organizational structures, problems also occur with the contract-ing of new relations. Contracts are often not formally designed. Even when the contracts are sufficiently formalized, they are often not respected. Such problems are hard to solve.
3.5.4 Problems with import of inputs for and export of potatoes
Mali is the biggest exporter of potatoes in Sub-Saharan Africa. The main part of the pro-duction meant for export is delivered to Ivory Coast. Although this is a big market for Mali, there are several problems associated with export to Ivory Coast. These are problems also consistent with other neighboring countries (though relatively less troubling) and the import of seeds and potatoes, but as market in Ivory Coast is by far the most important market due to its size, it is worth highlighting specific problems there.
• Import taxes are quite varying. Next to usual high export costs, it is hard to model the expected costs of exporting potatoes.
• Payments are often done on credit, forcing exporters to wait for the revenues of their sales.
• The closure of the port of Abidjan for incoming transports. Abidjan is one of the biggest ports of West Africa.
• The unstable political situation in Ivory Coast, making transports dangerous and ex-pensive due to corruption
• Lacking quality of buyers
Chapter 4
Supply of seeds and other inputs
for potatoes
Potatoes are produced with the use of several resources and inputs. The resources used are the tools and materials commonly applied with agricultural production like tractors, labor, ploughs, water irrigation and other materials. The inputs are the seeds, fertilizers and pesticides applied on the fields. As mentioned in the previous chapter, the seeds can not be produced in Mali and are imported from European suppliers. The fertilizers and pesticides are available on local markets. The costs of these inputs is significantly lower then the cost of seeds. As the research concerns the supply of inputs, all of them are included in the remainder of this chapter. However, as the supply market for seeds is much more complex and far more important to the producers of potatoes, the report will focus on the supply of seeds. The supply of fertilizer and pesticides is not really a problem for the producers. Supply of seeds is, as supply can not meet demand and it is hard to obtain credit for it. These problems are not related to the supply of fertilizers and pesticides. They are introduced in this chapter for informative purposes only and will not play a role in the analysis thereafter. The rest of the chapter is meant as an introduction and explanation of the supply of seeds for the production of potatoes.
Figure 4.1: Cost of different inputs for potato production (source: [3])
As mentioned in chapter 2, these figures are doubtful. Interviews with representatives of the suppliers of seeds suggest a cost of at least 100 CFA per kilogram, which supports the doubt cast by the figures in these reports.
4.1
Fertilizer and other inputs
There are two types of fertilizer found in the potato production areas: Urea and complex NPK. Urea is an organic fertilizer. NPK is inorganic and stands for Natrium, Phosphor and Kalium. There are many types of NPK fertilizer, which depends on the amounts of the differ-ent chemicals in the composition. The NPK fertilizer used for the production of the potato in Mali are NPK (10-10-20), NPK cotton (14-18-18-6-1B) and NPK cereal (17-17-17-4S). The numbers represent the proportions of the different compounds.
The NPK fertilizers are designed for other agricultural products, not for potatoes. Currently, efforts are made to design a fertilizer specialized for potato cultivation. The organization SO-MAFERT has tried to develop such a complex fertilizer. The organization has gone bankrupt and therefore research for fertilizers specific for potato cultivation has become less intensified. The fertilizers currently used suffice, but a chance for improvement of the potato chain is available with the development of a potato specific fertilizer. SOMAFERT contributed by introducing the formula (10-12-20) in the 2002-2003 campaign. A problem with this is that the demand for fertilizer is not well organized, and information on these kind of developments is not communicated to the demanding parties. Therefore, the newly developed (10-12-20) is hardly on the market. Inter-Agro has developed a new fertilizer as well. It is called Hydro-complex Pomme de terre (sans chlore). It is not certain at the moment if it is being sold on the market.
As of the current campaign (2006-2007), a Norwegian manufacturer of NPK fertilizer for potatoes has started a branch in Mali. These NPK fertilizer, specifically designed for potato production, are on the market now. The company brand, Yara, has manufactured 3500 tonnes of fertilizer for the potato market this campaign. The other NPK fertilizers are imported, but not by the importers of the seeds. Most of the other inputs (other then seeds) are provided locally by the traditional agricultural suppliers. These fertilizers are surplus of the cotton input supply chain. Many traders and producers have surplus supply of cotton fertilizers in stock. These fertilizers are then available for potato producers to use. Cikela Jigi is one of the suppliers of seeds, but they also take care of other inputs. Cikela Jigi is a cooperative of producers, and serves the needs of the producers. This includes all the necessary inputs the producers demand. The other suppliers of seeds are enterprises and are not dealing in the interest of the producers but have their own interests to consider. As the fertilizer (and other inputs other then seeds) supply is not a lucrative business, only a cooperative would be inter-ested in supplying these to the producers. The enterprises are solely aimed at the seed market. The reason that cotton fertilizers are used instead of potato fertilizers (until now), is twofold. They are available in great quantities and they are cheap.
fertilizers, but they are not considered relevant for this study. The research is focused on the import and distribution of seeds, which contain some interesting problems to be considered. The next section will start with the subject of potato seeds.
4.2
Potato seeds
At the moment, about 20 percent of the demand for potato seeds is satisfied with imported seeds. There are two types of seeds for potato production, seeds used for potatoes to be sold immediately and seeds for the production of potatoes which can be conserved. The amount of seeds used for production depends on the type of potato and the variety. Claustar is the most widely applied seed. It is an example of a potato which can be conserved for an amount of time. Spunta is an example of a potato variety which is grown for immediate selling on the market. Within each type, there are different varieties with different characteristics. An overview of some varieties and their characteristics is given in table 4.2 (source: Cikela Jigi). The cost price of the imported seeds is around 790 FCFA per kilogram. This is including the
Table 4.1: Seed varieties and some of their characteristics
Variety Form Preservability Profitability Cost (euro’s/ton) Claustar Round At least six months 600
Spunta Oval very short period Very good 600 Cosmos Round short period
Diamant Round Long, but less then Claustar Good, but takes long care Hermine/Safrane Longest after Claustar Good
Mondial Premium 766
price of the foreign supplier and the transportation costs. Depending on the multiplication factor (depending on the quality of the seeds), the quantity and selling price of the potato on the market can be determined. With the amount of multiplication we mean the following. Each seed potato which is planted has a certain multiplication factor for its harvest. Every kilogram of seeds which is planted, has a certain amount of potatoes which can be harvested. This amount is about six. So, on average, every kilogram of potato seeds produces six kilo-grams of potatoes. This factor is called the multiplication factor.
The price of the potatoes in the region of Sikasso is around 110 to 140 FCFA per kilogram. These prices are for potatoes which are sold at the sites of the harvests. This means that these potatoes are sold immediately after harvest at the growing locations and not on the markets. The traders go to the villages to collect the potatoes there, for these prices. They sell the potatoes on the market, for higher prices. The difference is the value of commercializing the product potato. The price for consumption on the market of Bamako varies from a minimum of 170 FCFA per kilogram in the rainy season to a maximum of 500 FCFA per kilogram.
4.3
Demand and crediting of potato seeds
Figure 4.2: Satisfaction of demand for seeds by different types of seeds; source: [3])
with (in part) the objective to organize the demand for seeds and other inputs in the villages. The AV’s are united in APPS (see chapter 2).
Access to seeds is made available largely with credits from BNDA. BNDA gives the credit to the AV’s (village organizations). The credit is on a basis of a small amount of the actual value of the seeds, as an advance (around 10 per cent). The AV’s administrate the demands of the individual farmers, associated with the AV. This system of crediting of inputs of the potato production is the result of an intervention program of PAVCOPA (an organization aimed at support for the revaluation and commercialization of agricultural products), the ministry of agriculture and CMDT for support of the production chain of potatoes. The crediting of the producers (organizations) is not only restricted to the banks and PO’s. The suppliers play a role in the crediting of the seeds supply too. This differs per supplier. This will be elaborated in a later section, where the different suppliers and their relations and activities will be explained.
Other financial institutions are active in providing of credit for seeds too. Most crediting for seeds follows a procedure, being part of the different time frames for the request and delivery of the seeds from Europe to Sikasso and from Sikasso to the producers. In July and Augustus, information on the demand for seeds in the villages is obtained by the suppliers and/or creditors. This information is collected by the AV’s in the villages from the individual producers. The supplier makes a demand for seeds with the European suppliers, with credit from a bank (on paper). In case a bank or other creditor has information on the demand of seeds from the producers in the villages, it can convene with the supplier to determine the amount of credits to be loaned to the producers (also on paper). This can be done without the advice of the suppliers too, depending on the relationship between supplier and creditor (for example, La Sikassoise is a supplier which convenes with BNDA for determination of the orders of seeds and accordingly, the amount of credit to be granted).
In the current situation, suppliers never have problems with credits reimbursement as all credits are handled on paper. They can decide what they want to order and deliver to the producers. Reimbursement is based on production of potatoes. As the producers never really receive any money from the bank but only a certificate, they are obligated to repay the credit with the money they obtain from growing and selling the potatoes. The repayment is dealt with by the bank, and not the supplier of seeds. The exception is Cikela Jigi. This supplier does obtain monetary credit and uses this to supply seeds to producers on credit too. If the producers do not repay the credit later on, Cikela Jigi can not repay the bank as well. More on this in the next chapter in the section on the suppliers.
Figure 4.3: Overview of financing of seeds supply in time, from [3]
4.4
The supply of seeds
Figure 4.4: The demand for seeds in the different regions of Mali, from [3]
The suppliers of seeds have no incentive to work together. They solely consider their own interests and see no benefits in sharing information, resources or collaborating with their com-petitors at all. There are some plans at the moment to form a frame for the suppliers. This was a result of the ’Journ´ees de pomme de terre’ (days of symposiums on the potato chain in Mali), held in Sikasso in September 2006. The suppliers spoke of an intention to form such a frame or platform, where it would be possible for them to convene regularly to reflect on current activities in the seeds supply chain. No plans for collaboration have been outspoken at the moment though. It is unclear if the suppliers have any incentive to collaborate. As there is at the moment no coordination of the supply of seeds, no group-coordinated purchasing is done. As the suppliers all face similar difficulties, there could be advantages to gain from working together. Without collaboration, they can not gain any possible economic (scale) benefits. Handling the issues of conservation seems to be a good incentive too to collaborate. Conservation is very expensive and the suppliers are not very interested in it due to the high costs. Sharing the costs of a storage facility with the proper conservation abilities might be a way to make the suppliers interested in conserving the seeds. The quality of the seeds is highly dependent on the availability (and quality) of conservation.
There are transporters active in the market for potatoes, other than the suppliers them-selves. They are (small) traders which deliver the potatoes from the producing villages to the consumption markets or storage facilities of the exporters or (bigger) traders. They are also active in transportation of the potatoes to other consumption regions in Mali and West Africa, but as the suppliers of seeds handle the transportation themselves, this is not relevant for the import of seeds. As the roads between villages is often not suited for transport with a big truck, it might be considered to buy or hire smaller sized trucks for some part of the distribution. We will come back to this point when we discuss the requirements of a distrib-ution network later on.
for imported potatoes, as this is dependent on much factors which are unknown. The import of seeds can be forecast though. With the use of a history of demands and information of the villages, the import can be determined and will be considered an important factor in the remainder of the research.
Overall, costs of inputs are rising. This is mainly due to rising costs of the seeds. This could be caused by higher prices of the European suppliers or higher transport costs.
4.5
Chains of supply of seeds
In general, there are two kinds of supply chains for the required seeds for production of pota-toes. General proceedings will be presented in a step-wise procedure. Most supply of seeds is funded by the bank BNDA. Most producers determine demands for potato seeds and commu-nicate them with their local village AV or cooperative. The AV’s commucommu-nicate the segregated demand for seeds at village level to the suppliers of seeds. The suppliers then make contact with the bank (mostly BNDA) to obtain a credoc, which is a document representing credits the supplier has requested to order seeds at the European suppliers. The bank then makes contact with the bank of the European supplier to convey the money needed for the purchase of the seeds order. The order is made and the seeds are shipped from Europe to West Africa. This is the first part of the procedure.
When the seeds arrive in Sikasso, the supplier wants to distribute them to the AV’s. In the time that seeds were on route for Sikasso, the producers and their AV’s contact the bank to obtain credits for the purchase of their seeds. The bank makes a decision on the basis of payment history if the producers or their AV’s are eligible for crediting. The bank commu-nicates with the suppliers and makes a list of the AV’s which are requesting credit. The list is communicated regularly with the suppliers. This procedure is followed such that villages which have a history of no5n-payment are excluded from supply of seeds, without making deposits.
After the demand for credit, some banks and suppliers confirm the requested credits with the requested demands for seeds. The bank makes arrangements with the supplier and takes care of the repayment of the credit. After the delivery of seeds, the suppliers are payed by the producers after which they compensate the bank for the credits obtained earlier. The producers repay the bank after they have sold the potatoes they have grown.
The procedure of this supply chain roughly looks like this:
1. June/July: AV’s accumulate information on requirements of seeds, requests are made with suppliers
2. July to September: centralization of information on input requirements on the level of the suppliers
3. Mid July: Communicating demands with European suppliers to obtain an estimate 4. End July: Suppliers file requests for funds with banks, with an enclosure on the financial
5. September: Communicating final demands at European suppliers by the suppliers of seeds.
6. September: Evaluation of the weaknesses and demands of the producers. Request for starting the crediting by BNDA.
7. October: Deposits are made from suppliers at European suppliers after confirmation of demands of seeds.
8. October/November: Arrival of seeds. Signing of contracts for credits between AV’s and banks.
This general procedure is adopted by most suppliers, banks and producers. Cikela Jigi, the smallest supplier of seeds, works in a different way with Kafo Jiginew as a bank though:
1. July: making an inventory of the needs of the producers for inputs 2. July: Cikela Jigi makes a request for credits with Kafo Jiginew. 3. August: Cikela Jigi obtaines credits in cash.
4. August/September: Cikela Jigi makes an order for seeds at the European supplier. 5. October: the seeds are shipped and payed in cash at the harbor.
6. November: Cikela Jigi sells the seeds on credit to the producers.
7. January: After production, the producers pay Cikela Jigi for the seeds, with interest. 8. February: Cikela Jigi reimburses Kafo Jiginew for the requested credit.
Chapter 5
The suppliers of potato seeds
Currently, there are three organizations active in the supply of seeds for the production of potatoes. Over the last years, their supplies of seeds can be desegregated as follows (LS stands for La Sikassoise, IA is Inter-Agro and CJ stands for Cikela Jigi; the numbers 25 and 30 stand for crates of 25 kilograms and 30 kilograms, respectively):
Table 5.1: Volumes of seed supplies of the different suppliers, distributed to producers in Mali. Numbers obtained by surveys amongst suppliers during ’Journ´ees de pomme de terre’
TYPES Organizations Qte 2005-2006 Qte 2004-2005 Qte 2003-2004 Qte 2002-2003 (units) (units) (units) (units) CAISSES IA30 6,400 5,200 4,800 4,800
LS25 35,574 34,496 36,652 28,028 CJ25 5,557 5,557 5,557 5,557 CJ30 1,600 1,600 1,600 1,600 TOTAL 49,131 46,853 48,609 39,985
Organizations Qte 2005-06 Qte 2004-2005 Qte 2003-2004 Qte 2002-2003 SACS IA25 8,000 4,000 4,000 2,000
TOTAL 8,000 4,000 4,000 2,000
Organizations Poids 2005-06 Poids 2004-2005 Poids 2003-2004 Poids 2002-2003 (kilograms) (kilograms) (kilograms) (kilograms) POIDS IA 392,000 256000 244000 194000 LS 889,350 862,400 916,300 700,700 CJ 186,925 186,925 186,925 186,925 TOTAL 1,468,275 1,305,325 1,347,225 1,081,625 PU/Kg 756 756 720 720 CA Seeds 1,110,015,900 986,825,700 970,002,000 778,770,000
to validate the numbers in figure 4.3 (although it accounts for the number presented for the campaign of 2001-2002). La Sikassoise is the oldest active supplier, holding a near monopoly on the market for a long time. Inter-Agro and Cikela Jigi have been founded later on. In recent years, Inter-Agro has taken over parts of the market, gaining terrain on La Sikassoise as well as expanding the market with new producers for their imported seeds. See figure 5.1 and 5.2 (from surveys amongst suppliers during ’Journ´ees de pomme de terre’
Figure 5.1: Market shares of the suppliers in the campaign of 2002-2003
This chapter will illustrate in detail the workings of the different suppliers and their relations with the other actors in the market. Figure 5.3 gives a general overview of the relations in the market.
5.1
La Sikassoise
La Sikassoise is the oldest supplier of potato seeds in the market. It was founded in 1973, the first Malian enterprise in the potato business. Before, the potato value chain and all of its sectors was controlled by French companies. The objectives of La Sikassoise were the import and presentation of potato seeds, when it was founded. Currently, the objectives are to completely control the market for the supply of seeds for potato production. With the arrival of competitors on the market, La Sikassoise no longer holds a monopoly on seeds. Their market share has declined in the last 10 years to a level of about 60 percent in the campaign of 2005-2006. (see figure 5.2). In the current campaign, 2006-2007, La Sikassoise has regained its market share of over 80 per cent though. This and other features of the campaign of 2006-2007 are explained in section 5.4.
5.1.1 Organization
La Sikassoise is staffed with a small number of employees. There is a president, who takes all the decisions. The president is not an expert on all of the activities of the company and therefore can not be assumed to be making optimal managerial decisions for the company, as this requires knowledge and expertise on the different subjects. In the western world, company boards and directors let managers make decisions and develop strategies on their own department. These managers have the expertise and knowledge of their field to run their sector of the company business. The managers themselves have section leaders under them which run the sections of the management sectors. This is an effective way of business management. The size of a western company is in general much bigger then that of the Malian seed suppliers. Therefore it is possible to make decisions on his own for a director or owner of a Malian seed supplier. It is only outlined here, that a company with more responsibility for management would function more effective.
5.1.2 Imports and distribution
La Sikassoise imports the potato seeds from the company Germicopa in France. Volume of import of La Sikassoise is at the moment around 900 ton. La Sikassoise uses the port of Dakar in Senegal for the import. The reason for the use of this port is, according to La Sikassoise, the fact that transport takes less time then with other ports. The fact that the other import-ing companies use other ports for reasons of efficiency, will be considered later on. Transport of seeds from Europe to Sikasso, with the use of the port of Dakar, takes a minimum of 16 days and a maximum of 18 days. It is the optimal choice for La Sikassoise, because the time it takes to transport via Lom´e (Togo) or Tema (Ghana) is longer. The imported products arrive during the end of October en the beginning of November in Sikasso.
statement is also remarkable as reports on the production chain of potatoes often speak of big problems with conservation, for the product and the inputs.
The distribution and storehouse of seeds of La Sikassoise is centered in Sikasso. Storage facilities have no conservation capabilities. Distribution of seeds commences immediately af-ter arrival of the seeds. There are some discrepancies in the arrival dates of the seeds in Sikasso. After arrival of the seeds, La Sikassoise informs the AV’s of the arrival of the seeds. The AV’s inform the producers, which go to Sikasso to pick up the seeds. La Sikassoise does not distribute seeds to villages by truck. This important will be discussed in the next chapter, when the problem setting will be explained. La Sikassoise used the following price for sales to their producers (campaign 2005-2006):
• 19000 FCFA for a crate of 25 kilograms which is about 760 FCFA per kilogram of seeds.
5.1.3 Relations with competitors and banks
Competition with the other import companies is not very fierce. The price of the seeds is not used for competing purposes. Opposed to the others, La Sikassoise is not undertaking much activity to compete with the others. They only grant certain assistance to the producers to make sure they continue to buy seeds from them. As La Sikassoise has a large amount of money, this is not a problem for them. Not having much incentive for competition is a result of the sternness of the organization. There is a growing market of seeds, which La Sikassoise wants to supply. Their strategy for this objective is to try to reorganize the seed market. Distribution to all the producers has to be materialized. La Sikassoise considers the growing percentage of local seeds use as a bad development. It is considered negative for the production of potatoes.
The financing of seeds supplied by La Sikassoise to its producers works as follows.
La Sikassoise for seeds. Often, transports are insufficient to meet the demand of all the pro-ducers. As the producers which applied for credits have to repay BNDA with high interest, they need any seeds they can get to raise funds with selling their potatoes. This gives La Sikassoise a lot of power to determine a price to maximize their profits.
5.2
Inter-Agro
Inter-Agro is a supplier of seeds, founded in 1986. It started with the export of vegetables and fruits to France (the old colonial power). Later on, the company also began importing potato seeds. This expansion of activities developed as there was an opportunity to enter this market due to a growing amount of producers starting to use imported seeds (either as a starting potato farmer or instead of locally produced seeds). Currently, Inter-Agro is focused on the import and distribution of seeds of potatoes. It is no longer active in the export of vegetables and fruits to Europe, as the import of seeds is more profitable. Only a small amount of export is still undertaken, to Ivory Coast. Inter-Agro is also active in other branches of business, such as sales of gasoline and construction of buildings and roads.
5.2.1 Organization
Inter-Agro is an enterprise. It differs with an enterprise like La Sikassoise, in that is an ’Society A Responsabilit´e Limit´ee’ (SARL). It is owned by several persons or groups, which all own a share in the company (which all have limited responsibility). La Sikassoise is an ’Entreprise Familiar’, a family business.
The last supplier mentioned in this section, Cikela Jigi, is a cooperative. Its working and function will be explained in the following section. Inter-Agro is a corporation of activities in import, export and fertilizer development. It is active in developing new fertilizers for the potato production. As mentioned earlier, the NPK-fertilizers applied currently in potato production are not specifically designed for potato cultivation (rather for rise or cotton pro-duction). With the development of new fertilizers or other technical research, Inter-Agro hopes to gain more footing in the seeds market. It is a strategy of trying to expand the market for seeds by making production of potatoes more profitable. Over recent years, this strategy seems to have been successful for Inter-Agro (see figure 5.1 and 5.2)
5.2.2 Import and distribution
larger shipments, it is therefore preferred over Lom´e.
The dates of arrival in the ports are between 20 October and the beginning of November. Like La Sikassoise, Inter-Agro is not completely sure about the dates of arrival in the ports or in Sikasso. This is one of the main issues of the import of seeds, which has to be addressed, as will be explained in the problem setting in the next chapter.
The seeds are loaded on trucks in the ports. Inter-Agro uses trucks which are suited for conservation. The seeds are conserved under a temperature of 15 degrees Celsius which is necessary for conserving the quality of the seeds. Transport by truck takes about 8 days. The seeds are not stored in depots in the ports. Transport is undertaken directly after arrival (assuming the trucks are already there). Volume of the imported seeds is around 350 tons per year. The cargo is carried in trucks of 25 tons.
Inter-Agro imports the varieties Spunta, Claustar and Mondial. The variety of Mondial is preferred among these because of an argument of quality. Quality of seeds still suffer a bit due to transport, despite the use of conservation in the trucks. This is a problem which we will come back to in the next chapter on the problem setting. The quality problem can not be compensated by the supplier, HZPC. Their responsibility for the quality of the product ends at the port where the seeds are picked up. Next to the distribution in the region of Sikasso, other production regions of Mali are supplied with seeds as well. Most of them are not very significant, but the village of Kati in the region of Kouligourou is. Other regions are Bamako, Gao and Mopti. Inter-Agro uses the following prices for sales to their producers (campaign 2005-2006):
• 18,000 FCFA for a crate of 25 kilograms • 25,000 FCFA for a crate of 30 kilograms
The prices are 720 and 833 FCFA per kilogram, respectively. The difference in these prices is hard to explain.
5.2.3 Relations with others and recent success
Problems which Inter-Agro faces (as mentioned by them) are of qualitative nature. Conser-vation of seeds is the most important. Competition with the other suppliers is only done on a basis of quality and quality preservation and the variety of the seeds offered to the producers. Funding for the seeds is done by BNDA. It has a different structure then La Sikassoise has with the producers and BNDA. Inter-Agro collects the information on the demands for seeds from the AV’s and makes an order with the European supplier on the basis of that information. No agreements are present between BNDA and Inter-Agro (at the moment), so that the producers have a bit more certainty on meeting their demand.
new varieties of seeds and offering them to producers has been a successful opportunity to create a different product from that of La Sikassoise. The method of package is also differ-ent. Inter-Agro uses package plastic, where La Sikassoise uses crates. The investments of Inter-Agro have paid of in a growing market share (see figure 5.1 and 5.2). However, in the campaign of 2006-2007, BNDA has decided to forfeit a big amount of the credit. Inter-Agro was forced to make a much smaller order of seeds in Europe therefore. The amount of re-quested seeds is therefore this campaign much lower than in the previous year(s) (less then half of the amount distributed in 2005-2006). As La Sikassoise has a large amount of capital and a strong relation with both the bank BNDA and the supplier Germicopa, they are able to obtain credits and maintain their business. In the campaign of 2006-2007, La Sikassoise has again a market share of over 80 per cent. The work of the last years of Inter-Agro to try to compete strongly on the market, has diminished with the credit forfeits of BNDA. More on the current campaign will be explained in the next section.
An important perspective for Inter-Agro is to try to establish storage depots with cooling and/or conservation. For this purpose, Inter-Agro is working together with cooperatives and NGO’s (like Prodepam) to try to develop these innovations. It requires a bit of commercializa-tion as well. The potato is not yet very popular in the agricultural sector or with customers, despite of the growing number of producers and the potential of the product.
5.3
Cikela Jigi
Cikela Jigi is a cooperative of producers of potatoes. It was founded in 1994 with the objective to serve the producers with all of their needs for the production of potatoes. This includes mainly the import and supply of the inputs seed and fertilizer. Furthermore, the cooperative assists and serves the producers with any needs they require. The organization delivers inputs, but also credits the producers. The producers buy the inputs on credit, and pay after the harvest. The price of the inputs is fixed and lower then the price of its main competitor, La Sikassoise. At the moment, Cikela Jigi has no capacity to expand their activities to supply more producers. La Sikassoise controls the major part of the market. Furthermore, the producers do not change supplier quickly. Bonds between suppliers and producers are strong and based on historic trust. La Sikassoise therefore maintains their grip on the market.
5.3.1 Organization and import
is undertaken in the ports, if the trucks are available for transport there. On average, the trucks take four days for transportation to Sikasso. The complete transport from Europe takes about 30 days.
Cikela Jigi uses the following prices for sales to their producers (campaign 2005-2006): • 18000 FCFA for a crate of 25 kilograms from HZPC
• 23500 FCFA for a crate of 30 kilograms from Agrico
The prices are 720 FCFA and 783,3 FCFA per kilogram, respectively. The products from Agrico are more expensive. This could be due to a different mix of varieties of potatoes. Cikela Jigi uses trucks with cooling containers for conservation. They use a total of 13 trucks with two containers each, which have a capacity of 12 tonnes. Cikela Jigi uses a stor-age facility in Sikasso to stock the seeds before distribution. Costs of distribution are around 20000 FCFA per transport (to a village).
The information on demands for seeds is obtained with the AV’s of the villages. There are over 60 villages which Cikela Jigi distributes to in the region of Sikasso. Cikela Jigi has a strong link with Mali Yiriden, the trader. Cikela Jigi distributes seeds to producers for a fixed price. For every case of 25 kilogram, the producer is then obliged to deliver 190 kilograms of potatoes to Mali Yiriden. Mali Yiriden then exports these potatoes or sells them in Mali. This results in a very low selling price (and profit margin) for the producers, as the producers only obtain FCFA 100 per kilogram of potatoes they sell. Mali Yiriden sells the potatoes for FCFA 300 per kilogram. The system has profen to cause a lot of problems.
5.3.2 Crediting and perspectives
Cikela Jigi works with Kafo Jiginew for the crediting of purchases of seeds. Cikela Jigi works in the interest of the producers and therefore lobbies with the bank themselves to try to get funding for the purchase of seeds. Unlike with the funding for seeds with La Sikassoise, the aim of getting funds is in the interest of the producers.
