Hotting up the market for chillies

Farmers in Africa are often poor, not because they can't grow crops and raise livestock but because they cannot sell their produce at a realistic price. Continuing poverty denies farmers the resources to grow better crops, to match output to what buyers want, and to benefit from the higher prices that buyers will pay when their specific needs are met. What would benefit millions of small farmers in Africa are improved access to markets and, perhaps just as important, a business service that guides them in what markets want in terms of products, timeliness, quantity and quality.

credit: Penny Harvey

In Malawi the National Smallholders Association of Malawi (NASFAM) has demonstrated how its members can be helped in accessing markets for rice, groundnuts, paprika, cotton and chilli. Various contractual arrangements have been negotiated for NASFAM members with financiers, input suppliers and traders, but probably the most dramatic success has been by NASFAM's marketing division, NASCOMEX, reversing the usual process for selling farm produce: instead of merely trying to sell whatever their members produce, NASCOMEX has found out what buyers want and then offered members the opportunity to supply the market demand.

Proof of NASCOMEX's success is the dramatic increase in sale price of chillies from US$0.17 per kilo four years ago to US$1.20 per kilo in 2003 - a more than six-fold increase, even taking into account inflation over the period. Indeed, NASCOMEX has been so successful with its campaign to offer buyers what they want that, in the case of chillies, NASFAM members have been unable to meet the demand and additional supplies have had to be sourced from non-NASFAM members.

To benefit from such increased demand, and from the much higher prices, requires specialist marketing skills and this is why NASCOMEX was formed. Its General Manager is a London-educated and trained accountant, Heshan Peiris, and he has led the new initiative, backed up by the agronomy team led by Malawi-born Crops Manager, Duncan Warren.

Warren's task was to introduce members to the stringent quality demanded by buyers, who are willing to pay high prices but insist on uniform and consistent quality products. This was a big challenge, Warren admits, because farmers were growing crops traditionally and had little concept of growing for quality and then grading their produce to offer only the best for sale. But when growers learned of the very much higher prices received for high quality chillies they responded readily, and today the rejected 'grade-out' is little more than 3 per cent of chillies offered for sale.

Knowing your market
To be successful is to know how to research potential markets and suppliers, and here NASFAM has sought and gained help from the UK to complement Malawian expertise. Clearly, as a farmers' association, NASFAM has to know not only how to do the best for its members, it must be able to quantify the impact of its activities on members. So, to complement NASFAM's own internal assessments, there is to be a supplementary independent assessment, which is being carried out by Imperial College London (from their Wye campus), with the University of Malawi's Bunda College of Agriculture. The study has been funded by the Crop Post Harvest Programme of the UK's Department of International Development (DFID). The results are being analysed and initial findings will be published in May.

The conclusions of the DFID Crop Post Harvest Programme study will undoubtedly offer ideas and guidance on which options to follow for the optimum benefit of NASFAM members. The crucial result will hopefully be that these shared experiences will provide an escape route for smallholders trapped in the cycle of poverty: low prices for farm products, declining surplus for sale, less income, and so more poverty. Instead, Heshan Peiris sees a number of promising possibilities for NASFAM's smallholder producers.

The immediate benefit of the greatly increased prices for chillies should significantly improve household finances, and provide funds and confidence to expand production, while maintaining quality standards. Then, there is scope for applying the same 'supply what the buyers want' approach to groundnuts, for which there is a healthy demand for quality nuts for confectionery, and possibly to other crops too. Adding value to both chillies and groundnuts by processing is a further option.

Heshan Peiris hopes to share the benefits of their experience with those representing smallholders in other countries in Africa, or indeed in Asia. "We believe in sharing our experience with others just as much as others share with us," he says. And perhaps this will help break the cycle of smallholder poverty and lack of productivity elsewhere.