Transitioning from subsistence farming to commercial agriculture is a key pathway to achieving agricultural transformation. In Rwanda, MRR Innovation Lab researchers are connecting maize farmer cooperatives with the innovative processor Kumwe Harvest to provide a stable market for newly harvested maize while increasing the quantity accepted for purchase.
This connection to markets could increase farmers’ investments in productivity enhancing inputs and profits while also ensuring a consistent supply of high-quality maize for consumer markets.
One of the main challenges keeping farmers from tapping into commercial value chains is that smallholders’ output often does not meet food processors’ phytosanitary standards. Farmers typically hand-shell maize kernels and dry them on plastic tarpaulins outside the home, increasing the risk of contamination.
In Rwanda, the start of the next rainy season comes shortly after the harvest of the main growing season, causing maize to often be insufficiently dried before it is put into storage. Residual moisture can lead the maize to be tainted by aflatoxin, a carcinogenic fungus. Contaminated maize does not meet the quality standard required by large food processors, and as a result, a large share of the maize brought in by small-scale farmers tends to get rejected. Without a way for farmers to effectively process and dry their maize after harvest, linkages to maize processors are meaningless.
Kumwe Harvest, a logistics and maize processing startup in Rwanda, has custom-built industrial shelling and drying machines that end the need for farmers to process and dry their own harvests. The machines reduce the traditional six-to-ten week process with a process that takes just 24 hours from picking up maize at the farm to delivery at the factory gate of the final buyer at a near-zero rejection rate.
This study will examine how access to Kumwe Harvest affects farmers’ investments into productivity enhancing inputs, specifically fertilizer, as well as agricultural output, total yields and sales. The project will also measure how farmers procure grains and other items after selling their entire harvest to Kumwe. Farmers may switch from consuming their own harvest and maize from local markets, both likely to be aflatoxin-contaminated, to processed grains or to reducing their overall consumption of maize.
Cooperatives are randomized to either a treatment or control group. In the treatment group, researchers are arranging visits with representatives from Kumwe to explain the program and enroll cooperatives. In this way, the treatment encourages cooperatives to secure a guaranteed buyer contract prior to the agricultural season.
The experiment spans two seasons. Round 1, includes 200 cooperatives split between treatment and control groups. Round 2, taking place in the following year, include an additional 200 cooperatives. The analysis measures effects during the year of implementation, two subsequent years for Round 1 cooperatives and 1 subsequent year for cooperates added in Round 2.
The data on fertilizer purchases come from Rwanda’s Smart Nkunganire System (SNS), a digital database administered by the Rwanda Agriculture Board (RAB) that records all individual farmers’ fertilizer purchases. The Rwandan government subsidizes all fertilizer purchases and fixes all retail prices. This leaves no private fertilizer market that would add unrecorded purchases.
Data on farmer outcomes come from Kumwe Harvest and surveys administered by the researchers. Kumwe is providing information on the timing of, quantity and price received by farmers for sales. Surveys take place at the cooperative- and farmer-levels to measure crop yields, sales, agricultural income, land holdings, investments in assets and inputs and other related outcomes as well as perceptions and behavior change due to the intervention and grains consumption.
Kumwe Harvest can provide farmers with superior returns while ensuring a consistent supply of high-quality maize to be processed for output markets. This process benefits consumers by reducing aflatoxin contamination in maize. Providing a guaranteed market to farmers will also eliminate uncertainty, which also may spur investments in productivity enhancing inputs.
Since Kumwe’s technology will reduce losses at the end of the value chain, the team expects increased investments in inputs and possibly shifts in land purchases and labor allocation. In a pilot of this project with funding from the Agricultural Technology Adoption Initiative (ATAI) in 2019, 70 percent of cooperatives given access to Kumwe Harvest reported increases in purchases of fertilizer and seeds, and 30 percent reported renting additional land as a direct consequence of the announced 25 percent price subsidy.
The project also relates to gender as an important cross-cutting issue. According to the EICV4, 70 percent of female-headed households in Rwanda depend on agriculture as their primary source of livelihood. More than half cultivate a plot of less than 0.3 ha compared to 40 percent for men, and only 25 percent use fertilizer compared to 40 percent for men. Measuring impacts separately for men and women will provide important insights on the gender-related impacts of linking farmers groups to value chains.