The Let’s Work Partnership is funding an aggregator program in Mozambique to improve productivity and earnings of smallholder farmers. The pilot program aims to connect smallholders through “aggregation systems” — systems that link farmers into profitable markets as “out-growers”, through contracts with buyers that help them access capital and technology. These will help ensure farmers meet standards and create opportunities for farming communities to enter domestic and international markets.
Agriculture is Mozambique’s second largest sector, employing 78 percent of the workforce. Although there have been new investments in some crops, productivity growth has been slow due to the continued prevalence of atomized smallholder farmers who grow low-value crops often on a subsistence basis.
Eighty five percent of rural households are smallholders, who have advanced slowly with the adoption of new products and technologies. Increasing smallholder productivity and earnings is a key challenge; and finding ways to link the farmers to value chains which can raise their incomes is an important strategy for achieving more inclusive growth.
Aggregator models have attracted attention from development agencies (including Lets Work partners such as the World Bank Group and DfID) who see them as a promising strategy for advancing agricultural transformation in Sub-Saharan Africa.
However, little research has been done to assess their impact on job creation or to determine the optimal design of government programs to support their development. One important challenge is to ensure that the benefits end up in the hands of the smallholders, not just the intermediary companies. Another issue is to ensure programs are sustainable and will not need continued subsidy to be viable. Another dimension of sustainability is helping smallholders learn how to change their production strategies in response to market signals.
Following an international bidding process, Let’s Work has contracted a high-level consultant team to implement the pilot, led by the Mozambican firm OzMosis and supported by leading evaluation experts from Georgetown University. The pilot will support the expansion of around eight different aggregators. The goal is to incorporate around 5,000 new “out-growers” in total, across a variety of regions and crops.
Aggregators will receive a small per-capita subsidy to help cover the cost of the expansion. The participating firms will be chosen over the next 6 months. The study team will monitor their costs and revenues as they roll out the program and will carry out a rigorous evaluation of the impact on farmers’ incomes, including a cost-benefit analysis that shows how the risks and returns are distributed. The study will be carried out over a three year period, from January 2017 to June 2019.