Commercializing quality planting material: A Case of Sweetpotato in Eastern and Western Africa
Jan 17th, 2017 /
Sweetpotato is a major food crop in eastern and southern Africa. However, smallholders have not been able to achieve its potential yield due to lack of access to and use of quality seed. The majority rely on farmer-to-farmer exchange of vines of unknown quality free of charge. This is a key constraint to increasing productivity and crop income for smallholders in these two regions.
Farmers’ ability to access new varieties and improved seed, depends not only on farmer seed demand characteristics, but also on linkages to systems able to produce and regularly deliver early generation seed (EGS) on a sustainable basis. The public institutions who produce EGS, have the mandate to generate, promote improved varieties and also adopt a business orientation for EGS production. However, they face technical and institutional constraints and unreliable funding streams.
Since 2014, the International Potato Center (CIP) has been working in collaboration with the national sweetpotato programmes to strengthen their technical, institutional and financial capacities for pre-basic and basic sweetpotato seed production. A key tool in this process has been the preparation of business plans, which reflect the institutional and market context.
In the business plan, setting up appropriate and accurate prices for sweetpotato EGS is a key activity. An appropriate price helps public institutions to improve their business strategies and revenues, and also achieve the objective of sustainable sweetpotato pre-basic seed production and in particular to link revenue to the operation of the revolving fund. This revolving fund is a complementary mechanism to link revenues from the sale of seed to meet recurrent seed production costs. Therefore, identifying actual price is one of the key factors for operating the revolving fund.
In order to produce EGS, public institutions incur enormous production and marketing costs, which need to be recovered through setting up appropriate price. This can be done by estimating actual cost of production and marketing incurred at each stage of the seed value chain – starting from breeder seed to basic seed and improved quality seed material. In the current scenario, buyers of sweetpotato EGS felt that the price of EGS was too high and required revision. Therefore, it was necessary to estimate the price for sweetpotato EGS based on cost benefit analysis using costs data collected from real-time basis. The Cost Benefit Analysis (CBA) is used to measure the financial viability of each stage and determine the appropriate prices.
With the support of CIP, cost estimates are under progress and will be ending by January, 2017 for Kenya Plant Health Inspectorate Services (KEPHIS), Kenya and Crop Research Institute (CRI), Ghana. The preliminary results for KEPHIS indicate that after including both fixed and variable costs along with markup costs, the price of per sweetpotato tissue culture plantlet varies between 50 to 100 Kenyan Shillings (KSH). The price of hardening material varies between 15 to 40 KSH and price of pre-basic seed varies between 10-35 KSH. These prices also vary based on type of consumers (i.e., institutional and individual multipliers). Prices also vary depending on the time that orders are placed. If institutional consumers make orders in last minutes, then prices of sweetpotato pre-basic seed is 35 KSH per cutting. Individual multipliers pay 10 KSH for early order and 20 KSH for late orders. These prices include markup costs, profit margins, fixed and variable costs based on production targets, crop multiplication calendar and assumptions for the production targets. The prices are tentative and it will be revised once cost estimates are completed after January, 2017.