Using experimentation to balance short-term agricultural gains with long-term value creation

Climate change and unstable agricultural markets in developing countries are forcing agricultural actors to rely on constant experimentation.

CHARLES DHEWA

Historical knowledge is no longer enough for decision-making, as contexts are always shifting.

The level of complexity is such that farmers, traders and financial institutions cannot fully depend on individual meticulous planning.

There are so many copycats waiting on their wings to enter the market and disrupt cash flows. While planning remains very important, it is the consolidation of all individual plans that matters most.

For instance, long-term national policy planning misses the point, if not informed by short and medium-term plans of actors such as farmers.

The main challenge in most developing countries is that agricultural value chain actors, such as farmers, processors, financiers and development partners, do not share plans and targets.

As long as plans are locked in silos, it is impossible to achieve national policy goals.

Farmers tend to depend on short-term plans, mostly seasonal as opposed to a framework laying out three to four-year plans.

The majority of seasonal plans are designed to meet household needs first, with the surplus going to the market.

Since information about surplus is barely consolidated, markets are kept guessing and, therefore, unable to plan.

Dangers and drivers of short-term plans

While short-term plans are good at meeting emergent needs like food security, there is no room for learning from short-term plans.

It is insufficient to learn from short-term initiatives that take three to six months.

In addition, short-term initiatives fuel premature conclusions, misleading people to believe that there has been success, leading to replication of ineffective short-term outcomes.

However, what is driving short-term planning are factors beyond farmers’ control like climate change and lack of a guaranteed market.

In a changing climate, farmers cannot plan for five years because things can quickly change.

On the other hand, without a guaranteed market, good farmers end up minimising their surplus to 10 bags of maize, when they could actually produce 100 bags if the market is available.

The absence of reliable markets compels farmers to make short-term decisions.

In addition, short-term planning discourages consultation between value chain actors, leading to a mismatch between market needs and supplies.

The situation is the same with short-term loans. There is very little to learn from two to six months loan cycles, compared to two to five year or season cycles.

Focusing on short-term and medium-term plans is mostly recycling of the same plans.

It is difficult to plan your budget or predict your growth patterns without a strong evidence base in such a scenario.

That is why the relationship between banks and farmers end up getting sour because the market suddenly becomes flooded with unexpected commodities.

It means a farmer or trader’s three-year cash flow is suddenly disrupted as more farmers start getting into the same commodities. This reinforces a tendency to rely on short-term planning.

The power of experimentation in building adaptation capacity

The fast-moving and competitive environment requires value chain actors, who can generate and test hundreds of strategic options.

Many farmers and traders are already progressing through trial and error, which is certainly experimentation, characterised by cycling through many ideas quickly, testing commodity assumptions, getting feedback and building on what is.

They are embracing experimentation as a strategy for maximising their ratio of insights over time and money spent.

While experimentation makes sense to farmers and traders, it is not yet natural behaviour for other value chain actors such as formal buyers and financial institutions.

These prefer the comfort zone of business as usual. Running an experiment is not their first instinct.

Any new opportunity is considered green field, which means it is an unexplored territory and high risk.

While a few formal institutions try to gather data, such data is isolated from the whole agricultural ecosystem and fails to generate sustainable business models.

The data does no enable agri-businesses to discern the potential impact of innovative agricultural ideas.

On the other hand, experimentation in farming communities and informal markets has the virtue of being both evidence-based and emergent.

A well-designed value chain experiment quickly tests the merits of available ideas, generates new and relevant insight into the deep needs and behaviours of farmers, consumers and other actors.

It also opens up new avenues that may not be apparent when information is continuously recycled.

Keeping pace with change

African value chain actors such as informal traders are keeping pace with the current relentless change through experimentation and quick learning.

They are always training themselves to tune into deep customer needs and work hard to fulfil those needs.

It is through experimentation that high quality information and knowledge is generated.

The difference between a tangible commodity like a tomato and knowledge is that you can produce soup from a poor quality tomato and be satisfied with the poor quality of the soup, but poor quality information and knowledge will lead to poor decisions, which will cause the business to collapse.

In most cases, smallholder farmers need high quality information and knowledge in order to compete in the fast-moving market. There is no gain in receiving the same information and knowledge twice.

It is becoming very important to equip and empower every value chain actor to test and advance new ideas based on deep customer insight and real-world feedback.

Most African organisations prefer to learn from mistakes made by organisations in a different context like the West.

That is why they are failing to produce extraordinary and original work.

Getting fluent in failure requires a certain amount of grit and perseverance, which our institutions do not want to experience.

Unfortunately, the organisational life of all financial institutions is built around avoiding failure and stamping out risk.

And, unfortunately again, playing it safe, refusing to venture down blind alleys and sticking to what they know, locks them in the same models such as contract farming.

How can experimentation be taken to the next level?

Policy makers and formal institutions have to stop defending models that are no longer working.

Rather than continue emphasising indiscriminate formalisation, they should fully understand local business dynamics.

What is the point of a CR6 when every trader ends up doing the same thing or can swiftly change to other commodities? It’s not about location but swift changes in business.

You may know where a trader does business but how does that help a trader to grow if (s)he decides to change from specialising in fruits to furniture or community tourism?

All value chain actors in agriculture and rural development should be empowered to build their capacity for experimentation.

While some farmers and traders are always experimenting, those lessons are not being codified for everyone to learn.

The last time African graduates conducted experiments is at secondary school and few at tertiary education level.
Community experimentation is taken for granted, although it may not require hi-tech laboratories.

In fact most fields, pastures, local markets and water sources constitute laboratories which could be used to advance community knowledge without waiting for external knowledge.

There is no reason why African graduates should not be as open and as curious as possible for as long as possible — to the evidence, feedback and signals coming into their communities.

At the moment, most people in African countries go through primary school, secondary school and tertiary education without making a career decision.

That is why we end up with graduates looking for any job, for example, engineers teaching at primary school.

Besides constituting short-term planning, this education system and mindset translates into lost years in terms of contributing to the economy.

By the time graduates find their true calling or career, they are already about to retire.

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