Crisis Mode: How Agribusinesses in Emerging Markets Innovated to Respond to COVID-19
When the COVID-19 pandemic struck, many agribusinesses in emerging markets reacted quickly and strategically. Among them were Feed the Future Partnering for Innovation partners, for whom the upheaval of this period sparked new and creative ways of doing business.
Whether it involved testing a new approach or deciding to expand — not contract — operations, our partners’ experiences during the past year are testament to successfully finding opportunity in adversity.
So, how did they do it?
They Developed New Products
Facing with plummeting sales due to the pandemic, some companies took the leap to diversify their products, as both a way to remain competitive and as a chance to tap into new markets.
Partnering for Innovation partner ReelFruit was one such company. The largest dried fruits and nuts packaging and distribution business in Nigeria, most of its sales were generated from the hospitality and travel industries. As the economic impact of the pandemic caused nearly all of the company’s sales to dry up, it quickly became clear that a different approach would be needed to navigate the new business environment. That led ReelFruit and Partnering for Innovation to collaborate, starting in July 2020, in developing a new product line to generate sales from a new set of customers.
ReelFruit installed new processing equipment to launch a line of toasted coconut chips in chocolate, honey sesame, caramel, and unsweetened flavors. Consumer response was positive and sales of the new chips accounted for nearly 15 percent of the company’s total sales during the partnership period.
Investment in the machinery delivered other vital gains, too — ReelFruit’s production capacity increased to a level where it could source fruits and nuts in bulk from smallholder farmers (providing them with a reliable market in the process) and then process these products to sell in large quantities to new customers in the business-to-business market, such as a large baked-goods manufacturer and distributor. The company also revamped its marketing materials and developed a strategic plan to further support the rollout of the new chips.
Now — less than a year later — ReelFruit is in a stronger place. The company continues to branch out beyond direct consumer sales to the comparatively more shock-absorbent business-to-business sector. And about 33 metric tons of processed fruits and nuts have been sold, which includes the new flavored coconut chips as well as the company’s core line of five products.
By taking a bold step to diversify at a time of great uncertainty, ReelFruit, with the support of Partnering for Innovation, was able to reach new customers, recover from the initial impact of the pandemic, and strengthen its resilience in responding to shocks.
They Created Digital Solutions
In a time of social distancing, many business functions — from logistics and inventory management to trainings and marketing — went digital like never before.
COVID-19 disrupted supply chains and logistics around the world, making it difficult for businesses and consumers alike to buy, sell, and distribute the goods they needed. For companies like Casa do Agricultor (CdA), a Mozambican agricultural input and services supplier and current Partnering for Innovation partner, the pandemic upended its ability to import products directly from overseas, driving up costs and damaging its bottom line.
In response, CdA decided to refocus its strategy, shifting from sourcing from overseas suppliers to those based within the region, such as South Africa.
The company worked with Partnering for Innovation to invest in an enterprise resource planning (ERP) platform that would enable the company to manage its procurement, logistics, and inventory more efficiently as it engaged with its new regional suppliers.
In a matter of months, CdA was able to design and launch the new platform to achieve sales of 1.25 million metric tons of agro-inputs to thousands of smallholder farmers throughout Mozambique.
While ERP platforms offer many benefits, they do require an upfront investment from companies and are not a quick-fix solution. CdA has been successful, but it now needs to increase its shipping volumes to reach a critical break-even point that ensures the tool will be self-sustaining going forward. To achieve this, the company is increasing the number of local suppliers with which it works and expanding delivery of products and services to farmers.
They Connected Directly
Changing how a business delivers its products or services might seem like an easy task. The pandemic, however, revealed just how complex this can be when businesses need to quickly pivot to meet their customers where they are: at home.
Depending on the company, the direct delivery model can take a variety of forms. Yet, even when the product is relatively straightforward — such as yogurt or popsicles — adopting such a model can be challenging. What does it take then for a company to directly deliver a service, instead of a tangible product?
Prior to the pandemic, Partnering for Innovation partnered with two organizations — Oikocredit in Peru and Farm Africa/Root Capital in Uganda, Rwanda, and the Democratic Republic of the Congo (DRC) — to improve access to financing through price risk management (PRM) training. Coffee cooperatives who completed the curriculum and demonstrated improved PRM ability would be eligible to receive financing.
Just as both organizations were planning to launch their first in-person training workshops, lockdowns and restrictions spurred by the pandemic rendered this approach impossible. Unsure of when it would be possible to safely meet in person again, both organizations had to find a new way to directly and effectively deliver the specialized PRM information.
Oikocredit and Farm Africa responded quickly, each hiring expert consultants to adapt their respective PRM training curriculums into interactive e-learning platforms. This process took significant trial and error, as the organizations had to find the right balance of self-paced modules and live virtual classrooms to effectively convey the information.
In Peru, Oikocredit started by emphasizing self-paced modules, but soon realized that more live sessions were needed so participants could more easily ask questions and get support from instructors. At times, smart phone literacy and access to reliable networks proved challenging. Both organizations leveraged WhatsApp to complement the virtual learning — Oikocredit by sharing informational videos and Farm Africa by creating WhatsApp Groups in which participants could ask questions, share information, and support each other. Oikocredit also developed a phone-based app that participants used to complete the self-paced modules without an internet connection.
After investing time and effort, the organizations developed effective e-learning platforms to conduct PRM trainings. Oikocredit completed its basic, intermediate, and advanced PRM trainings with 11 coffee producer organizations in Peru. It also approved disbursement of $100,000 in new financing options to four smallholder producer organizations (SPOs) that demonstrated strong capacity for managing price volatility. In Rwanda, Uganda, and the DRC, Farm Africa completed its pre-harvest trainings with 97 representatives from 36 producer organizations — and the second round of training is currently ongoing.
Learn more about how Feed the Future Partnering for Innovation’s agribusinesses fared as a result of the COVID-19 pandemic in our recent partner survey spanning 18 countries and four sectors.
Feed the Future Partnering for Innovation is a US Agency for International Development (USAID) program, implemented by Fintrac Inc., that is changing the landscape for supporting agriculture in emerging markets by empowering the private sector to raise incomes and reduce hunger. Learn more about our partners.