Solar-power, energy efficiency and business support give rice producers and processors the competitive edge in Benin
Although Benin is blessed with abundant sunshine, vast inland surface water and fertile soil, the country nevertheless imports more than half of the rice required to feed its population. To increase domestic production and improve the competitiveness of the rice sector, Energy 4 Impact has implemented a two-year programme under the Water and Energy 4 Food initiative (WE4F), funded by GIZ, the German agency for international cooperation.
The country’s heavy reliance on imported food makes Benin particularly vulnerable to international turmoil and climate shocks. Overcoming shortfalls in domestic production has become even more pressing since the outbreak of the war in Ukraine, which led to squeezed supply and spiralling prices. The use of time- and labour-intensive methods of cultivation, lack of irrigation and inefficiencies of rice processing mean that the domestic supply of rice is insufficient, of lower quality and uncompetitively priced compared to the imported varieties. Local rice producers have also had to deal with increasingly longer periods of drought which caused drastic drops in yields.
The programme is centred on the Ouémé valley and northern region of the Alibori, where Energy 4 Impact took a systematic approach to overcoming the barriers that hamper the sector, and to enabling a higher volume of better, more profitable product. It sought to demonstrate that building on the existing synergies and creating new collaborations between key stakeholders in the rice value chain (producers, processors, financial and technology providers, and offtakers) are effective ways to innovate the sector and pave the way for further expansion and scale-up. It also included introducing renewable energy and energy efficiencies measures to optimise rice production and processing systems.
As the programme drew to a close in July 2022, the results spoke for themselves. Access to solar irrigation accompanied by business support, has helped participating farmers double their average yields from 2.5 to 5 tonnes per season. Energy 4 Impact’s advice on efficiency improvements to processing systems, allowed processors to cut their energy costs by 39% on average, improving the profitability of their businesses.
Solar irrigation boosts productivity for small-scale producers
Rice farmer Joel Ogoumbeyi had been cultivating his one-hectare field in Adja-Ouèrè for nine years without adequate irrigation. He says,
Joel’s former predicament is far from unusual. Less than 1% of cultivated land in Benin is equipped for irrigation, so most farmers struggle with getting enough water to their crops in the absence of rain. However, other shortfalls typically quash the productivity of rice producers in Benin too - patchy access to improved seeds and suitable inputs like fertilisers, inadequate knowledge of modern agronomic techniques and the limited capacity of local farmers organisations to help their small producers aggregate produce and reach more profitable markets.
Joel first became aware of more suitable and cost-effective irrigation alternatives when Energy 4 Impact conducted an awareness-raising campaign on solar irrigation in his area in December 2020. He says:
Joel decided to enrol into the WE4F programme and agreed to turn his paddy field into a demonstration site, fitted with a complementary solar-powered irrigation system to allow other local rice farmers to see the benefits for themselves.
Through the programme Joel also received training on agronomy, horticulture, sustainable production, and efficient post-harvest management – a set of skills that would help make his farming more effective and resilient in the long-term. The improvement in Joel’s yields has already had a tangible impact on his farm and family. Joel says, “Almost tripling my yield led to a huge increase in my income, which allowed me to afford better food and clothing for my family as well as pay for my children’s school fees.”
Energy 4 Impact helped strengthen the ties between the local farmers organisation led by Joel and their regional network of private social economic enterprises, with a contract farming approach called ESOP (Entreprise de Services et Organisations de Producteurs). The Adja-Ouèrè ESOP not only offers credit for seeds, fertiliser, and herbicides, it also serves as an “offtaker” that offers good prices for the unprocessed paddy rice they need to turn into ready-to-sell white rice.
Joel is one of eight farmers who ‘lent’ their farms to become demonstration sites for solar irrigation and best agronomic practices for the duration of the pilot. These demo sites enabled 1,000 farmers to trial solar powered irrigation technologies, and receive training on improving crop production, marketing their products, business development and negotiating with equipment suppliers, financial institutions (FIs) and offtakers. This led to 400 local farmers expressing an interest in acquiring the technology and receiving further technical training on handling and troubleshooting of the pumps.
Energy 4 Impact also brokered an agreement with loan provider Agri-Finance and equipment supplier BM Solutions to bring the solar pumps into reach for low-income farmers through pay-as-you-go plans. Some of the 400 local farmers are currently taking advantage of this, and hopefully many more will benefit from this new financing option in the near future.
Matar Sylla, Benin’s Country Manager, Energy 4 Impact says:
Efficiency measures produce savings for processors
Energy 4 Impact sought to address the high energy costs of rice processing units by adopting energy efficiency measures to optimise the operation of machines, lower the cost of rice processing, and improve product quality and overall business profitability. It also carried out an energy audit of three semi-industrial units managed by the Adja-Ouèrè, Ouaké and Kandi ESOPS and subsequently trained staff on energy efficiency measures such as replacing old motors with more efficient ones, keeping up preventative maintenance of equipment to ensure it runs efficiently, simplifying production processes for a more efficient work plan, and adopting more economic systems for lighting, cooling and processing.
Dominique Tovizoukou, Manager of the Adja-Ouèrè ESOP, attests to the impact of the efficiency measures.
“Opting to increase the energy efficiency of the rice production process is a low-cost, high impact intervention that most semi-industrial processors in Benin can afford to reduce their operating costs,” says Matar Sylla, Benin’s Country Manager, Energy 4 Impact. “We also looked at the possibility of introducing solar technologies for paddy transformation (winnowing, milling, sizing and separating) but the market for these technologies is not yet mature in Benin.”
Using the three semi-industrial post-harvest units as demonstration sites, Energy 4 Impact has now delivered training to a further ten companies on improving energy efficiency as a means of increasing yield and profitability and improving the sustainability of the rice sector.
Building a more viable rice sector
The Energy 4 Impact team built on the existing synergies between various players of the rice sector (farmers, processors, solar equipment suppliers, financial institutions and others) to make solar irrigation more widely available and affordable to low-income, smallholder rice farmers, as well as opening up opportunities for innovation and modernisation.
By surveying the technological needs of rice producers and developing a deeper understanding of the needs of smallholder farmers and the context in which they operate, the Energy 4 Impact team has been able to provide more precise data to solar system suppliers, in order to help them improve their product offerings.
While farms in the Ouémé Valley tend to be best served by surface pumps, farmers in the northern region require more powerful pumps to tap into the water table. Matching the size of pump to acreage of land is key to efficient and cost-effective irrigation. Suppliers have been better able to gain a more complete understanding of how local growing conditions determine the type and size of their equipment, and Energy 4 Impact has helped them enlarge their market by identifying the locations where farmers can afford their products with appropriate financing in place.
A new affordable financial model for rice producers
After gaining an understanding of the constraints experienced by producers and ESOPs, Energy 4 Impact embarked on negotiations with local financial institutions to develop and test a new financial mechanism that makes productive use of energy products more affordable for rice producers. The proposed mechanism follows a cluster model in which risk is shared amongst several actors who have a common interest in working together.
For this to work, an aggregator/offtaker is needed. In this case, the ESOPs, (the companies that transform paddy rice into ready-to-use white rice) already had a model for supporting rice producers by providing them with technical support, making seeds available to them in the form of credit, and providing guarantees so they can raise small loans from financial institutions.
Energy 4 Impact built on what already existed, to propose a financing model that makes the ESOPs responsible as aggregators/offtakers, serving as moral guarantors for the financial institution to enable the rice farmers to obtain credit that will be used to acquire and install solar pumps.
The cost of the equipment and the risk is therefore shared across the different parties (the ESOP, the rice producers' cooperatives, the solar irrigation technology supplier and the financial institution), as each party has something to gain from this arrangement:
- The local farmers organisations mobilise 10-20% of the investment required as a one-off payment and also request a loan from the financial institution to cover 50-60% of the cost of the equipment (it is estimated that repayment would typically take around three years after six harvests).
- The rice processor contributes 10% of the cost of the equipment or commits to buy the equivalent in rice from the farmer and acts as guarantor on their loans from financial institution. By acting as a business partner to producers, processors are better able to secure a steady supply of harvested rice to process and sell at profit.
- The equipment supplier gives 20% of the value of the equipment in credit - the rest will be paid in instalments over an agreed period of time.
This approach has been received positively by the relevant stakeholders and it is hoped this model will entrench business links between them once implemented and foster a virtuous cycle of interaction that benefits them all.
Promoting reciprocal commercial relationships
Energy 4 Impact also promoted reciprocal commercial relationships between agricultural input suppliers (seeds, fertilisers, tools and equipment), ESOPs, solar equipment suppliers and the groups of farmers participating at demonstration sites. As a result, farmers from the Banikoara and Tanguiéta sites have become better connected to the ESOP network in addition to those from Adja-Ouèrè.
Producers will be able to improve yields after action was taken to make fertiliser more widely available. Sales points for inputs from Benin Fertilisers have been set up at the Kandi and Natitingou sites. The groups from Sonsoro and Kandi have also purchased leaf fertiliser from Benin Fertilisers, and distribution of organic fertilisers manufactured by AgroBio at their plant in Kandi will be extended to producers further north.
Moreover, PUE Precis Services, an equipment supplier, has also sold surface solar pumps to producers in Banikoara and Batran.
Country manager Matar Sylla is proud that the programme has laid the foundations for the establishment of a sustainable rice value chain in Benin - from supply to market demand. He says,