Using Pay-for-Results Prizes to Spark Business-to-Business Collaboration in the Tanzanian Dairy Sector

January 17, 2022

tractor in a field

High-quality inputs can dramatically improve dairy productivity in Tanzania, but only if smallholder farmers can access them. Historically, input businesses have struggled to deliver high-quality inputs to farmers: High service delivery costs, poor distribution networks, and lack of familiarity with their customers in remote areas have hindered relationship building with farmers.

The impact has been felt across the sector. Because smallholder farmers have limited access to quality inputs, many do not understand their application or benefits. This has led to poor animal health, affecting productivity and livelihoods.

To spark more comprehensive and effective delivery and use delivery of inputs, AgResults developed the Tanzania Dairy Productivity Challenge Project, a four-year Pay-for-Results (PfR) prize competition that uses monetary prizes to incentivize private sector actors (“competitors”) to sell input bundles with advisory services to smallholder dairy farmers to increase their adoption of productivity-enhancing inputs. The project is being implemented in Tanzania’s coastal area, targeting Tanga, Pwani, Morogoro, and Dar es Salaam. Now in its second year, the competition uses an open-ended approach that encourages competitors to innovate to find different ways – including business-to-business collaboration (B2B) – to address market demand.

Using B2B collaboration to meet farmer demand first emerged during the Induction Meeting in May 2021, where businesses competitors accepted into the competition received information about the upcoming sales period. While networking, some realized there were opportunities to pool efforts and resources for mutual benefit. By combining their specific areas of expertise and operations, they could better meet demand, especially among rural consumers. Several competitors used this information to develop action plans that complemented their capabilities.

Twins and Kile: Collaborating to Provide Advisory Services in Morogoro

Most farmers in the Morogoro district are pastoralists, struggling to access inputs and advisory services. They often depend on government support, which can be unreliable due to budget limitations. Seeing a chance to combine their expertise in service delivery and input procurement, Twins Agrovet and Kile Agrovet decided to collaborate.

group of men watching how to administer vaccines

The competitors distributed roles: Twins would seek permits for mass vaccination campaigns, awareness creation, and record keeping of services delivered, while Kile would source inputs and arrange for extensionists. However, due to the nature of the individual companies’ operations, they later decided to provide services together, with each company coordinating their own extensionists and keeping sales receipts to avoid double counting.

Through this collaboration, the businesses reached 1,055 smallholder farmers (741 of which were pastoralists), increasing demand for parasite control and vaccinations. Kile is capitalizing on this growth and is setting up a satellite shop in Morogoro to provide additional inputs and advisory services to smallholder farmers in the area.

MiL-Animal Nutrition and Vetfarm: Expanding Geographies and Driving Demand

Rather than using hay and silage, most smallholder farmers in Dar es Salaam and Pwani rely on cut and carry practices to get forage for their animals. To switch to formally produced hay and silage, which is cheaper and can improve animal productivity, farmers must see their value – requiring tactical marketing. Although MiL-Animal Nutrition had researched silage’s effectiveness in improving animal productivity, they were new to the area and unsure how to engage farmers. They needed help from businesses with established farmer relationships. On the other hand, Vetfarm had no access to silage and could not meet the current demand of smallholder farmers in their existing customer base.

After learning about the needs and demands of farmers in the region, the competitors realized they could work together to enhance their business operations. MiL-Animal Nutrition connected Vetfarm with suppliers of silage from Arusha and Kilimanjaro to serve farmers in Dar es Salaam. Likewise, Vetfarm provided MiL-Animal Nutrition with their deep local experience of the Pwani Region to help them deliver products and services to smallholder farmers. Through this collaboration, MiL-Animal Nutrition added three outlets to deliver high-quality nutrition products to more rural communities. And Vetfarm filled gaps in MiL-Animal Nutrition’s services, offering vaccines, parasite control, and artificial insemination to smallholder farmers.

bags of fodder

These examples show how the contest has promoted B2B collaboration among input businesses in Tanzania to solve the collective problem of reaching rural farmers. As more businesses see the economic benefits of partnerships, they may continue teaming up in the future. In turn, these relationships help smallholder farmers by increasing their access to reliable services and higher-quality inputs, strengthening the sector and increasing productivity.

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