All these actors shape the market system. Inclusive market systems ensure that everyone, including smallholder farmers, participate. This provides smallholder farmers with opportunities to lift themselves out of poverty.
All too often however, smallholder farmers are excluded from markets. As a consequence, they miss out on modern cultivation methods that would improve yields. They use inferior fertilisers or pesticides that damage their harvests, and they do not get a fair price for their hard work.
Katalyst changed this scenario by facilitating systemic change across various agriculture sectors. The project identified the weaknesses of existing market systems and analysed how and why they exclude smallholder farmers. In many cases, private companies did not recognise smallholder farmers as profitable customers, so they provided their products and services only to larger commercial farmers.
Katalyst worked together with the government and private sector to make these market systems more inclusive and achieve systemic change, which can only occur when a market system begins to include smallholder farmers, providing them with access to quality inputs, services and sales opportunities.
Katalyst together with Springfield Centre developed a practical framework to steer and assess systemic changes which became known as the AAER (Adopt-Adapt-Expand-Respond) framework. It is worth noting that Adaptation, Expansion and Response are not sequential phases following the adoption of an innovation but may occur – depending on the support the project provides – in different sequences and even simultaneously.
Katalyst began working in the marketing and distribution supporting functions in the seed market in 2008. One of the major causes of the low yields experienced by small and poor farmers of Bangladesh was the limited use of quality seeds. Katalyst designed an intervention to make quality seeds available to farmers in small, affordable ‘mini-packets’. Despite being seemingly simple, the intervention positively impacted the lives of hundreds of thousands of poor farmers in Bangladesh by ensuring higher yields and contributing to increased income.
Demo plots and seed distribution through Mobile seed vendors (MSVs)
Firstly, seed companies needed to overcome the negative perceptions of improved seed in poor communities by showing that they actually worked in increasing productivity. In order to do this, Katalyst identified seed companies with whom they would partner to set up demonstration plots in poor communities to show that the seeds worked.
Aware of the interactions between marketing (demo plots) and distribution functions, Katalyst recognised that seed distribution to remote regions was inadequate. Even if the awareness and knowledge were present, farmers wishing to buy improved seeds would have to walk for several kilometres in order to buy them.
Katalyst’s market analysis revealed that informal mobile seed vendors (MSVs) were being used to bridge this gap. These MSVs were trained and linked directly with seed companies. MSVs therefore acted furthermore as a provider of information, to develop more demonstration plots and took over the role of retailers.
Adopting and institutionalise the change through new ideas and continuous investments
Katalyst looked for evidence that change was institutionalised rather than taking actions to institutionalise change within partners.
Seed companies invested further in marketing methods, adding other marketing tools such as promotional materials and signboards to the demonstration plots to increase their effectiveness in attracting farmers. They even moved to crop specific promotion.
In terms of distribution, MSVs became an integral part of Katalyst’s partner’s business model. Intensified training modules and the introduction of pay and commission structures led to greater professionalism.
Introducing innovative marketing tools
Expanding activities to new remote areas interventions were strong. MSVs had grown significantly, the emulation of formalisation and the delivery of embedded services through MSVs meant that more and more of small farmers had have access to improved seeds and skills in how to use them.
Nevertheless, Katalyst recognised that there was still scope for penetrating further into poor communities. Further development of the marketing mechanism was necessary in order to target these farmers.
Therefore Katalyst developed new marketing methods. These were as simple as flipcharts and videos but were locally appropriate and new for the sector. However, these flipcharts contained vital information which had not previously been delivered but provided a vital incentive for farmers to invest in new seed technologies – cost benefit analysis of switching to new seed varieties.
An area had not, to date, seen any benefit from previous interventions due to its lowincome levels, geographical isolation and the climatic difficulties - the Chars – river islands with marginal land highly susceptible to flooding. Marketing interventions and the new mini-packs (see next section) were introduced through MSV in this region.
Innovative product development and information dissemination through packaging
Market analysis revealed that the price of seeds and capital requirements for farmers were so high as to make repeated purchase unfeasible for many at this time. It did not appear, that it was an information problem, or an issue caused by the informal rules around purchasing of inputs as many farmers were aware of the potential benefits. It was merely a question of affordability for what were very poor farmers.
Potential providers of seeds were not aware of the existence of a new market and had not developed appropriate products to explore it. These functions had failed to respond to the growth and potential of poor rural seed markets and product offering remained largely undifferentiated.
Aware of experience elsewhere in miniaturisation allowing access to products for low income consumers, Katalyst introduced a smaller, more affordable packet size of quality seeds to the market which was more appropriate to poor consumers. The redesign of seed packaging also contained detailed but accessible information on use and care in local languages.
In integrating this with the gains already made in marketing and distribution methods, Katalyst were able to increase the penetration of these higher yielding seed varieties into new markets.
The interventions in marketing and distribution put in place the foundations for outreach to be increased significantly, but the introduction of a new product, which addressed problems of product development and market information, built on this foundation to change the sector, and resulted in huge increases in access to seed for poor farmers.