In Malawi, increasing smallholder farmers' income through solar-powered processing technologies implemented in a profit-sharing service model.
15 million people in Malawi, 80% of the total population, depend on smallholder farming for their livelihood and have an average annual agricultural income of 75 Euros. Due to the unprofitability of their farming activities, most of these farmers remain critically poor and cannot sustain themselves and their families with farming. These farmers mostly do farming for subsistence and face various challenges, to switch to commercial farming.
First, most of the farmers grow the same crops during the rainy season and have the harvest at the same time - fetching low prices from the market due to over-supply. Second, farmers in remote areas struggle to get fresh produce to markets quickly and are forced to accept the low prices they are offered in the village, or struggle to find a buyer altogether. Furthermore, Malawi being a land-locked country limits the potential to export crops to international markets due to high shipping costs. Processing of crops can address both challenges mentioned above, as it can be stored for a longer time, can attract higher prices, and can be sold in more premium markets, including international export markets - as the value per volume is higher.
However, the low electrification rate, especially in villages, forms a barrier to post-processing options. Renewable energy-enabled processing technologies are a viable alternative, but the upfront costs required to install such technologies are prohibitively high for small farmers. In addition to the processing technologies, farmers lack the market intelligence to grow more profitable crops for processing, as well as lack the knowledge to operate the processing machines, and maintain the required quality standards as desired by the buyer.
Project: Grown with Solar
Country & region/location: Malawi, Lilongwe
Category: Energy & Water and Agriculture
The project promotes the productive use of solar energy in the post-harvest agriculture value chain in a circular, value-sharing business model. In the project, solar-powered drying, and processing machines are provided as a service to farmers, whereas the farmers can access these machines without upfront payment and share the profit from the sales of harvest, rather than pay a fixed price for the product or the service. In this way, the economic interests of the project promoter and the farmers are aligned and lead to a balanced value chain.
The processing technologies will be installed in a centralized location and will be provided as a service to farmers. The service will include a combination of market access and processing service, and farmers will pay for the service as a percentage of the revenue from sales of processed products. The project will also teach farmers good agricultural practices to meet the quality requirements of buyers and help them attain required certifications.
The processing of crops will increase the shelflife of crops, profitability of the concept, and in particular open possibilities for the export market. As Malawi is a landlocked country, it is most economically viable if crops are exported in a processed form, to reduce the volume, increase the value per shipping volume of products and minimize the perishability of the products to allow for longer transit times.
Additionally, the project also indirectly addresses the problem of malnutrition in children in Malawi, as one of the crops processed is groundnuts, which are used by a partner organization to make therapeutic food to treat malnutrition in children.
Expected results:
- 1.000 farmers with access to renewable energy processing technologies
- 1.000 farmers trained in good agricultural practices to meet the quality requirements of buyers and help them attain the required certifications
- 200% increase in income of farmers
- 800 tons of agricultural produce processed
- 120 tons of CO2 saved
