The Power of Private Sector Partnerships
Popoyán, a Guatemalan exporter and leading agro-input supplier, dedicated 10 years to developing biological products for integrated pest management, including beneficial insects and biological pesticides that offer alternatives to the use of harsh synthetics agrochemicals. Initially, Popoyán only had the capacity to produce and sell to a limited number of medium and large farmers. Thanks to a partnership with Feed the Future Partnering for Innovation, Popoyán received an investment that allowed them to scale their production through a state-of-the-art biocontrol laboratory, making this technology commercially available to Guatemalan smallholder farmers for the first time. This technology offers farmers many benefits:
- Biological products are effective and affordable. Because pests and diseases are becoming resistant to synthetic chemical pesticides, smallholders are desperate for an alternative that will recover and increase their yield from season to season. When they invest in biologicals, farmers experience better crop quality, higher yields, and increased incomes. Popoyán’s farmers report income increases that have moved them out of extreme poverty and poverty.
- Biological products have broader market reach. With consumer demand for products free of harmful residues, market opportunities for biological-treated products are increasing. Additionally, with international food safety standards requiring minimal residues, biologicals offer farmers the tools they need to comply with market requirements.
- Biological products offer an alternative to dangerous chemicals that cause health hazards to farmers and their families.
Despite the benefits of the product and Popoyán’s market reach and resources, the company faced challenges with product uptake. Guatemalan smallholders are simply accustomed to using broad-spectrum synthetic chemical pesticides to kill pests. Changing cultural practices is difficult because, from a farmers’ perspective, why change a practice that has been adequately supporting the livelihoods and food security of their families?
For Popoyán, integrating business strategies to educate smallholder farmers about the products and how to use them was too risky. Introducing the product to the smallholder market adds expenses that are a barrier to market entry and the company did not have the production capacity to meet demand. Expansion was cost-prohibitive.
For Feed the Future Partnering for Innovation, however, scaling up production, marketing, and sales of biological pest control products was a matter of sustainably increasing food security and resilience in Guatemala. If Popoyán could overcome the initial risk, the company had the potential to serve the smallholder farmer market in ways that benefit Guatemalan farmers over the long-term.
The two teamed up in 2015 and called the partnership MIPFuturo. The deal was for Partnering for Innovation to invest in de-risking business activities to support Popoyán to gain a foothold in smallholder markets. Partnering for Innovation also provided business advisory through its partnership management, such as piloting a cost-benefit analysis tool that ended up becoming a key business input. On Popoyán’s side, it agreed to target sales of biological products at $350,000 to over 6,000 farmers. This included repackaging the products and setting up a network of commissioned sales agents to efficiently sell the products. Popoyán also invested its own resources to build a state-of-the-art laboratory to manufacture enough product to meet the aggressive sales targets.
The Partnership Activities
They agreed to meet monthly to troubleshoot and overcome business challenges that, when solved, translated into smallholder farmer impact. By 2017, Popoyán launched its new biologicals production facility, Centro de Excelencia Microbiano (CENEM), giving it the capacity to produce and sell a variety of biological pest control products as part of an integrated pest management program. CENEM is now one of the most modern biocontrol production laboratories in Latin America and the largest in Guatemala. Popoyán also expanded the number of original target crops from five to thirteen, allowing farmers to purchase products for high-value export crops ranging from peas to coffee to cardamom. MIPFuturo included the development of robust marketing and distribution systems, resulting in 6,000 trained farmers and 400 demonstration plots – sales strategies that also help farmers learn better agriculture practices. Often, farmers do not initially trust products that they do not know. Therefore, reaching the 6,000 farmers also included identifying and mentoring 400 lead farmers, or community leaders, with a demonstrated interest in promoting biological pest control products. Popoyán selected lead farmers to host demo plots and from those, trained the best to be local distributors. The training included access to a line of credit and a margin for selling products on behalf of Popoyán. In addition to regional distributors and agrodealers, these lead farmers are a crucial part of Popoyán’s successful business strategy.
These are just a few of the activities the partners undertook to accelerate MIPFuturo and get biological products into the hands of smallholder farmers. Visit this link to follow all the activities!
MIPFuturo drove enough demand to successfully commercialize biological control products in a market accustomed to synthetic chemicals. This means that the de-risking funds and acceleration services provided by Partnering for Innovation translated into a viable business model. Popoyán can continue to expand the market now that it overcame the initial risks. The primary future challenge will be covering the significant upfront investment to introduce a new salesforce to cover the growing demand. To compensate for this challenge, Popoyán will continue identifying and training lead farmers, but will focus on using larger distributors and agrodealers to meet short-term sales goals. Popoyán will use this as an opportunity to test and evaluate the different distribution models to identify which strategies or combination of strategies will be most effective in the long-term.
- Behavioral change is possible, but requires a high-touch, multifaceted training and marketing effort. For new technologies, traditional practices and unfamiliarity can be significant barriers to uptake. Consequently, providing training and leveraging local community leaders as part of distribution and sales activities are effective ways of building demand.
- Develop a comprehensive and holistic business strategy. Key to the success was developing integrated research, extension, distribution, and marketing into a mutually beneficial strategy. Lead farmers acted as the nexus, using their unique position to teach farmers, build demand, and sell products. Popoyán used the investment in extension to inform its marketing.
- Testing new tools, such as cost-benefit analysis, can become go-to business inputs. For Popoyán, the introduction of the cost-benefit analysis tool helped it to show smallholder farmers the benefits of using a new product. It has since become an input into sales strategies among smallholder farmer customers.