An innovative way to encourage agricultural development

Canadian Foodgrains Bank is always looking for creative ways to fight hunger. That’s why the organization welcomes a new idea announced by the G20 at its recent meeting in Mexico that offers rewards for companies that can solve certain food-related problems.

Called AgResults, the new program offers incentives to the private sector to pursue new and innovative solutions to problems facing smallholder farmers in the developing world.

One of those problems is developing cheap on-farm grain storage that will prevent spoilage from insects, rodents and mould — smallholder farmers in developing countries often suffer high post-harvest losses to these pests.

To avoid the loss, many farmers sell their grain at harvest time, when prices are low. They then have to buy back grain for their own consumption later in the year when prices are higher. With good on-farm storage, farmers could save their own grain for family consumption, or make more money by selling it later in the year.

Under the AgResults program, companies are being encouraged to develop good storage technology for maize (corn) in Kenya, then sell this technology to smallholder farmers. The winning companies will be determined by the farmers themselves, and the G20 will pay rewards to companies based on how much market share they have captured.

AgResults is an example of what is called a “market-pull mechanism.” That is, rather than paying up front to develop a product, the G20 rewards those companies that invest their own money to produce the desired result. Similar mechanisms have been used to promote wider distribution of human vaccines, but this is the first use to solve agricultural problems.

Canada has committed $40 million of its foreign aid budget to AgResults, and it is joined by several other G20 countries in supporting the program.

In addition to on-farm storage, AgResults is also offering rewards to solve two marketing challenges. In Nigeria, it will reward grain buyers that are able to develop a market for a biocontrol product that prevents the growth of toxins on maize. In Zambia, the program aims to encourage wider use of maize varieties that are high in vitamin A, and it will reward milling companies that can build and sustain that market.

The Canadian Foodgrains Bank welcomes this innovative approach to fighting hunger — it’s a good way to harness the innovation of African companies. The new program will give a boost to entrepreneurs by providing some extra incentive for them to innovate.

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