HOW A PAY-FOR-RESULTS PROGRAM PAVED THE WAY FOR SUSTAINABLE DAIRY PRODUCTION IN TANZANIA
One potential solution to achieving sustainability is a model that is gaining traction around the world — the Pay-for-Results model. One potential solution to achieving sustainability is a model that is gaining traction around the world — the Pay-for-Results model. One potential solution to achieving sustainability is a model that is gaining traction around the world — the Pay-for-Results model.
Tessa Martin
Test Author
This story was originally posted on the AgResults blog.
Banner photo: Loukia Chacha, commonly known as “Mama Ng’ombe” or “Mama Cattle” is a satisfied VetFarm customer. Here, she showcases a nutritious mix that she feeds her dairy cows.
Sustainability. It’s a word we hear so often in the development community – the concept that our impact will last. We know the consequences of failing to achieve sustainability are severe. When time-bound development programs draw to a close and money runs out, local communities no longer have an incentive to keep up the momentum. Some argue that without sustainability, repercussions from failed development or humanitarian aid initiatives can leave countries worse off than they were before aid.
One potential solution to achieving sustainability is a model that is gaining traction around the world — the Pay-for-Results model. In contrast to traditionally funded development programs, Pay-for-Results (PfR) prize competitions use payments to ‘pull’ the private sector to tackle market failures and reach underserved populations. These competitions spark innovation and research, helping businesses to see the potential of entering untapped markets.
The AgResults Tanzania Dairy Productivity Challenge Project, implemented by Land O’Lakes Venture37, used a PfR prize competition that ran from 2020-2024 to encourage private sector input suppliers (“competitors”) to sell productivity-increasing inputs to smallholder farmers. The competition also motivated fodder wholesalers and input suppliers to produce, store, and sell fodder. By providing these prizes, the project aimed to increase smallholder farmers’ dairy productivity, boost smallholder farmer incomes, and strengthen value chain relationships.
When the project ended in June 2024, it was clear that its PfR structure had laid the foundation for sustainability by 1) motivating businesses to improve operations, 2) spurring strategic investments of prize money, and 3) strengthening relationships with customers.
Cliffson Maro (left) and Emmanuel Swai (right) showcase their cow “chocolates,” a new product they developed to provide better animal nutrition to their clients.
Evolving Business Operations
One key sign of sustainability is the way that businesses that were involved in the competition have evolved their operations. Following each sales period, competitors received a prize for each bundle of high-quality inputs they delivered. This positioned them to grow over the course of the project, gradually reassessing their operations and improving their business practices. In particular, before the competition, these businesses typically lacked systems bookkeeping procedures that would have been used to verify their sales and determine prize eligibility.
To address this in the competition, AgResults partnered with an AgTech software company, CropIn, to customize their ICT recordkeeping tool. Competitors were required to use this digital tool to track their sales and advisory services to smallholder farmers to determine who qualifies for a prize. As they used the tool for the competition, these businesses discovered additional benefits, such as having the ability to better track staff activities, inventory, and sales records. This allowed them to see the geographic distribution of their customers, monitor demand for inputs by location and consolidate farmer contact information — all of which are critical for business operations. Dr. Emmanuel Swai and Dr. Cliffson Maro own VetFarm and sell parasite control products, mineral blocks, vaccines, and animal feed. They joined the AgResults competition in 2020. VetFarm’s newest supply shop is nestled in a bustling commercial strip of the Bunju-B neighborhood in Dar Es Salaam. Their shop is stocked floor to ceiling with bottles and packages labelled with images of chickens, pigs, and cows.
Like other competitors, they began using the ICT tool in 2020 to register all their customers, and like others, by the time the competition ended, they were starting to see promising signs of sustainable growth. Emmanuel said using the ICT tool has improved how VetFarm leverages data and client relationships.
“We have got all farmers’ information at our fingertips,” he said. “That builds the relationship because we always ask him or her how the animals are doing… We even know the cows by name! ‘How is Baby doing?’ ‘How is Lisa doing?’… This is the way we build trust…”
Another competitor, Dr. Baklina Mafwere, expressed similar satisfaction with these business changes: “Even if the project is going to end, still we have their names, we have their telephone numbers, we have their sites…”
Baklina explains that the system was a “catalyst” for his business, Baklina Ltd., to track customers more readily in the future. This has helped him expand to two additional districts, and as of June 2024, he had reached approximately 3,000 farmers — a huge jump from the 400 customers that he served in 2022.
Across the board, competitors have expressed satisfaction with CropIn’s ICT tool and how it has positioned them to improve operations and client relationships. Six of these businesses plan to continue engaging CropIn and use the ICT tool even after the competition.
Re-investing into the Business
A second key sign of sustainability is how the competition participants invested their prize money. VetFarm owners Emmanuel and Cliffson said they used theirs to invest in business improvements, including hiring 16 new employees, opening five new retail outlets, and developing new animal nutrition products to better support their customers. They have even started developing and cleverly marketing their own nutrition products, such as “cow chocolates,” a nutritious supplement for cows made from ingredients like sunflower seeds, corn meal, and molasses. They say the cows “go crazy for it!”
These investments in their workforce, products, and facilities are indicators that VetFarm will continue to grow and serve their customers in the long run – ultimately leading to better service and higher-quality supplies for the farmers they serve.
Evolving Business Operations
One key sign of sustainability is the way that businesses that were involved in the competition have evolved their operations. Following each sales period, competitors received a prize for each bundle of high-quality inputs they delivered. This positioned them to grow over the course of the project, gradually reassessing their operations and improving their business practices. In particular, before the competition, these businesses typically lacked systems bookkeeping procedures that would have been used to verify their sales and determine prize eligibility.
To address this in the competition, AgResults partnered with an AgTech software company, CropIn, to customize their ICT recordkeeping tool. Competitors were required to use this digital tool to track their sales and advisory services to smallholder farmers to determine who qualifies for a prize. As they used the tool for the competition, these businesses discovered additional benefits, such as having the ability to better track staff activities, inventory, and sales records. This allowed them to see the geographic distribution of their customers, monitor demand for inputs by location and consolidate farmer contact information — all of which are critical for business operations. Dr. Emmanuel Swai and Dr. Cliffson Maro own VetFarm and sell parasite control products, mineral blocks, vaccines, and animal feed. They joined the AgResults competition in 2020. VetFarm’s newest supply shop is nestled in a bustling commercial strip of the Bunju-B neighborhood in Dar Es Salaam. Their shop is stocked floor to ceiling with bottles and packages labelled with images of chickens, pigs, and cows.
Like other competitors, they began using the ICT tool in 2020 to register all their customers, and like others, by the time the competition ended, they were starting to see promising signs of sustainable growth. Emmanuel said using the ICT tool has improved how VetFarm leverages data and client relationships.
“We have got all farmers’ information at our fingertips,” he said. “That builds the relationship because we always ask him or her how the animals are doing… We even know the cows by name! ‘How is Baby doing?’ ‘How is Lisa doing?’… This is the way we build trust…”
Another competitor, Dr. Baklina Mafwere, expressed similar satisfaction with these business changes: “Even if the project is going to end, still we have their names, we have their telephone numbers, we have their sites…”
Baklina explains that the system was a “catalyst” for his business, Baklina Ltd., to track customers more readily in the future. This has helped him expand to two additional districts, and as of June 2024, he had reached approximately 3,000 farmers — a huge jump from the 400 customers that he served in 2022.
Across the board, competitors have expressed satisfaction with CropIn’s ICT tool and how it has positioned them to improve operations and client relationships. Six of these businesses plan to continue engaging CropIn and use the ICT tool even after the competition.
Re-investing into the Business
A second key sign of sustainability is how the competition participants invested their prize money. VetFarm owners Emmanuel and Cliffson said they used theirs to invest in business improvements, including hiring 16 new employees, opening five new retail outlets, and developing new animal nutrition products to better support their customers. They have even started developing and cleverly marketing their own nutrition products, such as “cow chocolates,” a nutritious supplement for cows made from ingredients like sunflower seeds, corn meal, and molasses. They say the cows “go crazy for it!”
These investments in their workforce, products, and facilities are indicators that VetFarm will continue to grow and serve their customers in the long run – ultimately leading to better service and higher-quality supplies for the farmers they serve.
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Farmer Robert Gervas feeds his cows while playing Swahili music for them. “They love music,” he says, with a smile.
Tessa Martin
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Test Author
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