Memoire Online - Agribusiness management skills for agricultural smallholders in Africa

Table 9 Calculation of the Coefficient of Variation (CV) for the improved Scenario 32

In the Algerian Sahara, the production of early vegetable crops has been made possible by climatic conditions, sufficient land and groundwater resources, a labor force adapted to these hard-climatic conditions, and the increasing national demand (Dubost and Larbi 1998).

Alongside the growing date palm and figs in the region Biskra, the region El Oued has become the leading potato producer in the country and has produced 1.1 million tons of potatoes in 2014, representing 35% of the national production. Potato is cultivated mainly by small farmers in circular plots. It is the main source of income for these investors and their families. Some farmers practice this production in monoculture (growing and off season), others have led to crop rotation (potato, onion and Peanut). If the famers are producing in monoculture, yields are low and face rapid drops, which can reach 50%. (Oueld Rebai et al 2017).

Yield is not the only problem, smallholders face some issues such as the lack of agronomic skills, market knowledge and efficient use of modern technologies. Because of these inconvenience as well as the fluctuations in the market prices and climate change, smallholders cannot boost their income and sometimes, they make losses.

To address the lack of agronomic skills, organizations and companies of German Development Cooperation started a program in 2010 in Africa and have implemented Agribusiness training approaches at a large scale. (GIZ 2010)

Accordingly, farmers will be equipped with knowledge about entrepreneurial skills to optimize their production and maximize their incomes. Additionally, they will be able to manage their budget for household expenditures, education of their children and for the improvement of their Enterprises. Those skills will have a beneficial impact not only at the farm level, but also on the scale of food security, economic growth and employment.

With proper training and more support, smallholders show great potential for development with better allocation of production factors and investment decisions. For this reason, it turns out to be interesting to study the effects of these agribusiness management skills from the perspective of smallholders. To this study pursues several lines of

Analysis. First, it identifies the agribusiness management skills and the independencies between them. Second, it compares the Income-current situation of potato producers in Algeria and the progress after the participation in the Farmer Business School (FBS) training in terms of these performance criteria productivity, profitability, stability, diversification and sustainability.

For the next study (master thesis), the focus will be on several cases in different countries analyzing the impacts of Agribusiness management skills for agricultural smallholders in Africa from two perspectives. The first perspective is Broad-based Human Capacity Development (HCD) for agricultural smallholders and the role of implementing partners/ partner institutions of German Development Cooperation. The second perspective is about the contributions to alleviate poverty, food security and employment generation. Also, more research questions could be tackled and elaborated including micro and macro-economic analysis, effect of the horizontal-vertical integration and the advantages of producer's organizations.

Within the scope of this management internship, the intern received insight into the Agribusiness Facility for Africa (ABF), a programmer implemented in 2020 by Deutsche Gesellschaft für Internationale Zusammenarbeit GIZ, GmbH. ABF is commissioned by the German Federal Ministry for Economic Cooperation and Development (BMZ). The aim of the management task is to assess agribusiness management capacities and skills considered important for agricultural smallholders, economic growth and employment from Agriculture in Algeria. The following part will be devoted to the questions related to the theme and then develop the approach on how to answer them.

The present study will focus on the importance of agribusiness management capacities for African agricultural smallholders for their incomes, food security, economic growth and employment.

3.1 Farmer Business School (FBS)

Farmer Business School (FBS) is an approach developed by GIZ with financial support from the Bill and Melinda Gates Foundation and the World Cocoa Foundation to promote entrepreneurship and business skills among smallholder farmers.

In 2010, the Sustainable cocoa business (SCB) project, GIZ and other public and private partners developed the FBS approach which was adapted to other food and export products. In fact, 900,000 smallholders have benefited from the FBS training in 16 different African countries. Currently, a growing number of GIZ projects and partners are interested in adapting this perspective to their needs which makes FBS an exceptional asset for GIZ.

Based on empirical learning, the FBS aims to make farmers be entrepreneurs and investors. It's a necessity in order not only to adopt new techniques, exploit trade's opportunities and agricultural investments but also, to ensure better productivity and quality, diversified income and improved nutrition.

FBS's objective is to professionalize male and female producers' agricultural business and the input services `management. Nutrition is one of the FBS approach's objectives which aims to ensure the productive capacity of adults, the improvements of production efficiencies, product quality and the creation of professional organizations of producers for the sake of facilitating access to inputs, services and markets.

Considering the example of Potato, the objectives are illustrated in the following figure:

FBS is based on one main product and two other complementary products with good market opportunities having a role in the production, the improvement of nutrition quality and soil fertility. The promotion of the main product meets the expectations of local markets, import substitution and international markets.

This structure of FBS can be easily applied to other production systems if technical and economic data on production processes are available. Thanks to the FBS improved knowledge, skills and attitudes, smallholders are able to increase their income, request financial services and improve technical knowledge as well as the knowledge of producer organizations facilitates the promotion of value chains by promoting the

competitiveness of small farms and other actors within it. FBS is always linked to other services such as extension, finance, product diversification, market access and producer organization. (Kling 2017)

FBS targets three learning dimensions: entrepreneurs' business knowledge, skills and attitude to run agriculture as a business. (Matthess 2011).

Regarding the impacts of FBS in Africa 480,000 cocoa producers in the Ivory Coast, Ghana, Cameroon, Nigeria and Togo participated in FBS trainings within the SSAB framework. Since 2012, 20 other development programs, their partners, national organizations such as the Ethiopia Agricultural Transformation Agency and 7 companies have adapted FBS with support from SSAB for 34 value chains other than cocoa. In total, more than 1,400,000 farmers (33% women) in 22 African countries have completed the FBS training.

Concerning the introduction and adaptation of FBS training we can cite the following steps starting with the preparation phase and the partnership agreements in case of the approach's introduction. Next, the adaptation related to economic analysis, training material and pilot training with producers. Afterwards, the development capacity stage which concerns training, learning and validation of trainers `performance. Finally, the stage of real-scale delivery and quality management. (Matthess 2017)

The current or traditional agricultural production is characterized by a lack of organization, knowledge and financial resources which make it inefficient.

For instance, let's take Algeria's case as a current scenario since it faces many challenging problems in the agricultural sector. When we talk about Algeria, we refer directly to the desert. The desertification, the non-use of the desert in the agricultural production, low fertility due to soil erosion, sand storms and the overexploitation of water tables touch on the reproductive capacity.

Additionally, the water tables' lowering, the recourse to fossil water, the salinity and the pollution have decreased the volume of water available which impact disapprovingly the water's quality. Added to this, the mobilizable potential of soil and water have reached a critical threshold.

Hence, Algeria, is among the countries that suffer from a high risk of climate change. Consequently, climate change will lately exacerbate the anthropogenic factors of degradation originating in the decline in soil productivity.

3.3 Improved Production (Improved Scenario)

In order to improve the hard situation confronted in the agriculture field, farmers in Algeria have resorted to many innovative tools and practices to rescue its loss in reproductive capacity. For example, the adoption of technical innovations in the irrigation system like the mini-pivot which have considerably affected the production system

In fact, the government has supported smallholders to develop new irrigated perimeters and has created new farms particularly in its south. Added to this, it has attempted to remove the main limiting factor: water deficit modernization in agriculture which has a tremendous impact on the expansion of arable land. Therefore, with increasing number of boreholes and the mobilization of new investments for the realization of hydraulic infrastructures, new techniques like, mobile drip irrigation system(mini-pivot), have been implemented and permit an optimal and better exploitation of water resources.

Further, in order to sell the crops at a good price, smallholders have thought about storing them and selling them when prices rise. However, Algeria is characterized by a semi-arid climate and high- temperatures make the situation harder. Therefore it's

necessary for it to find innovative solutions to store the products for long periods of time.

Accordingly, the increase in production will occur and it is necessary to find other innovative marketing channels and even improve the quality of the agricultural product and move towards export.

Moreover, the current study is going to highlight other improved techniques such as an example, good agricultural practices (GAP), which include accurate farm measurement, the use of crop calendars, the diversification of production and, the adoption of basic cultivation techniques to improves water management and increase land productivity. In addition, the access to other financial services such as savings, loan insurance and other facilities are the key techniques for more improved farming production.

3.4 Material

In this present study, the case of Algeria was chosen following the contributions during the internship period in the preparation of the training FBS Potato for Algeria.

Algeria is the largest country in Africa and the most populated in the Maghreb region. Gross domestic product is rising moderately at 1.4 percent per year. Its development (like in the entire economy) depends essentially on the production and exportation of oil and natural gas. Nearly half of Algeria's 40 million people are under the age of 25. The major economic policy challenge is to create sufficient jobs for the young population, which continues to grow rapidly. The country's natural resources are under increasing pressure from population growth, economic development and climate change.

The project is taking place in the commune of El Oued, also called Oued Souf. It is located in the northeastern Algerian Sahara and south of Chott Melrhir, which is 79 km east-northeast of Touggourt, 212 km northeast of Ouargla and 512 km southeast of Algeria.

Regarding agriculture, potato has become one of the main crops for domestic consumption. Thus, Algeria is the greatest potato producer in the Arab world and the second in Africa, after South Africa. Algerians annually consume the equivalent of three times the world average of 31 kilograms. Algeria produces 47 million quintals annually, with local demand being met by local producers. However, the disorganization that characterizes this sector causes a surplus at certain times of the year. The large quantities that the market cannot absorb tend to drive prices down.

The Municipality of El Oued is ranked first in terms of potato production, with 13 million quintals and a planted area of 40,000 hectares, representing 30% of national production. The importance of the commune El Oued in the potatoes production makes it a strategic product for the national economy, the private partners and the expectations of the local market. The action zone of the FBS potato project took place in this area.

For the following study a database established by the consultants of the FBS potato project will be used. It includes all economic calculations for the main product potato and the two complementary products peanut and onion. In order to answer the research question, economic calculations will be used for analysis and discussion.

3.5 Methodological Approach

Prior to the analysis, the consultants prepared the collected Data in Excel, covering the economic calculations for each of the agricultural products in both the current and improved cases.

For the analysis methods, Ishikawa Cause and Effect Diagram and a Comparative analysis, are going to be used in order to highlight the efficiency of the given solutions.

To begin with, the Ishikawa Cause and Effect Diagram is a problem-solving tool for the farm business. This tool in the form of fish-shaped diagram (figure 5), suitable for monitoring the production techniques, farm management and economic skills. To construct this diagram, there are 8 main sections to identify the risks that could cause a problem at the farm level:

For the comparative analysis, 5 performance criteria relevant for analysis and planning at the farm level were assessed. These 5 criteria are: Productivity, Profitability, Stability, Diversity and Sustainability.

First of all, Productivity is the parameter of suitability of the activity in an agricultural environment and an indicator of resource which use efficiency and performance management. This was interpreted showing the effect of adopting GAP on crop yields and measure the increase on Production.

Second, concerning Profitability, tables deducting the change of Input Quantity, prices and Gross Margin in both cases have been established. These Tables show the impact over time of improvement management and production techniques on profit.

Thus, the choice of the main product of the training was explained and was determined if this product was the one with the highest profit. Furthermore, the return per euro invested, the unit cost, labor productivity and capital productivity have been calculated and interpreted.

Third, stability, which is the absence of fluctuations in product cost (labor unit and Input cost), yield and product price from one year to another. Stability of both scenarios is evaluated by measuring the coefficient of variation.

Forth, diversification, and to evaluate this parameter (diversity), the Simpson's Diversity index (DI) is an appropriate method to express the level of household income diversity. Finally, the depreciation of the Mini-pivot, the Farm Net Actual Returns and the Farm Net Sustainable Returns were Calculated. Then, the Household Revenue per day and per member is determined, in order to evaluate the place of smallholder farmers' incomes in relation to the poverty line.

4.1 Cause and effect analysis

ICHIKAWA, or 8M, is a causal diagram permitting to show the potential causes of a specific effect. This is the ishikawa diagram figure 8 applied in our case of study:

Man: The unavailability of trained or experienced labors during harvesting time can delay the cultivation activities, which will directly affect the crop yield. So, the trained workforce is of high importance to ensure a good application of the GAPs and then a good performance.

Machine: it's paramount to choose the right planting and harvesting equipment due to the varieties' sensitivity to mechanical harvesting. Moreover, irrigation is crucial in most of the regions concerned, the innovation artisanal pivot has a significant effect on the water-saving and the use of regular quantity of water in the correct moment avoiding the waste.

Material: the choice of adapted varieties and good quality seeds, both resistant and healthy, is essential to obtain a profitable crop and less susceptible to diseases and insects. Besides, the plant's superficial root system requires appropriate fertilization to accelerate its growth and shorten its development cycle. Moreover, the application of pesticides in the correct time is of high importance to reduce the spread of diseases and pests in the field.

Medium: on the way to increase soil fertility and avoid yield loss due to water quality, it's highly recommended to introduce carefully fertilizers and change the plots.

Method: Great importance should be attached to good choice of the plot, soil preparation, sowing, quantity of planting and drip Irrigation to improve crop establishment and water use efficiency. They reduce irrigation costs and increase the profitability of the crop. To ensure a good yield, there is always recourse to crop rotation and reduce growing crop in monoculture.

Financial means: such as own capital, loans and agricultural insurance are of great importance for the availability of cash at the beginning of the campaign. This can help the smallholder to better invest and manage his expenses concerning the purchase of inputs, fertilizers and the payment of labor. Having an account in the bank for savings, allows the farmer to record the flow of money, the payment of certain bills by checks and better management of his components.

Management: the lack of planning and strategy setting prior to the campaign can cause several risks to the success of the campaign or production. Therefore, joining a professional organization to help farmers group to negotiate the prices of inputs and to sales group in order to ensure a good selling price and facilitate market access. For the quality of production, it is necessary to select the suppliers and buy only fertilizers and certified seeds. In addition, making the right investment decisions and considering the rate of return, payback time and their effect on production and sustainability are crucial. In the current case, the investment in the artisanal pivot can reduce the irrigation costs and make it more precise and efficient. To finish this component, it's necessary to know the state regulations to properly manage the harvest and the storage.

Market: More Market knowledge is needed to derive maximum of benefit. The tubers could be stored until prices improve and then sold when prices are high and not too many potatoes are available in the market. Moreover, to ensure the best price for the potato, the sell should be organized with a farmer group, which has contracts with potato buyers in order to sell the production at a good price.

After the analysis of all the competences necessary for small farmers, these skills can be classified in 3 groups: technical, managerial and economic as shown in the following diagram, Moreover, some interdependence between these skills can be deduced.

Disease and Pest Control

Harvesting, Storage

professional
agricultural
organization

Investment decision

Potato cropping
Calender

Choosing the good plot

Sourcing healthy
seed, resistent
varieties

Harvest Potato
carefully

Obtaining market
information and
planning sales

Mini-pivot
Investment

Sourcing of inputs,
Managing Money
Daily

Planting in a circle,
knowledge the
growth cycle

No Potato grown last year

Separating damaged
and undamaged
tubers

identify potato
buyers before
planting.

Establishing
irrigation

Short medium long term planning

Dosage Planting
densities and
certified seeds

Safe use of
Pesticides

Good storage to
maintain good
quality

prices, quality,
quantity
requirements

efficient

irrigation, save
water

record Money-in & Money out

Properly Fertilizer
application

Monitoring and
control

Selling potato when price are high, group

sell

saving money in
Bank

Calculation of the
unit cost

Crop rotation:
Potato with onion
and Peanut

Financial
Management

As shown in the diagram 7, improved production techniques cover the right crop rotation (potato then groundnut, and the following year onion) which not only reduces pest problems, diseases and weeds, but also enriches the biodiversity and soil fertilely. Moreover, to ensure a good yield, it's required to make a correct dosage between the planting densities from certified seed and apply properly the fertilizers. With this improved production, the farmer can greatly increase his production yield.

For the second component, managerial skills, a good adjustment of land resources and especially labor can reduce costs and maximize profit. Moreover, the better planning of farming activities can also save money to cover necessary expenses during the campaign and then avoid expensive last-minute credits. These savings at the bank also allow the farmer to apply for loans. Added to this, membership in the professional agricultural organization allows the smallholders to obtain better prices from suppliers on the sake of reducing costs, obtaining a better selling price and good quality products. Hence, to succeed and finalize a medium-term investment like, in our case the irrigation pivot, it's crucial to follow the financial recommendations to plan it properly and decide whether it is an investment with savings or project financing.

Concerning, the economic skills, the calculation of production costs assist Smallholders to plan its expenses for the next season for the purchase of fertilizers, seeds, payment of labor, services etc. We noticed that there is interrelationship between the economic and technical aspects of production. The calculation of the unit costs and comparing it with the market price helps in the decision either to abandon or to adapt better production techniques in order to make profits. By calculating the gross margin and using the financial calendar, farmers can make an effective decision on the profitability of a given investment and short, medium- or long-term planning. Thus, we notice also an Interrelation between economic skills and management improvement.

4.2 Comparative analysis

The idea of applying multiple performance criteria at the farm level is not to evaluate performance in terms of profitability alone but to find a balance and examine the farm system in relation to the 5 criteria.

4.2.1 Productivity

In the present case productivity is measured in Kilograms per Unit pivot or hectare (Kg/unit pivot) or (Kg/ha) as shown in the following table:

Table 1 shows the significant improvements in production. These improvements are the results of the application of GAP, better management and adjustment of farm system components and efficiency in the use of resources to increase yield. The remarkable increase in yield 33.33% for the potato, 40% for the onion and 200% for the peanut can be explained at this level by using certified and recommended seeds, fertilizers, which are better adapted to the medium and give extreme high yield in comparison with the local variety.

4.2.2 Profitability

The profitability of a farm enterprise defined in the part 3.5 Methodological Approach is measured in monetary terms as total gross revenue minus total costs over the course of a campaign. To measure the economic profitability; gross margin is one of the performance criteria in the current case.

The purpose of these parameters is to evaluate the system, the process and the performance of an activity of a small agricultural enterprise. This type of evaluation is widely used to structure agricultural development projects.

The following table consists of a budget which is applied to the potato production in the current and improved to evaluate the impact of the improved production on the profitability. To make the comparison, all the parameters which change by adopting the improved production should be taken into consideration. These changes also include additional yield, labor use and reduced transport cost. The result of these changes is an increase in the gross margin.

The next table for the main product contains a gross margin, return on investment and unit cost calculation which are performance factors of a farm, and a quick tool to make a comparison between several scenarios.

The gross margin is hence obtained by subtracting the total income from the variable costs. Fixed costs are excluded here because it can enter the production of another activity or for several years of production. Unit cost is determined by dividing the cost of production by the number of units produced. The Return on Investment (ROI) is the benefit (or return) of an investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio.

Input	Unity	Current Scenario			Improved Scenario			Change
Input	Unity	Quantity (kg)	Price (DZD)	Total (DZD)	Quantity	Price (DZD)	Total (DZD)	%
Input
Seeds	Kg	2,000	150	300,000	3,000	150	450,000	Quantity: +50%
organic manure	Kg	20,000	4.5	90,000	30,000	4.5	135,000	Quantity: +50%
Fertilizer NPK	Kg	1,200	105	126,000	800	105	84,000	Quantity: -33.33%
Tractor Service	Fixed Price	-	40,000	40,000	-	40,000	40,000	No change
Ammonite 33%	Kg	-	-	-	150	6	900	+100%
Potash (K)	Kg	-	-	-	200	195	39,000	+100%
Chemical fertilizer	Kg	3	4,000	12,000	1	4,000	4,000	Quantity: -66.66%
Treatment ser- vices	l	-	-	-	8	7,500	60,000	+100%
Irrigation water	m³	5,000	4	20,000	8,000	4	32,000	Quantity: +60%
Packaging bag	bag	300	260	78,000	400	260	104,000	Quantity: +33%
Transport Service	Fixed price	3	25,000	75,000	1	28,000	28,000	Quantity: -66.66% Total: -62.66% Price: +12%
Electricity	Invoice	1	50,000	50,000	1	10,000	10,000	Price: -80%
Labor	Man-day	105	1,500	157,500	114	1,500	171,000	+9 Man-day
Total Variable Cost		948,500			1,157,900			+22%
Output
Gross Revenue	DZD	30,000	33	990,000	40,000	34	1,360,000	Yield: +33.33% Price: +3% Revenue: +37%
Gross Margin	DZD	41,500			202,100			+387%
ROI	(%)	4%			17%			+13%
Unit Cost	DZD	31.62			28.95			-8.4%

Table 2 shows a comparison of the costs for the two scenarios. In fact, an increase in seeds costs by +50% for seeds are noticed. This is due to the increase in the quantity of planting. These varieties of seed are of better quality than the one used in the current scenario and shows better yields. Also, for irrigation water, 60% additional quantity

was added in the improved scenario for more efficiency and therefore 60% additional cost at a fixed price per cubic meter. Some treatment services and fertilizer additives such as ammonite 33% and potash (K) are also added for the improved scenario marked by + 100% in order to ensure better growth of tubers. Less than 66% of NPK fertilizer and chemical fertilizer are used for the production and therefore less cost during the tuber growth face. The objective is to reduce residues and ensure good potato quality. Regarding the transport service, at a slightly increased price + 12% and a better service, there was a need for at least operation -66% and therefore a reduction in costs of 62%. Following the adoption of the improved scenario, a further significant reduction in the price of electricity by 80% and consequently 80% in costs reduced is noticed. For labor, a slight increase in man-day needed + 9 and hence additional employment.

As a result of these changes in the potato production activity as announced in part 4.3.1 productivity an excess production of 10,000 Kg is noticed, Furthermore, a remarkable and logical increase in the Gross Revenue more than 37% following this better productivity and a 3% higher price. What is very interesting, we notice that only the excess of the gross margin in the improved scenario is equal to 160,600 DZD almost 4 times the gross margin in the current scenario. Concerning ROI, for each DZD invested in the current scenario, it gives 0.04 DZD. On the other hand, regarding the improved scenario, it gives 0.17 DZD, more than 4 times. Again, there is a reduction in the unit cost, which shows that the changes are profitable. The next Figure 8 provides an overview of all changes in production costs and the farmer's margin.

This analysis was for the primary product, the following is the same analysis for the secondary products in a shortened form. The following table shows the performance analysis of onion production in the current scenario and the improved one.

Input	Unity	Current Scenario			Improved Scenario			Change
		Quan- tity (kg)	Price (DZD)	Total (DZD)	Quan- tity	Price (DZD)	Total (DZD)	%
Input
Input Cost	DZD	520,000			611,100			+17.5%
Labor	Man- day	95	1,500	142,500	101	1,500	151,500	+6 Man-day
Total Varia- ble Cost		663,100			762,600			+15%
Output
Gross Revenue	DZD	50,000	20	1,000,000	70,000	21	1,470,000	Yield: +40% Price: +5% Rev- enue: +47%
Gross Mar- gin	DZD	336,900			707,400			+110%
ROI	(%)	50%			92%			+42%
Unit Cost	DZD	13.26			10.89			-18%

For onion production, table 3 shows a 17.5% increase in input costs and a 6.3% increase in labor costs. Following these changes in production, a remarkable increase in gross margin of 47% in the improved scenario is observed. Thus, an increase in labor (6 man-day). Moreover, one DZD invested in this production gives 0.5 DZD in the current scenario and 0.92 DZD in the improved scenario. Likewise, the unit cost evolution shows a notable reduction from 13.26 DZD in the current scenario to 10.89 DZD in the improved scenario. The next Figure 9 provides an overview of all changes in production costs and the farmer's margin.

Input	Unity	Current Scenario			Improved Scenario			Change
		Quantity (kg)	Price (DZD)	Total (DZD)	Quantity	Price (DZD)	Total (DZD)	%
Input
Input Cost	DZD	168,200			257,600			+53%
Labor	Man-day	47	1,500	70,500	47	1,500	70,500	No change
Total Variable Cost		238,700			328,100			+37%
Output
Gross Revenue	DZD	1,000	260	260,000	3,000	260	780,000	+200%
Gross Margin	DZD	21,300			451,900			+2022%
ROI	(%)	8.9%			137%			+128.1%
Unit Cost	DZD	238.7			109.37			-54%

For Peanut production, table 4 shows a 37% increase in input costs and 200% increase in peanut production. Following these changes, a remarkable increase in gross margin +430.600 DZD in the improved scenario is observed. Besides, one DZD invested in this production gives 0.089 DZD in the current scenario and 1,37 DZD in the improved scenario. Likewise, the unit cost evolution shows a notable reduction from 238,7 DZD in the current scenario to 109,37 DZD in the improved scenario. The next Figure 10 provides an overview of all changes in production costs and the farmer's margin.

Finally, to get a global overview and based on the different performance criteria, the following figure 11 summarizes the evolution of the parameters GM, ROI and UC of the 3 agricultural activities (Potato, onion, peanut).

Figure 11 shows that the evolution of the GM, UC and the ROI in the improved scenario are mostly very important for the secondary products than for the main product, This may look contradictory, but this is explained by the advantage of potato production, for example, having 3 harvests throughout the year, the importance of this product in the eating habits of Algerians and the remarkable increase in its consumption in recent years, in addition to the orientation of industrial operators to engage in transformation and the start of exporting this product to Russia. As a consequence, and due to the state policy aimed at the development of the agricultural land, the cultivated potato land has increased from 300 ha in 1993 to 33,000 ha in 2000 and the number of potato producers has increased from 800 to 5,000 between 2000 and 2014. This can largely confirm the choice of potatoes as the main product. (Chambre d'agriculture Algeria, 2014).

To get an idea on the distribution of the gains concluded from the three activities and the improvement of the incomes. The chart in Figure 11 shows the composition of the smallholder farmer's income in the two scenarios and shows how many times the income has increased.

Figure 12 highlights the profit composition of the 3 crops in both scenarios. The total income from agricultural production increased more than three times. As far as income distribution is concerned, a great disparity of income between the 3 products in the

current scenario is noticed, but in the improved scenario, the distribution is more equitable. This is of great importance to practice this crop rotation system with a stable income with potato and Peanut in the first year and onion in the following year.

This last budgeting analysis is valid only at a certain time interval, any change in price and cost of production can directly influence the market and the introduction of a new technology such as the irrigation pivot by the farmer which can also cause changes in costs and prices.

It would be better to anticipate future changes and make a risk analysis and determine the influence of a price change on the gross margin in both scenarios. In this study more importance is given to the main product, the potato, and one of the most significant parameters, which has a great effect on the budget which is the price of potatoes. Already there is a large fluctuation of potato wholesale prices in Algeria, which alternates between 33 and 45 DZD per Kg. As a result, a simple equation of this parameter (potato price) can be established.

Figure 13 highlights the effect of changing potato prices on GM. In fact, the increase in potato prices has a very important impact, which highlights the importance of investing in potato storage, or else, smallholders should get updates on the prices each week. Then, they could decide how many batches they produce, the quantity of each batch and the time of planting, harvest and selling.

Concerning the unit cost and after moving to the improved scenario, an important reduction of the cost of production for the 3 crops is noticed as shown in the following histogram (Figure 14). This allows farmers to increase their competitiveness.

Through the results found above, the productivity of capital and labor productivity can be deduced as shown in the following table 5.

The comparison of capital and labor productivity shows a large increase in the improved scenario as a result of a good allocation of production resources. This large

gap between the two values as shown in Table 5 shows how absolute effective the improved scenario is. This productivity is increased thanks to the introduction of high-performance innovations, efficient work, training of the labor in new techniques and almost importantly by improving the production process and adopting GAP.

At this level, this type of last analysis, budgeting and the variable costs considered indicate to retain the necessary adjustments in production costs to increase profitability and also to highlight the direct impact of the GAP application, the improvement of technical, managerial and thus economic skills. It is all a complex process and with the adjustment of these parameters together, the profitability of the farm can be greatly increased. Moreover, additional employment has been realized after adopting GAP.

With regard to job creation, Ould Rebai et al. (2017, p.7) has enumerated from a sample of farmers surveyed, which distinguishes three types of investors, who specialize in potato production using the new mini-pivot technology. These are large investors, small investors and cultivators). The table 6 shows the number of pivots used for each category during a potato and Onion production campaign and then deduced the number of additional jobs created. (Production lasts two years)

Source: ould Rebai. 2017. An incremental innovation: design and diffusion of an artisanal center pivot for irrigationin the Souf (Algerian Sahara).

The number of jobs created varies between 30 and 180 man-days depending on the type of investor. This shows only the direct employment after the adoption GAP. Other indirect employment could be proclaimed, such as maintenance services, all the trainer from the training centers, who work in the mini-pivot production chain, the supply companies and importers of parts necessary to produce mini-pivot. This technology (mini-pivot Irrigation) has created a dynamic in the region starting with the return of investors, providing income to the local population, employing young people (majority of small investors, Table 6) and opening agro-supply businesses.

4.2.3 Stability:

When conditions are unfavorable, such as the decrease of product price, yield instability and increase of production cost there is always recourse to the diversification of activity, crop rotation, increasing storage capacity or better post-harvest efficiency. The best strategy for a good system stability is to work with robust solutions while knowing the market. For the following part, we will take into account the market risks and production risks. Table 7 summarizes the risks and the years respectively in which the risks will be taken into account.

Taking into account these risks, the gross margin for 5 years will be calculated in table 9. The production is done on two plots as follows. Peanuts follow potato in the first plot. In the second plot, only onion is produced. The following year, only the onion is produced on plot 1 and the peanut follows the potato in plot 2. The rotation continues this way in the following years.

Crop	Potato		Onion		Peanut
Scenario	Current	Improved	Current	Improved	Current	Improved
Input prices	791,000	986,900	520,600	611,100	168,200	257,600
Labor Cost	157,500	171,000	142,500	151,500	70,500	70,500
Yield	30,000	40,000	50,000	70,000	1000	3000
Price	33	34	20	21	260	260
GM Year 1	41,500	202,100	336,900	707,400	21,300	451,900
GM Year 2	-37,600	103,410	284,840	646,290	4480	426,140
GM Year 3	25750	185,000	322,650	692,250	14,250	444,850
GM Year 4	-57,500	66,100	236,900	560,400	-4700	373,900
GM Year 5	-57,500	66,100	236,900	560,400	-4700	373,900

Therefore, the income stability of the current and the improved scenario will be measured and analyzed. The calculation is as follows in Table 9:

Table 9 Calculation of the Coefficient of Variation (CV) for the improved Scenario

With a CV of 14.6% in the improved Scenario and 38.4% in the current Scenario, we can conclude that the income of the 3 crop is more stable in the improved Scenario.

4.2.4 Diversification

Diversity is a strategy of increasing the number of activities in a system to reduce the risk to household income on the one hand, and on the other hand, to increase income with a better allocation of resources on the other hand.

Scenario / crop	Current Scenario		Improved Scenario
Scenario / crop	income (ni)	(ni/N) ² (S=3)	income (ni)	(ni/N) ² (S=3)
Potato	41,500	0.010780227	202,100	0.02203744
Onion	336,900	0.710450338	707,400	0.2699968
Peanut	21,300	0.002839821	451,900	0.11018264
Sum	399,700	0.724070386	1,361,400	0.40221688
DI		0.275929614		0.59778312

The calculated DI values of 0.5977 for the improved Scenario and 0.2759 for the current scenario, which indicates that the farm-income is more diversified in the improved case in economic terms. The (ni/N) ² values also indicate that the farm's economic structure is dominated by Onion in Both Scenario.

4.2.5 Sustainability

Sustainability is the ability of a system to maintain its productivity and profitability at a satisfactory level for a specified period. This concept accounts for the evaluation of agricultural activities and the system in several terms. In the case of this study, the evaluation will be considered only in economic terms after the introduction of the new pivot irrigation technology. The following table calculates the depreciation of one mini-pivot investment taking into account that other capital Fixed costs are zero.

In the present case, straight-line depreciation (D) is the most appropriate method with a constant flow of service and normal wear and tear during the life of the Mini-pivot and the plumbing, which decreases with a well-determined annual amount. (Makeham and Malcolm 1986). The formula for obtaining D is as follows: D = (PV - RV)/L; with PV: present Value, RV: residual Value and L: expected total years of life

This is the appropriate method for Algerian Smallholders whose Mini-pivot and plumbing item is totally used in production. The following graph 15 shows the result of the application of this method and the depreciation of the mini-pivot and Plumbing during their lifetime.

Following the calculation of the depreciation of Mini-Pivot and Plumbing, the total of cost of one Mini-pivot Investment could be determined as follows.

	Current Scenario	Improved Scenario
A. Outputs			Potato
990,000	1,360,000	Onion
1,000,000	1,470,000	Peanut
260,000	780,000	Total Gross Revenue (DZD)
2,250,000	3,610,000	Total Gross Revenue over 2 years
4,500,000	7,220,000	Variable Cost
1,850,300	2,248,600	B. Variable cost over 2 years
3,700,600	4,497,200	C. Fixed cost over 2 years (2 Mini-pivot)
30,000	30,000	D. Depreciation over 2 years (2 Mini-pivot)
293,332	293,332

Measure		Calculation	Value (DZD)
			Improved	E.
Farm Gross Margin	A - B	799,400	2,722,800	F.
Farm Net Actual Returns	E - C	769,400	2,692,800
G	Farm Net Sustainable Returns	F - D	476,068	2,399,468
H.	Household Revenue per day	G/2 Years (730 days)	652	3287	I.
Revenue per day per mem- ber (for 2 Mini-pivot)	H/6	109	585

Table 13 shows a very large difference concerning 2 mini-pivot investment results of the two scenarios in an improved scenario. As far as the Household Revenue per day and per person is considered for one mini-pivot, noting that the average family member in Algeria is 6, the poverty line per day is 1.9 dollars in Africa (equal to 246.54 DZD) and smallholders have 2 mini-pivots according to Quld Rebai.

In the current scenario, the farmer and his family are well below the poverty line. However, in the improved scenario, the family is above the poverty line. Both values can significantly rise if family labor has been used. Therefore, to increase annual income, it is necessary to reduce labor costs and consider the high added value of family labor.

The following study highlighted the importance of agribusiness management skills for smallholder farmers in Africa. These skills were identified and classified into three groups; improved production techniques, management improvement and economic skills as shown in Figure 7. In addition, the interdependencies between them were identified. Then, in order to evaluate the impact of the application of these management skills at the farm level and following the training of farmers in the FBS approach, a comparison with a reference situation (Current Scenario) based on 5 performance criteria was made. For the first performance criteria Productivity, yield has largely increased, i.e. 33% for potatoes, 40% for onion and 200% for groundnut. This is due to the adoption of GAP, which comprises improved inputs such as seeds from improved varieties, mineral fertilizer, correct dosage of inputs, planting densities and improved techniques for cropping, harvesting and post-harvest. Second for the Profitability, the significant improvement in GM and ROI respectively and the reduction in unit cost highlight the extremely positive effects of changes made at the farm level to optimize the production process and maximize income. Third, regarding the income stability, the improved scenario has always showed better results, such as more income stability while working with better solution and knowing the market. In addition, the farm is more diversified in the improved scenario than the current scenario. Regarding income-sus-tainability, the farmer and his family are well above the poverty line $1.9 in the improved scenario as concluded in section 4.2.5 which confirms the hypothesis of this current study in relation to poverty reduction.

One project to promote sustainable agriculture in India has shown that when training farmers, providing them advice throughout the production cycle and marketing phase, helping them to monitor cost and earnings and then calculate. Farmers had nearly doubled their average yields and increased their income by 64% (BASF 2011). This

confirms our case study, that the training on agribusiness management skills contributes to farmers' prosperity and increase farmers' competitiveness.

In addition to higher incomes, the adoption of GAP has realized the creation of additional employment as shown in Table 6, depending on the type of investor, 30 up to 180 man-days of additional-job have been created. Moreover, more quality inputs, technical services, transport and loading have been realized. This led to future growth and expansion, higher profit and opportunity for more investment like Mini-pivot irrigation at the farm level. In Macro-level this led to the economic growth of the region as a result of the creating of a market for input.

According to Ouedeno (2019, p.121), concerning the region of oued Souf, the labor market did not exist before the development of market gardening which contributed to the emergence of two types of labor, monthly and daily. The adoption of the mini-pivot technique has minimized the irrigation work and has allowed the creation of agricultural input markets (seed, fertilizers, phytosanitary products) through agro-procurement companies or other neighboring regions. The introduction and dissemination of these pivots have given a big pat to the development of the potato and the colonization of new areas previously accessible.

Furthermore, this investment could help in fighting the limiting factor, water, as an essential element for production, farmers could use this to reduce water loss by evaporation, save water up to 30% consequently reduce labor costs and ensure the sustain-ability of water and reduce gas emissions by using less fuel. Another aspect can also be highlighted, the social one, following the creation of employment for young people and maintaining the base for future generations.

The current report has highlighted and answered the research questions regarding the role and the importance of agribusiness management capacities for African agricultural smallholders and their impacts on economic growth, poverty reduction and food security. These technical, managerial and economic skills have shown extreme positive results on the performance (productivity and profitability) of Smallholders from the perspective of allocation of production factors, investment decisions and the adoption of innovative techniques such as pivot irrigation. This confirms the hypothesis H1 that improved production techniques can intensify and increase yields and profit and the hypothesis H2 that improved managerial skills and better economic understanding will obviously have positive impact notably on the farm management and financial planning.

Besides, these skills enabled the farm system with more stability, income diversity and economic sustainability, which allow a future expansion of the SME, and consequently the creation of employment opportunities.

BASF (2011). Samruddhi - A Farmer training Project for sustainable agriculture in India.

Bessaoud, O., Pellissier, P., Rolland, P., & Khechimi, W. Rapport de synthèse sur l'agriculture en Algérie. [Rapport de recherche] CIHEAM-IAMM.2019, pp.82. hal-02137632

Dubost, D. & Larbi, Y. 1998. Mutations agricoles dans les oasis algériennes : l'exemple des Ziban. Sécheresse 9(2): 103-10.

IMF (2018). Rapport n° 18/168 des services du FMI pour les consultations de 2018 au titre de l'article IV. (2018, June)

Matthess, A., Kling, V., Hasse, D., Kempf, S., Chirimuuta, C., & Balep, M. Agribusiness 4 Change, International conference. Ethiopia. Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH. Registered Offices Bonn and Esch-born, Germany. (2019, May). Print.

Matthess, A., Akinola, A., Hinampong, A.B., Makong, H., Kling, V., & Hasse, D., Farmer Business School A guideline for introduction and management. Eschborn: GIZ, 2017. Print

Matthess, A. «Agri-Business Facility for Africa (ABF).» Fact Sheet. Deutsche Gesell-schaft für Internationale Zusammenarbeit (GIZ) GmbH. Registered Offices Bonn and Eschborn, Germany. (2020, August). Print.

Matthess, A. «Farmer Business School.» Fact Sheet. Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH. Registered Offices Bonn and Esch-born, Germany. (2020, January). Print.

Matthess, A., Hinderer, M., & Bunnenberg, L. Ecole d'Entrepreneuriat Agricole Système de production Pomme de Terre, Oignon, Arachide Cahier de Formation et d'Application Algérie. Eschborn: GIZ, 2020. Print.

MADR (2003) Recensement général de l'agriculture 2001. Rapport général - Alger - Minagri 2003.

MADR (2009). Projet de Programme Quinquennal de développement 2010-2014. Mars 2009. Alger. 38p.

MADR (2009). Bilan du programme quinquennal du secteur agricole et rural 20052009, 51p.

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MADR (2017) Base de données - Direction des Statistiques Agricoles et des Systèmes d'Informations - www.minagri.dz

Ould Rebai, A., Hartani, T., Chabaca, M.N., & Kuper, M., 2017. An incremental innovation: design and diffusion of an artisanal center pivot for irri-gationin the Souf (Algerian Sahara). Cah. Agric. 26: 35005.

Ouendeno, ML. 2019. Irrigated agriculture in Souf -El Oued (Algeria): actors and factors of development

ONS (2018). Statistiques sur la population et la démographie, statistiques économiques, emploi et chômage, les dépenses de consommation.

As a specialist in the field of global participation for supportable development and worldwide instruction work, the GIZ is committed to molding a future worth living far and wide. The specialist organization has more than 11 years of involvement with a wide assortment of territories, including monetary turn of events and business promotion vitality, the earth, harmony and security. The differing mastery of the federal undertaking is sought after around the world - from the German Government, European Union establishments, the United Nations, the private part, and administrations of different nations. GIZ works with organizations, common society entertainers and examination foundations, cultivating fruitful connection between advancement strategy and other approach fields and zones of movement. The endeavor's primary appointing party is the German Federal Ministry for Economic Cooperation and Development (BMZ).

The authorizing gatherings and collaboration accomplices all spot their trust in GIZ, and work with the improvement agency to produce thoughts for political, social and financial change, to form these into solid plans and to execute them. Since GIZ is a public-benefit federal venture, German and European qualities are focal to its work. Along with its accomplices in public governments worldwide and collaboration accomplices from the universes of business, research and common society, GIZ works hard to convey powerful arrangements that offer individuals better possibilities and sustain-ably to improve their everyday environments.

The enlisted workplaces of GIZ are in Bonn and Eschborn. In 2019, GIZ produced a business volume of around EUR 3.1 billion. Its 22,199 representatives, very nearly 70 percent of whom are public staff, work in around 120 nations. (GIZ, 2019)

The project Agribusiness Facility for Africa (ABF) builds on the prior experiences, approaches and practical training in business management for the smallholders, as an investment in the future. Some strategies to target this group are the integration of topics dedicated to food, processing and marketing of basic food products and measures to support women in a targeted manner in sectors where they are underrepresented. (GIZ, 2019)

Advisory support will be provided to key partners to effectively plan, fund and implement large-scale agri-food training. This will include advice on the integration of agri-food training into existing strategies and advice on the development of sustainable business and cooperation models. The ABF Trainings will focus on economic analyses of production sectors, technologies and optimization potentials and support for the adaptation of content to selected value chains by the implementing partners.

ABF supports the organization of large-scale training courses and the selection of master trainers and trainers for the training. At first ABF will support and evaluate pilot training courses, which will be used to adapt and improve the training. It has been shown that agri-food training courses can reach many participants and help them economically. (GIZ, 2019)

ABF works with local organizations responsible for agriculture to advance the program. In this process they include public and private stakeholders as an African center point dish to help MSMEs' agribusiness abilities increase in scope. (GIZ, 2019)

PESTELE is a broad fact-finding activity frequently used for analyzing the macro-environment and determining contemporary and future structural trends for the agricultural enterprise. Their evocation facilitates to the evaluation of the different evolution scenarios of a SME for its better adapted development and evolution strategy.

To start with, politically speaking, since 2000 Algeria has set up a policy aimed at improving national food security and developing a certain priority in agricultural sectors. This Policy could solve the maximum of challenging problems faced in the agricultural field. For instance, a smallholder with large agricultural production (potatoes, garlic, onions) could benefit from the regulation system for large consumption agricultural products (SYRPALAC) implemented in 2008. The government buys back from producers at incentive prices the production in periods of rising supply and falling prices, pays storage to the private sector. These governmental measures can boost the farmers' income and insure the sale of his harvest. (MADR, 2008)

Next, economically speaking, the growth rate in Algeria was averagely 3%, however, due to the oil price falling, the rate has slowed down in recent years and the IMF has estimated it at 2.7% in 2019. (IMF, 2018)

Besides, The Algerian Dinar (DA) has experienced very strong devaluations in recent decades. From 2010 to 2020, the value of the Algerian Dinar fell sharply both in euros and dollars by 36% and 43% respectively. This decline has not only improved the competitiveness of Algerian non-hydrocarbon exports but also it has contributed to the increase of production costs, particularly the agricultural and agri-food sector, through the import of agricultural inputs and aggravated the food bill. The unemployment rate was 11.6% in 2018 and is expected to rise slightly in 2019 to 12.3 % according to IMF and World Bank forecasts. (IMF, 2017)

With a surplus until 2014, Algeria's trade deficit reached US$2.05 billion over the first eight months of 2018, compared to a deficit of US$8.19 billion over the same period in 2017 which is a significant drop of nearly 75%. These two factors will encourage young people and the goverment to invest more in agricultural production, create jobs and reduce the import of agricultural products. (CNIS, 2018)

Subsequently, concerning demographic aspects, the Algerian population was 42.4 million in 2018, and ONS estimates 51 million and more than 70 million inhabitants respectively in 2030 and 2050. For the coming decades (2020-2030), a significant growth in the active population (15-64 years old) is forecasted. Therefore, the demand for additional employment is increasingly important. As a result, the dynamic agriculture must take up this employment challenge. The countryside is waiting for diversified economic activities, strong process of professional integration and good training of existing skills. (ONS, 2018)

Regarding the technological aspects, the manufacture and dissemination of artisanal pivots are subject of various actors whose sequence of interventions constitutes a dense network of services and supplies such as the acquisition of parts by importing or recovering spare parts on obsolete equipment. Its evolution has enabled the development of small businesses like manufacturing irrigation equipment, somewhat reduced the unemployment rate and provided practical training for young people from vocational training centers. This new technology will change the nature of potato production in the el wadi zone and will encourage young people and SMEs to invest in this value chain.

From an ecological side, for better adaptation of climate change, farmers should take advantage of these main measures summarized as follows: water saving, construction of dams and hill reservoirs, the adaptation of technical itineraries, the introduction of technical practices (direct sowing), the reconversion of production systems, adopting anti-drought programs and setting up of rural projects.

Finally, concerning the legal factors, the orientation towards organic production for environmental, biodiversity and health reasons is requested. Moreover, as regards the export restrictions, the residues of pesticides should be reduced and regulated as the farmers are invited to improve their production quality.