Memoire Online - Agribusiness management skills for agricultural smallholders in Africa

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.

Mini-pivot investment inventory
Item	Item Value (PV) (DZD)	Useful (L) Life (years)	Depreciation (D) (DZD)	Repairs (DZD)
Mini-pivot	200,000	5	40,000	7,500
plumbing	100,000	3	33,333	-
Total	400,000	-	73,333	7,500

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.

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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.

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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.

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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.

Agribusiness management skills for agricultural smallholders in Africa

4.2.5 Sustainability