Development

Putting subsidy future in mobile phone

The United States Agency for International Development (USaid) Malawi office is working on enhancing the Farm Input Subsidy Programme (Fisp) by using mobile phone technology.

USaid has embarked on a phone-based electronic (E-voucher) system where a farmer can buy subsidy fertiliser using a mobile handset. The aim is to improve inputs delivery in Fisp.

“While USaid is not a Fisp donor, it is very interested in the programme along with other development partners because of its importance in helping farmers get better crop yields,” said Doug Arbuckle, USaid mission director.

In the 2012-13 season, Fisp, using software piloted tracking of fertiliser deliveries from three warehouses (North, Central and Southern regions) to selected Admarc and Smallholder Farmers Fertiliser Revolving Fund Malawi (SFFRFM) markets.

According to Arbuckle: “Using SMS technology, a pilot monitored fertiliser deliveries to the selected markets and was able to track both movements and stocks of fertiliser.”

Officials were able to ensure the stocks were not diverted. No instances of diversion or loss among the shipments tracked using the new system under the pilot programme was reported.

The electronic tracking also allows rural market clerks to inform villagers that fertiliser is on its way, expected time of arrival and also to know in advance the number of fertiliser bags loaded onto the truck at the warehouse.

“The use of such a system also means that farmers no longer have to wait overnight at markets when trucks do not arrive and the rescheduled time of arrival is unknown,” he added.

He further says that the Ministry of Agriculture will have 24-hour access to electronic tracking online, allowing it to manage problems quickly as late fertiliser applications results in reduced yields.

“In effect, the $130 million fertiliser investment of the government (85 percent of the ministry’s entire budget and 10 percent of the government’s total budget) will not yield the potential dividends if it arrives late in the hands of farmers who must plant when the rains arrive,” he said.

This system also produces weekly inventories and farmer sales by phone texts as such, the ministry and the Fisp Logistics Unit officials will know in real-time the number of bags sold and unsold.

Currently, total sales of fertiliser are not known until the vouchers are re-collected at the end of the season, returned to the Logistics Unit, counted and reported in the unit’s end of year report (late April/early May).

Also inventories usually take a full day of phone calls to complete. But with the E-system, Arbuckle says “the warehouse will have this important information in less than one hour of mobile phone SMS.”

The phone information is then translated to an Excel computer software for everyone to use for decision-making, monitoring and evaluation purposes.

USaid and government plan to use an electronic voucher (E-voucher) on trials during the 2013-14 Fisp season in targeted areas in two districts to be chosen by the ministry.

Arbuckle is upbeat that once the results of the two-year pilot are good, the six million paper vouchers distributed each year to 1.5 million Fisp beneficiaries will no longer be necessary.

“This will free up extension workers from distributing the paper vouchers each year and, at the end of the Fisp season, from re-collecting the vouchers from all the participating private seed companies (who collect from 1 100 agro-dealers) and from all the 1 300 Admarc and SFFRFM outlets. Government fuel costs and staff time will likewise be saved,” he said.

In order to provide security, each Fisp beneficiary will be issued a backup paper voucher and a scratch card. Farmers who wish to use their own phones can choose to have their E-voucher sent to them directly on the phone by SMS.

Thus, two types of E-voucher choices are offered to the beneficiaries (scratch card and own phone). However, paper vouchers can also be used as a backup if desired.

The farmer takes the card or phone SMS to the nearest market for fertilisers and private agro-dealers for seeds, who in turn check the E-voucher against their own electronic database in their phone. They then confirm the farmer is in their database and ask the farmer to enter his/her PIN into the dealer’s mobile phone. (Each farmer with an E-voucher will receive a PIN from Airtel/TNM.)

“If the farmer’s scratch card or phone is lost or stolen, a new one is issued as soon as it is reported missing/stolen and the old one is invalidated. Therefore, strong security measures will be in operation,” he added.

The aim is to do away with fraudulent paper vouchers, altering paper vouchers, and no more ‘missing’ paper vouchers as each farmer holds his/her own voucher in an electronic form. The farmer is also empowered.

Just like the paper Fisp beneficiary registry, names of the farmer, gender, village and district data are entered into a Fisp database and shared with Airtel and TNM. The farmer walks into a farm agro-dealer and walks away with his/her chosen seed for which the seed company is automatically paid within 24 hours.

Sale of seeds will be entered into Microsoft Excel documents that can be distributed to the seed dealers for them to respond faster to their clients and also provide a wider choice of farm inputs.

This has an economic benefit because the faster reimbursement of E-vouchers, which is within 24 hours, could encourage more small businesses to enter into the seed agro-dealer business.

“Those with cash flow constraints were earlier barred from Fisp seed trade if they did not have sufficient funds to carry them through the many months needed to collect vouchers from their agro-dealers,” Arbuckle said.

Then they collate these paper vouchers, reconcile them, and submit them to the Fisp Logistics Unit, which then sends the vouchers to the Reserve Bank of Malawi for reimbursement.

Explains Arbuckle: “This type of increased competition will result in closer outlets for farmers thereby saving them time and cost for transportation and higher product quality. E-vouchers could usher in a dramatic increase in rural business in farm inputs since the Fisp reduces the original risk costs for small businesses to explore new markets in rural areas.”

The Ministry of Agriculture will have real-time access to online data showing which farmer bought what seed, when and where he or she bought the seed. This will enable the ministry to know parts of the country that planted with the onset of rains. Using E-vouchers, the ministry will know exactly where the problems are and act quickly to rectify the issues.

“An E-voucher system can also reduce opportunities for fraud and losses, so it holds much promise to be a powerful tool to increase transparency and efficiency in the government’s Fisp programme,” said Arbuckle.

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