Summary of results: sporadic sales reflect emerging markets
Monitoring & Evaluation
Increasing micro-irrigation adoption requires integrating sales and service.
iDE’s monitoring and evaluation team measured the number of drip irrigation kits sold through the SDC Scaling Up Productive Water Phase II project in the countries/regions of interest during the period of implementation (2014-2016).
One of the goals of the project was to scale the uptake of these technologies globally, thus sales was selected as an indication of successful scaling. At the beginning of the project, conservative and optimistic sales targets were set based on the opinions and knowledge of the size of the market opportunity by development experts from each region.
Sales were measured on a “per kit sold basis” although kits could vary in size between those that covered 20 square meters to kits that covered 1,000 square meters. In Nicaragua, iDEal installs custom-built drip systems that could be much larger, especially those sold for plantain production; thus, sales in Nicaragua are reported as sale per farm.
To provide more context on the size and variety of drip kits, the graph below shows the percentage of sales per year to direct clients based on drip irrigation kit size in Burkina Faso. At the beginning of the program, we observed that large kits sized 500 square meters represented over 50 percent of drip irrigation kit sales. After three sales seasons, there had been a significant shift with the product of 100 or less square meters providing over half of kit sales. One possible explanation for this shift is a change in the economic situation in Burkina Faso that led to buyers favoring cheaper options; during the years 2015-2016, the country faced turmoil that affected the income of most of the population.
In addition to selling both pre-packaged drip irrigation kits and custom-designed installations, regional initiatives have sold irrigation equipment through various channels, which have been broadly categorized into two categories:
- Direct sales with customers (i.e., sales directly to the end-user). Direct sales occurred mainly during the dry season (October to May). Limited sales occurred during the rainy season (May to September) as farmers focused during this time on cereal production.
- Indirect sales (i.e., sales to a third-party retailer, government agency, or NGO who then resold or provided the kits to the end-user for free or at a subsidy). Indirect sales created several spikes in the sales data from 2014 through 2017, as some indirect clients requested large orders to be delivered in a short period.
The chart below shows an example of the distribution between direct and indirect sales in Burkina Faso for the three years of the project.
Although sales reflected a contractual objective of the SUPW project regarding scaling up production and demonstrating commercial viability, the overarching goal went beyond the commercial aspect to have a social impact of increasing client incomes (mostly BoP farmers) and also increasing water efficiency.
From a monitoring perspective, commercial sales are quicker and easier to measure, but sales cannot tell the impact story of the technology. Measuring impact, such as farmer income or irrigation equipment water efficiency, requires much more time and effort. For example, monitoring of drip irrigation clients to determine a baseline as well as also regular check-ins to measure the possible income increase would be required to determine impact. Additional levels of complexity include needing to establish counterfactuals (i.e., what would have happened if the farmer had not invested in the solution) that requires either an experimental approach with a control group of farmers or a complex statistical analysis. This process is capital-intensive and time-consuming for the organization, as well as time-consuming for the population being evaluated.
But rigorous evaluation is necessary to better understand the real impact of the equipment on farmers’ incomes. With this information, you can determine your progress towards achieving the social business objective.
The article titled “All Sales Graphs” shows the sales by iDE offices in each country/region of the SUPW project. Only one country, Vietnam, exceeded the optimistic target. Compared to the other countries, Vietnam had a better established market situation (i.e., higher margins and a delivery mechanism through the Farmers Union that iDE was able to tap into to spur sales). Reports indicated that the average level of farmers’ knowledge about irrigation equipment was higher in Vietnam than in other project regions.
The conservative target was exceeded in Burkina Faso mainly due to a large indirect sale that occurred early in the project. Drip irrigation has strong potential in the Sahel region, and iDE products were perceived as revolutionary considering their prices (i.e., half the price of competing drip equipment in the region, easier to use, and lowers the risk of clogging). Burkina Faso was aggressive in developing the market and tried to spread the technology through both a social enterprise model using door-to-door sales agents (Farm Business Advisors, known as Conseiller Business Agricole [CBAs]) as well as a market facilitation model that leveraged the existing networks of public and private partners. In both models, however, sales were sluggish due to the pre- and after-market support needed by farmers that they were unwilling or unable to pay.
Issues surrounding the support needed for drip irrigation kit sales may also explain the poor results in the remaining regions of Central Asia and Central America. For example, Honduras negotiated an indirect sale with the government but declined to complete the sale due to the lack of commitment by the buyer to provide after-sale installation and maintenance support. After months of outreach and educational activities on the importance of support for successful implementation, Honduras began to sell kits integrated with technical service.
This is a key distinction of social business: to balance client success with total sales (profit).
In Central Asia, with a focused promotion strategy, sales grew annually by over 95 percent and by the end of 2015, over 550 gravity-fed drip systems were sold for a total area of around 172 hectares in both Kyrgyzstan and Tajikistan. By December 2015, drip irrigation systems worth over US$186,000 at wholesale prices had been sold. In Kyrgyzstan, the distribution network—consisting of two commercial wholesalers and four retailers—expanded into all provinces, including the Northern provinces of Naryn, Chui, Talas and Issyk-Kul. Both the private and public sector (NGOs and the Kyrgyz government) have now taken over agricultural projects, procuring the technologies through the commercial network that iDE and HELVETAS built up since 2010. While sales failed to meet the targets, the SUPW project results indicated that the adoption of gravity-fed drip irrigation can be accelerated through demonstration plots and from early adopters, generating positive word of mouth.
A final point needs to be stressed. Throughout all regions, the upfront price point for the drip irrigation systems, even without technical support, tended to be prohibitively expensive for farmers to be willing to take the risk on the technology (which often needed them to modify their crop selection as well). Thus, the need for low-cost loans or installment financing was reported everywhere.
