Theory of Change
We fundamentally believe that once one seed company has reached profitability with a given crop, others will be more likely to copy and invest in that seed value chain on a larger scale.
“…We have the first three varieties registered on the COMESA* variety catalogue. It took some time and energy to go through the procedures but finally we succeeded. Now we know the whole procedure it will be easier next time.”
- Seed company senior representative
*COMESA - Common Market for Eastern and Southern Africa, area of free trade
Our experience shows that seed companies typically reach profitability after four to five years of assistance, with seed sales of about US$ 0.5m (1-2% of national seed demand), depending on the crop.
This has been apparent in cases where SFSA and partners have provided a 'menu of services' and de-risked the first round of seed production.
Local private sector is at the center of the Seeds2B model, surrounded by four enablers to profitability:
1) Introduce new varieties
Foundation seed, proprietary varieties, licensing/distribution/ joint ventures
2) Access additional finance
Working capital, investment, business training
3) Build the market
Advanced market commitment, off-takers, credit/savings, input insurance
4) Integrate new seed technology
Such as seed treatment
Kick-starting seed markets to close the yield gap
We work in areas of market or institutional failure, to requests for assistance and encouraging the private sector to invest (more crops and more marginal markets).
Reaching the tipping point at project-level for potato seed sector investment in Kenya (2004-17)
The graph shows the timescale of introduction of new potato varieties into Kenya and the sequence of new agribusiness investments in the potato seed sector. As a ‘first mover’, Kisima Farm fundamentally changed perceptions of the crop’s potential profitability in Kenya. Kisima has sold some US$ 3.5 million in seed; the additional return to farmers purchasing it is estimated at US$ 16 million over 10 years.