SDC A&FS Network: Newsletter

The FOSTER Project ​

The Fostering Food Security, Food Systems and Inclusive Business (FOSTER) project aims to improve food security, income and social inclusion for more than 26'000 marginalized and crisis-affected households in Myanmar. Initiated by HEKS/EPER in 2021, the project received co-financing support in 2022 from the Swiss Agency for Development and Cooperation (SDC) for an additional four years. The project operates primarily in the Southern Shan state and peri-urban areas of Yangon. The context is characterized by political and economic instability, protracted conflict and displacement, and a worsening humanitarian crisis. 

Working in an increasingly fragile context 

A fragile context can be defined as an area characterized by significant instability and vulnerability, typically caused by conflict or natural disasters. Weak governance, limited infrastructure, humanitarian crisis and social inequalities are often key features of such contexts, which can all hinder efforts to support inclusive and sustainable market development. 

The 2021 military coup in Myanmar and the subsequent expansion of civil conflicts have resulted in an estimated 2.7 million people being internally displaced. The coup disrupted economic activities, and high rates of inflation have doubled the cost of a healthy diet and the proportion of households facing food insecurity. 18.6 million people are estimated to be in humanitarian need in 2024. Disadvantaged groups including smallholder farmers, ethnic and religious minorities, women and children and internally displaced people (IDPs) have been most affected by these impacts. 

The conflict in Kayah state and the recent escalations in Southern Shan state have resulted in an estimated 100'000 IDPs now taking refuge in Southern Shan state, increasing the needs and creating additional challenges to the project implementation. For example, due to conflict project partners have been compelled to close one-stop agricultural service centres and relocate training facilities to different areas. Furthermore, security concerns and conflict have displaced communities previously supported to engage in the production of chilli and other crops. This has prevented the harvesting of crops and led to the cancellation of planned agricultural interventions. The recent announcement that Myanmar's conscription law will be enforced is also significantly affecting the security of staff and partners. 

Flexible and adaptive design 

Given the fragility and fluidity of the context in Myanmar, the FOSTER project has been designed with an integrated approach linking food security relief with agricultural development, skills and employment and social cohesion interventions. Social cohesion initiatives include promoting inter-ethnic interaction and collaborations around mutual interests, such as the sharing of solar water irrigation pumps. The availability of a contingency budget has also allowed the programme to efficiently address humanitarian needs in project areas.   

FOSTER's design takes into account years of programming in the conflict-affected border regions of Myanmar which has found a need for more market-oriented livelihoods interventions, with a key focus on enabling self-reliance. The project's approach involves the piloting of smaller interventions which are iterated upon and scaled up or down based on their results and contextual developments. This approach more easily allows for flexibility and innovation, provided there are clear criteria in place to inform decision making on when to scale up or drop a given intervention. Using the Adopt-Adapt-Expand-Respond Framework to identify where systemic change may be occurring, along with regularly assessing the interventions alignment with the project's overall goals, are examples of such criteria. 

Engaging the private sector and social businesses 

The project does not engage with the de facto military government authorities, in line with other development partners. This has limited the potential scope for systemic interventions that typically require government involvement (particularly related to influencing the rules or regulations that affect a market system). Consequently, the project primarily works with the private sector and social businesses. The project has found that the crisis has resulted in greater receptiveness amongst companies to collaborate with development partners and adapt their business models to become more inclusive, partially as a strategy to buffer the shocks of the crisis.  

For instance, FOSTER engages with the agri-tech and machinery service provider Tun- Yat. HEKS/EPER supported them to diversify their business and to leverage their networks and expertise to produce nutritious food recipes such as dehydrated porridge using local ingredients (sesame and peanut) sourced from Myanmar farmers. These recipes have been used for both humanitarian aid distribution and are also sold commercially online and across more than 260 outlets nationwide. More than 400 people from disadvantaged groups have also been trained by the company on how they can locally replicate such recipes for income generation. This has helped to promote local products, address food insecurity, and enhance skills opportunities. 

Additionally, the project has discovered that in times of crisis, opportunities emerge to work with local entrepreneurs and champions willing to assist their communities. For example, inspired by seeing people in poverty struggle for food in parts of peri-urban Yangon, entrepreneur Zay Cho established an affordable meal shop offering nutritious and safe meals to underprivileged people. The project provided trainings on food safety and start-up capital to establish the meal shop. The shop not only provides healthy options but also employs disadvantaged individuals and allows customers to donate meals to those in need. To date, over 288'000 meals have been sold and more than 36'000 donated, with the funding for these donations coming from local charitable offerings.  

The local private sector has also proven to be a suitable partner in supporting humanitarian response initiatives. For example, the project partnered with an online food delivery start-up: sourcing produce from farmers struggling to sell their crops and distributing it to food insecure households in peri-urban Yangon. The start-up was also supported to assist unemployed chef's to convert perishable products like potato, chilies and chives into non-perishable foods. This initiative supported both farmers and communities while also assisting the start-up with business continuity during this challenging time. 

Crisis as a source of opportunities 

Crisis and instability can create opportunities to accelerate behaviour change, such as the transition towards more agroecological production systems, at a faster pace than usual. For example, with chemical fertilizer costs nearly tripling in 2022 due to both global and domestic factors, the project supported the promotion of bokashi, a potent organic fertilizer, to mitigate the risk of decreased yields. Following a rapid market assessment HEKS/EPER worked with the agricultural one-stop shop service provider Borderless Myanmar to design an intervention that improves the access to organic inputs for smallholders. Through supporting promotional subsidies (buy four bags and receive three additional bags for free) of organic fertilizers at a time of rising input costs, FOSTER promoted the usage of organic fertilizer among 6'000 farmers. This tripled the partners number of organic fertilizer customers, leading to their expansion of production nationwide across 22 factories. 

In addition to the positive impacts of reduced farmer's costs and stable yields, the intervention also helped to address the growing unemployment in rural areas, with more than 180 mostly landless and displaced people benefiting from part-time employment. Seeing the commercial opportunity and success of this company, five other companies are now also producing and selling bokashi fertilizers.  

The project also capitalised on similar opportunities caused by the rise in diesel costs. Through a partnership with the solar irrigation company Agros the project has enhanced smallholder access to solar pumps. Rising diesel costs have improved the return on investment for a solar irrigation pump to one year in certain cases and resulted in higher sales of pumps. By switching from expensive diesel-powered pumps to solar pumps, farmers have been able to save money while reducing their carbon footprint. 

Lessons Learned 

While still in the implementation phase, the FOSTER project has gained some initial valuable insights on how an MSD approach can best be utilised in a fragile context to strengthen food systems: 

The Swiss Increasing Market Employability Program - IME has joined forces with ‘Fresh Line’, a prominent four-party logistics company based in the Balkan region, with a unique business model, which combines its own production with joint ventures and buyouts from specialized growers. The production came because of a unique demand relationship with buyers in Germany, Sweden, Czech Republic, and Poland, including supermarket chains like REWE Group and COOP. The intervention is characterized by a comprehensive approach encompassing production and post-harvest handling.

​Within this modality, IME is co-financing crucial project components, including acquiring high-quality seedlings, certifying the value chain, and providing technical assistance to farmers, by supporting activities such as: engaging experienced mentors - agronomists, obtaining food safety and social certifications, creating educational materials, and seedling production costs. Fresh Line's substantial investment includes procurement of high-quality seeds, co-financing seedling costs, food safety certification, and expenses for packaging and logistics to the EU market. The contract farming model of cooperation led to increased sales for local farmers, enhanced product quality, and access to new international markets.

Four major producers have been strategically chosen, spreading across 32 hectares in different regions of Shtip, Strumica, and Demir Kapija. These locations have been carefully selected to optimize watermelon production, with planting techniques fine-tuned to extend the harvesting season from June to August. Furthermore, they offer an ideal environment to produce seedless watermelons, thanks to a combination of favorable climatic, soil, and geographical conditions. With a Mediterranean climate featuring warm, dry summers and mild, wet winters, these regions provide an extended growing season free from frost - a key requirement for watermelon cultivation.

Contract Farming as a Preferred Model for North Macedonia’s Agribusiness Sector

Within the challenges in North Macedonia, where farmers face distrust, disappointment, limited cooperation, and restricted market access, contract farming emerges as a potential remedy. Playing a pivotal role in modern agricultural practices, this collaborative approach involves formal agreements between farmers and companies, providing a secure market for produce and stability in income. Agribusinesses benefit from a consistent and quality supply of raw materials, fostering innovation and improved agricultural techniques. Contract farming offers traders and exporters of fresh fruits a secure and consistent supply of high-quality produce, reducing market uncertainties. This collaborative arrangement facilitates better planning, efficient resource utilization, and access to a network of reliable farmers. Additionally, it promotes the transfer of agricultural best practices and technologies, enhancing overall productivity and ensuring a sustainable supply chain.

This mutually beneficial partnership enhances productivity, ensures food security, and contributes to the overall sustainability of the agricultural sector.

Private Sector Engagement Modality and the Comprehensive Production Process

This initiative represents a pioneering effort, as seedless watermelons are not traditionally grown in the country. The innovative approach not only encompasses the cultivation of the product but also the introduction of a contract farming model, a partnership with a nursery for seedling production, and the deployment of experienced agronomists for on-site oversight, mentorship, and knowledge transfer with each of the involved partner partners.

What sets ‘Fresh Line’ apart is not only the product itself, but also the innovative production model. Fresh Line's role as a comprehensive supply chain integrator is pivotal in this cooperation. The company organizes the entire production process, from contracting with farmers and seed suppliers to overseeing and mentoring the production of high-quality seedlings, providing invaluable know-how, and ensuring advisory services for every step of the process. This private sector engagement modality efficiently addresses various deficiencies while establishing robust linkages with farmers.

To ensure high-level quality and compliance, ‘Fresh Line’ has taken decisive steps towards obtaining International Featured Standards (IFS) certification process for the packing facility, ensuring compliance with high-quality and safety standards. Additionally, the company invested in obtaining both Global Good Agricultural Practices (GAP) and Global Social Practice (GRASP) certifications, demonstrating its commitment to sustainable and socially responsible agricultural practice on a farm level. This dedication to certification proves Fresh Line's commitment to excellence and their steadfast pursuit of industry-leading standards, in accordance with the requirements of the leading European supermarket chains.

With the support of the Swiss Increasing Market Employability Program - IME implemented by the Palladium Group, ‘Fresh Line’ aims to achieve broader transformation in the watermelon value chain, ensuring the long-term sustainability of their investment. By offering full support to farmers in transitioning from conventional to seedless watermelon production, coupled with secured buyers, they aim to increase seedless watermelon production for export.

​Successfully Managing and Overcoming Challenges

The journey wasn't without its trials. Despite the groundbreaking efforts, the project encountered challenges, notably heavy rains in April, making the seeding process arduous. The solution was to engage 120 additional seasonal workers, which ensured the project stayed on track. Challenges persisted during the ripening phase, as a water supply issue plagued one of the major producers in the Shtip area, resulting in a significant reduction in yield.

Nevertheless, the producers displayed resilience and adaptability. Despite the challenges, the partner farms managed to produce and sell 480 tons of seedless watermelons, with majority making their way to ‘Fresh Line’ for export in Germany and the Czech Republic, while the remaining products found a market domestically.

Higher-than-expected earnings per kilo but also reduced transportation costs resulted in total earnings from the seedless watermelon export amounting to 153,000 CHF. The buyout price of the watermelon was around 63% higher than what was originally agreed between the four producers and ‘Fresh Line’, which represents an additional incentive for farmers to continue and increase production for the years to come. 

Empowering Farmers through Knowledge Transfer and Capacity Development

In the heart of the development intervention also lies a firm focus on knowledge transfer and capacity development. Seasoned producers and agronomists with extensive expertise in seedless watermelon production have been appointed, providing invaluable oversight and guidance at every stage of the process. Their proficiency in utilizing bio-stimulators is bound to foster continuous elevation of quality, and the establishment of a long-term, reliable production.

What is more, the project also incorporates educational videos illustrating the entire process ‘from farm to consumer’ for seedless watermelon cultivation, through the specialized information platform for the agricultural sector in the country ‘Agrotim’. Through interviews, media coverage, and case studies showcasing the applied technology and profitability of this production, more farmers will become acquainted with the opportunity, spurring interest in participating in seedless watermelon contract farming next year. It is also worth noting that ‘Fresh Line’ has been recognized as a role-model in contract farming in the country, by receiving the ‘Award for Promotion and Development of Contract Farming in North Macedonia’, issued by the media outlet ‘Modern Agriculture’.

Producers Remain Optimistic about the Future

Following the pulse of EU markets, ‘Fresh Line’ envisions a continued partnership with the farmers and extending the contract farming arrangements with other farms for production of seedless watermelons on more hectares for next year. This intervention not only represents a milestone in seedless watermelon production, but also showcases an effective model of cooperation between producers, traders, and other industry experts.

Having all this into account, the entire comprehensive approach, driven by the private sector engagement modality will strengthen the related value chain in North Macedonia, ensuring long-term sustainability. With continued support, this venture is set to redefine the agribusiness landscape and open new doors for Macedonian farmers. The future looks bright for both ‘Fresh Line’ and the local farmers, as they embark on a journey of sustained economic growth and increased employment, especially in the rural areas.​

​The Increasing Market Employability Programme (IME) is aimed at strengthening the business sector in the Republic of North Macedonia. Our mission is to create an enabling environment for our identified high-growth target sectors: Sustainable Agribusiness, Adventure Tourism and Information and Communication Technology (ICT). We aim to expand markets and boost competitiveness amongst domestic players in these sectors, to catalyse an overall improvement in the quality of products and services and create sustainable and decent jobs for high-skilled labour force in North Macedonia, especially women and youth.​​