Private sector agribusiness-led RAS have the most impact on farmers’ and businesses’ efficiency and profitability where publicly supported extension services are absent or ineffective. Private sector-led RAS are most likely to be effective for both provider and client where there is a demonstrated need and demand for these services, and in areas where donors and/or NGOs are actively supporting private companies’ RAS development and implementation.
Companies may be successful in areas with few existing RAS by becoming a market leader that offers these additional services; but they may also find success in markets with existing RAS offerings by following the lead of other companies or providing complementary services. Other factors affecting agribusinesses’ decision to provide RAS to small-scale farmers include their willingness to engage farmers over the long term, the proportion of supply that the small-scale farmers control, and whether side-selling (farmers selling to other offtakers) is a problem.
Governments must create an enabling environment where multiple stakeholders are encouraged and financially incentivised to participate in RAS. RAS work best when the public and private sectors work together to improve farmers’ capacities. While government may not be in a position to provide RAS, they can provide other support services such as improved power, water, road, and market infrastructure; reliable market information; and access to higher education and agricultural research services. The public sector can also ensure that environmental and social priorities are not neglected.
Evidence of impacts, sustainability, and scalability
To justify investment in RAS, private sector agribusinesses must see that this additional investment has a positive effect on their bottom line. They must be able to attribute improved farmer performance, increased product sales, and better brand recognition/loyalty directly to the RAS provided. Costs incurred for RAS must be considered a cost of doing business.
As well as increased sales revenue, there are a number of other ways in which companies can recover the costs associated with RAS and thus ensure sustainability. A company can charge farmers a service fee, but this is difficult for smallholders with limited capital who struggle to invest in production costs in the first place. More commonly, companies offer short-term production credit through, for example, an agrodealer, and recover the cost at harvest. These trade loans may be internally financed, or a company could partner with a financial institution or donor-funded programme to defer their RAS costs. The downside of using the donor option is that these programmes are short term and therefore are not sustainable.