The RAIN programme

By Miriam Christensen and Todd Flower

Miriam Christensen was the Documentation and Information Officer with the RAIN programme. She specialises in communications and knowledge management. Miriam now works with the International Labour Organisation and is based in Tanzania.

Todd Flower is the Chief of Party of the RAIN programme and has extensive experience in implementing and managing international agricultural development projects. He specialises in agricultural market development.

The authors acknowledge the support of the U.S. Agency for International Development and the Office of Foreign Disaster Assistance.

Rises in global food prices have led to an increase in vulnerability for areas of the world that are net food importers, which includes many countries in Africa. In Ethiopia, pastoralists and agro-pastoralist households depend on a delicate balance of trade to be able to purchase their household food requirements based on the value of their animal herds. If the prices of animals do not also rise with the prices of staple foods, then these households can struggle to meet their needs.

The United States Agency for International Development (USAID) through the Office of Foreign Disaster Assistance (OFDA) has been providing support to communities in Ethiopia for many years through short-term emergency assistance programmes, such as emergency vaccination or nutrition campaigns. These programmes have traditionally lasted from 6 to 12 months. The global food price crisis brought about a change in these programmes, with development of a longer term vision of assisting people and communities to remove themselves from the cycle of emergency assistance.

It is in this context that Mercy Corps is implementing the Revitalising Agricultural/ pastoral Incomes and New markets (RAIN) programme, a multimillion dollar OFDA/USAID funded programme. The RAIN programme is being implemented for three years from 2009 to 2012. It is clustered around an inter-linked geographic area connecting one zone in the Oromia region with four bordering zones of the Somali region. RAIN seeks to protect, promote, and diversify livelihoods in this strategic cluster as a means of increasing households' resilience to shocks. The RAIN programme works in the transitional environment from emergency to development programmes by combining traditional emergency interventions with longer-term development activities. This seeks to address both the immediate needs of communities and also to promote sustainable local economic development and integration. Some of these activities include cash for work, emergency animal vaccination campaigns, value chain analyses, linking producers to markets, and the establishment of a microfinance institution to increase access to credit. The RAIN programme is targeting over 700,000 people with these activities.

RAIN objectives

Cash for work beneficiaries digging soil bunds in Gashamo, Somali Region, to regenerate the rangeland

The programme has two objectives:

• To protect the agricultural and pastoral productive asset base of food insecure households to prepare them for participation in more profitable markets
• To increase and diversify the asset base of food insecure households via immediate economic opportunities and the development of high impact agriculture and nonagricultural markets, that spurs private sector investment and local economic growth.

Implementation: natural resource management

During the first year and under the mandate of the first objective, projects such as cash for work, seasonal and emergency vaccination campaigns and training of community animal health workers were implemented. Over 1.5 million animals received vaccinations that assisted 160,000 households and so far, more than 9,000 people have been employed under the cash for work component of the programme. While such activities have been going on in the region for many years as individual projects, it is the first time that such a range has been brought together under the umbrella of one programme.

Vaccination campaign in Gashamo, Somali Region

All cash for work activities have focused on natural resource management to provide immediate assistance for poor households and to ensure that resources are developed for the benefit of the community. Natural resource management projects include activities like pond rehabilitation or other earth works that reduce the threat of flash flooding or drought. All natural resource management activities are identified by the participating community through a community action plan. The RAIN team works together with communities on asset and risk mapping and needs assessment. Cash for work is utilised to assist poor households to rebuild their assets and pay off debts. Poor households are much more likely to be risk averse and unable to take chances on new market opportunities. The cash for work helps these households to become more secure so that they can participate in profitable markets.

Implementation: a market led approach

The second objective, to strengthen economic recovery and market systems, is what makes RAIN dramatically different from traditional OFDA funded projects. Working on market system development focuses on the long-term approach, rather than immediate, emergency interventions. Traditional emergency approaches tend to have non-governmental organisations (NGOs) providing services directly. A market based approach, however, puts the 'exit strategy' first and aims to strengthen the local market to provide access to goods and services, so that NGOs do not have to in the future.

Loading vaccination for livestock campaign in Gashamo, Somali Region

The RAIN programme focuses on market systems and provides support by creating linkages between various market participants. In the first year of the programme, several value chains were identified and evaluated including live animals, hides and skins, milk, fruits and vegetables, and peanuts. These value chains were selected for evaluation because they had the highest potential to provide benefit for the poor in the programme area. At least one of these commodities is an important income source in all of the communities where the programme is working.

The value chain analyses included interviews with government, private sector and community members. A common theme to all of these evaluations was that farmers do not have access to the inputs they require to invest in the production of large quantities of high quality products. The RAIN programme is targeting access to agricultural input supplies to assist producers to be able to meet available market demand. Most of the markets in this area are considered informal, with lots of small scale transactions in many local markets. There are very few large, formal businesses working in the area. This has left the RAIN programme to focus on the production side of the value chain for most of these commodities. Demand is considered strong for all of these commodities. This means that any increase in production through intensification and improving access to the means of production, agricultural inputs and knowledge, will lead to a cycle of continuous upgrading for producers.

Producers not only need access to agricultural inputs but they also need information about how to use these inputs effectively and information about market demand. The RAIN programme is working with the private sector because these are the market players who should offer matching incentives to the producers. If the producer does well, then the input supplier will sell more inputs to that producer. The RAIN programme is identifying these 'winwin' situations to improve the functionality of the market.

The RAIN programme views the producers as customers with demands and works to link private suppliers to the customers. A traditional emergency approach might include the distribution of needed inputs by an NGO. However, this tends to lead to low investment in the long term because the producers are unaware of where they can purchase these inputs in the future. It is also often the case that the emergency approach leads to 'dependency syndrome' where producers wait for the next distribution to occur. The RAIN programme is taking a facilitation approach to ensure sustainability by working with the private sector to invest in the region.

RAIN in action: the peanut chain

Another example of RAIN programme activities in market development is in peanuts. The RAIN programme is working on supply through the agricultural input market but also on the demand, by connecting farmers to a lead firm. Lead firms are identified by size (i.e. number of members of a producer's cooperative) and their influence (i.e. whether they set the standard for the market). RAIN set a strategic goal to increase the competitiveness of the regional peanut sector by reducing losses, increasing production efficiency, upgrading warehousing and storage, strengthening management capability, and facilitating linkages to higher value markets.

The RAIN programme is working with the Afran Kallo Union (AKU) and Hilina Enriched Foods Processing Centre plc to increase income for peanut producers in the programme area. AKU is a union of peanut suppliers with 68 member cooperatives that represent approximately 48,000 individual members. Hilina Enriched Foods is a manufacturer of a ready-touse therapeutic food (RUTF)¹ used to treat severely malnourished children. The relationship between these producers and the company was a very typical situation. Hilina could not source enough peanuts on the local market that met their stringent standards and the AKU was unaware of the standards and available prices. Low prices on the local market led to low investment by producers in production, harvest, and storage. Considering these needs gaps and opportunities, the two partners were identified as ideal candidates for support from the RAIN programme.

Seed fair beneficiary evaluating quality of seed before purchasing at Midegatola woreda, East Hararghe

The RAIN programme facilitated the signing of a production contract between Hilina and AKU in June 2010. Hilina and AKU signed a supply agreement at a 10 to 15 percent market premium starting July 2010. The RAIN programme also coordinated a production and post-harvest loss prevention training carried out by Hilina technicians and fully paid for by AKU and Hilina. By again aligning market incentives, the RAIN programme has been able to create conditions where participants are willing to invest in constant upgrading to meet this new market demand. The RAIN programme is providing additional support to this market by providing a research grant for improved peanut production at a local university and by identifying input suppliers for the cooperative members for access to improved seeds. Finally, RAIN will supply a management consultant to ensure AKU's management team is proactively able to seek solutions to members' production and post-harvest needs in meeting with market demand. This consultant will help the AKU Board, managers and members establish management structures, responsibilities and targets conducive to more proactive and responsive leadership.

In short, the RAIN programme seeks to create space and opportunities for market-driven systems using facilitation techniques to impact the targeted value chains. As the peanut chain example illustrates, the programme does this by identifying incentive structures and working to align them to create investment. The programme also works to reduce risks for all participants in the market to stimulate new market transactions.

One of the goals for the remainder of the RAIN programme is to continue to focus on market development and build on the successes to increase the impact of the project in the region. This will leave behind better functioning markets that in turn contribute to sustainable livelihoods.

RAIN and microfinance

Providing access to markets and inputs does not always allow producers to invest in these opportunities. To complement these activities, the RAIN programme is developing the first microfinance institution in the Somali region to provide access to credit. The RAIN programme started with the intent of providing loan guarantees for producer and income generating groups but it was quickly realised that there were no microfinance institutions working in the region. The RAIN programme began working with the government of the Somali region to establish a new institution, which was one of the first goals of the new president of the region. The RAIN programme has been providing technical support by working with the national bank and regional government to create all of the documentation required, including a business plan and memorandum of association. The RAIN programme also provided a technical expert to work directly with the government on making their budget request for the loan capital from the federal budget. The government has since held a general assembly meeting which voted in favour of all of the documentation required, election of the new board of directors, and approval of the shares to be distributed to the government and private investors. It is expected that the new institution will be operational by the end of 2010.

Lessons learned

The RAIN programme has reached the halfway point of implementation and many lessons have been learned. It is often difficult to transition staff into a new approach. When people have worked for many years on emergency programmes, they are often convinced that approach is the best method for providing benefits to needy people. The RAIN programme not only had to demonstrate success in the project area to convince people of the approach, but those successes were just as necessary for convincing staff of a new method of operation.

Seed fair beneficiaries queuing to purchase seed at Midegatola woreda, East Hararghe.

Agricultural markets in Ethiopia are fragmented into several regions. The Somali region of Ethiopia tends to do business with Somaliland instead of selling commodities internally to the rest of the country. This is due to cultural relationships on both sides of the border and better access and proximity to those markets. The RAIN programme is working with producers to provide better quality commodities in these markets but is unable to work with the end market of commodities, like livestock and milk, due to funding constraints for working across borders.

Like many countries in Africa, the agricultural input market is highly regulated and in some cases, such as fertiliser, controlled by the government. The market place for these products becomes a self fulfilling prophecy for the government. The government believes that the private sector cannot provide these products at a low enough price to the producers so it steps into the market to provide the service directly. The private sector is then unable to compete with the government so it remains unable to provide services and products to the producers. The RAIN programme is working to identify existing private sector suppliers that offer products that are not in direct competition with the government suppliers. The programme will demonstrate that the private sector can compete and provide benefits to producers with these products. The private sector will then be in a better position to demonstrate to the government that it has the capacity to provide services more efficiently.

The RAIN programme is taking a holistic view of the needs of the target region and providing emergency assistance where needed, connecting people to profitable markets, and assisting people to access capital needs for investment.

For more information, contact: Todd Flower, email: tflower@et.mercycorps.org

¹Plumpy'nut