Final Documentation

Reaching the rural poor with improved fertiliser technology, IDE Vietnam, 2004

    Description
    Although the project takes affordable innovation as a focal strategy to poverty reduction illustrated by promoting highly compressed fertilizer pellet that is placed deep in the soil, the main features of the initiative are the market strategies to deliver the technology through the local retailers at unsubsidized prices. The main market strategies exposed in this paper are three, namely: i) product development to adapt affordable and responsive solutions to upland farmers, ii) promotion and marketing to disseminate affordable innovation among upland farmers and iii) supply chain development to improve the coverage and quality of fertilizer and services to upland farmers.

    Summary of results
    By September 2004, in less than 4 years of implementation, the initiative managed by IDE has expanded from 9 to 34 of the poorest communes in the central region with sales of fertilizer pellets almost doubling for each rice crop every season.

    The total number of farmers regularly buying fertilizer pellets stands today at 2,858, of which 522 belong to indigenous populations, placing this project as one of the few poverty alleviation initiatives in Vietnam that are commercially viable and sustainable in the market.

    Through pilot operations, IDE learned early in the process of technology adaptation and enterprise development that the installed capacity of pellet producers and its relation to a market size that can be supplied in a limited timeframe is important. Through design focused on affordability, IDE and local machine producers engineered down the capital investment of the pelletizing unit from about US$1,950 to US$450. The average period for small-scale pellet producers to breakeven has been significantly reduced from approximately 10 crops to 3.5 crops.

    During the 4-year period, a total of 33 new small-scale enterprises have entered the fertilizer pellet commercialization business. By September 2004, 3 machine producers, 8 pellet manufacturers, and 15 pellet retailers are part of the network of small-scale upland private sector suppliers of this market.