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P4P Nicaragua: Improved negotiation skills key to success

Access to agricultural inputs such as seeds and fertilizers have helped P4P-supported farmers in Nicaragua to successfully increase their crop productivity, and therefore meet market demand. The strengthened link between smallholder farmers and agricultural input providers can be traced to the smallholders’ improved negotiation skills and access to credit, allowing their organisations to negotiate and buy inputs in bulk.

One of P4P’s main activities in Nicaragua has been to provide capacity building among smallholder farmers and to increase their productivity, achieve better yields, and grow higher quality products. The use of agricultural inputs, such as fertilizers, insecticides and improved seeds, are key to achieving all of these goals. Throughout the pilot, P4P and partners such as Disagro and Formunica, have arranged training sessions addressing the use and importance of agricultural inputs.

Commercial partnerships and negotiating purchases

P4P has also assisted farmers’ organizations in forming sustainable commercial partnerships with several agricultural input suppliers. During a series of P4P-sponsored negotiation rounds with suppliers, representatives from 15 selected farmers’ organizations learned how to meet suppliers’ demands, and how to successfully negotiate input purchases. They also developed their entrepreneurial skills, and established sustainable commercial partnerships with the inputs providers. Since 2009, over 9,000 smallholders from the participating farmer’s organizations have benefitted indirectly from these negotiation rounds.  

Additionally, in 2013, representatives from 15 P4P-supported farmer’s organizations established two Advisory Committees to facilitate the joint negotiation of better purchase conditions in order to reduce the cost of agricultural inputs.

Ana Rosa Romero, who belongs to an organization represented by the Advisory Committee, said: “Before P4P, the Cooperative La Union didn't have the option to take part in these events, nor to negotiate prices and volumes with commercial suppliers. However, thanks to P4P we are now part of an Advisory Committee. Through the committee we compare the prices offered by different suppliers with those of the market. We are seen as reliable potential clients for input providers, who offer us loans for the purchases and even technical capacity-building workshops.”

Credit secured but still challenges

Farmers in Nicaragua have also improved their access to credit through revolving funds, and by fostering relationships between farmers’ organizations and credit institutions.  This is fundamental for the purchase of inputs, because it ensures that farmers will not need to rely upon seasonal incomes, as these are often not available when the inputs are needed.

The nine farmers’ organizations making up the Advisory Committee in Nueva Segovia were able to invest a total of US$ 221,000 in agricultural inputs in 2013.  Almost 60% of this was purchased using credit.

Despite significant strides, one of the programme’s major challenges in increasing smallholder productivity is the limited access to credit for purchases of seeds, fertilizers but also other necessary investments in the commercialization phase. P4P continues to work with partners on capacity building to strengthen smallholder farmers’ commercial skills. P4P is also using revolving funds, enabling farmers to build up a credit history that makes them more attractive to creditors. Meanwhile many P4P-supported farmers have also been successful in accessing loans when using WFP contracts or letter of intent to purchase as a guarantee.

Story by Marta Ortiz