Central Stock-­‐and-­‐Flow Structure 26

The  first  task  in  creating  the  model  was  to  define  the  central  stock-­‐and-­‐flow  structure  of   the  value  chain.  Building  on  the  research  of  USAID  &  COMPETE  (2009),  Keyser  (2007)  and   Leathers  (1999)  Kang’ethe  (2011)  and  Kirimi  et  al.  (2011)  about  agricultural  value  chains   in  Sub-­‐Saharan  Africa,  I  conceptualized  the  main  actors  in  the  value  chain  to  be:  

• Farmers:  producing  the  original  product  of  maize  grain  

• Assemblers:  acting  as  brokers  for  grain  between  farmers  and  millers   • Millers:  milling  and  refining  the  grain  to  different  types  of  meal   • Wholesalers:  brokering  the  meal  from  large  scale  millers  to  retailers   • Retailers:  selling  the  final  product  to  consumers  

• Consumers:  purchasing  and  consuming  maize  meal  

Transforming   this   information   into   a   stock-­‐and-­‐flow   structure   of   maize,   the   relations   would  look  like  displayed  in  figure  4.  

Figure  4:  First  conceptual  formal  maize  value  chain  model  

However,  from  the  aforementioned  sources  it  also  became  clear  that  the  real  dynamics  of   the  maize  value  chain  in  Zambia  were  messier  and  less  strictly  compartmentalized  than  in   the  conceptual  view  presented  above.  The  most  important  differences  were:  

• There   is   a   second,   less   formalized   value   chain   involving   consumers   buying   their   grain  directly  from  farmers  or  grain  retailers  and  milling  it  themselves  using  small   hammer  mills  throughout  the  country  (USAID  &  COMPETE,  2009:  chapter  4).  

• Farmers  do  not  always  sell  to  assemblers,  some  also  directly  sell  to  millers  or  even   to  grain  retailers  (Leathers,  1999:  chapter  5).  

• Wholesale  and  retail  marketing  activities  can  in  Zambia  not  clearly  be  distinguished   from  each  other.  Many  actors  partake  in  selling  meal  from  millers  to  consumers  and   they  mostly  do  not  fulfil  clearly  specified  roles  in  the  sales  process  (Nyanga,  2015b).   • The  FRA  has  a  very  large  impact  on  the  maize  market  (N.  M.  Mason  &  Myers,  2011),  

which   can,   depending   on   political   decisions   for   funding   and   purchase   goals,   completely  alter  the  market  dynamics  in  a  given  year  (Kuteya  et  al.,  2014).  

Bearing  these  findings  in  mind,  it  was  necessary  to  adapt  the  stock-­‐and-­‐flow  from  figure  4   to  what  is  visible  in  figure  5.  

Farmer's storage Maize grain

production

Assembler's

storage Millers grainstorage

Miller milled maize storage

Retailer storage Consumer

storage

Assemblage Distribution Milling

Wholesaler storage Selling to wholesalers Wholesaling Retailing Consumption

Figure  5:  Adapted  stock-­‐and-­‐flow  structure  maize  value  chain  

As  you  will  notice,  the  new  structure  represents  the  fact  that  there  are  essentially  two  value   chains  for  maize  in  Zambia:  

There   is   the   more   formalized   avenue   shown   at   the   bottom   in   figure   4,   involving   farmers   selling  either  directly  or  through  small-­‐scale  assemblers  to  large  commercial  millers,  these   millers  milling  and  refining  the  grain  to  different  types  of  meal,  selling  it  to  retailers  and   these  retailers  then  selling  their  bags  of  maize  meal  to  consumers,  who  finally  consume  the   product.   The   FRA   is   also   involved   in   this   avenue,   as   it   purchases   large   amounts   of   grain   from  farmers,  then  selling  it  to  large  commercial  millers  later  in  the  year.  (N.  M.  Mason  &   Myers,  2011)  

However,  there  is  also  the  less  formalized  avenue,  which  is  formed  by  consumers  buying   grain   directly   from   farmers   (in   rural   settings),   or   from   informal   grain   retailers   that   purchase  grain  from  small  maize  assemblers  or  farmers.  These  consumers  then  bring  their   grain  to  small  hammer  mills  throughout  the  country  to  transform  it  into  whole  grain  maize   meal,  which  is  then  taken  home  and  eventually  consumed  by  them  (Leathers,  1999:  chapter   5).   I   will   call   this   the   “informal   value   chain”   from   now   on,   as   the   name   represents   the   division  between  this  avenue  that  involves  many  small-­‐scale  informal  actors,  and  the  other   avenue   discussed   in   the   paragraph   above,   which   includes   bigger   actors   with   more   formalized   organizational   structures.   The   other   avenue   will   thus   be   called   “formal   value   chain”.   Farmer storage Maize production Consumer informal grain storage Consumer informal meal storage

Informal retailing Hammer milling Consumption informal

FRA storage FRA purchases Millers storage Commercial assemblage Consumer formal meal storage Consumption formal Milling and retailing FRA sales

Apart  from  adding  the  informal  value  chain  and  FRA  to  the  structure,  you  will  notice  that   also  the  formal  value  chain  has  changed  from  the  first  conceptual  sketch  in  figure  4.  I  will   discuss  the  changes  in  detail  below.  

Since   there   is   hardly   any   information   about   residence   or   adjustment   times   for   many   processes   in   the   maize   value   chain   in   the   literature,   I   relied   on   estimates   by   experts.   My   interview   with   Nyanga   (2015b)   concluded   that   urban   retailers   only   stock   maize   for   1-­‐2   weeks,  as  the  majority  of  urban  maize  sales  is  done  through  street  vendors  or  in  big  market   spaces   consisting   of   a   congregation   of   small   independent   salesmen.   With   the   residence   time  of  the  stock  being  so  small  in  relation  to  the  model’s  time  step,  I  chose  to  represent   retailing  as  a  flow  instead  of  a  stock.  I  further  added  milling  to  that  flow  because  milling   takes  only  a  few  hours  and  is  thus  so  negligible  as  a  delay  that  it  I  felt  it  could  be  subsumed   into  the  retailing  flow  in  the  formal  value  chain.  

Concerning   retailing   in   the   informal   value   chain:   in   rural   areas,   there   is   normally   no   developed  retail  sector  at  all:  local  smallholder  farmers  just  keep  their  grain  stored  and  sell   it  directly  to  other  people  in  the  area  at  their  farm  gate.  In  urban  areas,  small-­‐scale  informal   retailers  buy  grain  from  farmers  or  assemblers  and  sell  it  to  consumers.  (Nyanga,  2015b)  I   subsumed  these  activities  in  the  “informal  grain  retailing”  flow  that  brings  the  maize  from   smallholder  farmers  to  consumers.    

Furthermore,   you   will   notice   that   the   wholesale   sector   does   not   explicitly   appear   in   the   model   any   more.   This   is   due   to   the   finding   that   there   simply   is   no   developed   wholesale   market   with   wholesalers   stocking   meaningful   amounts   of   maize   or   performing   strategic   purchasing   and   selling   behaviour   (Nyanga,   2015b).   Instead,   those   small-­‐scale   entrepreneurs  who  perform  functions  closest  to  what  one  might  understand  as  wholesaling   (linking  meal/grain  producers  to  retailers),  mostly  act  as  mere  agents  of  retailer  demand   for   maize.   Furthermore,   in   many   cases   the   retailer   himself   purchases   directly   from   the   producer,  especially  in  the  informal  value  chain.  It  thus  seems  reasonable  to  subsume  their   activities  into  the  retailing  flow  as  well.  

Finally,  I  assume  that  millers  prefer  to  store  their  maize  in  the  form  of  grain  and  only  keep   a   small   storage   of   milled   maize,   as   maize   meal   is   much   more   vulnerable   to   loss   due   to   moisture   or   pests.   I   therefore   neglect   the   miller’s   maize   storage   in   my   value   chain   structure.