Authors
Fitsum Hagos, Thai Thi Minh, Dagmawi Melaku, Soumya Balasubramanya, Petra Schmitter
Publication date
2022
Publisher
Technical report. Colombo, Sri Lanka: International Water Management Institute (IWMI). https://ilssi. tamu. edu/files/2023/01/20221124-Supply-chain-and-marketing-margin-Technical-Report. pdf
Description
This study aimed to characterize the supply chain of suppliers for solar, diesel/petrol, and manual pumps, estimate the marketing margin and assess whether the policy environment is favorable for business expansion and diffusion of selected pumps. The data was collected through online interviews to mitigate the risk of dissemination of COVID-19, complemented by telephone interviews and face-to-face interviews in early 2021, and the collection of additional data on purchasers’(import) prices and manufacturing costs from the global web and the literature.
The results indicate that the supply chain for solar, motor pump and rope pumps are short, ie, the importer or supplier of the locally manufactured irrigation technologies and wholesaler and retailer is the same company, sometimes using intermediary agents as the final link to end users by charging an additional commission of 10–15% of the sale price. The marketing structure is characterized as a'segmented monopolist', with farmers having a limited role in determining the market price of these irrigation technologies. Import and manufacturing costs, duty taxes, and marketing (including storage and logistics) influence the sale price. The estimated marketing margin for solar, diesel, petrol motor, and rope and washer pumps ranges between 12% to 48%(60% for Grundfos), 23–50%, and greater than 70%, respectively. Much of the estimated marketing margin is greater than the anticipated marketing profit of about 20%. Solar and diesel/petrol pumps are not low-cost for smallholder farmers. There are no financial products from microfinance institutions or suppliers to address farmers’ burrowing …