Gross Margins & Profitability Analysis for LFSP Market Development Supported Business Models | Jobs263

Gross Margins & Profitability Analysis for LFSP Market Development Supported Business Models

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  • Post Date: June 25, 2020
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Job Overview

Introduction

The Livelihoods and Food Security Programme (LFSP) is a DFID-funded initiative which seeks to improve rural household incomes and their food and nutrition security. The program is implemented in Zimbabwe in ten districts drawn from three provinces, Mashonaland Central, Manicaland and Midlands . The LFSP program has two main components as indicated below;

Agricultural Productivity and Nutrition (APN) Component

The Food and Agriculture Organization (FAO) manages the implementation of interventions under this component. The interventions under this component seek to raise smallholder farmers productivity by promoting improved and climate smart agricultural practices and technologies, access to finance as well as the production and consumption of safe and more nutritious food. The APN component is also responsible for farmer group formation, and these farmer groups are important for the MD component in aggregation of produce and establishment of Farmer Group Enterprises.

Market Development Component   

Palladium manages the implementation of the LFSP Market Development component (LFSP MD). The interventions under this component seek to strengthen smallholder farmers participation in agribusiness through improved linkages to various market services such as inputs, output markets, mechanization and other services.  Following the Market Systems Development approach (MSD), Palladium works closely with local partners, the Agricultural Partnerships Trust (APT) and GRM Zimbabwe to facilitate implementation of inclusive business models which have potential for pro-poor economic impact in their respective communities. In this respect, various value chains and agribusiness models are continually assessed for pro-poor impact and commercial viability. The LFSP MD component provides targeted support to market actors designed to contribute towards reducing market constraints which limit potential for scale, inclusiveness and long-term sustainability.  Market actors are supported under this component through a range of interventions including cost-sharing arrangements  and / or provision of technical assistance (TA) to enhance the depth, scale and commercial sustainability of supported interventions.

Purpose and Statement of Assignment

Background

In this Phase II of the programme, the LFSP-MD component continued co-creation and implementation an assortment of business models with multiple market actors, from national agribusinesses to local market actors such as farmer-group enterprises (FGEs) and Local Level Entrepreneurs (LLEs). This work is a follow-up to similar STTA gross margin and profitability analysis works that were conducted in Phase I for various business models and value chains. Another round of Business Models Profitability Analysis was also conducted during the inception phase of LFSP Phase II in 2019 to inform the re-design of the MD strategy.

In addition, gross margin, profitability and business cash flows have been routinely carried out through the life of the programme  as part of the  continuous M&E processes. LFSP-MD also made it mandatory to undertake business cash flow projections during the business model design and co-creation, hence all the market actors proposals to the LFSP investment committee contain either gross-margin and/or cash flows to inform commercial feasibility before grant funding. All such data and reports are readily available as benchmarks for triangulation and review by the STTA to augment the new primary data to be collected under this assignment.

Rationale

The ever changing macroeconomic, climatic and other shocks that include the Covid-19 may have rendered the previous gross margin and profitability analysis outdated. In addition, this round of assessment will also provide a trend analysis of the performance of the various business models in order to understand programme performance, impact, value for money and feed into the LFSP objectives for the 2020 Annual Review and Endline Evaluation. As the programme nears completion, the timing of this work is meant to inform the exit priority support areas to ensure long-term resilience, sustainability, stabilisation and commercial viability of LFSP-MD initiated and supported business models beyond the programme.
Annex 1 provides a list of the LFSP-MD supported business models. The performance and results secured from the supported business models has been varied for various reasons. Palladium therefore seeks to engage an independent STTA to conduct Gross Margins and Profitability reviews for selected business models with priority focus on contract farming and other business models as will be agreed through a joint (Palladium & STTA consultant) inception scoping exercise.

Assignment Delivery Approach

Previous Proven Methodologies

  • For consistency and comparison of findings, this assignment should draw and build on similar exercises conducted during the project Phase I and Phase II of the programme stated earlier on. The STTA therefore may need to consider previously applied methodologies such as (among others);
  • Sensitivity analysis for gross margin budgets, including Pressure points analysis,
  • Scenario analysis based on status (‘with’ or ‘without’ project),
  • Contextual considerations which have previously shown variations in the same business models across different locations/districts.
  • Unlike the previous round which included focus group discussions, because of covid-19 this round may need to be restricted to interviews with key informants, that include market actors management and leadership e.g. FGEs chairpersons, treasurers and secretaries, LLEs owners, NMAs management and key staff, LFSP MD technical team members including Provincial Market Leads and District Market Coordinators and other relevant APN project staff. Relevant Government departments’ staff who directly interface and provide technical support to the market actors and the business models are also key in the assessments.

Sampling

  • The conclusions that the STTA secures for each model needs to be as representative as possible and therefore the STTA will need to design and implement a stratified sampling approach that takes into consideration all relevant factors. While it is acknowledged that the results for each business model cannot be fully statistically significant, the sampling and data analysis approaches to be employed will need to be weighted to ensure not only the accuracy of the results but the diversity in each business model such as attributes related to the profile(s) of the implementing partners and locations.

The STTA is required to perform the following tasks:

  • Develop a clear sampling approach with defined parameters for application during the assignment. The sampling strategy together with the data collection methods will need to be presented to LFSP MD team for peer review and approval as part of the inception report of this assignment.
  • Undertake detailed Gross Margin and Profitability Analysis to determine the commercial viability of each of the agreed business models.
  • Outline the main conclusions related to the performance of each business model and provide specific programme exit recommendations to enhance resilience, sustainability and commercial viability beyond the programme, for each model.

STTA Deliverables and Timelines

The STTA under this assignment will need to provide the LFSP MD not only the narrative assignment report but also the raw database to facilitate triangulation of findings / conclusions and any further analyses (as may be required). The STTA will be required to present preliminary findings and conclusions to the LFSP MD Team for validation prior to the preparation of the final report.

The following are the main deliverables under this assignment expected from the STTA:

  • The desired STTA should have the following qualifications and experience;
  • At least 5 years direct experience in similar work and/or working in development work with smallholder farmers and small and large agribusiness organisations.
  • Proven previous work in business or value chain gross margin or profitability analysis – reports on such previous assignments maybe required.
  • A degree in a relevant program such as Agricultural Economics, Economics, Business Studies, Development Studies and other relevant qualifications.
  • Strong analytical and report writing skills.
  • Preliminary Meeting with LFSP-MD Team to Understand Scope of Work & ToRs
    Inception Report & Powerpoint Presentation to LFSP-MD team
  • Field Work – Across 3 Clusters (concurrent with analysis & drafting of report)
  • Draft Gross Margin Analysis Report & Powerpoint Presentation to LFSP team
  • Final Gross Margin Analysis Report (Inclusive of Raw Data Database)

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