Yam Business Plan
Yam Business Plan
Yam Business Plan
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© IITA 2017
ISBN 978-978-8444-78-7
Correct citation: Beatrice Aighewi, Norbert Maroya, Djana Mignouna. 2017. YIIFSWA Working
Paper Series No 8. Key for a profitable and sustainable seed yam business enterprise: Business
Plan and Market Development with Record Keeping for Seed Yam Farmers, International Institute
of Tropical Agriculture, Ibadan, Nigeria. 23 pp.
Cover photo: Seed yam tubers on display at Illushi seed yam market, Edo State, Nigeria.
(photo by B. Aighewi)
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Contents
Preface by Project Leader............................................................................................................................ iv
1. Introduction...........................................................................................................................................1
Section 1: The business plan................................................................................................................2
Section 2: The market development plan.............................................................................................2
2. The seed yam value chain....................................................................................................................2
Section 3: Business record keeping.....................................................................................................4
The Importance of Keeping Business Records for the Seed Yam Enterprise......................................4
Simple Business Records.....................................................................................................................5
Estimated cost of seed yam business .............................................................................................5
Estimated revenue and gross margin of seed yam enterprise.........................................................6
Actual cost of business.....................................................................................................................7
Labour use........................................................................................................................................8
Expected risks..................................................................................................................................8
Realised revenue and gross margin from enterprise........................................................................9
Record of market price data.............................................................................................................9
Technical information......................................................................................................................10
List of major challenges encountered in production and marketing................................................10
Simplified Sales Records Books.....................................................................................................11
Annexes
1. Producing Quality Seed Yams Using Minisetts...................................................................................12
Producing seed tubers by the adaptive minisett technique.............................................................12
2. Calendar of Yam Activities..................................................................................................................15
3. Collecting Required Information for the Business Plan Development................................................16
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Preface by Project Leader
The Yam Improvement for Income and Food Security in West Africa (YIIFSWA) project is a grant
of Bill & Melinda Gates Foundation to the International Institute of Tropical Agriculture (IITA). The
project is being implemented in Nigeria and Ghana by IITA in partnership with a consortium of
national and international R4D agencies and in collaboration with service provider organizations,
the private sector, smallholder yam farmers and traders.
The “Business Plan & Market Development with Record Keeping for Seed Yam Farmers” is a manual
developed specifically to assist seed yam farmers to operate with projections and decision making
for each of theirs activities in term of production, marketing and selling. This manual will help seed
yam entrepreneurs to achieve two goals. The first is to help generate financial projections regarding
a specific period to support the creation of a business plan. The second aim is to support decision-
making by enabling the user to change one or more parameters of his/her business setup.
The YIIFSWA Working Papers are published informally by the project to disseminate its intermediate
outputs or technologies. Publications in the series include methodologies, survey questionnaires,
as well as preliminary results of the various objective teams of the YIIFSWA project. The series is
aimed at scientists and researchers working with national agricultural research systems in West
Africa, the international research community, policy makers, donors, and members of international
development agencies that are interested in yam.
As these working papers are not in their final form, comments are welcome. Such comments should
be addressed to the respective authors or to the YIIFSWA Project Leader. Individuals and institutions
may obtain copies by writing to:
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Introduction
Yam (Dioscorea rotundata) is a major tuber crop that affects the livelihoods of millions of people in
West Africa. The crop is grown in areas from the Humid Forest to the Southern Guinea Savanna
regions, with production concentrated in the derived and southern Guinea Savannas. Farmers
normally plant whole tubers or tuber pieces of 200 - 1000 g to obtain a wide range of ware tuber
sizes including some seed tubers. The traditional methods of producing planting material from a
previous ware crop do not provide sufficient quantity and quality required by farmers for increased
productivity. New methods such as the adaptive minisett technique, aeroponics vine cutting
technique; micro and mini tuber propagation, etc. have been developed to rapidly multiply yams
and provide good quality seed yam tubers to farmers. It is hoped that some farmers will use these
improved methods to provide the vital missing link in the yam value chain - the seed yam enterprise.
This guideline is developed to assist existing seed yam farmers, as well as potential new entrants
into the seed yam business, to develop a profitable and sustainable business enterprise. Seed yam
production and marketing should be thought of as business operations just like any other business.
Hence, there are many things to be considered in developing the seed business plan ranging from
the need for labour, financial planning, advertising and promotion among potential buyers, meeting
competition in the market, increasing production and the number of products to be made available
for sale. A Business Plan is a detailed study of all factors which will affect your planned business. It
looks at each factor which influences your operations, management, production, sales, expenses
and profitability. It is a map, plan and direction of your operations. It shows what you intend to
do, how you intend to do it, and what the results (and profitability) should be. It also gives you a
“yardstick” against which you can measure your progress so that you can take corrective action if
things are not going according to plan. This guideline is intended for use by any seed yam grower/
producer, processor, stockist/dealer/merchant, sales agency, private sector or government agency
that operates a seed yam business to generate income, or operates within a defined budget to
provide planting materials for farmers. Other considerations are requirements of equipment and
buildings, how products will be priced, displayed and marketed. It is necessary to set aside enough
time to prepare a formal business plan which integrates the goals of the business, the production,
marketing and financial targets, and labour requirements into a management strategy.
Since each farm business is unique in terms of its physical characteristics, income level and people
involved, this guideline will provide farmers with the information needed and format for developing
realistic business and marketing plans as well as record keeping skills to meet the specific needs of
their seed yam business.
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The seed yam value chain
Seed yam passes through several stages and actors as it moves from the producer to the user. At
each step of the way, value is added to the seed tuber or planting material and each actor involved
in the value chain must add a cost to increase the value. This could be a service, , or expertise. The
seed farmer cannot make money from producing seed yam without a buyer, and a buyer depends
on the transporter to move the tubers from the farm gate to a storage barn and then to one market to
another. Each person in the value chain should make a fair income based on the inputs or services
that they contribute to move the seed yam to the users. The seed yam value chain include the pre-
basic seed also known as breeder seed produced by the Research Institutes, the basic seed or the
foundation seed yam produced by private seed companies and some public parastatal organization,
the certified or commercial seed yam produced by commercial seed producers, seed growers, etc.
In addition to the seed categories, the seed yam value chain includes seed storage, seed treatment,
seed packaging and transportation.
Overall Market Strategy: Describe your company’s general marketing philosophy and strategy,
derived from market research and evaluation.
What kinds of customer groups will you target for intensive sales promotion?
What kinds of customer groups will you target for later sales efforts?
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2. List categories of buyers of the seed and select the most probable (e.g. traders, farmers,
roadside retailers, etc.)
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3. Marketing and sales expenses
Sales Tactics
Describe methods to be used to make sales/distribute your seed yam or provide the
services.
Will you use your own sales force/stores, independent sales representatives, distributors?
• Distribution channels
• Transportation (means of transportation and routes used for transport)
• Storage
• Packaging (type of material used)
• Wages
• Records and record-keeping
• Advertising and promotion
• Describe approaches used to bring your seed yam or services to the attention of
prospective purchasers.
• Describe approaches used by your competitors, and relative success of each.
• Describe advertising costs
• Miscellaneous
4. Storage type, cost and duration:
Type of seed* Storage Length of time in Month/s to sell Losses during stor-
type storage age (No./100)
*milked tuber, small whole seed, large tuber to be cut into setts
Pricing strategy
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How are you sure that your prices are right to penetrate the market, maintain a market
position, and produce profits?
Type of seed Expected unit price Actual unit price (e.g. 100 tubers)
Milked seed
Very small tubers (< 100 g)
Small tubers (101 – 149 g)
Normal seed (150 – 300 g)
Large seed (301 – 500 g)
Extra-large seed (> 500 g)
6. Marketing plans (outline of plans to market seed yam tubers as a group, e.g. division of
labour), if applicable.
7. Marketing costs (e.g. per lot of 50, 100, 400, or 1000 seed tubers) - This should include:
bulking up of produce, sorting and grading, transport, handling, time spent on assembling
and marketing seed yam, commission (e.g. 1 tuber/heap of 100), and other costs.
8. Expected benefits from marketing (e.g. through higher prices, more stable market access)
9. Expected net benefits from marketing (estimated benefits of marketing minus estimated
costs of marketing):
It is necessary to have basic knowledge and skills of keeping business records. This section will
provide information on how to maintain basic business records, understand and monitor the trend
of business in a simplified way.
The Importance of Keeping Business Records for the Seed Yam Enterprise
Keeping business records is a very important aspect of managing your seed yam business. The
records help you manage your business better by:
• Planning and monitoring your business transactions and the corresponding incomes
and expenditures.
• Identifying easily and correctly whether your business is making a profit or loss at any
given time on basis of facts and records.
• Following up on your obligations (respect of signed agreements) with business
partners (suppliers and customers).
• Providing a basis for mobilising additional financial capital for the business
• Providing a basis for preparing good statements of accounts for the business and for
carrying out audits.
• Helping to separate private transactions from that of the business.
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Business records should provide enough details on all transactions undertaken at any given time.
This should be based on documents containing primary information on each transaction carried
out. There should be records with reference to fixed assets, expenditures, taxes, bank transactions,
personal drawings, sales, purchases, etc. Specify all cash and credit transactions, and all referential
documents should be properly kept.
Every transaction will involve exchange of goods or service for money. For each sale a receipt must
be issued even if the buyer does not need it. Basic business records, especially for micro and small
businesses will normally require consistent record of all cash and credit transactions.
Note: labour includes family labour cost at market value; planting material to include own and purchased seed yam)
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Estimated revenue and gross margin of seed yam enterprise
Estimated outputs from the enterprise (examples: number of seed yam tubers harvested – small,
medium, and large; other yam product produced, e.g. quantity of ware yam, chips)
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Actual cost of business
1 Land rent
3 Planting material
7 Mulching - labour
8 Mulching material
9 Staking - labour
10 Staking material
Herbicide
11 Weeding 1 –labour
12 Weeding 2 – labour
13 Weeding 3 – labour
14 Fertiliser
16 Harvesting – labour
Note: Labour includes family labour cost at market value; planting material to include own and purchased seed yam);
Compare actual costs of items to estimated costs.
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Labour use
Labour cost could be included in the actual costs (as above) or recorded in the labour use form
below.
Date Activity Family labour Hired labour Person Cost/ hour Total labour
use hours cost
Expected risks
List 5 main possible risks, e.g. drought, cattle grazing crop, flooding, pilfering, accident during
transportation, etc.
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Realised revenue and gross margin from enterprise
S/n Date sold Where sold (market) Item sold Unit price Quantity Revenue
Total actual revenue from enterprise (include both seed, ware and processed yam, also what is
consumed or used at home)
If there is a difference between the estimated and actual gross magin from the enterprise,
attempt to explain why and note what lessons could be learned.
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Technical information
Number of setts planted versus actual production
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Simplified Cash Transaction Records Book
It is important to keep track of all cash transactions. A transaction involving receipt of cash will increase
the cash balance while the one which involves payment of cash will decrease the cash balance.
Below is the illustration of a simplified cashbook in which cash transactions can be maintained:
Cash book
Date Particulars of Receipts and Pay- Amount received Amount Paid Balance
ments
N N N
01/08/15 Balance brought forward 300,000
01/08/15 Cash sales 50,000 0 350,000
02/08/15 Cash purchases 0 300,000 50,000
02/08/15 Telephone charges 0 10,000 40,000
05/08/15 Cash sales 100,000 0 140,000
05/08/15 Payment by credit customer 150,000 0 290,000
05/08/15 Payment to credit supplier 0 40,000 250,000
06/08/15 Private drawings 0 50,000 200,000
The other very important element of trade is the sales. The simplest way of tracking sales is to
maintain both cash sales and credit sales in Sales Day Book as follows:
The appendices in this guidelines will provide more information on the technical aspect of seed yam
production (Appendix 1), calendars for yam production activities to help in planning seed production
to meet demands (Appendix 2), and a series of questions to guide the preparation of comprehensive
business plan, market development and record keeping (Appendix 3).
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Appendix: 1 Producing Quality Seed Yams Using Minisetts
Several methods may be used to produce seed yams for commercial purposes and these include
the minisett technique, vine cuttings, tissue culture, and the aeroponics and temporary immersion
bioreactor systems. Traditional methods of production by milking and cutting of large setts are not
recommended because they are slow and wasteful. There are different types of planting materials,
and the type of seed to be produced will guide the decision on what method to use. Yam planting
material could be minitubers or cut setts of approximately 250 g (seed yam), vine cuttings or
plantlets. To produce minitubers to be used whole as seed, the adaptive minisett technique will be
most appropriate for many seed yam producers and is described in this document.
If the seed yam to be produced is earmarked for the formal seed system such as the production of
certified seed where quality is assured, then the appropriate seed regulatory agency must be duly
informed and totally involved in the entire production process starting from the land selection up to
harvesting. This will facilitate the issuance of certification for the seed yam produced.
Selection of Mother Seed Yams: There are many yam varieties available and the choice of which
variety to produce will depend on market demand. Select only healthy mother tubers of less than 1000
g, which have broken dormancy and are free from internal or external symptoms of pests and diseases.
Cutting and size of Minisetts: The size of minisett determines the size of seed tubers to be produced.
Choose a minisett size to avoid cutting of the seed tubers produced as much as possible. Note that
there are varietal differences in the performance of minisetts, so different sizes of different varieties
may perform differently. Generally the recommended size of minisetts ranges between 20 and 100 g.
Treatments of Minisetts – Cut minisetts should be treated with a mixture of suitable broad spectrum
fungicide and insecticide to prevent rots after planting [e.g. Chlorpyrifos (48EC) and Mancozeb
(80WP)]. There are many chemical products available that could be used, and an Agricultural
Extension Officer will provide useful advice on this.
Selection of Field – One of the reasons for developing the minisett technique is to produce clean
disease and pest-free seed tubers, hence the importance of selecting a field that is free from soil-
borne diseases and pests especially nematodes, mealy bugs and scale insects. Avoid land that has
been under continuous cultivation of yams. The soil should be loamy, well drained and free of stones.
Land Preparation – Land to plant minisetts is prepared as is customary for growing yam, although
the mounds or ridges are smaller than those made for ware yam production. For large scale
production, land preparation can be mechanized by ploughing, harrowing and ridging.
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Direct Planting – This should be done only when the rainy season is fully established or where irrigation
facilities are available. Plant minisetts at a spacing of 25 x 100 cm to give 40,000 plants/ha. The plant
spacing could be increased or reduced depending on the size of minisetts and seed tubers desired.
Transplanting Minisetts – When transplanting, handle pre-sprouted minisetts with care to avoid
damage to young roots and sprouts. This should also be done when rains are well established or
at any time where irrigation is available. Minisetts should not be allowed to grow excessively in the
nursery before transplanting.
Field Maintenance – The field should be kept free of weeds as much as possible, especially during
the first 8 to 12 weeks when the crop cover is poor. Weeding can be done manually using the hand
held hoe as is practiced by most farmers, or chemically with pre-emergence herbicides. Earthing-up
of exposed minisetts, roots and tubers is essential especially from the second or third weeding when
some soil would have been washed off by rain.
Where there is a need for fertilizer application, follow the recommendation for your location. However,
the following rate could serve as a guide: NPK 20:10:10 or 15:15:15 at 400 – 500 kg/ha applied at
8 – 12 WAP in bands on both sides of the ridge for single row planting, and double rows on each side
of the ridge for double row planting. If pre-sprouted minisetts are used, fertilizer is applied earlier at
4 – 8 weeks after transplanting.
In regions where yams are normally staked, plants from minisetts should also be staked using small
stakes of 1 – 2 m or trellising could be done. In trellising, two poles are placed at the end of the
ridges and another pole or rope is tied horizontally on top of the two. The young vines are directed
to the overhead rope using twines.
Inspect the crop regularly to eliminate diseased (virus) and off-type plants, and ensure that adequate
precaution is taken to keep pests out of the field.
Harvesting and Sorting – Seed yams mature in 5 to 6 months after planting or transplanting. To
avoid cuts and bruises which serve as entry points for the pathogen-causing rots in storage, harvest
carefully. Immediately after harvest, remove seed tubers from the sun to a shade to prevent sun
scorch. Seriously damaged tubers and those with symptoms of nematode infestation should be sorted
for use as food. Store seed tubers of each variety separately, and grade them according to size.
Curing of Harvested Seed Tubers - Immediately after harvest, pile tubers in a heap and cover
with materials such as grass, mats, sacks and/or tarpaulin for two to three days. This will hasten the
curing of tubers and they will store longer.
Storage of Seed Tubers – Cured tubers store better. Treat seed in a solution similar to the one
used to treat cut minisetts before storage. A good storage facility for seed yam tubers must have
good ventilation, adequate shade and good security against pilfering, rodents and other pests.
Regular inspection should be carried out to dispose of rotting tubers and also remove sprouts that
come up much earlier than planting time.
It should be noted that very small tubers that originate from vine cuttings and tissue culture derived
plantlets can be planted at close spacing to produce regular seed size tubers (100 – 250 g).
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Appendix 1: Seed production using minisetts technology
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Appendix 2: Calendar of Yam Activities
Seed yam production in Forest zone J F M A M J J A S O N D
Seed Selection
Preparation of Nursery
Cutting of minisetts and laying in nursery
Land preparation (mounding or ridging)
Transplanting minisetts/direct planting
Weed management
Staking
Field inspection for rouging/positive selection
Harvesting, sorting and curing
Storage
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Appendix 3: Collecting Required Information for the Business Plan Development
Most of the essential information items are presented in the form of questions. DO NOT answer them
by yes or no. They are intended as guides to help you learn the details of all factors which will affect the
success or failure of your business. Answer each with a complete discussion, tables, figures, costs, etc.,
which cover each item and all aspects in which it will affect your operations, sales, management, expenses
and profit.
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Do you know the skills needed to be successful in this area of the seed yam business?
Do you have the required technical and managerial skills?
Have you ever worked as a supervisor/manager, especially in a technical seed business?
Have you had any formal business schooling or seed technology training?
If you are lacking specific experience/training, how will you get it?
If you don’t have the skills, can you delay starting the business until you get skills?
What is the experience/knowledge of your planned partners, managers, and personnel?
Show how it will help the business succeed?
Can you hire people with the managerial and seed technology skills needed?
5. Market analysis
Is there an adequate market for your planned SY/SYS, site, etc.?
Who will your customers/farmers be? What are their primary crops and production
operations?
How large (units, money value, etc.) is the market for your SY/SYS?
Should you try to appeal to the entire market, or only to segments?
What percent (volume, value) of the market can you get?
Do you understand your potential farmer customers’ needs/desires?
Where do your farmers/customers live/work?
Will you offer the SY/SYS they are willing to buy?
Will your prices be competitive in quality and value?
Will your promotional plan effectively draw in farmers/customers?
Do you understand how your business compares with competitors?
Is your business conveniently located for your farmers/customers?
Will your business have adequate delivery facilities?
6. Competition analysis
Do you have a unique “market niche”? Describe it, and why it is unique and why your
farmers/customers will buy it. What competitive advantage will your SY/SYS have?
What SY/SYS will compete with yours?
List and describe (in detail) your direct competitors.
What indirect competitors do you have? (SY/SYS which can be used instead of yours)
Who are your nearest competitors?
How are your competitors’ businesses similar, different and/or competitive to yours?
How will your SY/SYS be better or more salable than your competitors’?
Are your competitors successful? Growing? Stable? Declining? Why?
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What can you learn from studying your competitors, or talking with their customers?
Which of your competitors’ good practices can you adopt, and which of their bad practices
can you avoid?
How do you compare with direct and indirect competitors in terms of price and quality?
7. Operations plan
Have you prepared an operations plan, including every aspect of your planned business?
Does your operations plan match with your financial/business plan?
8. Financial plan
Have you prepared a complete, detailed financial plan, showing funds available, funds
needed, income expected, and sources and amounts of required funding?
Does your financial plan show timings of expenses and income?
Will your plan allow you to earn the necessary margin?
Will farmers/customers pay the prices shown in your financial plan?
What kind of accounting system will you use?
What kinds of records will you use? Does it permit accurate reporting for taxes?
Do you need a computer and special software?
Is your financial plan and accounting system complex enough to require hiring an accountant?
Can you handle it yourself? Can your tax accountant keep it for you?
Does your financial plan reflect your operational plan, and include a profit and loss projection?
Does your financial plan include a schedule of sources and amounts of funds?
Does your financial plan include a pro forma (planned) balance sheet?
Does your financial plan include a cash flow projection?
9. Expense records
Do your expense records give you the key information you need to make sound decisions?
Do you know which expense items over which you have the greatest control?
Are records sufficiently detailed to identify where the money goes, and which items are
expensive?
Can you detect those expenses which are not necessary to successful operation of your
business?
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11. Business records
Have you prepared to maintain complete records of sales, income, expenses, accounts
payable, accounts receivable?
Have you prepared to handle payroll records, tax reports, and payments to employees and for
taxes, etc.?
Have you arranged for the necessary financial reports, and how to prepare them?
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Do competitors do much discounting? Do they hold special sales, give price leaders, use
consignment sales, etc.?
Have you established a set of pricing policies and goals?
Have you determined whether to price below, at, or above the market and your competitors?
Do you use a one-price policy rather than bargain with farmers/customers?
Do you offer discounts for quantity purchases, or to special groups?
Do you set prices to cover full costs on every sale?
Do the prices you have established earn the gross margin you planned?
Do you clearly understand the market forces affecting your pricing methods?
Do you know which crops/varieties are slow movers and which are fast movers?
Do you know which crops/varieties are price-sensitive to farmers/customers; i.e., when a slight
increase in price will lead to a big drop in demand?
Do you know which of your crops/varieties draw farmers when the seed is offered for sale at
your specified prices?
Do you know the maximum price farmers/customers will pay for certain crop/variety seed?
Is there a specific time of year when your competitors have sales?
Do your farmers/customers expect sales at certain times?
Are you influenced by competitors’ price changes?
Are there restrictions regarding prices you can charge?
If you buy some seed from other suppliers, do any of them set a minimum price below which
you cannot sell?
Do you know all the regulations affecting your business and sales and pricing?
15. Advertising
Have you developed an advertising plan and goals, including:
Is your advertising message continuous, frequent?
What advertising do your competitors use, and how effectively?
What advertising does your trade association suggest?
Does your advertising plan give a separate strategy for each variety/seed category?
Have you planned advertising (1) to identify yourself to the market and potential customers,
and then (2) to promote your seed?
What experience do you have with various advertising media?
What is your plan, cost ratio, use, type, etc., of advertising by:
Who prepares your ads? Is he/she adequately skilled? What is the emphasis/focus of your
ads?
Do they appeal to what farmers/customers need and market?
Do you know the strengths and weaknesses of various promotional methods?
Are the unique appeals/values of your business reflected in your business/store image?
(e.g., low prices, quality seed, special services, etc.)
Have you considered how various media and promotional methods might be used for your
business, to the best advantage?
Do you know which of your seed can be successfully advertised?
Do you know when it is profitable to use institutional advertising?
Do you know when crop/variety advertising is better?
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Do you record sales of seed yam advertised on each ad?
Do you check customer traffic in your store?
Do you know which of the media (radio, television, newspapers, telephone yellow pages,
billboards, etc.) can most effectively reach your target group of farmers/customers?
Do you know what can and what cannot be said in your ads? (Truth in Advertising
requirements)
16. Sales
Have you established a sales policy to cover selling methods, sales, prices, discounts,
commissions, etc.?
What sales terms are you planning (cash, credit, discount, etc.)?
Will you sell for cash only? On credit? What terms?
Detail your sales plan.
How will you sell? Describe in detail:
Retail stores/outlets, owned by your business
Wholesale
Direct sales
Traveling salesmen
Retail stores/outlets, owned by others
Delivery routes and traveling sales trucks
Distributors
From your primary business site only
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Additional reading materials
B.A. Aighewi, N.G. Maroya and R. Asiedu 2014. Seed yam production from minisetts: A training
manual, (36 pages).
B.R. Gregg, A.J.G. van Gastel, A.W. Ebert, L.L. Delimini and E.A. Asiedu 1999: Preparing a Realistic
Business Plan for Successful Seed Companies. IITA/GTZ/CSIR Project “Promotion of Seed
Production and Marketing in West Africa”. WASDU publication No 3, (53pages).
B.R. Gregg and A.J.G. van Gastel 2000. Seed Operations: Cost and Income Analyses sheets.
IITA/GTZ/CSIR Project “Promotion of Seed Production and Marketing in West Africa”. WASDU
publication No 5, (36 pages).
B.R. Gregg and A.J.G. van Gastel 1997. Managing Seed Marketing. IITA/GTZ/CSIR Project “Promotion
of Seed Production and Marketing in West Africa”. WASDU publication No 1, (117 pages).
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large scale production of minisett
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YIIFSWA Working Paper Series