TOR for Developing a cost model and pricing strategy for providing mechanization services to cooperatives

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TOR for Developing a cost model and pricing strategy for providing mechanization services to cooperatives.

Introduction

The DFID supported Improving Market Systems for Agriculture in Rwanda (IMSAR) programme is a 4-year initiative that helps to commercialize agriculture by improving the way agricultural market systems function, making them more effective, participatory (by including poor farmers and other disadvantaged groups), and more competitive. In so doing, it contributes to increasing the incomes of poor households in targeted agricultural market systems.  The programme has identified market failures – such as limited access to finance and technology, limited or poor storage, lack of access to inputs such as fertilizers – and design and develop interventions to address them. It seeks to strengthen the capacity of farmers and private sector actors to engage with and benefit from the markets.

Background

In 2020, IMSAR will partner with a private-sector provider (PSP) interested to test/develop the mechanization services for micro, small and medium growers in Eastern Province. The company is planning to provide the farmers with mechanization services to combine harvesting and land preparation to a cooperative established in Gatsibo district, on 1,500 hectares

As the private sector-led, mechanization services (potentially tractor) are new in Rwanda there is a need to be calculated or generate an accurate cost model to determine what the cost heads and amounts are that the company will incur in providing this service. Based on that and the willingness/ability to pay from the cooperatives, develop an appropriate, commercially viable, pricing strategy for the service.

IMSAR is looking to support the private sector company in rolling out this service but to ensure that the support is relevant and effective, this costing and pricing assignment is required.

 Objective

This assignment has two specific objectives:

  • Develop a detailed cost model for providing this service
  • Develop a commercially viable, pricing strategy based on costing and wiliness/ability to pay for such services

 Expected tasks:

The following activities are expected to be carried out by the selected firm in close consultation and agreement with both IMSAR and the private sector company

  • Review the cost structure and records of the company
  • Undertake field visits to selected cooperatives in Eastern province, to determine:
  • Costing requirements for providing such service
  • Willingness and ability of cooperative to pay for such services
  • Determine detailed cost model for providing services
  • Based on the investment made, demand for such services, develop a commercially viable pricing strategy for such services

The logistics for the field visits would be arranged for by the private sector company.

Duration:

The assignment is expected to be completed within 10 working days spread over one month.

Deliverables:

A final report which includes:

  • Detailed costing models with cost heads and amount (with supporting documents and calculations)
  • Commercially viable, pricing strategy which shows what margins are being made and expected growth.
  • Recommendations on how to implement this strategy

Reporting:

The selected firm will closely work with team members from both IMSAR and the private sector company; they will be reporting to the Team Leader of IMSAR

Requirements

  • The firm must be registered with ICPAR, at least for the last two years.
  • Have work experience in providing similar services; experience in providing service to cooperatives or agribusiness would be preferred.
  • Have a qualified team member that is willing to travel to field locations.

Next Steps

Interested firms are expected to submit their proposals via email peace.umuhoza@thepalladiumgroup.com not later than 25th January containing the following;

  • Profiles and resume of team members
  • Workday requirement
  • Gantt chart
  • Detailed budget
  • Name of similar projects/clients worked for in the last two years
  • Proof of current ICPAR membership