[Stoves] Do "market-based", "results-based" distribution strategies get in the way of the poor.? (Taken from Re: GACC Webinar (that was, Paul, Ron))

[Philip Lloyd]

Dear Nikhil

A small omission – spare parts.  Even the 1870’s design of cast iron stoves used hereabout to burn coal needs spare parts from time to time. The grate in particular – I have seen 5cm lumps of coal burning in the ash pit, having fallen through the nearly non-existent grate.  I bought a dozen grates from the local coal merchant for ~$10, and gave them to people having problems burning my low-smoke fuel (because there was no grate!) The merchant had spares for everything – even oven doors. 

Philip

 

From: Stoves [mailto:stoves-bounces at lists.bioenergylists.org] On Behalf Of Nikhil Desai
Sent: Sunday, September 10, 2017 11:52 PM
To: Paul Anderson
Cc: Anil Rajvanshi; Discussion of biomass cooking stoves
Subject: Re: [Stoves] Do "market-based", "results-based" distribution strategies get in the way of the poor.? (Taken from Re: GACC Webinar (that was, Paul, Ron))

 

Dear Paul:

Thank you. It has to be more than "paying the bills". There has to be a "smell of success"; as Oli of Eco-Zoom put it at the webinar, 35+% gross profit margin. 

And that is at the retail level. A retailer has to worry about inventory and the ability to vary prices, depending on the location - 50+% margin on "new models", only 15% margin on "old models" for clearance. Offering multiple technologies - solar-charged batteries and appliances (small lanterns to DC televisions or low-head water pumps), biomass stoves for different fuels and sizes - makes this inventorying and pricing enormously challenging, 

And that is at the "city" - capital, district HQ - level. How the product and after-sales service can reach village populations that are reachable by road and some local final retailer exists. (India LPG has this problem, which is why Kirk Smith writes off some 50 million households after Prime Minister Modi's current promises of granting "connections" but reducing subsidies are met. 

I remember throughout my life that kerosene lanterns were sold in "cities" - state capitals in India or national capitals I started wandering to some 25 years ago - and kerosene was delivered to distant shops and then by bicycle or handcarts or on foot. 

Efforts to start and run "energy stores" have floundered in India (a few going on still), and trying to sell solar lanters or cookstoves, clay coolers, via large supermarket chains. 

++++++++++

I have observed some 25+ years of these difficulties. A mass market for new energy technology products at the bottom of the pyramid households seems impossible except for gas and electric appliances. 

What then is the alternative? 

FWIW, my thought is: a) market to the bankable non-household customers (and middle-income households, of course) for any range of energy services, including cooking services (Anil's idea of rural restaurants and to me, generally, "outsourcing the kitchen") ; and b) once such a technology demonstration has been made and the products turned into "aspirational" items for the less fortunate, try expanding to that. 

Who would do this and how? Entrepreneurs with local knowledge, skills and capital base. Even so, there are many "pre-conditions" - infrastructure services, skill-base, social stability and openness to new business or new ways of doing business - that appear necessary. What can be done in some parts of India may be unthinkable in other parts of India. 


If interested, there should be a thread on this "Challenge to Biomass Stoves Community" by Kirk Smith. What will it take, short of governments-driven highly subsidized distribution, to reach the 500 million? 


Nikhil




------------------------------------------------------------------------
Nikhil Desai

(US +1) 202 568 5831
Skype: nikhildesai888

 

On Sun, Sep 10, 2017 at 9:28 AM, Paul Anderson <psanders at ilstu.edu> wrote:

Dear Nikhil,

Your reply is thoughtful and informative (at least it is to me).   

Economics terminolgy:  "Supplier finance is critical from manufacturing to distribution/after-sales service,"
If the suppliers (including the person who supplied the sales work) are not paid sufficiently, the system will break down (eventually, if not soon).  So, "paying all the bills" is ultimately the name of the game of success.

I am interested in carbon offsets for paying the bills.  And that is a crucial "demand" issue.  ("Supply" will follow demand, in this case.)   And demand for carbon credits is very much "in the eye of the beholder."  

The financial part of the TLUD stove situation (IMO) keeps coming back to the value of carbon offsets generated.   But it is too thinly related to the purpose of the Stoves Listserv.   So I will send ANOTHER  message about this.  

(I will stay active on the Stoves Listserv, but not about carbon finance issues of stoves -- except to give appropriate updates, if with merit.   And I will post appropriate messages about stoves and carbon in the EPosts section of my website   drtlud.com  )

Paul



Doc  /  Dr TLUD  /  Prof. Paul S. Anderson, PhD
Email:  psanders at ilstu.edu
Skype:   paultlud    Phone: +1-309-452-7072 <tel:(309)%20452-7072> 
Website:  www.drtlud.com

On 9/9/2017 4:40 PM, Nikhil Desai wrote:

Paul: 

I have had some experience with the use and abuse of terms "market-based" and "results-based" in the aid business. "Market-based" does not exclude taxes and subsidies; in fact, it is a code word for using taxes and subsidies rather than command-and-control.  Sometimes the costs are hidden; e.g., it takes money and skills to administer taxes and subsidies.  Hence my distress. 

"Results" have become quite a fad in the last 20 years -- output, outcome, and identification of "benefits" are all buzzwords on which a small cottage industry burns inferior data fuel in inefficient models to produce intellectual smoke. So long as the donor and the donnee agree which expert to put in charge of Monitoring and Evaluation (M&E) and get the desired ratings on the project, career promotions are guaranteed all around. Those who ask questions are thrown out. 

1. Reliable, efficient last mile distribution chains to poor households are difficult to develop. I can write many personal stories on these. Micro-finance for the users is not the answer; too high-cost. Supplier finance is critical from manufacturing to distribution/after-sales service, and that is not easy. Several things have to just "go right" in the procurement, inventory, and human resources chains. 

2. Massive free or near-free distribution is indeed a good idea, provided the upper and middle classes are taken care of first and weaned off subsidies. This is being done with the Indian LPG scheme. though I am skeptical that Kirk Smith's dream of "complete and permanent transition". Not only are the costs too high, I support a Woman's Right to Choose (stacking). And even then the subsidy burden is high and not transparent. (There is GOI subsidy under Direct Benefit Transfer L(?) or DBTL and on top of it there is a product-based "unrecovered loss" for public sector oil companies. It is complicated) Distribution to the poorest who don't have permanent homes, and/or collect woodwaste and such, or don't even have food to cook or time to cook, is a serious problem. 

Yes, these two problems limit effective, quick action to reach the poor (esp. those who are remote and whose income/cooking is not regular). 

Please do keep at these questions. I haven't yet found a sure-fire alternative, or rather, it takes enormous knowledge-base and TLC to foster entrepreneurship among the poor that leverages local knowledge and capital (financial, human, physical) in order to develop successful technology innovators. (I would be happy to converse about this on the phone.) 

Like many others in such business, I have some fantasies on how small-scale local businesses can be fostered with a combination of subsidies, knowledge intermediation, to build transformative biomass supply and use industries. But I haven't yet figured out how to do this on a large enough scale for the "stoves" projects. Definition of economic and agro/animal/forest contexts is key. 

Nikhil



 

 

 

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