Why African agriculture still depends on the 'middle man' — or woman

By Kelli Rogers 28 September 2016

Farmers purchase seed from an agro-dealer outlet. Photo by: Market Matters Inc. / CC BY-NC

“Agro-vet” is painted in block lettering on squat concrete buildings every few kilometers on the bumpy four-hour drive from Nairobi to Meru. The small shops sell feed, fertilizer, livestock products and other crucial inputs for smallholder farmers in the surrounding area. Drive further off the main road into Kenya’s banana, maize, mango, sorghum and millet farming country, though, and the input businesses become few and far between.

It’s there, far from anything that could be mistaken for urban, where Beatrice Nkatha set up shop. In 2009, Nkatha founded Sorghum Pioneer Agencies in the Mukothima marketplace of Tharaka Nithi county, a tooth-rattling 40 kilometer drive from Meru town center.

She supplies quality inputs like seed and fertilizer to farmers, and also buys their harvest, which is stored in one of her 50 aggregation centers in the surrounding area until it is sold in bulk to buyers such as East Africa Breweries. Business at her agro-vet — along with her 40 smaller franchises in the surrounding 35 kilometers — is booming, she told Devex.

Nkatha is effectively a “middle man” — or woman — in the agriculture value chain, and is part of a movement supported by organizations such as the Alliance for a Green Revolution in Africa to strengthen key links in the chain.

Traditionally a middle man role in business is considered one of exploitation, and certainly those fears exist with the agro-vet, also known throughout sub-Saharan Africa as an agro-dealer, who has the power to profit from rather than benefit local smallholders. But Nkatha’s network of agro-input shops, for example, have greatly reduced the distance farmers need to travel to buy inputs, and her guaranteed purchase of produce, which she is able to aggregate to wait for more favorable pricing to sell in bulk, means local smallholders can count on the sales; last year she bought over 800 metric tons of sorghum, green grams and cowpeas. If run wisely, the middle man role of rural agro-vets may not one to cut out — and not only because they provide a means of spreading agricultural best practices and delivering new technologies to farmers. Seed and other input suppliers are increasingly relying on rural agro-dealer hubs to sell their stock.

Commitments made at the Africa Green Revolution Forum 2016 in Nairobi in early September further reflect the rise of the agro-dealer: African leaders, businesses, and development partners pledged more than $30 billion dollars in investments to increase production, income and employment for smallholder farmers and local African agriculture businesses over the next 10 years. Rockefeller Foundation committed another $50 million — beyond the $105 million it already invested over the last 10 years — to AGRA, which implements Strengthening Agricultural Input and Output Markets in Africa, or the SAIOMA program.

SAIOMA, as part of its work, supports agro-dealers such as Nkatha with training in best practices to secure credit and in forming linkages with input  suppliers and buyers, among other things.

But it’s not the agro-dealer model alone — which many agriculture experts have hung Africa’s “green revolution” on for years — that AGRA champions.

“We’ve realized there is a gap in terms of provision of holistic services to the farmer at the rural level,” said Anthony Ngosi, AGRA’s SAIOMA program lead. “The agro-enterprise model that works both inputs and outputs is a solution that provides a middle man who is able to supply improved inputs to farmers and also buy back their produce.”

Even the holistic model, though, isn’t perfect. Limited funds for them to stock their stores and the current sporadic geographic coverage of agro-dealers remain hurdles. As a result, many are unable to meet farmers’ demand at the peak of planting season. Agro-dealers have also been slow in forming associations, something that Ngosi would like to see more of.

To address these challenges, AGRA will continue to link input supply companies with hub agro-dealers that have creditworthiness as a middle man for onward linkages with retail agro-dealer outlets — as well as brokering deals for profit-sharing and credit stock to improve accessibility of inputs in Kenya, Ngosi said.

The strengthening of rural agro-dealers in particular does address several problems outright — like the fact that many smallholder farmers in sub-Saharan Africa currently travel long distances to procure inputs, which are often only available in large, unmanageable bags.

Margaret Kageni, a farmer who sources her inputs from Nkatha’s agro-vet, used to travel the 40 kilometers to Meru for the insecticide she needed. Now she puts the 500 Kenyan shillings ($4.9) she would have spent on transport toward other endeavors, and noted that her local agro-vet is much more willing to explain the use of the pesticide, whereas the supplier in Meru was always “too busy.”

This piece — of training on best practices provided by rural agro-vets — is an important part of the program, according to Ngosi. The vision is not just for the businesses to sell products, but to be able to offer demonstrations and training on how and when to use fertilizer, for example.

This knowledge base adds credibility to Nkatha’s business, she told Devex, “because if the suppliers trust me, then the farmer also trusts me,” she said.

The relationship is also beneficial for seed companies relying on stockists, as they call agri-dealers, to sell their products: “That’s the type of partner we’re looking for — who buys into the knowledge part of the business and not just selling fertilizers, James Craske, Kenya country manager for Norwegian chemical company Yara, which supplies mineral fertilizer, told Devex.

In a competitive fertilizer market, Yara is not only looking to distinguish its product, but also strengthen its relationship with local regional distributors.

“When you look at distribution, big seems best,” Craske said. But this isn’t always the case, he added.

Right now, Yara seeks to partner with about 30 distributors to act as wholesalers for their products, as well as about 100 stockists that those distributors already partner with. They’d like to “add hundreds of branded, accredited stockists next year,” Craske added.

Stockists aligned with its brand and growing in number of local affiliates will prompt Yara to  consider them as a direct distributor, which comes with benefits such as access to credit, more brand exposure in the shop, signage, and training from Yara agronomists.

Already, the holistic agro-dealer model is developing into a service provider in terms of banking and other complementary services, which is a goal for all agro-dealers receiving training via the SAIOMA program as a way to become a more holistic service provider.

Nkatha, for example, has become an agent for Equity Bank and is able to take deposits on behalf of the bank and pay farmers using an ATM card machine, cutting the distance to the nearest bank by about 40 kilometers. She was also chosen as a distributor for a government assistance program where vulnerable farmers are given a card to swipe at her store so that she can provide them the government-funded inputs.

Nkatha, who is herself a tailor turned farmer, has become something of a local celebrity. Many of her farmer clients are women, while other women are traveling great distances to ask her how she started her business — and sometimes questioning her seemingly bizarre business decisions.

“Here in Kenya, many women think the person who can buy a tractor is a man,” she told Devex. “They ask: How did I decide to buy a tractor instead of me buying a personal car?”

When Nkatha started her business, there was plenty of land to be plowed, yet no tractors available in Tharaka. She quickly made the calculations  —  a farmer would pay 2,000 Kenyan shillings to have their fields plowed, and she could pay a driver 200 Kenyan shillings and fuel the tractor with another 500 Kenyan shillings — and suddenly the lack of tractors was a business opportunity.

“I decided to buy the tractors because I see this as helping me and helping farmers,” she told Devex.

She now has her sights set on building a warehouse in Mukothima to be able to aggregate all of the produce in one place, as well as obtaining a machine to more efficiently dry sorghum.

Meanwhile, the role of middle “woman” she plays is only growing in importance and profitability, she told Devex, adding fuel to the vision that the words “agro-vet” will be more commonly seen on rural buildings in the future.

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About the author

Mechosen
Kelli Rogers@kellierin

In her role as associate editor, Kelli Rogers helps to shape Devex content around leadership, professional growth and careers for professionals in international development, humanitarian aid and global health. As the manager of Doing Good, one of Devex's highest-circulation publications, she is constantly on the lookout for the latest staffing changes, hiring trends and tricks for recruiting skilled local and international staff for aid projects that make a difference. Kelli has studied or worked in Spain, Costa Rica and Kenya.


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