Rural retail ago-dealers and their suppliers face many challenges when selling and distributing agricultural inputs to smallholder farmers. The COVID-19 pandemic has deepened these challenges, disrupting trade and vital supply chains, while also impacting labor, harvest operations, marketing, processing and transaction.
Under these conditions, feeding Africa’s urban population has become even more problematic. With the pandemic exposing the fragility of agri-food systems, developing local resilience and sustainability is now more important than ever. So, how can we address the limitations of local input delivery as part of our efforts to feed the cities and grow the continent? How can we get new technologies off the shelf and into the hands of farmers?
To set the scene, Mr Jason Scarpone, President and CEO of AFAP, kicked off by discussing the key constraints agro-dealers face in reaching smallholder markets. These constraints include limited consumer demand, high transport and transaction costs, stock-outs, weak inventory management, and working capital constraints. Such constraints culminate in high default risks and low ROI, deterring investors and leaving agro-dealers with limited access to finance.
To address these issues, AFAP develops ‘hub’ agro-dealers, or wholesalers, who according to Scarpone are “able to alleviate many of the challenges that both suppliers and rural agro-dealers face in supply and distribution”. Hub agro-dealers, for example, serve a larger market. They enjoy greater working capital flexibility, and often have an agronomist on staff, which helps to drive consumer demand. They also deal in higher volumes, which lowers the per unit distribution and transaction costs for suppliers, while storage capacity minimizes the risk of stock-outs across a range of products.
But while organisations like AFAP are helping agro-dealers overcome certain operational challenges, much more remains to be done to extend the delivery of vital technologies to smallholder farmers. According to Dr Joseph DeVries, President of Seeds Systems Group, while great progress has been made in African agriculture in recent decades, “we are still only working in a portion of the continent”.
In many countries, said Dr DeVries, we have seen farmers emerging “from poverty, from subsistence-level agriculture [to produce] surpluses that help feed their communities and their nations”. In these countries, around 120 sustainable, locally-owned seed companies have produced and sold 150,000 metric tons of certified seed annually, serving the needs of approximately 15 million farmers.
But there are other countries, said Dr DeVries, where the “innovations from the emerging African green revolution” have not found their way into the hands of smallholder farmers. Keen to address this imbalance of distribution, Dr DeVries remarked: “It’s time to push back the boundaries…and make seed technologies available for all African farmers.”
According to Usha Zehr, Director and Chief Technology Officer at MAHYCO, the key to broadening the reach of retail agro-dealers, and expanding the delivery of vital seed technologies, lies in the digital marketplace. Providing a perspective from India, Zehr described how “seeds saved Indian agriculture”, and how digital platforms for regenerative agri-inputs have enabled retailers to connect with hard-to-reach farmers. Grow Online, an android app, allows Indian retailers to connect with over 150 agriculture retail points and access multiple companies and products. Placing orders based on market demand, each of the app’s 20,000 registered retailers reach between 100 and 1,000 farmers. This and other digital innovations, said Zehr, are helping to transform the connection between farmers, retailers and markets.
Concurring with this analysis, other panellists also spoke of the value of digitization in enhancing the intermediary capacities of agro-dealers. Faith Mulwa, CFO at Agri-Wallet, described how digital solutions help to reduce risk, bypassing the arduous legwork of physical, on-the-ground transaction, while enabling players to leverage data to build reputable credit scores. Jason Scarpone added that digital solutions “reduce cost build-up across the value chain”, increasing input affordability for farmers. Meanwhile Dr Yemi Akinbamijo, Executive Director at FARA, observed that digital technology can enable pre-selling and forecasts, which helps to tackle the issue of post-harvest losses.
Whether through the digitization of value chain relationships, or the development of wholesale hubs and one-stop-shops, all participants were clear: we need to continue evolving the provision of agricultural services to smallholder farmers. And we need to continue supporting agro-dealers and retailers, who play such a vital role in the input delivery system.