EMRC Workshop iv joseph mwangangi

Commercial Opportunities forAgri-Inputs: The AgrodealerEnterprise.

The Agrodealer Business Opportunity: Outline of the Presentation1. Defining the Agrodealer Business Opportunity.2. Agrodealer’s Strategic Role/Position.3. A permanent feature in African Agriculture?.4. Enhancing Smallholder competitiveness5. Key Elements of the Agrodealer Business.6. Factor Underlying Agrodealer Dev. Success.

Agrodealer Business Opportunity Defined:The Market Smallholder Farming CommunityThe Product/Service Ag. production inputs / technologiesLocation Rural based in proximity to farmersCapital Low start-up of about $2,000Ownership Entrepreneur owner most effectiveSupplies Upstream Input supply companiesFinancier Critical for Working Capital needsRisk Factor High due to dependence on rain

Agrodealer StrategicLink along the Value Chain: Consumption Marketing Processors Market Links Transportation Policy Dialogue Transportation Inputs Supply Technology Linkages Cos. Production input supply Agrodealers Extension / Agronomic Training Credit Linkages Product Information and Safe UseSmallholders

The Agrodealer and Smallholder Value Chain DriversInputs Supply Chain: Outputs Value Chain: I •Market specifications;• Availing Quality Inputs, N• Establishing demo plots, P O •Aggregation; U• Organizing field days, U •Quality Assurance; T T• Passing Ext. Messages. S P •Warehousing;• New Technologies U T •Transportation.•Availing credit to farmers S •Forward contracting; Small Rural Enterprise Inputs Output “Agrodealer” Planned Smallholder Production

AGMARK Agrodealer Support Program Building •Business Management Training and Mentoring support Agrodealer •Technical Training in agronomics, product knowledge, etc.Capacity to Serve •Demand Creation through field days, demos, exhibitions Farmers •Training in Output Marketing Capacity •Guarantee Facility for Increased Access to Credit;Financial Services •Matching Grants for Startups, Output Marketing, etc; for Agrodealers and Farmers •Agricultural Lending Trainings and Linkages •Farm Input Savings and Loan Advancing •Sustainable Associations of Agrodealers;Agricultural Policy •Public Private Partnerships and Forums; Advocacy •Voucher Program Assessments/design; • Development of Smallholder Production Clusters;Access to Output • Capacity to aggregate and link into competitive value Markets chains.

The Agrodealer: A Permanent Feature of Africa’s Agriculture?1. Agriculture remains the mainstay economic activity for most African economies;2. 80% of Africa’s agriculture is smallholder and rural based;3. Population growth and land policies encourage smallholdings in Africa;

The Agrodealer: A Permanent Feature of Africa’s Agriculture?4. Smallholder based production is generally uncompetitive, => uncompetitive Value Chains!5. The future of Agrodealer Business Opportunity dependent on the future of smallholder production in Africa.6. Shift towards Trade favors more efficient value chains, NEED to enhance smallholder efficiency.

The Agrodealer: Enhancing Smallholder Competitiveness1. Agrodealers enhance smallholder access to yield- enhancing inputs and technologies.2. Agrodealers provide extension support as a “bundled service” through demand creation activities.3. Agrodealers increase productivity per unit of investment, e.g. 3 bags/acre to 18 bag/acre in Chwele in Bungoma-Kenya.

The Agrodealer: Enhancing Smallholder Competitiveness1. Agrodealers make it feasible for Input Supply companies to access the “smallholder mass market.”2. Agrodealers are viable “market access agents” for smallholder farmers.3. Agrodealers do enhance efficiencies along the value chain, hence overall competitiveness.

The Agrodealer: Challenges and Downside1. Vulnerable to government / NGOs interference in the functioning of inputs and output markets;2. Lead time and investment necessary before farmers adopt new technologies = barrier to entry3. Agrodealerships skewed in favor of higher potential areas;

The Agrodealer: Key to Successful Agrodealer Enterprise1. The Entrepreneur Profile: passion, education, age, ability to network, risk management, responsiveness;2. Enterprise Environment: location, pop. density, product range, farmer loyalty,3. Value Chain Relationships: Farmers, input supply companies, MOA, distributors, dev. agencies.

On-Going Agrodealer ProgramsAGRA:AGMARK implemented 3 year AGRA funded AgrodealerStrengthening program supporting 2,500 agrodealers in Kenya.COMRAP:IFDC and AGMARK are implementing COMRAP- an AgrodealerDevelopment sub-component of COMESA-ACTESA in 8 countries.IFDC and AGMARK are implementing the project through HostPartner Organizations in each of the 8 countries.

Joseph N. Mwangangi Regional Director,Agricultural Markets Development Trust AGMARK jnyamai@africaonline.co.ke; jmwangangi@agmarkkenya.org

EMRC Workshop iv joseph mwangangi

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