CNFA/RUMARK2009 FANRPN REGIONAL POLICY

DIALOGUE AND AGM By

George J. MagaiCountry Director - CNFA

Managing Director - RUMARK31 AUG – 04 SEPT 2009

CNFA AGRODEALER STRENGTHENING

PROGRAM COUNTRIES

INTRODUCTION:INTRODUCTION:

• Ghana

• Kenya

• Malawi

• Mali

• Burkina Faso

• Uganda

AGRODEALER STRENGTHENING

PROGRAM COUNTRIES

• Mozambique

• Nigeria

• Tanzania

• Angola

• Niger

• Senegal

Quick Facts• CNFA establishes local marketing trusts that facilitate

private sector participation and investment in the agrodealer programs

• Through these programs the local trusts have established strong private sector networks which include:

Over 6000 locally owned Agrodealers with annual input sales of over $100 million

Over 80 National and International Agricultural Supply Companies

Over 30 National and International Financial Institutions

든Working with our partners we have been able to directly benefit the lives of over 2.5 million small-holder farmers

Key Problems & QuestionsKey Problems & Questions

• Low use of farm inputs by smallholders

• Low yields

– Smallholder farmers lack access to farm inputs and services

– Smallholder farmers lack information and knowledge about the farm inputs.

– Inputs and other services are expensive

– Smallholder farmers do not have adequate information and access to markets for agricultural products

Question

How do we increase the

use of farm inputs and

services?

- Sustainably?

- Cost effectively?

- At scale?

Question

How do we increase the

use of farm inputs and

services?

- Sustainably?

- Cost effectively?

- At scale?

CNFA’s Development HypothesisCNFA’s Development Hypothesis(the Premier Agrodealer developer)(the Premier Agrodealer developer)

• Farmers will increase use of inputs and services if they are readily accessible and affordable.– AgrodealersAgrodealers ( rural stockists) ( rural stockists) in farming communities need in farming communities need

strengthening as the last link in the commercial input strengthening as the last link in the commercial input marketing chain.marketing chain.

– Input supply companies & financial agencies need incentives Input supply companies & financial agencies need incentives & support to work with rural agrodealers. & support to work with rural agrodealers.

– Private sector is responsible & most suited to deliver inputs to Private sector is responsible & most suited to deliver inputs to farmers.farmers.

• Private sector- based approachPrivate sector- based approach– Strengthen and build sustainable linkages between Strengthen and build sustainable linkages between

enterprises in the input and output marketing systems- enterprises in the input and output marketing systems- suppliers, buyers (large/institutional), agrodealers & farmers.suppliers, buyers (large/institutional), agrodealers & farmers.

– Promote market-based policy interventionsPromote market-based policy interventions Result: increased flow of inputs into rural communities.Result: increased flow of inputs into rural communities.

The CNFA Inputs Model The CNFA Inputs Model

Cash, Voucher or Credit

Inputs & Knowledge

Financial Organizations

Input Supply CompaniesRegional Wholesalers &

Rural Agrodealers

Loans for inputs

Cre

dit

Gu

aran

tees

Commercial Trainers

Supply Companies

Business Mgt Training

Inputs on Credit

Product Training

Public AgenciesTraining on Regulations

Commercial Relationships

Smallholder FarmersMFI

Community Mobilizers

Voucher

Dem

onst

rati

on P

lots

, Fie

ld D

ays,

& E

xhib

itio

ns

Cash, Voucher or Credit

Inputs & Knowledge

Financial Institutions

Input Supply CompaniesDistributors &

Rural Agrodealers

Loans for inputs

Cre

dit

Gu

aran

tees

Business Mgt Training

Inputs on Credit

Product Training

Public AgenciesTraining on Regulations

Commercial Relationships

Smallholder Farmers Financial InstitutionsVoucher

Ru

ral B

ased

agr

odea

ler

Ass

ocia

tion

/far

mer

gro

up

sFor

mat

ion

Dem

onst

rati

on P

lots

, Fie

ld D

ays,

& E

xhib

itio

ns

The CNFA Output Marketing ModelThe CNFA Output Marketing Model

OUTPUT MARKET FACILITY

MANAGED BY AGRODEALERS OR

OTHER ENTERPRENEURS

Training, Linkages,

Financial Support & Services

Training Financial Services

Demand Creation &

Technical support

Inputs and

Advisory Services

Buyers to market

Quantity & Quality ProduceOutput

Inputs and

Advisory Services

Technical & Management Services

Output Marketing

Info & Promotion

Business

Management Training

E.g PCB, MoA, AITA, STAM

E.g Fertilizer (optichem), Seeds(MONSANTO, SeedCo)

and Chemicals (C&M, FO)

E.g. RAB Processors, WFP,Mulli, ACE platform

E.g. MRFC, FMB, OIBM, First Merchant Bank

Institutional ArrangementInstitutional Arrangement

DEVT. PARTNERS

E.g AGRA,MoA&FS, USAID

RURAL AGRODEALER

Training on

RegulationsSmallholder FARMERS

Information on use of outputs and demand creation

Loans for

Inputs

Product Knowledge Inputs on Credit,

Training & Demos on Products

Focus on Agrodealers & FarmersFocus on Agrodealers & Farmers

•Training in product knowledge, use, safety

•Company demos of products, technologies

•Public Sector training on regulations

•Business training from independent trainers

•Training on output marketing

Access to Finance:

Agrodealers

Smallholder Farmer

Smallholder Farmer

Informationon Inputs &

Use

Exposure to products and technologies

•Trade credit from supply companies for inputs

•Working capital loans for inputs from Financial Organizations

•Assistance to establish output marketing enterprises

Capacity Building:

Outputs sold to agrodealers

STRENGTHS: 1) Business Skills TrainingSTRENGTHS: 1) Business Skills Training

Training in business management of agrodealers has Training in business management of agrodealers has improved their businesses. Over 1,400 agrodealers trained improved their businesses. Over 1,400 agrodealers trained and certified to-date.and certified to-date.

STRENGTHS: STRENGTHS: 2) Technical Training2) Technical Training

Product Knowledge Product Knowledge Training in Training in collaboration with collaboration with Pesticides Control Pesticides Control Board (PCB), Input Board (PCB), Input supply companies supply companies and research org. and research org. has improved has improved knowledge on knowledge on InputsInputs

STRENGTHS:STRENGTHS: 3) Demand Creation 3) Demand Creation

Demand Creation have:Demand Creation have:• Facilitated companies and Agrodealers to conduct field Facilitated companies and Agrodealers to conduct field

demonstrations & field days in rural areasdemonstrations & field days in rural areas• Facilitated agricultural Inputs exhibitions in rural areasFacilitated agricultural Inputs exhibitions in rural areas• Promoted increase of use of Inputs and reduced travel distances for Promoted increase of use of Inputs and reduced travel distances for

smallholder farmers, and reduced transaction costs for companiessmallholder farmers, and reduced transaction costs for companies• Increased coverage through newsletters, newspaper, radios Increased coverage through newsletters, newspaper, radios

STRENGTHS:STRENGTHS:4) Financial Services4) Financial Services

Financial ServicesFinancial Services

• Utilization of Credit Guarantee Fund to financial institutions Utilization of Credit Guarantee Fund to financial institutions and input supply companies to offer credit to agrodealersand input supply companies to offer credit to agrodealers

• Support capacity building of Financial Institutions to develop Support capacity building of Financial Institutions to develop new financial products appropriate for rural entrepreneursnew financial products appropriate for rural entrepreneurs

Project ActivitiesProject Activities4) Financial Services cont.4) Financial Services cont.

• AGRA through RUMARK AGRA through RUMARK has a guarantee has a guarantee arrangement with MRFC arrangement with MRFC through which the through which the institution gives institution gives advances credit to advances credit to farmers to procure farmers to procure inputs. inputs.

• RUMARK certified RUMARK certified agrodealers have agrodealers have received $218,666 received $218,666 (K30,766,306) in loans (K30,766,306) in loans from MRFC and other from MRFC and other institutions institutions

STRENGTHS: STRENGTHS: 5) Output Marketing5) Output Marketing

• Train agrodealers Train agrodealers on bulking and on bulking and aggregation of aggregation of grainsgrains

• Support agrodealers Support agrodealers to establish output to establish output marketing marketing enterprises enterprises

STRENGTHS: STRENGTHS: 6) Matching 6) Matching InvestmentInvestment

Matching Investment facility has been used to support:

a) Output Marketing grain bulking and aggregation initiatives by agrodealers

b) Establish Agrodealers in rural markets

STRENGTHS: STRENGTHS: 7) Advocacy7) Advocacy

Facilitated the formation (and training) of agrodealer associations that will promote the interests of agrodealers and by extension to farmers.

WEAKNESSES/CHALLENGES/GAPS

• Implementing program activities through partner organizations highly depends on their goodwill;

• Isolation of agrodealers in the ISP weakens their business growth;

• Logistics to move both inputs and outputs are a major constraint

WEAKNESSES/CHALLENGES/GAPS

• Agrodealer business takes long time to grow and extremely fragile in poor economic and climatic conditions

• BDS is not yet commercialized – no providers;

• Weak/limited capacity (technical) of Commercial Trainers to effectively deliver BDS;

The Ideal Agrodealer

• Farm Service Centres Inputs suppliesOutput market – aggregation points

(sorting, grading, storage)Information provision for markets and

prices – e.g ACE - /MACE/GTPATractor hire Extension services - Soil testing,

spraying services (herbicides, etc), basic technical information

Processing Centres – value addition

ENDEND