Commercial Opportunities for

Agri-Inputs: The Agrodealer

Enterprise.

AgriBusiness Forum 2010 | 3 – 6 October 2010 | Kampala, Uganda.

The Agrodealer Business Opportunity:

Outline of the Presentation

1. Defining the Agrodealer Business Opportunity.

2. Agrodealer’s Strategic Role/Position.

3. A permanent feature in African Agriculture?.

4. Enhancing Smallholder competitiveness

5. Key Elements of the Agrodealer Business.

6. Factor Underlying Agrodealer Dev. Success.

AgriBusiness Forum 2010 | 3 – 6 October 2010 | Kampala, Uganda.

Agrodealer Business Opportunity Defined:

The Market Smallholder Farming Community

The Product/Service Ag. production inputs / technologies

Location Rural based in proximity to farmers

Capital Low start-up of about $2,000

Ownership Entrepreneur owner most effective

Supplies Upstream Input supply companies

Financier Critical for Working Capital needs

Risk Factor High due to dependence on rain

AgriBusiness Forum 2010 | 3 – 6 October 2010 | Kampala, Uganda.

Smallholders

Agrodealers

Processors

Marketing

Consumption

Inputs Supply

Cos.

Transportation

Product Information and Safe Use

Credit Linkages

Transportation

Technology Linkages

Policy Dialogue

Extension / Agronomic Training

Production input supply

Market Links

Agrodealer Strategic

Link along the Value Chain:

AgriBusiness Forum 2010 | 3 – 6 October 2010 | Kampala, Uganda.

The Agrodealer and Smallholder

Inputs

Planned Smallholder Production

Small Rural Enterprise

“Agrodealer”

Inputs Supply Chain:

• Availing Quality Inputs,

• Establishing demo plots,

• Organizing field days,

• Passing Ext. Messages.

• New Technologies

•Availing credit to farmers

Outputs Value Chain:

•Market specifications;

•Aggregation;

•Quality Assurance;

•Warehousing;

•Transportation.

•Forward contracting;

Value Chain Drivers

I

N

P

U

T

S

O

U

T

P

U

T

S

Output

AgriBusiness Forum 2010 | 3 – 6 October 2010 | Kampala, Uganda.

AGMARK Agrodealer Support Program

Building

Agrodealer

Capacity to Serve

Farmers

Financial Services

for Agrodealers

and Farmers

Advancing

Agricultural Policy

Advocacy

Access to Output

Markets

•Business Management Training and Mentoring support

•Technical Training in agronomics, product knowledge, etc.

•Demand Creation through field days, demos, exhibitions

•Training in Output Marketing Capacity

•Sustainable Associations of Agrodealers;

•Public Private Partnerships and Forums;

•Voucher Program Assessments/design;

• Development of Smallholder Production Clusters;

• Capacity to aggregate and link into competitive value

chains.

•Guarantee Facility for Increased Access to Credit;

•Matching Grants for Startups, Output Marketing, etc;

•Agricultural Lending Trainings and Linkages

•Farm Input Savings and Loan

AgriBusiness Forum 2010 | 3 – 6 October 2010 | Kampala, Uganda.

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;

AgriBusiness Forum 2010 | 3 – 6 October 2010 | Kampala, Uganda.

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.

AgriBusiness Forum 2010 | 3 – 6 October 2010 | Kampala, Uganda.

The Agrodealer:

Enhancing Smallholder Competitiveness

1. 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.

AgriBusiness Forum 2010 | 3 – 6 October 2010 | Kampala, Uganda.

The Agrodealer:

Enhancing Smallholder Competitiveness

1. 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.

AgriBusiness Forum 2010 | 3 – 6 October 2010 | Kampala, Uganda.

The Agrodealer:

Challenges and Downside

1. 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 entry

3. Agrodealerships skewed in favor of higher potential areas;

AgriBusiness Forum 2010 | 3 – 6 October 2010 | Kampala, Uganda.

The Agrodealer:

Key to Successful Agrodealer Enterprise

1. 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.

AgriBusiness Forum 2010 | 3 – 6 October 2010 | Kampala, Uganda.

On-Going Agrodealer

Programs

AGRA: AGMARK implemented 3 year AGRA funded Agrodealer Strengthening program supporting 2,500 agrodealers in Kenya.

COMRAP: IFDC and AGMARK are implementing COMRAP- an Agrodealer Development sub-component of COMESA-ACTESA in 8 countries.

IFDC and AGMARK are implementing the project through Host Partner Organizations in each of the 8 countries.

AgriBusiness Forum 2010 | 3 – 6 October 2010 | Kampala, Uganda.

Joseph N. Mwangangi

Regional Director,

Agricultural Markets Development Trust

AGMARK

jnyamai@africaonline.co.ke;

jmwangangi@agmarkkenya.org