Aggregating farmers for markets and agricultural support services

Norbert Tuyishime

Agriculture is back at the top of Africa’s development agenda, enjoying the support of governments and attracting heavy investments from private sectors. Many of smallholder farmers across Africa that are central to the agricultural transformation taking shape on the continent, however, struggle to benefit from these developments due to their dispersed, small-scale and unorganised nature. Aggregation of smallholder farmers’ needs may provide the solution, says Norbert Tuyishime of the Eastern Africa Farmers Federation (EAFF).

In East Africa, the agriculture sector is dominated by smallholder farming (averaging 0.2–3 ha), with 60% of farmers making less than €1.5/day. Fertiliser use among these farmers is low; about 1.7 kg/acre against 60 kg/acre globally. The agricultural sector is mainly rain-fed and entirely dependent on bimodal rainfall, making it vulnerable for frequent drought-related crop failure. Under pressure to deliver even more food for rapidly growing and urbanised populations, generate and sustain employment, incomes and livelihoods, smallholder farmers who do not aggregate around input and output markets or other agricultural services, such as extension, credit, transport, mechanisation or warehousing, fall short of realising their potential for agricultural commercialisation.

Aggregation for collective access

EAFF recognises that smallholder farmers are highly dispersed and often lack collective action to strengthen their position in agricultural markets. Agriculture is a high-risk sector which makes working with individual farmers difficult for many value chain actors. Aggregation of smallholder farmers through farmers’ organisations is needed to create an enabling environment for farmers to thrive. Aggregation can support efficient agro-service and extension delivery, technology adaptation and mechanisation in agriculture, input procurement at favourable prices and competitiveness in output markets. In addition, data on farming is needed to inform decision-making on investment and innovation with regard to technology, financing, value addition, policy and advisory services. Apart from farmer profiles providing general bio data, EAFF recognises an overall lack of historic data on farm activities, which would allow banks to credit score farmers and advance loans.

Since 2013, EAFF has shifted its focus from lobbying and advocacy to strengthening the role of farmers in profitable value chains enabled by strong entrepreneurship. EAFF thereby focusses on knowledge, institutional development, policy, partnerships and youth. With the digital revolution taking place in the agriculture sector, where big data applications are (re-)shaping power relations among value chain actors, EAFF embraces use of technology as the transformational tool to help achieve the objectives of this new strategy. In this framework, EAFF launched the e-Granary project in Kenya in 2016 in partnership with PAFO, AgriCord and CTA.

e-Granary is a mobile-based platform aimed at increasing access to markets and e-extension services. The platform provides 4-in-1 services; it aggregates farmers for input and output markets and financial and extension services, in the maize, rice, beans, green gram, black-eyed bean and soya value chains. To access the platform, farmers need to be members of a farmers’ organisation and register their bio data, crop and harvesting data. The platform is gradually evolving in an ecosystem that serves stakeholders through various connected services.

  • For farmers, it enables sales at best prices, access to certified inputs, affordable tailor-made financial solutions, and access to timely e-extension on agronomic advice, post-harvest management and financial literacy.
  • For financial institutions, it allows access to bankable and de-risked smallholders to market various financial products, such as insurance as a bundled product with a loan.
  • For buyers, it allows access to better quality traceable produce in a large marketplace at competitive price without the exorbitant premium charged by middlemen.

The core services provided through e-Granary are: group purchase of agriculture inputs, learning groups, micro-finance and micro-insurance, policy and advocacy, coordination of contract farming with millers and buyers, coordination of post-harvest services, coordination of farm equipment leasing and crop management e-extension and tools.

By end 2018, 103,000 farmers had registered in the platform, a significant increase compared to the 39,000 and 5,000 registered farmers in 2017 and 2016 respectively. The platform has already trained over 3,000 trainers of trainers on structured trade, agronomy, financial literacy and extension, and targets to reach 20,000 smallholder farmers by 2018 through voice and text messages at different stages of crop season. In 2017, e-Granary assisted 3,627 farmers to access loans in the form of certified inputs (seeds and fertilisers) worth €136,036. Collectively, e-Granary farmers have sold 316 MT of maize and soybean worth €77,141.

Taking aggregated farmer services to scale

Aggregation of farmer needs and data are key enabling factors to strengthen the position of smallholder farmers in agricultural markets. For farmers to enhance their position, they need access to finance for inputs. Where financing is not easily accessible, farmers recycle seeds, use less fertiliser and rarely use necessary chemicals to protect their crops, and increase production. The most effective business model for smallholder farming financing is non-cash input loans, such as seeds, fertilisers and insurance. The e-Granary experience has shown that uptake of insurance increases when bundled with input loans. E-extension provides farmers with timely information so that they are able to anticipate risks and minimise losses.

Farmers across the region are eager to participate in the e-Granary due to their concerns for climate change vulnerability and access to markets and certified inputs. In 2019, the platform intends to register 340,000 farmers, of which 150,000 will receive e-extension services. Objective is to turn 10% of e-Granary member farmers into active users of loans worth €879,000 with the volume and value of sales reaching 1,000 MT and over €1,300,000 respectively. EAFF is launching e-Granary in Uganda and Rwanda by end of 2018 and in Tanzania in the near future.

A strong concern for upscaling is, however, limited technical capacities of smallholder farmers in structured trade and use of agricultural digital solutions. A lot of capacity building is needed on collective marketing, contractual farming, finance management and use of digital solutions in agriculture to enable smallholder farmers to truly benefit from the digital transformation in agriculture in Africa.

other articles in this issue

Copyright © 2016, CTA. Technical Centre for Rural and Agricultural Cooperation

CTA is a joint international institution of the African, Caribbean and Pacific (ACP) Group of States and the European Union (EU). CTA operates under the framework of the Cotonou Agreement and is funded by the EU.