How To Start and Grow Agribussines in your Community

By Madison Ayer, Executive Chairman of Farm Shop and Chairman and CEO of Honey Care Africa

Smallholder farmers working in rural areas dominate agribusiness in Africa. The need around the world for more food and more diverse types of foods gives these small farmers great opportunity, but the challenges they face are significant also.

At Honey Care Africa, we partner with smallholder farmers across East Africa to strengthen incomes and expand Africa’s honey output through sustainable beekeeping.  We understand the problems facing small producers and have a rich history in helping them overcome these challenges.

We have discovered that understanding both inputs and outputs distribution is key to success in agribusiness, so we work to support farmers in learning about and adapting to these methods.

Inputs. Poor inputs — seeds, plant material, water, fertilizers and pesticides — and farming methods keep African smallholder farmers far below the world averages for agricultural productivity.

• Working with smallholders: It is common practice for small-scale producers to enter contracts for product delivery to the companies who use and market raw agricultural products. These arrangements are called “outgrower” schemes or direct buying. These agreements make smallholder farmers critical components for agribusinesses. Both partners need to make efforts to build trust and loyalty in their relationships and to work effectively in a network of producers.
• Quality strategy: A farmer must produce something of value to have a competitive advantage in his market. People want to eat good, nutritious food that has been sustainably produced. Agricultural products must be good quality, and the grower must know how to control that quality. The grower must also be well-versed in understanding and meeting any certification requirements. Meeting those standards is the best way for the grower to establish product quality and credibility with buyers and other contractual partners.
• Logistics, transport and storage: Most farming is done in rural areas, far from the established infrastructure of city centers. Farmers must establish supply sources and routes for all those things they need to produce a crop. They must identify and account for the costs of transport and develop backup plans for those occasions when weather and conditions might impede delivery.
• Modern farming methods: Many high-productivity and sustainable agricultural practices have been developed in the world, but most African production is still very traditional. Farmers need to have information sources to better understand regional or global trends in their specialties. They need to stay up-to-date with the latest training and production techniques.

Outputs. Farmers must have a keen vision of their customers, what they need and how to communicate with them.

• Customer insights: Producers can’t assume that a great product will have buyers lining up at the door. Farmers must clearly identify their customers’ needs and the types and volumes of products that they are likely to buy. The farmer needs to understand why customers are interested in their raw materials and what they’ll be doing with the commodities.
• Product-market fit: By studying needs and behaviors of your prospective buyers, you can get to market acceptance of your product faster. Remember that changing behaviors is difficult, time-consuming and expensive. It is easier to change your product. The successful farmer will offer a product that a chosen customer thinks is truly valuable.
• Distribution channels: Once a target customer is identified and the marketability of the product is established, the producer needs to figure out how to get the product to the customer. This is hard work, scrapping in the streets to build distribution systems and convince buyers to buy. A producer must assess the distribution of customers and the difficulties of delivery conditions and decide how marketing, advertising and promotion might aid sales.
• Unit economics: Once the producer identifies the customers and how to reach them, ensuring that the delivery systems are affordable is critical. The successful farmer is going to be obsessive about the unit economics of the product. To succeed in agribusiness, the producer must scale production and distribution and make a profit. Consider everything: cost of goods, packaging, wastage and product replacements.

At Honey Care Africa, we see an exciting future as we lead Africa into the global honey market. The same opportunities are available to other African agricultural sectors.

Madison Ayer is the chairman and CEO of Honey Care Africa, producing and distributing trusted, pure honey through a network of thousands of smallholder farmers in Kenya, South Sudan and Tanzania. Ayer is also the executive chairman of Farm Shop, providing smallholders with farm inputs through a modern retail platform and with franchised shops in villages in rural Kenya.
  
      An extract of  YALI