Agro-dealers and the Private Delivery of Seed and information: Lessons from Kenya, Malawi

and Zimbabwe Hannington Odame & Leonard Oduori

FAC-Tegemeo Seed Dialogue 2014Strengthening African Seed Systems

July 14-15 2014, Nairobi, Kenya

Theory of Change?

‘Market-led technology adoption’

1. Encourage farmers to grow new crop varieties that reduce losses and increase stability of yields

2. Enhance agricultural productivity through use of synthetic fertilisers and soil mgt practices

3. Build more efficient input markets to deliver better seeds and other inputs to farmers, and the output markets that enable farmers to convert surplus production into profits

4. Support agro-dealers and the interests promoting their role in the delivery of seeds , agro-inputs & information

Towards an African Green Revolution?

Who is an Agro-dealer?

Trained and certified stockists (AGRA) No legal definition in Kenya --Seed

laws recognize licensed seed merchants & sellers

Agro-dealers range from large multi-product retailer-distributors, to small sometimes mobile and seasonal traders whose product range may be limited either by market or finance.

The specific types of agro-dealers include: small business people, vendors, lead farmers, agricultural extension workers, employees of seed companies/agro-chemical dealers.

3

Commodity Focus

Value of Commodities Stocked by Agro-dealers(%)

Seeds10%

Others40%

Vet Drugs5%

Human Drugs6%

Fertilizer8%

Pesticides10%

Feeds9%

Building Materials

12%

Commodity Focus cont...• Fertilizer & seed constitute

<10% of stock value

• Direct agric. inputs constitute about 42% of stock value

• Commodity diversification vital risk mitigation & cost management

• Regional differences on stock composition reported

• There is an assumption that agro-dealers operate in a free market (AGRA (2013). Do they?

• Forming groups is promoted as a powerful strategy for achieving economies of scale ==most agro-dealers will not join associations if they do not see opportunities for direct personal benefits and ==and it is common for successful sectors to be dominated by a few dominant players (oligopolies).

• Earlier Agro-dealer Programs (in East Africa) also assumed that there would be no market failure or thin markets == but the reality is there were input subsidies and sluggish demand, especially for non-hybrids which affected the viability of the business.

Assumptions in Agro-dealer Development Programmes

• The seed sector is still developing in all SSA Countries with many countries in early growth stages. Only Uganda, Zambia, Kenya, Malawi and Zimbabwe are in the late growth stage (AGRA, 2013).

• Although there is limited agro-dealer in more than 8 countries surveyed by AGRA, there is a growing/strong network in 10 countries.

• Most seed business is concentrated on maize despite the diversity of crops grown in SSA. The low commercial value of other crops relegates them to limited promotion and trade in specific regions or agro-dealers.

• The growth of agro-dealer business is therefore concentrated in high potential areas for maize and in urban areas (Odame et al., 2011)

Overview of Country Experiences

• Political turmoil & radical land reform affected Zimbabwe’s seed system reduced quality seed supply and undermined agro-dealer business growth

• Collapse of the seed system was exacerbated by seed relief programmes implemented by the government and aid agencies bypassed the normal market chain where agro-dealers operate

• In 2010, aid agencies experimented with ‘market-friendly’ input subsidy programmes created distortions and became objects of political manipulation and elite capture

• The result was the dominance of few politically-connected players (oligopolies).

Zimbabwe

• Maize politics dominates Malawi’s electoral politics• Interests of multinational seed companies, donors and

the state converged around the Agricultural Input Subsidy Programme (AISP)

• The AISP has had some success at improving the country’s food security raised its global profile

• But it has been exploited as a source of political patronage limiting access, diversity and affordability of seeds for many producers

• There have been recent debates on the rethinking AISP in Malawi == but is this change in status quo?

Malawi

• Kenya is the ‘poster child’ for the new Green Revolution key element: a growing network of ‘agro-dealers’

• But agro-dealers are spread unevenly across the country concentrated in the higher potential areas

• Changing structure of Kenya’s seed industry is narrowing the choice (hybrid maize, GM maize?) leading to technological ‘lock in’

• Agro-dealership is risky business limited by capital constraints and government interference

• Need to rethink the agro-dealer model take account for in farmer, crop/seed and geographical differences

• Consider promoting agro-dealership of both formal, informal and intermidiate seeds

Kenya

Commodity Focus

• Fertilizer & seed constitute <20% of stock value

• Direct agric. inputs constitute about 42% of stock value

• Commodity diversification vital risk mitigation & cost management

• Regional differences on stock composition reported

Value of Commodities Stocked by Agro-dealers(%)

Seeds10%

Others40%

Vet Drugs5%

Human Drugs6%

Fertilizer8%

Pesticides10%

Feeds9%

Building Materials

12%

11

Are we overloading the carrier? Role of agro-dealers in the delivery of agro-inputs & extension information

• Few agro-dealers have key information sought by farmers on seed varieties they stock

• Many agro-dealers do not assist in addressing farmers’ concerns about seed quality

• Lack of information and sustainable demand for novel technologies

Source of information on new varieties by gender: Average for 9 surveyed countries

Source: PASS Farmers survey, 2013 (with GRA’s use permission)

• The most common source of information on new varieties was the mass media, such as radio, television and agricultural shows for Burkina Faso, Malawi, Mozambique and Zambia, which are often adverts or programmes sponsored by large seed companies; this was a more important source for men than women .

• Other farmers (neighbours or friends) remain another important source, and the principal source of information on new information for women farmers in all regions.

• Extension services of the MoA was next most important source for information in Kenya, Tanzania, Ghana and Malawi: both for men and women farmers, reflecting the continued importance of the service, particularly for women farmers.

Preferred source of information on new varieties Source: PASS Farmers survey, 2013 (With AGRA

permission)

• Generally, extension services were preferred by farmers: particularly in Kenya, Tanzania, Burkina, Ghana and Mozambique

• Radio/TV was the preferred source of information on seeds for farmers in Uganda annd Malawi.

1. Agro-dealers are participating in GR, but capital, demand & parallel govt/NGO input models limit them

2. Agro-dealers come in different types, sizes networks, and are supported by different donors. Thus, there is need to characterise the different types of agro-dealers and mainstream gender to ensure that opportunity is given to women entrepreneurs in rural areas.

3. Running agro-dealership in remote regions or where government subsidies are a popular political tool used to mobilise support are not conducive to profitable and sustainable farm input business

4. Links between agro-dealers and local extension in many cases remain weak. In some cases, extension workers themselves are agro-dealers, AGRA (2013).

5. Agro-dealers face challenges in providing advisory services to farmers where they are not trained as extension workers and depend on shop attendants whose turnover is very high.

The General Findings in SSA Countries

• Characterise the different types of agro-dealers and mainstream gender to ensure that opportunity is given to women entrepreneurs in rural areas.

• It is important to consider the profit-oriented nature of agro-dealers. Most lucrative businesses are usually dominated by a few well established market players.

• Strengthening and integration of agro-dealer associations into government subsidy programs and enable them to lobby for tax rebates or access import license:

• Training of agro-dealers should be on-going, provided in local languages and gradually transferred to strengthened agro-dealer associations

REFLECTIONS

• Training should be given to agro-dealers and their assistant attendants (‘managers’).

• Build capacity of agro-dealers to undertake multiple roles: For example, agro-dealers play an important role in delivering AGRA’s goal, not only for PASS but also AGRA’s Soil Health and Marketing Programs.

• Work with extension services on building capacity of agro-dealers to participate in extension and link them with extension workers and lead farmers.

•  Increase the participation of agro-dealers in different extension approaches –including demos, mobile deliveries and subsidised government/NGO input programs.

REFLECTIONS CONT…

18