Outgrower Schemes through Last Mile Distributors(Agro Dealers) can it work?
I run at agro Dealers Business in Zambia that Interfaces with farmers everyday. The traffic( in store) becomes intense when farmers begin to prepare for the growing season. However, farmers(especially small holder farmers) fail to meet their production/productivity pontential due to limited capital to invest in farming amidst other Family income commitments. The ideal Options then becomes Access to finance for Agriculture(quite complex Topic). Most Banks and other FIs opt not to finance such a market given the high risk Appetite of Small holder farmers when it comes to credit. However if we have to increase Food production and security, investing in farmers still is a necisity hence my thinking that the Agro Dealer Needs to be supported to advance Agriculture Finance. Below are the reason to use this vehicle:
- They are Proxy to the farmers( right Location)
- Their Locations can be used both as Points of Input collection and commodity Aggregation
- Their Locations can be used as Information Centers for various topics that relate to Agriculture i.e. a LED Screen in store describing best agro practices
- A Point for Mobile Money servcies that allows farmers to save and transact
- Access Point for Bridge finance in times of Need and emergencies
Inspite of the good reasons for this Approach, it Comes with its own challenges among them:
- Lack of Capital thus having limited stocks
- Lack of technical Support to offer the right Extension Services
- Lack of logistics to reach farmers who in most cases are widely spaced
- Lack of a safenet to secure that funds in cases of natural disasters and or deliberate defaulting by farmers
NB: am in the process of piloting an outgrower using the Agro Dealers, so ideas from the Group is welcome