Africa’s smallscale farmers face a number of challenges which can affect both the quality and quantity of their output. For agribusinesses sourcing produce from them, this can negatively impact their business.
To overcome these challenges, agribusinesses need to improve their engagement with smallscale farmers along the value chain. Here are three examples of African agribusiness companies which have implemented ways of overcoming the challenges of sourcing produce from smallholders and ensuring steady supply.
Divine Masters in Uganda: managing 12,000 smallholders
Divine Masters is a Uganda-based business involved in the production and trade of soya beans, maize and rice. Started in 2007 by entrepreneur Orisa Raphael Jawino to supply the demand for soya in the region, Divine Masters works with about 12,000 out-grower farmer families in addition to managing its own farms.
Managing so many farmers does come with challenges, but Divine Masters has tackled some of these issues by organising its farmers into 300 groups, consisting of between 30 and 500 farmers per group.
“These farmers operate in a cooperative manner where they have their own leadership structures; they elect their own committee members who guide or lead their operations,” Jawino told How we made it in Africa last year.
“Now Divine Masters operates or works directly with these elected leaders of the group, and any services – for instance inputs or credit facility that [have] to be extended to these farmers – I extend it through the group leadership, who is also responsible for ensuring that these services trickle down to the farmers. In the same way, when it comes to the collection of the grains and also the recovery of whatever inputs that were given or credit facility extended to them, we also get it through the group leaders.”
AACE Foods in Nigeria: solving communication and payment challenges
AACE Foods is a Nigerian startup agroprocessing company which processes and packages nutritious food made from fruits, herbs and vegetables sourced from smallholder farmers in northern Nigeria.
According to a report by the United Nation’s Food and Agriculture Organisation (FAO), Rebuilding West Africa’s food potential, the company has faced a number of challenges sourcing its raw materials.
For example, cellular phone connectivity remains poor in many rural areas in Nigeria, making communication difficult with smallholder farmers. Even when connectivity is available, power supply is unreliable in Nigeria and farmers sometimes cannot charge their phones.
To overcome the challenge, AACE Foods developed a working relationship with organisations in the region that support these farmer clusters and can physically relay information about orders, pricing and payments to farmers.
AACE Foods also found that many of their smallholder farmers do not have bank accounts and prefer to be paid in cash on collection of their produce.
“Working with AACE Foods, which has a policy of paying 50% up front and providing the balance upon delivery in Lagos (which typically occurs three to seven days after the first payment), proved difficult at first, because of the significant distrust that exists between smallholders and agroprocessors,” stated the FAO report.
To overcome this, a bank account could be opened for each farmer cluster where a group leader receives payments on behalf of the cluster and then distributes the funds to the smallholder members.
La Laiterie du Berger in Senegal: improving milk supply
Senegal is highly dependent on food imports and, according to the research by FAO, 90% of the milk being traded is imported, mainly as powdered milk.
La Laiterie du Berger, established in 2006, supplies locally produced milk and milk products (such as yogurt and cream). The company’s main factory is at Richard Toll, roughly 400km from Senegal’s commercial and administrative hub Dakar.
High costs for transporting milk is a challenge for both milk producers and la Laiterie du Berger, especially considering the distance between milk producers and factories and the need for daily collection to keep milk fresh. The company has set up a system of collections circuits where drivers in each circuit pick up and drop off fresh milk in collection rounds.
“The milk collection system has effectively reduced the amount of spoilt milk received at the factory,” stated the FAO research.
La Laiterie du Berger also provides a variety of services to its milk producers and breeders to ensure it has a steady supply of quality milk, and assists milk producers with increasing their production. These services include the delivery of fodder, veterinary consultations and feeding and milk-related hygiene advice. The company also allows group purchases and distribution of animal feed.