Interview with Simon Bentley
MANAGING DIRECTOR, FARM DEPOT

Lives in: Zambia

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Zambia-based Farm Depot is a retail chain supplying a wide array of agricultural products to small-scale farmers. In addition to the stores, the company also offers financing for smallholders and a subscription-based farming support service. Learn how Simon Bentley and his co-founder Nina Gibson grew their modest pickup truck operation into a business with 26 branches.

The article covers the following topics:

• Origins of the business
• Shifting towards a platform model that connects smallholder farmers with service providers and clients across the value chain.
• Dealing with human resources challenges
• Economic headwinds in Zambia
• Market opportunities in the Democratic Republic of Congo

Farm Depot origins

Growing up on a tobacco farm in Zimbabwe, Simon Bentley always had a passion for agriculture. “It’s in my blood,” he asserts. Yet, in 2005, faced with political and economic instability in Zimbabwe, Bentley relocated north to Zambia, attracted by the government’s open-door policy to agricultural investments.

Initially, Bentley joined forces with other investors to start a banana farming business but he left that venture after a few years.

In 2008, he began talks with Ross Breeders, a poultry hatchery business that provided small-scale farmers in Zambia with day-old chicks, which the farmers would then raise for egg production or as meat. Although Ross Breeders had a robust distribution network in southern Zambia from its Lusaka base, its presence was weaker in the Copperbelt region. Consequently, Bentley and his co-founder Nina Gibson established a distribution business to extend Ross Breeders’ presence into areas where the company was less established.

Operating from a Toyota pickup truck and trailer, specially modified to carry day-old chicks in boxes of 50 to 100, Bentley and his team traversed the Copperbelt, scouting new customers and making deliveries to those it had already signed up.

From pickup truck to storefront

In 2009, after trading from his Toyota for a year, Bentley and Gibson opened the first Farm Depot store in Kitwe, the second-largest city in Zambia. The 150m² outlet was located near a bus stop, benefitting from high foot traffic.

The transition to a physical store introduced additional overhead costs. To spread these over a greater range of items, Farm Depot broadened its inventory to include veterinary products for chicken farmers, like vaccines.

Bentley then expanded his offerings to include a variety of products for crop farmers, such as seeds, fertilisers, chemicals, as well as equipment. He views crop farming – specifically maize, soya beans, and vegetable cultivation – as a significant growth area for the company. Bentley notes that the market for crop inputs had been distorted for years by a government-subsidised programme, making this segment less attractive to Farm Depot. However, he states that the current administration plans to revise the Farmer Input Support Programme due to affordability issues, which will create more opportunities for Farm Depot to serve crop farmers.

Farm Depot sells products from brands such as Pannar, SeedCo, Yara, Syngenta and Bayer that are procured both from within Zambia and internationally.

Navigating growth

Farm Depot has grown its store network to 26 outlets across four provinces in Zambia. This expansion has not only made Farm Depot more appealing to suppliers but also enhanced its buying power.

To make its products more affordable, Farm Depot introduced the Panono Panono payment plan. This concept allows customers to make a 10% deposit on day-old-chick or feed orders. They then have four weeks to pay the balance, interest-free. Upon completing the payment, customers can collect their orders. This arrangement enables customers to secure products at a fixed amount, safeguarding them from price fluctuations, and also helps them to manage their cash flow.

Bentley notes that the company has seen an average annual growth of 20% since inception, although this hasn’t always been linear. Typically, a store generates about US$30,000 in monthly turnover, with a gross profit margin of 12% and a net margin of 2%. The company’s annual revenue ranges between US$10-15 million.

Pivot to platform

Farm Depot’s next growth phase involves transforming into a ‘platform’ that connects smallholder farmers with service providers and clients across the value chain. Bentley has identified business opportunities in tackling the four main challenges confronting farmers in Zambia: access to finance, knowledge, quality agricultural inputs, and markets.

Expanding access to quality inputs

Farm Depot aims to create a digital marketplace enabling other agricultural input dealers to list their products. “The idea would be to introduce other agri dealers onto the platform so that we can scale, because right now it’s dependent on us opening retail stores,” Bentley explains.

Financing solutions

In early 2023, Farm Depot launched a service that connects the 115,000 registered farmers in its database to finance providers. As of now, Inde Credit is the only financier, but the intention is to add a variety of lenders. Bentley points out that there’s a significant finance gap of $1.5 billion between what Zambian smallholder farmers require and what is available to them.

Farm Depot shares the purchase history of its customers with Inde Credit, which Inde Credit then uses to determine which farmers to finance. By December 2023, Inde Credit had issued 450 loans with a total value of $500,000 via the platform. The loans offered are collateral-free, and according to Bentley, the default rate is below 5%.

Farm Depot earns a commission on each loan extended. A potential future business opportunity is to also offer insurance to the farmers.

Access to knowledge

According to Bentley, the average maize yield for small-scale farmers in Zambia is just over one tonne per hectare, in stark contrast to the eight tonnes achieved by commercial farmers. This gap exists even though smallholder maize farmers have receive subsidies from the government for inputs, indicating a lack of farming expertise among them.

To address this knowledge deficit among poultry farmers, Farm Depot introduced the Broiler Assist Programme. For a monthly subscription of $22, farmers are visited weekly by extension officers who advise on optimal chicken rearing practices. While the service currently caters exclusively to chicken farmers, Bentley plans to extend it to crop farmers as well.

Facilitating market connections

The final piece of the puzzle is helping farmers sell their produce. Recognising the difficulty many face in finding buyers, Farm Depot is set to launch a platform facilitating direct connections between farmers and potential customers, streamlining the path from farm to market.

Minimal external investment

Farm Depot has demonstrated that starting a business doesn’t always require a substantial upfront investment. It was launched with a US$50,000 loan from friends and family. In its early days, Ross Breeders also provided the company with stock on credit, allowing iy to sell the day-old-chicks before needing to pay for them. “Any profits that we made were invested back into the business in order to … either purchase more products or … open new stores,” Bentley explains.

The company’s initial institutional investment of €235,000 came from the Enterprise Zambia Challenge Fund.

Human resources challenges

Finding the right staff continues to be a significant challenge for Farm Depot, Bentley notes. The company has over 100 full-time employees. His current strategy focuses heavily on conducting thorough interviews to ensure the right candidates are hired from the start and to fire swiftly if someone is not the right fit.

Bentley mentions that education levels in Zambia are generally low, prompting Farm Depot to implement its own training programmes, despite the risk of investing in employees who may not stay long-term.

Moreover, Bentley emphasises the importance of hiring individuals who are committed to supporting small-scale farmers in Zambia. “One of the fundamentals is that the people we employ have to care about transforming our customers from being small-scale farmers into emerging or commercial operations,” Bentley says.

Doing business in Zambia

Zambia has faced several economic challenges in recent years, notably grappling with a significant debt burden. In November 2020, it became the first African country to default on its debt during the Covid-19 pandemic. Zambia’s total debt was estimated at $32.8 billion at the end of 2022.

Bentley points out that exchange rate volatility ranks among his toughest challenges. The Zambian kwacha has depreciated more than 300% against the US dollar over the last decade. This has been problematic for Farm Depot, as some of its products, like fertiliser, are priced in US dollars but sold in kwacha.

Bentley believes the country relies too heavily on copper mining and suggests that more emphasis on agriculture could benefit the economy.

Despite these macroeconomic challenges, he mentions that Zambia is generally stable politically outside of election times, which aids in long-term planning.

DRC opportunity

Bentley highlights a significant market opportunity in the Democratic Republic of the Congo (DRC), Zambia’s northern neighbour. He mentions that exporting to the DRC offsets some of Zambia’s currency-related challenges since the DRC is a dollarised market.

He observes that the DRC produces very few products domestically, leading to a high reliance on imports. Farm Depot has strategically located stores near the Zambia-DRC border, attracting Congolese customers who cross the border to make purchases.

While Bentley is open to the idea of establishing stores within the DRC, he says that the entry costs are substantial, necessitating significant financial resources.

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Farm Depot managing director Simon Bentley’s contact information

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