Using the market to cultivate a global mindset among farmers and entrepreneurs

One of the most seductive assumptions in African agriculture is that farmers and aspiring agricultural entrepreneurs can succeed through following a specific set of steps. However, as markets become highly networked and competitive, success no longer just depends on what a farmer or an entrepreneur does but on the actions of rivals or competitors. Unless they cultivate a global mindset, farmers and entrepreneurs in developing countries will continue to over-simplify agriculture by thinking it is a straight forward undertaking with obvious results.

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Dynamics of a free-market economy

Key elements that drive performance in agribusiness are now beyond the control of farmers, traders and other value chain actors. That is why farmers may never achieve success simply by following certain steps prescribed by input companies or extension officers. In the prevalent free-market economy, competition and imitation is leading to a decline in profits. For instance, the more farmers get into producing a commodity, the less income is shared among farmers. Unfortunately, in Zimbabwe, for instance, tobacco farmers want more money each year irrespective of the effects of more farmers joining the tobacco production band-wagon every season. As more farmers start producing a particular commodity, they copy each other’s winning ways and diffuse best practices.

In many developing countries, domestic horticulture has shown that farmers and value chain actors who enjoy long-term success do so through a number of innovations such as stringing together many short-term successes unlike trying to look for elusive secrets to success.  This is contrary to a tendency by development interventions and formal contractual arrangements to mislead smallholder farmers into believing that following a few key steps will inevitably lead to success without influence from external factors. As a result of these misconceptions, many farmers call eMKambo looking for a formula that can be easily applied in order to earn high income from agricultural activities.  Some of the famous questions include: Which crop can I grow to earn more income?  Our usual answer is that there are no guaranteed keys to success in agriculture because a lot depends of competitors, mostly unknown to farmers until they get into the market.

Limitations of searching for certainty

Rather than search in vain for success formulas, eMKambo always encourages farmers and other value chain actors to adjust their thinking and recognize the fundamental uncertainty of the agribusiness world. A majority of farmers have been schooled into believing that agriculture and related businesses can be made predictable so that specific actions lead to certain outcomes. The reality is that agriculture is now largely about making choices and decisions under uncertainty. For instance, it is difficult to accurately know whether consumers will embrace or reject your commodity. Actions of competing farmers and food producers are often fluid and unknown.

Empowering farmers through evidence and a global mindset

African agriculture is becoming more about odds, chances, and trade-offs than abundance of natural resources. Faced with uncertainties of the agricultural sector, especially markets, wise farmers and value chain actors have to invest in gathering accurate information and subjecting it to careful scrutiny in order to improve their odds of success.  While greater knowledge and understanding is critical, good decisions do not always lead to favorable outcomes, and unfavorable outcomes are not always the result of poor decisions. Agribusiness is no longer a place of clear causal relationships, where a given set of actions leads to predictable results, but one that is more tenuous and uncertain. That is why farmers and agricultural entrepreneurs should gather appropriate information, evaluate it thoughtfully, and make choices that provide the best chance for success, while recognizing the fundamental nature of uncertainties surrounding agricultural economies.

Rather than expecting every smallholder farmer to travel around the globe understanding international markets, it should be the role of educated people in developing countries to cultivate a global mindset in their local communities. How do educated Africans and those toying with technology help farmers so that they don’t continue wasting their capabilities by producing more than the local market can absorb?  How can technology enable marginalized people to reach various parts of the globe without physically going there? The informal market constantly challenges leadership and intellectual skills through presenting models cultivating and utilizing global mindset. Farmers who frequent informal markets always express the following attributes and competencies that exemplify a global mindset:

  • A strong desire and resilience for working cross-culturally.
  • Thorough understanding and knowledge of other cultures.
  • Careful choice of the correct verbal and non-verbal actions in unfamiliar circumstances.

The genesis of a global mindset is when communities celebrate diversity and reward culturally intelligent behavior. While local people embrace both external and local commodities, to become smart consumers, they need capacity building.  When a global mindset geminates, a farmer can be able to connect his resources such as land, curiosity, water and labor with the globe. Empowering farming and rural communities with a global mindset is like giving them a key out of poverty because they will become confident knowledge seekers. Farmers should be wise enough to constantly look for independent evidence rather than merely accepting ideas from their associations or peers as the only gospel truth. Decisions must not be entirely based on data contaminated by their biases.

 

charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

 

Increasing odds of success through knowledge-driven farmer characterization

Diverse ways of characterizing farmers are beginning to reveal ways in which different farmers engage with knowledge and generate positive outcomes. To the extent knowledge is considered power, there are many farmers and traders who prioritize knowledge protection and will only share knowledge when sharing is the best thing to do. Cultural values, norms and practices also influence knowledge sharing in different communities. In some communities, knowledge sharing is embedded in local norms and values. Some value chain actors share knowledge because they are naturally inclined to sharing. Yet others are hesitant to proffer their ideas unless there is demand and will only share when asked to do so.

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Four types of farmers from a knowledge development perspective

Working with different types of farmers and traders over the past few years has enabled, eMKambo to discover and distil the following categories of farmers, irrespective of land size and other resources:

 

  1. Perfectionists: This group is obsessed with getting everything right the first time and unless things are clear they will continue playing it safe. For perfectionists, crops have to be completely free of weeds and livestock pens have to be free from mud all the time. Unfortunately, perfectionist farmers tend to get stuck because seasons and markets are not perfect. An important role for knowledge brokers is to nudge these farmers toward tolerating imperfect progress and learn to fine-tune as they go, as a natural learning process. However there are situations where perfectionism is critical. For instance, when dealing with international markets where quality is fundamental, perfection carries the day but there has to be a balance with consistency in supply.

 

  1. Know-it-alls: This cluster comprises aggressive knowledge seekers who can answer many questions about any commodity. While this group can be a powerful asset or a reliable library in a farming community, farmers in this category may not be team players, preferring to be considered the only sources of truths. When things go wrong, farmers who claim to know it all will blame everyone except themselves. Such a finger of blame can reflect a closed mind, which can be catastrophic in a dynamic world fuelled by knowledge and fluid ideas. In most cases, know-it-alls become jacks of all trades and masters of none, in a world where more success comes from specializing than embracing everything.

 

  1. Silo builders: This group is motivated by hoarding knowledge and building silos which can be shared with a small inner circle. As if to exemplify this category, there has been a growing tendency by large scale commercial farmers in African countries like Zimbabwe and South Africa to monopolize and build silos around export markets. New entrants have found this to be a more serious barrier to entry than conditions on the export market. Farmers in this group may also refuse ideas better than their own, especially if such ideas threaten their advantages.

 

  1. Victims always waiting for rescue: Sadly this group of farmers has increased in many African countries like Rwanda, Kenya, Tanzania, Malawi, Zambia and Zimbabwe over the past few years. Most of these farmers who are capable of buying their own inputs and invest their own capital into agriculture are now prefer to rely on government for assistance. They claim to be victims of unforeseen circumstances like macro-economic challenges and climate change. These farmers tend to conveniently ignore how they have overcome their own challenges in the past without any assistance. Unfortunately, this victim mentality has also infiltrated business lobby groups like chambers of commerce, retailers associations and privileged commodity association who continue to lobby government for protection against competition yet they should be competing and solving their problems.

 

In many rural farming communities, the victim mentality is being perpetuated by some development agencies who validate themselves by solving other people’s problems.  Instead of allowing communities to solve their water and livestock disease challenges, some NGOs rush to rescue capable “victims”.  This is one way in which poverty is being perpetuated through validating helplessness among people who are fit enough to solve their own challenges and assist the government in rebuilding the economy. When communities give themselves permission to solve their own challenges, their solutions are often better than those from outside because outcomes will be locally-owned.

The above issues are some of the many reasons why categorizing farmers in developing countries by land size is no longer enough. Critical considerations include relationships among farmers, the way farmers relate with the market as well as types and quality of commodities.  All these are underpinned by different kinds of knowledge, some of which may not be acquired through conventional extension methods.

charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

Succeeding through a secret mix of competencies and data

The fact that farmers and students exposed to the same capacity building initiatives produce different results suggests training alone does not lead to success. In the majority of developing countries, farmers in the same environment and with access to similar resources achieve different outcomes. On the other hand, agricultural economists and agronomists who did the same course can achieve different results. If it is difficult for sophisticated graduates to translate knowledge they have acquired during four years of university education, why should we expect farmers and semi-literate people to find it easy?

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Limitations of trying to professionalize local indigenous knowledge

Instead of addressing structural and institutional barriers, African policy makers, private companies like seed houses and development agencies are blaming farmers for not adopting new technologies to lift themselves out of poverty. There is no realization that knowledge application is context-sensitive such that for many innovative farmers, it is a secret mix of competencies. That is why most of the farmers who are asked to describe what makes them succeed may not know what really contributes to their success but go on to share surface intuitions. If it is about hard work, every farmer works hard. While farmers and rural entrepreneurs are expected to share knowledge, each actor tends to have a secret set of skills and competencies hidden from the surface. Very few farmers and traders have the ability to apply what they know under pressure in order improve their level of quality. In the absence of clear market channels and processes, farmers can do everything right but face different prohibitive rules on the market.

Failure to account for contextual dynamics is one of the reasons why efforts by development actors to turn local indigenous knowledge into professional communication products like videos, manuals and formal reports is reaching a dead end. To the extent this effort does not take into account the value of the oral and fluid nature of local indigenous knowledge, it remains communication lipstick. For instance, aggregating commodities among smallholder farmers for the market is often very difficult due to different circumstances and needs among farmers. Some want to sell immediately while others may have other options like remittances from their children based in urban centres.

Benefits of a nuanced understanding of consumers

For food producers in developing countries, an important part of secret competencies is understanding consumers at a granular level.  This is where data and analytics become vital. Value chain actors who are beginning to embrace a culture of data collection and analysis are building a nuanced understanding of their customers. For instance, three classes of consumers are emerging in many African countries – those who want to go back to traditional food systems; those trying to balance traditional with modern food choices and; the last group comprising those not sure what they really want (lukewarm by-standers who consume whatever comes).  Efforts to promote organic food should consider these issues.

Knowing the market includes detailed characterization of consumers. Targeted marketing messages can only be developed from drilling down into detailed nuances of different classes of consumers based on their incomes levels and culture, among other indicators. Without digging deeper into the attitudes and behaviours of consumers, it is difficult for traders to plan and build sustainable businesses. Competencies in manipulating data can reveal more meaningful layers of insights into what influences choices by low income consumers who patronize African informal markets.  Although many consumers are becoming health-conscious, sporadic incomes and poverty often force them to consume whatever comes.

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On a more revolutionary note, a new breed of dynamic value chain actors is harnessing ICTs to build data- informed businesses that undermine traditional agribusiness models like contract farming. This trend is transforming the nature of competition in African agriculture such that supermarkets and processors no longer have monopoly on consumers and market segments. Collecting data regularly in fluid informal markets is enabling smart value chain actors to capture patterns at a very detailed level in ways that cultivate a culture of fluid knowledge development. That is why policy makers, financial institutions and development agencies should invest in monitoring of agricultural markets for new insights and best practices.  Best practices in agricultural production are meaningless without insights from the market.

 

charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

 

Making sense of wealth distribution in the new networked economy

Just as they distribute commodities and knowledge to all classes of people and income levels, informal markets in developing countries continue to play a central role in redistributing wealth. African economies have traditionally been characterized and driven by community knowledge sharing and individual innovation. While individual innovation was privatized, local ideas were shared through the community in ways that fostered wealth distribution through shared skills, knowledge and natural resources. Common pool resource sharing was also a powerful means of rationalizing and distributing resources like land, water, pastures and different forms of capital at the time. Taking all these dynamics into account, it can be argued that traditional economies had a more even wealth distribution pattern. Unlike the current scenario where Africa economies are dominated by a few millionaires, the gap between the rich and poor was not as wide as it is at the moment.

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Demerits of employer – employee relationships

The traditional economy had an effective system of passing on knowledge from one generation to the next and this ensured community cohesion. Conversely, the advent of the formal economy brought new ideas and technologies which became confined in formal enterprises.  An employer-employee relationship was created where employees were just supposed to have knowledge limited to their tasks in the production chain. Such surface knowledge would only sustain their families since it ensured they stayed employed, earning an income. The work environment was structured in such a way that employees became conversant with surface knowledge and had no access to deep, back end knowledge.  For instance, an employee would master how to operate a processing machine or drive a tractor but not know enough to make his/her own machinery or improve on what has been invented so that it meets the context.

This scenario had led to pockets of privatized knowledge within a few private companies or individuals.  Also created was a knowledge hierarchy and skewed ownership structure where those who own innovations and capital ended up owning most of the resources available for exploitation.  For instance, adding value to timber, minerals and agricultural commodities was based on skills and knowledge confined to the owners of capital.  Employees just contributed labor and knowledge but could not use that knowledge to create their own enterprises.  An employee’s contribution was owned by the company while knowledge from the company was privatize property that could not be used elsewhere. While innovation by individual employees focused on improving the quality of products and services, the employer-employee relationship created a wider gap in wealth distribution with much of the wealth being accumulated by employers.

Lower barriers to entry and new levels of innovation

The current informal, networked economy has less restrictions and barriers to knowledge sharing compared to the formal economy where recipes and formulas were protected for exclusive exploitation.  There are now more direct relationships between manufacturers and consumers with consumers contributing to the quality of products through continuous feedback. In fact, consumers are becoming co-creators of processed products. These dynamics are improving products and services and increasing incomes for SMEs.  However, there are still cases where privatized knowledge continues to be used in producing some products in ways that limit innovation.  For example, you cannot improve someone else’s seed or equipment.

Most SMEs who were previously formally employed are now using their previous knowledge to produce goods and services that were the preserve of their former employers. The context has changed from legislation and copyright laws which used to protect the interests of the few through prohibitive policies.  In the informal networked economy, an open competitive environment prevails in favor of those innovative enough to convert challenges into opportunities.  This is translating into increased products, diversity, resource utilization and wealth creation.  For instance, in Zimbabwe the formal economy had mining claims where one would keep a piece of mineral land for exclusive use even if s/he was not willing to exploit it immediately for the benefit of the entire economy. One could also keep 5000 hectares of land lying fallow for years, merely because s/he had exclusive rights. This practice of locking resources to one individual is being challenged by the new network economy, giving way to effective rationalization of resources to ensure more players participate.

Since ICTs have revolutionized the economy, nothing can stop people from sharing knowledge within their communities and with the global world. Local people living abroad can easily invest back home while communities can globalize their entrepreneurial mindsets in ways that earn them income while in remote villages. On the other hand, local institutions have to re-invent themselves and revisit their traditional business models.  For instance, banking will no longer be what it was a few decades, thanks to the ICTs-driven mobile money phenomena. The same applies to markets. We used to have formal markets confined to particular producers, tied to strong niches between producers and the market. That is now becoming a public secret. A smallholder farmer who can meet the requirements of hotels, supermarkets and processors can easily enter that market and upset traditional balance of economic power. Models like contract farming were used as barriers to entry, with the effect of interfering with a competitive environment. Most actors who lobby for the introduction of barriers are afraid of competition.  Wealth distribution starts in the market as it moves money to farmers and commodities to where they are needed.  This is where ICTs are becoming a critical tool kit for distributing wealth.

charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

The evolving role of smart intermediaries in African agriculture

While digital technology is threatening to diminish the role of intermediaries in African agriculture, there are signs that smart intermediaries will be around for some time. Although it is spreading connectivity among farmers, traders, consumers and policy makers, digital technology will always need people who translate services between value chains actors, most of whom may struggle to appreciate each other’s contribution.

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Digitization of agriculture and rural communities is increasing need for customized services that are too expensive or rare for farmers, traders or consumers to consolidate on their own.  For instance, very few farmers have the capacity and resources to follow their commodities along the entire value chain or ecosystem. On the other hand, digitization is accelerating the movement of commodities and information in ways that make it difficult for farmers and other value chain actors to keep pace with opportunities and threats.

Intermediaries as creators of value

As agriculture and food supply models become more complex, intermediaries that will not disappear overnight are those able to build sustainable models. Failure to do so means they will find themselves on the endangered list. The intermediaries that persevere will be those that adapt and produce unique value such as:

  • Consolidating each value chain actor’s comparative advantages in ways that prevent some value chain actors from falling into avoidable pitfalls.
  • Building relationships and providing a neutral space for competitors to share reliable information. Without such a space, competitors tend to mislead each other. There are circumstances where it makes sense for competitors to collaborate through facilitating information and knowledge exchange. Unfortunately, competitors often hide useful insights from each other because some will have incurred costs in gathering business intelligence and may not recoup such costs if such knowledge is made a public good.
  • Rationalizing the utilization of resources in order to avoid duplication of efforts. Farmers who get into a new market often require guidance from intermediaries. There are cases where traders may pretend not to have financial services when the opposite is true and they are only interested in testing financial facilities from new players in comparison to what exists. On the other hand, some farming communities may pretend they don’t have coping strategies in order to get free inputs and services when in fact they already have better ways of coping with challenges. All this requires intermediation.

Integrating ICTs into needs-based content development

ICTs are not independent of human skills and capacities in terms of efficiency.  Developing needs-based content requires an intermediary. For instance, what informs the development of a mobile application or a short message service?  The most important input is the quality of content that makes a short message service a conversational tool. ICTs can fuel the interpretation of invisible relationships into strategies that would otherwise remain locked within actors. Sometimes value chain actors preserve knowledge to their advantage in ways that hinder knowledge sharing and flow. Allowing knowledge to flow enhances competitive advantages.

For instance, Mbare agricultural market has its own knowledge which has to be consolidated and connected with knowledge from other markets, producers, consumers, processors and others. eMKambo is already using ICTs to accelerate and sustain this process. Just as commodities are pushed from producers to consumers, the same happens to knowledge. It is often difficult for knowledge to move from farmers to consumers directly. How can a rural farmer communicate with an urban consumer whose income and consumption patterns are hidden from farmers?  All these conversations have to stay fluid, instead of each of the millions of farmers trying to communicate with millions of consumers.  That is how trends become a consolidated value-added product for diverse value chain actors.

Information and knowledge are different from seed, fertilizer or other inputs. If knowledge is to be shared productively, many actors have to be involved. Some of the value is found at the extremes of value chains than in formal markets. Intermediaries become more critical in facilitating transactions between producers and consumers as well as interpreting high level patterns within the ecosystem. By monitoring and herding commodities and actors, they close gaps between disconnected value chain actors that require one another to survive. In many developing countries, most value chain actors do not have access to those they need in order to stay alive. As technology deepens connections between producers and consumers, smart and dynamic intermediaries will continue satisfying a high value function.

 

charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

When is a disadvantage actually an advantage?

If it was true that more resources always lead to better results, African communities in high rainfall areas and favorable climatic conditions would be the richest and happier than everyone else. Development organizations and policy makers are slowly awakening to the reality that dumping resources on communities does not guarantee a beneficial end. For instance, projects set up over the past decades have not moved poor people out of poverty as expected. It looks like something more is needed.

Is there advantage in disadvantage?

Evidence from several African informal food markets indicate smallholder farmers and rural communities that are beset by disadvantages have ways of becoming competitive by compensating for their weaknesses. A typical example is how resource-poor smallholder farmers tend to bring more high quality commodities to food markets than large scale farmers who have many advantages like alternative sources of income. In the absence of quick answers, African smallholders force themselves to innovate and solve their own problems. That is why free inputs, under whatever name, are not a good idea. The majority of smallholder farmers produce high quality commodities because they pay closer attention to detail, knowing that agricultural commodities are their only source of livelihood.  On the other hand, those with alternative sources of income don’t care much about producing competitive products or developing sustainable markets.

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The urge to overcome weaknesses

eMKambo is not suggesting smallholder farmers and poor people should be denied resources as a way of nudging them into radical innovation. However, it seems scarcity of resources has a tendency to strengthen rather than crush smallholder farmers.  By working hard to know their disadvantages and taking action to turn them into advantages, many smallholder farmers consider disadvantages a permission to succeed. More support often paralyses African politicians who masquerade as farmers when all they need are free inputs whose outcome they do not even trace to the market.  On the other hand, farmers with disadvantages, beyond just unavailability of inputs, feel a strong need to overcome their weaknesses.

However, overwhelming disadvantages can hinder progressive growth. When rural communities fight poverty, malnutrition and socio-economic battles with less sophisticated weapons and tools, they are more likely to lose those battles. On the other hand, it is not enough to have sophisticated weapons in the form of good soils, farming equipment, good road network, access to finance and proximity to the market when one is not able to use those weapons and tools productively. Smallholder farmers can only exploit their disadvantages if basic amenities and resources are made available first.  In most African rural areas, some levels of poverty and squalor make it difficult for poor people to take advantage of their disadvantages.

 Disadvantages as a platform for creativity and innovation

Useful disadvantages like limited resources encourage competition and prevents complacency in ways that foster equitable growth and development. When farming communities clearly identify a disadvantage they will have successfully identified something they do not have that they want.  A degree of individual and collective resilience is necessary in order to take the disadvantage forward. These communities should be encouraged to further develop their strengths rather than waste time working on their weaknesses. That way, they will take stock of what they do well and cultivate critical skills and strengths for further success unlike continue believing they are poor and not able to do anything for themselves.

The power of random and informal conversations should not be underestimated.  By telling each other positive stories in the market, smallholder farmers tend to be the answer to many questions bugging their peers for decades. Some farmers hide their disadvantages until a courageous peer with the same challenges tells his/her story. Turning disadvantages to advantages enables farmers and other value chain actors to open their hearts to others.  Adverse conditions calibrate their abilities and strengths to inspire them to push against both visible and invisible barriers to success. Disadvantageous circumstances teach them to adapt and embrace flexibility with focus and tenacity. Struggling through disadvantage turns rote to reality.

So, should we continue blaming development organizations for initiating projects?

It might be unhelpful to continue blaming development organizations which start projects that become white elephants. The local community should ensure those projects succeed. Every new project is a chance for local people to succeed. When the NGO goes away, it is creating a strategic disadvantage in the form of withdrawing resources.  Rather than exploiting this strategic disadvantage and move forward, most communities go back to their original situation. Usually people outside the beneficiary group, who are naturally curious and innovative, are the ones who quietly copy and innovate. Metal fabricators are an example of people who take advantage of strategic disadvantage.  Most of them have not been trained in formal engineering but have taken that lack of training to become creative in turning those disadvantages into tangible outcomes.  Creating stumbling blocks is giving people a chance and permission to succeed.

 

charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

Using evidence to connect with a bigger purpose

In their pursuit for survival, most value chain actors in developing countries do not clarify their contribution to a big purpose like economic growth.  For instance, instead of seeing how their work contributes to national food and nutrition security, most farmers and manufacturers tend to be interested in the colour of the money. That is why their first question to the market is how much is the market offering per a given quantity of specific commodities?  Ideally, money and better incomes should be outcomes from a much larger purpose. Those motivated by money or high prices will always struggle to achieve their goals.  There will never be enough money to satisfy all wants.

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The power of evidence and reflection

Everyone should ask themselves how they are contributing to socio-economic resilience and growth. For instance, those fond of importing goods into the country should demonstrate how their activities contribute to economic growth. Exporters should do the same. Why do importers of basic commodities think importing is the solution to the high cost of producing agricultural commodities like soya bean and fruits locally? It should be easy to bring farmers, processors, transporters and input providers together and explore each other’s level of effort in supporting socio-economic growth and resilience.

By taking 30% from farmers’ incomes, how do financial institutions and transporters think they are contributing to socio-economic growth? How do exorbitant interest rates charged by African financial institutions contribute to economic growth? While many African countries are full of development organizations, economic growth and resilience cannot be left to development partners. Are development organizations expected to be more patriotic than local value chain actors who seem more interested in money than long-term economic growth and future prospects?

Building a new evidence-informed mindset

For farmers who say they can’t accept low prices due to the cost of inputs, what is going to be the end?  What is the price of money that causes input providers to increase their price, leading to consumers failing to afford agricultural commodities?  Developing countries cannot continue blaming the international market for not accepting their products but focus on finding ways of making their commodities competitive on the international market.  Critical questions to be answered collectively include:

  • Who is causing our commodities to be uncompetitive on the local and international market? Is it the farmer, input provider, financier, transporter or policy makers?
  • Why are we failing to feed our people when we have abundant natural and human resources?
  • Why should consumers buy local food when imports are available and cheap?

Knowledge-intensive methods are critical in addressing these chicken and egg challenges. Instead of resorting to a blame game, every value chain actor should ask themselves whether they are contributing negatively or positively to socio-economic sustainability. When we see commodities come into the country through our borders we should ask ourselves whether we have reached such a crisis point that most consumers no longer have any choices or we just open borders willy-nilly. Naturally consumers should be allowed to adjust and exhaust all their options before resorting to imports. We would rather have temporary shortages causing local producers to innovate and benefit from that investment later on.  In most cases, when they don’t find what they want, consumers tend to adjust their preferences.  However, there are cases where compelling forces nudge consumers to go for cheaper commodities.  For instance, low disposable income can over-power the superior taste and organic nature of local products, prompting people to buy foreign food because it is affordable.

 

charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

Price as an outcome of negotiations between diverse market actors

African agriculture is one of the most misunderstood ecosystems, especially by investors and development organizations. There is a persistent tendency to force smallholder farmers into contract agreements when most of them have made up their mind about the pros and cons of such agreements. While informal markets continue to carry the day, investors, development actors and policy makers continue to cling onto out-dated contract farming models which condemn smallholder farmers into labourers.

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More than just supply and demand

While formal institutions still believe in the laws of supply and demand, such laws no longer call the shots in African food systems where borders no longer exist. Although commodity supply is important, profitability and sustainability result from many elusive factors. Part of the solution is careful characterization of the market and its actors. With the majority of smallholder farmers in developing countries shunning contract arrangements, unless when blackmailed through free inputs, informal markets are setting the rules of the game at different levels.

Farmers and vendors who exchange goods and knowledge in informal markets understand each other very well to the extent of getting into win-win pre-financing arrangements. This is contrary to views from some development actors which pretend to protect farmers from ‘middlemen’ when they will be  destroying hard-earned relationships that must continue to exist when donor life-support has disappeared.

The biggest group of buyers for farmers who sell in the farmers’ market are vendors who buy in small quantities for selling further in high density areas. A second cluster of buyers are traders with permanent stalls who have invested into trading particular commodities. Traders purchase in bulk and often deal directly with farming communities.  Measurements used in farmers’ markets signify the character of the market. When commodities come into the farmers market, they are in large measurements such as cardboard boxes, large plastic boxes (sandaks), 50kg bags and 20 litre tins for commodities ranging from butternuts and groundnuts to tomatoes. These measurements define the role of the market.

The fluid nature of informal food markets

While agricultural commodities come in bulk from farming areas, most buyers do not buy in bulk but in smaller measurements. This means the market uses different measurements to break bulk. All these nuances have a bearing on financing agricultural production. Where buyers bring commodities straight from production areas into the market, such volumes are stocked in the wholesale market for other informal or formal markets like processors.

The market pulls together a food basket from diverse farming areas. As it breaks bulk it mixes and matches commodities according to diverse nutritional needs. Individual buyers come to the market looking for specific food baskets which the market brings together. However, buyers rarely spend their whole budgets on single commodities. When commodities travel in bulk from one large urban market to another, the market where they travel to is responsible for consolidating food baskets for local consumers.

This fluid role needs to be understood as it influences consumption patterns. For instance, when the consumer budget gets strained, some commodities are rejected. That is how commodities are given weights in terms of whether they are necessities or luxuries. Commodities like lettuce, carrots, peas and fine beans are normally not produced in large quantities because they are sometimes considered luxuries not necessities.  A necessity is hardly substituted fully and that is why a tomato is always in the market because it is a necessity.  It has a marked price range. For commodities that are considered necessities, when demand is high, prices also tend to be high due to a built-in tendency by consumers to acquire appetites and tastes for particular commodities.

Significance of characterizing markets

Instead of focusing entirely on price, farmers and other value chain actors can benefit from characterizing and scoring markets in terms of availability, volumes absorbed by a particular market, commodity uses and price elasticity. Farmers markets can be high on price but score low because prices can fall below contract prices.  On the other hand, while in contract arrangements the buyer and price can be known before producing, the informal market can be always available and sometimes offering better prices due to competitive pressures.

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Knowledge already exists at different value chain nodes such as producer levels and market level.  How can this knowledge be pulled together to inform agribusiness models?  Processors and SMEs have raw knowledge still to be understood. If that knowledge is supported by that from the production side, it can become a bridge for resuscitating formal processing companies. Tracking volumes into markets also provides a framework for building consumption patterns in ways that speak fluently to prices. Commodities cannot be compared in isolation but in competition with each other. For the past six months, which 11 commodities were moving together and competing in the market and which one, upon entering the market, disturbed a necessity like tomatoes?

 

charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

When data and evidence become currency

Most of the information disseminated to African smallholder farmers and rural marginalized entrepreneurs is barely enough for progressive decision making. In most cases where price information for a particular commodity is provided, critical details are missing and these include diverse sources of the commodity, levels of competition, demand cycles and the type of people who consume or use that commodity.  For instance, in Zimbabwe and other developing countries, the production and consumption of butternut squash (cucurbita moschata) is on the increase. However, due to the absence of data and evidence, reasons for this trend are often hidden from producers and policy makers.

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Butternut squash belongs to the same family with the pumpkin, cucumber, gourd, watermelon and cantaloupe. These plants grow on a vine and are relatively easy to produce, especially in the right environment.  Production information is simple to find and standardize. What is often missing is the  picture for each commodity in terms of who is consuming the commodity, whether supply to the market is increasing or decreasing and reasons behind those dynamics. Data becomes currency when such details are generated and consolidated. eMKambo has made it its calling to align data with decisions.

Butternut Squash supply to Mbare market, Harare: January – October 2017

In Mbare agricultural market, the butternut squash is usually packed in bags known as Sassekas. Don’t ask what that name means, the agricultural market has its own lingua franca. A standard size of a Sasseka of butternut squash is 60kg. Traders who buy from farmers prefer to use the Sasseka as a standard unit of measurement for their transactions. It is becomes convenient to repack the butternut into smaller pockets. A total of 98 083.7 pockets of butternut squash were supplied to the market between January and October 2017. A standard pocket of butternut squash weighs 7.22kgs. Converted to sassekas, a total of 11 802.74 Sassekas were supplied to Mbare Market from January to October 2017.

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Major sources of the commodity

As shown in the chart below, Mutoko district was the biggest supplier of the butternut squash. The Harare figure is a combination of peri-urban production and volumes held by traders in Harare over a given period in which case Harare is presented as a supplier to the market. There are many cases where Harare traders buy squash butternut seed and other inputs which they extend to farmers. Such decisions are largely informed by data showing areas with potential for producing more and those that have reached their ceiling in terms of production capacity.  In the absence of such granular evidence, funding the production of butternut and other commodities is based on guess-work and wastes scarce resources.

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Price trends

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Butternut squash can be stored for a period of six months or longer and the taste is often superior when it is stored for a long period as compared to being consumed just after harvesting. Research and evidence gathered by eMKambo over the past five years has shown that the demand for butternut squash is high during the festive period. If you are producer or financier, it is important to know all these economic nuances associated with squash butternut before making an investment decision. This information can easily be compared with 2015 and 2016 in order to demonstrate trends.

The law of demand and supply states that all things being equal, when supply is low there is an increase in price and that when supply is high, there is a decrease in price. Evidence provided in the above graphics show that this law applied in 2017 except in April where both supply and price went down. In 2016 the same law applied in April, May, July and October only. Price was constant from January through to March where supply was fairly high. This demonstrates the extent to which, like all other markets, agricultural markets can be unpredictable. However, mastering other factors like consumer behavior, income levels and how food commodities compete and substitute each other can generate better insights.  Given the scarcity of resources, decisions have to be based on strong evidence.

charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6