Agribusiness ideas in agricultural marketing

Small-scale farmers produce 70% of marketed agriculture products in Kenya. Despite their efforts, we pay them low prices for their hard work while brokers and traders enjoy the profits. This is because;

  • Smallholder farmers lack access to adequate information, transport and storage infrastructure. They have to depend on brokers who can access markets.  Brokers prescribe low buying prices to farmers.  Brokers make high profits while farmers make fewest profits
  • Small-scale farmers are price takers. They work in informal and fragmented markets which limits their bargaining power. They cannot negotiate better prices with buyers.

Creating market linkages is not about going to physical market structures.  It involves creating strong networks between producers and consumers. This ensures an efficient flow of market information, goods and money. Farmers gain a chance to control the supply of products and prices in the market, hence reap higher profits.

This article digs into tactics which farmers can carry out to enhance their market linkages. They include; value addition, online marketing, product aggregation and market dominance.  Entrepreneurs can invest in any of these business ideas. This will make sure farmers earn more cash from their farming.

Aggregate produce

Small-scale farming, processing and marketing of agricultural produce are not profitable.  Small volumes do not meet market needs and increase operating costs. To solve this challenge, farmers can combine their produce to market and process together in bulk. To build bulk, farmers and businessmen can;

  1. Create and register producer and marketing groups.  These can be self-help groups, cooperatives or partnerships. Farmers will combine their little produce and sell as bulk.
  2. Become a broker. buy produce from small-scale farmers, process and market at a profit

Value Addition

The major cause of low prices among small-scale farmers is minimal or no value addition in their products. They only market raw materials. Manufacturers and processors finish products to add their use and cash value. Farmers can get higher revenues if they invested in value addition before marketing. They can come together as proposed above and share the cost of investment in processing equipment.  The value addition businesses farmers can invest in include;

  1. Buying food processing equipment and machinery. These can be boilers, refrigerators, freezers or dryers. Farmers can now add the value of products before sale to make more cash.
  2. Invest in cold chain transport.  This will enable farmers to preserve temperature-sensitive products such as milk and vegetables. This helps one to sell in newer markets facing scarcity.
  3. Engage in cottage industry food processing activities.  These can be; milling grains, fermenting, packaging or branding at home. One can sell more valuable products making more cash.

Online Marketing

The Internet has disrupted the way we carry out our daily activities. More people have shifted from shopping in physical stores to online and virtual stores. Using smartphones personal computers, people can now order, compare and shop for raw and cooked foodstuffs in many credible e-commerce sites.

Individuals and group producers can reach to their consumers directly through; mobile apps that link producers (sellers) and consumers (buyers). Hosting a website that connects buyers and sellers. This gives them a platform to bid, display, compare prices and features, etc. young entrepreneurs can run informative blogs on where and how to sell and buy produce.  

Distribute market information

Most people have poor information about markets. Buyers and sellers have differing expectations on price and product features.  This hinders the sale of products that do not meet consumer preferences in terms of quality and health standards. Farmers cannot sell all of their products and attract lower prices.  Traders and consumers cannot get sufficient products.

Offering timely and relevant market information is a viable business. One can give this news on Websites, social media platforms and mobile apps. You will make money from your site visitors, readers and followers when they register or follow your site.  Additional means of information provision include writing magazine articles and offering training to both farmers and buyers.

Market dominance

The aim is to influence and control the production and marketing of products.  Farmers have access to farm inputs to make sure production is efficient, timely and reliable. On the marketing side, farmers maintain a direct connection with the consumers to eliminate the brokers. A shorter value chain allows farmers to control supply and prices of goods in the market.

Tactics in dominating the value chain include:

  1. Set up farm-inputs shops. These supply farmers with farm inputs such as animal feeds, fertilizers and seed. They can sell inputs on a check-off system.
    Sign contracts with suppliers and distributors. These may be herbicide manufacturers and transporters. This will secure a reliable supply of inputs as needed. Farmers can also access inputs cheaply through discounts and credit.
  2.  Establish factory shops and outlets. These may be dairy shops, automated dairy machines or restaurants that make direct sales to consumers. 
  3. Negotiate contracts with exporters, food processors and distributors. These will collect yields immediately after harvest. This cautions farmers from post-harvest losses. Contracts specify prices saving farmers from price fluctuations. 

Samuel K

Samuel Kibicho is passionate about profitable and safe agriculture as a tool for wealth creation and food security. He is the founder of Agcenture and consults in market systems development (MSD), program management and result measurement, monitoring and evaluation for sustainable agriculture & rural development projects.

1 Response

  1. March 4, 2020

    […] Market linkages will improve the profitability of agriculture products.  Businessmen will set up firms to collect produce, add value, store and distribute foods. Gather growers into farmer groups and cooperatives to formalize markets. Contract farming will solve volatile and stagnant pricing. […]

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.