Fertilizer as a catalyst for East and Southern African

agribusiness

MARKET-ORIENTED HUB AGRO-INPUT DEALERS

IDEAL FOR: FARMERS, INPUT SUPPLIERS, EQUIPMENT
PROVIDERS, FINANCIAL MARKETS, SUPERMARKETS, HOTELS,
RESTAURANTS, AGROPROCESSORS, FOOD COMPANIES , etc
ESAFA | Maputo | 9-11 October, 2017

www.afap-partnership.org
FERTILIZER as a CATALYST: RURAL AGRO-INPUT DEALER
.

Rural agro-input dealers are unable to aggregate significant fertilizer demand

Limited capital and storage constrains ability to buy in bulk, resulting in multiple small
transactions

SUPPLIERS / RURAL
IMPORTERS AGRO-DEALERS
3 MT 3 MT

3 MT 3 MT 3 MT

.
FERTILIZER as a CATALYST: HUB AGRO-INPUT DEALER

Meanwhile, a hub agro-input dealer with adequate credit guarantee and warehouse
space for fertilizer presents many advantages to suppliers

“HUB”
AGRO-DEALERS RURAL
AGRO-DEALERS
SUPPLIERS /
IMPORTERS 20 MT

. HOWEVER…
JUSTIFYING THE NEED FOR MARKET-ORIENTED HUB AGRO-INPUT DEALERS IN THE FERTILIZER VALUE CHAIN

Weaknesses
• Ownership: Many agro-dealerships: i) are owner-operated, in which one retail store front is owned; ii) have limited access to
professional services, output buyers, financial institutions, etc; iii) are unable to negotiate for favourable repayment terms
with their suppliers; iv) have not been trained on either fertilizer agronomics or economics.
• Value to suppliers: Limited credit availability in the fertilizer distribution chain hinders the volume and timeliness of fertilizer
flows from suppliers (manufacturers, blenders, importers) to farmers.
• Value to farmers: Many agro-dealers are not aware of: i) the soil types on which their farmers are cultivating; ii) the volume of
fertilizer farmers will purchase in subsequent years; iii) the level of on farm post-harvest losses when grain has to be
threshed, winnowed, and dried; iv) the output buyers of the farmers’ commodities
Solution
• Increase sustainable volumes of crop specific fertilizers via market-oriented hub agro-input dealerships linked with
professionals to secure long-term contracts with output buyers and suppliers upstream whilst extension agents assist their
farmers downstream.
Mechanism
• Train existing “buy-and-sell” hub agro-input dealers to adapt to the market-oriented model
• Link hub agro-input dealers to existing service providers such as sales and marketing, procurement, ICT, finance, supply chain
management, etc
BEST FERTILIZER CATALYST: MARKET-ORIENTED HUB AGRO-INPUT DEALERS at PRE-PLANTING PERIOD

Pre – Planting Period

Sales & Marketing Unit
Purchasing/Procurement Unit
“HUB”
AGRO-DEALERS RURAL
Market Credit via (Letter of
AGRO-
forecast/demand SUPPLIERS /
DEALERS
Credit)
Output buyers IMPORTERS 20 MT
(NGOs, Agro processors and
Technical Assistance
Food companies)

The Market Input and Equipment

Crop/Soil Specific Inputs Suppliers

Market Information

Weather Information
Extension services
Credit lines

Credit
Soil Testing

Inputs
ICT &Technical Unit

Outputs

Smallholder farmers
Financial markets
BEST FERTILIZER CATALYST: MARKET-ORIENTED HUB AGRO-INPUT DEALERS at HARVEST AND POST-HARVEST

Harvest and Post -Harvest

ICT & Technical Unit Sales & Marketing Unit
Product Traceability
“HUB”
AGRO-DEALERS RURAL
AGRO-
Payment from Output Buyers (Less any pending debt) SUPPLIERS / DEALERS
IMPORTERS 20 MT
Output buyers
Traceability
Harvest services (Agro processors and food
companies)
Payment for Farmers Output
The Market

Financial Unit

Storage Services
Credit repayments

Smallholder farmers/Cooperatives Input and Equipment

Suppliers Financial markets
POTENTIAL IMPACT OF MARKET-ORIENTED HUB AGRO-INPUT DEALERS AS FERTILIZER
CATALYST & AGRIBUSINESS VALUE CHAIN

INPUT SUPPLIERS FARMERS AGROPROCESSORS FOOD COMPANIES SUPERMARKETS/ FINANCIAL MARKETS

HOSPITALITY
Higher sales volume of Access to output buyers on Consistent access to Consistent access to Consistent access to Opportunity to lend capital
quality fertilizer and multi-year contracts will quantity and quality quantity and quality quantity and quality for multiple deals at lower
seeds due to long term increase income, and raw materials will raw materials will finished goods will risk because of the
demand forecast from reduce post-harvest losses help operate the help operate the help boost revenue participation of solvent
the market for raw and the pressure to sell to processing plants at processing plants at and create jobs input suppliers and output
materials, processed, market women at a optimal level and optimal level and buyers on long-term
and finished goods discount create jobs create jobs contracts

Less risky transaction Production methods of
because of the inclusion specific commodities
of output buyers for according to market
long term schemes standards will increase
productivity in other crops
Ability to trace Opportunity to Ability to trace
undesirable raw procure certain raw undesirable
materials back to materials via the horticulture products
farmers via the structured market- back to farmers via
market-oriented hub oriented hub-dealers the market-oriented
agro-input dealers hub agro-input
dealers

Guaranteed payment Availability of cash from Might not need to Might not need to
for supplies due to selling via market-oriented provide input credit provide prolonged
consistent cash inflow hub agro-input dealers because market- period of technical
from output buyers – throughout the year will oriented hub-dealers assistance because of
hub dealers-importers facilitate the purchase of could secure bank market-oriented hub
 CONTACT

SERGIO USSACA sussaca@afap-partnership.org +258 82 458 4240

PIERRE BRUNACHE pbrunache@afap-partnership.org +27 79 588 0180

We look forward to discussing further with you

THANK YOU