To improve productivity, smallholder farmers need access to quality inputs, product information, services, as well as new technologies. KMT seeks to transform the current retail practices of agrodealers to provide better value to farmers mainly through better customer service and information sharing, marketing, product quality, product availability and shop lay-outs.
Through selected partners, KMT is supporting an upgrade of rural agrodealers so that they can become one-stop-solution centers for farmers. The agro-dealer micro franchising model focuses on demonstrating the commercial value of a customer-focused retail strategy to agro-dealers. In spite of having a direct link with the farmer, agro dealers have traditionally invested little in improving this relationship. Key model features include:
- Driving business growth through improved ‘out-reach’ to farmers. Using a mix of modern retail tactics to expand farmer outreach, including the use of promotional events at village markets and building agent networks to expand coverage. Integral to this approach is the use of ICT to develop customer databases which enable the agro dealer to reach their customers where they farm, targeting offers and promotional packages to meet the needs of their farmer clients
- Improving business management. Agro-dealers begin to manage their internal business operations more effectively. This is due to use of ICT to improve inventory management, finance and HR to complement the investments made in customer relation systems.
- Forming strategic partnerships with service providers. This includes developing partnerships to deliver ‘solutions’ to farmers, with in-built mechanisms to track and ensure quality control through market authentication and rating systems. Not only does this maximize the return from the inputs farmers are using, but reinforces customer loyalty and good farming practice whilst increasing the volume of sales moving through the system. Examples of service partners include spray service providers (SSPs) and soil testing.
The case of Positive International
KMT has partnered with Positive International to set up agro-franchise networks starting with Machakos and Makueni Counties. Under the engagement, PositiveInternationalcommits to identify, recruit and train franchisees. The franchisor also manages the supply chain activities including standards development and monitoring. Potential franchisees are the existing independent agrodealers, usually in the remote villages. Once franchised, they run their shops under the Positive Internationalbrand.
Positive International has been actively involved in the agro inputs sector in Tanzania for over 15 years and 5 years in Zambia, Malawi and Mozambique. In Tanzania they have built an Agro dealer network comprising of over 500 franchisees.
In Makueni and Machakos Kenya, Positive Internationalhas franchised 11 agrodealers and set to take on another 10 in the coming months
Indicator of Success in Kathiani, Machakos County
Woni agrovet is located in Kathiani, Machakos County. In just over 4 months after engagement with Positive International, Mrs. Esther Kanini, the proprietor, says she has seen tremendous change in her business. For starters, she feels the training provided by Positive Internationalon customer service management has greatly improved relationships with her customers.
Both Esther and her staff see the importance of proactively providing farmers with information. “Currently, we ensure that every farmer coming in knows about any new product we have in the shop” she says.
In return, many farmers in Kathiani Village now prefer to shop at Woni, now a Positive International agrovet. The increased farmer traffic and monthly sales trends verify this. In just over 5 months after being franchised, the monthly sales have increased by over 25%.
For the model to work well, Positive focuses their trainings on:
- Agro-Franchise concept
- Business training- Including Inventory and financial management
- Customer Care training
- Product Knowledge training
- Demo plot preparation and management training
- Promotions and management
- Introduction to ICT use
What makes the model important for rural agrodealers?
Rural agrodealers sometimes face inputs supply challenges, often lacking sufficient stock to serve farmers during the peak season. Due to financial challenges, they are unable to procure in bulk from their suppliers. The situation is made worse by the rural infrastructural challenges, thus suppliers often do not have incentives to reach out to these groups of retailers.
A franchisor (like Positive international) sees an opportunity in consolidating groups of remotely located agrodealers, becoming their suppliers, and adding value by introducing new service offerings to smallholders. Because of their capacity to bulk-purchase from different suppliers, the franchisor is able to offer better rates to the agrodealers. The price benefits trickle down to the farmer.
The new branding concept for the franchisees also helps create more visibility and positions the agrodealers strategically as farmer solution centers.