Africa has an estimated 33 million smallholder farms.
Despite their small operational scale, the smallholder farmers, who grow staple crops such as maize, rice, wheat, cassava and sorghum, contribute up to 70 per cent of the continent’s food supply.
Additionally, smallholder farmers produce around a third of the world’s food, according to the Food and Agriculture Organisation (FAO) of the United Nations.
However, these farmers face many challenges, including access to finance and quality inputs, climate change, lack of proper storage facilities, and market access.
To help them address these challenges, the Eastern Africa Farmers Federation (EAFF) deployed an integrated digital farmer services platform, e-granary, to improve the living standards of smallholder farmers in Kenya through increased incomes and financial inclusion.
To access the platform, farmers must register using their phone numbers, which also double as their mobile wallets.
The farmers receive payment on produce delivery to warehouses (on credit) for 100 per cent (assuming a low grade). The grain is graded, and the batch is tagged for traceability. Thereafter, the revised grade is communicated to the farmers.
Prices increase after the harvest, and credit is based on the anticipated price hike, the new grade and credit score.
E-granary sells the grain to the output trader and pays the farmers (net of loans, interest charges and warehouse fees).
Speaking on the sidelines of the AGRF Summit 2023, EAFF Board Member Mr. Philip Kiriro noted that they have worked towards ensuring that farmers are organised into cooperatives or business clusters to manage the value chains and the products they deal with.
“Our approach is slightly different because we have said, as small farmers, if you look at the markets, markets have owners, even the markets in our countries, in our capitals that are agricultural markets, they have owners, it’s very difficult for farmers to get onto that market and do business,” he said, adding, “So we said, why don’t we establish our business line through value chains, by organising ourselves and agreeing that we need to collectively make sure that we dominate one important segment of agri-food business and that is aggregation.”
This has been advantageous to farmers, who have also received support from the private sector. For example, partnering with off-takers has ensured the farmers’ produce has a ready market.
Farmers have also gained support from suppliers of farm inputs, where the lobby and specific groups agree on the method used to supply fertilisers and seeds to save money, ensure quality input and see to it that the products reach the farms on time.
E-granary has also assisted farmers in accessing finance through tailor-made products and addressed risks that farmers face by having discussions with insurance companies.
“For example, Vision Fund has microfinance, and we worked with them in Kenya. It got to a point where they started reducing the interest specifically for farmers out of the money they give out because they saw the larger benefits that emanate from us aggregating farmers. They can support farmers in borrowing for other activities like value addition, apart from just borrowing for crop production,” said Mr. Kiriro.
Goodwill from the government is also crucial in any sector, and e-granary has allowed farmers to get government support for their projects.
“In the case of Kenya, we have gone to counties like Nakuru. We have been to counties in Western and Eastern Kenya to discuss how we can partner with county governments, now that agriculture is devolved to ensure that we energise agribusiness,” said Mr Kiriro.
Those county governments have been receptive to e-granary as they have already started talking about aggregation centres.
“That means they have taken our vision where you aggregate produce and seek markets and manage, you know, even post-harvest losses that we have been talking about for years. Once you aggregate, even as farmers, you can see the size of the aggregation or the bulk and you say, ‘I think with this one we can start value addition, we can seek a private sector partner to process this produce,’” he said.
Aggregating produce has significant benefits in agribusiness. For instance, when maize farmers aggregate their produce, they can collectively negotiate for better business and the buyers do not have to go around looking for the maize. This translates to a lot of savings in terms of overheads.
A lot went into making the e-granary initiative a success, including support from development partners like AGRA. “If you look at the engagement we have had, the support mainly comes from development partners. Like the e-granary process of Kenya was initially supported by AGRA, while in Rwanda and Uganda, we have been supported by the World Bank,” Mr. Kiriro said.
With support from AGRA’s Financial Inclusion for Smallholder Farmers in Africa (FISFAP) programme, the e-granary worked with farmers in Meru cooperatives, Nakuru, Trans Nzoia, Bomet, and Narok.
“Out of that, we generated a platform that has membership, where farmers say they are part of the e-granary platform, and with that platform, now we can reach them through information extension, consulting, digital, innovation, issues on agronomical challenges, issues around markets,” he said.
Farmers’ forums need to be well organised to ensure their success. The farmers also need proper training and guidance from a secretariat that understands them. To thrive in agribusiness, they also have to successfully go through the aggregating process, for access to market, and partner with off-takers. With this, smallholder farmers will drive food systems transformation across the world.