Opportunities abound for entrepreneurs along agro value chains

With good entrepreneurial/management skills professionals who are not farmers can create wealth and jobs by helping farmers scale up and make more profit, and thereby boosting these professionals’ businesses.

Maria Odido, a Ugandan, founder/chief executive, Bee Natural Uganda, exemplifies this business model, as she has succeeded in linking about 2,500 rural beekeepers to city markets in Uganda.

The company organises beekeepers into groups, gives them training, helps them get access to beekeeping production implements at lower rates with support from financial institutions, and repayment at a structured pace over a period. The company then buys the honey and the beeswax from the farmers. It processes and packages the products and sells in the cities, and some of the products find their way to European and American cities. Bee Natural Uganda has about 20 people on its staff team.

Entrepreneurs’ role

Poor rural African farmers lack the education and entrepreneurial skills to access high-end markets. Moreover, beekeeping is best carried out in the forest without the need to fell trees and clear lands, so the capital outlay is low and the resource poor farmers living in remote areas are the major producers. But marketing the honey and other products on a large scale is often beyond many rural farmers. The company therefore processes and packages the raw products in the factories located in the rural areas where the producers are and market them to supermarkets in the cities, currently controlling about 80 percent of the Ugandan market and about 8 percent of the Kenyan market.

Founded in 2000, Bee Natural Uganda is a venture that deals in packaging of bee products such as honey, propolis and candles, with plans to produce honey wine, marmalade and pulp.

It also makes foundation sheets from bee products and sells back to the farmers so that they can increase their colonies. Odido has been able to keep thousands of beekeepers in business by ensuring a regular market and decent income for them, while at the same time creating wealth for herself and jobs for the staff.

She says, “So far, we have 250 groups of 10 people each, that means 2,500 beekeepers. We do not deal with individuals unless they have attained a certain level of production. We find it easier to deal with groups because of the issue of corporate governance; groups have a tendency to honour agreements than individuals.”

Based on the uniqueness of this business, she won the 2010 project incubator award of $15,000 (N2.25m). The award was given by EMRC, a Belgium-based organisation, and Rabobank Foundation. The award is given yearly at Agribusiness fora organised by these organisations to any organisation in Africa that is into profit making, while empowering many other people to make wealth.

Success factors

High net worth individuals in African cities appreciate hygienic production of food, attractive packaging and reputable food brand names that deliver on promises. Skilled entrepreneurs can provide these while the smallholder farmers do what they know best – primary production.

This enterprise can be replicated in any African country among any groups of farmers for virtually all kinds of farm produce. Since agribusinesses have intricacies that are not inherent in other businesses, special management training is required so as to avoid setbacks from lack of knowledge.

Management training

This is what the Lagos Business School aims to provide. According to Kola Masha, chief executive, Doreo Partners, the keynote speaker at the launch of the Agribusiness Management Programme (AgMP) in Lagos. Nigeria needs managers who can provide economies of scale to farmers, help them achieve higher profitability over and over again, he said.

He cited opportunities in businesses that have the responsibility of providing services such as bulk purchases of inputs and subsequent sales to farmers’ groups, adding that the present practices whereby individual farmers have to journey long distances to buy inputs was not only time consuming but they might end up buying substandard inputs from middlemen at even more expensive rates. But an entrepreneur or business manager can source these inputs direct from producers at cheaper rates.

Various issues were also raised at this launched that took place at Pan African University in Lagos. Farmers accused banks of apathy in lending to agribusinesses, pointing out that this was due to bankers’ ignorance about agribusinesses.

Ernest Ihedigbo, head, agricultural finance department, FirstBank, however maintained that many farmers and agribusiness investors do not operate their businesses the right way, and oftentimes present proposals that were not workable to bankers. As agribusiness managers avail themselves of training from leading business schools such as LBS, operate the businesses the right way and present bankable proposals, it remains to be seen if these would improve access of small and medium agribusiness investors to financing.

The AgMP of LBS is expected to provide exposure to general management tools to execute for greater effectiveness and impact in organisational roles, exposure to current global, regional and domestic trends and market realities to enhance strategic capabilities and planning, a learner centred approach with learning opportunities including classroom lectures, discussions, case studies, team work, simulations and skills practice, guest lectures by leading agribusiness industry practitioners and so on. The course would consist of three modular blocks of five days each for a total of 15 contact days for the programme spread over six months.

The target covers a range of stakeholders across the agricultural sector including company executives and managers with decision making power, development organisations/NGOs, producer/farmers’ organisations, agribusiness corporations, policy makers, government agencies, entrepreneurs, value chain players, financial institutions, and business coaches/advisors.

OLUYINKA ALAWODE