Agricultural business development services

The business of agricultural business services. Working with smallholders in Africa.
Mariana Wongtschowski, John Belt, Willem Heemskerk and David Kahan Editors
2013, 192 pages.

The majority of farmers – particularly smallholders – need to expand their understanding of markets and economic opportunities if they are to achieve success in running their farms as sustainable and profitable businesses. To create a viable livelihood from farming, they need to move from a sole focus on production for home consumption and occasional marketing of surpluses to producing also for the market, responding to the continuously changing market demands.

Even though farmers are innovative and entrepreneurial, they often lack the know-how to do so alone. They need advice from others; they need services.

Traditionally, farmers were served by public extensionists. In response to the trends described here and the challenge to link farmers to markets, several countries have been reconsidering extension delivery, encouraging a more pluralistic, business-oriented and demand-driven approach to providing advice to its farmers.

Governments and international donors have long tried to promote small and medium enterprises (SMEs) in urban areas by providing “business development services”. From the mid-1990s onwards, they began adapting this approach to rural settings. Agricultural business development services – the subject of this book – include technical advice on production and postharvest handling, marketing ideas, assistance with business planning and access to credit, advice on how to organize farmers, training, links with suppliers and buyers, market information and research, etc. Such services can also be provided to other value chain actors such as local traders, input dealers and agro-processors. Some of the same services were provided by extensionists earlier on, but with a keen eye on the market. Sustainable financing of these services remains a challenge because resource-poor farmers cannot afford to pay for them.

Business service providers now operate in a pluralistic system where governmental, non-governmental, for-profit companies and farmers’ organizations all play a role in service provision. They often compete with each other, and depend on subsidies from governments and donors. In this landscape and from a perspective of financial viability, new and innovative ways of ensuring broad-based coverage and financing of services need to be introduced.

This book describes the two dominant approaches to providing services:

1. supply-driven (where the funder decides what services should be offered), 
2. and market-driven (where more emphasis is put on market forces). 

It looks at how 12 business service providers from across Africa run their businesses.It describes the seven different “business models” that they pursue, and examines the features of each one. Based on their experiences, it proposes a new, needs-driven approach, which aims to overcome the shortcomings of both the supply-driven and the market-driven approaches by taking the needs of clients as a starting point for policy and action.

 As a collaborative endeavor between FAO, KIT and Agri-ProFocus, it sheds new light on agricultural business development services in Africa. The objective of this book is to learn from field experiences to gain an understanding of what has worked where and why. It analyses the challenges faced by those trying to make business service provision a business in itself.

Practitioners working in value chain and enterprise development, development partners who finance projects and policymakers will find this book useful for orienting their support to the agricultural sector.