Easing Pain Points in Ag Value Chains
Agriculture, by nature, is a dispersed enterprise. We fail to realize this—both here in Nairobi and in the U.S.—when we pop into the grocery store for essentials. All of our products, fruit and vegetables, dairy products, eggs, coffee, have made long and varied journeys to our shelves.
In the last two weeks I have had several enlightening conversations with organizations working with clients in various agriculture value chains. These informative meetings highlighted the challenge of a scattered value chain. Cotton ginneries, for example, hire field agents to buy cotton from smallholders. “Superagents” travel from kiosk to kiosk checking on field agents and ensure that they have enough cash. In the dairy sector, milk is often sold to middlemen who transport it—on foot, by bicycle, or in trucks—to chilling plants where it is chilled and then sold/sent to processing plants.
Distance results in many challenges: employees at agro-processing plants must travel long distances with large amount of cash to pay smallholder farmers or ensure that buyers have enough float, which is both costly and potentially insecure. Often, farmers must wait weeks or months to receive a cash payment, and often end up credit constrained. Dairy farmers, for example, frequently wait several weeks to be paid for their milk, which increases the incentive to sell milk into the informal sector where they are paid right away.
FrontlineSMS:Credit believes that our product can help close the distance gap in value chains. By facilitating mobile money payments, we can ensure that business processes are streamlined and that farmers can access payments regularly and keep them secure.