RURAL AGRICULTURE REVITALIZATION PROGRAM

OUTPUT MARKETING AGRO DEALERS PROFILE SURVEY REPORT

August 2012

By Dowsen Sango

Netherlands Development Organization 6 Caithness Dr Eastlea, Harare

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Contents
Introduction and background ....................................................................................................................... 3 The Survey..................................................................................................................................................... 4 Objectives ................................................................................................................................................. 4 Methodology............................................................................................................................................. 4 Findings ......................................................................................................................................................... 4 Demographic Data .................................................................................................................................... 4 Business Environment............................................................................................................................... 6 Accounting Systems .................................................................................................................................. 7 Participation In Grain Marketing (Output Marketing) .............................................................................. 8 Agrodelars Participation In Input Marketing ........................................................................................... 9 Previous Experience With Consignment Stock ................................................................................... 10 Current Stock ...................................................................................................................................... 11 Conclusions and Recommendations ........................................................................................................... 13

Introduction and background

The Netherlands Development Organization (SNV) is implementing a Rural Agriculture Revitalization Program (RARP III) in Zimbabwe with the intention of ensuring the recovery of agriculture after decade of decline in production and attendant situations. Key to this recovery is marketing of smallholder farmers produce. SNV believes that Agro-dealers can play a pivotal role in marketing of rural produce. They can do this through mobilizing and bulking quantities to satisfy markets. 1The RARP III intends, among other objectives, to strengthen agro-dealers and agro-dealers associations for: 1. Access to input and output markets to serve the smallholder farming communities 2. Collective bargaining with wholesaler, manufacturers, processors, commodity brokers and transporters for services rendered along the value chain. Specifically the output marketing component seeks: 1. To facilitate the establishment of sustainable output market channels between farmers, agrodealers, commodity brokers in the programme areas. 2. To facilitate increased access by smallholder farmers to competitive commodity market prices 3. To improve capacities of actors in the agriculture and food value chains to relate for mutual benefit and rural economic development To this end SNV is facilitating the development and strengthening of a national Agro-dealers Association and provincial associations. These, in-turn, organize themselves to participate fully in the revival of agriculture in their respective constituencies through the capacity they receive from SNV in market linkages and input distribution. On the 26th of July 2012, provincial agro-dealer association for Mashonaland West and Central provinces signed a memorandum of agreement (MOA) with Rollex a commodity broking international company for the supply of 60 000 tonnes of maize. The agro-dealer associations selected agro-dealers to facilitate the procurement of maize from smallholder farmers. The Agro-dealers in turn mobilized farmer who want to sell their produce. Rollex purchased the produce at an agreed price and transported them to their final market. In this context, this survey was conducted to get a profile of agro-dealers participating in output marketing

MOU between Rolex and The Agro-dealer Association-Mashonaland West 26 July 2012

The Survey
Objectives
The objective of the survey was to profile Agro-dealers in Zimbabwe. This is in terms of their location, capacity to participate in output marketing (maize), scale of business, and bankability and their potential for participating in input marketing. The results of the study can be used as a baseline for monitoring the output marketing component of the RARP III, planning purposes and evaluating the impacts of the program on the Agro-dealer level.

Methodology
A structured questionnaire was developed to elicit information on demographic and programmatic information on the selected agro-dealers. The questionnaire was self-administered at separate orientation workshops for the agro-dealers. The Mashonaland West agro-dealers were surveyed on the 3rd of August 2012 at the Chinhoyi University Hotel while the Mashonaland Central agro-dealers were surveyed on the 4th of August 2012 at the Mazowe Hotel. Two agro-dealers from Mashonaland East also participated in the survey due to the fact that they have business operation in both the selected provinces and also Mashonaland East. The sample included all participating agro-dealers under the Rollex maize buying scheme. The filled in questionnaires were coded and entered into a computer statistical package; SPSS for analysis.

Findings
Demographic Data
A total of 92 agro-dealers participated in the survey (69 Males and 23 Females). 57 from Mashonaland West, 33 from Mashonaland Central and 2 from Mashonaland West. The agro-dealers were derived from the 15 Districts of the three provinces. The following figures summarizes the information Summary of agro dealers who participated in the survey.

Province Mashonaland Central

Ward Bindura Mazowe Shamva Mt Darwin Muzarabani Guruve

Number of Agro-dealers Male 5 1 5 2 5 5 11 Female 0 3 2 2 1 2 2 Total 5 4 7 4 6 7 13

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Mashonaland

Kariba

West

Zvimba Sanyati Hurungwe Makonde Chegutu Mhondoro

6 6 9 2 6 4 1 1

3 5 2 0 0 1 0 0

9 11 11 2 6 5 1 1

Mashonaland East

Wedza Marondera

The highest number of agro-dealers is operating in the Mashonaland West province with Kariba district providing the highest number of agro-dealers (14.1%). The Agro-dealerships were established at varying times. The earliest was established in 1957 while some were established as late as 2012. However, the majority (47.1%) were established after 2000 and 14.1% of the agro-dealerships were established in the last four years. 65.8% of the agro-dealerships are registered as private companies while 34.2% are not registered. Female Agro-dealers are more likely than their male counterparts to register their agro-dealership. 78% of female agro-dealers are registered compared to 62.3% of male agro-dealers. It is important to note that of all the districts surveyed only in Muzarabani are all the agro-dealers unregistered. There is need to educate agro-dealers on the need for registration with the Register of Companies or with the Ministry of Small and Medium Enterprises and Cooperatives. The agro-dealerships have an average of 2 directors or owners (minimum of 1 and maximum of 6 with a standard deviation of 0.94). They employ on average 4 permanent employees with a minimum of one and the agro-dealer with the largest number had 27 permanent employees in 7 shops. On average agrodealers have 2 outlets/shops (min 1 and max 7). The average gross monthly income for each agro-dealer is US$2768.75 with a minimum of US$200 and maximum of US$15000 (from 4 outlets) Only 1.2% of the agro-dealers interviewed indicated that they were not members of the Agro-dealer association. Their inclusion in the current program is therefore not clear. Of those who indicated that that they are members of the Agro-dealer association 87% are paid-up members while 13% have outstanding subscriptions. Some Agro-dealers have been Association members for about 15 years while others are relatively new having recently joined as of 2012. Membership grew rapidly in the last 5 years. The following line graph plots the Associations membership over the last 15 years.

Business Environment
Most Agro-dealers own the business premises on which they are operating. There is no significant difference between male and female agro-dealers on premises ownership (57.8% and 56.5% respectively). The majority (71.6%) stated that they have been operating from that premise for more than 3 years. 21.6% have been using the current premises for between 1 and 3 years while 6.8% have been using the premises for less than a year. The majority (61.1%) of agro-dealers operate as General Dealers meaning that they trade in a wide variety of commodities from clothing to food items. They do not specialize in one single product line but they diversify according to demand at any particular time. In a sense this makes them resilient to economic and demand and supply shocks and at the same time distorts customer loyalty. The following pie chart classifies the main business that agro-dealers are involved in.

Agro-dealers hold various assets for personal and business use. The following table list the bankable assets the agro-dealers have. Assert Plough Tractor Bicycle Wheelbarrow Radio TV Cattle Goats/Sheep Fowls Premises Motor Vehicle Cell phone Computer/Till Machines Generator Min 0 0 0 1 1 0 0 0 0 0 0 0 0 1 Max 4 4 4 4 6 10 87 700 2000 5 8 2 6 2 Mean 1 1 2 1 2 2 13 28 118 2 2 2 1 1

The study also asked agro-dealers about the value of stock currently in their shops. The average value was US$8682.28 (min US$140 and max US$43200)

Accounting Systems
A few (10.1%) agro-dealers do not have a bank account. There is therefore need to encourage them to own a bank account. However, it was noted that female agro-dealers are more likely not to have a bank account than males. 18.2% of females do not have bank accounts while only 6% of males do not have an account with the bank. 92.8% of agro-dealers stated that they kept books of accounts while 7.2% do not. More females do not keep books of accounts than males. 10% of female agro-dealers do not have books of account compared to 6.3% of males. Varying books of accounts are kept including a cash register, profit and loss/cash flow, stock register and breakages register. Most of the Agro-dealers keep manual books. Only 8% have computerized their books of accounts. The following graph shows how many agro-dealers keep books of accounts.

Participation in Grain Marketing (Output Marketing)

The study found that 55.8% of agro-dealers have experience in grain marketing. The majority 80% participated as buyers/bulkers. Some (11.1%) used their facilities for storage purposes while others participated as transporters (8.9%). There is no significant difference between men and women in participation in grain marketing as 56.3% of male agro-dealers are involved in grain marketing compared to 54.5% of females2 Those who stated that they bought or bulked grain from farmers dealt with an average of 311 smallholder farmers (minimum 3 and maximum 3000 with a standard deviation of 641). On average each agro-dealer handled 104 tonnes of grain during the last season. The average grain price in 2011 was US$231 (ranging between US$180 and US$295) 84.3% agro-dealers have grain storage facilities. The facilities hold on average 159 tonnes of maize grain (min 3t and max 5000t). Half (50%) of the Agro-dealers have received training in grain marketing, including grain handling, grading, storage and pricing. Some were trained as recent as 2012 while others were last trained more than 27 years ago. Therefore there is need for continuous training. However, 70.1% were trained in the last 4 years. The following time line shows when agro-dealers were last trained in grain marketing.

This however, may have been affected by internal Association selection criteria, since the surveyed agro-dealers had been selected for participation in the Rollex grain marketing contract.

Various companies worked with agro-dealers in the procurement of grain in the various districts. The following table summarizes the company engaging agro-dealers in grain marketing in the respective districts. District Bindura Mazowe Shamva Wedza Mt Darwin Muzarabani Guruve Kariba Zvimba Sanyati Hurungwe Makonde Chegutu Mhondoro/Ngezi Marondera Companies Olam, National Foods, Ivirnes GMB, Trust Bank Grafax, Agriseeds, Seedco, Pioneer, Ivirnes, Victoria, National Foods GMB, Trust Bank No Company Reported Greatwin, National Foods National Foods GMB, Lake Harvest GMB, GMB, Delta, ParogateStewart Goal, GMB, National Foods, ZFC, Seedco, Agricura Steelbase, Topfellas, GMB GMB, Sable Foods No Company Reported Feedmix,

It is important to note that all the 4 agro-dealers from Mhondoro/Ngezi have never participated in grain marketing and they also do not have any formal training in grain marketing.

Agrodelars Participation In Input Marketing

It is apparent that agro-dealers are important in small-holder farmers access to agricultural inputs. Agro-dealers act as local stockist of various inputs.

Previous Experience with Consignment Stock The study found that 66.3% of agro-dealers have participated in some input schemes (consignment stock) whether driven by NGOs, wholesalers or manufactures. The value of agricultural input sold last season 2011/2012 ranged from US$900 to USD$75000 per agro-dealer with an average of US$14457. Most agro-dealers (94.1%) have been able to remit/repay the supplier of the consignment. The following graph shows the repayment rates.

A number of suppliers were engaged on input marketing. The following table shows companies that provided consignment stock in the various districts. District Bindura Mazowe Shamva Wedza Mt Darwin Muzarabani Guruve Kariba Zvimba Sanyati Hurungwe Companies Feya Feya, Agriseeds Feya Feya, Seedco, Pioneer, Windmill, Harvest Rama Africare, Feya Feya, Nico Orgo, Pioneer, Seedco -------Feya Feya Agriseeds, TIMB Feya Feya, Seedco, Nico Orgo, Mashco, National Foods, ZFC Seedco, Pioneer Feya Feya, Mashco Mahaka Enterprises Goal, Agricura, Bayer, ZFC, Coopers, Pannar, Seedco, Red Star, Windmill, CAPS, National Foods, Wiruma, Ominia, Agriseeds Makonde ---------Chegutu Agriseeds, FSG Mhondoro/Ngezi SAT Marondera Chemplex, Coopers, Granite Chemicals 10

The survey noted that agro-dealers in two districts (Makonde and Wedza) have never participated in agriculture input consignment stock. While no reasons for this were proffered it might be important to engage suppliers so that the two districts are coved by some agriculture input scheme. Current Stock At the time of study, 20.8% of agro-dealers had consignment stock. The low figure could be attributed to the fact that the study was carried out at the beginning of August when suppliers were just beginning to deliver inputs for the 2012/2013 season. However, it is indicative in the sense that stocking of inputs is slow as the season is almost arriving. . However, Mr Mapiki (the Mashonaland Central AgrodealersAssociation Charperson) indicated that about seven suppliers of agricultural inputs had indicated that they ould start supplying inputs in the following two weeks. At the time of survey, only six of the 15 districts had consignment stockThe districts that had some consignment stocks incude Bindura, Mazowe, Muzarabani, Guruve, Hurungwe and Marondera.

Of the agricultural inputs already in stock, the most stocked inputs are fertilizers and maize seed at 57.1% and 57.4% respectively. The following bar chart illustrates the number percentage of agro-dealers stocking each of the agro-input.

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In some districts some inputs were total out of stock. The hardest hit was Guruve with virtually no reported stocks of all inputs save fertilizers and implements. The table below shows the inputs that are not stocked in each district. Input Type Fertilizers Maize Seed Other Field crop seeds Garden crop seeds Farming implements and tools Herbicides Pesticides Veterinary chemicals District without stocks Mt Darwin Guruve Mt Darwin, Muzarabani and Guruve Guruve Mt Darwin Guruve Guruve Guruve

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Conclusions and Recommendations

It is apparent that agro-dealers have an important part to play in input and output marketing. Agrodealers are not novices in input and output marketing. However, agro-dealers are not a homogeneous group. They do have varying interest and capacities. Some are more inclined towards grocery marketing while others are general dealers; some are interested in transporting grain produce than purchasing and bulking. These capacities have to be developed and spread throughout the districts so as to maximise the potential of the value chains. The Mashonaland West Agro-dealers Association is more developed than its Central counterpart. There is therefore need for sharing between associations. This can be through exchange visits between association members or even Local Capacity Builders. Agro-dealers should be encouraged to register their companies with the registrar of companies and or the Ministry of Small and Medium Enterprises Development and Cooperatives. This will be important to comply with regulations as well as benefit from government programs. Agro-dealers should also be encouraged to subscribe to their local Agro-dealers associations ad tangible benefits should flow through these associations. While it has been noted that Agro-dealers are engaged in appropriate business management practices like banking and accounting systems. It will be necessary to inculcate better practices in the agrodealers. The study has also affirmed the fact that agro-dealers are ethical business persons. This has been demonstrated by the fact that a large percentage of agro-dealers being able to repay input loans. This is despite the general sentiments that agro-dealers are not trust worthy. Thus it is recommended to engage agro-dealers in input and output marketing as they provide competitive services within their local confines.

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