Madison Ayer

28
th
May 2014
How can social entrepreneurship contribute to
making agricultural markets work for the poor?
Social Entrepreneurship and Agricultural Markets
for the Poor

1. A New Idea: Smallholder farmers are neglected by industrial agriculture
systems. They do not have the resources they need to be productive
participants in the global food system.

1. Creativity: Bridging informal cultures, traditions, and local market
economies with formal business systems is challenging. Standard
procedures are out and creative responses are the norm.

1. Entrepreneurial Quality: Major challenges in this sector include
economic viability, logistics, infrastructure, cultural conflict, quality control,
consistency, and political interference, even armed conflict. There are
easier ways to make a living.

1. Social Impact of the Idea: The majority of the poorest people on our
planet rely on smallholder farming to survive.

1. Ethical Fiber: The global poor are also the most vulnerable and the most
exploited. Absolute trust is the only way to achieve success.
Traditional systems have failed to provide
smallholders with the agri-inputs they need.
Rural distribution is informal,
fragmented, & inefficient
Public systems face corruption,
inconsistency, and dependency
Subsistence farmers suffer poor
availability, high costs, and bad
quality
Existing retail shops have empty
shelves and do not provide a
positive customer experience

1. http://www.capital.nedbank.co.za/nedbank/action/media/downloadFile?media_fileid=2383
2. http://www.thepeople.co.ke/34272/alarm-raised-over-food-insecurity-as-fake-seeds-trade-soars/
The Kenya Agricultural Research Institute estimated that roughly 4 out of 10 seed packets sold in the
country contained some fake seeds and that three-quarters of Kenyan farmers had planted fake seeds
at least once.
1
Poor productivity traps farming families in a cycle
of poverty and subsistence living.
Background maize crop
Planted with traditional methods and
poor quality seeds
Will not produce enough at harvest to
feed the family.
Foreground maize (same land)
Hybrid seeds purchased at Farm Shop,
planted after training event
Will feed family and produce excess
harvest for cash sales in local market.

Farm Shop is revolutionizing rural input
distribution systems for poor African farmers.
The franchise model establishes incentives for all market
actors to participate transparently and competitively.
1. Integrated Supply Chain
2. Branding & Marketing
3. Access to Finance
4. Training & Systems
SUPPLIERS
SMALLHOLDER
FARMERS
(FRANCHISEES)
(FRANCHISOR)
Agri-inputs: Seeds, fertilizers, agro-chemicals, animal feeds & veterinary
medicine, farm tools, finance
The market is significant, as population and GDP
depend on improved farm production.
30 million individuals in Kenya
Agriculture 51% of Kenyas GDP

10,000 existing informal agro-
dealers
East Africa region population
250M
Annual farm budget as much as
$1000 for average 1-acre plot



1. http://www.feedthefuture.gov/country/kenya
Farm Shop clients are low-income, rural families
that rely on mixed farming for their livelihood.
Farm Shops typical customer is a mixed farming family. They farm multiple crops throughout the
year, and keep some animals. They depend on a variety of inputs across different seasons to support
their diversity of farming activities.
They are empowered with better inputs to become
more productive, healthy, and happy.
I will sell maize and potatoes in the market for the first time. Priority one is to feed my family as I will
afford to buy meat and other diet supplements from the supermarket. Secondly pay school fees for
my children. Save some money for future emergency like sickness that I can pay hospital bills.
- Peter, Farm Shop customer in Ngecha village
Dramatic revenue increases at converted shops
validate our marketing strategy effectiveness.
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
Karura Kibiku Ndenderu Githurai Kahuho
M
o
n
t
h
l
y

R
e
v
e
n
u
e

(
K
E
S
)

Top Shops Before/After
Pre-Franchise
Post-Conversion
Trends over time show that market demand is
sustainable and growing with each season.
0
100000
200000
300000
400000
500000
600000
700000
800000
900000
1000000
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
2012 2013
M
o
n
t
h
l
y

R
e
v
e
n
u
e

(
K
E
S
)

Karura Franchise Performance
Post-
Conversion
Pre-
Franchise
Next Steps: Rapid expansion of operating network
to impact more farmers, gain efficiency.
Market-based model leverages franchise structure
with goal of achieving a scalable and sustainable
system.
Pilot completed with 14 active shops in rural Kenya.
Validated farmer demand for professional retail
experience via average revenue increase of >500%
following franchise conversion.
Next stage of expansion to 50 shops; expected
economic breakeven at 120 shops.
The agro-dealer model is the single most important rural market
revolution in Africa in decades.
- Akinwumi Adesina, Vice President, AGRA
When you put the right tools in farmers hands, the results can be
magical.
- Bill Gates, Bill & Melinda Gates Foundation