ICTs can help in eliminating the silo thinking that currently inhibits agricultural actors from fully taking advantage of their heroic economic potential
Charles Dhewa
Zimbabwean agriculture has reached a stage where transformative growth can only happen if efforts are directed at busting silos and building a strong market place of solutions.
The sector has become so congested with actors ranging from Government departments, parastatals, donors, non-governmental organisations and private companies in ways that make it difficult to get the big picture.
While there is still an assumption that agricultural productivity is the main problem, poor understanding of the demand side has become the main issue. An increase in food production does not necessarily translate to more consumption by the same households.
How can we connect more than two million farmers?
We need to seriously think about smart ways of aligning surplus production with shortages that often show up unannounced.
All agricultural actors should start operating on the premise that their whole is greater than the sum of their single parts. Growth will happen when solutions are shared across the entire sector.
While it is not easy for farmers to stay connected with each other and constantly share ideas that drive innovation, an increase in the number of actors is not adding much value but increasing disconnect between farmers who should team up for competitive advantage.
Major questions to be urgently answered include: How can we connect more than two million farmers in Zimbabwe’s 52 districts and dozens of markets in urban centres, growth points and borders with neighbouring countries?
How can that connection be done in a dynamic and practical way without confusing farmers with too much information and negative demand for their attention?Without a radical shift in the way agricultural value chain actors are currently working, silos are going to continue and collaborative growth will remain a dream.
How the situation has evolved
Land use patterns have changed over the years. For instance, farmers who used to produce flowers, coffee and other export crops have switched to horticulture for domestic markets. On the other hand, demand has remained stagnant.
The increase in population has not been proportional to the increase in horticulture production. A decrease in export markets means all commodities are being produced for the domestic market. That is why we end up with increased supply for any given commodity, suppressing prices for many commodities.
This is negatively affecting the profitability of agribusiness. On the other hand, the expansion of informal markets has not been matched by support in infrastructure like market stalls, logistics, warehousing and cooling facilities. This is leading to more post-harvest losses, further reducing profitability.
The financial sector has not moved with the paradigm shift towards building business models that can support informal markets. One of the reasons is lack of evidence in terms of cash flows that can be derived from informal markets and guaranteed cash flow from informal markets.
The agricultural market has been left to supply and demand factors with predictability becoming a problem from a planning point of view. Things can change within three months.The evolution of more actors in the agriculture sector should have started addressing most of these challenges.
In spite of an increase in actors, value chain actors have not invested in understanding the absorptive capacity of informal markets in order to coordinate production and rationalise use of resources in producing other commodities that are only found to be in short supply at point of sale.
The agricultural sector lacks a system for supporting production plans connected to market expectations. There should be a consolidated system like the one in the tobacco sector and to some extent maize.
Consumption patterns are yet to be clearly understood
While the national consumption capacity of maize has been understood to be 1,8 metric tons per year, the same cannot be said for horticulture commodities like leafy vegetables, tomatoes, potatoes and onions, which are usually consumed daily.
eMKambo has been working over the past five years in filling that gap and building a culture of evidence among Zimbabweans who have traditionally been used to making decisions based on emotions, personal interest and instructions from the top.The same approach used to support tobacco and maize should be provided in supporting informal markets.
Horticulture drives more than 70 percent of the agricultural sector.
While tobacco may be considered the main cash crop, it has a short cycle. In addition, most tobacco farmers are locked in the tobacco system such that 70 percent of the income goes back to the tobacco industry while a farmer is left with less than 30 percent to meet other needs. It is also a once-off crop.
If that wasn’t the case, most tobacco farmers would have been weaned from contractors. On the other hand, horticulture farmers save from their own production and need support in order to increase their profit margins.
The role of ICTs in eliminating silo thinking
ICTs can help in eliminating the silo thinking that currently inhibits agricultural actors from fully taking advantage of their heroic economic potential.Beyond just mobile calling, WhatsApp, mobile money and other versions of ICTs, vigorous and focused digitalisation can assist in building platforms that facilitate a market place of agricultural solutions in ways that inspire new practices.
That will improve agricultural productivity and accelerate problem solving. eMKambo’s experiences from agricultural markets show that nothing will change without the right culture.Digitalisation will create a network effect that can help farmers to share and ask for ideas from other farmers across the country without having to know everyone’s name.
This effort will also make it easier for value chain actors to identify the right partners and inputs. At the moment, most agricultural activities are based on trial and error, during which time resources are squandered.
Currently, agricultural actors do not seem to have a coherent mission for solving agricultural challenges and creating sustainable solutions. Continual appraisal of what is available is important if actors are to see the value of doing agriculture differently.
It entails interjecting to align outcomes before getting to the right solution. It does not help to continue encouraging farmers to produce commodities whose demand is not clear. Informal markets provide the right lessons, based on business performance and the right combination of engaged leadership and reliable culture.
What is visible on the surface is use of plastic money, mobile transfer and cash itself but what drives all these in informal agricultural markets are relationships that make them inclusive financial services.
The demand for loans in the agriculture sector is going down due to lack of cash.
Both uptake and loan repayments are going down. It costs money for people to take money to the bank. There is need for an informal-sector driven advisory tool for all banks. Many underlying issues need to be uncovered in order to understanding the financial situation at national level.
As a result of agricultural actors working in silos, processing companies lack information regarding who is producing what, where, for whom and in what quantities? It becomes difficult to invest in a processing line. Chances of getting wrong information from farmers are also very high.
Why monetary policy should come in
The current movement of commodities lacks a financial support system. It is basically a cash value chain from the farmer — transporter — informal markets.
There is no bank providing services at the market or at farmer level. The two nodes should be supported such that if a farmer sells at the market, his/her money should be deposited and s/he should be able to get money at the business centre back home.
At the moment, a trader will have to withdraw money from a bank in Harare and travel all the way to buy commodities in Gokwe with cash in the pocket. The traders and other actors are forced to keep cash which they receive from end users.
Consumers bring cash to the market because there is no other mechanism they can use to buy what they need. The current financial infrastructure is not accommodative of new innovation. There is no Automated Teller Machine (ATM) at the market yet the market is open 24 hours a day.
ATMs are in industrial sites yet there is no longer any business there. Why do we find banking halls at colleges and universities yet there is no such facility in informal markets where money circulates every day?
Giving money to cross-border traders increases competition among the traders. Why not start with giving money to agricultural traders? We cannot enter the export market when the domestic market is in shambles in terms of infrastructure.
Need for collaborative evidence gathering
We need an in-depth evidence gathering and interpretation supported by the RBZ, Ministry of Agriculture, Mechanisation and Irrigation Development and the Ministry of Industry and Commerce.
Currently, there are invisible frictions in the marketing of agricultural commodities where the Ministry of Agriculture’s role ends at production while in the market farmers and agricultural commodities are in the hands of local authorities (Ministry of Local Government).
Most of our crops are seasonal and available in abundance during short periods of time. Value addition should be part of food security. Reserves from value added seasonal crops should takes us for two to three years. Unfortunately, every year we tend to produce what we lost last year.
Consistence in supply stimulates innovation. Someone who wants to procure processing machinery should be guaranteed enough supplies to last a season of processing.
Research should be broadened to cover loss in production and time due to hours and days spent by farmers in the market compared to what a farmer could have done within a week.
We cannot control the cost of fertilizer and other inputs but we can control marketing costs which constitute 40 percent of a farmer’s total costs. If these costs are reduced to less than five percent farmers become competitive, even in the export market.
If a box of tomatoes costs 80c to transport and it fetches $1,20 in the market, the cost of transport is more than 60 percent.This can be avoided. Knowledge has to be embedded in infrastructure and systems if we are to improve this situation. It means setting up knowledge hubs at community levels and production areas and completely doing away with silo thinking among various value chain actors.
Charles Dhewa is a proactive knowledge management specialist and chief executive officer of Knowledge Transfer Africa (Pvt) (www.knowledgetransafrica.com) whose flagship eMKambo (www.emkambo.co.zw) has a presence in more than 20 agricultural markets in Zimbabwe. He can be contacted on: [email protected]; Mobile: +263 774 430 309 / 772 137 717/ 712 737 430.