Mar­ket ac­cess a life­line for small-scale farm­ers

Finweek English Edition - - ENTREPRENEUR - BY ANDILE NTINGI

Many small-scale farm­ers dream of turn­ing their oper­a­tions into prof­itable busi­nesses. How­ever, ac­cess to mar­kets re­mains a big hur­dle. Draw­ing from her child­hood ex­pe­ri­ence, one agri­cul­tural com­modi­ties trader de­vel­oped a sys­tem that could change things for strug­gling farm­ers.

Jim Rogers, the man who ac­cu­mu­lated vast for­tunes b y maki n g d a r i n g in­vest­ment bets along­side his one-time friend and leg­endary in­vestor Ge­orge Soros, is evan­gel­i­cal in preach­ing that the next gen­er­a­tion of bil­lion­aires will emerge f rom agri­cul­ture. Rogers en­cour­ages any­one who cares to lis­ten to learn to drive a trac­tor and profit from the world’s in­sa­tiable ap­petite for food. How­ever, Ezkiel Skhosana (right), a Mpumalanga-based mixed veg­eta­bles farmer (and skilled trac­tor driver) has yet to hit t he agri­cul­tural jack­pot pre­dicted by Rogers.

“I am good at pro­duc­ing veg­eta­bles, but I am strug­gling to get ac­cess to mar­kets. I need help with f ind­ing buy­ers,” ad­mits Skhosana.

His in­abil­ity to f ind re­li­able, longterm buy­ers in the fresh pro­duce mar­ket has led to Skhosana giv­ing away four of the seven hectares of land he in­her­ited from his late fa­ther to neigh­bours.

I n 2 01 2 , t he de p a r t ment of agri­cul­ture, fore­str y and f i sheries re­leased f ig­ures that showed a to­tal of 3.15m tons of f r esh f r uit a nd veg­eta­bles – val­ued at R10.8bn – were sold at 19 ma­jor fresh pro­duce mar­kets in South Africa.

The Johannesburg mar­ket – the largest by far – ac­counts for roughly 41% of sales, fol­lowed by Tsh­wane (18.8%), Cape Town (9.7%) and Dur­ban (9.3%). The re­main­ing 21.2% is split be­tween 15 mar­kets. Ac­cord­ing to Pru­dence Ngo­mane, an agri­cul­tural com­modi­ties t rader, Skhosana’s predica­ment is one of many in which small- sca l e fa r mers can’t f ind mar­kets for their fresh pro­duce. An es­ti­mated 1.4m black farm­ers have ac­cess to roughly 14m hectares of farm­land, but they com­pete for mar­ket ac­cess with 36 000 large-scale farm­ers that con­trol any­thing be­tween 75m and 86m hectares of prime farm­land in South Africa.

Ngo­mane’s c om­pany, Be­walt Global, was set up in 2013 to un­lock hard-to-pen­e­trate sup­ply chains of the fresh pro­duce mar­kets for small-scale farm­ers that face mar­ket­ing and sales chal­lenges. Not only do they get their feet in the door, but also re­ceive fair prices for their hard toil.

“The farmer will pro­vide a list of fresh pro­duce, price and quan­tity to Be­walt. We then mar­ket this pro­duce and when we find an in­ter­ested buyer, a sales agree­ment is signed.

“The buyer then makes a pay­ment be­fore pick­ing up the pro­duce. This en­sures that the farmer is pro­tected from fraud and paid on time while the agree­ment pro­tects the buyer – Be­walt will be re­spon­si­ble should the pro­duce not be avail­able,” ex­plains Ngo­mane.

Bewa l t does not c ha r g e t he farm­ers for its ser vices, but adds a mark-up or com­mis­sion to the selling price to re­cover costs and make a profit. Ne­go­ti­at­ing a fair price for a farmer is a hur­dle, but Be­walt also as­sists them in ne­go­ti­at­ing cor­po­rate red tape and ob­tain­ing pa­per­work as­so­ci­ated with sup­ply­ing ma­jor food re­tail­ers. Doc­u­men­ta­tion re­quired may in­clude health in­spec­tion cer­tifi­cates, pa­per­work prov­ing that the farmer is sup­ply­ing a South African prod­uct, grad­ing cer­tifi­cates and proof of farm own­er­ship.

Fin­week caught up with Ngo­mane at Skhosana’s fa r m i n Siyabuswa, Mpumalanga, where she was vis­it­ing the farmer to as­sess his readi­ness to sup­ply hard-to-please cus­tomers – mainly ex­porters and su­per­mar­kets. Skhosana’s l ack of com­mer­cial ex­pe­ri­ence has al­ready cost him dearly and he be­lieves Be­walt will help him ne­go­ti­ate tricky con­trac­tual curve­balls thrown at him by so­phis­ti­cated food buy­ers.

“Last year, I lost over 10 000 heads of cab­bage af­ter the depart­ment of ed­u­ca­tion in Mpumalanga re­neged on

Siyabuswa

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