Madison Ayer has launched Farm Shop, a non-profit Kenyan Trust, to transform the system for delivering agricultural inputs to rural, smallholder households. Farm Shop removes barriers in the “last mile” to improve the entire system for all stakeholders: Input suppliers, distributors, agro-dealers, and farmers. To achieve this, Farm Shop helps to upgrade the operating performance of rural agro-dealers through a complete business-format franchise package, which includes management capacity training, access to product and financial services suppliers, management information systems, and dedicated marketing support. Input suppliers and distributors benefit from a larger and more efficient market; agro-dealer families increase their incomes and influence within communities; and smallholder households are able to access a broader range of high-quality agricultural products and services at affordable prices to improve their farm-level productivity.
The New Idea
Madison saw that the success of farmers at the grassroots depends in no small part on the ability of a network to consistently provide them with timely, relevant, and quality inputs at an affordable price. To do this, he saw that agro-dealers had to be aggregated, modernized, and transformed into professionally-managed businesses. There are approximately 10,000 agro-dealers all around Kenya. Madison began by selecting those with the most potential to benefit from improved management systems. With the best candidates in hand, he created systems and processes for inventory management, financial management, quality control, performance measurement, and supply management. The idea was to transform the agro-dealer outlets into professionally run businesses and leverage that to enable them to access financing from banks as well as to attain high level contracts with input manufacturers. Professionalizing them also means giving them access to technology, both hardware and software, to allow them to operate more efficiently. Working with Farm Shop, each agro-dealer will get a computer, Internet access, power back-up, professional accounting software, inventory management software, as well as supply chain management software.
The second element that Madison saw as absolutely critical is the ability of the now professionally run network of agro-dealers to aggregate their orders. He therefore has created a supply chain management system that is centrally managed at Farm Shop. Through this centralized system, Farm Shop is able to track the inventory levels of different products at each one of the agro-dealers. With the ability to pool this information in one place, Farm Shop places aggregated bulk orders to different suppliers. This ensures that each agro-dealer keeps optimum stock levels of a variety of product lines at all times and that they are able to get these products at lower prices due to economies of scale. The benefit of reduced prices is ultimately passed down to farmers who will also be able to get their inputs at more affordable prices.
Agro-dealers are the closest point of contact to farmers in the input supply chain and have the best understanding of farmers’ needs. Farm Shop will leverage this unique position to actively shape the way agricultural inputs are marketed, transforming agro-dealers into knowledge brokers that capture and transmit information from farmers to input manufacturers and suppliers. By closing the information gap between farmers and input manufacturers, agro-dealers will be playing an important role in making the entire input supply chain more progressive and ultimately more successful.
Seventy percent of Kenya’s population of 39 million relies on agriculture and livestock production for its livelihood. The majority of these farmers rely on agro-dealers for access to inputs such as seeds, pesticides, veterinary drugs, appropriate technology and so on. The problem is that the agro-dealers who occupy this critical space in the agricultural value chain lack the capacity to deliver the comprehensive range of products and services necessary to significantly increase the productivity of smallholder farmers. Many have sponsors with specific agendas that are not conducive to the overall improved functionality of the networks.
One of the biggest challenges faced by agro-dealers is their lack of access to capital and consequently their inability to stock services and products that farmers need in a timely and affordable fashion. Banks consider agro-dealers a risky market segment because they are so small in size and not run professionally enough to inspire confidence. The lack of proper systems and processes creates even more challenges for agro-dealers, as they are unable to attract partnerships with suppliers and manufacturers who prefer to work with institutions with better management structures and quality management processes. Adulterated products easily make their way through the supply chain to farmers due to a lack of quality control measures. This further undermines the integrity of agro-dealers to bankers, suppliers, and farmers.
The average agro-dealer makes a turnover of less than $5,000 a year. With this size, each agro-dealer is incapable of buying products in quantities that make business sense to suppliers and as such this disqualifies them as viable partners. As the CEO of Honey Care Africa, Madison was unable to find a sufficient number of agro-dealers with adequate marketing capabilities or inventory management to successfully distribute beehives. This experience left him with a unique perspective on the potential for upgrading the entire agro-input distribution network.
With an extension services system that has been ineffective for decades, agro-dealers are often the closest source of information for farmers located in far and remote areas. Farmers expect agro-dealers to not only have the supplies and inputs they need but also to be knowledgeable about the problems they face and be in position to offer advice or hands on assistance. Farmers expect agro-dealers to be providers of services, products, and knowledge. Unfortunately, agro-dealers are cut off from the sources of these important components because of the way they are resourced, organized and operated. Farm Shop is looking to transform agro-dealers from passive players in the agricultural sector to a more active and engaged body that influences decisions both upstream and downstream of the value chain.
When it became apparent to Madison that there were not enough agro-dealers resourced, organized, or well managed to partner with not only Honey Care Africa but also other manufacturers and suppliers, he knew something had to change. Madison took the lead in transforming the agro-dealer industry to generate substantial benefits for all stakeholders. He spent months in rural areas all around Kenya to understand the challenges that farmers face with the way agro-dealers are currently set up. He talked to hundreds of agro-dealers to find out what their challenges were and performed a diagnostic analysis of each business. He found that agro-dealers needed to be able to manage their finances and supplies better. They needed to be able to expand their services offerings and create demand for those services. They needed to be able to control the quality of their products and services and be in a position to attract capital and partners.
Farm Shop targets those agro-dealers with the most potential to upgrade their business. They have gone through intensive business management training and plugged them into Farm Shop’s support structure to enable them to access capital, capture and transmit knowledge up and down the value chain, and ultimately, operate at a much higher level. The Farm Shop support structure is modeled around a franchise system whereby the same quality control and performance standards are set and applied across the network of agro-dealers. The same state of the art technology, systems and processes are installed in every business. Farm Shop facilitates an aggregated supply and demand system that allows the agro-dealers to collectively place bulk orders to suppliers and benefit from reduced costs. Each agro-dealer is required to maintain a database of information from farmers including feedback on products they use as well as suggestions, questions, and observations. Such information aggregated over a wide geographical area is invaluable to suppliers and manufacturers.
Farm Shop aims to recruit and professionalize many of Kenya’s existing agro-dealers and add hundreds more within the next three years. Madison plans to develop Farm Shop into a pan-African brand and expand into ten African countries in the next five years.
Madison was born and raised in rural Colorado in the U.S., and brought up by entrepreneurial parents who ran a boutique book publishing business. He spent a lot of time with his mother while working on book projects targeted at the youth who his mother was passionate about. In university, Madison traded stocks, paying particular attention to small technology companies that had gone public, and was able to pay for his college education. He left school to join a venture capital firm at age 19 and focused on analyzing information technology startups.
While working at the VC firm, Madison recognized a problem of families in the U.S. being unable to get loans or to refinance their mortgage because they had artificially low credit ratings. Investigating further, he found that the credit rating problem came out of a broken consumer financial information system. To solve the problem, Madison started a credit restoration business to help people clean up their credit histories, which are often based on erroneous information, in order to help them become eligible for affordable financing. As Madison and his partners grew this business to become the number two business in its field in the U.S. they again recognized that a lot of the cases they handled were a result of identity theft. This led them to start one of the first businesses in the U.S. to monitor for and prevent consumer identity theft, which they grew and took public.
After growing these two organizations, Madison turned his business attention to more fundamental social problems in the developing world. That opportunity arose when he joined Honey Care Africa, a pioneer in social enterprise, as CEO to scale the business. It is through the course of this work that he started Farm Shop.