The Top Three Solutions to Improve Input Retailers in Emerging Markets
A few weeks ago, SCOPEinsight wrote about the issues facing input retailers and these could broadly be categorized as:
Business acumen – most input retailers in emerging countries work informally, without business support and training they need to grow. A lack of business skills to support their marketing, accounting and overall management and employees impacts their ability to increase profits, reach new markets and clients and reduce inefficiencies in operations.
Access to finance– Finance is lacking at small holder as well as input retailer level. Smallholder farmers and agri-businesses depend on readily available inputs such as seeds and equipment to start their farming, but high upfront investment costs impose challenges, and rarely can they afford the required seasonal inputs from retailers.
Low level of technical knowledge and technical service provision: It is important that input retailers know how to apply the products they sell and extend this knowledge to the farmers they sell to. Often this knowledge is lacking, and as a result, an insufficient amount of extension services given to the clients (i.e. farmers).
Recently, we held a public discussion with industry leaders about the challenges and importance of input retailers. Three solutions support input retailers sprang from this discussion:
- Strengthen input retailer’s ability to market products and services to their clients. By improving the input retailer’s technical knowledge and awareness of how to provide adequate advisory services to its client, will contribute to the retailer’s ability to market its products as well as to contribute to a better application of the products sold. As Mr. Ogbole Samson from Kenya stated, “input retailers struggle understanding demand in the market. Usually they find a media trend to use as a pretext to create demand”
- Help input retailers access finance. As Margaret Andersen from CNFA mentioned, “Improved financial record keeping, and well-developed business plans can improve the creditworthiness of input retailers.” These efforts should run parallel with creating finance schemes in collaboration with Financial Institutions and supplying companies, to unlock finance opportunities for the retailers that improved their creditworthiness.
- Make input supply market It is important that input suppliers understand the market in which they work and that they sell according to price realities of farmer yields . As Antonie C. Fountain stated “The cocoa price collapse two years ago showed that if the price is too low, there simply is no return on investment on fertilizers. ….Increasing yield is only worth it if prices are right.”
For SCOPEinsight, these three solutions all point to the business acumen (i.e. professionalism”) of the input supplier. At SCOPEinsight, we know that at the heart of these problems lies the lack of professionalism of input retailers. Improving professionalism of input retailers in combination with the right market incentives will support them in optimizing their viability and performance in the market. Improving professionalism, starts with measuring the status quo of an input retailer. This was the impetus for creating the input retailer tool. The tool assesses input retailers over five key performance areas: Internal Management, Operations, Sustainability, Market, and Financial Management. Scores are calculated in our tool from a range of 1 (being very immature) to 5 (very professional) and demonstrate how professional an input retailer is and their strengths and weaknesses by performance area.
As the demand for the input retailer increases, we are gathering more data and are learning where gaps exist for input retailers and providing direction for our partners working with capacity training on where greater impacts can be made. Internal management organization is a very weak area for input suppliers in emerging economies that we can identify, seen in our chart below from our assessments conducted on input retailers. Often because they operate very informally, they do not maintain proper records over their sales, contracts, suppliers and services, which can affect their ability to offer competitive prices and keep track of client orders. Building their business skills will support them in organizing their staff, ensuring that a person is trained in marketing, finance and accounting to keep oversight on supplies, pricing and documents. A professional SCOPE score can also be a sign for financial institutions…
For more about the Input Retailer tool, we are holding a webinar with one of the co-creators, Bayer, during the month of July. Please sign up here to receive more details.