For 70 percent of the developing world, agriculture is the main source of income and employment. In Ethiopia, agriculture accounts for almost half of the
country’s GDP and 90 percent of its exports. However, agriculture in Ethiopia is often characterized by low productivity, with most smallholder farmers having limited access to inputs, information and services. While the demand for these ingredients for successful agricultural production is high, access and delivery is often
An innovate solution to these constraints, the USAID-funded Commercial Farm Service Program (CFSP) is establishing a network of private, retail supply and farm service businesses called Farm Service Centers (FSCs) throughout the Oromia region of Ethiopia. The program was designed by CNFA, a U.S. international development organization that focuses on stimulating economic growth by empowering the private sector. CFSP adapts CNFA’s market-oriented, private sector model for a sustainable enterprise-based delivery of farm supplies and services. The Farm Service Centers are one-stop-shops that provide smallholder farmers with agricultural and veterinary inputs, services and technologies that will help them produce surpluses and become better linked to end markets. This highly adaptable model, with support from CNFA in capacity building and training, has already been proven successful in Afghanistan, Georgia, Moldova and Romania. Building off the success of these enterprises in previous countries, CNFA is adapting the model to build a Farm Service Center network in Ethiopia – the first of its kind.hampered by a variety of factors including high transaction costs, inadequate infrastructure, the lack of commercial distribution networks and limited financing. In addition, many smallholder farmers have a poor understanding of the productive benefits that would be achieved through the use of quality inputs and improved cultivation practices.
Setting out for Success
Launched in the fall of 2012 through a partnership between the United States Agency for International Development’s (USAID) Innovative
In the initial phase of the program, staff worked to survey target Woredas (counties) for a viable year-round market demand for agriculture and veterinary products and services. Outreach events were then held in targeted towns and cities to generate interest in applying for the opportunity to work with CNFA and USAID in establishing these new enterprises. Applications were reviewed and ranked on a competitive scale that evaluated their technical capacity, proposed business plan, and potential impacts. CNFA then selected six of the applicants for the matching grant award and subsequent Farm Service Center development. Of these six, one is a woman-owned proprietorship, three are privately owned and two are owned by Cooperative Unions. The six selected CFSP grantees include:Fund for Ethiopian Agriculture (IFEA) and CNFA, CFSP kicked off its two-year operation with the goal of creating six locally-owned Farm Service Centers in Ethiopia’s Oromia regional state and establishing a wholesale buying cooperative owned by and dedicated to serving the inventory needs of the Farm Service Centers and linking them to national and international suppliers.
- Bishoftu – Alema Farms PLC
- Shashamane – Barite Agricultural Inputs Trader
- Fiche – Biftu Salale Farmers Cooperative Union
- Nekemte – Etafa Mekonnen Crops Trade
- Ambo – Gadissa Gobena Commercial Farm Products PLC
- Dodola – Raya Wakena Farmers Cooperative Union
Leveraging Investment from the Ethiopian Entrepreneurs
In addition to encouraging a competitive business plan evaluation in its grant award process, CFSP places an equally important emphasis on investment on behalf of the selected entrepreneurs. For each of the new Farm Service Centers, USAID has dedicated a $40,000 grant to be used for branding costs (uniform shelving and signage), environmental mitigation measures, worker safety measures, farmer outreach activities, and office and/or service-providing equipment. But the investment into this agribusiness start-up does not end there. To promote buy-in and sustainability, CFSP also asked that each selected grantee “match” USAID’s investment to the dollar. As a result, each grantee has contributed a minimum of $40,000 to the project in the form of construction/renovation, inventory and salaries for newly created jobs. By leveraging private sector investment, the Farm Service Centers will have a minimum initial value of $80,000 – a first for an Ethiopian business dedicated solely to serving the needs of s
Appreciating the potential as well as recognizing the need for improved capacity of these new business ventures, CFSP has also provided targeted training to all Farm Service Center staff which includes an Owner/Operator, General Manager, Accountant, Agronomist, Veterinarian and two Sales Clerks at each Farm Service Center. Trainings ranging from business management, to integrated pest management, to environmental mitigation, to marketing and communication have developed the business and technical capacities of all Farm Service Center staff members and helped to ensure the sustainability of the Farm Service Center network.
Open for Business
By January 2014, five out of the six Farm Service Centers held ribbon cutting ceremonies and were formally open for business. At the Bishoftu Farm Service Center opening ceremony USAID Mission Director Dennis Weller expressed his optimism by commenting that, “these Farm Service Centers provide increased access to high-quality, reasonably priced inputs, training, technical advice and output market linkages to at least 30,000 smallholder farmers. At the same time, they also serve as an innovative model for scaling up private farm supply and service networks in other regions of Ethiopia and other nations of Africa.” Ribbon cutting ceremonies were held at the five locations and attended by officials from the Government of Ethiopia, USAID, input suppliers, local media and eager customers that were ready to shop. Delayed due to land acquisition and construction, the sixth Farm Serve Center is slated to hold its ribbon cutting ceremony in April.
The positive reaction from Ethiopian Farm Service Center customers has been astounding. Chaltu Senbetu, a customer of the Nekemte FSC commented that she has, “never seen any other shop in town that is as appealing to shop in, that is very clean and safe for medicines and that provides quality products on a timely basis.” She also expressed gratitude that the shop provides everything she needs “without having to travel as far as Bishoftu or Addis Ababa.” Even from Chaltu’s testimony, it is clear to see that the Farm Service Centers alleviate the traditional input supply bottlenecks by reducing the time and money spent typically spent for traveling to find the relevant products. Now, customers can purchase relevant, high-quality products that are available at the time the farmers need them.
Complimenting a diverse agriculture and veterinary product line, customers can also visit uniformly branded and environmentally sound stores to receive agronomic and veterinary consultations and training from highly trained staff. When describing the immense value of accessible expert advice Atsede Abate, a customer of the Ambo FSC, stated, “I bought a calf and it became so sick and very close to death. I lost all my hope before I came to this center and got treatment for my animal. Now my calf is more than well and is even running around. I believe this center brings hope to many of us in the town as it is accessible, knowledgeable and welcoming.”
By providing quality inventory and expertise that is tailored to the demands of their respective local customers, the six Ethiopian FSCs are helping improve the productivity, incomes and food security of the smallholder farmers that they serve. And because each FSC is locally owned and operated, it is a sustainable model that showcases the success of harnessing the power of private sector entrepreneurs to help solve development problems.