Business of Agricultural Business Services

An increasing number of African smallholders are moving from subsistence farming to selling at least part of their output. To shift successfully to a more commercial footing they need a lot more than the production advice traditionally provided by extension services. They need to understand how markets work. They also need advice on post harvest handling, help with business planning and marketing, assistance with organisation, information on prices, links to buyers and credit, help with contracts and standards, and many other types of assistance. These agricultural business development services are provided by a mix of private companies, NGOs, co-operatives and government agencies in what is called a "pluralistic extension system". Farmers and other clients such as input stores, small-scale processors and traders get some services for free, paid for by donors or the government. Others are subsidised: the farmers pay part of the cost. For still others, the farmers must pay the full cost. That leads to questions of sustainability (what happens when the donor''s money runs out?), accountability (whom do the service providers listen to: the farmers, or the source of the funds?), and inclusiveness (how to ensure that women, the poor and disadvantaged get the services they need but cannot afford?). This book describes the two dominant approaches to providing services: supply-driven (where the funder decides what services should be offered), and market-driven (where more emphasis is put on market forces). It looks at how 12 business service providers from across Africa run their businesses. It describes the seven different "business models" that they pursue, and examines the features of each one. Based on their experiences, it proposes a new, needs-driven approach, which aims to overcome the shortcomings of both the supply-driven and the market-driven approaches by taking the needs of clients as a starting point for policy and action.