Bring home the business

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What business?

    The relationship between the country and the city has changed over the last few hundred years.

The country supplied the city with food and was largely self sufficient.

Over the period of industrialisation the cities have supplied more and more goods and services to the people living in the country.

Farmers have become more dependent on the cities.

    The goods and services supplied from towns and major cities are:

    * Banking, credit and insurance.

    * Farm inputs such as fertiliser, herbicides, fungicides and tractor fuel.

    * Machinery, machinery spare parts and repair services.

    * Technical support and training.

    * Marketing, marketing information and services. Product storage, processing and transport.

Why bring these goods and services back to the country?

    The main reasons for trying to bring these services back to the country in a decentralised form are:

    * A better and cheaper service to farmers.

If the services are provided locally they can be better organised to suit farmers needs and the farmers' costs of access are much reduced.

This access cost is often ignored.

The true cost for a farmer of a banking service is not merely the bank interest and charges but his personal costs in obtaining access to the service.

If the bank is many kilometres away and he has no telephone it is costly to access the bank.

    * Additional income for farmers who provide the services and goods.

It is important not to isolate small farmers into a specialised farming economy.

They are mixed businesses.

If a farmer has machinery repair skills he can expand in that direction rather than expanding his farm enterprises.

The additional income for farmers in the country need not be as great as that in the city.

The farmer can add the income on to his farming income.

He already has a house and a low cost of living.

Additional income from a part-time machinery repair business or the supply of spare parts could provide a useful income to a farmer but it would be inadequate to support a family in the town or city.

    * Additional income and employment in the country will provide great opportunities for community services by reducing the drift to the cities.

Government budgets will not be under such pressure to supply services to the expanding cities and can provide more in the country.

Can the market provide all these services for small farmers?

    The simple answer in no.

Within the farming community of most countries there is a 80% - 20% split.

That is 80% of the farmers provide 20% of the business and 20% of the farmers provide 80% of the business.

There are of course variations and in some countries farm wealth is more concentrated and in others slightly less but somewhere between 70% and 90% is an average.

With such a split the obvious market for goods and services is the 80% of large purchases made by the 20% of farmers.

Banks, machinery suppliers and all the service and goods providers will put all their effort into obtaining as large a share as possible of this large-farmer market.

Small farmers are free to purchase goods and services but their contribution to company profits is insignificant compared to the big farmers.

These facts have been well recognised for many years with the provision of credit and technical support.

Many international organisations such as IFAD have supported special schemes to provide small scale credit to small farmers and Ministries of Agriculture have provided technical information.

Government support needed.

    If the small farmer is going to survive in the agricultural economy governments will need to provide selective support.

There is no need to provide large subsidies on agricultural produce but carefully targeted support can produce considerable benefits.

    For example:

    * Marketing information and services.

    Larger farmers can afford to buy market information from commercial providers and improve their returns considerably.

Small farmers would find the cost of such as service (if they can access it at all) greater than the improved return.

In theory a group of farmers can use the service and improve their returns but the reality is they are unlikely to do so.

Governments should provide them free.

General information can be disseminated on the radio.

More precise information can be provided through the internet or by telephone.

The government can provide it directly or by providing farmers with vouchers which can be used with authorised private suppliers.

The vouchers can be supplied to all farmers or only to small farmers.

In either case farmers would need to form some sort of group to obtain a service completely paid for by vouchers.

    * Technical services.

    Vouchers can be used in the same way to support technical services for small farmers.

Services such as soil testing, leaf analysis and detailed field by field advice on weeds and pest is becoming increasingly difficult for Ministries of Agriculture to supply.

Private services based in towns are suitable for large farmers but small farmers will need to organised their own group services with some government support in the form of vouchers.

Farmers can form improvement groups.

A member of the group can attend a course of some weeks on a specific topic such as weed control or fertiliser use or grazing management.

He then becomes the local technical adviser on these narrow topics.

He is paid a fee by local farmers and by the vouchers available for technical assistance.

More difficult questions are referred to the Ministry adviser.

    * Communications.

    Many countries are developing telephone and fax points on a commercial basis.

Small farmers in convenient localities can expand into these commercial activities on a part time basis.

The communication point can then develop further with some support into market and technical information centres.

Government agencies can send them daily or weekly faxes on market prices or technical reminders which can be displayed.

    * Banking and insurance.

    Internet banking and insurance reduces the cost for small transaction and provides a decentralised service.

It is obviously beyond the resources of a single small farmer but is increasingly realistic for a group of farmers.

In countries just as Tunisia with a well trained population of young people it may provide a business opportunity without the need to migrate to a city or town.

More than a local agent.

    Large insurance companies, fertiliser manufacturers and many others have employed farmer agents for many years to collect orders and transmit them on to head office in the city.

Bringing home the business it quite different.

It is attempting to change the relationship of the farmer to the supplier and increase his power in the market place.

The important tools are the telephone, the fax and the Internet.

These are not available to most small farmers in the WANA region but they are available to some and could form the basis of a business.

The farmers can undertake the initial move by forming a farm improvement group, a credit union, a buying group, or marketing group and employing one of their members as a manager.

These groups would search for the best deals for their members.

The manager would be paid a salary or a commission.

There is no need to be limited to farmers' cooperative initiatives. Farmers could set up on their own providing machinery repair or other goods and services.

Technical services are different.

    Technical support is different because the growing trend is to smart farming.

Smart farming is using more intensive technical support to fine-tune the use of other inputs.

Soil tests and leaf analysis to increase the efficiency of fertiliser use.

Biological control, weed counts and insect counts to improve the use of herbicides and insecticides.

These technical services are better provided independently of the fertilisers and the chemical suppliers as the purpose is to reduce the costs of inputs (even when the technical services are included) without reducing yields.

Providing these services through the Ministry of Agriculture is too costly.

Local extension officers cannot provide the level of individual service needed to inspect fields on a weekly basis.

Even if the funds were available it would be a wasteful use of resources.

To take soil samples or carry out NIR analysis of cereal leaves does not require a degree or diploma in agriculture.

Farmers with secondary education can undertake short courses in specialised aspects of farming and provide a locally based service to other small farmers.

Their costs would be much lower than town based tertiary-educated staff.

They would be funded by a combination of fees from farmers (large and small) and vouchers (from the government).

    Some areas that could be locally operated:

    * Soil tests.
    * Leaf analysis.
    * Livestock vaccination.
    * Weed counts for herbicide advice.
    * Insect trapping and counting.
    * Grazing management.

    Farmers could establish a Technical Advisory Group and employ one of their members or another farmer as an adviser.

They would pay a small fee and the government would provide vouchers that could be cashed in to pay for technical advice.

The adviser would need to obtain a certificate in the field of expertise.

He would need to attain refresher course.

These conditions could be applied as part of the agreement to cash the vouchers.