Brokering the brokers
Brokers and middlemen have terrible reputations – but they are critical in any value chain involving smallholder farmers. Bulk buyers do not visit individual farms (or even cooperatives) because the quantities offered are usually small. Instead, they rely on brokers or aggregators. These brokers have unique skills – knowledge of the local market, flexibility, and often a long-term relationship with the community. But they also have the ability to buy cheap and sell dear. Is there a way to alter this balance of power, giving both sides a fair profit?
Ask KIAMA, a vegetable cooperative in Kenya, whose 2,000 members grow cabbages, capsicum, kale, tomatoes and other vegetables for the Nairobi market. 2SCALE organized a series of meetings between KIAMA and local brokers which has transformed an unsatisfactory relationship.
The cooperative identified several brokers whom they trusted, and guaranteed that its members would sell exclusively to these brokers. The brokers agreed to collect fresh produce from the farmgate, paying 25% higher than the local market price. The agreement went into effect in August 2016. In five months, the cooperative sold more than 40 tons – compared to 12 tons during the same period a year earlier.
The catalyst was price. Previously, farmers had to choose between selling their terere (amaranthus) at the farmgate for 20 shillings per kilo, or transporting it 30 km to the nearest market and selling at 28 shillings. Neither option was attractive. Now they get 35 shillings at the farmgate.
2SCALE coaches work closely with the group, inspecting fields every week to maintain top quality. The cooperative has set up a cropping schedule which ensures that buyers have a steady, year-round supply of exactly the vegetables they need, with no gluts or shortages and stable prices. Other partners are coming on board, offering seeds, fertilizers and other farm inputs. We’re designing a credit scheme (based on 2SCALE experience in other countries) that will allow farmers to upgrade to even better quality seeds.
Mary Munyutha is smiling all the way to the bank. She increased production five-fold in three months, and used the profits to install a drip irrigation system. She plans to double the size of her garden in 2017, and to experiment with new crops for the health-food market.
Mary explains how the relationship has changed. “We used to smile at the brokers only with our teeth – now we smile with our hearts.”
Photo: “The KIAMA cooperative – a new relationship with middlemen, brokered by 2SCALE”