Inclusive trajectory towards driving AOFCU’s sales volume

A common theme that is prevalent in the agriculture industry across Africa is the challenge of market access for smallholder farmers. Often farmers produce goes to waste due to lack of markets or they have to sell produce at throw-away prices due to lack of proper market knowledge.

One of the ambitions of the Awash Olana Farmers’ Cooperative Union (AOFCU)-2SCALE partnership is to increase farmers margin by directly supplying to the institutional buyers (such as universities, prisons, hospitals, etc.) and organized wholesale markets. AOFCU has been aggregating the members produce to supply to different buyers in the open market in Addis Ababa, Adama, and Dire Dawa cities. However, the experience has shown that the Union did not have a competitive advantage (in the open and often unorganized wholesale market) over the other traders/aggregators that work with middlemen/brokers in different geographic areas. Hence, in targeting the institutional market, the union has been facing stiff competition from commercial farmers and other unions operating in the region.

On August 5^th & 6^th 2021, 2SCALE facilitated a Business Model Canvas (BMC) workshop among the AOFCU team. The workshop enabled AOFCU to develop their own vision board in relation to the union’s vegetables market business. This is in terms of value propositions, customer persona, distribution strategies, identification of key activities, mobilization of resources, revenue and cost analysis, marketing strategies (with high emphasis on branding) and customers linkage/networking/relationship mapping against their competitors. A clear action plan was drafted afterwards. Whereby all stakeholders contributed to the results achieved. 2SCALE is supporting on one key marketing intervention; the development of AOFCU’s brand identity to fairly ground its competitiveness and increase its visibility as well as its recognition among BoP consumers. Moreover, the market linkage workshop on November 20^th was a platform for them to make direct networking with Addis Ababa Consumers Associations. In addition to collecting orders and presenting their products during the workshop, they were able to discuss on the challenges faced and come up with resolutions together with the consumer associations.

Since the training, the partnership sales progression has been exponential with over 130 tons of transaction in less than a months’ time through Oro-Fresh outlets and Consumer Associations in Addis Ababa. Additionally, it has secured institutional contract agreement with Bale University to initially deliver 24 tons of vegetables on monthly basis.

Yeshi Degu, the Executive Director of AOFCU stated that “Previously AOFCU had almost naught track record of sales; that it only has been focused on fertilizer distribution, mechanization service and chemical supplying businesses. Whereby, it was not fulfilling the very core purpose of its existence as a vegetable producing farmers’ cooperative union. Aside from the stiff competition with brokers/traders, the union neither have the network nor the skillful human resource to source produce from primary cooperatives and generate significant sells volume. Even if 130 tons of transaction seems minimal at this point, we see it as an achievement caused by the partnership with 2SCALE. Generally, the partnership interventions are enabling us to dream and achieve bigger.”

This will be an input for the ambition and novelty of the partnership. Whereby a structured market outlet is being facilitated for 20,000 vegetable producer SHFs with a volume of 25,000 tons annual transaction over the three years of implementation period as per the partnership agreement signed among the business champion and 2SCALE. Accordingly, the union now aspires to supply an average volume of 2,000 tons of vegetables transaction in a month and improve the 7% achievement of the target set in the partnership agreement at the beginning of the sells journey in December 2021. AOFCU strongly believes that this is achievable as it has recently purchased ISUZU truck in addition to the cold truck it already has to smoothen the logistical arrangement. Moreover, 2SCALE has facilitated ways of accessing loan and developed bankable business proposals for AOFCU. It has now accessed 15,000,000 birr (266,967 Euro) loan/finance as working capital and is striving to run the business with full capacity and determination.

Finally, the champion has fully equipped itself with resourceful human capital to run the business more effectually. i.e., marketing task force entailing key stakeholders starting from the government cooperative structure up to Arsi University and the newly hired ABC coaches. Hence, the partnership is expected to deliver and reach its targets in 2022.