July 10th, 2024

Organisation of farmers and attendant Micro and Small Enterprises (MSEs) is critical to success of small-scale agriculture. The ingoing hypothesis rationalising development of value chains has always been that smallholders are not as equipped to benefit from existing economic opportunities due to poor organisation. In retrospect, organising smallholders in models that ensure active market-based participation has always been essential for their growth which includes delivery of finance and access to requisite technology.

FSD Kenya, in partnership with FSD Africa, Farm to Market Alliance[1](FtMA) and 71poiint4 undertook a deep dive study on Farmer Service Centres (FSCs) to better understand opportunities that enhance their access to finance and deliver finance to the small holder farmers (especially women), as well as understand the role of digitisation in unlocking access to finance for both smallholders and the FSCs. Interrogation of FSC business model, its viability and sustainability and more broadly FtMA after exit conditions to ensure sustainable economic growth were also central to this research.

This study revealed that actively linking smallholders and enterprises (FSCs[2]) to off takers accrues benefits to all engaged in market development and ensures that benefits accrued are shared fairly across value chains. This in turn, not only spurs value chain innovations but also cooperation. This study also reveals organic emergence of new models for smallholder farmer coordination and aggregation by enterprises that are somewhat self-organising. In fact, new(er) segmentations observed during the course work classifying FSC’s as subsistence, transitional and established is testament to this evolutionary process that is devoid of external design.

Introduced by FtMA in 2019, the Farmer Service Centre (FSC) model, now boasts of network of more 970 active FSCs across 13 counties in Kenya[3], with 44% being female owned. Of the 146 youth FSCs aged 18 to 34 years old, just 50 (or 34%) are female. While 93% of male FSCs are married, the corresponding percentage for women is 76%. 15% of female led FSCs are widowed, divorced, or separated (0% for males), possibly making them more able and willing to take on the work of an FSC.

Important to note that FSCs are a vital bridge between private, public-sector partners and smallholder farmers, among others. They generate revenue by offering various productivity-enhancing services to smallholder farmers, including advice and training, input sales, aggregation of produce, mechanisation services, and financial service linkages. Many FSCs are farmers themselves and demonstrate the value of the inputs, services and farming methods they promote as FSCs directly on their own farms (model farms).

By correcting failures of coordination and information asymmetries along the FSC value chains, a more inclusive economic development is achievable. A point of concern that might be a direct result of structuring smallholders and enterprises is feudalism – a risk further in the study.

Click here to read/download a slide deck presenting insights from the study.

Click here to read/download focus notes presenting insights from the study. 

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[1] The Farm to Market Alliance (FtMA) aims to enhance the transition of smallholder farmers to commercial agriculture by providing support, information, and investment from seed to market.

[2] The Farmer Service Center (FSC) model intends to bridge first mile (inputs and services and) last mile (commodity) gaps for smallholder farmers in the rural areas.

[3] FtMA Validation Survey (2023). *Question in validation tool: “Are you an active or inactive FSC in the project?”

 

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