This daily series focuses on business ideas for those looking to launch new ventures in Nigeria (and Africa in general). The short ideas are archived here.
The Problem
The price asymmetry between prices of produce in rural and urban areas in Africa remains a big challenge. Farmers who do the hard work of farming largely sell for nothing to middlemen (or merchants) who then re-sell in urban areas. Those middlemen mop up more than 40% of the profit in the value chain. In other words, if the farmer makes 10%, the middlemen make 60% while the end-resellers make 30%. The nexus is possible because the farmers do not have clear ideas what the items which they have produced are sold in cities.
The Opportunity
This is a data business which is certainly huge. If farmers have the real-time data of what produce goes for in big cities, they would bargain better with middlemen and merchants when they come to buy produce from them. A top-grade system will support not just farmers but also merchants and commodity traders who can feed into the system to have real-time insights on pricing. There are opportunities to sell subscriptions, comprehensive market reports, and more to clusters of market makers. This is nothing but a marketplace which can be structured to be an aggregation system with data coming from farmers, merchants and even end-users.
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Action Roadmap
Build SMS, chatbot or web app that can deliver a marketplace for farmers, merchants, traders and end-customers in the agro value chain. The system should offer value to all participants in the marketplace. It must deliver supply chain pricing transparency to unite all players and then deliver equilibrium that is possible due to lack of any asymmetry on pricing.
Comments from LinkedIn
Ndubuisi Ekekwe, this is a very important issue to tackle and the potential solutions you are opening up to building a real market in which producers have a view of the market and can operate around that knowledge is great. Depending on the African country concerned, there might be different barriers to building such integrated network, which allows for the producers to access a fair share of the revenues, better than what they get. One aspect could be to help producers organize along the value chain and create there own logistics if they are able to regroup as coop or something similar. All the technologies available to helping hem to that end should be taught to them. There is certainly a lot to do around the idea put forth here. As usual, I appreciate your analysis about these issues and the founding solutions you provide.
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Nice one Sir, I thinks the big picture is agro commodity trading marketplace. But the success depends on logistics and storage facility. Of what use is the knowledge of the prevailing market price to the farmer if he can not get it to that particular market and still left at the mercy of the middle men. They will also be forced to sell at the price dictated by the middle men where their is no appropriate storage facility especially for perishables. But beyond that,commodity trading will allow the farmer to sell at the price of his choice and even the ability to sell his commodity before harvesting it as commodities can be paid for ahead of time.
Jude, great perspectives. I agree with you. There are many other pieces to this.