Smallholder farmers produce 80–90% of the grains in Eastern Africa, but many face challenges in accessing markets and fulfilling market demands. Smallholder farmers often lack the skills and knowledge to trade effectively, yet most are dependent on their farms for income. They are also disadvantaged by the relatively high cost of inputs (improved seed and fertiliser), and many have nowhere to store their produce so are unable to wait for a better market price for their crops. In addition, traders and processors struggle to purchase grain from individual farmers due to the challenges of economies of scale.
CTA first partnered with the Eastern African Grain Council (EAGC) in 2014/15 to promote the adoption of structured grain trading systems in Eastern Africa, harmonise regional grain standards, establish a regional training institute, strengthen grain market intelligence systems – through the development of mobile-based systems – and promote multi-stakeholder engagement to strengthen grain policy.
A new partnership between CTA and EAGC will build on the previous achievement – including building capacity for structured trading systems and supporting and certifying warehouses. However, the new initiative aims to go further in enhancing the participation of smallholder farmers in structured grain trading systems by introducing Grain Trade Business Hubs (GTBHs).
GTBHs are intermediary systems which aim to bridge the gap between grain farmers and grain businesses. They are designed to enhance smallholder farmer’s access to services and markets, including seed and fertiliser and market information. The Hubs – which will digitally register farmers to be able to offer services efficiently and cost-effectively – will also allow farmers to aggregate their produce as a farmer group, sell collectively, store their produce in a certified warehouse, and access markets through EAGC’s E-Soko online trading platform and its Trade Facilitation events.
GTBHs are able to unlock access to finance by allowing farmers to use their produce as collateral for loans. By enabling smallholders to build strong links with private sector grain traders, GTBHs will also help farmers earn more money by increasing crop quality and yields. Smallholders will also be able to improve their post-harvest practices through access to certified warehouses services. At the same time, warehouses and traders will be able to use the Hubs to better manage their inventory and plan ahead.
The project, which will run initially in Kenya and Tanzania for 2 years (2018–2019), will:
- Organise farmers into trade units and conduct farmer profiling.
- Facilitate the set-up of GTBHs.
- Facilitate linkages with input suppliers, financing agencies and grain traders.
- Build capacity for structured
- 30 farmer trade associations will be created and digitally registered with GTBHs.
- 20 new GTBHs will increase production and incomes for 30,000 smallholder grain farmers in Kenya and Tanzania.