ACTORS IN AGRICULTURAL VALUE CHAINS
BY JOSEPH OKPAIRE
The core, or primary, actors in agricultural value chains typically include input suppliers, primary producers, also referred to as farmers, wholesalers (agents or traders) and processors, manufacturers, and retailers.
Input suppliers specialise in distributing genetic materials used to produce crops or livestock. For example, seeds or breeding stock that are used to produce the main agricultural products. This is, essentially, the stage before farming. There is often significant research and development involved in producing what is called seedstock. In agriculture, input suppliers can be private enterprises.
Unlike most other producers of goods, primary producers are unique in that their businesses are generally tied to the land or other natural resources. Primary producers can be family farms, farmer groups, farmer cooperatives, smallholder farmers, and large corporate enterprises. Fishermen are even considered to be primary producers. A large percentage of these actors in Nigeria are found in this category. This stage basically involves the use of input supplied coupled with other natural resources to produce a desired raw material or finished products.
After products leave the farm, which is referred to as post-farm gate, they may be handled by a number of actors. These actors are involved in transporting, trading, processing, manufacturing, and distribution, making up the chain between primary production and the end consumer. Wholesalers, agents, and/or traders are involved at different stages throughout the value chain. They are, but not always, included in diagrams of value chains. These players in the sectors are those with financial capabilities and resources ready to pick these products from the farm. It also involves those who possess valuable information on where and how to identify primary producers.
They play an important role as they are responsible for getting products from upstream actors (primary producers) to downstream actors. I believe you would have seen heavy vehicles or even smaller ones conveying agricultural products from rural areas to urban areas. These products can range from yams, dried maize, pepper, cattle, goats, poultry, cassava, plantain, banana, cocoa, etc. In particular, these actors play an important role in the aggregation of products from numerous producers, which helps facilitate an efficient chain.
Actors in this stage of the value chain have been accused overtime to reap the efforts of the primary producers. They issue excessive prices to buyers of the products while bargaining with the primary producers for a smaller amount. Sometimes it is done in the presence of the primary producers, although after coming to an agreement. I remember one time I had to sell cucumber to wholesale dealers in the local market in Osisioma, close to Aba market, Abia state. One of bag (25kg) of cucumber was sold for N2500 after lots of price haggling. One Saturday evening, while driving in town (Aba), I was opportune to witness a transaction where a dealer was reselling cucumber, she bought from the local market for N5000 per bag(25kg). Well, in business there is no bad guy. We are all out to make profit.
Wholesalers add value in that they may perform activities such as aggregation, distribution and storage, and minor post-harvest activities. These activities may help to differentiate quality levels through sorting, cleaning, grading, and sometimes even minor packaging.
AGENTS AND TRADERS
Agents and traders generally do not take ownership of the product. They are often referred to as middle men. They focus on brokering, or negotiating, deals and connecting the seller - the primary producer -with the buyer. Facilitating this connection is how they add value. After products leave the farm, there are a number of other potential actors, in addition to wholesalers and traders, who may be involved in adding value to the product. The involvement of types of actors in the chain differs depending on the end product and the market destination.
PROCESSORS, MANUFACTURERS, AND RETAILERS
Other common actors include processors, manufacturers, and retailers. Processors and manufacturers add significant value by transforming the commodity into more complex and, possibly, finished products.
In agrifood value chains, the processor may combine commodity products, transforming them into an ingredient for further processing or use by a consumer as an ingredient. For example, a flour mill would turn grain into bread flour. Consumers then have the option to buy flour or the fully finished bread itself. Retailers and actors in the food service sector are responsible for distributing food products directly to the end consumers.
In developing countries, retailers might include farmers' markets and wet markets, while in developed countries, examples may also include local markets, independently owned food shops, as well as multinational global food retailers.
Last in the list of core actors, but easily the most important in the value chain, is the end user of the product the customer or consumer. In an effective value chain, the wants and needs of the end user are at the core of all chain activities and decision making. A key point for value chain thinking is that all actors in the value chain need to work together to meet the needs of the customer or consumer.
They only add value if the end user perceives it adds value.
ACTORS IN VALUE CHAIN OF TOMATO IN NIGERIA.
The input suppliers will supply farmers with inputs such as tomato seedlings and agrochemicals (fertilizers, pesticides, greenhouse ancillary equipment, herbicides, insecticides, etc. They are the first actors who add value to the crop commodity. Although, most of these inputs are not produced in Nigeria, making them a little expensive than what the farmers can afford. This reduces the farmer’s ability to maximise profit.
The next stage in the tomato value chain is the production or farming of tomato. Here, tomato seedlings are raised in nurseries, before transplanting to the field. In Nigeria, tomato production flourishes majorly in the middle belt and northern regions. A large percentage of producers are small holder farmers who hire labourers and family members to carry out production operations such as planting, weeding, fertilizer application, harvesting, etc.
Tomato is mostly sold fresh in Nigeria; hence, processors rarely find readily tomatoes for processing operations especially during the off season when it is a scarce commodity.
The distribution stage includes assemblers, local traders, intermediaries and retailers. Some of these actors take ownership of the products while other connect buyers and primary producers. The distribution component of the value chain is separated into three parts. First, part is sold to end users either in the vicinity of the farm or through wholesales marketers to local market or processors. Processors get their suppliers directly from the farmers or the dealers. This component of the value chain is not organised in Nigeria, resulting in little or no value addition to the products.
The final stage in the tomato value chain is occupied by consumers who buy raw tomato from the local markets, road side vendors and other retailers.
ONE MORE THING
It is worthy to note that for actors to participate in agricultural value chain, there is margin or profit margin expected for whatever service he/she rendered. These actors directly or indirectly influence the price of the products before it gets to the intended consumer.
Agribusiness is the new cool and it is attracting attention from all sides. These actors listed above will make a reasonable margin while contributing to ensure food insecurity and alleviating poverty. So ask yourself as an actor ‘’at which stage should I come in?’’