Agribusiness is one of the most important activities with tremendous potential for growth and development which involves production, distribution, and consumption. It has many functions to be performed by key players to bring about its efficiency in addressing food insecurity, unemployment and economic recession. However, agribusiness has monumental and consequential issues it must address and one of it is middlemen participation.
Middlemen are regarded as intermediary between the producers (or farmers) and consumers. They are believed to be performing some marketing functions that enable smallholder farmers’ produces get to the consumers and of which they get rewarded by performing the functions. Some smart agropreneurs are beginning to query the acts of these middlemen to be exploitative rather than facilitating marketing functions.
Why will smallholder farmers pay 10% of their sale revenue to market agents in Mile 12 public market? Shouldn’t farmers be selling their produces directly to consumers and cut off the middlemen? Will farmers be able to perform these marketing functions efficiently and bear the accompanying costs? What is Government doing about increasing smallholder farmers’ shares and profits while curbing the excesses of middlemen?
These are some of the issues that were raised, discussed and addressed during Nigeria Agropreneurs Forum (NAF) Agribusiness Session.
A female NAF member, Mrs. Wulasha Amina, a greenhouse tomato farmer in Abuja gave her own submission about the role of middlemen in agriculture and how to curb their excesses.
According to her, Nigeria has enough food. The problem is the middle men. Middlemen raise prices for consumers while underpaying farmers, leaving farmers poor and unproductive. Farmers encounter high production cost in their effort to boost production but hardly get fair pricing of their produces from middlemen, the bulk farm gate buyers. The real profit goes to the middlemen who buy up the farm produces at almost give away prices and sell them at outrageous prices to consumers. This attitude of middle men has discouraged genuine investors from getting into agribusiness because of the marginal profit associated with it as the middle men cart away the bulk of the profit. This activity of the middlemen is therefore a threat to food security.
Do we therefore eliminate the roles of middlemen completely?
In my opinion, the answer is NO! This is because they free us to concentrate on our business which is getting better yield and so add to our efficiency.
Production is not complete until the goods produced reach the final consumers. I feel like middlemen if well utilized will add to the growth of the agricultural sector, thereby adding to the growth of the economy and improved standard of living. Here are a few suggestions to tackle this issue.
We will not be able to completely eliminate the roles of middlemen. I consider them ‘Necessary Evil’. However, we will need to have structures in place to; determine fair prices for produces, control the market and penalize offenders and to act as checks and balances to the excesses of the middlemen. We can actually have something like a task force so to speak. We will need to belong to some associations where we will register for a token. Our produce should be inspected and then the middlemen will buy at a price agreed by the association which should have a fair representation of both sides of the divide. Let’s not wait till tomorrow. Change can start here and right now. We have the number to start the change we hope to see. We have people of diverse professions here. Let’s use that to our advantage. We can no longer do business as usual and expect things to be different. Let’s not expect middlemen to just fold their arms and not fight back when we effect changes but we must be firm in our resolve to see any meaningful change. I know agriculture is the next big thing in Nigeria and we are the people to make that happen. The end of the matter is that we must ensure good practice so that everyone goes home happy.
Amaechi John, a poultry egg farmer in Porthacourt gave an insight into how he has been getting good prices for his products;
As a farmer, don’t sound desperate when you are selling your farm produces. For example, when I’m going to make supply for eggs, I dress as if I’m going to my office. Add value to what you do, then people will respect and accept your price.
I’m not really concerned about what the middleman does. I’m just trying to focus on getting more bucks for my efforts and enterprise. In Kenya I think, catfish sells for up to an equivalent of N1,000 per kilo. We need the middlemen as much as the middle men need us however, what’s happening here is that the middlemen are the ones putting a price on our produces because the farmer don’t have unity, the farmers don’t have one voice, the farmers are at the mercy of the buyers (middlemen), affirmed Kunle Dulan, Commercial Catfish Farmer in Ogun state.
In another reaction by Gbenga Fagbohun, a financial expert and catfish farmer;
Controlling prices at the farm gate is not so easy as it seems. Farmers don’t really have access to grants or long term loans; they basically have to incur all the cost associated with production personally. When it’s time to sell, and a farmer is low on cash flow, it won’t be that easy for farmers to start dictating price. So basically what we have is a cash flow problem. If farmers can structure their farm and practices such that there is steady cash flow, he can always stand his ground. The reality is that middlemen will always make more money than the farmers, same way a wholesaler makes the least profit in the production chain. They get compensated by volume of production. So these everyday items we buy, if you knew how small the margin is on these items from the production company, you will be surprised. The middlemen and retailer always make more profit in terms of percentage, but the production company makes more in terms of volume. The only solutions available is for; 1. Farmers to find a way to increase production volume/capacity and also reduce product cost. 2. Participate in the value chain, i.e. farmers should also be middleman and retailer. Forming a body in order to fix prices may not work in the long run in my humble opinion
|Fruits and Veggies Value addition|
According to Simi Ogunlade, Songhai trained agropreneur, the Government is trying to make almost everybody happy at the moment, the middlemen many farmers dislike is seen by the Government as part of the value chain they love to talk about so if we are saying Government should come up with policies that will boycott them, I’m not sure they will be easily disposed to that.
Equally, Okezie Sylvanus, who is an exporter shares his experience how foreign middlemen blocked his deal with farmers;
We had a contract to supply shea nuts to a company here in Nigeria. After we have discussed price with the seller on 30,000/MT with transport fare, on the day we were ready to pick up our goods with the agreed price, the farmer said that he is no longer selling to us, that an Indian man have paid 50,000/MT; how can a foreigner come down here to meet farmers directly? We have several orders to export agric produce but the middlemen price is a problem.
A submission by Emeka Willy, a Crop Scientist, to ending middlemen excesses reads;
In response to the session on middle men and women making the profit from the farmers’ sweat and causing price pain to the consumers/customer; In America for example, due to this trend in middlemen business, most farmers decided to be selling their product directly to the consumers, cutting off the middlemen and that was how Farmers’ Market came to be, and since 1994 farmers markets in America has tripled from 12,019 to 36,000 plus and still rising, with more licenses to create more been given which was caused by the surge of farmers to sell their product directly and make maximum profit. New York Times reports that, “60% of Americans now go to farmers market nearest to them to get their fresh fruits and veggies and all other produces and that was caused by the Bush administration campaign for F to T (farm to table). The trend can be seen in South Africa where farmers markets are springing up here and there and in solidarity and pursuit of profit, farmers in the country are flocking to sell their produce in any farmers market nearest to them. If we are to make head way in maximizing profit as farmers we ought to follow this tried and tested method or system which seeming to be growing and bringing joy to the farmers using it.
Olumide Ajibare, a Shea butter allied products maker, however, concurred to the creation of farmers’ market. He said that, the idea of farmers market is a good one. But it will need to be developed into a business model, segmented into infrastructure (buildings, refrigerators, dryers etc). The logistic aspect of it also includes, refrigerated trucks, crates and packaging generally. Then the farmers will have to go into associations that will operate in clusters to cover specific physical zones or areas. All these can’t be achieved without serious Government commitment and legal backing.
Adeniyi Sola, an agribusiness consultant says that, “I believe agribusiness is potentially the next frontier for Nigeria. I also believe that proper farm management, access to key markets and training can potentially help change the fortunes of smallholder farmers and make them commercially viable. The solution is obvious but the resources are finite”
Equally, Deji, a commercial Pig farmer proposed how he wants to boycott middlemen;
Government has no business in business. Any farmer that intends to boycott middlemen should invest in having centers or shops to sell directly to the public. To cut out the middlemen; I am looking into processing my pigs to pork, I want to sell my eggs directly to the end user. If not for middlemen, a lot of farmers won’t even be able to function. If you feel you want to get closer to the market, then we have to grow our own market. We should rather look at setting up, farmers market. Some middlemen came from Warri, Portharcourt to buy pigs in Kwara state. I can’t set up a shop in Portharcourt even if I can afford it. We all need to specialise and face what is convenient and profitable for us and care less about others profit; Middlemen make more profit in piggery, but I prefer to be a pig farmer; I have made up my mind not to complain about it again. I will process and cut them out.
In conclusion, Olamilekan, CEO Stamal Farms appeals to the Government, policy makers, ministers and commissioners to look into the current situation of Nigeria’s smallholder farmers and middlemen exploitation, give farmers enabling environment to enable them contribute efficiently to food security and economic development.
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