"These are now your middlemen"

March 18, 2018

The story has been the same for years. Middlemen act as the intermediaries between farmers and buyers and take a large percentage of the profit made on the sale. Farmster is disrupting this model to create a world that is more equitable for the farmer and community.  

PHOTO: "These are now your middlemen." Msasa stands behind members of various villages in the Mtwari area, and explains that these members of those communities will act as agents for Farmster and help farmers sell their produce.

 

The Middle Ages

"Middlemen" are simply resellers with transport, who are in touch with buyers further up the value chain, and source produce from the farm.  While they provide valuable services (transport, aggregation), they often have a bad name for the extortionary practices. After all, they know the real prices in town, and are among the farmers' only options for making sales. But they are usually outsiders to the communities they source from, holding no investment into the future success of farmers or communities. Their ultimate objective is to obtain the highest margin between buyer and farmer. Since buyer prices are quite fixed, the most common way of doing this is by obtaining a low price from the farmer.  In some cases, this markup exceeds 100%.

 

Agents of Change

Farmster agents, however, are different. They provide a new model on how crops are bought and sold in rural communities. They improve the farmer's experience in 5 ways:

 

1) They are part of the community and their interests are aligned with the long-term success of the farmer

2) They are farmers themselves, and can relate to the challenges of farming, and even add "extension" services

3) By earning commission on sales, they are incentivized to boost the production and sales of their community at large.

4) They may serve as "judges" when there are disputes between buyers and farmers

5) They may train farmers on how to grow and package their produce at a high quality

 

Farmster's platform balances out the information asymmetries common in rural economies, and allows farmers direct access to markets. Middlemen, then, must compete with a wider market including even other middlemen and vendors, and shift from extortionary to competitive prices.

 

All with a simple SMS.

 

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