Impacts of COVID-19 on Agro-dealer Businesses in Kenya

Jul 28, 2020 | All, Digital Financial Services, Distribution Channel Logistics, Market Access

AgriFin is excited to publish recent findings of a study we commissioned on the impacts of COVID-19 on agro-dealers in Kenya. The study findings are complemented by findings in other research pieces conducted by our partners.

READ THE FULL REPORT

***

The Covid-19 pandemic has disrupted social-economic activities across the world. The business of growing food and moving them to markets has become increasingly difficult. Slowdowns in financial markets, curfews, and social distancing affecting mobility, and disrupting supply and decision-making across agricultural value chains, converge to challenge already strained systems. One of the most affected groups is agro-business dealers, who have had to adopt unique coping mechanisms to beat the extremely harsh business environment they find themselves in.

AgriFin’s programming is designed to cope with the effects of systems-level disruptions, leveraging our network of digital partners and solutions that can collaborate and support both farmers and each other. We are supporting innovation and collaboration across growing groups of partners to combat the joint threat of COVID-19.

We are excited to introduce the Agro-Dealer case-study, which is a snapshot of our planned series of research projects on the impacts of Covid-19 on businesses. The studies are meant to help us understand the challenges that different agro-dealers are facing in order to come up with viable solutions by liaising with various stakeholders and partners.

Supported by AgriFin, Ipsos-Kenya gathered feedback from agro-dealers across the country in June 2020.

Here is a summary of the agro-dealer research findings:

  • Most of the businesses (93%) had a very positive outlook of the year ahead before the COVID-19 struck.
  • 92% of agro-dealers said COVID-19 has had a negative impact (high or low) on their businesses. Their revenue/cash flow has reduced immensely and the flow of customers has gone down.
  • The agro-dealers are distressed from the COVID-19 crisis, with a large portion experiencing a drop in business. There is a need to support these businesses to return back to normal business.
  • The reduction in customer/farmer flow is mainly coming from a drop in incomes amongst farmers. There is a need to help farmers regain their financial standing.

Our agro-dealer case study also highlights key findings from similar studies done by 60_Decibels and the Precision Agriculture for Development (PAD) as outlined below:

Summary findings of 60_Decibels study on how best to support global food systems amid the pandemic:

  • Almost all households are in a worse financial position than before the pandemic. The households have had to take some sort of financial coping mechanism such as borrowing money and selling off assets
  • 72% of households report price increases for food while another 72% report having to sell their produce at lower prices
  • Expenses have increased (due mainly to supply shortages, labor scarcity, and lower food sale prices) while incomes have decreased almost across the board 
  • 83% have reported an increase in prices for agricultural inputs

PAD summary findings include:

  • Financial distress & food shortages among many farmers
  • Farmers are optimistic about production, but disruptions observed in agricultural labor markets
  • Kenya agro-dealers are closing shops earlier, lower foot traffic & revenues
  • Strong knowledge of COVID-19 symptoms & prevention, and interest in digital updates

The PAD study on the effects of Covid-19 on farmers and agro-dealers makes the following recommendations to navigate the tides:

  • Combine targeted financial support with direct provision of agricultural subsidies
  • Utilize widespread mobile phone access to provide farmers with timely and accurate information regarding COVID-19
  • Establish a digital channel to enable efficient communication across the supply chain, in order to overcome potential obstacles faced by agro-dealers in meeting farmer demand 

The agro-dealer case study is the first in a series of research projects on the effects of COVID-19 pandemic on businesses and the economy that we planning to engage in. 

AgriFin will continue to work with various partners in the agri-business sector to deliver impactful research that would ensure business continuity and income sustainability among smallholders during the pandemic.  

If you want to find out more about how AgriFin is adapting its programming to the pandemic, please read our AGRIFIN’s COVID-19 Response.

Author(s):

Nicholas Sewe, Communications and Learning Specialist, Mercy Corps AgriFin.