Assessing Survival Strategies for Agro-dealers in Chipata and Petauke Districts, Eastern Zambia.

1Trans Nyimba Munalula, 2 Charles Muwe Mungule

1. Area Sales Manager, Bayer Zambia Limited, Zambia (MBA Management Strategy Student). Email: trans.munalula@yahoo.co.uk

2. Principle Lecturer & Portfolio Manager for Master Degree Programs, Botswana Accountancy College, Botswana (Research Supervisor) A research report submitted in partial fulfillment of the requirement for the award of a master of business administration in strategic management degree. Graduate School of Business Studies, University of Zambia, Lusaka. 13th April 2021.

Abstract: The face a lot of challenges and struggle with little hope for survival. The main purpose of this study was to assess the survival strategies agro-dealers use to sustain their business in Chipata andPetaukedistricts. The specific objectives of the study were to identify the major challenges faced by agro-dealers in Chipata and Petauke districts; explore the survival strategies used by agro-dealers to sustain their businesses in Chipata and Petauke districts; and to recommend appropriate measures that would help agro-dealers to sustain their business Descriptive survey design was used and questionnaires were used for data collection from 23 registered agro-dealers in Chipata and Petauke districts.The data was analyzed using both qualitative and quantitative methods and descriptive statistics were used aided by statistical package for social scientists (SPSS). The findings were that agro-dealers in Chipata and Petauke districts facedmajor challenges and these were lack of access to finance (95%), competition (90), lack of partnerships (86%), and lack of strategic assets (81%). The survival strategies used by agro-dealers were marketing strategies (95%), networks and partnerships (86%), training of employees (81%), engaging rural agents (81%), and establishing linkages (71%)

Keywords: Agro-dealers, Chipata, District, Petauke, Strategies, Survival

I. Introduction

This chapter discusses the background to the study and the statement of the research problem that informed the study. The general and specific objectives have been formulated to indicate what the study intended to achieve in terms of action, decision making as well as policy change. Additionally, research questions were derivedfromspecificobjectives and these questions ledthe researcher to gather data regarding the research problem. The study scope states the parameters within which the studyisconfined The significance of the study is also given.

1.1 Background

Agro-dealers are very important because they provide a stable supply of agriculture inputs on reasonable terms and they often give technical advice to smallholder farmers [1] Agro-dealers have tremendous potential to facilitate private sector led agricultural growth and development (Chinsinga, 2011). The Zambian government recognizes the importance of agriculture and has been supporting agro-dealers through various policy guidelines and agro-business programmes such as the Farmer Input Support Programme (FISP).

1.3Statement of the Problem

The purpose of this study is to assess the survival strategies agro-dealers use to sustain their business in selected districts in the Eastern province of Zambia. Agri-business offers opportunities for economic diversification and job creation in society. This sector if well-coordinated and managed, exerts a huge impact on poverty reduction, create more and better jobs, and increase productivity and incomes [3]; [2]. The Zambian government, likewise, recognizes the importance of agri-business and has been supporting such players as agro-dealers through policy guidelines and agro-business programs such as the Farmer input Support Program (FISP). Despite being involved in the agro-business programs that

Assessing Survival Strategies for Agro-dealers in Chipata and Petauke Districts, Eastern Zambia.

give opportunities to agro-dealers to be distributors of agriculture inputs to farmers, agro-dealers’ performance and competitiveness have remained poor, face a lot of challenges and struggle with little hope of survival The case study for market engagement innovation and impacts by [4] found that 61% agro-dealers were categorized as poor; 30% were categorized as average; and only 9% were categorized as good with sustainable business models. The difficulties that arise from this situation is that with time the non-efficient agro-dealers will be replaced in the value chain by efficient large multinational corporations that set up their outlets in the same locations as small indigenous agro-dealers thereby making it difficult to compete with the large multinational agro-input suppliers. The competition between large multinationals (agro-input companies) and indigenous agro-dealers is that the later slowly is being crowded out and out-competed by large multinational corporations [5]. The subsequent effect of this can be detrimental to the economy of the country. Since most of the smaller farmers are found in remote rural areas that are poorly reached by large multinational corporations, these remote areas will have inadequate and expensive input packages that may not be available in the small quantities that small poor smallholder farmers could afford once indigenous agro-dealers are out of the value chain. The indigenous agro-dealers will also not be available to provide technical advice to smallholder farmers [1]. This study will help in reducing the risk of many agro-dealers being wiped out of the agricultural value chain. Literature from Sub-Sahara Africa countries showed some survival strategies agro-dealers used to counter the challenges they faced. These were engaging rural agents to sell products [4]; training of workers in customer care and product knowledge [6]; joining networks and partnerships [7]; [2]; establish linkages with multinational agricultural input manufacturers [2]; having strategic assets [8]; use of ICT strategy [9] and adopting new marketing strategies [9]; Vani, 2017).

1.4Aim of the study

The aim of the study is to assess the survival strategies agro-dealers used to sustain their business in Chipata and Petauke districts.

1.4.1 RESEARCH OBJECTIVES

1. To identify the major challenges faced by agro-dealers in Chipata and Petauke districts.

2. To explore the survival strategies used by agro-dealers to sustain their businesses in Chipata and Petauke districts.

3. To recommend appropriate measures that would effectivelyhelp agro-dealers to sustain their business in Chipata and Petauke districts.

1.4.2 RESEARCH QUESTIONS

1. What challenges do agro-dealers face in the value chain in Chipata and Petauke districts?

2. What are the survival strategies used by agro-dealers to sustain their businesses in Chipata and Petauke districts?

3. What measures can be recommended to help agro-dealers sustain their business in Chipata and Petauke districts?

1.5Study scope

This research study is confined within the Zambian agriculture value chain and restricted to Chipata and Petaukedistrictsof Eastern province of Zambia. Selected players in this farming areasuch as agro-dealers, the District Agriculture Coordinators (DACOs), agro-input companies took part in the study. The study addressed only the issues of agro-dealers in the agriculture value chain. The study could not be extended to other agricultural farming areas because of inadequate resources and time.

1.6Justification

This study is justified by several reasons most of which is drawn from literature. Little evidence shows any study that has been done in Zambia to show survival strategies of agro-dealers There are only sparse data to show the level of competition agro-dealers face from large multinational firms (Chinsinga, 2011; [8]

1.7Significance of the study

The findings of the study would provide practical solutions to agro-dealers in Chipata and Petauke districts that can help them to remain effective and competitive in the marketplace. The results of the study would help the Ministry of agriculture and NGOs working with farmers in Chipata and Petauke districts to identify practical solutions to bottlenecks in the agriculture value chain. The results will also help government to come up with appropriate policy directions that will positively impact the agriculture value chain.

II. DATA PRESENTATION AND INTERPRETATION

2.1Employment of qualified personnel in agro-products/services

Figure 1 shows employment of qualified personnel to run business. 70% agree that their business is run by non-technical personnel with 13% strongly agreed that their business did not employ technical personnel while 57% agreed to the same. Only 30% agro-dealers employed technical personnel in agro-products and or/ services. This is contrary to findings in Kenya where successful agro-dealers employed technical staff [10]

(Total Sample =23; data obtained using self-administered questionnaires)

2.2 No Training in Agro-dealership

Figure 2shows the data collected concerning the assertion that respondents do not have training in agro-dealership. The data shows that 57% of agro-dealer had training in agro-dealership with 35% disagreeing to not having training in agrodealership and 22% strongly disagreeing while 43% did not have the training with 13% strongly agreed to not having training in agro-dealership, 30% agreed to not having the training.

2.3Business Status with multinational input agro-dealers

Figure 3 shows whether agro-dealers were registered with other multinational input agro-dealers. Data shows that 87% agro-dealers were registered with the multinational input suppliers with 39% disagreed and 48% strongly disagreed that business not registered with multinational input suppliers, while 13% agreed to their business not registered with multinational agro-input suppliers This implies that majority of the agro-dealers (87%) had good working relationships with the multinational input suppliers and this is consisted with literature (Chinsinga, 2011).

Figure 1: Employment of qualified personnel in agro-products/services to run business

Figure 2: No training in Agro-dealership

Business Registration with Multinational Input Supplier

2.4 Challenges Agro-dealers faced in the Agriculture value chain

Figure 4 shows the list and range of responses by the respondents concerning the challenges faced in the agriculture value chain. Majority of respondents identified lack of access to finance (95%) as the main challenges. Other major challenges in descending orders were Competition among value chain actors (90), lack of partnerships (86%), lack of strategic assets (81%) due to lack of fixed assets and also that those who owned shop buildings that could have been used as collateral for securing bank loans, the building were on customary land and did not have title of ownership for them. Lack of training in agricultural products (67%) follows and finally and the least is lack of market demand (52%).The other challenges were delay by government to pay agro-dealers who supplied inputs to farmers in Farmer Input Support Program (FISP).

2.5 Survival strategies adopted by Agro-dealers to sustain their businesses

Figure 5 shows the survival strategies adopted by agro-dealers to sustain their businesses. Data shows that respondents adopted the following strategies in descending order of importance: adopting new marketing strategies (95%),joining networks and partnerships (86%), training of their employees in customer care and/or management (81%), engaging rural agents to sell their products (81%), establishing linkages with multinational corporations (71%), borrowing working capital from family members (43%) and adopting Information and Communication Technology (ICT) strategies such as using internet, podcast, electronic media to sell the products (24) The other survival strategies used by agro-dealers were diversification, where they engaged in farming activities

Figure 3: Businessnot registered with multinational input suppliers

Figure 4: Challenges faced by agro-dealers

Figure 5: Survival Strategies Adopted

2.6 Marketing strategies to sustain business

Figure 6shows somemarketing strategies that respondents thought could enhance their businesses in the agriculture value chain. Respondents indicated that the appropriate strategies in running their businesses were adopting new marketing strategies (95%), joining districts and provincial agro-dealer’s associations (86%), engaging rural agents to sell their products (81%), and training of workers in customer care and product knowledge (81%). However, borrowing working capital from family members (43%), and adopting Information and Communication Technology (ICT) strategies (24%) were among the least strategies that respondents felt is considerable for their businesses. Secondly, respondents indicated they used the following marketing strategies: relating well with suppliers and buyers (95%), participating in out-door advertising such as farmer’s days or field days, and agricultural shows (91%), training of farmers on agronomic practices (91%), improving customer service in the business (91%) and educating farmers in product knowledge (86%). It is worth noting that respondents ranked compliance to government regulation as one of their least strategy. To the contrary, compliance is mandatory and it is suggested that it could be used as a marketing strategy by agro-dealers.

III. Conclusion

The study found access to finance as a major challenge and this is in line with literature that suggested that access to finance is probably the highest ranking challenge that Small and Medium Entrepreneurs (SMEs) faced in the whole world [12]; [13]. Other major challenges faced by agro-dealers in Chipata and Petauke districts were competition; lack of market demand; lack of partnerships which is found to be critical for agro-dealer business success [11]; lack of strategic assets to use as collateral which is in line with literature that showed that lack of adequate capital assets is one of the challenges agriculture industry entrepreneur youth faced in Zambia [8]; and lack of training which agrees with the findings of the survey of Nigerian enterprises by [6] that individuals with higher levels of education tended to do better than those with lower levels. Other challenges were delay by government to pay agro-dealers who supplied inputs to farmers through Farmer Input Support Program (FISP). This study can help policy makers to tailor their policy direction in line with the needs of agro-dealers. the study can also help the ministry in charge of agriculture to fix bottle-necks

Figure 6:Marketing Strategies used by agro-dealers

Assessing Survival Strategies for Agro-dealers in Chipata and Petauke Districts, Eastern Zambia.

put value chain and help the agro-dealers business to grow. the study is confined within the Zambian agriculture value chain and restricted to Chipata and Petauke districts and could not be extended to other farming areas because of inadequate resources and time.

IV. Recommendations

 Since agro-dealers were given agriculture inputs by suppliers on consignment, it is recommended that agrodealers should build and maintain sustainable relationships with suppliers

 With regard to business diversification where agro-dealers were engaging in farming activities it is recommended that that agro-dealers should diversify into other businesses in different industries to minimize the risk of winding up should that particular industry be hit by some un foreseen events.

 It is also recommended that agro-dealers should have strategic assets such as buildings and farms with title of ownership to use as collateral for securing bank loans.

 It is recommended that agro-dealers should use compliance to government regulation as strategy to differentiate themselves from competitors, build and maintain long and sustainable relationships with stakeholders such as government departments, suppliers and the general public

 The Ministry of Agriculture should pay agro-dealers who supply inputs to FISP promptly to ensure agro-dealers were not put in a situation that would force them to into liquidation

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