The challenge of becoming a rural fertilizer distributor

An enterprising man named Elijah is looking to open a store to distribute fertilizer, chemicals, and other farming products. He lives in Namoo, a rural community at the northern Ghana-Burkina Faso border. Most farmers in Namoo have to travel about 1-2 hours to reach the nearest fertilizer depot. And other farmers simply don’t find the transport profitable, so they farm without fertilizer. Elijah wants to open his store to make fertilizer more accessible to meet the demand in Namoo. It’s an excellent idea, and there’s significant farmer demand for the subsidized fertilizer which can improve farmer harvests!

Elijah was uncertain how to start, so he met with myself and my co-worker, Cosmas, a government Agriculture Extension Agent. We quickly realized there were many unknowns to starting this business. So I offered to do some research and meet with the input supplier in the regional capital, Bolgatanga. And what I found revealed why it’s highly uncommon to find rural fertilizer distributors…

How to Become a Rural Input Supplier in Ghana 101.

Step 1

Register with the Ghana Agriculture Input Dealers Association. You need to have a passport size photo and buy a registration form. At the time of registration you need to pay 100 GHc (~$73 CDN). And thereafter, you have to pay a 4 GHc/month membership fee. It’s unknown how long this may take to process.

Step 2

Register the business with the Ghana Registrar General. You will buy a form from the Post Office for 3.50 GHc. A particular agency, called NBSSI, will fill the form for you, and submit it to headquarters in Accra for processing. You will pay 70 GHc for the processing fee. You will also need to select 3 business names in order of your preference, and they will select one which has yet to be taken in Ghana. It’s unknown how long this will take to process. The forms may get stuck in the abyss of Accra paper work, and there is potential you need to visit Accra and “buy” your way out.

Step 3

Register with the Environmental Protection Agency. The form is 3 GHc.

After this you need to link up with a major input dealer and convince him to make you his agent. As an agent, you can now negotiate a deposit for fertilizer provided on credit. Then you need to negotiate for a truck to transport the fertilizer to the rural store. And if you advertise well, you will make your sales.

The cost for Elijah to register as an input supplier is 180.50 GHc (~$132 CDN), compared to his annual store rent of 120 GHc (~$88 CDN). These barriers to start this rural business are hefty! And Ghana is even ahead compared to other sub-Saharan African countries.

Most international development projects recognize farmers have limited access to fertilizer. And the typical project solution is to pre-finance fertilizer and drop it at the farmer’s feet. More effort needs to be invested so that Elijah can open and effectively manage his rural fertilizer store. This will develop the distribution network and will sustainably improve farmer access to fertilizers and other farm inputs to increase yields.

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