Location, Location, Location: How Spatial Distribution Impacts Market Access
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In countries across Africa south of the Sahara (SSA), agricultural value chains often rely on agro-dealers—small-scale local distributors—to help bridge the gap between input firms and farmers. Agro-dealers can thus form an important node of the value chain, providing access to critical inputs like seeds, inorganic fertilizers, and new agricultural technologies that can help increase productivity and improve food security. According to a 2021 study published in Food Security, however, despite a high and growing number agro-dealers, many small-scale farmers still lack access to this important resource.
Part of the problem may lie in agro-dealers’ spatial distribution.
The study was conducted in eight districts of Tanzania between September and October 2019. The sample was composed of the 299 agro-dealers (maize seed and fertilizers) in operation in the selected districts during that time period. More than half of the sample owned the input store; others identified themselves as experienced employees or store managers. The surveys covered agro-dealers’ current maize seed stock, pricing, and sales of both maize seed and fertilizers.
The study analyzed results at both the individual agro-dealer level and the cluster level, with clusters being considered all agro-dealers located within a radius of one kilometer. Just over 18 percent had no competitors within a one-kilometer radius, 22.4 percent had one or two competitors, and 26.4 percent had over 10 competitors.
The study also used a geospatial travel time model to estimate the distance between agro-dealers and farmers and between dealers and the district headquarters (i.e., the urban market center).
In the districts with the highest density of agro-dealers, there was an average of one dealer per 1,619 farming households; in those with the lowest density, the ration was one dealer per 2,919 farming households. Across districts, the average time needed for a farmer to reach an agro-dealer was approximately 60 minutes.
While the authors found the number of agro-dealers per rural household to be relatively high (although lower than other countries in the region, like Kenya), they also found the spatial distribution of those agro-dealers to be fairly heterogeneous. They suggest that this could in part be demand-driven—agro-dealers tend to congregate in districts whose farmers tend to invest more heavily in agricultural inputs.
Agro-dealer cluster sizes also became smaller the further away they were from the district headquarters, meaning that dealers in these more remote areas face less local competition. The authors posit that more remote farmers may thus face increased input prices and decreased input choices, after controlling for travel time to the nearest urban center. In fact, while agro-dealers closer to urban centers offered an average of eight maize seed varieties, those further away (one hour) from the district headquarters offered only six; this number dropped further with increased travel time. Similarly, input prices also increased with longer travel time (and with smaller agro-dealer cluster size). Urea prices increased by approximately 18 percent for farmers with only one local agro-dealer compared to those with a cluster of 12 agro-dealers to choose from.
These findings show that increasing farmers’ access to important inputs like seed varieties and fertilizers does not just depend on increasing the overall number of agro-dealers in a region. Rather, policymakers and other stakeholders interested in understanding farmers’ input adoption need to consider these agro-dealers’ geographic distribution and the length of their distribution chains. More targeted efforts to provide training, credit, and other incentives for agro-dealers to invest in more remote areas could help overcome the constraints that many smallholder farmers face when it comes to accessing critical agricultural inputs.