SDM case study: Farmworks, Kenya

| 8 Jun, 2023

Farmworks was founded in 2020 and is a grower, aggregator and distributor of horticultural produce. Its business model is anchored on an out-grower scheme producing products for local and export market distribution. The scheme has contracted 1,000 farmers engaging in the production of sweet corn, baby corn, French beans, orange flesh sweet potatoes and snow peas. Its distribution unit markets its produce in the domestic market (serving 200 small vegetable vendors) and to export markets. Farmworks provides farmers with training, input provision and financing (through third party partnerships) and crop aggregation services. The business aims to optimize and scale its out-grower program to 17,000 farmers by 2027.

To serve its farmers effectively and cost-efficiently, Farmworks sought to answer the following key question: How can the business scale its out-grower model from 1,000 farmers to 17,000 farmers while enabling 80% of farmers it sources from to access inputs on credit and increase farmer income for all its farmer segments? To answer this, we:

  • Analyzed performance and needs as well as the drivers to increase income for each of the farmer segments.
  • Evaluated the business performance that entailed analyzing the business case for scaling the out-grower model.
  • Assessed the key pressure points and opportunities in the supply chain.

Our analysis shows a positive business case at both farm-level and business level. The case report covers the following recommendations:

  1. Developing a farmer segmentation and graduation approach coupled with testing incentives for graduating farmers (such as discounts on input packages and/or premiums on vegetable produce) will enable Farmworks to enhance productivity, profitability and resilience of the farmers they work with.
  2. Investing in capacity building for staff at collection centers is critical to building a successful model at scale. This will also provide Farmworks control of the production processes through continuous monitoring of farmer application of GAP and thus manage risks of food safety.
  3. Leveraging data collected through FMIS will be key in driving efficiency at center, scheme and packhouse levels. The system can be leveraged for farmer segmentation, provision of input financing, tailoring service provision, forecasting demand for input packages, production and sourcing planning etc.
  4. There is need to develop partnerships with financial service providers for farmer input financing.