Service Hubs: One-Stop Centres to Cater for Farmers’ Needs More Effectively

• Companies source from farmers far from headquarters
• Farmers do not have nearby access to several services
• Companies have underutilized infrastructure (e.g., warehouses) in the agricultural areas they source from

• The offered services should be complementary to each other (and not competing) to enrich the value proposition
• A Farmer Management Information System support partner companies to benefit from shared data
• The hub can be complemented with last-mile strategies (e.g., agent network) to ensure effective service delivery
• Adequate fees system ensures transparency and balanced distribution of value, costs, and risks between hub owner and partners

• The hub owner must have the required infrastructure
• Availability of high-quality service providers interested to participate in the hub
• Large farms and/or contiguous plots are required for some services to be feasible (e.g., mechanization, irrigation)

AKL has a new source of income from the hubs’ fees system. Due to those fees, in the last 2 (two) years AKL increased the revenues of its storage and processing facilities by 26% in Purongo, and by 16% in Kasese. At that rate, the hubs are projected to be financially self-sufficient by 2025.

By revamping the hubs’ offer, AKL has increased its aggregated volumes in Purongo by 25% and in Kasese by 10%. In turn, these larger volumes increased the usage of the hubs’ processing capacity from 5% to 25% in Purongo, and from 5% to 10% in Kasese. These improved aggregation and processing capacities contribute to AKL’s ambition of expanding regional trading.

By participating in AKL’s hubs, other service providers have access to new customer segments and margins without incurring in major investments (i.e., infrastructure, marketing, agent networks). For example, by selling through AKL’s hubs, FICA Seeds (an AKL’s sister company) has increased their sales of maize seeds by 7% and sorghum seeds by 12%.

Agents from AKL’s network earn commissions by delivering products and services offered at the hubs. These commissions can be additional to other sources of income agents may already have. For instance, FICA Seeds pays them 500 UGX per kg of delivered seeds, whereas AKL pays them 30 UGX per kg of aggregated produce.

AKL hubs allow farmers to access a nearer, timelier, and broader service offer. Owing to the implementation of the service hubs, farmers now can access 4 more services in Purongo area (i.e., quality seeds, mechanization, financial services, agronomy advisory, agri-inputs) and 3 more services in Kasese area (i.e., quality seeds, agronomy advisory, and financial services).