Developing segment-specific business models for agricultural crop protection distributors in South Africa

Abstract

Agriculture faces several challenges these days, most notably is the worldwide key challenge of providing sustainable food supply and agricultural systems to a population that is expected to grow to 10 billion by the year 2050 (FAO, 2017a). The report clearly states that “business as usual” by all stakeholders should be critically assessed to address major transformation in agricultural systems, rural economies, and natural resource management. The Crop Protection Distribution has seen significant changes, ranging from consolidation in suppliers, consolidation in growers due to continued sustainability pressure, including commodity prices and increased input costs, to accelerated adoption of technology. This caused a significant threat to the Crop Protection Distribution profitability, sustainability, and challenges what value they present to growers. We have seen dozens of Crop Protection Distributors and cooperatives exiting the market. Research in the segment-specific business models in the Crop Protection Distribution Industry is limited, specifically in South Africa. In Lithuania researchers propose that a that the business model that focusses on product production accompanied by limited service is no longer suitable. They draw attention to the fact that the product plus service business model should be implemented. Compared to South Africa, who has a traditional channel business model of extensive service plus product through Independent Affiliated Commissioned Agents which was adopted in the early 1990s. This approach is no longer applicable to this study. This study analysed and developed segment-specific business models for Crop Protection Distributors in South Africa, based on the needs and wants of the growers in each of those segments.