Pomegranates Grow into New Market Channels
With the goal of expanding marketing channels and increasing sales revenues of smallholder pomegranate farmers, USAID’s Feed the Future Egypt, Food Security and Agribusiness Support (FAS) project organized a farmers’ visit to Al Obour wholesale market. The goal of the visit was to successfully negotiate profitable sales agreements by applying sales negotiation best practices which they learned from the FAS project. Five farmers, representing the two largest agricultural associations in Assiut, participated in the visit on September 20th, 2018. Two of the five farmers came from Al Akal Al Bahary Association, which has 65 farmers who collectively own 130 feddans. They produce about 1,000 tons of pomegranate a year. The other three farmers came from Bader Association, which has a membership of 630 farmers who collectively own 750 feddans. They produce about 11,250 tons of pomegranate a year.
Two days before the visit, the five farmers received hands-on field training from the FAS marketing and post-harvest teams on collecting, sorting, and packing pomegranate to meet Al Obour wholesale market’s required specifications and can help farmers increase their sales opportunities and profit margins. The day before the visit, FAS production and marketing team members trained the farmers on negotiation skills so they could be better equipped to negotiate favorable deals with Al Obour market traders. The FAS team explained to farmers the importance of carefully collecting information on traders and crop prices in the market; the more market information farmers have, the better equipped they are to fetch favorable prices for their crops. FAS provided the farmers with handouts containing sample questions farmers can use to collect market information. In addition, the training covered the importance of identifying the specifications required by dealers and exporters, which will enable farmers to better adhere to specifications to increase possible market channels. The FAS project has identified Al Obour market as an optimal location for pomegranate sales compared to other markets because the market is well connected with pomegranate exporters.
Early in the morning on market day, the five farmers delivered 25 cartons, 5 kilos each, of their high-quality pomegranates to be displayed at Al Obour market. They then applied lessons from their previous days’ training by meeting with traders to collect marketing information. In addition, the Al Obour traders reinforced the importance of sorting, grading, and packing the pomegranates by providing an informal lesson to complement the training they received from the FAS technical team. Farmers then negotiated sales prices with the dealers; in general, buyers will buy the commodities according to the prevailing daily market price, while the dealer will receive a commission from the buyer for services rendered. This commission ranges between 5% to 15% of the purchase amount.
Haj Amro Abo Elela, a well-known trader at Al Obour market, agreed to display the 5 FAS farmers pomegranates at the market with the goal of selling them on the export market. Mr. Abo Elela agreed to an 8% sales commission for any successful export sales, on the condition that the farmers deliver the pomegranates according to the market’s grading, sorting, and packing standards. An eight percent sales commission is considered by farmers to be a favorable commission for export sales.
Haj Gamal Saad, another trader at Al Obour market, agreed to visit the 5 pomegranate farms to review the quality of the pomegranates and the farm facilities. During that visit, he expressed interest in facilitating the sale of their produce, in accordance with the best market price, and with a 5% commission (5%-15% is the current range of acceptable market commission rates).
The visit to Al Obour market allowed the farmers to learn about wholesale operations, sales processes, and to realize the great potential for increased profit margins that they can yield by engaging with traders who can sell their pomegranates for export. By exposing associations and cooperatives to new market channels for one crop, the USAID FAS project also helps member farmers tap into new market channels for other types of crops that they are growing by expanding their awareness of market opportunities.
Farmer Refaat Mohamed Hassan, representative of Al Akal Al Bahary Association explained that “the visit to Al Obour market was beneficial to us (farmers), because we collected a great database which we will use to compare the sales prices and to negotiate the best profitable deals.” Mr. Hassan practiced his new market analysis and negotiation skills by comparing the sales prices in different markets; he ended up selling 15 tons of pomegranate at the Soal wholesale market for EGP 56,250 compared to the EGP 45,000 that he could have sold them for at the local market, which resulted in a 25% income increase.