Module 11: Agricultural

entrepreneurship

LECTURER GUIDE
Module 11: Agricultural
entrepreneurship
Pre-assessment
After reading through the module overview and introduction,
complete the following pre-assessment in order to determine how
experienced or comfortable you are with the topic of supporting
agripreneurship. You will be asked to complete a post-assessment
after you have worked through the learning content.

Question Self-assessment
Low High
Have you helped farmers to set up
1 1 2 3 4 5
new business opportunity?
Can you spot a great entrepreneur
2 and know what it takes to succeed in 1 2 3 4 5
business?
Have you worked with agripreneurs
3 1 2 3 4 5
to spot a gap in the market?
Have you developed plans with
4 farmers based on results from a 1 2 3 4 5
market/value chain study?
Have you developed a business plan
5 1 2 3 4 5
with or for farmers?
Have you presented a business
plan to an investor (project, bank
6 1 2 3 4 5
or individual) to access financial
support?
Have you completed a study of the
7 strengths and weaknesses of local 1 2 3 4 5
business development services?

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 Question Self-assessment
Low High
Have you implemented a chain wide
upgrading plan to support multiple
8 actors to deploy new business models 1 2 3 4 5
that improve productivity, profitability
and competitiveness?

Answer: Learner’s own answer.

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Study unit 1: Introduction to
agripreneurship
Session 1.1: The role of the extensionist in
agripreneur development
Activity 1.1 Group activity: Identifying agripreneurs
Are you able to identify an agripreneur(s) in your area/rural
communities? Together with two or three of your colleagues,
discuss the following:
1. Describe the type of business they operate.
2. How are they different from the typical farmer?

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 Activity 1.2 Group activity: Supporting new agripreneurs
Imagine you are going to support some agripreneurs. Together
with two or three of your colleagues describe the methods that
you will use to:
1. Identify your clients;
2. Diagnose their needs;
3. Identify partners who can help provide the services required;
4. Provide the capacity building;
5. Support the investment needs; and
6. Provide the ongoing mentoring.

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Activity 1.3 Individual activity: Matching clients with
market opportunities
Consider the types of clients in your area and then answer the
questions below:
1. Which category do they fall into?
2. What are their methods for accessing capital?
3. If their main method of gaining capital is through savings,
4. Are they in a savings group?
5. Do they have a savings plan?
6. Can they join a local digital savings method for their inputs?
7. If you can only co-invest to a level of 40% of their needs
8. What is the timeframe you will need for raising the capital to
support the new venture?
9. Should you give the agripreneur more debt/credit?
10.Should you wait?
11.Are there opportunities for equity stakes in a business and is
that a good idea?

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 Session 1.2: Criteria for a successful business
Activity 1.4 Individual activity: The new extensionist in
agripreneur development
Answer the following questions in your own words.
1. Briefly explain the benefits involved in pluralistic extension
services.(5)
Answer:
• Pluralistic extension:
• Addresses the need for specific extension services for specific
contexts, economic enterprises, livelihood operations and for
different farmer categories;
• Addresses the wide variety of demands, while making better
use of the variety of service providers available;
• Develops better services by means of the cooperation between
the public and private sector;
• Shifts the coordination and accountability between extension
services and other service providers to the level of the farmers,
farmer groups and organisations;
• Provides a system in which the quality and content of extension
services are more responsive to the needs and priorities of
farmers, e.g. some services focusing on enhancing the social
inclusion of vulnerable groups and others focus on developing
and empowering the value chain.
2. In your opinion, what are most important characteristics of an
agripreneur?(10)
Answer: The learners may include any ten the following
characteristics in their answers:
Successful entrepreneurs:
• Have the initiative, drive and ability to identify and take
advantage of opportunities;
• Are creative leaders who are always looking for opportunities to
improve and expand their businesses;

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• Are determined to implement their vision and ideas and to
achieve their goals;
• Thrive on change and cope well with uncertainty;
• Know how to identify and evaluate risks and are willing to take
calculated risks, while accepting responsibility for both profits
and losses;
• Can organise people, strategies and technologies to fit
changing environments;
• Are creative problem-solvers, understand the decision-making
process and enjoy making decisions;
• Establish strong partnerships and other relationships and work
well with other people;
• Are innovators who are always looking for better and more
profitable ways to do things, which is particularly important
in the face of strong competition and a changing agricultural
market environment;
• Are honest and trustworthy;
• Are eager to learn and keep themselves informed about the
latest developments and trends in the agricultural environment.
3. Outline the process that you would follow to analyse the cost
of resources in preparation of starting a business. (10)
Answer:
The best way of analysing the costs involved in the identified
resources is to inspect all the information about the
activities and resources. The following process can help
you to identify analyse and prioritise resources.
Step 1: Vision and identify possible costs and benefits of
each resource by:
• Listing all resources related to each of the activities that has to
be performed;
• Allocating costs to each of the identified resources; and
• Identifying the benefits of the resources listed.
Step 2: Prioritise resources by comparing costs and benefits.

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 It is important to compare the value of your costs to the value of
your benefits and to use this analysis to prioritise your resources.
You have to calculate your total costs and your total benefits
and compare the two values to determine whether your benefits
outweigh your costs.

 Total: 25 marks

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Session 1.3: Evaluating entrepreneurs (clients)
Activity 1.5 Individual activity: Evaluating entrepreneurs
Answer the following questions in your own words.
1. Outline the criteria that a strong business opportunity has to
meet.(5)
Answer: A strong business opportunity usually has to meet the
following criteria:
• The product meets a need ;
• The opportunity has to work in your location;
• Having access to the resources;
• Providing the product at the right price;
• Timing is a key element when evaluating business
opportunities.
2. Design a questionnaire—consisting of ten questions—that
you can use to assess the readiness of your clients to take a
business approach and enter agri-entrepreneurship. Record
your questions in the following table format. (10)

Question YES NO

Answer: The learner should only design an elementary

questionnaire and does not need to include highly
sophisticated or structured questions with different options.
Questions such as the following may be considered:

Question YES NO
Do you have a strong drive for success?
Do you regard yourself as a leader?

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 Do you plan ahead?
Do you prefer to make your own decisions, with
input from others?
Do you enjoy competition?
Are you strong enough to face the challenges
and risks of running your own business?
Do you work well under pressure?
Do you know which basic skills you need to be
successful in business?
Are you prepared to go for training if you do not
have all the skills need in agri-entrepreneurship?
Have you ever work in a supervisory position?
Do you work well with people?
Are you prepared to delegate tasks, hire, motivate
and discipline people/workers?

 Total: 15 marks

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Session 1.4: Defining the business idea
Activity 1.6 Individual activity: Testing the viability of a
business idea
Complete the following practical activity.
In a group, discuss how you would assist a client to test the
viability of his business idea.
Answer: Learner’s own answer.

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 Activity 1.7 Individual activity: Defining the business idea
Answer the following questions in your own words.
1. Briefly explain to a client what it means to identify the
business gap.  (7)
Answer:
Identifying a business gap involves the following:
• Study trends in the market that the farmer or producer intends
to enter;
• Listen to customers and try to determine what their
expectations and concerns are and what they like or dislike
about the farmer’s competitors;
• Establish what customers require in terms of product cost,
quality and service delivery;
• Identify customer needs that are not currently being addressed;
• Determine if there is room for the farmer’s product in the
market by identifying competitors’ strengths and weakness,
in order to identify gaps in their services that the entrepreneur
may offer;
• Identify areas of specialisation that the entrepreneur’s
competitors do not address; and
• Define the competitive advantage of the entrepreneur’s
product.
2. Briefly explain the concept of value proposition. (6)
Answer:
A value proposition is a statement that identifies and
briefly describes the unique value that a product would bring
to your customers that your competitors’ products do not offer. In
other words, the value proposition summarises the reasons for a
customer buying a particular product and, in this way, it:
• Offers a clear explanation or your product;
• Gives an indication of the way in which your product differs
from alternatives on the market; and

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• Outlines the reasons why customers would prefer your product
over your competitors’ products.
3. How would you help your clients to identify a business gap?
(10)
Answer:
A business gap can usually be found in an area in which
consumers are not yet buying a particular product, or in which
there is a customer demand that has not been met. Business
gaps range from the need for new products to changing a current
product, or offering it in an alternative way, e.g. importing bulked
soybean or providing organic coffee to the international market.
Identifying a business gap involves the following:
• Study trends in the market that the farmer or producer intends
to enter;
• Listen to customers and try to determine what their
expectations and concerns are and what they like or dislike
about the farmer’s competitors;
• Establish what customers require in terms of product cost,
quality and service delivery;
• Identify customer needs that are not currently being
addressed;
• Determine if there is room for the farmer’s product in
the market by identifying competitors’ strengths and
weakness, in order to identify gaps in their services
that the entrepreneur may offer;
• Identify areas of specialisation that the entrepreneur’s
competitors do not address; and
• Define the competitive advantage of the entrepreneur’s
product.
 Total: 23 marks

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 Summative assessment: Unit 1
Answer the following questions in your own words.
1. Identify the fee-for-service methods that are applied in
developing countries. (5)
Answer: In developing countries, the following types of fee-for-
service methods have been implemented:
• Direct contracts between governments, local authorities and
private consultants to provide extension services for a limited
period;
• Direct contracts between governments, local authorities and
private consultants, which include payment rates based on the
producer’s’ income level;
• Direct agreements between producers and extension services
in which payment is calculated in terms of crop or profit share;
• Tradable extension vouchers that are funded and awarded to
low income farmers by government, based on certain criteria;
and
• Direct contracts between farmer groups and extension services
and other experts .
2. Briefly explain why it is important for an agri-entrepreneur
to have a vision for his business. (6)
Answer:
A vision is a brief description of what a business or an
organisation wants to become and achieve in future.
Having a vision has a number of benefits for the agri-
entrepreneur, in that it:
• Gives a better understanding of the environment in which the
business will be operating in future and what the business
needs to be successful in that environment;
• Gives a clear focus on the things that really matter to the
business, so that time and resources are not wasted on
unnecessary tasks;

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• Provides a common goal that can be used in building teams
and encouraging teamwork;
• Simplifies decision-making, in that every decision can be tested
against the vision;
• Provides a tool for measuring business progress; and
• Makes it possible for the business to integrate all its change
efforts into a single process, in order to process the demands
of the changing business environment (e.g. technological
changes, financial changes, changes in government legislation
and regulations and changes in markets and competition.
3. Explain the role and importance of competitor analysis in the
value proposition and identify the steps involved in conducting
a competitor analysis. (8)
Answer:
Businesses operate in a highly competitive environment and,
therefore, it is crucial to be familiar with what their competitors
are doing. Like the identification of a business gap, a competitor
analysis lies at the basis of a value proposition. A competitor
analysis is a tool that is used to evaluate the strengths and
weaknesses of the competitors of a business in a particular
market. Once you know your clients’ competitors’ products,
strategies, strengths and weaknesses the information can be
included in the value proposition.
The following four steps are involved in conducting a
competitor analysis:
Step 1: Conduct market research;
Step 2: Collect information on competitors;
Step 3: Analyse the collected competitor information; and
Step 4: Determine your position in the market.
4. Distinguish between customers in the consumer market and
customers in the industrial market. (4)
Answer:

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 The consumer market refers to the markets for products that are
bought by individual customer for their own or family use.
The industrial market involves the sales of goods and products
between businesses. In the agricultural sector, customers in the
industrial market include supermarkets, hotels and restaurants,
feed markets and export markets.

 Total: 23 marks

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Study unit 2: Evaluating the key skills
involved in running a business
Session 2.1: Evaluating the key skills

involved in running a business

Activity 2.1 Individual activity: Evaluating the key skills
involved in running a business
Answer the following questions in your own words.
1. Identify the basic skills that a farmer needs to conduct a
market analysis. (7)
Answer: The following skills are required to conduct market
analysis:
• Critical thinking skills;
• System-analysis skills;
• Operations analysis skills;
• Decision-making skills;
• Problem-solving skills;
• Coordinating skills; and
• Communication skills.
2. Identify the essential production operation skills that
the agri-entrepreneur requires. (9)
Answer: The following production operation skills are
essential to running an agri-entrepreneurship:
• Selecting, designing, operating, controlling and updating
the production system;
• Short and long-term planning in terms of what and how to
produce;
• Making decisions in terms of the timing of production
operations, e.g. sowing according to soil conditions and
seasons, sowing methods and fertiliser levels;

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 • Selecting the resources and materials needed to produce
agricultural products;
• Scheduling and controlling production processes;
• Selecting and operating farm machinery and equipment;
• Routing, which consists of designing the workflow from the
selecting input (e.g. seeds, fertilisers and agro-chemicals) to the
point of packaging and selling the product;
• Monitoring and evaluating the production operation; and
• Solving complex problems that may occur in the production
operation.
 Total: 16 marks

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Activity 2.2 Individual activity: Assessing the key skills
level of an agri-entrepreneur
Complete the following practical activity.
1. You are supporting and advising a farmer in Malawi who is
starting a small-scale business operation producing organic
vegetables. Design a rating scale that you can use to assess
his skill level in the following basic skills that he needs to run
this operation:
yy Production operation skills; and
yy Marketing and sales skills
Answer: The following is an example of a rating scale that the
learner may design. The learners should relate their rating scales
to the operation given in the question, i.e. the organic farming
operation.

Skills 1 2 3 Comments
Production operation Insert comments
regarding
Operating the production
training and skill
system
development
Scheduling and controlling that should be
operations introduced.
Planning what and how to
produce
Decision making about
production and operations
Resource, equipment and
materials selection
Designing workflow and
input operations
Monitoring production
operation

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 Problem solving in daily
production
1 = Not competent: Needs training and skill development
2 = Average: Needs improvement
3 = Competent

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Summative assessment: Unit 2
Answer the following questions in your own words.
1. Explain to a farmer group what a business plan is. (6)
Answer:
A business plan is a document that outlines the financial and
operational goals of a business for the near future and shows how
these goals will be achieved. In other words, a business plan is
a written description of the future of a business. A business plan
also describes:
• The value proposition;
• Means of delivery to key customers;
• The resources and partners needed to deliver the product; and
• Basic income and costs.
2. Identify the skills that a farmer needs to do business planning.
(8)
Answer: In order to do business planning, the agri-entrepreneur
should develop the following skills:
• Setting goals that align with the value proposition of the
business;
• Identifying a value proposition that fits with customer
needs;
• Collecting, organising, analysing and interpreting
information and situations;
• Diagnosing problems and identifying relevant causes
of the problems;
• Evaluating and comparing courses of action to address
problems;
• Predicting and forecasting;
• Estimating the time and effort required to complete tasks; and
• Implementing and monitoring actions and tasks.
3. In your opinion, what are the six most important negotiating
skills that an agri-entrepreneur would need? (6)

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 Answer: Any six of the following negotiating skills:
• Active listening skills;
• Clarify issues by asking relevant questions;
• Identify the key issues involved in the negotiation;
• Identify areas of common ground between negotiating parties;
• Develop a line of logical, reasoned argument;
• Put their points across clearly and understandably using verbal
communication skills;
• Identify and structure the problem, identify possible solutions
or courses of action and decide on the most suitable option
using problem solving skills;
• Plan alternative outcomes if a satisfactory decision cannot be
reached;
• Use decision-making skills;
• Use presented facts to make decisions with reasoning skills;
and
• Use persuasion skills.
4. Identify the steps involved in the sales process. (6)
Answer: The sales process has the following six basic steps:
• Prospecting for new leads;
• Initial contact with the prospect;
• Presentation of sales materials;
• Objection handling;
• Closing the sale; and
• Follow up/after sales service.
5. Identify four essential skills that a farmer needs to
perform the sales function. (4)
Answer: Four of the following skills:
• The skills required to perform the sales function include:
• Prospecting skills;
• Written and verbal communication skills;
• Active listening skills;
• Influencing and persuasion skills;

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• Presentation skills in order to make effective sales presentation;
and
• Reporting writing skills in order to compile regular sales reports.
 Total: 30 marks

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 Study unit 3: Identifying markets,
mapping resources and conducting
business planning
Session 3.1: Identifying market

opportunities
Activity 3.1 Individual activity: Identifying market
opportunities
Answer the following questions in your own words.
1. Briefly explain the way in which the market opportunity
identification (MOI) can assist the both the extension agent
and the agri-entrepreneur in spotting a market gap. (3)
Answer: The market opportunity identification process helps
agents and farmers to evaluate:
• Market demand and buying conditions for existing
products with reference to collective marketing within
a group;
• Market options for new products to encourage
diversification, with an emphasis on higher value
goods; and
• Market options for value added products, so that
service providers can assist farmers in shifting from
raw to processed goods.
2. Explain why understanding seasonal demand and
supply is important to an agri-entrepreneur. (6)
Answer: Market supply and demand are important concepts,
because they influence the prices that farmers and agri-
entrepreneurs can get for their produce. If agri-entrepreneurs
understand seasonal supply and demand, they can:

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• Plan what crops to grow, when to plant and harvest, and where
to sell;
• Plan to harvest their crops at the beginning or at the end of the
season, when prices are higher;
• Grow a crop variety that is more expensive than the standard
one, for example, red potatoes may be sold for more money
than white potatoes;
• Decide to grow a more nutritious crop, such as vegetables or
fruits instead of maize;
• Decide what would be the best time to sell their crop, for
example, by storing it until the price goes up;
• Try to increase the quality of the crop by protecting it from pests
and diseases, so it can be sold for a higher price.
3. Outline the effects of seasonal supply and demand on the
agricultural industry. (6)
Answer:
In countries with highly identifiable seasons, supplies are low at
the start of the harvest season and, therefore, prices are high.
Prices are at their lowest level when the crop reaches maturity
in the main production areas. At the end of the season, prices
normally increase again, while supply declines. Prices are
generally highest during the off-season, when only a small
percentage of farmers are able to grow the crop.
Short-term changes in supply and demand may be
caused by the weather. For example, in cold areas, sunny
weather increases the demand for salad crops (tomatoes,
lettuce, cucumbers, etc.), whereas vegetables for cooking
are in stronger demand during colder weather. In this way,
seasonal changes lead to short-term fluctuations in the prices of
these products.
4. Identify the steps involved when conducting an interview with
a buyer. (9)
Answer: The following steps are usually followed when conducting
an interview with a buyer:

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 • Always start with a greeting and, if you are talking to someone
who does not know you or who is not familiar with the topic of
the interview, introduce yourself and explain what you require
from them.
• Explain to the respondent what the information will be used for
and point out the value of the interview.
• Being approached by a stranger may make the respondent
feel uncomfortable and affect the interview. Therefore, it is
important to keep the atmosphere relaxed, even if you are
conducting a structured interview.
• Try to adopt the language of the interviewees.
• Make your questions clear, so that the respondent understands
exactly what is being asked.
• It is important to keep the interview short.
• If the respondent requests you not to reveal their identity then
you need to be able to assure them that their identity will not be
revealed.
• Conduct the interview and keep to matters that are relevant to
the research topic y.
• Once the interview is done, you can close it off by thanking the
respondent for their time and information.
 Total: 24 marks

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Session 3.2: Managing key activities and

partners in a business
Activity 3.2 Individual activity: Managing key activities
and partners
Complete the following practical activity.
1. Choose any agricultural business operation and design a
business process map for key operations and activities involved
in the operation.
Answer:
There is no ‘model’ answer to this question. It is important that you
try to record all the key activities involved in the operation. You may
also consider including information on the employees responsible
for each activity.

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 Session 3.3: Business planning: From

canvas to business plan

Activity 3.3 Individual activity: Business planning
Answer the following questions in your own words.
1. Outline the purpose of the business plan. (10)
Answer: A business plan is a document that outlines the financial
and operational goals of a business for the near future and shows
how these goals will be achieved. The purpose of a business plan
is to:
• Guide the direction of the enterprise over the long-term;
• Facilitate the understand of agreement;
• Improve organisation and decision-making;
• Test and strengthen financial feasibility to show whether the
business is making a profit;
• Monitor performance, so that changes in can be made in the
course of the production season;
• Ensure continuity in the business;
• Sell the business enterprise to partners such as
suppliers, business services and important customers;
• Convince lenders and donors to get involved in the
enterprise; and
• Guides as a guide to the implementation plan of the
business.
 Total: 10 marks

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Activity 3.4 Individual activity: Designing a model canvas
for a business plan
1. Identify a specific farming operation and design a model
canvas that the farmer can use to compile his/her business
plan.
Answer: Your canvas has to include the following nine areas:

Customers These are the buyers of the product,

such as traders or consumers. For most
products, there is more than one type of
customer. For example, a supermarket
may buy the highest grade output, but
the lower grades will have to be sold in a
local wholesale market and lowest quality
used to feed animals.
Value proposition This is a statement that clearly and
concisely describes the unique value of
a firm or group’s products. It states the
firm/group’s core objectives, which set
it apart from the competition. In most
cases, the value proposition focuses on a
specific product that the farmers plan to
produce Products may include things like
maize or milk.
Channels These are indications of the way in which
the group plans to deliver the product to
the buyer, e.g. by having members deliver
to a village collection center ready for
pick-up.
Customer These indicate how the group plans to
relationships identify buyers and create and maintain
relationships with them, through basic
agreements, alliances and or contracts.

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 Income This is the money the group earns from
selling the product
Key resources These are the inputs and resources that
the group uses to produce the product
and they include land, equipment,
seed, fertiliser and labour, as well as the
group’s internal organisation.
Key activities These are the activities that the group
plans to do to produce the product, e.g.
planting, crop management, harvesting
and drying.
Business services These are the services and partners that
and partners the group uses to produce and market
its product, such as input suppliers,
the agricultural extension service and a
microfinance institution.
Costs These are the costs that the group incurs
in order to produce and market the
product.

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Summative assessment: Unit 3
Answer the following questions in your own words.
1. Design a basic questionnaire that a client can use in an MOI
survey. Include at least fifteen questions in your questionnaire.
(15)
Answer: The learner may include the following types of questions
in the questionnaire:
• Where can the buyers be reached (i.e. buyers’ contact
information)?
• What are the trends in demand for the (selected) products?
• Which products in this market are in highest demand and why
are they in high demand?
• Which products are in low supply and why are they in low
supply?
• What are the price of the main products of interest?
• What is the seasonality of the main products of interest?
• What are the buying conditions?
◦◦ Volume
◦◦ Quality
◦◦ Minimum purchase lots
◦◦ Buying frequency
• What are the terms of payment?
• Would you (i.e. selected buyer) be interested to work
with our farmers?
2. Identify the benefits involved in conducting a market
visit.(6)
Answer: There are a number of benefits involved in taking part
in a market visit, in that it makes it possible for agri-entrepreneurs
to:
• Monitor the external environment that may affect their market
opportunities and business success;
• Identify potential opportunities in the market;
• Reach customers, buyers and business partners directly;

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 • Raise your profile and credibility in the market;
• Identify and overcome barriers to entry in the market (e.g. the
bargaining power of buyers and suppliers); and
• Understand the nature and intensity of competition in the
market.
3. Explain why a farmer must understand the effects of seasonal
supply and demand. (7)
Answer: If farmers understand seasonal supply and demand, they
can:
• Plan what crops to grow, when to plant and harvest, and where
to sell;
• Plan to harvest their crops at the beginning or at the end of the
season, when prices are higher;
• Grow a crop variety that is more expensive than the standard
one, for example, red potatoes may be sold for more money
than white potatoes;
• Decide to grow a more nutritious crop, such as vegetables or
fruits instead of maize;
• Decide what would be the best time to sell their crop, for
example, by storing it until the price goes up;
• Try to increase the quality of the crop (for example, by
protecting it from pests and diseases), so it can be sold for a
higher price.
• Information on and knowledge of market supply and
demand help the agri-entrepreneur to understand
the importance of specific products and to make use
of opportunities that occur because of changes in
demand and supply.
4. Explain the effect of market size and market growth on
product selection as an essential element in key buying
conditions. Use examples to illustrate your answer. (10)
Answer:
Market size

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Large markets have a greater capacity to absorb additional
supplies than small markets. It is important to avoid a situation
where farmers are supported to produce and sell a certain
commodity, but end up facing low and declining prices because
the market is too small and therefore unable to absorb new
supplies.
However, market size alone is not enough to ensure absorption
capacity. Some markets may be large in size but already
oversupplied.
Examples:
• Urban markets and export markets have much greater
absorption capacity.
• The market for most traditional export commodities is
saturated, e.g. there is excessive supply and very intense
competition in the world market for coffee, tea, and cotton.
Market growth
Growing markets have much greater potential for absorbing
additional supplies and generating remunerative opportunities
than stagnant markets. Products sold in medium to high growth
markets therefore merit special consideration.
Growing markets are better at absorbing additional supplies
and creating opportunities for profit than markets that have
grown stale. Products sold in medium to high growth
markets, therefore, merit special consideration. A product
that has a demand that grows at an annual rate of 5% or
more can be listed in the high-growth category. Products
that have a growth rate of 3–5% per annum belong to an
intermediate category, while those that have less than 3% growth
are in the low-growth category.
Examples:
• Global demand for staples (e.g. rice) and traditional export
commodities (e.g. cotton, coffee and tea) is relatively stagnant
but the risk are also relatively low.

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 • Export markets for organic and ‘ethical’ products, fresh
vegetables and fruits, flowers, cashew nuts, spices, essential
oils, and aromatic and medicinal plants are expanding rapidly,
but this potential for growth comes with increased risk.
• Domestic markets for milk, fish, meat, fruit and vegetables also
enjoy high growth rates.
5. Identify the essential terms that have to be included in a sales
agreement.(9)
Answer: The sales agreement has to include terms for the
following elements:
• Scope and duration of the agreement;
• The obligations of each party to the agreement;
• Consequences of failing to fulfil obligations;
• Quality and grading of the product;
• Prices and taxes;
• Invoicing and terms of payment;
• Delivery, risk of loss, handling and packaging terms; and
• Terms of product return, if necessary.
 Total: 47 marks

34
Study unit 4: Financial management,
sales and risk management
Session 4.1: Identifying sources of

finance
Activity 4.1 Individual activity: Identifying sources of
finance
Answer the following in your own words.
1. Identify the criteria that you would use to evaluate and select
savings options for an agripreneur. (5)
Answer: The following criteria can be used to evaluate and select
savings options:
• Liquidity refers to how easy it is to turn an asset into cash, e.g.
liquid assets (such as cash kept by the individual), can be used
immediately, whereas less liquid assets (e.g. animals) first have
to be sold, before they can be turned into cash and used to
make a purchase;
• Risk level involves the potential of savings losing their value,
based on varying market prices;
• Cost refers to the price of the savings service, e.g.
banking fees charged on savings accounts;
• Profit is how much a person earns in the form of
interest; and
• Accumulating assets refers to how easy it is to increase
a person’s savings, e.g. by making deposits to add to an
existing saving.
2. Briefly discuss the use of SACCOs as a savings option for
farmers.(8)
Answer:

35
 SACCOs provide financial services and savings options to millions
of people in many countries; particularly to people in low-income
groups. SACCOs are user-owned financial institutions in which
members, who have equal voting rights, are from the same
geographic area, community, or the same employer. The main
services of SACCOs are savings and credit.
Choosing a SACCO as a savings option has the following benefits:
• SACCOs reach clients and areas that are of little interest to
commercial banks, e.g. low-income clients in rural areas;
• SACCOs often start locally, without any external support;
• The small savings accounts provide a stable and low-cost
funding source; and
• They have lower administrative costs than other financial
services providers.
The main disadvantage of SACCOs is inadequate regulation and
supervision, which may result in instability.
3. Define the term investor and outline the factors that contribute
to the increasing demand for investment opportunities in the
agricultural sector. (4)
Answer: An investor is an individual or an institution who places
money into a particular business in return for an ownership
or partner stake in the business. The following factors
contribute to the increase in the demand for agricultural
products and, therefore, investment opportunities in the
sector:
• The increasing demand for food produce, which can
partly be seen as the result of population growth and
longer life expectancies; and
• Increases in the purchasing power of populations in
emerging economies have caused more increases
in food demand and changes in food consumption
patterns.

36
4. Briefly discuss impact investing as a new investment option
that is available to farmers. (5)
Answer:
Impact investing involves a new type of ‘social investor’ that
is looking to invest funds in social businesses or socially
minded enterprises that show clear social benefits in terms of
environmental gains, helping under-privileged people, but also
gaining an economic profit. Due to the nature of these types of
investments, the investors typically seek a social rate of return,
rather than a market rate of return. For the agricultural sector,
impact investors are of interest, as they may offer a new source
of investment in both short-term trade finance and longer term
infrastructure investment. The aim of the investment being to find
new ways of capitalising a sector to accelerate and scale growth,
as compared with the failure of traditional investment and banking
support in smallholder/development agriculture.

 Total: 22 marks

37
 Session 4.2: Managing financial
resources
Activity 4.2 Individual activity: Managing financial
resources
Answer the following questions in your own words.
1. Define the term production costs and explain to a farmer why
it is important to calculate their production costs. (5)
Answer: Production costs are all the costs involved in producing
or manufacturing a product or delivering a service. Knowing the
production costs of your client’s products or crops is important, in
order to:
• Determine how well their business is doing;
• Evaluate how efficiently resources are being used in their farm
operations;
• Predict how their business will respond to specific changes;
and
• Make decisions for attaining their goals.
2. Distinguish between cost-based pricing, value-based pricing
and competition-based pricing.  (6)
Answer: In cost-based pricing, the product price includes
the operating, manufacturing or production costs of
the business. Once the production costs have been
calculated, add the profit level that needs to be achieved
to the production sub-total to determine the price.
Value-based pricing, also known as customer-based pricing,
is based on the customers’ perception of the value of the product,
which involves customer preferences, convenience, product
quality and benefits, as well as alternative products offered by
competitors.
Competition-based pricing is focused on an industry and,
therefore, on existing and emerging competition. Once an

38
entrepreneur knows what their competitors are doing, they can
decide how to price their products.
3. Why is it important for a farmer to manage their cash flow?(3)
Answer: If a farmer manages their cash flow properly, they will
make sure that they:
• Do not run out of cash;
• Improve relationships with their suppliers, because invoices are
paid immediately; and
• Spot cash flow problems before they actually happen.
4. Distinguish between gross profit, operating profit and net
profit. (9)
Answer: Gross profit simply refers to revenue minus inventory
expenses. Gross profit can be a useful tool to examine the finances
of a farming operation to see how profitable it would be if all other
expenses were excluded.
Operating profit is similar to gross profit, but it takes other costs
into account. In order to determine operating profit, the gross
profit is calculated first and then operating costs—like rent, labour,
transport, storage, utilities such as lighting and phones and other
fixed costs—are subtracted. This leaves the total operating
profit.
Net profit is the amount of money that is left in the account
at the end of the year or season, after subtracting all
business-related costs from the revenue. In order to work
out net profit, calculate the operating profit and then
subtract any one-time expenses (e.g. advertising costs,
legal fees and other irregular expenses).
5. Define the term cash flow forecast. (2)
Answer: A cash flow forecast is basically an estimate of the
amounts and the timing of receipts (cash inflows) and payments
(cash outflows) that a farmer expects over a particular period
(usually a season or year), broken down by month. It is an

39
 important business tool that enables an entrepreneur or a farmer
to estimate income and expenses of their business.

 Total: 25 marks

40
Session 4.3: The basics of sales
Activity 4.3 Individual activity: The basics of sales
Answer the following questions in your own words.
1. Identify the different types of sales agreements into which an
agripreneur can enter.  (4)
Answer: The agripreneur can enter into following types of sales
agreements:
• Handshake local agreement
• Cash forward agreement;
• Deferred pricing agreement;
• Deferred payment agreement; and
• Minimum price agreement.
2. Define each of the following terms. (8)
a) Agreement
b) Contract
c) Sales contract
d) Term
e) Condition
Answer:
a) An agreement is a non-binding commitment to sell to a
willing buyer
b) A contract is an oral or a written agreement where two
(or more) parties bind themselves to certain obligations that
they agree to fulfill, in some cases these contracts are legally
binding. c) A sales contract is a legal agreement to accept or
deliver a specified quantity of a product (e.g. grain) with a specified
minimum physical or chemical content that is produced according
to a specified method.

41
 d) Term is a provision in the contract that states an obligation or
set of obligations imposed on one or more of the parties. Failure to
fulfil a term of a contract results in a breach of the contract.
e) A condition is a contractual term. If a condition or contract is
breached, it gives the injured party the right to cancel the contract
and claim damages.
3. Identify the external market and economic factors that may
affect sales and sales forecasting. (8)
Answer: The following external market and economic factors,
which are beyond your client’s control, may also affect sales:
• Seasonality of the business;
• Relative state of the economy;
• Direct and indirect competition;
• Political events and changes in legislation and regulations
governing the industry;
• Consumer earnings and spending potential;
• Population changes;
• Weather conditions, patterns and changes; and
• Changes in productivity.
 Total: 20 marks

42
Session 4.4: Assessing risk
Activity 4.4 Individual activity: Assessing and mitigating
risk
Answer the following questions in your own words.
1. What does production risk include in the agricultural industry?
(5)
Answer: Climatic and environmental risks that are not
predictable—such as droughts, floods and diseases—influence
the amount and the quality of agricultural output. Therefore,
agricultural production is often characterised by varying
production outcomes. Climatic factors may lead to a total or partial
loss of crops or herds, which may have long-term implications for
the farmer. Farm equipment may also hold a production risk. For
example, if a farmer’s tractor breaks down during the production
season, he may not be able to harvest in time, which may affect his
output, profit and income.

2. Outline the steps in the agricultural risk management process.

(5)
Answer: The agricultural risk management process has five
steps, which are discussed below:
• Step 1: Identify possible sources of risk, such as
environmental factors, unstable market conditions and
price changes;
• Step 2: Identify possible outcomes resulting from the
sources of risk, including low production and low income
periods in the production cycle;
• Step 3: Decide on alternative strategies;
• Step 4: Assess the consequences of each possible outcome of
each strategy; and
• Step 5: Evaluate the results between the cost of risk and the
gains that can be made.

43
 3. Explain to a farmer group how they can manage production
risk in their farming operations.  (7)
Answer: Production risk may be managed by implementing:
• Risk-reducing inputs, which improve the chances of higher
quantity and quality of farm products, e.g. fertilisers, pesticides,
compost and irrigation;
• Risk-reducing technologies, such as drought-resistant seed
and disease and pest-resistant seed for crops, irrigation
technology for high-value crops and breeding livestock
specifically for the market;
• Low-risk operations with high profit potential, e.g. smallholder
farmers planting a drought-resistant sorghum, rather than other
varieties that may fail in a drought;
• System flexibility, which makes it possible to make quick and
short-term decisions and changes to production and sales;
• Production diversification techniques such as:
◦◦ Managing multiple farm enterprises together at the same
time or in the same season;
◦◦ Engaging in the same farm enterprise in different locations;
◦◦ Engaging in the same farm enterprise over successive
periods or seasons; and
◦◦ Generating income from off-farm activities.
4. Explain how a farmer can reduce financial risk.  (7)
Financial risk is caused by uncertainty and borrowing
money to finance farming operations. It can be addressed
by the following strategies:
• Farmers who save for future investments are able
to buy inputs with less need to borrow capital, this
reduces their exposure to debt.
• Increasing the capital available to farmers through
loans, which enables them to expand their operations,
bearing in mind that they have to meet the financial
obligations of paying back the loan;
• Improve liquidity by selling assets that are most easily
converted into cash;

44
• Generate additional income by leasing assets (e.g. land,
machinery and equipment), which allows the farmer to use
equipment that might not have been profitable to buy;
• Managing the timing of investments, e.g. by spreading
purchases over several months, rather than buying all
equipment at the same time; and
• Where possible farmers should insure operations against major
risks, such as death, accidents and sickness, as well as fire and
loss of crops by storms or floods.
 Total: 24 marks

45
 Summative assessment: Unit 4
Answer the following questions in your own words.
1. Advise an agripreneur on the criteria that they should consider
when evaluating savings options. (5)
Answer: Your client should keep the following criteria in mind when
evaluating and selecting savings options:
• Liquidity is how easy it is to turn an asset into cash, e.g. liquid
assets (such as cash kept by the individual), can be used
immediately, whereas less liquid assets (e.g. animals) first have
to be sold, before they can be turned into cash and used to
make a purchase;
• The risks associated with savings indicate potential of savings
losing their value, based on varying market prices;
• The cost associated with savings is the price of the savings
service, e.g. banking fees charged on savings accounts;
• The profit associated with savings is how much a person earns
from their savings in the form of interest; and
• Accumulating assets is how easy it is to increase a person’s
savings, e.g. by making deposits to add to an existing savings
account.
2. Briefly explain why micro-financing should be considered
very carefully as a source of finance. (5)
Answer: Using micro-credit has the following
disadvantages:
• At present very few micro-finance institutions lend in
rural areas, and it is rare that they lend to farmers;
• The costs involved in microcredit is high, partly because one is
dealing with a large number of small loans;
• The lending conditions are limited, in that the loans are short-
term and for small amounts only, which makes micro-credit a
less suitable option for agri-business management; farmers
need multi-disbursement loans, which few MFIs offer;
• Some micro-credit systems offer loans only and the importance
of local savings is sometimes underestimated; and
46
• Some people (particularly the poorest people) are excluded
from micro-financing.
3. Create a seasonal calendar for financing needs for a farming
operation of your choice.  (15)
Answer: The learner’s seasonal calendar should include the
following categories of financial information
• Season;
• Income;
• Household expenses;
• Business expenses;
• Savings; and
• Loans.
Award 12 marks (2 marks for each category of information) and
3 marks for the graphic presentation of the calendar; total = 15
marks.
4. Explain the purpose, nature and calculation of production costs
to a farmer group. (9)
Answer: Production costs are all the costs involved in producing
or manufacturing a product or delivering a service. Knowing the
production costs of your products or crops is important, in
order to:
• Determine how well your business is doing;
• Evaluate how efficiently resources are being used in
your farm operations;
• Predict how your business will respond to specific
changes; and
• Make decisions for attaining your goals.
It is important to note that production costs refer to direct costs
only. Direct costs relate directly to the production or manufacturing
process, whereas indirect costs may be necessary to make or
produce a product, but they cannot be traced directly to the
specific product, e.g. property taxes, rent, electricity services,
insurance, etc.

47
 Direct costs are costs that relate directly to the production or
manufacturing of a product, for example:
• Direct costs of the materials needed to produce the product
(e.g. crop), which may include units of seed, fertiliser, irrigation
water, etc.; and
• Direct labour costs are the total costs involved in employing
workers who are directly responsible for the production
process, e.g. salaries or wages, payroll taxes and pension fund
contributions.
You calculate the total production costs of a product by adding all
the direct costs involved in the production process.
5. Why is it important for a farmer or agripreneur to manage his/
her cash flow? (3)
Answer: Managing your cash flow properly, enables you to:
• Make sure that you do not run out of cash;
• Improve relationships with your suppliers, because their
invoices are paid immediately;
• Spot cash flow problems before they actually happen.
6. Explain the process involved in the cash flow forecast. (12)
Answer: The following steps are involved in creating a cashflow
forecast:
Step 1: Estimate your potential sales
The first step is to estimate your expected sales for each
week or month:
• Use your previous sales history from the last couple of
years to get an idea of the level of weekly or monthly
sales that you can expect;
• Remember to consider current conditions and trends
in the market;
• If you’re planning a new marketing drive or launching
a new product, you have to include the expected
increased sales in your forecast; and

48
 • Remember to plan for seasonality, which is particularly
important in the agricultural business, because most of your
sales occur at a particular time of year.
Step 2: Estimate your payment timing
In Step 2, you estimate when you expect to receive payment for
your sales. If you sell on credit, include the likely delay in payment
into your cash flow forecasts, e.g. if your terms of payment are 30
days, you can then expect to receive your payment within one or
two months after the sale has been made.
Step 3: Estimate your costs and loss
Once you have your expected sales and payment information
in place, you have to estimate the costs involved in running
your business. These costs may include agricultural input costs
(seeds, fertilisers, pesticides, etc.), vehicle and equipment costs,
employee salaries, insurance, loan repayments, bank costs and
interest on loans, marketing and promotion costs.
Step 4: Apply the forecasts
Once you know your weekly or monthly income and expenses, you
ready to record them in a cash flow forecast template.
7. Identify the internal factors that influence the sales
function and the sales forecast. (8)
Answer: The following internal factors related to the sales
function may impact on the sales forecast:
• Labour problems;
• Sales motivation plans
• Stock or product shortages;
• Working capital shortage;
• Changes in the product price;
• Change in distribution method;
• Production capability shortage; and
• Introduction of new products.

49
 8. Advise a client how to analyse and review the quality and
volume of sales. (4)
Answer: Analysing and reviewing your sales data involves the
following steps:
• Calculate the values (sales or profit) of each product for a
particular period (e.g. a year) and add the values to get a total;
• Calculate the value of each product as a percentage of the total
sales value for the period;
• Arrange the calculated values and percentage of the products
from high to low; and
• Analyse the results and try to determine the variables that
distinguish the products with high sales volume from those with
low sales volume.
9. Briefly explain how the agripreneur can manage marketing risk
in his/her farming operation. (7)
Answer: Marketing risk, which results from the variability of
product prices and the uncertainty of future market prices, can be
addressed by using the following risk management strategies:
• Spreading sales by storing a crop after harvest, until it
can be sold at different times and for better prices;
• Enhancing profitability to selling directly to the final
consumers;
• Making contractual agreements with buyers in
advance, thereby ensuring a fixed product price;
• Developing trust with the buyers, so as to obtain the
best deal and maximise profits; and
• Keeping track of market prices relevant to their
products.
 Total: 68 marks

50
Study unit 5: Record keeping
Activity 5.1 Individual activity: Operations and financial
record keeping
Answer the following questions in your own words.
1. Identify five types of production records that should be kept
for a farming operation. (5)
Answer: Any five of the following production records:
• Seed-starting records;
• Planting record;
• Harvesting scheduling record;
• Pest management record;
• Irrigation record;
• Equipment cleaning scheduling record; and
• Delivery scheduling record.
2. Distinguish between an invoice and a receipt as financial
records.(7)
Answer: An invoice is evidence of a particular business
transaction. The invoice helps in recording expenses and the
payment of expenses. A receipt is a document that records the
following information:
• The date and time of a particular purchase;
• Item(s) purchased and the number of items purchased;
• Purchase price and totals;
• Method of payment; and
• The name of location of the store or supplier where the
purchase was made.
3. Explain the cash book as a financial record in an agricultural
operation.(5)
Answer: The cash book, which is one of the main financial records
in any business, reports on the cash that comes into the business
(e.g. by means of product sales) and the cash that is used to pay

51
 for daily items during a particular period. The cash flow statement
organises and reports the cash generated and used in the
following four categories:
• Item;
• Cash in;
• Cash out; and
• Balance.
 Total: 17 marks

52
Summative assessment: Unit 5
Answer the following questions in your own words.
1. Explain to a farmer group why they should keep operations
records and financial records.  (6)
Answer: Keeping operations records makes it possible to evaluate
the performance of your operation during a particular period and
to check that your operation is running according to plans and
schedules.
Financial record keeping makes it possible to determine the
financial condition or profitability of your business. Using financial
records helps you to understand how and where your business is
going, identify the weak links in your business and enable you to
take corrective actions to address them.
2. Outline the information that is recorded in the harvesting
scheduling record. (5)
Answer: The harvesting scheduling record gives you the following
information:
• The crops and varieties harvested and the amounts harvested;
• The harvesting techniques used;
• The crop that is ready for harvest during every month of
the year, which is particularly helpful if you are running a
larger scale operation;
• Post-harvesting handling methods (e.g. washing,
packaging, etc.); and
• The harvesting record also helps you to determine if
and when you should hire extra labour in the fields for a
particular harvesting period.
3. Identify the financial records that should be kept as part of
farm management. (6)
Answer: The following financial records are kept as part of efficient
farm management:

53
 • Invoices;
• Receipts;
• The cash book;
• The sales book, costs;
• Account and investment statements; and
• Employment records.
4. What is the purpose of the invoice as a financial record? (3)
Answer: An invoice is evidence of a particular business
transaction. The invoice helps in recording expenses and the
payment of expenses.

 Total: 20 marks

54
Study unit 6: Building a business and
managing relationships
Session 6.1: Putting plans into action and

monitoring progress
Activity 6.1 Individual activity: Putting plans into action
and monitoring progress
Answer the following questions in your own words.
1. Briefly explain the importance of proper planning when
launching a business. (6)
Answer: Although the business plan is a valuable tool in any
business, planning the launch of a business is not limited to the
business plan. It is important to include the following four levels in
enterprise planning: marketing, business planning, production and
post-harvest planning. Your clients should consider obtaining the
advice of experts in the industry, who have in-depth knowledge
and experience, in order to refine the business plan and model.
On the production level of planning, you and your client have to
consider the following:
• All the requirements that may be needed, e.g. land,
seeds, labour and capital;
• Potential problems, such as the effects of rains being
earlier or later than normal;
• Post-harvest handling, which includes sorting, grading,
packing, storing and transporting the crop to the market;
and
• Cost and quality.
2. Identify the types of customer information that is required as
part of the process of launching an agripreneur or farming
operation.(4)

55
 Answer: It is essential to understand the characteristics and buying
behaviour of your potential customers: they are one of the key
determinants of your business success. You need to determine:
• What drives their buying decisions;
• How you can differentiate your products from that of your
competitors;
• How you can convince of them of the value of your product.
3. Outline the role of problems and change that may occur when
launching a business and indicate how you, as the extension
agent, can help the farmer to address the problems and/or
changes.(8)
Answer: In all business ventures, there are issues that arise and
problems to face. Identifying and managing problems will require
the team to meet and discuss issues regularly and these meetings
need to be planned. As many businesses go through periods of
problems or even failure, a key trait of a strong entrepreneur is the
ability to learn from mistakes quickly and to find ways to overcome
them.The business team needs to go into their investment with
a clear understanding that they will inevitably face problems and
must be ready to make changes constantly, in order to launch and
maintain their business successfully.
As the extension agent, you may want to consider the
following key aspects, which are involved in the evaluation
of change:
• How can the agripreneur approach be expanded?
• How can decision-making support tools be integrated
to develop improved market linkage for farmers?
• What information and technical support do
aagripreneur need to make well-informed decisions?
4. Briefly explain what is involved in monitoring equity and
wealth.(4)
Answer: Monitoring equity and wealth involves the following
criteria and considerations:

56
• Which community members benefited most from the
agripreneur development process?
• Does the agripreneur improve the livelihoods of vulnerable
groups such as women and the poorer social segment?
• Does the agripreneur stimulate innovation cycles and streams?
• Does the agripreneur stimulate greater investment in
sustainable natural resource management?
 Total: 22 marks

57
 Session 6.2: Managing relationships
Activity 6.2 Individual activity: Managing relationships
Answer the following questions in your own words.
1. Distinguish between business relationship management and
customer relationship management. (8)
Answer: Business relationship management refers to the
strategies, processes and behaviours involved in creating and
maintaining value-producing relationships between an agripreneur
and all its stakeholders, including: employees (labour), service
providers, key partners and financial partners.
Customer relationship management is the application of
practices, strategies and technologies to analyse and manage
the interactions and relationships between a business and its
customers.
2. Identify the principles of business relationship management.
(6)
Answer: Business relationship management is based on the
following, underlying principles:
• Acknowledge and actively monitor the concerns of all your
stakeholders and take their interests into account when
making business decisions;
• Listen to and communicate openly with your
stakeholders about their concerns and contributions;
• Implement processes and modes of behavior that are
sensitive to the concerns, opinions and contributions of
each stakeholder;
• Recognise the interdependence of the stakeholders’ efforts and
try to achieve a fair distribution of the benefits among them;
• Cooperate with all stakeholders to ensure that your business
risks are minimised; and
• Acknowledge the potential of conflicts between stakeholders
and address such conflict (if it does occur) through open
communication.

58
3. Explain to a group of agripreneurs the purpose of customer
relationship management.  (7)
Answer: The main purpose of customer relationship management
is to analyse customer-related information, in order to:
• Understand customer needs and buying patterns, based on
reliable information;
• Identify buying patterns, so as to identify the high-value
customers who produce the greatest profit for your business;
• Retain existing customers by improving their overall experience
with your business;
• Improve the customer’s experience with your business and,
therefore, ensuring customer satisfaction and customer loyalty;
• Attract new customers and entering into new sales contracts;
• Drive the sales effort; and
• Increase sales growth and profitability.
 Total: 21 marks

59
 Summative assessment: Unit 6
Answer the following questions in your own words.
1. Identify the steps that should be followed when launching a
new agripreneurship. (7)
Answer: The following steps are involved in launching your new
agripreneurship:
Step 1: Conduct proper planning;
Step 2: Test your business idea;
Step 3: Make sure that you know the market;
Step 4: Make sure that you know the customer;
Step 5: Establish cash and other financial resources;
Step 6: Select an appropriate business structure; and
Step 7: Build the right team.
2. In your opinion, what are the five most important elements in
the evaluation of agricultural process performance? (5)
Any five of the following elements are relevant to the evaluation
of agricultural process performance:
• Is the agripreneurship development is an effective
mechanism for empowering resource-poor rural
communities to link with markets?
• What was the level of community participation and
empowerment in the process of evaluating the market,
designing the entrepreneurship and monitoring the
outcomes?
• What type of product value or market type
combinations work best with the selected
communities?
• Does agripreneurship development create new market
or business entrances?
• What are the minimum resources and capacities
required to participate in agripreneurship projects?
60
 • How do capacity, organisational levels and competence
affect process performance?
• Does agripreneurship development facilitate better working
relationships across development agencies and between
public and private-sector agents?
• How does agripreneurship development contribute to
changes in rural livelihood strategies on community and
administrative levels?
3. Identify the principles of business relationship management.
(6)
Business relationship management is based on the following,
underlying principles:
• Acknowledge and actively monitor the concerns of all your
stakeholders and take their interests into account when making
business decisions;
• Listen to and communicate openly with your stakeholders
about their concerns and contributions;
• Implement processes and modes of behavior that are
sensitive to the concerns, opinions and contributions of each
stakeholder;
• Recognise the interdependence of the stakeholders’ efforts
and try to achieve a fair distribution of the benefits among
them;
• Cooperate with all stakeholders to ensure that your
business risks are minimised; and
• Acknowledge the potential of conflicts between
stakeholders and address such conflict (if it does
occur) through open communication.
4. Briefly discuss the following elements of customer
relationship management in agriculture. (12)
yy CRM goals
yy Customer information
yy Market approach
Answer:

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 CRM goals
It is important to align CRM goals to the essential goals of the
agricultural enterprise, which directly affect their performance.
These goals include:
• Increasing customer satisfaction with products or services;
• Providing value to customers and increasing customer loyalty;
• Maintaining long-term relationships with customers (buyers)
and retaining existing customers;
• Gaining a reputation of fairness among customers; and
• Achieving mutual trust with customers.
Customer information
One of the key elements in the success of both the
agripreneurship and the CRM programme is to collect, analyse
and use reliable customer-related information and customer
behaviour during the customer lifecycle. It is important to use
this information in different business areas, from production to
marketing.
Market approach
When approaching the market, agricultural business should use
strategies such as:
• Superior product quality;
• Superior customer service;
• Lower prices;
• Product differentiation; and
• Customised offering of products as well as lower
prices.
 Total: 30 marks

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Post-assessment
The post-assessment is to be done once you have read through
the module and completed all the activities. Compare your
answers to those in the pre-assessment to identify where
knowledge has been gained and where improvements can be
made.

Question Self-assessment
Low High
Have you helped farmers to set up
1 1 2 3 4 5
new business opportunity?
Can you spot a great entrepreneur
2 and know what it takes to succeed in 1 2 3 4 5
business?
Have you worked with agri-
3 entrepreneurs to spot a gap in the 1 2 3 4 5
market?
Have you developed plans with
4 farmers based on results from a 1 2 3 4 5
market/value chain study?
Have you developed a business plan
5 1 2 3 4 5
with or for farmers?
Have you presented a business
plan to an investor (project, bank
6 1 2 3 4 5
or individual) to access financial
support?
Have you completed a study of the
7 strengths and weaknesses of local 1 2 3 4 5
business development services?

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 Question Self-assessment
Low High
Have you implemented a chain wide
upgrading plan to support multiple
8 actors to deploy new business models 1 2 3 4 5
that improve productivity, profitability
and competitiveness?

Answer: Learner’s own answer.

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