+1(978)310-4246 credencewriters@gmail.com
  

Answer each of the following questions below for Case 3 that is attached

Fertilizer is a commodity – why did Postigo spend so much time developing a relationship? Shouldn’t he have just set up an auction?

What was Postigo’s BATNA to reaching a negotiated agreement with Dehvi Medji and Sons?

Should Postigo have spent the time and money to meet face-to-face with all five potential vendors for the purpose of telling them about One Acre Fund rather than sending them an email?

Did Postigo pay particular attention to the other party’s needs in the phone calls with Dehvi Medji?

What do you think about Postigo’s sharing information with Dehvi Medji about OAF’s strategy for the future? Was this a good thing to do? Is this a good way to develop a relationship?

If Dehvi Medji’s price had been good, but not the best, would you still have recommended that Postigo try to negotiate with Dehvi Medji?

OAF’s founder, Andrew Youn, is an MBA. Given the importance of low-priced, good-quality fertilizer to his company’s ability to achieve its goals, should Youn be considering alternatives to buying from a handful of Kenyan wholesale suppliers? What might those alternatives be?

Postigo informed the case writers that the Kenyan government did implement its program of buying fertilizer in bulk to distribute at reduced prices to farmers, but the program did not really affect OAF farmers because they could only afford to travel to government depots and did not have the cash to buy or transport the fertilizer. However, this action by the Kenyan government might have secondary effects for OAF’s negotiations with fertilizer suppliers in the future. What do you think those secondary effects might be?

In what way did Postigo use his awareness of hierarchy in Kenyan culture during his negotiations with Dehvi Medji?

What do you see as the strengths and weaknesses of Postigo’s negotiating strategy for fertilizer in 2007 and beyond?

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KEL434
November 1, 2009
JEANNE BRETT
Negotiating for Fertilizer
Moises Postigo, manager of external relations and research for One Acre Fund (OAF),
needed to buy fertilizer for farmers enrolled in OAF’s program in Bungoma, Kenya. The
conditions under which he would do so were complex: OAF was just two years old. This would
be its first large acquisition of fertilizer. Postigo had five potential suppliers, none of whom he
had ever met face-to-face and would not during these negotiations.
Over a period of several weeks, Postigo leveraged his knowledge of the relationship-oriented
Kenyan culture, his sensitivity to the fact that the product he was buying was a commodity, the
growth strategy of his NGO, and his awareness of the Kenyan government’s evolving farm
support policies to successfully negotiate a deal for fertilizer and build a relationship with a new
supplier.
The One Acre Fund
“Empowering the chronically hungry to pull themselves out of poverty.”
OAF was founded by Andrew Youn in January 2006 as a not-for-profit organization with the
goal of solving the chronic hunger problem in Africa—not by giving food away, but by providing
the resources necessary for farm families to grow enough food to feed themselves. OAF’s
approach to eradicating hunger in Africa rests on these principles:
ï‚·
Empower local, pre-existing self-help groups
ï‚·
Provide farm education
ï‚·
Provide capital, including environmentally-sensitive planting materials and fertilizer
ï‚·
Connect members to established output markets
OAF works with the poorest of the poor: farm families that do not raise sufficient crops to
feed themselves, much less sell surplus to buy seed and fertilizer. OAF’s core mission is to
“empower persistently hungry farm families to grow their way out of hunger” (One Acre Fund
home page). Its core values are:
ï‚·
We don’t give handouts—we empower permanent life change. Lasting change must rely
on the poor themselves.
©2009 by the Kellogg School of Management, Northwestern University. This case was prepared by Katherine Nelson ’09 and Nicole
Tilzer ’09, with additional assistance from Teena Lee ’10 and Brian Bohl, under the supervision of Professor Jeanne Brett. Cases are
developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or
illustrations of effective or ineffective management. To order copies or request permission to reproduce materials, call 800-545-7685
(or 617-783-7600 outside the United States or Canada) or e-mail custserv@hbsp.harvard.edu. No part of this publication may be
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photocopying, recording, or otherwise—without the permission of the Kellogg School of Management.
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NEGOTIATING FOR FERTILIZER
KEL434
ï‚·
We provide a solution that is realistic for the extreme poor. Our solution includes tools,
training, and market access, making it realistic for someone starting from nothing to grow
for high-value markets.
ï‚·
We must dream big. Limitless human need demands an ambitious response. Eighty
percent of the extreme poor in the world are farmers, and we must aggressively scale to
meet demanding milestones.
ï‚·
We must remain 100% accountable to both our biggest donors and our littlest children,
measured by hard operational metrics that are reported, good and bad, to stakeholders. If
we are not improving the lives of children, we are failing, and must find a way to
improve.
The Importance of Fertilizer
Fertilizer is a key element in OAF’s ability to help African farmers. According to Moctar
Touré, executive secretary of the World Bank, “Soil is sometimes the only asset farmers have.
You get out of it what you put in. African soils are by nature extremely poor. They are very low
in organic matter and also low in all the major nutrients. When you start using the soil and not
replacing nutrients, you enter a cycle of mining” (Sode, 2007). The negative effects of mining the
soil continue to worsen as farmland becomes more densely populated by smallholder farmers
who cannot leave a portion of their land idle during the growing season (Fritschel, 2002). Indeed,
OAF only serves subsistence farmers who own one-acre plots of land, use only simple hand
plows, and generate such poor harvests that they are considered to be crop “failures” (One Acre
Fund).
Agricultural inputs such as seed and fertilizer have an “enormous potential to leverage the
efforts of hard-working farmers,” stated Paul Guenette, vice president of the Africa and Middle
East Division of ACDI VOCA. “Used appropriately, [seed, fertilizer, and agrichemicals] can
mean the difference between a good harvest and starvation” (Guenette, 2006). Exhibit 1 shows
the results of a study presented at the 2008 Egerton University Tegemeo Institute Agricultural
Policy Conference in Nairobi analyzing trends and patterns of fertilizer use by smallholder
farmers in Kenya from 1997 to 2007 (Ariga, 2008). As the exhibit shows, fertilizer and seed can
significantly increase maize yield. Yet fertilizer is out of reach for OAF farmers. Fertilizer is
typically sold in 50 kg bags, which is double the amount needed per one-acre farmer. These
smallholder farmers cannot afford to pay for small quantities of fertilizer, much less buy and store
large quantities. After visiting Kenya in May 2008, economist Jeffrey Sachs commented, “These
people are so poor that they can’t afford the inputs. There’s no money, there’s no credit, there’s
no collateral. This is the classic poverty trap. You can’t start when you have nothing” (The
Associated Press, 2008).
This is where OAF comes in. It buys fertilizer prices in bulk and then distributes 25 kg to
each farmer. In addition, OAF teaches farmers to use the fertilizer effectively in combination with
seed—which it also supplies—and other critical inputs. OAF sets a conservative yield target for
its first-season farmers based on analysis of the yields of farmers in the area who are already
enrolled in OAF’s program. If OAF farmers reach their yield targets they will not only have
sufficient crop to feed their families for the season, but will also be able to pay back OAF in the
form of a percentage of the crop (farmers starting in the OAF program do not have to come up
with cash on the front end to purchase fertilizer).
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The Negotiation Context
The Government of Kenya
The Republic of Kenya is bordered by Ethiopia, Somalia, Tanzania, Uganda, and Sudan, with
the Indian Ocean running along the southeast border (see Exhibit 2). The capital of Kenya is
Nairobi, and the current government can be classified as a semi-presidential republic. There was
no clear winner of the December 2007 election, and the ensuing disagreement between the
incumbent party and the challenging party erupted into a larger ethnic dispute that turned violent.
After five months of dispute, a power-sharing agreement was reached in April 2008, keeping the
incumbent president in power and designating his challenger as prime minister.
Kenya is ethnically diverse. Kenyans are bilingual, speaking English and Swahili, although
most also speak the mother tongue of their ethnic tribe. A sampling of the most common tribes
includes Kikuyu, Luhya, Luo, and Kalenjin. Current census estimates put Kenya’s population at
approximately 37,953,840, with a GDP of approximately $27.026B in nominal U.S. dollars. The
main agricultural products are tea, coffee, sugar cane, horticultural products, maize, wheat, and
rice. With regard to industry, Kenya is reliant on such products as petroleum products, grain and
sugar milling, cement, beer, and tourism.
Kenyan Culture
Kenyan culture’s emphasis on relationships and hierarchy stems from the importance of
family. Kenya is a place where you need to get to know people. If you walk into a room with
twenty-five people, you need to shake everyone’s hand. If you want to ask for directions on the
street, you need to have a conversation before you can ask for what you want (Jackson, 2008).
OAF’s on-boarding documents educate expatriate staff to build relationships with in-country staff
by making an effort to learn about their lives and families (Borgonovi, 2008).
In rural Kenya (where OAF employees spend the majority of their time), the culture is also
hierarchical. Native Kenyans will frequently act differently with foreigners than they do with
each other. They tend to be deferential—and often guarded—with foreigners (Westerners and
Caucasians in particular), despite their apparent warmth and perceived openness (Jackson, 2008).
These cultural attributes underscore the importance of relationship building. While rural Kenyans
may be very friendly and welcoming, it takes time for them to trust an outsider enough to share
the same information openly with them. Kenyans can be very indirect and overly polite,
refraining from saying that they do not understand something or that they disagree, because they
do not want to be confrontational (Borgonovi, 2008). It also takes much longer to reach decisions
or move things along in Kenya than in most Western cultures. People do not move as quickly or
feel the same urgency that someone from the United States might (Borgonovi, 2008).
Because OAF is an outsider in Kenya, it has learned about these characteristics of the Kenyan
culture and has developed a specific process of relationship building before starting a program in
a new part of the country. OAF staff members first meet with the sub-chief of the village, then
with the village elders, and then with an identified community self-help group. Only after all
these relationship-building group meetings have occurred does OAF staff begin to meet
individually with village leaders, and then with potential OAF participants (Borgonovi, 2008).
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Access to Fertilizer in Kenya
The fertilizer used in Kenya is imported. The main types of fertilizers in use are diammonium
phosphate (DAP) for planting and calcium ammonium nitrate (CAN) for top-dressing. OAF
utilizes both planting and top-dressing fertilizer, but this case focuses on a negotiation for DAP
fertilizer.
Fertilizer has been used in Kenya since the 1920s. However, early use was limited to large
farms growing coffee and tea that were run by Europeans. After winning independence from
Britain in 1963, the Kenyan government’s Ministry of Agriculture and the Kenyan Farmers
Association introduced new maize variations and encouraged the use of fertilizer.
Maize yield increased rapidly but stalled in the 1970s, at least partly because of the limited
availability of fertilizer. During the 1970s the fertilizer industry was heavily regulated. The
Kenyan government imposed retail price controls, import licensing quotas, foreign exchange
controls, and limited external fertilizer donation programs. In the early 1990s a consensus
emerged that heavy state involvement in regulating fertilizer was responsible for the stagnation of
maize yields (De Groot, 2005). Regulation of the industry was eliminated, and the government
successfully pushed for rapid private investment in the fertilizer industry.
In the 1990s Kenya became the only country in Africa to claim both significant fertilizer use
intensity (designated by 25 kg per cultivated hectare) and increased growth rates in fertilizer use
per hectare. Exhibit 3 shows that these growth rates in fertilizer use per hectare were greater than
30 percent in the periods 1990–1995 and 1996–2002 (Ariga, 2006).
Kenya now boasts a competitive fertilizer distribution network of 10 to 11 importers, 500
wholesalers, and 8,000 retailers (Ariga, 2008). One company, MEA, built a factory in Nakuru,
Rift Valley in 2008 to blend fertilizers in various formulations to suit a whole range of crops
grown under different soil types and agro-ecological zones. This is the only factory of this type in
East Africa. Fertilizer blends are based on type of crop, type of soil, and rainfall expectations and
may contain different amounts of filler materials such as limestone and soapstone, which are
locally available in Kenya.
Fertilizer Prices in Kenya
The competitive fertilizer distribution environment should have also resulted in lower
fertilizer prices in Kenya. Indeed, DAP fertilizer prices relative to maize prices did drop
dramatically in the 1990s. As Exhibit 4 shows, the DAP fertilizer/maize price ratio dropped from
3–4 to 2 (De Groot, 2005). However, the price of DAP fertilizer relative to maize is really not a
meaningful metric for OAF farmers; because they have no surplus maize for sale, they have not
benefited from increases in maize prices. Although fertilizer usage increased steadily by
smallholder farmers in the 1990s and early 2000s, the drastic fertilizer price increases starting in
2007 have hurt Kenyan farmers considerably. Agriculture Minister William Ruto recently stated,
“The commodity is now out of reach for many deserving farmers” (Otieno, 2008). Exhibit 5
shows the nominal wholesale price increases for DAP fertilizer during this period at both the
Mombasa port and inland at Nakuru, where higher prices reflect transportation costs (Ariga,
2008).
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The rapid rise in fertilizer prices reflects the fact that global fertilizer consumption entered a
demand-driven cycle around 2007: “Grain consumption is rising, driven by strong demand for
food, feed and biofuel production, leading to very tight grain market conditions and a severe
contraction of the world [cereal] stock-to-use ratios well below critical levels . . . The global DAP
supply/demand balance shows tight supply conditions in 2007, marginally easing between 2008
and 2010 with a surplus of less than 0.7 Mt P2O5. The balance would then expand into a surplus
exceeding 1.6 Mt P2O5 in 2011, as new large DAP plants come on stream” (Maene, 2007).1
The Negotiation
The negotiation in question took place in the last quarter of 2007. Although OAF had bought
fertilizer in small quantities before (and essentially paid retail prices), this was its first large-scale
purchase and Postigo’s first time negotiating for fertilizer for OAF. Postigo, a Spanish national,
joined OAF in June 2007. His background was in human resources and industrial relations. Prior
to joining OAF, Postigo ran his own cafeteria, where he “learnt that everything, from every
supplier, is susceptible to negotiation” (e-mail communication, November 3, 2009).
The negotiation for fertilizer occurred over a period of several months, during which Postigo,
who was located at OAF’s headquarters in Bungoma, Kenya, contacted five different potential
vendors. Each vendor had been recommended to him by other players in the market as established
companies that were reliable suppliers both in terms of quality and delivery.
These vendors included:
ï‚·
Athi River Mining Ltd. Produces and sells Mavuno Fertilizer, which is currently the
fastest-selling fertilizer in Kenya. Tests carried out by independent agencies indicate that
Mavuno is 30 percent more effective than traditional fertilizers.
ï‚·
Yara. Responsible for a wide variety of fertilizer products sold within Africa, specifically
in Cameroon, Egypt, Ghana, Ivory Coast, Kenya, and South Africa. Many of these brands
are also global brands, available in countries around the world for a variety of soils and
crops.
ï‚·
MEA Fertilizers. MEA Ltd is a private company established in 1977 to supply inputs to
farmers for the purpose of improving crop production and hence accelerate agricultural
development in Kenya. It has 40 percent of the Kenyan fertilizer market.
ï‚·
Minjingu Mines & Fertilizer Limited. Minjingu is aTanzanian firm operating a phosphate
rock beneficiation plant producing 100,000 tons of fertilizer per annum.
ï‚·
Dehvi Medji and Sons. Kenyan company based in Nairobi that imports approximately
2,000 tons of DAP fertilizer each year (Postigo, 2008).
OAF estimated it would need 15 Mt of DAP to supply its 600 farmers for spring planting in
February 2008 (25 kilos per farmer × 600 farmers = 15,000 kilos, or 15 metric tons). In 2007
Postigo was looking for a partner who would benefit from growing along with OAF’s expected
growth and therefore might trade price in 2007 for a long-term relationship and increased volume
1
Mt refers to a metric ton or 1,000 kilograms.
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KEL434
in the future. Dehvi Medji was the smallest vendor on Postigo’s list, which made that firm
especially attractive.
Although Postigo could not guarantee OAF’s growth, Exhibit 6 shows that OAF’s vision for
the future embraced not only rapid growth (from the 600 farm families in 2007 to 30,000 in
2010), but also an increasingly higher percentage of cost recovery. One way OAF planned to
recover costs was via the success of its current farmers, who as they began to produce and sell
surplus maize could pay OAF for the fertilizer that contributed to that growth. The other way
OAF intended to recover costs was to leverage economies of scale by negotiating volume
discounts for fertilizer.2
After identifying multiple vendors and learning a little about the business of each, Postigo’s
next step was to get information about the price for DAP fertilizer on the wholesale Mombasa
Index. At the time of Postigo’s negotiations, the wholesale price of fertilizer in Mombasa was
3,263 Ksh/50 kg bag.3 Across the country at Nakuru, where the wholesale prices reflected
transportation costs, the price was closer to 4,000 Ksh/kg bag (see Exhibit 5). With this
information, Postigo set a limit of 3,500 Ksh/50 kg bag and 300 Ksh/50 kg bag for transportation
costs. His target was 3,050 Ksh/50 kg bag for fertilizer and 225 Ksh/50 kg bag for transportation.
Armed with knowledge of the wholesale market and his limits and target, Postigo opened
negotiations with the five vendors via e-mail. Postigo’s e-mail described OAF, its mission, its
accomplishments to date, and, most importantly, its plans for growth. The e-mail also asked for a
bid on 15 Mt of DAP to be delivered to OAF’s headquarters in Bungoma by January 1, 2008.
Postigo received bids from four of the five vendors. He then entered into a series of
conversations with each vendor, all of which were conducted via cell phone. Postigo had not and
did not meet any of the vendors face-to-face during the negotiations. The reason was that the
vendors were located in Nairobi and Mombasa, approximately 250 miles from OAF headquarters.
Traveling to meet the vendors face-to-face would have been expensive and time consuming.4
Postigo conducted all the follow-up negotiations via cell phone, not e-mail, for technical reasons:
cell phone service was more reliable technology than e-mail, which required electricity.5
Nevertheless, negotiating via cell phone is notoriously difficult; without visual contact, it is
difficult to build relationships and to communicate and interpret information essential for
effective negotiating. The limitations of negotiating via cell phone technology were particularly
2
OAF was aware that a major threat to accomplishing its strategy was the huge increases in fertilizer prices. The organization’s
semiannual report stated: “We do face a risk to the organization . . . Fertilizer prices have increased by as much as 100% in the past
year. We are currently doing a large-scale trial with 300 farmers of five potential alternatives to our current fertilizer regimen—less
fertilizer, different fertilizers—that may help our farmers to save costs next season” (One Acre Fund, 2008).
3
Ksh refers to Kenyan shillings, the currency of the country.
4
Teena Lee, who spent summer 2009 working for OAF, reported: “It takes seven to nine hours to get from Nairobi to OAF
headquarters in Bungoma depending on whether you are taking a bus (which is what most people do) or you are driving. You can also
fly one hour from Nairobi to Eldoret or Kissumu and from there, a two-hour drive to Bungoma. In terms of driving, there is a mix of
dirt roads and paved roads—though the paved roads are terrible because there are just too many potholes. Driving is dangerous as well
because of crazy drivers/bikes/motorcycles, etc.”
5
Lee commented: “Cell phones are used heavily for business. Almost everyone has a cell phone. Of the sixty farmers we surveyed in
the new district in summer 2009, 50 percent had a cell phone.” She went on to say: “Cell phones are also used to build/keep
relationships. Kenyans love to call one another and frequently call/text each other throughout the day. Even so, Kenyans will still
travel miles to meet each other face-to-face. I was working with a DJ who refused to talk business on the phone. Instead, he wanted to
make a six-hour trip out to Oyugis to meet me first so we could talk. I had a similar experience with another vendor.”
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relevant to Postigo because of the Kenyan emphasis on relationships and the fact that he had no
prior personal relationships with these vendors.
In his phone conversations with the vendors, Postigo tried to negotiate price reductions by
playing one vendor off the others. Because of the volatility of fertilizer prices and the fact that
OAF did not want delivery until January, one vendor was dropped immediately because it would
not commit to a price for January delivery. Now Postigo was down to three potential vendors and
began to negotiate on delivery. He wanted a November price, no charge for storage in December,
and delivery in the first week of January. Postigo ultimately received three price-delivery offers,
the best of which was from Dehvi Medji and Sons at 3,300Ksh/50 kg bag. At this point Postigo
began intense negotiations with Dehvi Medjii. Dehvi Medji, a family-owned firm named for its
original founder, had been operating in Kenya for several generations. It is currently managed by
a father (Mahesh Patel) and a son (Jiten Patel). Postigo’s negotiations all took place with Jiten
Patel.
Before Postigo opened the next round of negotiations with Patel, he lowered his target to
2,970 Ksh/50 kg bag. This is because Postigo knew that in previous fertilizer negotiations
between OAF and Dehvi Medji, the company had settled for 10 percent off its initial offer.
Postigo talked to Patel about the huge increases in the price of fertilizer and how that had such a
negative impact on an organization such as OAF, whose mission depended on getting its farmers
sufficient fertilizer. The two parties also discussed the likelihood of the Kenyan government’s
stepping in to start importing fertilizer itself and selling directly to farmers at subsidized prices—
a factor that could hurt OAF’s prospects as well as undermine Dehvi Medji’s business. Postigo
repeated the information provided in the opening e-mail concerning the projected growth of OAF
with respect to number of farm families and recovering costs and provided current information
about OAF’s growth. He also asked about growth prospects of Dehvi Medji and indicated that the
two organizations might grow together.
Finally, Postigo talked to Patel about price, transportation cost from Nairobi to Bungoma
(where OAF had a warehouse to store the fertilizer), and delivery date of January 1. Postigo
conducted the negotiation in a friendly, cooperative manner, indicating that he was looking for a
better price and could increase the amount he would buy for such a price, and had some flexibility
on transportation costs and delivery date. One of the biggest appeals of Dehvi Medji to OAF was
its willingness to fix a price in November for January delivery.
After a series of phone calls, Postigo and Patel agreed to a price of 3,100 Ksh/50 kg bag,
transportation costs of 225 Ksh/50 kg bag (well below Postigo’s limit of 300 Ksh/50 kg bag), and
a delivery date by January 20, which would give OAF sufficient time to rebag the fertilizer and
deliver 25 kg bags to its farmers for February planting. Postigo made an immediate 50 percent
cash down payment—an unusually large up-front payment, but an amount he felt was necessary
in order to establish good relations during his first wholesale purchase.
The Aftermath
Since its first major purchase of DAP fertilizer from Dehvi Medji in fall 2007, OAF
continued the relationship with Dehvi Medjii for the 2009 growing season (purchasing in fall
2008 for delivery in January 2009). Unfortunately, this potentially long-term relationship has not
lasted. Dehvi Medjii was unable to keep up with OAF’s explosive growth in 2008 and 2009 and
had difficulty supplying sufficient fertilizer for 2009 planting. In the 2009 negotiations it was also
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no longer price competitive with MEA Fertilizers, which had opened a fertilizer manufacturing
plant in Kenya in 2008. In addition, OAF’s founder, Andrew Youn, developed a relationship with
the CEO of MEA Fertilizers.
Ironically, the Kenyan government did start a fertilizer subsidy program for farmers, buying
large quantities of fertilizer and selling at a discount to farmers. However, this action has had
almost no effect on OAF. The Kenyan government’s fertilizer warehouses are a great distance
from OAF farmers, who do not have the money to transport the fertilizer. OAF’s growth and
stable demand for DAP, the relationship between Youn and MEA Fertilizers’ CEO, and MEA
Fertilizers’ ability to manage costs by manufacturing rather than importing DAP have made MEA
Fertilizers OAF’s primary supplier for DAP fertilizer.
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Discussion Questions
1. Fertilizer is a commodity—why did Postigo spend so much time developing a relationship?
Shouldn’t he have just set up an auction?
2. What was Postigo’s BATNA to reaching a negotiated agreement with Dehvi Medji and Sons?
3. Should Postigo have spent the time and money to meet face-to-face with all five potential
vendors for the purpose of telling them about One Acre Fund, rather than sending them an
e-mail?
a.
Followup question: Did Postigo pay particular attention to the other party’s needs in the
phone calls with Dehvi Medji?
4. What do you think about Postigo’s sharing information with Dehvi Medji about OAF’s
strategy for the future? Was this a good thing to do? Is this a good way to develop a
relationship?
5. If Dehvi Medji’s price had been good but not the best, would you still have recommended
that Postigo try to negotiate with Dehvi Medji?
6. OAF’s founder, Andrew Youn, is an MBA. Given the importance of low-priced, good-quality
fertilizer to his company’s ability to achieve its goals, should Youn be considering
alternatives to buying from a handful of Kenyan wholesale suppliers? What might those
alternatives be?
7. Postigo informed the case writers that the Kenyan government did implement its program of
buying fertilizer in bulk to distribute at reduced prices to farmers, but that this program did
not really affect OAF farmers because they could not afford to travel to government depots
and did not have the cash to buy or transport the fertilizer. However, this action by the
Kenyan government might have secondary effects for OAF’s negotiations with fertilizer
suppliers in the future. What do you think those secondary effects might be?
8. In what way did Postigo use his awareness of hierarchy in Kenyan culture during his
negotiations with Dehvi Medji?
9. What do you see as the strengths and weaknesses of Postigo’s negotiating strategy for
fertilizer in 2007?
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Exhibit 1
Maize yield: 90-kg bags/acre
8
13
17.5
Maize Yields by Seed-Fertilizer Combination Group 1997-2007
14.2
14.1
13.4
14.0
11.4
10.5
8.4
6.3
6.0
4
1
9.4
9.0
8.0
6.1
5.0 5.0
2.9
1
2
3
Neither
2
3
4
Trad. & fert
1
2
3
4
Hybrid & no Fert
1
2
3
4
combo
Key for Bars: 1=1997 2=2000 3=2004 and 4=2007 Season
Source: Ariga, J. E. (2008, September 17). Trends and Patterns in Fertilizer Use by Smallholder Farmers in Kenya, 1997–2007. Retrieved
December 1, 2008, from http://www.tegemeo.org/documents/conference2008/day1/presentations/Trends-and-Patterns-in-FertilizerUse.ppt.
10
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Exhibit 2
Source: The World Factbook 2009. Washington, DC: Central Intelligence Agency, 2009.
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Exhibit 3
Source: Ariga, J. E. (2006). Factors Driving the Growth in Fertilizer Consumption in Kenya, 1995–2000. Retrieved November 23, 2008,
from MSU Agricultural, Food and Resources Economics, http://www.aec.msu.edu/fs2/Kenya/wp24.pdf.
12
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Exhibit 4
Source: De Groot, H. E. (2005). The Green Maize Revolution in Kenya Revisited. Electronic Journal of Agriculture and Development
Economics 2(1), 32–49.
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Exhibit 5
nominal Ksh per 50kg bag
4000
3000
2000
Nakuru, wholesale
1000
Mombasa, cif
0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Source: Ariga, J. E. (2008, September 17). Trends and Patterns in Fertilizer Use by Smallholder Farmers in Kenya, 1997–2007. Retrieved
December 1, 2008, from http://www.tegemeo.org/documents/conference2008/day1/presentations/Trends-and-Patterns-in-FertilizerUse.ppt.
14
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Exhibit 6
Source: One Acre Fund. (n.d.). Retrieved November 23, 2008, from One Acre Fund, http://www.oneacrefund.org.
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References
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documents/conference2008/day1/presentations/Trends-and-Patterns-in-Fertilizer-Use.ppt
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16
KELLOGG SCHOOL OF MANAGEMENT
This document is authorized for use only by shaquality singletary in MGTL 570 taught by Robert Bisking, University of Saint Francis from Jul 2022 to Jan 2023.
For the exclusive use of s. singletary, 2022.
KEL434
One Acre Fund. (n.d.). Retrieved
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