Team Wazua, I need you to poke holes, advise, critique, question, add ideas etc in an idea I have. The objective of the project is as the subject says. Empower peasants farmers back in the village economically. Tere are so many people living not so good lives economically. Despite there being resources like Land and water, there remains challenges that has made wealth creation for the majority a mirage. I have broken the issues into the following:
RESOURCES AVAILABLE:1. Land
2. Water
3. Hardworking people
4. Numbers(Can mobilise about 10,000 people to form a group)
CHALLENGES:1. Source of Capital
2. Lack of Market for produce
3. No compensation for crops destroyed by adverse weather.
4. No access to modern farming practices
5. Greedy brokers
6. Lack of leadership
7. Small scale projects that cant give the individual farmer any bargaining power on all touch points of the farming.
OPPORTUNITY1. Fix the funding
2. Fix the market
3. Fix Insurance
4. Fix the way farming is done
REQUIREMENTS:1. Type of crop to pilot with
2. A ready market
3. A willing financier
4. A willing Micro-Insurer
SUGGESTED MODEL1). Organize the farmers into groups. Target would be having about 10,000 farmers there growing the produce together. This would make it easier to train them in acceptable modern farming standards and practices. The easiet crop to start with would be horticulture, specifically, French peas
2). There are several companies that could offer the market for such eg Homegrown, East Africa Growers etc. If one of them is willing, they would guarantee that they shall buy the french peas once they are ready at an pre-agreed price. So market is sorted.
3). Approach a micro-finance/Bank that is willing to fund this activity. The bank shall not give cash to the farmers. Instead, we shall identify agents who sell the farm inputs (seed, fertilizer, chemicalsetc) where the registered farmers shall go collect the farm inputs and the bank shall pay for them.
4.) At very small rates, the micro-insurer shall insure the the produce against adverse effects like rain and drought. The insurance shall be factored in the financers rates such thus the farmers shall not be expected to pay any cash directly
EXECUTION1. Register the farmers
2. Bring the different stakeholders on the table(The BUYER OF PRODUCE,The FINANCIER, The INSURER, The FARM INPUTS AGENT, The FARMERS' REPRESENTATIVES) to agree on all the terms.
3. The farmer applies for the financing, the bank authorises and sends them a shopping voucher with specifics of what has been approved, the farmer takes the voucher to an agent and redeems farm inputs, the farmer goes to plant.
4. The buyer will be sending field officers to train farmers and offer other such support.
5. After 3 months when the produce is ready, the farmer harvests, takes the produce to the buyer who records clearly how much has been produced.
6. The Buyer shall not pay the farmer directly but rather through the financier. The financier deducts the cash they led to the farmer and gives the remaider to the farmer.
=>The farmer makes money
=>The financing bank makes their money from the interest. They are also happy coz the produce is insured in case of complete failure. They are also happy coz of the power of numbers. If each farmer is led KES 5,000, for 10,000 farmers that would be 50,000,000. At 10% pa, that would be good business.
=>The buyer has an assured source thus they are able to supply their customers overseas or wherever.
=> The agent is happy for the "guaranteed" sales
All parties are able to bargain for favourable terms since they are able to ride on the numbers involved...Thus
1. Lower lending rates for the farmers
2. Lower farm inputs prices from the agent
3. Lower Insurance rates from the insurer(Some financing organization also does insurance so that could be a better combination)
4. Better prices for the farmers(No broker)
There you are. Would this model work? What are the loopholes? Do you think there are institutions out there that would be willing to enter into such an arrangement?