Making capital and training accessible for East African farmers through inclusive business relationships

A stable and long-term business relationship makes it easier for small producers and their organisations to obtain access to loans, training, technology, etc. These are incentives that encourage them to invest in their business.

Therefore, one of the six key principles of an inclusive business relationship relates to equitable access to services for all parties. Do producers have access to training to learn more about new agricultural and post-harvest practices? Do they have timely access to market information? And to financial services? Are these services provided by the buyer or by another actor? Below, we give some examples about specific business cases brokered by Rikolto.

Grain trading systems (including rice) in Uganda are largely unstructured. Such unstructured trading systems are not transparent and do not provide farmers with efficient services that support their growth and allow them to earn decent incomes from the farm. Since mid-2019, Rikolto has brokered business relations between two cooperatives of smallholder rice farmers in Bulambuli district (Taabu Integrated Cooperative Society Limited and Bunambutye ACE) and SWT, a company engaged in rice processing and distribution across Uganda.

“The local Micro-finance Support Centre and Yara East Africa, an environmentally safe mineral fertilizer company from Kenya, monitored the progress of our discussions, even before formal agreements have been signed,” explains John Ereng, rice programme coordinator in Uganda. “Even more, MSC and Yara have already started providing services to the farmer organisations, because they saw a business case in it for them.”

“MSC is now working closely with the Bunambutye ACE management to help them meet its lending requirements. At the same time, Taabu ACE has also been given the nod to apply for a larger working capital loan from the financial institution. This is extremely important as it will allow Taabu to make advance payments to their members for paddy rice at harvest, before SWT can pick it up from the Taabu’s central store. To this effect, Taabu is currently undergoing an audit.

Yara East Africa is building on the fact that the farmer organisations intend to make a deal with SWT and access loans from MSC. This will allow the farmers to buy farm inputs, including fertilizers. The fertilizer supplier has already earmarked funds for setting up rice demos to train the farmers on how to use their products. The new season begins in April 2020, let’s see if everything falls into place!"

In Tanzania, the horticultural association Muvikiho brings together 570 farmers. Among other things, Muvikiho organises training courses on which farmers learn how to produce better and safer vegetables and fruits. The association even achieved the required Global GAP (Good Agricultural Practices) label, which guarantees safe products. In the past, an export company paid for the certification process. As a result, the company was in a powerful position and could impose its conditions and prices on the farmers. Now that they have their certificate, the farmers are stronger, and they can negotiate with several exporters.

Despite the limited volumes, the export market works as a catalyst. “The knowledge farmers gain about how they can grow higher quality products also comes in handy when they produce for the domestic market,” says Shukuru Tweve, our colleague in Arusha. “And we see that domestic buyers also start paying better prices in order to be able to compete with exporters.”

Because Muvikiho can provide evidence of sales contracts, this facilitates access to loans for its members. This allows the farmers to invest in seeds, fertilizers, equipment and other services. Together, the farmers of Muvikiho are stronger, with better prices as a result.