Transcript farmer ownership model - Rural Finance Learning Center

Mainstreaming Small Holder
Farmers into the World
Economy – Using Farmer
Ownership Model – Red Court
Hotel – Nairobi Kenya
Oct. 16 – 17, 2007
Why Farmers are Poor



They are in a poverty circle
Small production for self consumption
and small surplus for sale - money to
buy basic items they do not produce
(soap, paraffin oil, sugar, match box)
They sell the small surplus at a give
away price – exploited by middle men
and become price takers (need for
immediate cash)
Why?


For cash crops they sell as individuals, not
adding value to justify the basis to negotiate
and bargain for a better price
For those farmers who are selling through
cooperatives or associations they do not have
the sense of ownership hence they surrender
ownership to the managers and leaders who
assume free ownership without investing on
the production – Advance payment assumed to
be the price of their crop, and additional
payment is taken as manner from heaven
Why?



Small production because they cultivate a
small piece of land using hand hoe technology
They are not organized to apply the farming is
business, pay on performance principles and
benefit from group power
They cannot access efficiently business
facilitation tools (credit, inputs, skills,
knowledge, appropriate technologies, market
access, price and market information)
Why?




They are not marketing value added
products at a negotiable and
competitive prices, hence earning less.
They cannot accumulate capital – to
invest and increase production
Lack of investment result to low
production
Low production - low incomes – low
investments
Reversing the Poverty Circle



Organize farmers into business groups( 25 – 35 per
group) using a strategic crops in a holistic, integrated
and harmonized manner within the farming systems,
and get their businesses names registered with the
Registrar of Companies for legal backing (can be sued,
sue, open bank accounts and enter into a contracts etc).
Assist groups to profile their baseline and establish
baseline data that will be used to develop vision based
business plans and implementation strategies
Assist groups to develop survival and Working Capital
accumulation strategies
How Capital is Accumulated



Identify source, use of cash and deficit (
assist the groups to come up with simple
cash flow statements and identify sources for
financing their deficits. – borrowing (group
guaranteed), development partners government)
Identify immediate opportunities to improve
cash generation and cash management
(avoiding unnecessary expenditures)
Initiate small savings mobilization schemes
which will also enhance groups cohesiveness
and having a sense of ownership.
How?



Groups lending to members to finance their
immediate needs so that they can postpone
individual sales of their produce at a give
away price
Encourage value addition by stopping selling
to middle men and move higher to the
nearest bigger market with bigger volumes
Group marketing of all products for bargain
power due to bigger volumes and value
addition
OUTPUT





Increased income and savings
More Farmers become members of groups as they
learn from the others
More value addition – moving to processing,
packaging, labeling, export and internal market
consumption promotion – price setters
Establish traceability to the source of origin that can
be certified or verified targeting niche markets i.e.
fair trade, utz kapeh, organic, rainforest alliance etc.
Farmers being active participants, profitably taking
advantage or market liberalization policies and
become part of the global economy
Who are better positioned to Empower
Stakeholder along the Supply Chain






Private Sector Service Providers
Who strongly believe that farmer and other
stakeholders empowerment is a viable
enterprise
Willing to invest their own resources till
positive results are achieved
Should not have vested interest in the Chain
(no ownership of the product or process)
Willing to be paid on Performance (Value for
Money)
Opportunity to commercialize extension
services which become part of the product cost
Why Farmers Organization
leaders, staff and gvt. officials
cannot empower farmers




“Lions cannot organize cows” due to conflict of
interest – They have vested interest not
necessary farmers’ interest in the process.
It is not their job to organize farmers and have
no capacity to do so
They should play the role of facilitation,
coordination, linking farmers to source of
resources and provide enabling environment
(legal, order, infrastructure and security)
Leaders, staff and others are paid on
performance (value for money)
Role of Middlemen



Becomes a facilitators, coordinators and
providers of goods and services needed by
the farmer as a result of increased purchasing
power.
Assume ownership based on the level of
investments into the processes such as
purchase and installation of machinery, value
goods and services to be provided etc.
Will no longer take ownership of commodities
along the supply value chain
Key for Success




Attitude change by thinking in “we” instead of
“me” - being smart greedy
High level of trust, integrity, honesty,
efficiency, commitment, determination,
transparency and accountability within the
chain
Continuous flow of resources to empower the
farmers and risks management till there is a
complete real change
Setting up “Innovative Rural Development
Revolving Fund” funded and managed jointly
by all key stakeholders.
OUTCOME






Minimize waste and misuse of resources
Promote harmonization of use of resources
and interventions (Farmers able to select who
to work with and for what value)
Paradigm shift “ Supply chain influencing the
demand”
Increased economy and efficiency
Maximization of Farmers Income
Wealth creation and Poverty eradication in
very short period of time
National Union of Coffee Agribusinesses and Farm
Enterprises – (NUCAFE - Uganda) – Success Story






Recognition and support from the Government of
Uganda and its institutions
Funding and support from International organizations
Presence in all five growing regions in Uganda, have
been able to work with 18,000 farmers to organize 600
farmer groups consisted of 30 farmers per group and
these farmers were able to market a total of 1,200
m/tons of green coffee in the last 3 years
Increased income of an average of 40% over equivalent
green coffee at farm gate price
120 groups with bank accounts and savings averaging
Ug Shs 360,000 per group.
Market linkage fees collected amount to over UG Shs 10
million (US$ 6,000)
Presented by:









Herment A. Mrema
Executive Director
Africa Rural Development Support Initiative
(ARUDESI
P.O. Box 11415
Kampala
Uganda
Tel: 256 – 75 – 3- 301494/71-2-301494
Email: [email protected]
[email protected]

AHSANTE SANA

THANK YOU