Small-scale farming – an African success story

In previous posts I have mentioned the enormous risks farmers accept when choosing farming as their livelihood.  In previous posts I have also discussed the reality that the family farm as we know it is becoming an endangered species.  While many of the risks come from our inability to control Mother Nature, farmers now have to add the complication of global competition.  While we can debate about whether this is in our best long-term interest – and I will do so in future posts – the reality is that, whether it’s food, clothing or toys, and despite how we lament the moving off-shore of our manufacturing, North Americans like their consumer goods as cheap as possible.  Factory farming seems to have become the primary model for producing cheap, plentiful food in this competitive environment.

Methods developed for large-scale commercial farming do not work for everyone.  They require weather within a range of moderate climates; they require large swaths of land that can be tilled, seeded, and harvested with large, expensive equipment.  Its model for success requires farms to specialize rather than grow a range of crops and/or animals, a risk in and of itself.  It’s big business.

Large-scale farming techniques are singularly unhelpful for agriculture in most developing countries.  There are many reasons. If we consider Africa alone, the extremes in weather from drought to monsoon call for soil management techniques quite different from what is common through large-scale farming practices.  Perhaps more importantly, in areas where industrialization has not replaced subsistence farming as a way for people to provide for themselves, taking that away by replacing their efforts by commercial farming, even if doable, is taking away both their ability to feed their families and the dignity of work.  What they need instead is support in being able to farm their small plots more effectively.

This can’t happen without credit.  In order for North American farms to operate, they need access to credit.  They need to borrow money to buy the seeds and fertilizer – or livestock and feed – to start their season, and then hope to pay back the loan with profit remaining at the end of the season.  They may need to borrow money to pay employees until their revenue stream starts flowing.  They need to purchase crop insurance to protect themselves against the punishing vagaries of Mother Nature.  In a given season, our farmers may need to upgrade or replace expensive machinery, requiring bank loans.  They may need to build new barns or storage sheds.  It all takes money, which comes in only at harvest time on farms.  The need for loans is not so different from other business ventures, but the lack of revenue prior to harvest is central to farming.

Happily, in the western world we have a banking system which, for the most part, facilitates these needs.  Without our banking system, and our ability to own property and other assets against which to borrow money, we would have no way of making improvements, of getting ahead, or of being able to protect ourselves – our investments – against unexpected difficulties.

Sadly, this is not the situation in which most small-plot farmers in developing countries find themselves.  They may own their plot, although they may only be leasing, but they do not have the ability to obtain credit in order to purchase the tools that could make their plots more productive.  They do not have access to funds to purchase high quality seeds or fertilizer.  They do not have access to storage or to the information that would allow them to store a good harvest and sell it at a better time, rather than be forced to sell to the middleman when supply is high and demand low.

And this is where a relatively young organization called the One Acre Fund comes in.  Andrew Youn visited Kenya on an internship as part of his MBA work in 2005.  He saw that improved farming practices could boost both productivity and nutrition.  Mr. Youn went home and developed a business plan, found funding, and in 2006 started an NGO called the One Acre Fund.

The One Acre Fund currently operates in Kenya, Rwanda, and Burundi, with the goal of helping subsistence farmers “grow themselves out of poverty.”  The NGO program involves five components:

1.  Empower local groups. Identify local farmers (mostly women, as it turns out) with an interest in working as a group to increase their farming incomes.  Working as a group makes it possible for them to economically interact with markets.

2.  Farm education.  Provide the farmer groups with training to improve their farming techniques and knowledge of how to grow more valuable crops.

3.  Capital.  Distribute high quality seed and fertilizers to the farmer groups. The farmers typically would not have used these because the up-front costs have been out of reach.

4.  Market facilitation.  Provide extensive education on post-harvest handling and storage, plus access to market data, allowing farmers to sell their surplus crops several months after harvest, when prices are higher.

5.  Crop insurance.  Offer the farmers crop insurance to mitigate the risks of drought and disease.

This “market bundle” is considered a loan, with the main difference from other micro-financing programs being that repayments are tied to the harvest cycle rather than on a monthly or quarterly basis.  The heartening news is that, to date, 130,000 farm families have been served by One Acre Fund, with a repayment rate of 99% and a doubling of their farm income.

Except for the middlemen, there are no losers in this story.  The clear winners are the farm families, who are helping themselves out of poverty and malnutrition.  And their hero has to be Andrew Youn, a Yale grad and MBA, and former management consultant, who saw a social problem and used his business skills and entrepreneurial thinking to solve that problem.  Mr. Youn is a shining example of a social entrepreneur.


This entry was posted in Entrepreneurship & Business, Farming and tagged , , , , , , , . Bookmark the permalink.

5 Responses to Small-scale farming – an African success story

  1. snowbirdpress says:

    I have read and seen (from friends) the great successes some of the back to earth farmers acheive. I don’t think there would ever be a famine if people were left alone to farm and we didn’t have wars.

    • Jane Fritz says:

      So true. Especially the “if we didn’t have wars” part, which goes hand in hand with a few people imposing raw power over others for ego and money. I guess all we can do is continue to hope the “one step at a time” approach will someday win out.

  2. very very interesting, I will visit again to relieve me of my ignorance!

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