What One Acre Fund can teach us about supporting African small-scale farmers

.

BY | 23 May 2014

 

One Acre Fund is a non-profit organisation serving smallholder farmers (typically living on one acre of land) in the East African countries of Kenya, Tanzania, Rwanda and Burundi. However, what makes it unique is that its model operates like a business.

One Acre Fund supports small-scale farmers across East Africa. Photo courtesy of One Acre Fund

“Instead of giving handouts, we invest in farmers to generate a permanent gain in income,” explained Jenny Best, spokeswoman for One Acre Fund, adding that the organisation is moving towards financial sustainability with 73% of its field operating costs covered by farmer repayments, while the remainder comes from donations and grants.

Co-founded by Andrew Youn in 2006, One Acre Fund provides loans in the form of seeds and fertilisers and currently serves roughly 180,000 small-scale farmers. The organisation’s aim is to reduce poverty and improve food security in areas where agricultural potential is severely untapped.

“Seventy percent of the global poor are farmers,” Best told How we made it in Africa. “So the people who are hungry are producing food for their primary economic activity. If we can make that economic activity more productive, the potential is gigantic to impact global hunger and poverty at large.”

Typically the farmers under One Acre Fund have no basic infrastructure (such as electricity or farming irrigation), have no agricultural machinery, live in rural areas far from urban centres, and usually have nothing more than a hand hoe. Around 65% of the organisation’s farmers are women.

Since its formation, One Acre Fund has been growing rapidly, employing around 2,000 people, and by 2020, expects to serve 1m farmers.

“I think what other organisations can learn is through simplicity of addressing a problem and building a programme model that is easily scalable and easy to replicate, you can have a real major impact,” Best noted.

Addressing needs on the full value chain

One Acre Fund addresses all the farmers’ needs along the value chain. This includes the financing and distribution of farm inputs such as quality seed and fertiliser, training on best planting practices, and market education to maximise storage of harvests and market profits.

According to Best, all of these services must be provided together for the model to work, from seed sourcing to harvest sales.

“Without financing, seeds and fertiliser are unaffordable. Without training and market education, farmers do not maximise yields or farm profits. And as our founder likes to say, without delivery, these services may as well be on the moon,” explained Best.

“Imagine if you live in rural Rwanda, it’s a mountainous area… without One Acre Fund’s drop offs, the closest place [to access] high quality seeds and fertilisers is going to be about 30kms away on foot. So delivery is a key component of that programme model.”

Asset based financing and flexible repayments

One Acre Fund offers a service bundle of asset-based financing. “We don’t lend cash, the loan is in the form of seeds and fertiliser,” explained Best.

She added that on average, One Acre Fund’s farmers roughly double their crop yields in a single season.

“And our data shows that for every dollar a farmer invests with One Acre Fund through the loan package, he or she will realise a 100% return on investment and actually sometimes it is as high as 180% return on investment.”

Last year, 99% of the organisation’s farmers repaid their loans in full and on time, according to Best, which is believed to be partly due to the flexible repayment system where farmers can pay off loans at any time throughout the growing season.

Farmer cooperatives and onsite training

To be part of the One Acre Fund, farmers have to join groups that typically meet weekly and are in walking distance from their homes.

During these meetings, the organisation’s field officers provide group training on best planting techniques, harvest storage, financial planning and market sales.

Another reason for grouping farmers into cooperatives is to offer group support. “The group absorbs responsibility for each farmer so if a farmer defaults, for example, or is unable to repay their loan, the group will absorb that cost, and pool that money to pay off that farmer.”

Best highlighted that the group has the power to decide not to let a farmer back into the group if he or she is at risk of not being able to repay loans. “So in a lot of ways they are self-run.”

http://www.howwemadeitinafrica.com/what-one-acre-fund-can-teach-us-about-supporting-african-small-scale-farmers/39618/

 

Tags: , , , , , , , ,

One Comment on “What One Acre Fund can teach us about supporting African small-scale farmers”

  1. Seth May 28, 2014 at 9:43 am #

    One Acre Fund” sounds so humanitarian, working with farmers who have almost no land. It claims to double and sometimes nearly treble farmer profits. The problem is, trying to live from farming one acre is deep poverty, and even if you treble a very small number, that’s still fairly profound poverty. What is left un-addressed is the fact that any family with only one acre of land needs some other source of income to survive, and most if not all are already branching out into migrant labour, petty commerce, etc. That one acre of land becomes less and less important to their economic survival – and that’s a good thing.

    What is really needed for poor families with tiny farms is other employment options. Donors need to be switching part of their focus to industrial and service-sector job creation, so that subsistence farmers have somewhere to go and some way to live when they inevitably leave the land. That way, the farmers left behind can farm larger parcels of 5-10 ha from which it is possible to generate a decent standard of living.

    These efforts to make tiny farms support entire families are misguided. I would wager that not one of the people contributing to or working for the One Acre Fund would be willing to live the way they are advocating that others do on tiny farms.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: