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Grow Africa Smallholder Working Group focuses on implementing inclusive investments

Grow Africa Smallholder Working Group focuses on implementing inclusive investments

Grow Africa Smallholder Working Group focuses on implementing inclusive investments

Grow Africa Smallholder Working Group focuses on implementing inclusive investments

The Grow Africa Secretariat recently initiated a new working group focused on improving business models for engaging with smallholder farmers. Co-chaired by IDH, The Sustainable Trade Initiative, the Grow Africa Smallholder Working Group follows in the footsteps of the Grow Africa Finance Working Group, which was established in 2013 to bring together players from different types of financial provider to address financial gaps throughout all stages of the agricultural supply chain.

Problems in agricultural value chains are generally systemic, requiring a group of stakeholders from different parts of the chain to work together to form solutions. For example, smallholders will break contracts and sell to other buyers because they are in desperate need of cash. This in turn is due to the fact that bank lending rates are often exorbitant, which is partly linked to the fact that land rights are often not clearly established or enforced, meaning the farmer cannot use their land as collateral against a loan.

Part of the Grow Africa Secretariat's remit is to focus on bringing together partners within the Grow Africa network from the public and private sectors as well as non-government, civil society and donor organisations, to share best practice in addressing these systemic issues and, where feasible, to develop concrete solutions.

The Grow Africa Smallholder Working Group comprises a core group of 20 committed members from: International and domestic agri-businesses; farmer organisations; and non-government organisations. Members include AgDevCo,AGRA, Bayer, East African Grain Council, Ecom, Heineken, Intervalle, FONG (Ghanaian Farmer Organisation),Malawi Mangoes, Netafim, and Value Farms. 

Members of the group were polled on the issues on which they would most like to hear best practice from other members. Responses ranged from: How to get information to the farmers so they can make decisions prior to planting crops?; How to make rural service supply viable? What type of mechanisms (for example tax systems for companies and outgrowers) can be put in place to enable governments to pay for infrastructure investments?

These questions were clustered into groups that will be addressed in turn in working group meetings. January's meeting focused on reducing side-selling, with a presentation by Njack Kane of Intervalle, an agri-business company that is involved in a public-private partnership with the government of Côte d'Ivoire to produce rice. Kane discussed initiatives the company - through its Ivorian subsidiary Yanaovel - is trialling to increase farmer loyalty, such as providing inputs and mechanized services on a campaign credit system without interest. The inputs are repaid in kind (paddy or rough seed) at harvest.The group discussed other strategies for building better trust between farmers and buyers, through channels such asservice supply as well as through incentive schemes. The group also discussed smart contracting mechanisms such as bartering systems and flexible contracts, as well as how to improve farmer access to finance and cash-flow to reduce side-selling for cash in hand.

The second meeting took place in person in Nairobi in February 2015 and focused on different models for providing services to farmers; from direct provision of services by the buyer, to provision of services by a third party but paid for by the buyer, to service provision through a third party aggregator who procures from a group of farmers on the buyer's behalf. Presentations were given by Kenyan maize trading company, NAFICS, on using warehouse receipt systems to provide additional services to farmers, and by commodity trading and processing company, Ecom on the company's experience of developing financial services to boost the commercial viability of cocoa farmers in Ghana.

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