For a long time, models for ending extreme poverty in Africa have been laden with hand-outs. Development activists however have strongly opposed giving free money, goods or services to the poor because the cycle of poverty starts as soon as the free part of the bargain ends.
Development financiers are now starting to see the reality of this problem and have shifted to models that will empower the poor.
A new concept agreed upon at the World Economic Forum in 2007 to end poverty and hunger by enabling farmers to increase yields and add value to the harvest has been rolled out in Kenya.
The concept combines unique business models and partnership between the private and public sectors to grant subsidies to poor farmers. The funding is aimed at enabling the farmers purchase inputs that can boost crop yields.
The model is being tried for the first time in Siaya district, which is acting as the “learning laboratory”. The model will then be rolled out in other districts.
Experiments are being carried out to find out if these business models really end up empowering the poor, and cutting the dependency syndrome on financiers.
Almost one year after the launch of the Siaya projects, Cornela Roettger, former head of Unilever in China and Eastern Europe now heading the Siaya “learning laboratory” says the results are “encouraging”.
Among the eight projects started last year, five have qualified to enter into the next level of food chain value addition and seven more among them are already growing greenhouse tomatoes .
The project is an initiative by companies to devote part of their corporate social responsibility resources to help end hunger and poverty in developing countries. To facilitate the implementation, the public sector is also a partner.
The partners have created agribusiness and retail business models stretching from the village farm to the supermarket counters. In between, there are aspects to do with increasing yields, processing, packaging and streamlining marketing infrastructure.The idea was born in 2006 during the World Economic Forum (WEF), an annual gathering of top business people and policy makers held in Davos, Switzerland.
Then, the Business Alliance Against Chronic Hunger, a public-private partnership managed by the WEF was launched. Companies who are members of the alliance are required to use their expertise to help set up market-based solutions to hunger and poverty which are self sustaining.
The ultimate aim of the project is to change farmer’s income levels by 2015, as part of the Millennium Development Goals which aims at halving poverty by then.
Siaya District was chosen because it has high rate of poverty level which stands at 64 per cent for those living under Sh70 per day. Thirty eight per cent of the children in the region are stunted by malnutrition and the area has one doctor for every 96,000 people. The life expectancy averages 40 years, and only one per cent of households have electricity while only 30 per cent have access to safe drinking water.
The project has many dimensions. The first aims at enabling farmers to improve yield of their staple crop, which is maize and then have surplus. That surplus will then be processed.
To improve farm yields however, the alliance includes farm input makers to ensure that farmers have the right inputs and farming techniques through support of agro-dealers who have direct contact to farmers. Usually, agro-dealers are trained on better crop husbandry and provided with loans to enable them acquire enough stocks.
The second focus involves supporting farmers to grow high value crops like soyabeans, herbs and spices which can give better returns in the market. The next process involves adding value to the food chain from storage, processing, packaging, retail and distribution.
Already, the first process of enabling farmers have surplus staple food has started and the next phase that of enabling them to diversify into high value-crops is already on. “We do not believe in subsidies but smart models that can sustain themselves. We are not an non-governmental organization,” said Roettger.
The alliance’s major entry point is the market level where it will working with farmers to identify weaknesses in market infrastructure and act on them. Already, some corporate partners are providing ready market for the surplus produce.
For instance, HoneyCare and Dominion Farm have trained 44 farmers to start beekeeping projects on contract. The companies will also provide credit and quality control services to the farmers.
Farmers have potential to earn up to Sh100,000 per year from the project. Unilever and Technoserve have also contracted farmers to grow herbs and spices. The companies have financed farm inputs.
The project has potential to make Sh50,000 per acre per season.
Others include Nakumatt and Fresh Juici for contract growing of vegetables, Spectre International for growing of sweet sorghum that will be used to produce bio-ethanol while SealedAir has helped develop appropriate packaging machine.
At the moment, at least 14,500 farmers, most of who are maize growers are benefiting from the project. One of the main projects that is being rolled out starting last month is the growing of high quality tomatoes under the greenhouses so that yield is not affected in the case of less or no rainfall. The alliance will establish 12 such green houses each measuring 240 square meters.
Each green house will cost Sh168,000 to set up. Farmers will be able to harvest at least 4,000 kilogrammes of tomato every season spanning three months.
According to a business model developed by the alliance, the break in period will be after three seasons. The green house can serve the farmers up to three years.
The model aims at experimenting on how farmers can maximize usage of one acre of land to boost food security and for commercial gains especially after processing.
Successful processing of surplus would be a major gain because of its ability to increase returns for farmers. A survey done in Siaya using the already successful projects like that of soybeans shows their value would go up by 29 times if processed into flour, 114 times into beverage, 27 times into milk and 18 times into nuts.
The value of processed sunflower doubles while that of groundnuts goes up seven times when they are processed.
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