In gesprek met Cor Wattel van Terrafina, bleek dat de issues van Survival entrepreneurs daar al wat langer op de agenda staan, zoals ook Johannes Solf in de discussie afgelopen donderdag al liet doorschemeren. Op het raakvlak social security/safety nets en microfinance hebben Syed Hashemi en Richard Rosenberg een lezenswaardige samenvatting gegeven van enkele ervaringen. Zie Focus Note 34 Feb.2006
Met dank aan Cor!
Rob
Monday, June 29, 2009
Thursday, June 25, 2009
Lunch Session on the logic of survival entrepreneurs
This afternoon Dr.Peter Knorringa of ISS (The Hague) was invited to discuss the distinction between growth oriented entrepreneurs and survival oriented entrepreneurs.
In efforts of entrepreneurial trainings, small business development and value chain development quite often the distinction between the two categories is not made, or at least not explicitly. Peter Knorringa argues that by pushing survival entrepreneurs into specialisation, Business Development Service providers may actually increase the risks these survivalists are exposed to, instead of reducing risks, which is often what they are looking for.
In terms of policy implications that came out of the discussion, I want to mention a few:
- In microfinance survivalists and growth oriented entrepreneurs are already provided with differing services, the Business Development sector may learn from this.
- Keeping an eye on the inclusion or exclusion of the poorer segments is not yet a strong point of M&E systems of economic interventions. Can we improve on that?
Please find the presentation here:ISS
In efforts of entrepreneurial trainings, small business development and value chain development quite often the distinction between the two categories is not made, or at least not explicitly. Peter Knorringa argues that by pushing survival entrepreneurs into specialisation, Business Development Service providers may actually increase the risks these survivalists are exposed to, instead of reducing risks, which is often what they are looking for.
In terms of policy implications that came out of the discussion, I want to mention a few:
- In microfinance survivalists and growth oriented entrepreneurs are already provided with differing services, the Business Development sector may learn from this.
- Keeping an eye on the inclusion or exclusion of the poorer segments is not yet a strong point of M&E systems of economic interventions. Can we improve on that?
Please find the presentation here:ISS
Tuesday, May 12, 2009
Capacity Development and Learning in the SFED department
By Angelica Senders
On May 11 a considerable part of the Specialist Meeting (OEPS) was dedicated to report 2008 and planning 2009 on Capacity Development and Learning in the SFED department. (Full report)
To start with we looked into the relation between our learning activities in the SFED department, the internal capacity building to be achieved and its intended effect on our programmes. See the logical framework .
Subsequently we briefly looked at the learning activities implemented in 2008 and the way they are appreciated, see e-survey
Two major lessons were drawn:
• Learning events in general are appreciated, but their application into practice proves to be difficult
• COMPART flower tools are not used very often.
Furthermore we looked into the effect of this internal Capacity Development on our work ‘in the field’, Very important as this is the proof of the pudding. Major lessons with regards to this are:
• Only few programmes have clear capacity development strategies
• The gender sensitivity of our programmes is poor
• The development of coalitions, be it around chains or for programme development is still in a very early state.
Monitoring of programmes is difficult, look here for an attempt to give an overview of programme development progress. With R&D we are in the process of developing a Programme-scan
Finally we brainstormed on plans for 2009. Major issues will be:
1. The training of staff of the RWOs and experts (e.g programme facilitators) in programmes.
2. The development of a (or several) global knowledge networks to continue the process of knowledge development in a decentralised organisation
Please look also at the Powerpoint presentation
On May 11 a considerable part of the Specialist Meeting (OEPS) was dedicated to report 2008 and planning 2009 on Capacity Development and Learning in the SFED department. (Full report)
To start with we looked into the relation between our learning activities in the SFED department, the internal capacity building to be achieved and its intended effect on our programmes. See the logical framework .
Subsequently we briefly looked at the learning activities implemented in 2008 and the way they are appreciated, see e-survey
Two major lessons were drawn:
• Learning events in general are appreciated, but their application into practice proves to be difficult
• COMPART flower tools are not used very often.
Furthermore we looked into the effect of this internal Capacity Development on our work ‘in the field’, Very important as this is the proof of the pudding. Major lessons with regards to this are:
• Only few programmes have clear capacity development strategies
• The gender sensitivity of our programmes is poor
• The development of coalitions, be it around chains or for programme development is still in a very early state.
Monitoring of programmes is difficult, look here for an attempt to give an overview of programme development progress. With R&D we are in the process of developing a Programme-scan
Finally we brainstormed on plans for 2009. Major issues will be:
1. The training of staff of the RWOs and experts (e.g programme facilitators) in programmes.
2. The development of a (or several) global knowledge networks to continue the process of knowledge development in a decentralised organisation
Please look also at the Powerpoint presentation
Thursday, April 23, 2009
Gender and SFED
By Angelica Senders (Programme Specialist Capacity Development and Learning)
On April 23, a meeting was held on gender and SFED. The objective of the meeting was to discuss the gender plans of the SFED department.
We started with a presentation on the Agri-profocus (APF) gender learning network, in which ICCO plays an active role. This network started about a year ago with the aim to jointly:
1. develop a conceptual framework for gender and value chains;
2. make tools and instruments accessible;
3. develop ways to monitor and evaluate our successes.
A very informative learning history was made about the experiences of the network druing the first year. The document is downloadable from the blog on the Ning (website) of the gender network: http://genderinvaluechains.ning.com/ I herewith would like to recommend this ning. Don't forget to click on the icon for the 'tools wiki'.
Furthermore we discussed the plans to describe in-depth a variety of value chains from a gender perspective. Together we generated a number of ideas, in the three continents, which will be worked out jointly with Margreet Mook, gender specialist of ICCO.
More reading? Look at the following Powerpoint (don't forget to select the 'full screen' option, below on the right)
On April 23, a meeting was held on gender and SFED. The objective of the meeting was to discuss the gender plans of the SFED department.
We started with a presentation on the Agri-profocus (APF) gender learning network, in which ICCO plays an active role. This network started about a year ago with the aim to jointly:
1. develop a conceptual framework for gender and value chains;
2. make tools and instruments accessible;
3. develop ways to monitor and evaluate our successes.
A very informative learning history was made about the experiences of the network druing the first year. The document is downloadable from the blog on the Ning (website) of the gender network: http://genderinvaluechains.ning.com/ I herewith would like to recommend this ning. Don't forget to click on the icon for the 'tools wiki'.
Furthermore we discussed the plans to describe in-depth a variety of value chains from a gender perspective. Together we generated a number of ideas, in the three continents, which will be worked out jointly with Margreet Mook, gender specialist of ICCO.
More reading? Look at the following Powerpoint (don't forget to select the 'full screen' option, below on the right)
Gender DREO 23 April, 2009
View more presentations from Compart User.
Tuesday, February 12, 2008
Non-Timber Forest Products in the Honduran Moskitia
Introduction
The Honduran agricultural frontier is moving up into the natural reserves of La Moskitia, home of the indigenous Miskitos, Tawahkas and Pech. (Il)legal logging and extensive animal husbandry are quick ways for making money here, yet treathen Honduras’ tropical rainforests and the livelihoods of its indigenous inhabitants. MOPAWI, a development agency for La Mosquitia and partner organization of ICCO, is looking to manage the forests more sustainably, through the commercialization of Non-Timber Forest
Products (NTFPs).
Background
From its establishment in 1985, MOPAWI has been stimulating the commercial production of cocoa, but in more recent years other NTFPs like batana (Elaeis Oleifera) and swa (Carapa Guianensis) have grown more important. Although both swa and batana have been used for centuries by the indigenous people of La Moskitia for different medical and cosmetic purposes, the commercial value of these products was never recognized, until recently.
After less legal and less sustainable economic activities, like logging and narcotrafficking, the commercialization of NTFPs has become the most important source of income for a large number of indigenous communities in La Moskitia. The population of La Moskitia predominantly exists of subsistence farmers that can really use the monetary income for the purchase of medicines, the studies of their children, clothing and to improve their housing conditions. Currently, the target group consists of around 2000 families producing batana, 400 families producing swa and, 600 families producing cocoa.
Roles and responsibilities of the different actors in the chain
At this point, MOPAWI has a strong role in the value chain of the NTFPs, taking care of the purchase and logistics of the different products and negotiating contract terms with Ojon Corporation. In return, MOPAWI receives a fixed quota over every liter of batana or swa delivered to the representative of Ojon Corporation in San Pedro Sula, the country’s man harbor. Basically MOPAWI is fulfilling the role of a trading company in the value chain.
At the same time MOPAWI is also forming local committees of producers in every village and councils with representatives of different committees, which in turn are organized into one overarching association per region. These associations are to take over some of MOPAWI’s current roles over time.
Apart from building local management capacity, MOPAWI also provides technical assistance to the producers of the different NTFPs.
(Technical Facilitator of MOPAWI)
Barriers to development of local management capacity
MOPAWI’s transition of a chain actor to a chain facilitator has been complicated by a number of factors. First of all, the level of education of the target group, the producers of the NTFPs, is very low. Illiteracy lies between 50% and 80%, depending on the community. People with higher education are scarce, yet essential for a solid management and administration of the different associations. Finding honest and competent local administrators is difficult and professionals from other parts of the country do not want to work in the isolated Moskitia. The number of local organizations failing because of mismanagement and corruption is troublesome, despite numerous capacity building programs of GTZ, the EU, FUNDER and MOPAWI. The Moskitia sometimes appears to be a cemetery of failed local economic development initiatives.
A second constraint to the empowerment of local organizations is transportation. The majority of the communities are rather small and geographically dispersed.
In addition, most of the communities can only be reached by motorboat over water. Fuel is expensive in La Moskitia, because it has to be brought from outside of La Moskitia and there is no physical infrastructure connecting La Moskitia with the rest of the country (which actually might be a good thing as otherwise the region would probably have already been robbed of all its natural resources). These conditions make the logistic pr
ocess difficult and require good planning and coordination between the different communities.
(Transporting the Ojon Palm Fruit)
Finally, communication means between communities are limited. There is no phone network in the region and the fast majority of the communities do not have internet access or electricity. Radio communication is a possibility for most communities, yet not always readily accessible.
Due to these constraints the process of empowering local producer based organizations (at community, regional and intraregional levels) in taking over chain responsibilities of MOPAWI is a rather slow-paced process. Lack of personnel for the building of capacities of the producer based organization slows this process even further down. It seems unlikely at this moment that MOPAWI will redraw entirely as a chain actor, yet what role it will take in the future is still a point of discussion.
Dependency
Ojon Corporation has a strong commitment and interest in La Moskitia. Its product names, its slogans, its commercials, its whole marketing strategy is based on the image of ancient tribes using magical hair products, long time hidden from humanity in the tropical rainforests of Honduras. In addition, Ojon is profiling itself as a socially responsible enterprise; not only buying its raw materials from La Moskitia, but also actively contributing to the sustainable development of the region.
Ojon Corporation pays considerably better prices for the NTFPs to the indigenous producers, than producers in other parts of the world receive for the same products. Ojon is moreover MOPAWIs main donor and pays for the cost of an educational project that is setting up several schools in different remote communities.
It seems to be a win-win situation for all the actors in the value chain. Ojon has a solid marketing strategy, MOPAWI a flexible donor, and the producers a good price for their products. To a large extent this is true, yet one connotation should be made. Exclusivity contracts have been closed with each individual producer, making it impossible for other potential buyers to compete with Ojon Corporation. In addition, Ojon Corporation has protected the extraction of batana with patents. Although it is not likely that there are buyers willing to pay as much as Ojon Corporation for the Batana and Swa oils, Ojon’s demand for the NTFPs is limited. The potential production of NTFP is much higher than required by Ojon Corporation and because of the described constraints; entrance of potential buyers to purchase the overproduction is made impossible.
(SWA oil producers)
The purchase orders placed by Ojon Corporation, also directly influence MOPAWIs budget, creating instability in the NGO’s operations (e.g. how much personnel to contract each year). MOPAWI’s is highly dependent on Ojon Corporation and has the difficult task to balance its NGO activities (Natural Resource Management, building local management capacities, and defending indigenous rights) with its business activities (the commercialization of the NTFPs).
Maarten den Uyl (Junior Business Advisor ICCO-MOPAWI)e-mail. maartendenuyl[at]hotmail.com
The Honduran agricultural frontier is moving up into the natural reserves of La Moskitia, home of the indigenous Miskitos, Tawahkas and Pech. (Il)legal logging and extensive animal husbandry are quick ways for making money here, yet treathen Honduras’ tropical rainforests and the livelihoods of its indigenous inhabitants. MOPAWI, a development agency for La Mosquitia and partner organization of ICCO, is looking to manage the forests more sustainably, through the commercialization of Non-Timber Forest
Products (NTFPs).Background
From its establishment in 1985, MOPAWI has been stimulating the commercial production of cocoa, but in more recent years other NTFPs like batana (Elaeis Oleifera) and swa (Carapa Guianensis) have grown more important. Although both swa and batana have been used for centuries by the indigenous people of La Moskitia for different medical and cosmetic purposes, the commercial value of these products was never recognized, until recently.
In 2000, A Canadian entrepreneur, Dennis Simioni discovered the amazing properties of batana for the hair during his holidays, which eventually led to the foundation of a new cosmetics company, Ojon Corporation. Ojon Corporation has formed a strong alliance with MOPAWI and is currently buying large quantities of NTFPs from the zone. Using an origin based product marketing strategy they sell shampoos, conditioners and moisturizers to the highest segment of the Canadian and US cosmetics market. 
After less legal and less sustainable economic activities, like logging and narcotrafficking, the commercialization of NTFPs has become the most important source of income for a large number of indigenous communities in La Moskitia. The population of La Moskitia predominantly exists of subsistence farmers that can really use the monetary income for the purchase of medicines, the studies of their children, clothing and to improve their housing conditions. Currently, the target group consists of around 2000 families producing batana, 400 families producing swa and, 600 families producing cocoa.
Roles and responsibilities of the different actors in the chain
At this point, MOPAWI has a strong role in the value chain of the NTFPs, taking care of the purchase and logistics of the different products and negotiating contract terms with Ojon Corporation. In return, MOPAWI receives a fixed quota over every liter of batana or swa delivered to the representative of Ojon Corporation in San Pedro Sula, the country’s man harbor. Basically MOPAWI is fulfilling the role of a trading company in the value chain.
At the same time MOPAWI is also forming local committees of producers in every village and councils with representatives of different committees, which in turn are organized into one overarching association per region. These associations are to take over some of MOPAWI’s current roles over time.
Apart from building local management capacity, MOPAWI also provides technical assistance to the producers of the different NTFPs.
(Technical Facilitator of MOPAWI)
Barriers to development of local management capacityMOPAWI’s transition of a chain actor to a chain facilitator has been complicated by a number of factors. First of all, the level of education of the target group, the producers of the NTFPs, is very low. Illiteracy lies between 50% and 80%, depending on the community. People with higher education are scarce, yet essential for a solid management and administration of the different associations. Finding honest and competent local administrators is difficult and professionals from other parts of the country do not want to work in the isolated Moskitia. The number of local organizations failing because of mismanagement and corruption is troublesome, despite numerous capacity building programs of GTZ, the EU, FUNDER and MOPAWI. The Moskitia sometimes appears to be a cemetery of failed local economic development initiatives.
A second constraint to the empowerment of local organizations is transportation. The majority of the communities are rather small and geographically dispersed.
In addition, most of the communities can only be reached by motorboat over water. Fuel is expensive in La Moskitia, because it has to be brought from outside of La Moskitia and there is no physical infrastructure connecting La Moskitia with the rest of the country (which actually might be a good thing as otherwise the region would probably have already been robbed of all its natural resources). These conditions make the logistic pr
ocess difficult and require good planning and coordination between the different communities.(Transporting the Ojon Palm Fruit)
Finally, communication means between communities are limited. There is no phone network in the region and the fast majority of the communities do not have internet access or electricity. Radio communication is a possibility for most communities, yet not always readily accessible.
Due to these constraints the process of empowering local producer based organizations (at community, regional and intraregional levels) in taking over chain responsibilities of MOPAWI is a rather slow-paced process. Lack of personnel for the building of capacities of the producer based organization slows this process even further down. It seems unlikely at this moment that MOPAWI will redraw entirely as a chain actor, yet what role it will take in the future is still a point of discussion.
Dependency
Ojon Corporation has a strong commitment and interest in La Moskitia. Its product names, its slogans, its commercials, its whole marketing strategy is based on the image of ancient tribes using magical hair products, long time hidden from humanity in the tropical rainforests of Honduras. In addition, Ojon is profiling itself as a socially responsible enterprise; not only buying its raw materials from La Moskitia, but also actively contributing to the sustainable development of the region.
Ojon Corporation pays considerably better prices for the NTFPs to the indigenous producers, than producers in other parts of the world receive for the same products. Ojon is moreover MOPAWIs main donor and pays for the cost of an educational project that is setting up several schools in different remote communities.
It seems to be a win-win situation for all the actors in the value chain. Ojon has a solid marketing strategy, MOPAWI a flexible donor, and the producers a good price for their products. To a large extent this is true, yet one connotation should be made. Exclusivity contracts have been closed with each individual producer, making it impossible for other potential buyers to compete with Ojon Corporation. In addition, Ojon Corporation has protected the extraction of batana with patents. Although it is not likely that there are buyers willing to pay as much as Ojon Corporation for the Batana and Swa oils, Ojon’s demand for the NTFPs is limited. The potential production of NTFP is much higher than required by Ojon Corporation and because of the described constraints; entrance of potential buyers to purchase the overproduction is made impossible.
(SWA oil producers)
The purchase orders placed by Ojon Corporation, also directly influence MOPAWIs budget, creating instability in the NGO’s operations (e.g. how much personnel to contract each year). MOPAWI’s is highly dependent on Ojon Corporation and has the difficult task to balance its NGO activities (Natural Resource Management, building local management capacities, and defending indigenous rights) with its business activities (the commercialization of the NTFPs).
Maarten den Uyl (Junior Business Advisor ICCO-MOPAWI)e-mail. maartendenuyl[at]hotmail.com
Friday, December 14, 2007
Monitoring Food Security
Beste Collega's
Hierbij stuur ik jullie de pdf versie van het rapport dat ik geschreven heb over het gebruik van indicatoren door DREO partners om voedselzekerheid te monitoren. Ik wil jullie tevens bij deze nogmaals bedanken voor jullie input en medewerking.
Ik vond het leuk om dit onderzoek uit te voeren en hoop dat de resultaten en aanbevelingen bruikbaar zullen zijn. Voor eventuele verdere opmerkingen, suggesties of commentaar, ben ik bereikbaar op mrijerse@hotmail.com.
Met vriendelijke groet,
Marja Rijerse
Junior Policy AdvisorDepartment Research & Development ICCO
Hierbij stuur ik jullie de pdf versie van het rapport dat ik geschreven heb over het gebruik van indicatoren door DREO partners om voedselzekerheid te monitoren. Ik wil jullie tevens bij deze nogmaals bedanken voor jullie input en medewerking.
Ik vond het leuk om dit onderzoek uit te voeren en hoop dat de resultaten en aanbevelingen bruikbaar zullen zijn. Voor eventuele verdere opmerkingen, suggesties of commentaar, ben ik bereikbaar op mrijerse@hotmail.com.
Met vriendelijke groet,
Marja Rijerse
Junior Policy AdvisorDepartment Research & Development ICCO
Wednesday, December 12, 2007
Case study: Savanna Farmers Marketing Company Ltd
Introduction
In 2004, ACDEP, a network of 20 agricultural development stations in Northern Ghana, launched the Farmers Agricultural Production and Marketing (FAMAR) Project. This project aims at the development of supply chains from small-scale farmers in Northern Ghana to agro-processors inside or outside Ghana. As part of the project, Savanna Farmers Marketing Company (SFMC) was established. The other part of the project is to develop three layers of farmer based organisations (FBOs) that will become shareholders in SFMC in the future. SFMC is now in its third season. The company is successfully marketing sorghum, groundnuts, soybean and sheanuts for over 5,000 farmers, selling to customers in Ghana. Development of primary (community-level) and secondary (district-level) FBOs is in progress, set-up of tertiary (regional) level cooperatives is yet to start.
In 2004, ACDEP, a network of 20 agricultural development stations in Northern Ghana, launched the Farmers Agricultural Production and Marketing (FAMAR) Project. This project aims at the development of supply chains from small-scale farmers in Northern Ghana to agro-processors inside or outside Ghana. As part of the project, Savanna Farmers Marketing Company (SFMC) was established. The other part of the project is to develop three layers of farmer based organisations (FBOs) that will become shareholders in SFMC in the future. SFMC is now in its third season. The company is successfully marketing sorghum, groundnuts, soybean and sheanuts for over 5,000 farmers, selling to customers in Ghana. Development of primary (community-level) and secondary (district-level) FBOs is in progress, set-up of tertiary (regional) level cooperatives is yet to start.
The project model
In the value chain design, a deliberate choice was made to set-up a commercial company for the marketing of the farmers’ produce separate from the FBO. This is different from the traditional cooperative model where farmer cooperatives are expected to perform the marketing function themselves. The advantage of this split is that the marketing is done by professionals and that the long term interest of the marketing function is balanced against the short term interest of the farmers.
In the value chain design, a deliberate choice was made to set-up a commercial company for the marketing of the farmers’ produce separate from the FBO. This is different from the traditional cooperative model where farmer cooperatives are expected to perform the marketing function themselves. The advantage of this split is that the marketing is done by professionals and that the long term interest of the marketing function is balanced against the short term interest of the farmers.
Groundnut farmerThe role of the NGO ACDEP was to provide training and technical assistance in order to develop the farmers organisations. It was a deliberate choice to not make the NGO a chain actor, because of the risks of lack of business focus and lack of sustainability. Separating the business role from the NGO role worked very well. They each have different interests and this creates healthy tensions between the NGO goal (poverty reduction) and the business goal (volume and profitability). There is however a concern that the business will focus too much on its business objectives, thereby jeopardizing the equally important social goals. Governance of the company is therefore a challenge at this moment.
Sorghum farmerAn important lesson is that farmers are far more receptive to capacity building (e.g. agronomic extension and training in group development) when they know there is a ready and attractive market for their produce. We call this the push-pull model. The company pulls the farmers into the chain by providing a secure market. The NGO pushes the farmers in the right direction by assisting them with capacity building.
Development of SFMC
SFMC needed seed capital to start the business. It was not possible to get this capital from local sources and therefore ICCO decided to provide a loan to the NGO ACDEP to be used to buy the shares in the company, thereby providing the seed capital. This made ACDEP the shareholder, holding the shares in trust for the farmers. ACDEP appointed an independent Board of Directors. The ICCO business advisor was appointed Managing Director.
SFMC needed seed capital to start the business. It was not possible to get this capital from local sources and therefore ICCO decided to provide a loan to the NGO ACDEP to be used to buy the shares in the company, thereby providing the seed capital. This made ACDEP the shareholder, holding the shares in trust for the farmers. ACDEP appointed an independent Board of Directors. The ICCO business advisor was appointed Managing Director.
Soybean farmerSavanna decided to start trading sorghum, soybean and groundnuts. In the third year sheanuts were added as a fourth product. The number of farmers in the first season was 3,000 growing to 5,000 in year 3. The farmers are organised in groups of between 10 and 20 members. Savanna signs formal supply contracts with these groups. As part of the contract, farmer groups have the possibility to access production credit, either directly from Savanna or through local banks.
Involvement of farmers
In 2004 the farmers were organized through the agricultural member stations of ACDEP. The start was not easy. At the start sensitization meetings were held, whereafter contracting meetings were held in which the leaders of the groups signed formal contracts with Savanna Farmers for supply of produce. The main enticement for the farmers to participate was initially the credit that was provided. But in the second season the farmers started to see the benefit of the marketing service. Gradually the most committed groups sustained (most groups that fell apart could not repay the credit or did not meet the supply demands), and in 2007 these groups were assessed against a set of criteria for group development. The best performing groups are coached in order to help them to become certified as a co-operative under Ghana co-operative law.
With the high illiteracy level of farmers (over 90 %) and the lack of tradition to form groups as challenge, the step to form secondary groups of farmers at station level worked well. They represented the primary groups at local level. Having capable leaders in place had a very positive impact on the performance of the primary groups. Another key success factor was the huge investment of time in dialogue with farmers. This helped a lot in building trust and in getting feedback from the farmers. The next step in the process is that the farmers need to build and formalize their primary and secondary groups, so that they finally can become shareholders of SFMC. It is expected that the handover of the shares will take place within the next three years.
In 2004 the farmers were organized through the agricultural member stations of ACDEP. The start was not easy. At the start sensitization meetings were held, whereafter contracting meetings were held in which the leaders of the groups signed formal contracts with Savanna Farmers for supply of produce. The main enticement for the farmers to participate was initially the credit that was provided. But in the second season the farmers started to see the benefit of the marketing service. Gradually the most committed groups sustained (most groups that fell apart could not repay the credit or did not meet the supply demands), and in 2007 these groups were assessed against a set of criteria for group development. The best performing groups are coached in order to help them to become certified as a co-operative under Ghana co-operative law.
With the high illiteracy level of farmers (over 90 %) and the lack of tradition to form groups as challenge, the step to form secondary groups of farmers at station level worked well. They represented the primary groups at local level. Having capable leaders in place had a very positive impact on the performance of the primary groups. Another key success factor was the huge investment of time in dialogue with farmers. This helped a lot in building trust and in getting feedback from the farmers. The next step in the process is that the farmers need to build and formalize their primary and secondary groups, so that they finally can become shareholders of SFMC. It is expected that the handover of the shares will take place within the next three years.
Truckloading at warehouseThe credit caused a lot of groups to break down. We applied a group credit concept in which the group as a whole is responsible for repayment of the total credit taken. This meant that in some cases members of a group had to pay-off the debt of other groups members that failed to supply to our company. Our rule was (and is) that groups that don't pay off their credit are not given more credit in the next season. Many of the groups where this happened fell apart for this reason.
Pricing model
Savanna has many competitors. Especially for the groundnuts, the number of traders is high. It is a product with strong price fluctuations. Since contracts in Ghana do not have much value, it was very difficult for SFMC to guarantee the supplies of peanuts when SFMC’s price was lower than the price of traders. Therefore, in the first year there was a large number of farmers that did not obey the contracts and sold their product to traders.
After long discussions it was decided not to penalize these farmers immediately, but to withhold their loans in the second year. The ‘carrot – stick approach’ was introduced. When the loans were not repaid from the first year, these farmers were excluded from further credit. This penalty system worked out quite well. In the first year the repayment percentage of credits (through supply of produce) was 70 %, in the second year it was 85 %. This was done through a quite strict monitoring system. The farmers who violated the roles where immediately visited by a representative from SFMC, and with some of them they confiscated some assets of farmers.
Farmers decide who they sell to mostly on price. It is therefore important for SFMC to offer a price to farmers at least equal to the market price. But this is easier said then done when you operate in an intransparant volatile market and when you have a customer who wants the best price in the market as well.
SFMC started applying a fixed price model with both farmers and customers. In the first year the price was determined at the start of the planting season. This created difficulties when the market price exceeded the Savanna price and farmers started diverting. This made us decide in the second year to fix the price at the beginning of the harvest season. This allowed us to anticipate on price fluctuations. SFMC is also experimenting with a so called staircase price model. In this model, the season starts with a fixed price for farmers and for the customer. When the market price goes up and reached the fixed farmer price, SFMC renegotiates a higher fixed price with the customer and increases the fixed farmer price.
Savanna has many competitors. Especially for the groundnuts, the number of traders is high. It is a product with strong price fluctuations. Since contracts in Ghana do not have much value, it was very difficult for SFMC to guarantee the supplies of peanuts when SFMC’s price was lower than the price of traders. Therefore, in the first year there was a large number of farmers that did not obey the contracts and sold their product to traders.
After long discussions it was decided not to penalize these farmers immediately, but to withhold their loans in the second year. The ‘carrot – stick approach’ was introduced. When the loans were not repaid from the first year, these farmers were excluded from further credit. This penalty system worked out quite well. In the first year the repayment percentage of credits (through supply of produce) was 70 %, in the second year it was 85 %. This was done through a quite strict monitoring system. The farmers who violated the roles where immediately visited by a representative from SFMC, and with some of them they confiscated some assets of farmers.
Farmers decide who they sell to mostly on price. It is therefore important for SFMC to offer a price to farmers at least equal to the market price. But this is easier said then done when you operate in an intransparant volatile market and when you have a customer who wants the best price in the market as well.
SFMC started applying a fixed price model with both farmers and customers. In the first year the price was determined at the start of the planting season. This created difficulties when the market price exceeded the Savanna price and farmers started diverting. This made us decide in the second year to fix the price at the beginning of the harvest season. This allowed us to anticipate on price fluctuations. SFMC is also experimenting with a so called staircase price model. In this model, the season starts with a fixed price for farmers and for the customer. When the market price goes up and reached the fixed farmer price, SFMC renegotiates a higher fixed price with the customer and increases the fixed farmer price.
Farmers as shareholders in the company
The interests of SFMC are sometimes in line with those of the farmers, but sometimes they conflict, for instance when the farmer price is concerned. By making farmers shareholders in the company, their interest is safeguarded. The second reason for involving farmers in the company is to be able to pay them dividend in order to keep them in the value chain.
Farmers are not yet shareholders in the company. They first have to build and formalize their primary and secondary groups before this process can start. The shares are presently held in trust for the farmers by ACDEP. The conditions for hand-over of the shares to the farmer groups have been agreed between ICCO and ACDEP (because ICCO provided the funds to ACDEP for buying the shares). We expect that the handover will start within the next three years, but that it will take several years before all shares are handed over. This because farmer groups do not develop at the same speed.
In the mean time farmers do not have a formal say in the company, although they are consulted on important issues. ACDEP is looking for ways to get farmer representatives more involved in decision making, even before they become shareholders in the company.
The interests of SFMC are sometimes in line with those of the farmers, but sometimes they conflict, for instance when the farmer price is concerned. By making farmers shareholders in the company, their interest is safeguarded. The second reason for involving farmers in the company is to be able to pay them dividend in order to keep them in the value chain.
Farmers are not yet shareholders in the company. They first have to build and formalize their primary and secondary groups before this process can start. The shares are presently held in trust for the farmers by ACDEP. The conditions for hand-over of the shares to the farmer groups have been agreed between ICCO and ACDEP (because ICCO provided the funds to ACDEP for buying the shares). We expect that the handover will start within the next three years, but that it will take several years before all shares are handed over. This because farmer groups do not develop at the same speed.
In the mean time farmers do not have a formal say in the company, although they are consulted on important issues. ACDEP is looking for ways to get farmer representatives more involved in decision making, even before they become shareholders in the company.
This article is written by Ties Kroezen
e-mail. tieskroezen@yahoo.com
Business Advisor ICCO in Ghana from June 2004 - July 2007
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